Bismuth: Another critical metal gets squeezed

Unless you are a hobbyist or technician who solders things on a regular basis, your only acquaintance with the metallic element bismuth is probably through Pepto Bismol, the main ingredient of which is bismuth subsalicylate, a pinkish substance sold, not surprisingly, under the name of pink bismuth.

The fact that you can ingest pink bismuth and it will soothe your stomach should tell you something about its toxicity; it's quite low. And, that's why bismuth is  favored over lead for soldering. It is now widely used for soldering of circuit boards and other electronic equipment, lens production for high precision equipment, alloys with low melting points (for example, in automatic sprinklers to activate them when fire breaks out) and, of course, pharmaceuticals.

All of those products are at risk as supplies of bismuth have dwindled. Those of you who read my pieces regularly can almost surely guess who is holding those supplies back. It's China. Bismuth is one of five metals on which China placed strict export limits back in February. Now those restrictions are beginning to bite.

The turbulent globe: Resources and climate change in the background

It should come as no surprise that the two major conflicts raging in the world today involve large energy producers and exporters, namely, Iran and Russia. Energy resources, especially fossil fuels, attract conflicts because they are so unevenly distributed in the world and because despite this, everyone needs those resources. The simple fact is that nothing gets done without energy and fossil fuels are still the dominate fuels in the world.

But it's not just energy, of course, which invites conflict. Water resources are becoming increasingly a focal point of contention. The Pacific Institute, which provides comprehensive data on the world's water resources, also keeps a database of conflict involving water and lists 785 conflicts worldwide since 2020.

While I do not deny that there are other reasons for the conflicts we are seeing—ethnic, religious, geostrategic, domestic politics, even personal—the fight over stuff is always under the surface, especially in a world which is fast depleting its finite stores of nonrenewable energy and minerals. How fast? Two examples will give you a taste.  Through 2021 half of all the oil consumed in the modern oil age since 1859 was consumed from 1998 through that year.  Through 2018 half of all the copper ever mined was mined from the year 2000 through that year. The expectation that we can keep doubling production for many mineral resources from here in ever shorter time frames does not seem credible.

No safety net: Insurance starts to go away

Ever since the words "insurance premium" began appearing on contracts in the Republic of Venice in 1255, modern global trade and now our broader society depend on insurance to mitigate risk of loss to enterprises and individuals for their business and personal property.

But as insurers retreat from areas made too risky for them by wildfires, hurricanes and floods supercharged by climate change, it becomes difficult to build new dwellings or continue operating businesses in disaster-prone areas.

A recent report complied by Deep Sky, a carbon removal company, illustrates just how bad things are getting in California. The key findings:

• Home insurance premiums have shot up 42% in the most fire prone areas of California [since 2009].


• One in five homes in extreme fire risk areas of California has lost coverage since 2019.


• Spring fire risk in the US Southwest and Northern Mexico has reached a ten-year record.

Trade war vise grip: China is squeezing rare earth supply and it's hurting

China is proving to be a more difficult adversary in the trade war launched by the Trump administration than previously imagined as it squeezes the world's rare earth elements (REEs) supply. I warned in early March that China had critical non-tariff weapons to bring to bear and that using them might turn out to be very painful for a world dependent on China's rare earth metal production. China currently controls 69 percent of the REEs mine production and almost 90 percent of the processing of these elements.

Why is this important? As I pointed out in my previous piece:

REEs are a group of metals, often found in deposits together, that are critical for modern electronics (such as computer hard disks, smartphones, and cameras); strong magnets used in hybrid cars and wind turbines; X-ray and MRI scanning equipment; aircraft engines; and crude oil refining. This is just a partial list. There are no viable substitutes for these metals available at any scale that would be meaningful.

When the Trump administration imposed tariffs on Chinese goods that reached 145 percent, the Chinese responded with their own tariffs on American goods of 125 percent. Those have since been dropped considerably to 30 percent for Chinese imports into the United States and 10 percent for American goods coming into China.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, June 8.