Some key metals are byproducts of mining other metals; that's a problem

When we hear the word "byproduct," it often designates something unwanted or even negative coming out of a decision or process that provides some product or outcome we do want. In the world of mining, however, byproducts are often valuable minerals produced in the course of extracting other desired minerals from their ores.

For example, zinc mines often also produce profitable quantities of lead and silver. And, it can be the other way round; gold, silver and copper mines can sometimes also contain profitable quantities of zinc. I mention zinc, in particular, because zinc mines are one source for gallium, a metal that is important for advanced semiconductors. Gallium is also used in aerospace, optical devices and medical devices. Needless to say it is in high demand and is important for military applications.

Another source of gallium is aluminum ore, usually bauxite, and it's the biggest source. What you will not find on planet earth are any gallium mines because geologic processes in the Earth simply do not allow gallium to concentrate in a manner that would create a profitable ore body. So, it turns out that no matter how high the price of gallium goes—and the price is up by almost a factor of five since 2016—its supply depends almost exclusively on the rate of extraction of aluminum and zinc ores (and not all such ore bodies have concentrations of gallium that are worth extracting).

Proposed East Texas water pipeline and the growing thirst for distant water

One of the ways you can claim rights to water sources is to own land next to them or over them. It seems intuitive that you should be able to dip into a river running along your property to get a drink for yourself and possibly your livestock or water for your plants and possibly your farm fields. That works so long as you don't hog too much of the river flow and your downstream neighbors can do the same as you are doing. In practice there are so many humans today demanding so much water that the amounts each person or enterprise can withdraw are usually regulated by agreement or law.

The same goes for groundwater since aquifers rarely span just one person's property and can be very large, for example, the Ogallala aquifer which lies below 122 million acres of the U.S. Great Plains.

What is not so intuitive is that water rights can belong to people far from the water itself and that the rights to that water can be traded like any commodity. That's what residents of the Neches Trinity Valleys Groundwater Conservation District in the middle of East Texas discussed recently and quite heatedly in a public meeting of district officials.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, November 30.

Tehran contemplates "evacuation" as many cities across the globe face water dilemmas

I've put the word "evacuation" in the title of this piece in quotes because it's not clear where Tehran's 9.8 million people or some significant number of them would evacuate to as water supplies run dangerously low. Iranian President Massoud Pezeshkian has been criticized for saying out loud how bad the situation is: "If it does not rain in Tehran by December, we should ration water; if it still does not rain, we must empty Tehran."

Doubtless Iranian water authorities will force severe restrictions on Tehran's residents if the rains—which have been 82 percent below the long term averages for the past year—do not come. And there is almost certainly room to conserve. But the relentless heat (and thus increased evaporation from reservoirs) and lack of rain are not something that can be put down to water system mismanagement unless (as you should) you count not understanding and reacting to climate change as a failure of management.

Back in 2018 Cape Town, South Africa was facing a severe water shortage for lack of rain during which the city began making announcements of a specific date which it called "Zero Day" when water would have to be shut off to most of the city. Dramatic conservation which drove water consumption down 30 percent and the return of seasonal rains saved the city (for now).

Washington denials and AI bailouts

There's an old adage in Washington: Don't believe anything until it is officially denied. Now that the Trump administration's so-called artificial intelligence (AI) czar David Sacks has gone on record stating that "[t]here will be no federal bailout for AI," we can begin speculating about what form that bailout might take.

It turns out that the chief financial officer of AI behemoth OpenAI has already put forth an idea regarding the form of such a bailout. Sarah Friar told The Wall Street Journal in a recorded interview that the industry would need federal guarantees in order to make the necessary investments to ensure American leadership in AI development and deployment. Friar later "clarified" her comments in a LinkedIn post after the pushback from Sacks saying that she had "muddied" her point by using the word "backstop" and that she really meant that AI leadership will require "government playing their part." That sounds like the government should still do more or less what she said in the The Wall Street Journal interview.

Now maybe you are wondering why the hottest industry on the planet that is flush with hundreds of billions of dollars from investors needs a federal bailout. It's revealing that AI expert and commentator Gary Marcus predicted 10 months ago that the AI industry would go seeking a government bailout to make up for overspending, bad business decisions and huge future commitments that the industry is unlikely to be able to meet. For example, in a recent podcast hosted by an outside investor in OpenAI, the company's CEO, Sam Altman, got tetchy when asked how a company with only $13 billion in annual revenues that is running losses will somehow fulfill $1.4 trillion in spending commitments over the next few years. Altman did NOT actually answer the question.

U.S.-China trade dispute resolution leaves China with huge leverage over global electronics industry

Back in 2019 the United States had a dust-up with China regarding trade and tariffs and as part of its response China threatened to reduce export of rare earth elements (REEs) essential for many civilian and military electronics.  The Chinese then as now held a dominant position in the mining and processing of these metals. China did not carry through on its threat and by early 2020 both nations signed an agreement that deescalated the trade war.

Fast forward to today and we have China and the United States deescalating a trade dispute far broader in its scope with both sides reducing tariffs and China agreeing to drop its restrictions on exporting REEs to the United States. But none of this alters China's stranglehold on REEs production and mining. And China's return to exporting these strategic metals means its dominant position in that market gives it continuing power over key electronic industries worldwide that are dependent on Chinese supplies. China currently controls 69 percent of the REEs mine production and almost 90 percent of the processing of these elements.

To guard against ongoing dependence on Chinese supplies, the Trump administration has provided capital for a facility that will produce high-strength magnets made from REEs for delivery to the U.S. military by becoming part owner of the only operating REEs mine in the United States. The U.S. Department of Defense (DOD) will guarantee prices that are almost twice the current world price for such magnets for 10 years. This move was followed by a DOD award to U.S. company developing facilities to increase production of scandium, niobium, and titanium, the first of which is an REE. Investors believe there are more investments to come in other companies by the U.S. government.

How did U.S. 'energy dominance' turn into rising domestic natural gas prices?

The noticeable upward tilt in graphs of the U.S. natural gas price since April 2024 is likely a hint of things to come for U.S. consumers of energy. That's because record amounts of U.S. natural gas are now being sent abroad in the form of liquefied natural gas (LNG). And much more export capacity is planned. The U.S. Energy Information Administration forecasts that U.S. LNG export capacity will double by 2029. That's all gas that cannot be delivered to American users.

I have written about these trends (see here, here, here and here) and predicted they would mean considerably higher heating and electricity costs for Americans and much higher costs for American-based chemical manufacturers; for industries that rely on natural gas for process heat in the manufacture of steel and other metals, concrete, and glass; and for farmers who use natural gas to dry crops.

There's been a lot of talk about U.S. "energy dominance" by which the current administration means policies that maximize production, maximize exports, and yet somehow "reduce energy costs" at the same time. It's the "reduce energy costs" part that is now running into trouble.

'Newspeak' comes to the Energy Department

In George Orwell's novel, 1984, a totalitarian regime now rules the homeland and operates by three slogans: 1) War is peace, 2) freedom is slavery and 3) ignorance is strength. In 1984 the term "Newspeak" refers to what is essentially a mandatory style guide for using the English language under that regime by substituting Newspeak formulations for common words and phrases so as to make public discourse conform to the ruling party's orthodoxy. (For a list Newspeak words and phrases, check here.)

Not surprisingly, failure to conform to this style in written and oral communications is considered a crime. In fact, to think thoughts contrary to those expressed in Newspeak terms is considered a "thoughtcrime" because it implies one's personal values are not in harmony with official party dogma. Even having a facial expression that appears to imply disagreement with that dogma is a "facecrime."

Every modern regime tries to regulate the language used by its citizens (or subjects, as the case may be). As I have written previously, "If you want to corrupt a people, corrupt the language." So, it's not particularly surprising that the U.S. Department of Energy (DOE), now controlled by an oil industry insider, has put out its own Newspeak-like manual in the form of an email to department employees which is focused on subtracting words and phrases according to Politico. In the email the DOE is doing to the vocabulary of its personnel what the Trump administration is doing to the government, namely, cutting it.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, October 19.

AI vs humans: The 'singularity' keeps getting postponed

Sam Altman is the CEO of the most visible artificial intelligence (AI) organization on the planet, OpenAI, the purveyors of the popular ChatGPT AI interface. His job is to keep the investment dollars flowing into OpenAI, tens of billions of them. So, it's pretty important for Altman to keep investors interested and to promise them breakthroughs...and also, apparently, to reschedule those breakthroughs when they don't occur.

Now, something that most people don't understand about OpenAI is that despite being recently valued at $500 billion, OpenAI loses money, reportedly $5 billion last year on sales of $3.7 billion. Back in 2023 Altman was telling the public that OpenAI had achieved artificial general intelligence (AGI). For those who don't know, AGI means intelligence capable of learning and executing all the tasks that humans can do. No one appears to know how exactly to measure whether a machine can do the totality of things a human can do, but it sounds very cool to talk about it. And, it's the kind of talk that keeps investors excited. The implication, of course, is that the investor class won't have to put up with pesky employees much longer for most jobs.

The moment when this happens, when machines become smarter than humans and start running everything for us —as if they don't already—is sometimes called the singularity, usually with a capital "S." Now, singularity has a specific meaning in physics. In this context it refers to a nonreligious, tech version of the rapture in which technological advancement becomes very rapid as machines take over and iterate on technical innovation. We know what happens to people in the religious version of the rapture—some ascend to heaven and others are left behind. But we aren't exactly sure what is to become of humans after the so-called singularity version of the rapture since supposedly there won't be much work to do. AI will be doing it.