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Welcome to The Corner. In this issue, we take a closer look at how the transition to renewable energy will be hampered if the U.S. continues its overreliance on minerals concentrated in nations considered to be foreign adversaries.

China’s Chokehold on Metals May Pose Bigger Threat than Putin’s Hold on Oil

Garphil Julien

Skyrocketing prices for oil and gas in the wake of Russia’s invasion of Ukraine have led to a flurry of calls [[link removed]] from lawmakers, officials, and pundits both in the United States and Europe to drastically reduce [[link removed]] dependence on Russian sources of supply. While these calls are long overdue, any serious effort to transition from fossil fuels to cleaner forms of energy must also target another critical dependency: China’s domination of production of many of the minerals essential to next generation energy technologies such as electric vehicles (EV), wind turbines, and solar panels.

“We already are using more metals than any time in history.” says Simon Jowitt, an economic geologist at the University of Nevada, Las Vegas. “This high demand, pandemic-related shutdowns, and China’s energy struggles” are combining to severely constrain “the speed and uptake of the energy transition” in the United States.

Examples of how China’s control over minerals chokes off production include:

Graphite

Graphite is a major component of EV batteries. China has a 100% [[link removed]] market share in the refining of graphite for batteries. The Chinese corporation BTR Material Group accounted [[link removed]] for 70% of graphite production used in EVs. Last winter China suspended production of graphite as rolling blackouts, as a result of power rationing, led to factory closures. This caused [[link removed]] a worldwide shortage of the mineral and drove up prices.

2. Manganese

Manganese plays a major role in the EV battery supply chain. The mineral is also a major component of offshore and onshore wind turbines. China controls 90% [[link removed]] of the world’s manganese production and last October, Chinese producers formed a production cartel to tighten control over supply, which later resulted [[link removed]] in an increase in prices for the mineral.

3. Silicon

Silicon is needed for the manufacturing of solar panels. Five tons of polysilicon are needed to produce 1 megawatt of solar power, which could power more than 100 homes. China [[link removed]] controls 97% [[link removed]] of the world’s production of silicon wafers, the raw material in photovoltaic (PV) cells. Last September, China began to cut production as a result of electricity rationing, which sent prices skyrocketing [[link removed]] 300%, rippling through the worldwide solar industry.

4. Lithium and Cobalt

EV batteries depend on lithium and cobalt. China processes 50-70% [[link removed]] of the world’s lithium and 66% [[link removed]] of the world’s refined cobalt.

5. Rare Earths

Rare earth elements are used [[link removed]] in the production of wind turbines and permanent magnets in the motors of electric vehicles. China dominates the production of rare earth elements with a near monopoly at 90%. Over the past year, Beijing has explored [[link removed]] options at restricting the export of rare earths to countries and companies it believes to be a national security risk, throwing into question the availability of global supply.

Today’s U.S. dependence on China for these minerals stands in sharp contrast to decades ago, when the country had highly developed policies to ensure the supply of critical materials. After World War II, the U.S. passed [[link removed]] the Critical Materials Stockpiling Act of 1946, which set a target of $2.1 billion to be used to stockpile minerals that were in short supply during World War II. The Defense Production Act (DPA) of 1950 increased the amount of funds to expand supplies, and President Harry S. Truman later established the Paley Commission to develop [[link removed]] policy recommendations for dealing with the scarcity of minerals. This included incentives for private industry development and encouraging direct investment abroad.

But after the Cold War, Congress sold [[link removed]] off most of the stockpile. The value of the stockpile was reduced [[link removed]] from $9.6 billion in 1989 to just $887.9 million today.

There are promising signs [[link removed]] that the Biden administration has begun to address the crisis. The White House launched a comprehensive review of supply chain deficiencies in critical minerals, recently announced $3 billion in funding for refining battery materials, and has taken steps to rebuild the critical minerals stockpile. And earlier this month a bipartisan group of U.S. senators called on [[link removed]] the Biden administration to invoke the DPA to increase the production of graphite, manganese, cobalt, and other minerals.

Jowitt agrees. “The real strategy for the U.S,” he says, “is to develop projects here in the U.S. along the entire value chain, especially when it comes to refining.”

🔊 ANTI-MONOPOLY RISING:

- U.S. Senators Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn.) sent a letter to the Justice Department (DOJ) last week, urging officials to investigate anticompetitive conduct by ticketing and events company Live Nation. The letter alleges that Live Nation violated its agreement with the DOJ that convinced the agency to approve the company’s vertical merger with ticketing company Ticketmaster in 2010. Live Nation is accused of retaliating against concert venues that decide not to use Ticketmaster for their events. ( Reuters [[link removed]])

- On March 11, the European Commission and the U.K.’s Competition and Markets Authority announced that they were investigating Google and Facebook over their “Jedi Blue” deal launched in September 2018. The regulators allege that the deal created obstacles for ad-tech competitors to Google’s Open Bidding Program. In 2017 Facebook decided to drop its support for a potential Google rival after receiving preferential access to Google’s bidding system. The deal is already being investigated in the U.S. as 15 attorneys general have filed lawsuits. ( The [[link removed]] Verge [[link removed]])

- Last week, the European Commission raided several automakers over suspected violation of the EU’s cartel rules, while the U.K.’s Competition and Markets Authority also launched a probe. The automakers are suspected of collusion in the collection, treatment, and recovery of end-of-life cars and vans. The companies raided are reported to be Renault and Stellantis, while Mercedes Benz and BMW received information requests. The European Commission has not publicly disclosed the names of companies being investigated. ( Reuters [[link removed]], Bloomberg [[link removed]])

- Judge Richard A. Jones of the U.S. District Court for the Western District of Washington last week allowed a class-action lawsuit against Amazon to move forward. The lawsuit, brought by a group of consumers, accuses Amazon of putting in place “most favored nation” style rules in the form of “fair pricing agreements.” Such agreements force sellers who want to use different platforms to add an Amazon fee to the cost of their products, raising the price on platforms that offer lower prices and driving up prices across the entire internet. In 2011, Amazon signed an agreement with the Federal Trade Commission not to use such arrangements. ( Competition [[link removed]] Policy International [[link removed]], Bloomberg [[link removed]])

📝 WHAT WE'VE BEEN UP TO:

- Karina Montoya was a featured speaker in an event [[link removed]] sponsored by R Street focusing on the breakup of Big Tech and aspects of the fluctuating success of the digital economy.

- Claire Kelloway participated in Rural Advancement Foundation International’s Come to the Table Conference, which was covered in FoodTank [[link removed]]: “’A large handful of corporations closely control the food supply chain in ways that block access to mainstream markets for community-based businesses, and also limit choices for farmers and consumers,’ says Kelloway. Kelloway says this wealth concentration causes a few large and powerful businesses to center ’decision-making on how to feed the world … around the short-term interests of financial institutions instead of public interest.’”

- Claire Kelloway was quoted in Marketplace [[link removed]] commenting on meat industry consolidation and how in conjunction with supply chain issues, the Big Four companies are reaping immense amounts of industry profits. “’Obviously, the pandemic and the supply chain disruptions that it created really exacerbated a lot of these underlying structures and brought this issue to people’s pocketbooks to the kitchen table,’ said Kelloway.”

- Johnny Ryan was interviewed in Politico [[link removed]] regarding his recent lawsuit filed against Ireland’s Data Protection Commission for its failure to uphold security regulations allowing significant data breaches against citizens. “The data breach is the biggest we’ve ever had, and because the data involved are so sensitive. Billions of broadcasts a day about people from millions of websites and apps, about what everyone is watching, reading, and listening to, and roughly where they are.”

- Barry Lynn’s book Liberty From All Masters was cited in Washington Monthly [[link removed]]as supporting literature for a progressive movement regarding the democratic duty to oppose monopolistic traits in markets. “It’s a tradition of thought that is neither liberal nor conservative as we understand those terms today, and that has become all but forgotten, although some recent books, including Ganesh Sitaraman’s The Crisis of the Middle-Class Constitution and Barry Lynn’s Liberty From All Masters, have also begun the process of excavating it and showing its relevance to today’s progressive movement.“

- Open Markets was listed in the Sierra Sun Times [[link removed]] as an endorser of the Future of Water Act, a bill being pushed by Senator Elizabeth Warren (D-Mass.) and Representative Ro Khanna (D-Calif.) to prevent large corporations from profiting off of water rights.

- Barry Lynn was quoted in press releases from Senator Elizabeth Warren [[link removed]] and Represenative Mondaire Jones [[link removed]] (D-N.Y.) announcing the Prohibiting Anticompetitive Mergers Act of 2022.

- A letter [[link removed]] signed by Open Markets was mentioned in Politico [[link removed]] calling on Representative Maxine Waters, who leads the House Financial Services Committee, to investigate Google’s “digital asset” programs. “In a letter being sent [[link removed]] this morning, the groups — which include Demand Progress, Public Citizen and the Open Markets Institute — call on Waters to scrutinize the company’s effort as carefully as she did Facebook’s abortive foray [[link removed]] into the digital currency ecosystem.”

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: $83 Billion

The European Union’s Digital Markets Act would apply to “gatekeepers” — tech companies with “a market capitalization of at least 75 billion euros ($83 billion) or annual revenues within the EU of at least 7.5 billion euros in the past three years. They must also have at least 45 million monthly users or 10,000 business users in the EU.” ( CNBC [[link removed]])

📚 WHAT WE'RE READING:

“ Handcuffed by the Courts [[link removed]]” (Institute for Local-Self Reliance, Ron Knox): The author explores how the courts changed the interpretation of the antitrust laws by overruling many previous cases from the New Deal.

NIKKI USHER'S

NEW BOOK

News for the Rich, White, and Blue: How Place and Power Distort American Journalism

Nikki Usher, a senior fellow at Open Markets Institute’s Center for Journalism & Liberty [[link removed]], has released her third book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism [[link removed]]. In her latest work, Usher offers a frank examination of the inequalities driving not just America’s journalism crisis but also certain portions of the movement to save it.

“We need to radically rethink the core functions of journalism, leverage expertise, and consider how to take the best of what the newspaper ethos of journalism can offer to places that have lost geographically specific news, “ says Usher, an associate professor at the University of Illinois-Champaign. “The news that powers democracy can be more inclusive.”

Usher is also the author of Making News at The New York Times (2014) and Interactive Journalism: Hackers, Data, and Code (2016).

News for the Rich, White, and Blue, published by Columbia University Press, is available as a hardback, paperback and e-book. You can order your copy here [[link removed]].

🔎 TIPS? COMMENTS? SUGGESTIONS?

We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue.

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Written and edited by: Barry Lynn, Garphil Julien, Ezmeralda Makhamreh, Daniel Hanley, LaRonda Peterson.

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