The U.S. Crisis Revealed by the COVID-19 Pandemic
These COVID-19 days that have turned into weeks have now officially turned into months as we approach the end of April.
Push aside all of the fiery rhetoric being flung from both sides of the political spectrum, and if there’s truly one takeaway here, it’s how woefully unprepared we were for this kind of crisis.
It also showed us how badly we rely on the international community for even the basic weapons to fight this pandemic.
Just take a look at one facet of this COVID-19 crisis, and you’ll see what I’m hinting at.
Globally, some estimates for the number of ventilators needed topped 880,000.
Unfortunately, this isn’t exactly as cut and dry as you might be lead to believe.
We’ve watched this scramble for ventilators firsthand over the two months, haven’t we?
Well, the need for more has certainly forced us to take some rather extreme measures.
When the president invoked a little-known piece of legislation called the Defense Production Act to boost the country’s supply of ventilators, it’s not a stretch to say that most people had never heard of it before.
Passed in 1950, the Defense Production Act essentially forces producers’ hands to manufacture goods that are in the nation's interest.
It’s an extremely powerful move to make and had only been used a handful of times since the Cold War.
On April 2, the president effectively ordered both medical suppliers and the world’s largest carmakers to build the needed ventilators.
He told GM to produce 30,000 of these ventilators, which would quadruple the current supply of them in the Strategic National Stockpile.
And make no mistake, absolutely nothing in this world is free.
That GM order will cost the government a cool $490 million.
Phillips will receive even more — $647 million to build 43,000 ventilators.
If the U.S. doesn’t use them, the rest of the world certainly will.
Whether or not they’ll be needed isn’t the question you should be asking.
What’s lost in this chaos is where they’re getting the materials to manufacture them.
You see, even though we can compel these huge companies to build what we want, things get much more complicated when it comes to building them.
In the case of these medical ventilators, production requires access to critical rare-earth materials.
For example, each of these vital ventilators contains a small number of permanent magnets that are made from rare earth elements.
I’d give you three guesses where the U.S. will turn to for this supply, but you only need one.
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That, dear reader, is something the government is trying to change… and they had better do it soon.
The real resource war is finally emerging.
The cold, bitter pill to swallow here is that the Chinese have a lock on over 90% of the rare earth market. We’ve talked a little about this before, when my colleague Luke Burgess warned us just how reliant the U.S. is on China for our rare earth elements.
Look, I wish I could tell you this was all new; that we all woke up one morning recently and realized that China has been in control of this market for a very long time.
Sadly, the red flags have been waving for years.
My veteran readers will remember a dire report from the Department of the Interior that was released several years ago that showed the U.S. relied entirely on foreign imports for 50 nonfuel mineral commodities.
The picture is grimmer than that.
The U.S. is incredibly dependent on China for these strategic minerals.
After that report was released, the U.S. started to prepare for this upcoming resource war.
And if you’re still trying to wrap your head around the kind of growth that’s ahead for the strategic metals, just consider that the current market of around $23 billion is expected to grow $57 billion over the next five years.
Next week, I’m going to show you firsthand how to take a piece of those profits for yourself.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
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