The price offered by HKEx for LME is 160 times net income - the kind of gaudy multiple that would make Mark Zuckerberg envious. Either HKEx has more money than sense, or it sees a value others don't. As part of its exchange, LME operates physical warehouses of metals ranging from aluminum, copper and zinc to tin, nickel and lead. Could HKEx's outsized interest involve the chance, unavailable until now, to locate physical metals warehouses on Chinese soil?
As China pursues a multi-point plan to safeguard resource access, what's the so-called 'Rest of the World' doing towards that end?
If we're growing concerned that the global market has delivered China a Rare Earths near-monopoly, we're hoping that maybe technology will get us out of the jam.
Maybe researchers will discover an alternative to Rare Earths for Electric Vehicle batteries. And wind turbines. And photovoltaic solar arrays. And CFL light bulbs. And cell phones and laptops. And several score applications essential to our advanced weapons systems. But then again, maybe while that first group of researchers is beavering away on RareEarths work-arounds, a second set of researchers will discover that Rare Earths may repel shark attacks (likely) or, fused with graphene - the next wonder-substance - will make nano-computing ubiquitous (apparently true, and funded by the Department of Energy's Office of Science). It's called Jevons' Paradox – the tendency that technological progress that increases the efficiency with which a resource is used will increase rather than decrease demand for that resource -- and it's been true since the only known use of Rare Earths was for flints in London's street lamps.
On the geo-political front, maybe Western environmentalists will see the tension between yearning for wind and solar power and opposing the mining of the metals and minerals that make wind and solar possible. Maybe Beijing Central will curb the Rare Earths smuggling that begins in a South China farm-field and funnels into the global market via the Chinese mafia. Maybe millenials peering at a screen to see the precise shade of Katy Perry's hair this week will take an interest in where that Yttrium and Europium in their retina display comes from, who dug it out of the earth under what circumstances.
Maybe.
And maybe chocolate chips will be found to cure cancer.
Many things are possible. What matters is what's probable.
And in that realm, it seems increasingly clear that while the 'West' has hopes, China has a plan. And whatever it is, it's not the one translated into English and published last week on the front page of the People's Daily.
