RE: Mega mining project that could cripple Australia18 Jun 2021 16:10
On the macro/geopolitical front, here's John Mauldin's summary of a Gavekal research article on China, the commodities (super)cycle and energy at the nexus :
.."In his typical Socratic style, Louis Gave breaks down the relationship between China, energy and commodities, and why it may be changing. The answer could have a big influence on inflation prospects.
Key Points:
With local inflation approaching double-digit rates, China has been the only major economy tightening its monetary, fiscal and regulatory policies.
China is also the single largest buyer of almost every commodity, yet its tightening hasn’t derailed the commodity bull market. This is odd.
The linchpin is energy prices, which account for a large part of commodity prices.
With governments aggressively promoting clean energy, we are seeing an unprecedented divergence between share prices of green energy plays and hydrocarbon producers.
However,if green energy investments prove unproductive, the oil industry will strengthen and the commodity bull run should continue.
With Russia now months away from pumping natural gas to Germany through the Nord Stream 2 pipeline, Germany and other EU states may scale back green energy investments, especially if the recent decline in support for Germany's Green Party continues.
Bottom Line: Consumers are ultimately in charge, and they just want the lights to work and the car to run. They will prefer whichever fuel is convenient and least expensive. Green energy has many advantages but the oil and gas industry has a big head start. Higher inflation is more likely if it maintains control."
ATB
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