Vulnerable access

Publication le 3 septembre 2018 sur Les Echos Le Cercle


The economic war initiated by President Trump requires new doctrines of natural resources.

Since their peaks in 2018, prices of the main industrial and precious metals have declined in various ways: -17% for copper, -20% for aluminium, -30% for zinc, -13% for gold, -23% for platinum and palladium, -32% for cobalt. At nadir during the summer heat wave, some of them straightened up.

Others have not experienced an air gap. Lithium is still in its stratosphere, steadily increasing since 2016, but analysts predict a price drop of about 30%, to be seen. Steel was up 4%. However, its two main components, iron and coke, fluctuated in opposite directions, -13% for the former and +30% for the latter. It is true that coal has been on a steady rise since 2016, +140 %.

How to characterize these variations? Tolstoy? He would have said: calm metals are all alike; agitated metals are agitated in their own way! The dollar? Except for gold (and again, the real interest rate is a much more effective barometer, especially in Yuan), it is often a false friend of an economist, a farmland marginalized by mining fundamentals: production, consumption, extraction costs, stocks, environment, taxation… This is Atticism, and the contraction in metal prices in the first half of the year masks a future: a powerful growth in industrial demand and a tight mining supply. As autumn approaches, prices remain historically high and reflect the pressures of future competitive consumption.

The theory of competitive consumption, a vulnerable access of industries to new metals causing a fragility of downstream sectors, has been stated here several times. Its realization in the first semester is the second lesson of 2018. It is a consequence of the trade war, itself a facet of the economic war encompassing that of currencies, resources, the environment…

The example was clear in April, and it doesn’t matter here who is unfit or irremissible. The US spring sanctions policy targeted Russian personalities, including the oligarch Oleg Deripaska. When implemented, it drove the latter’s company, the aluminium producer Rusal, out of the markets. Upward speculation on metal prices followed. However, they collapsed, as the oligarch pastelized the colors of his business. But this time, it was nothing.

By also banning the second largest Western supplier of alumina, a position held by the same Rusal, a European blockage of access to this upstream material of aluminium became a risk. Downstream consumers, such as the automotive, aeronautics, defence, packaging, etc., were affected. The threat was considerable, the spectre of competitive consumption emerged. Moreover, what would be our situation if diplomacy had been less effective, or if Russia did not comply? Will it do so clearly? It seems not, since the response attacks the pre-eminence of the dollar.

As a collateral victim of the bilateral American-Russian economic war, alumina became a de facto French strategic material, worrying because its access was vulnerable. Let us remember that, unlike the geological or market characteristics of a critical material, a strategic material is essential to a state’s ambitions, regardless of whether this resource is abundant or under stress. Its classification varies from one state to another, changes over time, depending on policies, events and the presence or, unfortunately, the absence of national actors. In the future, the omnipresence of competitive consumption will be linked to accesses weakened by the many warnings: Pechiney, CLAL, Metaleurop, Pennaroya, BRGM mining assets, Arcelor, Rhodia, Alstom, Lafarge,…


This major attack is not over. However, it was followed by a second assault. The isolationist and multilateral – even global – trade war focused, in a second offensive, on steel and aluminium tariffs (and tomorrow perhaps on copper, zinc, cobalt, lithium…, corn, wheat, soya…, gas… ?). These metals were no longer collateral victims, but were deliberately transformed into strategic American materials. The act of war on natural resources was “voluntary”, a threat that was all the more considerable for industrial sectors and their jobs as it knew powerful aftershocks in all directions.

Let us not go into the results of the two offensives, about the jobs created or destroyed in China, the United States, Russia or elsewhere in steel and aluminum smelters. These two charges, free warnings, are the battery side; on the face side, everything is still possible about the future of the link between economic warfare and natural resources. Refusing to anticipate it would lead us to multiple vulnerabilities of access to resources and to various disasters of supply and competitive consumption, so all questions are allowed.

Aluminium and steel, therefore bauxite, iron ore and coal, have become strategic for American trade war policy; but they are also strategic for the more peaceful policies of Chinese or Indian urbanization and for the economic invasion of Beijing’s “silk roads”. What about a confrontation between these policies, so far disconnected from each other?

Other aspect. How to deal with a sudden bellicose war policy of nationalism of the resources of a producing country? What are the expectations of a future alliance of Asian, African, European or other parts of the world producing countries, which, after an aggression, would retaliate by linking their different doctrines of power and sovereignty governing their various resources?

Conversely, would consumer countries (China – Japan), hostile to an act of economic war, become occasional allies by bringing their policies of influence towards resource-producing countries closer together?

The hypothesis of disturbed flows is clear in the case of mining resources, but is it more opaque to imagine in an ecological war of solar electricity producers refusing to export their waves to countries dominated by coal or gas electricity?

What about the impact of economic conflicts, on the producer or consumer side, around agricultural commodities, the impact in Brazil and France of a soybean war between the United States and China?

Who is not with me is against me; what would a neutral state in this conflict mean? Could the European Union founded by and for peace respond to anything other than peace?

Etc… This “and so on” is imperative here because the military interrogation metaphor should be so exhaustive.


One method will avoid these risks of disruption linked to economic wars, the adoption of agricultural, mineral and energy natural resources doctrines.

In the Preface to the Roman History of Titus Livius, we discover remarks on the salvation and fruitfulness of the spirit brought about by the knowledge of historical facts and exemplary behaviour. 500 years earlier, the Athenian strategist Themistocles expressed the first natural resources doctrine I knew in Western history when he convinced his fellow Athenians to pool the riches of the Laurion silver mine. 200 ships were financed, the Xerxes invader was defeated in Salamis in 480BC, this was the starting point of the brilliant Athenian thalassocracy. His doctrine of natural resources was a single thought, a strategic solidarity, a resilience through a community of objectives and means.

Renovated, whether national or interdependent if several states collaborate, it will be multifaceted and will anticipate, plan and arm itself to exercise its power through energetic strategies, which will be implemented downstream by an economic, environmental, diplomatic and military mix.

In antiquity Zeus foresaw so well that he instilled this principle of economic warfare into Themistocles. Who is he leading today?


Linkedin: Didier Julienne

Twitter:  @didierjulienne