Good morning, and welcome to the Global Situation Report for Tuesday, 12 December 2023.
- TIGHTER COPPER SUPPLY, HIGHER PRICES AHEAD: Mine closures and supply disruptions have caused analysts to lower their copper production estimates.
- Mining companies Anglo American and Vale recently announced new copper production guidance that was below bank analysts’ expectations.
- Chile, Peru, China, and the Democratic Republic of the Congo – countries that could limit supply to the U.S. – account for over 50% of global copper production.
- Panama’s Supreme Court ruled in late November that it’s unconstitutional for Canadian copper producer First Quantum to own and operate Panama’s Cobre mine, which accounted for 1% of global mined copper supply in 2022.
Why It Matters: Bank of America commodity analysts don’t expect a restart of the Cobre mine until after Panama’s May 2024 elections. Next year is a key election year not just in Panama but throughout the world, and countries’ election results will impact global natural resource supplies, especially as geopolitical tensions rise. There are heightened risks of more mine closures, resource hoarding, and even nationalization of mines – all potentially by executive actions that may be encouraged and backed by citizens. Meanwhile, Western governments’ continued green energy push, which requires a massive amount of copper, could send copper prices much higher. – H.B.
- POLAND’S TUSK TO “DEMAND” FULL MOBILIZATION FOR UKRAINE: Poland’s Prime Minister Donald Tusk is “loudly and decisively [demanding] the full mobilization of the free world, the Western world, to help Ukraine in this war.”
- Tusk added that Poland will become a leader for Europe and bolster their involvement in NATO.
Why It Matters: Poland remains among the most ardent supporters of Ukraine and the most outspoken opponent of Russia. Tusk has a long history as a politician in Poland and the European Union, but his mission will incur greater challenges if a Russian winter offensive makes substantial territorial gains in Ukraine. Last month, the Poles were considering a deployment of troops to help Finland bolster their Russian border – a deployment that could grow into a check on the Russian military. – M.S.
- CHINA, VIETNAM AGREE TO “SHARED FUTURE” COOPERATION: Chinese President Xi Jinping made a state visit to Vietnam today, where officials agreed to improve economic ties and build a “shared future.”
Why It Matters: China’s move to make nice with Vietnam comes just months after Vietnam and the U.S. struck a new strategic partnership agreement, and both India and Japan moved into their security partnership with Vietnam. The Chinese understand that U.S. alliance-building in the region puts China at a geostrategic disadvantage, while Vietnam hopes that expanding its economic ties with China will decrease Chinese aggression and incursion into Vietnamese waters. – M.S.
- PI CONSIDERING MAKING CHINESE ENVOY PERSONA NON GRATA: The Philippines Foreign Ministry Spokeswoman Teresita Daza said the government was considering declaring the Chinese envoy to The Philippines “persona non grata” after an emergency summons.
- The summons was in response to the Chinese Coast Guard’s attempted deterrence of Filipino resupply missions this weekend.
- Huang Xilian, the Chinese Ambassador to the Philippines, is already declared persona non grata in the Kalayaan municipality of The Philippines but not under the rules of the Vienna Convention.
- President Ferdinand Marcos Jr. promised that The Philippines would defend its territorial claims.
Why It Matters: Persona non grata is a special legal status in the Philippines and for the United Nations Ambassadorial protections under the Vienna Convention. Considering Huang is already barred from a municipality in the Philippines, the new declaration is more likely and also likely to fall under the Vienna Convention. This would severely chill the Sino-Filipino relationship and radically increase the risk of accidental engagement in the future. If China and the Philippines did go to war, the U.S. is treaty-obligated to defend the Philippines. – J.V.
THAT’S A WRAP: This does it for today’s edition. Thank you for reading. If you know folks who would also like to receive this email, would you please forward it to them? We appreciate you spreading the word. – M.S.