Myanmar, LatamPolitik, Cobalt, Food Prices and the Week in Review

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Myanmar, LatamPolitik, Cobalt, Food Prices and the Week in Review

Happy Friday! The latest podcast is here. LatamPolitik is here. And the weekend isn’t far behind!

Myanmar’s civil war. Myanmar’s ruling military junta has killed over 500 civilians. A group calling itself the Committee Representing Pyidaungsu Hluttaw (CRPH) declared the 2008 Constitution null and void and announced it would be setting up a parallel national unity government on the basis of a 20-page Federal Democracy Charter in order to resist the military junta. Ethnic militias throughout the country are siding against the government and fighting is already occurring, especially in Karen territory near the border with Thailand and Kachin territory near the border with China. Myanmar military jets even launched airstrikes against militia targets earlier in the week. China officially called for calm even as reports surfaced of a Chinese military build-up near Shan state.

What it means: First of all, this is a tragic and disturbing conflict, and unfortunately, it looks like the fighting is only going to get worse. Our job is to figure out how conflicts like this affect global interests but we’re humans too and that means our first reaction to this is sadness at the suffering of Myanmar’s people.

On the more mundane topic of global supply chains, this conflict is beginning to have global ramifications. The fighting has begun to affect Chinese access to rare earth elements (REEs), tin, and other mineral commodities sourced in Myanmar. Myanmar is the third-bigger miner of tin in the world and in 2020 accounted for more than 95 percent of China’s imports of tin concentrate. Myanmar now also accounts for more than 60 percent of China’s heavy REEs (HREEs). These are minerals like gadolinium, dysprosium, yttrium, and terbium, which are particularly important in the development of clean energy technologies, fiber optics, and medical devices.

As recently as last week, Chinese state-run media was reporting that operations at Chinese mines in Myanmar continue to operate as usual. Logistics and transport issues are the primary culprits for the delays and shortages China is experiencing. That, of course, raises a host of uncomfortable questions, namely, will China intervene to secure its supply lines? Are Myanmar’s ethnic militias blocking shipments in the hope of getting China to take a tougher approach toward the military junta? Will China begin restricting REE exports to maintain a stable domestic supply, as it did with PPE when COVID-19 was just beginning to make its way around the world around this time last year?

Perhaps China is uncomfortable with these questions and is pressuring Myanmar’s military junta, which did decide to declare a unilateral, one-month ceasefire earlier this week (even though it also reserved the right to respond to “actions that disrupt government security and administration.”)

Latampolitik. Infobae reported that Argentine President Alberto Fernández’s government is considering whether to rescind all agreements pertaining to diplomatic relations between Argentina and the United Kingdom in the last 30 years. Diplomatic sources told the news website that two specific agreements are in the Argentine government’s crosshairs: the so-called 2016 “Foradori-Duncan Agreement,” which pledged to remove obstacles limiting growth and to establish air links with third countries, and the 1989 Madrid Agreement which restored relations between Argentina and the UK.

What it means:

1) You should check out our newsletter, LatamPolitik. We’ve got you covered in English and Spanish on the top geopolitical developments in Latin America three times a week for the price of a fancy cup of coffee a month.

2) We all know what happened the last time a nationalist Argentine government picked a fight with an embattled British Prime Minister eager to offer proof of British power to the world…

Cobalt. Operations officially began at Entreprise Générale du Cobalt, the state-owned Democratic Republic of Congo monopoly with rights to the purchase and sale of the country’s cobalt. (As a reminder, the DRC has over 50 percent of global cobalt reserves and accounts for over 70 percent of current global production.) Canadian company Capstone Mining Corporation will carry out a feasibility study to produce cobalt at a mine in Chile.

What it means: Cobalt is becoming even more geopolitical than REEs. Compared to REEs, global sources of cobalt are even fewer and far between — we will be extra curious about that feasibility study in Chile. Kinshasa’s move to establish the Entreprise Générale du Cobalt will affect roughly 30 percent of DRC cobalt production and has been in the works for a while. It’s not exactly a surprise the DRC wants to leverage its cobalt riches at the state level, but we’d be lying if we said we thought that boded well for regular global access to cobalt going forward.

Food prices. U.S. Department of Agriculture estimates for U.S. corn and soybean plantings were 2.2 percent and 2.6 percent below consensus analyst expectations. Wheat plantings were 3.5 percent higher than expectations. Corn, soybean, and wheat stocks were all down 3 percent, 31 percent, and 7 percent respectively year-on-year. Meanwhile, Mexico’s National Confederation of Corn Producers (CNPAMM) said the Mexican government’s projection of 27 million tonnes of corn production was 3 million tonnes too high.

What it means: The UN’s Cereal Price Index is up 26.5 percent year-on-year, and we expect a sharp jump next month as a result of these developments.

Honorable mention

In China, African lions look a lot like Golden Retrievers.

U.S. President Joe Biden published a fact sheet on his proposed “American Jobs Plan,” which calls for $2.3 trillion of infrastructure spending.

Mexican President Andrés Manuel López Obrador sent a bill to the Chamber of Deputies that would significantly reform Mexico’s Hydrocarbons Law in order to make Pemex the ultimate guarantor of Mexico’s security and energy sovereignty.

OPEC+ agreed to lift oil production. Most of the group will boost output by 350,000 barrels per day (bpd) in May and June and by another 450,000 bpd in July. Saudi Arabia, which had reportedly been pushing to keep production quotas unchanged, changed its mind and announced it will begin phasing out its separate, unilateral cuts of one million bpd by the end of July.

The Indian government on Wednesday infused a total of 145 billion rupees ($1.98 billion) in state-run lenders Indian Overseas Bank, Bank of India, Central Bank of India, and UCO Bank.

The European Commission referred Poland to the EU Court of Justice over its controversial 2019 judiciary reform law.

Brazilian President Jair Bolsonaro fired or accepted resignations from six cabinet ministers in total, including now-former Defense Minister Fernando Azevedo e Silva and Attorney General Andre Levi.