I had an interesting exchange w/ Mike Gatto on Twitter this morning regarding the likelihood of the dangers and damage current ‘petro-states’ do to both their own economic development and the international security space writ large, would only be transferred to and repeated by states with significant sources of lithium and other rare-earth elements based on this FT article. I pointed out that the US and other nations dedicated to international development have lessons learned and influence to help structure and/or direct policies on the extractives industry and those countries internally in order to avoid the “resource curse” – it was just a question of whether or not we would leverage them. Mike doubted that such leverage would be used. I didn’t disagree.
The resource curse, for those playing along at home, is an umbrella term for the numerous ways that building a national economy around a single high-demand resource (usually finite and labor intensive) damages the countries economy and civil institutions by flooding a limited group of individuals and companies with an exorbitant amount of money as compared to any other industry in the country. This often opens the door to massive corruption, vast amounts of income inequality, and autocratic government dedicated to keeping the money flowing from that resource with little interest or investment in diversifying any other economic sector. Examples of this are not just major oil countries such as Saudi Arabia, pre-2003 Iraq, and Venezuela, but also African nations mining coltan (used in electronics) and other conflict minerals, and, of course, Russia.
Thinking on it later, however, it did occur to me that there is one major distinction to be drawn between oil and lithium – the first is consumed, the other simply utilized. This may seem to be splitting hairs, but it means there is a much easier path forward that avoids the worst outcomes of a resource curse for any country: recycling. An economy that runs on oil (or coal or gas) is consuming that resource and must always replace it. There is always a need for more production. But a resource that is simply utilized can be re-utilized in another form – such as stacking worn out car batteries into a static battery bank on the electric grid – or recycled and re-processed to be used again – which Europe does with spent nuclear fuel as opposed to shoving it under a mountain like we do in the US.
Of course, as long as there is an ample supply of anything, the likelihood of major investment into recycling and reuse is small. We know this is still true for plastics and paper worldwide. Nor does this possibility negate the need to continue R&D into storage technology that use more common elements to avoid geographic and national dependencies. However, if we keep avoiding the resource curse in mind, and push storage businesses to develop cradle-to-cradle supply chains from the outset, we’ll have a much easier time avoiding the exchange of one resource curse for another.