Why the Energy Transition is Going to be Messy

Brace for impact...

The push towards greening the economy will reshape the geopolitical landscape. Because of the geographic concentration of key commodities, geopolitical volatility will amplify oscillations not just in commodities but in all green-tech markets connected to them. 

Let’s take a look

Countries with large deposits of key inputs as a % of world total:

70% Cobalt ➡️ DRC 

~30% Lithium  ➡️ Chile 

~27% Graphite ➡️ Turkey 

75% Manganese ➡️ South Africa

Political stability ranked by each country on a scale of -2.5 (weak) to 2.5 (strong):

DRC: -1.61

Chile: 0.06

Turkey: -1.1

South Africa: -0.71

China’s investments in Africa are well-documented. Because of their key position along the global commodity supply chain, Beijing will hold significant economically-linked political leverage.

China is also making bigger moves in Latin America, and is estimated to be the region’s top-trading partner by 2035, a major slap in the face for the US.

Countries along the commodity supply chain that are essential for the green transition will therefore be able to extract major geopolitical concessions from hegemonic competitors (e.g. China and the US).

But in doing so, they will de facto choose a side, and the repercussions of fractured alliances or new partnerships will reshape everything. Take a look at the semiconductor industry vis-a-vis US-China relations. 

Now amplify that, and grab some popcorn.