31.08.2017 Author: Caleb Maupin

“Too Much Coal” – Grabbing Energy Markets with Geopolitics

Miners kept the economy running for centuries.

Miners kept the economy running for centuries.

After a two year slump, coal, iron, and everything related to mining is seeing a boom. Entities on the New York Stock Exchange linked to the extraction of minerals from the earth are seeing their profits go up. Like most things in the global economy, this dramatic shift cannot be separated from geopolitical events. The boom on the energy markets is directly linked to confrontation between the USA and China, related to the crisis in the Korean peninsula.

Too Much Coal

In 1930, a coal miner in Poland famously explained the economic crisis to his son with an unforgettable dialogue:

“Father, Why don‘t we light the stove? I am cold”

“We don’t have coal, son”

“And why haven’t we got coal?”

“Because there is too much coal.”

The father had been laid off from his job as a coal miner, due to the abundance of coal created by advances in mining technology. Because he was unemployed, he could not afford coal to heat his home. The coal miner and his son were without heat, not due to a lack of coal, but because there is “too much coal.”

This is the problem of the capitalist mode of production. Abundance creates poverty. Overproduction leads to economic ruin.

The problem plaguing the energy markets, not just coal, but also oil and natural gas, has been a problem of abundance. The development of hydraulic fracking has drastically increased the amount of oil and natural gas on the markets, driving the price down. 

In 1949, China had no steel mills, and its coal mining was very limited. Today, 50% of the world’s steel is produced in China. As “Socialism with Chinese Characteristics” blossoms, 700 million people have been raised from poverty. As China’s independent economy grows, numerous mountain ranges are now being opened up for mineral extraction. The expansion of China’s coal mining, as well as aluminum and steel production have also driven prices down, and cut into the profits of Wall Street mining and metal investors.

However, the trend has suddenly been reversed. The price of coal is now rising, with the metal markets not far behind. Why? The USA has opened up the attack on China’s industries, using North Korea as a cover.

Coal and Food in North Korea

One of the biggest problems that North Korea has faced is its lack of arable land. The Democratic People’s Republic of Korea is located in the mountainous parts of the Korean Peninsula, and it has long struggled to maintain food independence. The DPRK’s agricultural system is one of the most complex in the world, with fields on the sides of mountains, and all kinds of complexly engineered methods of growing food in terrain that is far from ideal for agricultural production.

In the 1990s, when the Soviet Union fell, the DPRK was unable to purchase petroleum on the international markets. This brought the country’s food production system to a grinding halt. Millions of people starved to death during what the Korean people refer to as the “arduous march.” The Korean Workers Party blames the sanctions from the United States, and the hostile military threat in the south, for the humanitarian crisis.

While the DPRK may not have much arable land, it has lots of coal. The sanctions imposed on the DPRK have worked to prevent the DPRK from selling its coal on the international markets. By preventing the DPRK from selling coal, the USA is preventing the DPRK from using the proceeds to feed its population, develop its infrastructure, or further improve the living standards of its population.

The hope of US leaders is that enough economic misery can be piled onto the Korean people, they will lose faith in the Korean Workers Party, and this independent government and economy can be eliminated.

It should be obvious that such a plan will not lead to peace. The more isolated and threatened the DPRK is, the more it will develop its military capabilities, including nuclear weapons in the hopes of defending itself.

Poverty and war are directly linked. The most unstable parts of the world are usually the most impoverished. Drug gangs and terrorist groups tend to set up shop in places where people are desperate to survive.

Furthermore, countries that are doing business with each other, and are economically linked, are far less likely to go to war. The road to peace is not through impoverishing the Korean people, while conducting provocative military exercises in the south.

A Real Peace Plan – The “Iron Silk Road”

The plan for peace in Korea championed by China and agreed on by the United Nations is called the “Iron Silk Road” or the “Trans-Asian Railway Agreement.” The idea is to create a train system in southern Korea that would extend into North Korea, through China, through Russia, and into Europe. This would integrate North and South Korea, as well as isolated parts of Siberia, to the world economy, and allow for industrial development and economic cooperation.

Despite the agreement for the “Iron Silk Road” being put into force in 2009, the project remains very much on hold in the Korean Peninsula, as threats of war and nuclear tensions hold back development.

Wall Street has an obvious motivation for stopping the “Iron Silk Road” which would result in a lot more of the DPRK and China’s coal being placed on international markets, accessible through the new railway line.

Targeting China’s Mines & Steel Mills

US leaders currently allege that North Korea makes $1 billion per year from selling its coal to China. China disputes this figure, but regardless, an income of $1 billion for a country of over 25 million people shouldn’t be a real source of outrage. Most countries with a similar population size have a much larger domestic income.

US leaders have put sanctions on numerous entities in China, alleging that they somehow cooperate with North Korea’s coal industry. US leader say they are determined to stop North Korea from making money by selling its coal, alleging that the money will be used for nuclear proliferation.

Indeed, almost all the entities in China, which are accused of collaborating with North Korea and are subject to US sanctions, are somehow linked to China’s booming mine and metal markets. These entities have had their assets in the USA frozen. They have been prevented from utilizing US banks for their transactions. Millions of dollars have essentially been stolen, and huge barriers have been put in place in order to prevent these corporations from working on the international markets.

No trial ever took place. These Chinese entities never had an opportunity to defend themselves, or challenge the claims made against them by US leaders. A decree was issued by the state department, declaring them guilty of doing business with North Korea, and simultaneously punishing them for it by seizing their property and blocking their transactions.

This unilateral attack on China’s vital industries constitutes economic warfare, and China’s leaders have responded with justifiable anger.

China’s state controlled steel manufacturing apparatus currently produces half of the steel in the entire world. 60% of steel production involves metallurgic “coking coal” in its production. Crippling China’s steel industry and China’s coal mines has a much wider effect than anything related to North Korea. North Korea serves as a convenient excuse to weaken China’s state controlled industries.

The High Cost of Wall Street “Energy Dominance”

 Now, not surprisingly, Wall Street mining corporations are seeing their profits increase in the aftermath of the sanctions. Due to sanctions harming its domestic coal operations, China now has to import more coal from the USA.

Trump’s White House has called for “energy dominance,” a goal that it seems to be pursuing by means of geopolitical confrontation. The efforts to push China and North Korea out of coal markets, mirror US efforts to push Russia off the oil and natural gas markets. The new sanctions on Russia work to undermine the Nordstream 2 natural gas pipeline, and force Germany and other EU companies to purchase natural gas from the USA instead of Russia.

Tim Ryan, a US Congressman from Ohio, blatantly stated that the new sanctions on Russia were a market grab, saying verbatim: “We must continue to focus on how we can get our gas to allies in Europe.” The European Union currently gets 38% of its natural gas from Russia, but the USA is looking to erode this.

The western monopolists in Wall Street and London have no room for any competitors. The development of independent countries cuts into their profits. US confrontations with independent countries are not about ideology or human rights.

Whether they be the Communists of the DPRK and China, or the Orthodox Christian Russian Nationalists in Moscow, or the Bolivarian Socialists in Latin America, or the Islamic Revolutionaries of Iran, all independent countries which break free, start to develop, and begin selling resources on the international markets are opposed by Wall Street, London, Washington, and the Pentagon.

The “energy dominance” and wealth of western corporations comes at a high price. This “dominance” can only be maintained by keeping the world poor.

Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.