Friday, April 28, 2023

China’s property pain deflates ‘overhyped’ iron ore market

 

Closeup of construction site in China. Stock image.

https://www.mining.com/web/chinas-property-pain-deflates-overhyped-iron-ore-market/ 

After a bullish start to 2023, iron ore is struggling with the reality that China’s property sector — the steelmaking material’s largest demand driver for two decades — is still far from a robust recovery.

Iron ore dipped below $100 a ton this week for the first time since early December, becoming the biggest victim of a bearish mood across industrial metals. The main culprit is a weaker-than-expected peak construction season, which runs from April through June, highlighting China’s uneven rebound.

President Xi Jinping’s flagship campaign to squeeze debt from the real estate sector has stifled commodities demand, as developers focus on completing existing projects with few new ones in the pipeline. That’s crimped the appetite for iron ore and metals during a period when building sites should be buzzing.

“Developers are very reluctant to start new projects outside of the top-tier cities, and that’s where the bulk of steel demand used to come from,” said Tomas Gutierrez, an analyst at Kallanish Commodities Ltd. Iron ore was “overhyped” as the price rallied late last year into March, he added.

China’s steelmakers are already losing money and cutting output in an ominous sign for global miners. Prices for iron ore to copper — and the fortunes of major producers such as BHP Group and Rio Tinto Group — have been tied to the nation’s property booms and slowdowns since 2000.

Chinese mills monitored by the country’s statistic bureau made a first-quarter loss for the first time in more than a decade, according to data from the National Bureau of Statistics released Thursday.

Still shrinking

China’s economy grew at the fastest pace in a year during the first quarter, and several banks recently raised growth forecasts, but the rebound has been patchy. The recovery has been led by consumer sectors, with the government so far reluctant to unleash major stimulus.

While real estate has turned a corner in terms of prices and sales this year, fresh investment is still falling. Property starts will decline 12.5% in 2023, according to Hong Kong-based consultancy Real Estate Foresight. Citigroup Inc. is even more pessimistic, with a forecast for a 40% contraction.

“China’s property sector is not completely out of the woods and steel consumption from the sector is unlikely to see a meaningful turnaround this year,” Citi analysts including Max Layton wrote in a note this week.

Iron ore slipped to $99.90 a ton on Wednesday in Singapore before rebounding, and was down 0.7% at $104.40 as of 3 p.m. local time Thursday. Prices are down around 16% in April, heading for the biggest monthly drop since October, after surging above $132 in mid-March.

‘Missed expectations’

The property sector typically accounts for between a third and half of metals use in China, and the construction malaise has fed into base metals. Copper fell to the lowest level in a month on the London Metal Exchange this week, while aluminum was down for a sixth session on Thursday.

“Chinese copper demand has missed expectations,” Ni Hongyan, the vice president of trading firm Eagle Metal International Pte Ltd. told an industry conference this week in Shandong province. She expects prices to go even lower, under pressure also from US monetary tightening and financial stress.

Copper and aluminum are used more in the later stages of construction and are less exposed to the slump in new housing starts. The price of steel rebar, used to reinforce concrete buildings, has collapsed close to the lowest since early November, a bleak period when China’s Covid curbs were wreaking havoc across the economy.

Infrastructure spending

The prospect of more global supply and warnings from Beijing about cracking down on speculation have also been weighing on iron ore of late. China is also planning to cap steel output this year, which would theoretically limit iron ore buying and spur a partial switch to scrap steel.

The demand outlook is not universally gloomy, however, notably for infrastructure, with Chinese provinces planning to boost spending on major construction projects by almost a fifth this year. Fixed-asset investment rose modestly in the first quarter and economists expect that to accelerate as the year goes on.

“We think stimulus policies gave a boost to the strong infrastructure demand at the beginning of the year, and expect infrastructure investment to stay resilient in 2023,” said Chaohui Guo, a commodity analyst at China International Capital Corp. Still, a smooth recovery in other sectors of the economy will reduce the need for a steel-intensive infrastructure splurge, they said.

For now, China’s steel industry sounds increasingly pessimistic, with the major industry association warning this week that prices would remain weak and volatile for the rest of this year. Mills need to save cash and exert caution on inventories and production in the face of “severe challenges,” the China Iron & Steel Association said.

(With assistance from Winnie Zhu, Tom Hancock and Fran Wang)

OPEC is at odds with the International Energy Administration (IEA)

Oil Set for Sixth Month of Declines on Slowdown Concerns | WTI heads for longest stretch of monthly losses since January 2015

 https://gritcapital.substack.com/

  • The group claims the agency is stoking volatility after warning production cuts risked fueling inflation.

  • The cartel also criticized the IEA for its call to halt investments in new oil and gas projects.

  • Meanwhile, oil prices are on track for the 6th straight month of losses.

  • That’s the longest such streak in more than 8 years.

Chile’s state lithium push emerges as test for Latam resource nationalism

 Chile's state lithium push emerges as test for Latam resource nationalism

Chile’s President Gabriel Boric. (Image courtesy of Boric’s campaign.

https://www.mining.com/web/chiles-state-lithium-push-emerges-as-test-for-latam-resource-nationalism/ 

Chilean President Gabriel Boric’s pitch last week to enshrine greater state control over lithium is emerging as the latest test for the resource nationalism embraced by Latin America’s ascendant left but which has proven tough to implement in practice.

While the former student protest leader’s proposal to give the government a majority stake in all future lithium projects faces an uncertain path in Congress, its mere introduction shook one of the mining industry’s most lucrative corners.

The push from Boric, 37, also highlights the long-running regional tension between governments’ hunger for control of coveted commodities and future profits versus their ongoing need for private sector capital and know-how.

“In Chile, its probably going to be the most significant case,” said Carlos Pascual, top energy executive with IHS Markit, referring to other regional efforts to exert more government control over the mineralseen as key to a greener future and citing Chile’s outsize role in the global metals market as the world’s top producer of copper and No. 2 in lithium.

“This is seen as an opportunity to ensure direct revenues to the state just as many countries decided to make the decision to nationalize oil in a different era,” he added.

Last year, Boric’s fellow leftist in Mexico, President Andres Manuel Lopez Obrador, enacted a sweeping lithium nationalization and later ordered the creation of a new state-run lithium company, LitioMx, even though the country is still far from selling its first cargo of the ultra-light metal.

Lithium is in high demand for rechargeable batteries for future fleets of electric vehicles in the global transition to green energy.

Lopez Obrador, who reveres the country’s landmark 1938 oil nationalization, justified his policy as its logical extension. He invoked past abuses at the hands of colonial masters and more recent corporate titans, arguing that only the government can prevent exploitation and ensure broadly-distributed benefits.

Across the world, nationalizing oil industries in particular has proved attractive as a means of cashing in on valuable raw materials and boosting development, even as competitive commodity markets often see more output and innovation.

Illustrating the challenges of starting from scratch, a Mexican official knowledgeable about government plans for mining, however played down the possibility the new state lithium miner might achieve production anytime soon, instead touting a different option.

“LitioMx could drive the value chain by importing lithium,” the official told Reuters.

Asked for comment, a spokesman for Mexico’s energy ministry stressed that LitioMx remains focused on finding and extracting lithium, and while future imports could be considered “it’s too early for that.”

Unsurprisingly, mining companies are less than ecstatic about the statist tilt of Lopez Obrador and Boric, who stressed that under his plan private miners would be able to partner with a not-yet-created state-owned producer, but only as minority stakeholders.

“It’s a brave bet to ask an investor to prefer an uncertain marriage with a state company and a minority stake risking capital and technology as opposed to simply flying alone,” said Armando Ortega, who chairs the executive committee of Baramin, Mexico’s biggest producer of barite, a mineral used in oil drilling.

Statist trend

Chile and neighbors Bolivia and Argentina are believed to hold more than half of the world’s extractable lithium in otherworldly salt flats that typically employ evaporation pools to concentrate the metal, though new technologies are also being developed.

The ruling socialists of Bolivia have also insisted that the state take the driver’s seat in unlocking its huge but untapped reserves, although it is counting on the help of partners like Chinese battery giant CATL to do so.

Peru, a mining powerhouse best known for copper, might have pursued a similar approach to Boric to bolster its development of lithium had former President Pedro Castillo not been ousted late last year.

The leftist Castillo won a narrow victory in 2021, pledging to nationalize the ultra-light metal along with other minerals including copper, but later moderated his position, leaving the promise unfulfilled.

Ivan Merino, who was Castillo’s first energy and mining minister, said in an interview on Monday that Peru is for now watching from the sidelines as the resource nationalism trend gains steam.

“It’s now almost commonplace,” he said. “We will see history made, but without participating in it.”

That leaves the exception to the trend, Argentina, as an increasingly likely Latin American destination for new private capital for lithium.

“That’s not because Argentina is doing what needs to be done, but rather because of our neighborhood’s upheavals and the world’s spiking demand,” said Santiago Dondo, its former deputy minister for mining.

A strong pipeline of lithium projects in Argentina, the world’s No. 4 producer, are already close to coming online.

Dondo said the four political parties in the main opposition coalition to outgoing leftist President Alberto Fernandez recently voted to endorse private enterprise as the sector’s main motor ahead of elections later this year.

He noted that local control over mining in three key provinces in northwest Argentina managed to help thwart any moves toward lithium nationalization at the national level a couple years ago, boosting investor sentiment.

But Dondo still worries that lithium could be eclipsed by another battery technology.

“We don’t know how many years we’ll have this huge window of opportunity,” he said. “Change in the energy transition is getting faster all the time.”

(By David Alire Garcia and Marco Aquino in Lima; Editing by Christian Plumb and Marguerita Choy)

Thursday, April 27, 2023

The Full Alex Epstein: the Moral Case for Fossil Fuels, Renewable Energy...

U.S. House passes bill limiting drawdowns from strategic oil reserve

The U.S. Capitol is seen through the roof of the House Visitors Center in Washington

The U.S. Capitol is seen through the roof of the House Visitors Center in Washington, U.S., January 23, 2023. REUTERS/Nathan Howard

https://www.reuters.com/world/us/us-house-backs-bill-limiting-drawdowns-oil-reserve-2023-01-27/ 

WASHINGTON, Jan 27 (Reuters) - The U.S. House of Representatives passed a bill on Friday limiting the ability of the energy secretary to tap the strategic oil reserve without developing plans to increase the amount of public lands available for oil and gas drilling.

Representatives backed the bill 221 to 205, with support from only one Democrat. President Joe Biden would veto the legislation should it pass Congress, the White House said this week. The bill is expected to face an uphill battle in the Senate, which unlike the House, is controlled by Biden's fellow Democrats.

The Strategic Production Response Act, or H.R.21, requires the U.S. energy secretary to develop a plan to increase oil and gas leasing on federal lands, including submerged ones on the Outer Continental Shelf, before tapping the Strategic Petroleum Reserve. It would not stop the president from tapping the SPR in case of an emergency, such as a hurricane that halts production of crude.

Republicans, who took control of the House this month, have pushed a series of political messaging bills that appeal to conservative voters.

Republican backers of the bill said the Biden administration acted recklessly in selling 180 million barrels from the reserve last year, or 1 million barrels a day for six months, in the biggest release ever. That drawdown and others Biden approved have pushed the level of the SPR to its lowest level since 1983.

The SPR should be used only to address true emergencies, said Representative Cathy McMorris Rodgers, a Republican and chair of the House Energy and Commerce Committee.

"President Biden has turned a longtime bipartisan strategic asset, the Strategic Petroleum Reserve, into a political tool to cover up the consequences of his expensive rush-to-green agenda," said Rodgers.

The Biden administration, which is pursuing an aggressive policy to curb climate change by supporting the energy transition off fossil fuels, has said it sold the oil to counter gasoline prices that had risen to $5.00 a gallon and helped fuel the highest inflation levels in decades. Oil prices spiked last year on Russia's invasion of Ukraine and as the world began to emerge from the pandemic.

U.S. Energy Secretary Jennifer Granholm told reporters at the White House this week that Biden "will not allow the American people to suffer because of the backwards agenda that House Republicans are advancing."

Reporting by Timothy Gardner; editing by Jonathan Oatis, David Gregorio and Leslie Adler

Statutory Authority for an SPR Drawdown

https://staticseekingalpha.a.ssl.fastly.net/uploads/2016/9/13816732_14735421347787_rId7.jpg

https://www.energy.gov/ceser/statutory-authority-spr-drawdown

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Chinese Money Launderers Are Central to Cartels’ Fentanyl Trade: Rep. McClain

Rep. Lisa McClain (R-Mich.) departs from a press conference on vaccine mandates for businesses with House Republicans on Capitol Hill in Washington on Nov. 18, 2021. (Anna Moneymaker/Getty Images)Rep. Lisa McClain (R-Mich.) departs from a press conference on vaccine mandates for businesses with House Republicans on Capitol Hill in Washington on Nov. 18, 2021. (Anna Moneymaker/Getty Images)

Rep. Lisa McClain (R-Mich.) departs from a press conference on vaccine mandates for businesses with House Republicans on Capitol Hill in Washington on Nov. 18, 2021. (Anna Moneymaker/Getty Images)

https://www.theepochtimes.com/chinese-money-launderers-central-to-cartels-fentanyl-trade-rep-mcclain_5223839.html 

China’s communist regime is overseeing massive money-laundering operations being conducted by Chinese nationals to support drug cartels that are flooding the United States with lethal opioids.

The Chinese Communist Party (CCP) gives cover to schemes that support the production of synthetic drugs responsible for killing hundreds of thousands of Americans, according to testimony given during a House Subcommittee on Health Care and Financial Services hearing on April 26.

“Criminal organizations based in [China] have captured the money-laundering organizations of the cartels,” subcommittee Chair Lisa McClain (R-Mich.) said.

“We have to work together to find solutions to fight against the CCP.”

Chinese Organizations Critical to Cartels

The subcommittee examined how Chinese money-laundering organizations (MLOs) have become an indispensable part of Latin American cartels and are depended upon to launder illicit funds needed to produce and finance fentanyl and fentanyl-related compounds.

“Cartels are making millions as Chinese organized crime is laundering money and providing the precursor elements needed to produce, finance, and traffic narcotics moving across the border,” McClain said.

While cartels used to take weeks to months to launder the same amounts of money, the Chinese MLOs are capable of accomplishing that in a matter of hours, McClain said, which has “significantly increased the cartels’ bottom line.”

Fentanyl was the foremost cause of death of Americans aged 18 to 45 in 2021. That year, more than 100,000 Americans died from drug overdoses, including more than 75,000 who died from opioids such as fentanyl.

The Chinese MLOs have been highly successful because they exploit China-specific exchanges and manufacturing centers to profit from the drug trade, says Channing Mavrellis, director of the illicit trade program at the think tank Global Financial Integrity.

The system relies on Chinese citizens residing in the United States who act as money brokers between the cartels and China-based launderers who convert the money into tangible goods.

Essentially, proceeds from drug trades are given to a Chinese broker in the United States. That broker then advertises the dollars for sale to Chinese nationals in China, who purchase the equivalent sum in local currency and use that currency to purchase goods, which they then send to Latin America. An operative in Latin America then sells those goods in local currency for the cartel.

That system, Mavrellis said, is highly lucrative and successful.

A Chinese MLO network operating in Chicago and New York laundered tens of millions of dollars in drug proceeds for Mexican cartels, she said. One of the network’s couriers, a Chinese national who was a permanent U.S. resident, had an average cash pickup of $500,000.

In another example, she said, a Chinese businessman with U.S. citizenship laundered nearly $30 million of drug proceeds for Mexican, Colombian, and Guatemalan cartels by using a casino in Guatemala, a U.S.-based seafood export company, and U.S. and Chinese bank accounts.

CCP Looks the Other Way

The money-laundering efforts couldn’t have continued without the CCP’s “complicity” in overlooking such schemes, McClain said.

Anthony Ruggiero, former senior director for counterproliferation and biodefense at the National Security Council, said the Biden administration hasn’t tackled the issue of how Chinese banks continue to allow such behavior. The administration, he said, appears “afraid” to use the tools at its disposal, out of concern of exacerbating international tensions.

“There’s this fear of going after Chinese banks,” he said. “They fear the impact on the global economy.”

To that end, Ruggiero said that Chinese banks still covet access to Western markets and that the United States should make that access contingent upon conditions, including taking steps against the Chinese MLOs.

Wednesday, April 26, 2023

Stocks of US crude oil fell by 6.1 million barrels last week, according to the latest API data.

  • Analysts were expecting a 1.6 million barrel drop.

  • Gasoline and distillate inventories declined by 1.9 million and 1.7 million barrels, respectively.

    https://gritcapital.substack.com/ 

First Republic May Sell $100 Billion in Assets

Chile’s lithium move a further push for automakers to diversify supply chain

Chile's lithium move a further push for automakers to diversify supply chain

Factory site for Volkswagen parts in Braunschweig. (Image courtesy of Volkswagen Group)

https://www.mining.com/web/chiles-lithium-move-a-further-push-for-automakers-to-diversify-supply-chain/ 

Chile’s move to nationalize its lithium industry adds fresh supply chain uncertainty for global carmakers facing a shortage of electric vehicle (EV) battery materials and could provide fresh urgency to find new sources of the metal.

Chilean President Gabriel Boric announced plans last Thursday to create a new state-owned company to control its lithium industry. The country has the world’s largest reserves of the metal and accounts for 30% of global output.

While there are startups working on sodium ion batteries that could eventually provide a cheaper alternative for EVs, for many years to come the auto industry will be entirely dependent on lithium for its batteries.

Leading industry executives have warned of a supply chain crunch around the middle of the decade as the world’s top automakers plan to spend nearly $1.2 trillion through 2030 to develop and produce millions of electric vehicles.

“Automakers may be more trepidatious around committing to lithium supply deals from Chile until it’s clear what nationalization will look like,” said Caspar Rawles, chief data officer at Benchmark Mineral Intelligence. “Most automakers will have been looking for a diversified portfolio of regional supply before this anyway, but perhaps this makes other regions more appealing.”

David Brocas, founder of mineral supply chain advisory firm Voltaire Minerals, said that battery metals are becoming as strategically important to countries as oil, and carmakers will need a special “diversified sourcing strategy” in response.

Major carmakers have already been looking for new lithium supplies in the United States, Europe and Africa. General Motors, for instance, invested in Lithium Americas Corp in January and will help it to develop Nevada’s Thacker Pass lithium mining project.

This push for fresh options is expected to accelerate.

“We’re implementing a commodity roadmap that includes regional diversification,” a Volkswagen spokeswoman said in an email. “So we’re looking at a lot of regions.”

Mercedes-Benz chief technology officer Markus Schaefer told reporters on Monday that the carmaker is “still open to direct purchasing from Chile – but there are alternatives, such as Australia and Canada.”

Shares in lithium miners in Australia, the largest producer making up around half of global supply, rose after Chile’s announcement.

“No lithium = No batteries = No EVs”

Chile’s move to nationalize its lithium industry follows a trend of countries seeking tighter control over key resources. Mexico has nationalized its lithium industry, while Zimbabwe, Myanmar and Indonesia have all announced restrictions affecting various commodities.

Santiago’s announcement “will place an even higher focus on secure supplies of UK and European lithium for carmakers who are desperate to secure raw materials for EVs,” Jeremy Wrathall, CEO of Cornish Lithium, wrote in an email. “No lithium = no batteries = no EVs.”

Lithium is not the first supply chain crisis facing the car industry, which found itself short of semiconductors during the Covid-19 pandemic and is unlikely to be the last.

Rob Anstey, CEO at GDI, which is developing silicon anodes for batteries, said this should be a wake-up call for an auto industry dependent on China for graphite for battery electrodes.

“If Chile nationalizes lithium, Australia can increase supply and America and Europe will increase supply,” Anstey said. “But if China starts to restrict exports of graphite, the entire battery global supply chain screeches to a halt.”

Several startups are developing EV batteries with silicon-based electrodes that hold more energy, have greater range and charge more quickly, but at present 70% of all graphite comes from China.

Chile’s move may provide an advantage for other countries hopeful of developing their own lithium supplies.

Lithium exploration company Aterian sees opportunities for mining in a number of African countries, including Morocco and Rwanda.

“These countries will attract the energy transition investment which would have previously gone to Chile,” said Executive Chairman Charles Bray.

(By Nick Carey, Ilona Wissenbach, Giulio Piovaccari, Marie Mannes and Victoria Waldersee; Editing by Sharon Singleton)


Related Article: Argentina’s lithium pipeline promises ‘white gold’ boom as Chile tightens control

Monday, April 24, 2023

Xi tells Putin of ‘changes not seen for 100 years’ | Al Jazeera Newsfeed

China’s Xi tells Putin of ‘changes not seen for 100 years’

https://images.indianexpress.com/2018/06/putin-and-xi-759.jpg?w=759

China’s President Xi Jinping and his Russian counterpart Vladimir Putin bid each other farewell following talks in Moscow.

https://www.aljazeera.com/news/2023/3/22/xi-tells-putin-of-changes-not-seen-for-100 

President Xi Jinping and his Russian counterpart Vladimir Putin were filmed saying warm goodbyes as their two-day meeting ended with China’s leader saying they were driving geopolitical change around the world.

The two leaders called for “responsible dialogue” to resolve the Ukraine crisis, with Xi acknowledging Beijing and Moscow had signed an agreement bringing their ties into a “new era” of cooperation.

A video of Xi’s departure on Wednesday was filmed with translators speaking for both men.

“Right now there are changes – the likes of which we haven’t seen for 100 years – and we are the ones driving these changes together,” Xi told Putin as he stood at the door of the Kremlin to bid him farewell.

The Russian president responded: “I agree.”

Xi then put out his hand to shake Putin’s and said: “Take care please, dear friend.” Putin responded by holding Xi’s hand with both of his and saying, “Have a safe trip.”

The Chinese leader’s visit to Moscow comes days after the International Criminal Court (ICC) issued an arrest warrant for Putin for war crimes allegedly committed in Ukraine, where Russian forces have made little progress in recent months despite suffering heavy losses.

The talks were intended to cement the “no limits” partnership the two leaders announced last February, less than three weeks before Russia invaded Ukraine.

Putin said a Chinese proposal to end the conflict could be used as the basis of a peace settlement, but the West and Kyiv were not yet ready.

The United States has been dismissive of China’s peace plan and said a ceasefire would lock in Russian territorial gains and give Putin’s army more time to regroup.

North Korea’s ‘DF-41’ Intercontinental Ballistic Missile

A view of a test launch of a new solid-fuel intercontinental ballistic missile (ICBM) Hwasong-18 at an undisclosed location in this still image of a photo used in a video released by North Korea's Korean Central News Agency (KCNA) on April 14, 2023. (KCNA via Reuters)

A view of a test launch of a new solid-fuel intercontinental ballistic missile (ICBM) Hwasong-18 at an undisclosed location in this still image of a photo used in a video released by North Korea's Korean Central News Agency (KCNA) on April 14, 2023. (KCNA via Reuters)

https://www.theepochtimes.com/north-koreas-df-41-intercontinental-ballistic-missile_5207283.html?src_src=ref_share&src_cmp=cw-cc 

After having warned of its development for seven years and revealed its transporter erector launcher (TEL) in a Feb. 8 parade, on April 13 for the first time, North Korea successfully tested its solid-fuel intercontinental ballistic missile (ICBM), which it calls the Hwasong-18.

With propaganda images and videos of the Hwasong-18 and his daughter revealed by North Korean state media on April 14, North Korean dictator Kim Jong-un was likely paying homage to the real technology source of his new ICBM.

The next day, April 15, was the 11th anniversary of the official revelation of the China Aerospace Science and Industry Corporation’s (CASIC) transfer of Sanjiang Special Vehicle 16-wheel TELs to North Korea, in a parade celebrating the birthday of the first North Korean communist dictator Kim Il Sung.

Over the subsequent decade, the Chinese Communist Party (CCP) has barely concealed its continued proliferation of technology to assist North Korea’s nuclear missile programs.

In North Korea’s military parade on April 15, 2017, a version of the CASIC TEL was used to display a full-scale mockup of the future solid fuel cold-launch tube for the North Korean solid fuel ICBM, as TELs based on Chinese Sinotruk trucks from a 2013 co-production scheme pulled a mockup of a medium-range solid fuel ballistic missile that looked like the early CASIC 932-mile range DF-21 ballistic missile.

In that same parade, a Sinotruk-based TEL pulled North Korea’s new solid fuel submarine launch ballistic missile called KN-11. A smaller Sinotruk-based TEL was used for a new precision-guided 300-millimeter diameter artillery rocket in a parade on Oct. 10, 2015.

There are two more versions of CASIC-Sanjiang TEL, an 18-wheel version revealed in a North Korean military parade on Feb. 2, 2018, carrying the liquid-fueled Hwasong-15 ICBM, and then a 22-wheel version, the largest ICBM TEL in the world, revealed in a military parade on Oct. 10, 2020, carrying the liquid-fueled Hwasong-17.

The 18-wheel version of the CASIC-Sanjiang TEL carries the new solid fuel Hwasong-18.

This analyst has long held that to build their TELs, China’s CASIC-Sanjiang would also have to have intimate knowledge of the missiles being carried, which points to the high likelihood that CASIC and the China Aerospace Science and Technology Corporation (CASC) have been heavily involved in North Korea’s liquid and solid fuel missile programs.

Epoch Times Photo
North Korean leader Kim Jong-un watches a fire assault drill at an undisclosed location in North Korea on March 10, 2023. (KCNA via Reuters)

In its first military technology exhibit in October 2021, when Pyongyang revealed that it had a hypersonic glide vehicle (HGV) warhead almost exactly like that of the CASC DF-17, it was clear that the CCP did not care that the world understood its role in North Korea’s nuclear missile program.

In his early analysis of the Hwasong-18 based on North Korean revealed images and videos, analyst and 3D image artist Nathan J. Hunt estimates that the diameter of the first stage of the three-stage Hwasong-18 is 2.21 meters.

If the Hwasong-18 is based on a Chinese solid-fuel missile, then there are two possible technology sources. One is CASC’s 8,000-mile range DF-41 with an estimated 2.28-meter diameter. The other is the 2.2-meter diameter CASIC Kuaishou-11, currently a space launch vehicle. Still, since CASIC has undertaken previous deception exercises attempting to conceal its near-total creation of Pakistan’s large solid-fuel ballistic missiles, it could have easily mounted a deception operation to help develop the Hwasong-18 based on Kuaizhou-11 technology.

But what is clear is that the Hwasong-18 is a mobile solid fuel ICBM in the same class, if not a replica of the DF-41 or a CASIC equivalent not yet deployed by the People’s Liberation Army Rocket Force.

As the DF-41 is credited, mainly by Chinese sources, as having the potential to carry up to 10 warheads, it should be considered that the Hwasong-18 will eventually have a similar capability.

In Kim Jong-un’s January 2021 Work Report to the 8th Congress of the Worker’s Party of North Korea, he stated the North’s “research into perfecting the guidance technology for multi-warhead rocket” was in its “final stage.”

This could mean larger multiple warheads for the Hwasong-17. Still, with North Korea’s March 28 revelation that it has developed a new small common tactical nuclear warhead for eight short-range ballistic missiles, land attack cruise missiles, and unmanned underwater delivery systems, such a small nuclear warhead could also form the basis of a smaller multiple warhead system for the Hwasong-18.

Unlike the Hwasong-15 and Hwasong-17, which require time for fueling that creates vulnerability to attack, the solid fuel Hwasong-18 can be made ready for an attack within minutes of emerging from its under- or above-ground base, making possible effective surprise nuclear strikes.

The solid-fuel Hwasong-18 can also be developed into a rapid space launch vehicle that can build a constellation of Chinese-assisted surveillance satellites to enable continuous North Korean targeting of its nuclear missiles.

In addition, the Hwasong-18 can be developed into an effective anti-satellite weapon capable of attacking crucial U.S. Medium Earth Orbit satellites, such as its Global Positioning Satellite (GPS) system.

The Chinese regime likely began helping to build North Korea’s nuclear missile capacity in the early 2000s, first to deter a large-scale U.S. attack against the Pyongyang dictatorship and second, to make Pyongyang into a proxy nuclear rogue, capable of creating nuclear crises that divert U.S. military resources to make possible the CCP’s invasion of Taiwan.

But as North Korea also traffics in nuclear and missile technology to Iran and Pakistan, it can now sell the full range of nuclear missiles, from short-range tactical to medium-range, HGV, and solid-fuel ICBMs.

But what is perhaps most confounding is that the United States has refused to expose the CCP’s full role in creating North Korea’s nuclear threat. Recall that when the United States helped save China from a Soviet nuclear attack in 1969, it subsequently worked hard to convince South Korea to forgo its nuclear weapons program.

Even more galling is that the Biden administration refuses to consider building up U.S. nuclear forces—limited to 1,550 deployed nuclear warheads by the 2010 New Start nuclear agreement to which Russia suspended its adherence on Feb. 21—as China is building up its nuclear weapons from 3,000 to 4,000 warheads by the early 2030s.

Should China and Russia engage in cooperative nuclear targeting of the United States—which has long been suggested by their increasing cooperation in missile defense—then a combined Chinese, Russian, and North Korean nuclear force threatens to overwhelm that of the United States, making Americans vulnerable to nuclear coercion or a massive first strike.

The United States is in danger of losing the opportunity to redeploy warheads reduced due to New Start, deploy new ones, rebuild its regional nuclear forces, and commit to building a real national missile defense.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.