Football more deadly than Tennis, and Lithium’s Hindenburg Moment

Blain’s Morning Porridge July 1 2021 – Football more deadly than Tennis, and Lithium’s Hindenburg Moment

“A total of 1.6 million man hours went into building the Hindenburg..”

This Morning – Finally, proof Football is more deadly than Tennis. And, as the UK proudly climbs onboard the Gigafactory bandwagon, are we heading for a Hindenburg Moment?

At long last we have proof Football is far more deadly than Tennis. If the UK’s new Health Secretary, the excellent Sajid Javid, is reading this he should probably ban the beautiful game before it’s too late… preferably before England embarrasses Boris by crashing out against the Ukrainians…

While the crowds at Wimbledon are having a simply marvellous time quaffing Pimms and Strawberries as they watch the players skate around the courts, 1300 Scotland fans came back from London last week with more than the memory of a famous 0-0 victory over England.

The Scots caught Coronavirus.. and as the medical types say “may have unknowingly transmitted their infection to others”. 397 of them were actually at the match in Wembley – despite having negative test results or full vaccination proofs to get in. That’s roughly 15% of the Scots at the match came back… doomed! Doomed to experience mild discomfort if they actually have it…

Scotland is wisely considering whether to lock down the whole country for another year… just to be on the safe side. Alba (posh Gaelic name for North Britain) is now experiencing its highest rate of infection – nearly 4000 cases yesterday. 80% of cases are in under 44s. Only 2% of new cases were in over 65s, yet all 17 deaths in Scotland last week were in the over-65 age cohort. It would be interesting to know how many of them were vaccinated.

The rate of infection across the UK spiked to 26,000 yesterday. That’s the largest number since the peak of wave 3 on January 29^th. If you were fortunate enough to have gone to the match to watch England thrash Germany earlier this week – be very worried should you experience chills, headache, etc… To be safe you really ought to isolate, and get everyone you’ve talked to to isolate as well.. Ah, went to the pub last night? Better close it down for 10 days just to be safe…

Yesterday some chums found themselves home schooling again after their child was sent home from school because a lad in the year above had a positive test. As a result the school is closed for 10 days… and longer if anyone else tests positive. Nearly 400k kids in England are isolating of school because of virus lockouts.

In January, the same day there were 29k new infections there were 1245 deaths. Yesterday, 26k infections across the UK and 14 deaths. Hospital admissions with Covid are down – but hospitalisations of other serious conditions are rising.

Today the UK starts to “taper” Covid supports – companies will have to pay 10% of furlough wages, while stamp duty is back on.  Yet it still feels like everything we do is run to an agenda set by whatever the government’s goal was.. which was something like protecting the NHS for having to do its job?

In market terms: never under-estimate the ability of the Government to still snatch defeat from the Jaws of Victory – especially when it comes to Covid… It would be unsafe assume it’s over.. It’s not all over till the plump lady stops sneezing. (Has she tried any over-the-counter hay-fever allergy treatments?)

Meanwhile… Lithium…

Oop North, Nissan has announced a £1 bln Gigafactory to build lots of lithium batteries for Electric Vehicles. It’s a “major vote of confidence in the UK” says Boris as he cheers on his twin goals of decarbonisation, and putting the UK firmly back on the battery production map relative to Yoorp in terms of the we-make-more-batteries-than-you competition.

Oh dear. I think I shall call it a Hindenburg Moment.

Back in the 1930s, as air-travel was opening up, the Germans were impressing the world with their Graf Zepplin airships, flying passengers in luxury across the Atlantic. British Airships were not so great – the R101 crashed, killing important people. While the German’s got on with beautiful airships, the British built Flying Boats and developed passenger routes to connect the Empire. We all know what happened to the Hindenburg, and 20 years later we were flying Jet passenger planes…

In their 1930s guise Flying Boats and Airships were two evolutionary dead-end technologies. Filling canvas bags with highly inflammably explosive hydrogen, in retrospect, wasn’t a great idea. Much like lithium battery powered electric vehicles will prove to be when water-tables around the globe are compromised by battery pollution. Ouch..

Heresy you say!

For all the noise, EVs are not carbon-neutral. Like any manufactured about, they depend on hewing materials out the ground and processing them into cars. Lithium is a scarce commodity – as are cobalt and nickel which are also required. To mine and process them becomes increasing difficult the scarcer they get. Lithium and Cobalt are nightmares to recycle and very toxic. An article in the Torygraph says there will be 8 million tonnes of waste batteries by 2040!

Lithium batteries require lots of electricity to power them – which comes from renewable and non-renewable sources – all of which creates carbon. Lithium should trigger all kinds of ESG alarm bells – but somehow gets the nod because it’s become the current paradigm! (Geddit: current paradigm.. ??)

The UK Government can garner all kinds of cheap publicity points about this new Nissan Factory being clean, job-creating, and enabling the UK to meet its target to ban diesel and petrol engines by 2030. It’s all bogus of course… Its politics. The politics of Brexit mean lithium batteries are the only favoured capacitance solution because they are written into the “rules-of-origin” battery provisions of the treaty – meaning the UK can only export EVs tariff-free if they are made in existing automotive plants…

There are many promising alternatives to lithium batteries. There are other technologies in development… but how many of them will be quietly crushed by the Lithium-industrial-complex? There is a gang of politicians, miners and manufacturers committed to selling us lithium only solutions.. (Brilliant, it’s not even 9 am and I’m well on the way to creating a whole new conspiracy theory meme.)

Better alternatives that will not cause the massive pollution and environmental degradation lithium will create are coming. They will provide more efficient capacitance, and/or provide more reliable service range. But give them time. It might be Carbon-ion or Aluminium based new capacitance tech, or it might be developing blue and green hydrogen – there are better ways to proceed.

Lithium tech is over 50 years old and should never have taken the forefront of EV development – but it did. It is a useful stopgap – but not a long-term solution. Perhaps because it was simply easy for Tesla to go down that road…

Three times I have invested in companies promising an Airship renaissance. I love flying boats… but, to be fair, even a Boeing 737Max is an easier way to fly up to Edinburgh than a commercial version of The Sunderland (which neatly segues back to Nissan..)

Five Things to Read This morning

BBerg – Sunak Promises to Sharpen City of London’s Competitive Edge

Finance Monthly – G7 tax noise: will anything change

BBerg – Xi Warns China’s Foes Will Break Against “Steel Great Wall”

FT – China advance in challenge to dollar hegemony

WSJ – Stock Markets Cruise to Records in First Half, But Investors Grow Uneasy

Out of time, and back to the day job..

Bill Blain

Strategist – Shard Capital.