I’m not sure if there’s a more iconic 80’s movie than Top Gun.
Oh, and Tom Cruise.
But for me, the price of admission isn’t buying a quality screenplay.
Well that, and I totally want to see him buzz the tower one last time.
When Life Imitates Art
I’m not the only one who gets a kick out of a good fly-by – plane enthusiasts the whole world around love to see it happen at air shows.
Here in Annapolis, I’ve watched the Blue Angels essentially buzz the whole town over and over again for an hour during Commissioning Week at the Naval Academy every May for 10 years.
Well, except for this one.
But the real reason I’m bringing up this particular movie and this particular concept at this particular time is because from time to time, similar things happen in real-life military situations.
And in fact, the United States Navy has been “buzzing China’s tower” – in this case, the Strait of Taiwan – more times in 2020 than we have in almost half a decade.
The reasoning is obvious. I’ve written before about China’s increasing aggression on a few occasions.
Mainly, it has been occurring along three fronts: their border with India to the west in Ladakh, their border with India in the south near Bhutan and Bangladesh, and to the east in the South China Sea.
Each region represents a land grab that China believes will deliver resources to both their military and their people, and will reduce the United States’ influence in the region.
But while most of the aggressive actions have been focused on the west and south so far this year, increasing amounts of attention are being paid to Taiwan.
China has been busy bolstering forces on the coast over the past few weeks, upgrading bases and adding their new DF-17 hypersonic missile.
And that activity has clearly been noticed, as just yesterday, Taiwan foreign minister Joseph Wu said there is “no doubt” China wants to target the island pseudo-nation, which he believes to be “on the front line” of their authoritarian expansion.
So while the US sat idly by as Russia annexed Crimea in 2014 – unwisely allowing the first land grab by force in decades – we are unlikely to make the same mistake twice no matter who wins the election in two weeks.
Instead, we have to compete.
And while that might start with “buzzing their tower,” we also likely have to make sure Taiwan can defend itself, build up our network of bases in East Asia, and ready our US Navy’s Top Guns to defend the Indo-Pacific region from authoritarianism.
Chinese Retaliation is Inevitable, But We’ve Seen It Before
The leverage that China believes it has over the rest of the world is their vast manufacturing infrastructure that lords over just-in-time delivery, and the effective monopoly they have over certain technologies.
Of particular note are rare earth elements (REEs), which Chinese magazine the Global Times called “an ace in Beijing’s hand” after the US Department of Commerce cut off China telecom giant Huawei from access to US microchips and components.
China has tried to shift reliance on that technology to other countries, and as I wrote last week has been hoarding as many semiconductors and integrated circuits as they can.
Moreover, they may also try to cut exports of rare earth material to the US in retaliation for both our ongoing trade tiff and the aforementioned military exhibitionism in the South China Sea.
That’s important, because one of those REEs – neodymium – is integral to producing magnets. And what you might not know about magnets is that cell phones, MRI machines, wind turbines, and essentially all green technologies… don’t function without them.
In fact, as my colleague Marin Katusa wrote here back in August, there are 920 pounds of magnets in an F-35 jet.
As such, a lack of access to this material would constrain both our economy and our military.
However, this is a well-known and telegraphed Chinese ploy, as they did the same thing to Japan just a decade ago.
In response, Japan diversified their future supply, investing in friendlier Australian assets and discovering huge underwater resources they’re currently looking to develop.
Similarly, the US has possible alternatives it could leverage.
First, you can’t make the most important neodymium permanent magnets without the element Boron, and the US happens to control about 25% of the world’s Boron supply via a single mine in California operated by Rio Tinto.
But even better, it will be fairly easy for the US to counter this potential Chinese threat… because we already have them.
About three years ago, a Chicago/NYC financial group formed the company MP Minerals to acquire that idle US operation – the Mountain Pass mine – and they’re in the process of restarting that operation now.
Moreover, they sought a public listing through a merger with Fortress Value Acquisition Corporation (NYSE: FVAC), and can now be easily purchased on the open market.
And while I think they’re a little overpriced based on current market conditions and liquidity, they’re off recent peaks and worthy of watching over the next few weeks.
And if prices happen to fall down around the $12 per share range – or alternately there is some movement in REE markets – there is about a 100% chance we’re going to buzz their tower.
All the best,