Lewis Black is the director, president, and CEO of Almonty Industries, a global tungsten mining company. Tungsten is used in a variety of industries including crude oil refinement, natural gas to hydrogen gas conversion, and lubricants. It’s used in the semiconductor industry, solar power industry, and is even used in medical and dental applications. It’s also used as a pigment in glazes and enamels. Fuel cell energy is another industry where the use of tungsten is being explored.
As a miner of a key component in so many industries, Lewis Black has to keep his head on a swivel, watching how different industries perform and how local and global economies affect each industry where tungsten is used.
Modern WorkTruck Solutions recently chatted with Black, and he shared his insight and thoughts on the current economy and its effects on the industry and supply chain.
MWS: WHAT ARE THE CHALLENGES THAT AUTOMOTIVE AND ENERGY COMPANIES CURRENTLY FACE?
BLACK: There are a combination of factors playing into the challenges of industries today. Transport is currently a major issue with getting products from Point A to B through traditional methods like trucking or vessel. But the biggest problem industries are currently facing is inflation. Unfortunately the fear is that inflation will start to spiral out of control because no one is being truly honest as to what is fueling it.
MWS: WHAT HAS CAUSED THESE CHALLENGES?
BLACK: Everyone puts too much emphasis on political parties, but inflation isn’t occurring only in the United States, it is a global issue in every democracy worldwide. And it really comes down to a salient point: The first time in a generation, politicians globally had an opportunity to be heroic during the pandemic. But the effect of the political heroism was catastrophic. Economies were essentially closed down—but not completely. Many things were still operating, such as grocery stores and online shopping. Governments spent billions of dollars in stimulus to keep the economy afloat.
The introduction of this money fueled demand in goods from industries that were shut down due to the pandemic. This caused shortages of goods. Additionally, the extra money floating around in the system caused the value of money to decrease, which inevitably caused inflation. This inflation is essentially going to drive tens of millions of people into poverty through no action of their own.
The problem is that inflation seemed to be completely ignored by everyone—especially in Europe and the UK, the United States, Australia—they all looked the other way because there was no plan after locking everyone down and throwing money into the system. However, the consequences of these “heroic” actions have created the perfect storm to drive inflation. And once inflation begins to happen, it isn’t easy to address.
The most efficient way to address inflation, historically, is to raise wages. But on the other hand, raising wages puts a strain on businesses. And how can you raise wages right now? All the money distributed by governments was borrowed. So how can you service that debt as a country by raising wages to control inflation? I really believe this is the biggest problem, and it needs to be taken seriously.
MWS: IS THERE ANYTHING THE INDUSTRIES CAN DO TO EASE THE PRESSURE OF INFLATION?
BLACK: The energy and automotive sectors could decide to increase output and decrease demand by flooding the market with oversupply. Traditionally, that would bring prices down of those specific commodities, but ultimately it wouldn’t affect the other commodities because they aren’t in a position of oversupply. Also keep in mind, energy and oil is a little different because it is a raw material, whereas the automotive sector requires many other products to construct the vehicle. These products would all be affected by inflation, driving up the cost of vehicles.
The automotive and energy industries are both powerful lobby groups that have the ear of governments. Now it’s just going to take one smart person in the room to ask that this issue of inflation and supply chain is taken seriously—without putting blame on anyone. It’s going to require asking the question, “What are we going to have to do domestically and internationally to head this off at the pass?”
MWS: WHEN CAN WE EXPECT SOME RELIEF FROM SUPPLY CHAIN ISSUES?
BLACK: With our company, Almonty Industries, one of our major hurdles is shipping. Shipping is in total chaos. It’s difficult to find containers, and it’s difficult to get lead time for allocation on boats. With consumerism off the charts in North America, demand for Asian products is so great that the freight rates from China to the US have increased more than tenfold. Therefore, if you’re in the shipping business, you get as many vessels and containers as you possibly can and you work the route that will make the most money—which is currently the route from China to the US. But then again, the US doesn’t even have the capacity to take the amount of vessels coming to it or trucks to move the product once the vessel docks. So we’ll see a balance come soon.
That is just one example of the wrinkles that has occurred with the global economy returning to business. Not every aspect of the economy is returning at the same rate. There was no coordination between countries to shut down, and there was no coordination between countries to reactivate. So we’re reliant on the market to find a balance. I believe we’ll see that balance return in 2023. Because of that, I’m not much worried about the problems in the supply chain in the medium- and long-term. The market finds the solution, not other external groups. It will eventually balance.
MWS: HOW SHOULD FLEET OWNERS APPROACH THE SITUATION WITH INFLATION?
BLACK: Get ready. Before all of this is over, you’ll see more than the price of vehicles, parts, and fuel increase. You’ll also see an increase in insurance rates. Fleet owners will have to decide how to be as efficient as possible with the increase of rates across the board. Find ways to be as fiscally responsible with the truck to spread the costs, because costs will not come down anytime soon.
But the most important thing is not to panic. The market is much smarter than people give it credit for. It has a really great way of finding balance very quickly—that’s one of the joys of the free market. This will be a hard year, but we will get through it.
FOR MORE INFORMATION
Lewis Black is the director, president, and CEO of Almonty Industries, a global tungsten mining company. Find out more, visit www.almonty.com.