Russian roulette

Jonathan Webb

currently dominated by China and Russia.

Currently, China supplies in excess of 90% of rare earth metals consumed by European industry – the latest European Union figures illustrate that Russian rail lines continue to be a busy route and a key component of Beijing’s Belt and Road initiative.

European governments recognise just how crucial the Russian rail freight network is to the West's by sanctions, goods can still be impounded at the borders with Europe if Custom officers believe any tampering has taken place during the journey – such as swapping Chinese goods for Russian ones. After being sealed in China, the goods must travel through Russia and be verified as intact by European Union officers. One example of potential problems would be if a company buys Chinese coal and it unknowingly gets swapped for Russian economy and last July the EU clarified that freight passing through Russia is not subject to sanctions.

Away from the transport of rare metals – rail transport via Russia to Europe has suffered to some degree or other. Most of this decline is put down to nervous European companies, with both BMW and Audi having ceased sending their cars by rail to China. Although westbound consignments can still travel from China via Russia, unhindered coal during the journey. The customer would be prevented from moving that coal out of Russia, to their coal-fired power station in Europe. Such an incident would prove to be very costly.

Rare earth metal lanthanum is commonly used by western arm manufacturers to produce armour-piercing ammunition. Tungsten, another rare earth metal is used in the production of anti-tank weapons made by Thales Air Defence Ltd. and

Rheinmetall AG . The majority of both metals imported into Europe, have been mined in China.

European vulnerability

The war has exposed the West's supply chain vulnerability by revealing just how dependent Europe is on Russia's rail freight corridors in regard to shipping goods from China. Although the amount of China -EU freight passing through Russia amounts to just 3-4% overall – this being a tiny fraction when compared to the amount of freight using ships, rail is significantly faster than moving goods by sea. For example, a freight train from Wuhan, China can cross Russia and arrive in Duisburg, Germany in just 16 days. To make the same journey by boat would take twice as long.

There are a number of route options for trains travelling between China and Europe. Since 2016, the northern rail corridor had seen tremendous growth, with the equivalent of 692,500 20 feet containers being conveyed in 2021. As can be expected, the Ukraine conflict resulted in a rapid decrease of goods carried, with only 187,000 conveyed between January and April 2022.

There are alternative middle and southern rail corridors, but these have capacity constraints –making them unsuitable to absorb any extra traffic that would be displaced from the northern corridor. Such limitations are of no immediate concern, as the freight traffic is not subject to EU sanctions. However, should hostilities escalate, problems could arise in the medium to long term.

Overlapping supply chains regarding adversaries is nothing new. During World War II Japan imported scrap metal from the United States, for use in its ship building – many such vessels going head-to-head with American ships. Soviet metal assisted the west during the Cold War by helping produce weapons aimed at Moscow.

Painful revenge

Russia could exact a painful revenge. If Russia feels backed into a corner by the western armed Ukraine (one has to remember that Ukraine is en- tirely reliant on western money and arms), it would be logistically sensible for Russia to either increase the costs for European bound goods using its rail network or, a take a more extreme course of action and block the 15 European-bound wagons that use the route most days.

The latter course of action would devastate the west's military strategy and put Russia on the front foot against a weakened Ukraine. Chinese mined tungsten accounts for more than 83% of world production – disruption would leave western economies in disarray. Away from military use, the rare earth metal is used in batteries, magnets and microchips etc. Two thirds of the world's known reserves are controlled by either China or Russia and, according to Tungsten West PLC, soaring demand is being driven by "defence spending fuelled by the Ukraine and Russia conflict”. The company is in the process of attempting to open a Tungsten mine in England later this year.

Taiwan conundrum China's metal supplying role in the Ukraine war has the potential to spill over into other areas of American foreign policy. As we can see, the west, especially America, is heavily reliant on Chinese metals. This puts America at the centre of a conundrum regarding the threatened invasion of Taiwan. Would it risk losing access to such a precious resource, in an effort to defend Taiwan?

The Ukraine war could drag on for years and with China stating that it intends to invade Taiwan by 2027, could America supply arms on two fronts, even if it wanted to?

NORFOLK Southern partnered with 120 companies to facilitate 159 industrial development projects in 2022. The projects expanded operations or created new facilities along the company's rail network. Collectively, they represent $3.2 billion in investment and the creation of more than 3940 new jobs.

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Strong project pipeline

Norfolk Southern has a strong project pipeline of customer initiatives in 2023 and beyond. These include 33 companies that have announced plans for a new production facility or a significant plant expansion along Norfolk Southern's rail network – or with one of Norfolk Southern's short-line partners. The announcements represent $30 billion in projected investment and are prime opportunities for business development. For example, in May of 2022, Hyundai Motor Group stated plans to invest $5.54 billion in Bryan County, Georgia for its first fully dedicated electric vehicle and battery manufacturing facility.

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Customers that NS provided industrial development support to included:

Commercial Metals Company, as the company invests $450 million in Berkeley County, West Virginia for a new rebar steel mill.

Packaging Corporation of America

(PCA), as the company invests $440 million to produce linerboard used for corrugated packaging in Jackson, Alabama.

Mark Anthony Brewing, as the company invests $400 million in a new state-ofthe-art brewery and production facility in Richland, South Carolina.

NewCold, as the company invests $333 million in building and operating an advanced, large-scale distribution facility in McDonough, Georgia.

CONSOL Energy as the company invests $100 million to open the Itmann Preparation Plant in Itmann, West Virginia, to produce premium, low-vol metallurgical coking coal to serve the domestic and international steel markets.

Fairwinds Landing as they invest $100 million in Norfolk, Virginia to transform Lambert's Point Docks into a maritime operations and logistics center that supports the offshore wind, defense, and transportation industries.