Articles in Category: Company News

This week, the reality of a hard Brexit sunk in across the pond in the U.K. and Europe. The instability that might follow after elections in other European countries in the coming months could create volatility in all commodities markets, not just metals.

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Here in the U.S., President Donald J. Trump was inaugurated today and promised “America first” in all the dealings of his new administration. In metals, this means that tariffs of 251% were confirmed on Chinese cut-to-length steel plate even before Trump even got into office. So, across the globe it looks like things are getting really, really populist. Is this good for metal prices?

Weaker Dollar

One thing that Trump has already caused, again before even being president, is a weakened U.S. dollar against other global currencies. Presidents and even presidents-elect usually refrain from even talking about the value of the currency because setting its value is seen as the job of the Federal Reserve and its chairman and the nation’s chief executive talking about the value of the dollar can cause volatile swings in the currency.

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Trump, though, as everyone should know by now, does not obey convention and freely told reporters that he would like a weaker dollar. This is actually bullish for the metals we track, but our Lead Forecasting Analyst, wrote this week that the dollar’s bull run may not be over, despite Trump’s wishes.

Populism in the Far East

Indonesia tried a protectionist raw ore export policy way back in 2014 and this week finally weakened it (a little) to allow some nickel ore out of the country on certain conditions. Ironically, the country that picked up the slack as the top Chinese nickel-pig-iron raw materials supplier after the Indonesian ban, the Philippines, now has its own wildly populist leader, President Rodrigo Duterte, whose fiercely environmentalist Environment Secretary, Regina Lopez, has cancelled six mine permits.

It’s going to be an interesting few years.

Even in today’s price competitive global market place there are a few industries in which the United Kingdowm can be said to punch above its weight. Automotive is one, it accounts for 10% of the UK’s trade in goods, and over 50% of UK manufactured cars go out for export.

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Defense is another. The U.K. is the world’s fourth-largest arms exporter after the US, Russia and China. But maybe the crown jewel of U.K. manufacturing is the aerospace sector. It doesn’t come much more value-add than aerospace and the U.K. ranks fourth in the world behind the US, Germany and France for export values. However, France’s numbers are distorted by the fact Airbus aircraft are receive their final assembly in Toulouse. So, although 75% of the aircraft is imported as major components — fuselage, wings, tail, engines, etc. — the total value of the aircraft is reflected in France’s export earnings even though most isn’t made there.

And therein lies the problem for the U.K. post-Brexit. The wolves are gathering around the gates slavering at the prospect that the majority of the citizens’ decision to leave the E.U. means the position of U.K. aerospace manufacturers in the Airbus supply chain is up for grabs.

According to the Financial Times, Airbus will face political pressure to bring jobs back to France, Germany and Spain as a result of the U.K.’s decision to leave the single market. BAE Systems has played a leading role in the development of wing technology, designing and manufacturing virtually the entire wing for Airbus’ super jumbo jet, the A380. But there has been a constant move by Germany to get as much wing work out of the U.K. because it is one of the most lucrative parts of the supply chain. The bottom skins of the wing for the new A350 went to Spain and Germany, both keen to secure further work as new models come up for bidding.

Last year, the U.K. aerospace sector grew by 6.5% to £31 billion ($38 billion) 87% of which was exported. The industry fears a clampdown on free movement of labor and political influence over trade regulations could combine to raise the cost of business for U.K. companies in the sector.

Although aircraft and their parts are exempt from tariffs under World Trade Organization rules, the FT reports there is a fear the competitors could encourage their governments to find loopholes during exit negotiations that would create barriers or raise the cost of business for U.K. companies. For Rolls-Royce, the U.K.’s premier aero-engine manufacturer, the major concern is that a block on free movement of labor would inhibit the company’s ability to move workers between Europe and the U.K. at short notice as production issues demand.

About a quarter of Rolls-Royce’s workforce is based in the E.U. outside the U.K. Despite the U.K.’s reputation for engineering excellence, the country is desperately short of engineers. As a result, the manufacturing sector has been at the forefront of lobbying government for exemptions to a blanket block on immigration.

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The future prosperity of U.K. manufacturing was probably not at the forefront of voters’ minds when they opted to leave the E.U., but if it is found that highly paid jobs are lost as a result of the U.K.’s exit from the single market, economic issues me yet come back to become a focal point in any post-Brexit analysis.

Remember that giant aluminum stockpile that sat in a Mexican desert for years before being transported to Vietnam recently?

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Why it has crisscrossed the globe remains a puzzle for American executives and investigators trying to unravel the logic behind its movements.. Now, a Dallas attorney’s correspondence suggests a surprising possibility: that the stash is Chinese billionaire Liu Zhongtian’s retirement fund.

Like all Chinese citizens, Zhongtian, the 52-year-old chairman of aluminum giant China Zhongwang Holdings Ltd., isn’t supposed to move more than $50,000 a year out of the Communist Party-led country. To get around the restrictions, Chinese nationals have used Hong Kong money changers to illicitly transfer cash between bank accounts, combined their $50,000 quotas to make large-scale transfers and even carried cash across borders in suitcases.

The Wall Street Journal reports that Zhongtian developed an industrial-scale approach involving boatloads of aluminum which he stockpiled with plans to sell the metal over time, according to the Dallas attorney’s correspondence and people who have worked for Mr. Liu whose accounts are supported by shipping and corporate records.

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Representatives of China Zhongwang deny that the stockpile is an attempt to move wealth out of China.

No greater debate has ever roiled our virtual pages than the one about Ford Motor Company and its use of the term “military-grade aluminum.” This post from last May is just one of several posts we have written about Ford’s ad campaign for the aluminum-bodied F-150 pickup and all not only rank high in our site stats but also seem to draw the most commenters willing to lend their expertise that, mostly, rejects Ford’s use of the term.

Enjoy this look back and feel free to post if you have any strong feelings about “military-grade” yourself as we look back at the year that was. — Jeff Yoders, editor

No term has brought up more discussion in the pages of MetalMiner than Ford Motor Company‘s insistence that the F-150 pickup truck is made of “military grade” aluminum.

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On this Memorial Day, we thought we’d revisit whether military grade was actually a specification or a simple marketing ploy on Ford’s part. Since the aluminum-bodied F-150 was introduced in the 2015 model year, more information about its actual construction has been shared by Ford.

Individual dealers are now touting the strength and research that went into the cab and other body parts of the F-150. “Military grade” is still sprinkled throughout the the video, but they also concede the alloy is also part magnesium and silicon. Ford also mentions that a large portion of the F-150 is, in fact, high-strength steel.

Ford has also admitted that the F-150 is primarily built from 6,000 series aluminum alloy, the strength of which is increased by heat-treating after it is formed.

The “military grade” refers to the specs that military applications of 6,000 series alloy is used in. In fairness to Ford, manufacturers and fabricators have been promoting their products as “military grade” for decades, and that’s really no different than Ford’s use of the term.

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We certainly wouldn’t recommend that anyone take an aluminum-bodied F-150 into a war zone to test just how “military grade” it really is, but, from a specification standpoint, Ford seems to have good reason to be proud of the rigor of the processes it uses to produce the F-150.

Indian-born metals tycoon Sanjeev Gupta seems to be snapping up metals fast, whether those investments are aluminum, steel or other producers. Gupta’s investments come as competition is shying away from investing in the U.K. steel and other metals businesses.

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Gupta recently announced that he would be investing $148 million (around £120 million) in Britain’s last standing aluminum smelter. Gupta’s Liberty House along with his father’s SIMEC business will be paying $371 million (£330 million) to buy assets that include the plant at Lochaber in the western Scottish Highlands and two hydroelectric plants that power it.

UK Aluminum

The plan is to upgrade the equipment and turn it into an aluminum wheel manufacturing facility. Gupta’s Liberty and sister company SIMEC are part of the Gupta Family Group Alliance (GFG) , and, according to a report in the London Telegraph, “the move is part of the parent group’s strategy  to build what it describes as ‘a competitive and sustainable metals and engineering sector’ in the U.K.”

The Scottish government has supported the acquisition and has guaranteed the power purchases of the aluminum smelter for the next 25 years.

Liberty supplies parts to the U.K.’s automobile industry with clients including Jaguar Land Rover. Lochaber, with a capacity of 47,000 metric tons, was put on the block by Rio Tinto under its plan to dispose of its non-core assets.

The deal will immediately safeguard the existing 170 jobs, generate another 300 jobs directly and about 2,000 direct and indirect jobs in the overall supply chain.

This deal marks one of the largest single investments made by the GFG Alliance. It also marks a major step in GFG’s plan to forge a sustainable metals and engineering sector in the U.K. by integrating the supply chain.

Other Acquisitions

Liberty has spent at least $618 million (£500 million) in the past year on acquisitions. In November, it had also signaled its intention to buy some of Tata Steel UK’s specialty steel business.

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The Telegraph says the purchase of various steel furnaces is part of Gupta’s larger plan to complete his “green steel” vision, where scrap steel is recycled in the U.K. market.

Well, Tata Steel works operations across the U.K. are safe, at least for now, following an agreement between the company and its unions last week.

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According to the BBC, almost 7,000 people are employed by Tata Steel across Wales, including more than 4,000 in Port Talbot. In a significant turnaround, the company has committed to keep both blast furnaces at Port Talbot operating for a minimum of five years. In addition, they have promised to invest $1.27 billion (£1 billion) over a 10-year period to support steelmaking at the site. Included in this investment, will be refurbishment of the number two blast furnace.

This steel plant at Port Talbot in South Wales, U.K., could close if Tata Steel can't find a buyer. Even as steel prices increased last week. Source: Adobe Stock/Petert2

This steel plant at Port Talbot in South Wales, U.K., has been saved by a new pension deal between Tata Steel and its union. Source: Adobe Stock/Petert2

Apparently, Tata has committed to a policy of avoiding compulsory redundancies for five years both at Port Talbot and across smaller steel plants the company operates in Wales. Needless to say, the announcement was met with enthusiasm by steelworkers and those in a supply chain estimated to be worth some $4.18 billion (£3.3) billion a year to Wales.

Why Reinvest?

So, what secured this remarkable turnaround? Was it a slashing of energy costs? A cut in fiercely criticized business rates? Barriers on the import of foreign steel or a government subsidy? No, apparently all it took was an agreement to replace the current final salary pension scheme with a defined contribution plan involving maximum contributions of 10% from the company and 6% from employees. Read more

The Chinese government is attempting to support domestic businesses by shoring up rare earths market conditions.

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This includes stepped up enforcement of environmental rules at rare-earth metal plants and crackdowns on illegal mining and smuggling.

Rare-Earths_Chart_December-2016_FNL

Beijing carried out a series of spot inspections on environmental measures at factories last summer. Teams of experts tested wastewater and examined pollution-reduction measures at rare-earths smelting and separation plants. Operations at facilities that did not meet standards were suspended.

Those inspections covered a total of eight provinces and regions, such as Inner Mongolia, Heilongjiang and Jiangsu.

Japan is still wary of Chinese production due to a 2011 unofficial boycott of selling raw rare earths to the islands by Chinese producers. So much so that the Japanese have taken an interest in keeping Australian rare earths miner Lynas Corp. alive and helped it restructure its debts last month.

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The Rare Earths MMI did not move for the sixth consecutive month, showing just how much the market has stabilized since the last China-Japan rare earths dust up.

Correction: A previous version of this post referenced a patent expiration this month for neodymium and cobalt motors. That patent expired in 2011 and was later rejected outright. We regret the error.

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Should we live like wookiees?

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Well, maybe not EXACTLY like Han Solo’s best pal, Chewbacca, but live in tall, wooden structures?

Wookiee Cultural Center

A wookiee cultural center nestled deep in the trees of Kashyyk. Why don’t we get Pete Nelson to design treehouses for all of us? Painting by the incomparable Ralph McQuarrie. Source: Lucasfilm.

Wookiee civilization, as depicted in the “Star Wars” films, is an advanced, highly sophisticated one. The ape-like humanoids have all of the intelligence of the human characters in the movies, save the ability to vocalize and speak in a language that isn’t moans and growls. Read more

The copper market will go into deficit by 2020, just when Rio Tinto‘s, extension to the Oyu Tolgoi mine in Mongolia comes online, the company said on Tuesday.

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The Anglo-Australian mining major gave approval in June for a $5.3 billion expansion of Oyu Tolgoi, one of the world’s largest copper mines and a project central to the major’s efforts to become less dependent on iron ore.

Traders Still Skeptical of OPEC Output Cut

The Organization of Petroleum Exporting Countries‘ output set another record high in November, rising to 34.19 million barrels per day from 33.82 million bpd in October, according to a Reuters survey.

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Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma.

No sooner than when Indiana-based manufacturing company United Technologies announced it would keep 1,000 jobs in the state last week — after it had initially planned to move 1,400 jobs to Mexico from its Carrier division — than 538.com almost immediately chimed in to say how it “was not the way to save U.S. jobs.”

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The Washington Post warned “beware of Donald Trump’s con” and that Trump can’t “turn back the clock on decades of automation.”

factory manufacturing

Isn’t it time to remind companies about the benefits of keeping manufacturing jobs in the U.S.? Source: Adobe Stock/Anastasia Usoltceva.

We here at MetalMiner have been on the automation beat for quite some time and, while it’s true that the Carrier deal won’t end automation, we fear that some of our media colleagues may not be seeing the full picture here, either. We talked to Harry Moser, founder of the Reshoring Inititiative, for a different perspective on what this kind of deal means for American manufacturers. Read more