Minor Metals

In January 2015, Saudi Arabian company ACWA Power surprised industry analysts when it won a bid to build a 200-megawatt solar power plant in Dubai that will be able to produce electricity for 6 cents per kilowatt-hour.

Why Manufacturers Need to Ditch Purchase Price Variance

That price was less than the cost of electricity from natural gas or coal-fired power plants, a first for a solar installation. Electricity from new natural gas and coal plants would cost an estimated 6.4 cents and 9.6 cents per kWh, respectively, according to the US Energy Information Agency.

Technological advances, including crystalline silicon-solar photovoltaic panels can now convert higher percentages of sunlight into energy and have made solar panels more efficient. As a result, we may be seeing a long-awaited rise in the price of silicon used for the panels, microchips and semiconductors. The week's biggest mover on the weekly Renewables MMI® was the price of silicon, which saw a 7.4% increase.

Last week, manufacturer SolarCity began construction on a $900 million, 1 million-square foot PV panel factory in Buffalo, as well.

The price of silicon rose 7.4% on the renewables MMI last week.

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This week, the UK’s Metalysis and GKN Aerospace announced a bold, new process that’s a significant step forward in the adoption of 3D printing/additive manufacturing for aerospace. The advance will allow users to essentially sinter titanium from rutile powder, a process that previously could be accomplished with only lighter metals.

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The cost of the powder in 3D parts makes up roughly 50% of the final cost so a significant reduction in powder costs could be a major spur to the adoption of such technology in more applications and in industries beyond aerospace and medical devices, such as automotive.

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I always think it harsh, particularly for those of us sitting in northern Europe often under leaden skies, that the Middle East is not only blessed with vast reserves of cheap and easy to extract oil and natural gas, but even more limitless supplies of sunshine.

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When the oil runs out they will become the powerhouse of the world again, but this time generating electricity. True sandstorms in desert areas are a source of considerable maintenance and repair cost, but clearly aren’t a major hindrance as solar and wind farm investments have boomed in 2014 driven increasingly by economics, not subsidies.

Japan and China Investing in Renewables

After all the hand wringing we have done over the years about subsidies paid to wind farms, it comes as a welcome development to report that some 95 gigawatts of increasingly economic renewable generating capacity was created in 2014 at a cost of $270 billion, led by China and Japan who combined, invested $75 billion in solar power.

This is the largest level of new renewable capacity (not including hydro-electric) in one year, at least in terms of GW of capacity. The previous higher spending year, 2011, resulted in lower levels of installed capacity because costs were so much higher then.

Lower Costs

According to the Financial Times, equipment costs have fallen 75% since 2009 while large solar construction and connection costs have fallen by up to 65% in the last four years and solar panel efficiencies are rising making such projects increasingly attractive.

Thierry Lepercq, chairman of Solairedirect, a French company that has 57 solar parks built or under construction around the world said, “We’re generating power at lower prices than other energy sources in Chile, India and South Africa.”

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MetalCrawler brings you warning of more domestic steel producer layoffs and China released new rare earth quotas.

More Layoffs Coming

U.S. Steel Corp. could slash 1,400 jobs as it continues to grapple with a difficult market.

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The Pittsburgh-based company notified workers last week, mostly at plants in Texas and Arkansas, that they could be out of a job as early as June 17, U.S. Steel spokeswoman Sarah Cassella said Monday.

The potential cuts include 579 employees in Lone Star Tubular Operations; 166 in Offshore Operations Houston; 255 at Wheeling Machine Pine Bluff in Arkansas; and 404 managers throughout its tubular operations.

China Sets Rare Earth Quotas

China’s Ministry of Industry & Information Technology recently released rare earth production quotas for 2015.

Rare earth oxide (REO) mining quotas were set at 52,500 metric tons while smelting and separating limits came in at 50,050 mt.

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The Chinese economy is still posting slow growth and US rare earths producer Molycorp, Inc. signs a major new customer.

Chinese Economy Can’t Get Started

In the first quarter of this year, the Chinese economy grew at its slowest past since the first quarter of 2009, when the global financial crisis was at its height.

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That this slowdown has continued despite the fact that the Chinese government has enacted a number of large-scale economic stimulus programs in recent months reveals that the slowdown is, indeed, gaining momentum. Nearly all sectors of the Chinese economy recorded lower rates of growth in recent months, China may find itself forced to turn back to an economic model that is driven by exports rather than domestic consumption.

Siemens Selects Molycorp

Siemens AG has selected Molycorp, Inc. to supply rare earth materials over the next 10 years from its Mountain Pass, Calif., facility for incorporation into Siemens’ high-efficiency, direct drive wind turbine generators. Molycorp will supply raw rare earth materials to Shin-Etsu Chemical Co., Ltd., which will produce the rare earth magnets Siemens intends to utilize in its wind turbines.

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Last month we lamented the slow growth of both the US and international solar and wind power supply industries. While we can't report a great one-month turnaround, renewables were flat as a board again this month, incremental progress seems to picking up steam in local markets both here and abroad.

Flat? Steady? You Make the Call

The monthly Renewables MMI® registered a value of 61 in April, proving that one man's steady with March's value is another man's flat with March's value.

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While it might not be realistic to expect neodymium and solar silicon to trade into the higher ranges of our MMI reports, one would certainly think that increased adoption would lead to somewhat higher prices for mature technologies such as solar. While prices are not increasing for the base materials there were several positive stories about market-based solar technology adoption this month.

Texas Solar/Wind Power

In Texas, the city of Georgetown became the first city in the state to commit to receive its energy from 100% renewable sources by 2017.

In Georgetown, the city utility company has a monopoly and can choose the city’s provider like individuals elsewhere in Texas. When its staff examined their options last year, they discovered something that seemed remarkable, especially in Texas: renewable energy was cheaper than non-renewable. In February, city officials finalized a deal with SunEdison, a multinational solar energy company. It means that by January 2017, all electricity within the city’s service area will come from wind and solar power.

Last year Georgetown signed a 20-year agreement with EDF for wind power from a planned project near Amarillo, the deal with SunEdison takes the renewable elements of the city’s power supply up to 100%. SunEdison will build plants in west Texas that will provide Georgetown with 150 megawatts of solar power in a deal running from 2016 or 2017 to 2041.

India Solar

If a small city in Texas embracing renewables doesn't convince you the needle is moving, then perhaps bigger government-supported projects in India are what's needed to convince the skeptics.

In the build-up to India's government-sponsored RE-Invest 2015 conference, participating companies provided non-binding investment indications of 166-gigawatts of solar power generation capacity and five-GW-per-year solar manufacturing capacity.

SunEdison and First Solar committed to build more than 20,000-megawatts of clean energy capacity in India by 2022. SunEdison said it would build 15,200 MW of solar and wind power capacity by 2022, while First Solar made a commitment to develop 5,000 MW of solar by 2019.

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Rare earths got a spotlight this that's more often reserved for steel, renewables and other more flashy metals courtesy of CBS News' "60 Minutes.

Response has been mostly positive and the monthly Rare Earths MMI® registered a value of 29 in April, an increase of 3.6% from 28 in March. More importantly, shares of the only US-based Rare Earths producer, Colo.-based Molycorp, shot up as soon as the report aired.

Hype vs. Hope

Is this a sustainable trend? The trace metals that make up the rare earths group are not any more abundant or in demand than they were a few weeks and we're still not clear on exactly what China lifting its rare earth export quota system actually even means.

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Why all of the concern, all of a sudden, for yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium? We have documented, several times, that despite China's market dominance there is not yet a shortage of the elements that are used in everything from cell phones to fighter jets.

My colleague, Lisa Reisman, rightfully pointed out this month that, "the underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a 'not break the bank' price, the private sector remains content with the status quo."

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You know you are a metal nerd when you rush home from a family dinner and force your kids and your kids’ friends to watch a 60 Minutes segment on the state of the rare earths market!

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For those of you that may have missed Leslie Stahl interviewing MetalMiner friends and colleagues Daniel McGroarty and Ed Richardson last week.

The segment does a great job of highlighting the public policy issue at the core of the rare earth metals debate – that national security relies upon a raw material supply source provided exclusively from one nation – a nation that is not exactly Washington’s best friend – China.

That creates substantial risk for US security interests.

But the private sector appears to be not only a deer in the headlights, but dead at the wheel!

Why The Inaction?

The answer is actually quite simple. The underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a “not break the bank” price, the private sector remains content with the status quo.

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This week we examined several metal/currency movements which were not what they’d outwardly appear to be.

Free Download: Cut Your Zinc Shipping Costs

Whether it’s the supposed zinc deficit, the seemingly sharp fall of the US dollar or the USA dropping to fourth in steel production, our reaction was largely “We know better than to panic about that.”

All the more reason for you to trust MetalMiner for all your metals’ sourcing needs. We won’t steer you wrong 😉

Honey, I Shrunk the Zinc Deficit

This week, my colleague Stuart Burns asked where that supposed zinc deficit is? As recently as January major bank HSBC was insisting that the zinc market was in deficit. Even The World Bureau of Metal Statistics said in their February report that the zinc market was in deficit by 262,000 metric tons during the January to December 2014 period, compared to a 95,000-mt surplus for 2013.

Yeah, not so much.

Burns deftly explains how the London Metal Exchange’s Commitments of Traders Report (COTR) shows that longs have moved to shorts, suggesting not just that investors switched when they saw the prices fall, but may well have created the fall by bailing out of long positions they had built up in the expectation of supply shortages that were not materializing.

Stick with us and you’ll know which deficits and surpluses are real and which ones are phantoms.

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The new March 2015 edition of Roskill’s Rare Earth Report said that has said the global RE industry was expected to undergo “significant changes” by the end of 2015 as new sources of supply come online.

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According to a report by CBS’ “60 Minutes” about Rare Earths on March 22, the federal government, as well as manufacturers of everything from smartphones to fighter jets, are highyl concerned about the security of RE supply from China. Following the airing of the program, shares in Molycorp, one of only a few North American producers of REs, leapt 22% premarket on Monday, the morning after the program.

While China and some of the other Asian nations are either consolidating or finding new avenues for RE mining, non-Asian players such as Molycorp and Lynas Corp. are reportedly floundering. Molycorp just reported fresh losses, as reported by MetalMiner. It reported net revenues for the last quarter of 2014 at $116.2 million, a 6% decrease from the third quarter. Full year 2014 net revenues were $475.6 million, a 14% decrease as compared to 2013. A combination of low RE prices and a high debt burden led to the lowest stock prices in 2014 for Lynas.

Clearly, there’s major churn happening the RE world, from Pacific to the Indian Ocean.

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