Articles in Category: Minor Metals

India’s renewable energy sector just got bigger thanks to an investment from U.K.-owned CDC Group  of up to $100 million to support renewable energy projects.

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The announcement was made by the U.K.’s Secretary of State for Business, Energy and Industry Strategy Greg Clark at the inaugural India-U.K. Energy for Growth Dialogue in New Delhi on April 6. He also met with India’s Minister for Power, New & Renewable Energy, Coal and Mines, Piyush Goyal, to talk about large-scale, private sector investments between the two countries in the area of energy.

The two ministers agreed that on the power and renewables front, the focus will be on the introduction of performance-improving smart technologies, energy efficiency and accelerating the deployment of renewable energy.

For some time now, CDC Group Plc, the U.K. government’s development finance institution, has made its known that it seeks to set up its own renewable energy platform focused on the eastern part of India, and even neighboring countries such as Bangladesh.

The finance institution is contemplating leveraging its experience in running Globeleq Africa, a company in which it acquired a majority stake in 2015, for green energy investments in Asia. Globeleq has a 1,200-megawatt gren power generation capacity spread across Côte d’Ivoire, Cameroon, Kenya, South Africa and Tanzania.

As reported by MetalMiner, India aims to generate over half of its electricity through renewable and nuclear energy by 2027. The world’s largest democracy published a draft 10-year national electricity plan in December, which said it aimed to generate 275 gigawatts of renewable energy, and about 85 gw of other non-fossil fuel power such as nuclear energy, by the next decade. This would make up 57% of the country’s total electricity capacity by 2027, more than meeting its commitment to the Paris Agreement of generating 40% of its power through non-fossil fuel means by 2030.

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India has been taking massive forward strides in the renewable energy sector. Already, as per one estimate, it is set to overtake Japan as the world’s third-largest solar power market in 2017.  Taiwanese research firm EnergyTrend predicted that the global solar photovoltaic demand was expected to remain stable at 74 gw in 2017, with the Indian market experiencing sustained growth. The country was expected to add 14% to the global solar photovoltaic demand, the equivalent of the addition of 90 gw over the next five years.

This month, some of our metals reached new heights while others saw their rallies noticeably falter.

Aluminum and Raw Steels are still riding high, while complicated supply stories saw stainless and copper fall. Demand from manufacturers for almost all of the metals we track remains strong.

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17 Of the 18 manufacturing industries tracked by the Institute for Supply Management’s index of national factory activity reported growth and no industry reported a contraction last month. Buyers still might want to beware as metal markets are showing more pull-backs than we witnessed in March, despite the overall bullish behavior across the entire industrial metals complex.

China is now home to two-thirds of the world’s solar-production capacity.

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The efficiency with which China’s solar products convert sunlight into electricity is increasingly close to that of panels made by American, German and South Korean companies. Because China also buys half of the world’s new solar panels, the country now effectively controls the panel market.

Renewables MMI

A recent New York Times article details the meteoric rise of China’s solar industry and how its dominance in growing markets complicates the Trump administration’s attempts to cut down the U.S. trade deficit with China. China’s policy shifts and business decisions now have global impact on solar prices and production, particularly of crystalline polysilicon photovoltaic panels, everywhere else in the world.

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Now that China is cutting subsidies that it offers to panel manufacturers there, the ripples are being felt by installers in the U.S. and elsewhere. China’s solar-panel makers have recently cut their prices by more than a quarter, sending global prices plummeting. The NYT reports that Western companies have found themselves unable to compete. They have cut jobs from Germany to Michigan to Texas and the account includes the case of Russell Abney, a 49-year-old equipment engineer from Perrysburg, Ohio. The American panel manufacturer he worked for laid off Abney, among others, to remain competitive after China yanked its subsidies and manufacturers there lowered domestic prices to compensate.

If China’s dominance of solar panel manufacturing remains, able to move markets and cause layoffs worldwide depending on which subsidies are continued and which are scrapped, then the solar panel silicon market is likely to remain in the low-price rut we’ve documented in the Renewables MMI since 2012.

The Renewables MMI fell one point to 54 this month.

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U.S. Mining for rare earths is rapidly falling behind China, a trend that “limits our growth, our competitiveness and our national security,” Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R.-Alaska) said recently.

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According to the U.S. Geological Survey, imports in 2016 represented more than 50% of American consumption of 50 mineral commodities, a market valued at $32.3 billion annually. Of those 50, the U.S. was 100% import-dependent on 20, representing $1.3 billion. In 2015, the U.S. was half-dependent on 47 non-fuel mineral commodities and 100% reliant on 19 commodities.

Murkowski said at a committee hearing recently that this trend exposes the U.S. to potential supply shortages and price volatility, while also reducing international leverage and attractiveness for manufacturing.

Rare Earths MMI

“Instead of lessening our dependence, we are actually increasing our dependence,” she said. “We’re not making headway on this issue. … What are we doing wrong here?”

While Senator Murkowski’s comments are no doubt welcome by U.S. manufacturers who would love to source neodymium, scandium and other elements locally, a cursory look at our Rare Earths MMI shows that the supply situation is as much to blame for the lack of U.S. production as anything else, particularly among the heavy rare earths that most Chinese companies provide. Our Rare Earths MMI increased one point to a paltry 19 this month, its HIGHEST point since August of 2015. Ever since China banned export quotas of the key battery and magnet metals there has been plentiful supply and the low prices that come along with it.

Many smaller (some illegal) Chinese producers do not have the start-up costs that any Western rare earth producer does, simply because of lax regulation in that part of the world. That is changing, but the process is a slow one. Unfortunately for any prospective U.S. producers, the start-up costs situation is even worse when facing off against the larger Chinese rare earths producers. Some are state-sponsored and even the private ones enjoy subsidies at the state and national levels that no American producer could ever hope for.

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If Senator Murkowski and her committee want to promote the work of a U.S. rare earths miner (Molycorp, Inc. was the last active one and its Mountain Pass mine is up for auction after a bankruptcy last year), they should do what was promised during the election and roll back regulations that drive up startup costs for miners. It’s unlikely that a U.S. miner will ever face an even playing field with state-sponsored Chinese miners but right now, the tilt of it is so bad that many won’t even try. How bad is it? The company that holds the most promising identified deposit in the U.S. changed its name last year to downplay the fact that it plans to mine rare earths. Texas Rare Earths, which plans to mine a deposit in rural Round Top, changed its name to Texas Mineral Resources Corp.

The new name reflects a “significantly broader scope of Round Top projected output,” the company said in its release. What’s funny is one of the “broader” elements the release notes is scandium, which is generally considered a light rare earth element. It’s used the aerospace and automotive industries, particularly in aluminum alloys. Could it be that the rare earth “brand” is so damaged by abundant Chinese supply that U.S. companies are running away from it in their quest to draw investors?

Good luck with fixing the domestic supply situation, Senator Murkowski.

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NioCorp Developments Ltd. has successfully produced high-purity 99.9% commercial grade Scandium Trioxide from its Elk Creek, Ne., Superalloy Materials Project and the company has finalized plans for a proposed scandium purification circuit there.

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Niocorp also announced that it anticipates public release of the results of its Elk Creek Feasibility Study in the second calendar quarter of 2017. Following the release of the study, the company intends to intensify efforts to secure government permits and obtain project financing to prepare for the launch of construction operations in Nebraska.

NioCorp’s successful production of a high-purity commercial grade scandium, an element used to make superstrong and light alloys used in both the automotive and aerospace industries, was conducted at SGS Mineral Services lab in Lakefield, Ont., Canada. This is a major milestone in Niocorp’s plans to become one of the world’s largest producers of the high-value metal. A 99.9% purity level, otherwise known as 3Ns or “three nines” scandium, meets or exceeds the purity needed for the additive’s use in virtually all of its mainstream commercial applications, including ultra-high-performance aluminum-scandium alloys for the aerospace and automotive industries, in the solid oxide fuel cell industry, and in other defense and non-defense applications.

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NioCorp said in a news release that the test showed its scandium product meets or exceeds the purity specifications of all potential customers with whom it has been in discussions.

OPEC Output Cut Threatened: Saudi Arabia Demands Iranian Cut

Saudi Arabia may demand that Iran, which is allowed a slight rise in output under the Organization of Petroleum Exporting Countries’ deal with member-states and non-members such as Russia, commit to an output reduction as a condition of continuing the cuts, people familiar with the kingdom’s thinking told S&P Global Platts.

Rainbow Rare Earths, which owns a rare earths mining project in Burundi, was listed on the London Stock Exchange at the end of January, according to the Financial Times. This has prompted speculation in mining and trading circles that China’s dominance may finally be challenged. We’re not holding our breaths, and China likely isn’t either, but it wouldn’t be the first time that the abundance of resources in Africa had been underestimated.

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The U.S. Geological Survey said in 2015 that China’s annual production of the key battery, magnet and conductor elements was slightly more than 100,000 metric tons. Australia came in second with 10,000 mt. Only three other countries produce more that 1,000 mt of rare earths a year. The US produced 4,100 mt but that’s sure to go down after the 2016 closure of the Mountain Pass mine, Russia produced 2,500 and Thailand checked in with a respectable 1,100 mt contribution to the production of cell phones, military hardware and wind turbines.

Rare Earths MMI

The FT points out that despite China’s dominant market position in refined exports, the same is not true of rare earth deposits. It’s estimated that China has no more than 30% of global deposits of the quite abundant, despite their name, elements. The problem that all new rare earths projects run into is the cost of bringing new deposits into production and the ability of one country with such a dominant position to flood the market and bring down prices, hitting the viability of new projects.

What’s Left of China’s Previous Challengers

Remember what happened to Molycorp, Inc. and how the Japanese threw a lifeline to Australia’s Lynas Corp.? Yet, the fact that Lynas is still trudging along and investment is still being made by a Japanese government and industrial culture that wants nothing to do with China’s rare earths industry may, paradoxically, be what sets Africa apart and its low-cost resource sector apart from others who have taken on the dragon.

Japan was de facto banned by the Chinese government from receiving any shipments of rare earths back in 2011 after the Japanese Navy detained a China fishing trawler captain. Since then, Japanese industry has not only aggressively replaced rare earths in its supply chains, depriving China of customers, but also supported Lynas and other non-Chinese manufacturers even to the point of keeping them in business. There is little doubt that both public and private Japanese money would automatically flow into African projects if significant deposits of rare earths are found.

Grudge Match

That China has lifted export quotas and prices have fallen to a low range means little to nothing to Japanese businessmen and women who remember having their supply chains cut off in 2011.

According to the FT, it is widely acknowledged that, outside North America and Australia, southern and eastern Africa offer the greatest potential for rare earth production, especially in South Africa, Tanzania, Malawi, Mozambique, Kenya, Burundi, Zambia and Namibia.

Rainbow Rare Earths’ IPO is premised on its Gakara project in Burundi. The project is not yet producing and further exploration will be needed. The risks described in the IPO prospectus are a reminder of the difficulties of developing such projects, including pricing and environmental challenges and the need to produce ore at the required levels of concentration.

Rainbow raised $9.77 million (₤8 million) at its IPO.

The Rare Earths MMI broke eight straight months of flat performance and increased 1 point (5.9%) to 18 this month.

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We have long lamented that while solar energy production is a mature generation technology that should be used in nearly the entire U.S., the inability of our electronic grid in much of the country to store solar-generated energy limits its use to when the sun is shining. This almost always requires a backup (usually burning natural gas) for those hours when the sun does not shine.

Renewables MMIIt’s been a few years since we last talked about the baseline load problem that causes utilities that have abundant solar generation, particularly subsidized photovoltaic silicon panels on homeowners’ roofs, to bring energy costs down to zero during the day while the complete lack of generation at night forces them to give much of their short-term stored energy away before the sun goes down.

California Dreamin’: Solar for All

The Wall Street Journal recently reported that, stepping in where government and university research have failed to deliver solutions, for-profit California utilities — including PG&E Corp., Edison International and Sempra Energy — are testing new ways to network solar panels, battery storage, two-way communication devices and software to create “virtual power plants” that manage green power and feed it into California’s power grid. In California, real-time wholesale energy prices often hit zero during the day while the need for energy at night can spike them to as high as $1,000 a megawatt hour.

If California wants to stand as a land of free-flowing solar without even the need of the fossil fuel industries that the Trump administration says it wants to re-energize, then it will need a way to store its solar power, particularly if it wants to retire its last nuclear plant in 2025. Power company AES brought 400,000 lithium-ion batteries online last month in Escondido, Calif., (near San Diego) where Sempra plans to use them as a “virtual power plant” to smooth out its energy flows over the 24-hour service day.

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Electric car manufacturer Tesla, Inc. is supplying batteries to Los Angeles area network that will serve Edison International, to create the largest storage facility in the world if no one builds a bigger one by 2020 when it’s slated to be completed. The facility will be able to deliver 360 mw/h to the grid for a full day on short notice.

The 2,2000-mw Diablo Canyon nuclear plant is owned by PG&E, which wants to retire it by 2025 to meet stringent state energy codes as well avoid costly upgrades to the aging plant. Its first unit began churning out power in 1986 for the company then known as Pacific Gas & Electric.

Many utilities avoid building lithium-ion battery virtual plants because they remain considerably more expensive to build and set up than traditional power plants. California’s state laws make them more desirable there because of both environmental policies (read, climate change goals) and the regulatory hurdles and costs of just building a new plant in the Golden State. Of course, that hasn’t stopped the state from approving and building them, but the utilities that have shuttered plants early are now turning to the virtual plants to shore up their own bottom lines. PG&E Is testing batteries, software and several technologies to upgrade its grid and replace Diablo Canyon.

Intermittency, What is it Good For?

If Tesla, PG&E, Sempra and Edison can solve the grid intermittence problem in California then economies of scale could reduce the costs of virtual plants elsewhere and incentivize grid modernization via market prices rather than regulation. The costs of energy from a virtual plant will still likely cost more per mw/h than those of a new gas peaker plant, but only experimentation in cost reduction from actual working plants providing energy 24/7 can bring down those costs and deliver the innovation necessary to both optimize and right-size battery-based virtual plants. The utilities deserve praise from both customers and investors for boldly going where none have gone before. Once again, the market provides.

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The Renewables MMI inched up 1.9% this month in the very mature actual metals market.

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Investors are running up cobalt prices as automakers and suppliers stock up on the raw material for lithium-ion batteries as they prepare for an increase in electric vehicle production.

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Reuters reported that Shanghai Chaos Investments and Switzerland-based Pala Investments as two of the companies that invested heavily in cobalt last year, although the amount they’ve stockpiled is unknown.

On Dec. 1, cobalt was just around $30,000 per metric ton on the London Metal Exchange. As of Monday, one mt of cobalt was trading around $49,000. That’s an increase of 63% in three months.

Report: Trump Will Scrap EPA Clean Power Plan Next Week

President Trump is expected to issue orders next week that will begin the process of striking the Clean Power Plan and ending a moratorium on new coal mining on federal lands.

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The plan was largely opposed by manufacturers and metals producers. Its end will most likely bring a sigh of relief from utilities with coal-dominated generation mixes, as well, since they won’t have to alter their generation mixes within any deadlines.

We warned last month that the mostly small losses the prices our MetalMiner IndX experienced were caused by investors taking profits.

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Our suspicions were confirmed when almost all of our sub-indexes had big price rebounds this month. The Automotive MMI jumped 12.2% Raw Steels 8% and Aluminum 6%. Even our Stainless Steel MMI only dropped 1.7% and has taken off since February 1 as nickel supply is even more in question now with both the Philippines and Indonesia’s raw ore exports in question.

The bull market is on for the entire industrial metals complex. Last month’s pause was necessary for markets to digest gains but the strong positive sentiment for both manufacturing and construction shows no signs of ebbing in the U.S. and Chinese markets.

California’s Mountain Pass mine, the sole significant developed source for rare earths elements in the U.S., will go on the auction block in March, according to papers filed in late January in the U.S. Bankruptcy Court in Wilmington, Del.

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Up for sale is land and some equipment at the mine which cost former owner Molycorp, Inc. roughly $1 billion to develop, according to the court. Mineral rights at the site belong to an entity called Secured Natural Resources LLC, which is owned by creditors of Molycorp including JHL Capital Group LLC.

The open-pit mining operation was part of Molycorp’s plan to have both production and processing capability for rare earths, at a time when prices were high (early in this decade)… but as our Rare Earths MMI chart shows, prices have been flat for eight consecutive months now and low for much, much longer. The prices of the 2011 rare earths market, strongly affected by Chinese supply disruptions, appear to be nothing more than a distant memory at this point.

A switch in trade policy in early 2015 — prompted by losing a World Trade Organization case — ended export quotas placed on Chinese producers effectively killed any chance Molycorp had to compete based on costs of production. Molycorp’s rare earths processing business, with operations mainly in Asia, emerged from the bankruptcy as the core of a reorganized company, Neo Performance Materials, but Mountain Pass and its high cost of production were left behind in the reorganization.

According to the Wall Street Journal, a Swiss investment fund linked to Russian-born billionaire Vladimir Iorich is part of a buyout group that has made an offer to take over Mountain Pass. Pala Investments Ltd., Iorich’s investment firm, is a partner in a buyout group’s $40 million offer for the assets. Joining Pala is Novatrek Capital GmbH, a private-equity firm founded by Pala alumnus Joseph Belan, as well as Sole Source Capital of Los Angeles, according to filings with the bankruptcy court.

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Efforts to sell Mountain Pass out of bankruptcy had struggled because the mine carries with it national security concerns, due to its ability to produce rare earths for high-tech military equipment, and might catch the eye of international trade regulators. The Committee on Foreign Investment in the U.S., or CFIUS, is likely to take an interest in new owners, according to courtroom discussions during the bankruptcy case, the Wall Street Journal reported. CFIUS is an interagency body tasked with reviewing transactions that could result in control of a U.S. business by a foreign person to determine if the deal would have affect the national security of the U.S.

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