Public Policy

It is one of those delicious ironies of life that India, the world’s largest consumer of gold, has very little to show when it comes to actually mining the yellow metal.

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That’s poor form because India sits on very large resources of gold, revealed by several geological studies in the past. One such study pegged India’s primary gold resources at about 491 metric tons. Despite its 6,000-year mining history, the country mines just around a pitiful 25 mt of gold annually.

Imports Flourishing

India is one of the biggest importers of gold, despite a punitive 10% import tax. In the financial year ended March 31, gold imports had touched 900 mt, up 36% from a year ago.

Perhaps keeping all this in mind, and the fact that gold mining could mean earning some big bucks, Western Australia recently expressed interest in developing gold mines in India, as part of the bilateral cooperation in minerals and energy sectors between the two nations.

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The big news in metals this week was China’s economy growing at the slowest rate since 2009. If our bearish markets are to turn around this year, it would appear they’re going to have to do it without help from the world’s second-largest economy.

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But that’s not all that we learned from China this week. In many ways, China doesn’t really look like an economy growing at even 7%, with exports plunging in March, power generation dropping 3.7%, and a host of other indicators pointing to sluggish growth. This is bad because the most of the demand for our metals is based on China at least maintaining 7.5% economic growth. In today’s world economy, if you’re not growing, you’re dying.

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Fresh MetalCrawler news today on the US housing market, China's attempt to restructure its economy and a short-term fix to fund the Highway Trust Fund.

US Housing Starts Disappoint

US housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economy could struggle to rebound from a soft patch hit in the first quarter.

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There are expectations growth will rebound in the second quarter, but Thursday's lukewarm data suggest the momentum will probably not be strong enough for the Federal Reserve to start raising interest rates before September.

Controlling The Chinese Slowdown

Beijing's efforts to wrestle China's growth model from its investment and credit-fueled addiction to a more sustainable long-term footing, as well as to clean up the environmental damage wrought by decades of industrial pollution, is predictably slowing growth there. The difficult task for Chinese leaders will be to control the slowdown of the world's second-largest economy among calls for stimulus and government help.

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The US ranks 41st in the world in terms of the ease of gaining federal permits to proceed with construction or infrastructure projects, according to the 2014 World Development Indicators‘ Ease of Doing Business Index.

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Philip K. Howard of Common Good, recently discussed with us how permitting, not funding, is the biggest obstacle to renewing and replacing the nation’s crumbling infrastructure.

A Chief Permitting Officer

Senators Rob Portman (R. – Ohio) and Claire McCaskill (D. – Mo.) have introduced a bill that requires the first chief permitting officer for federal agencies. The bill would impact projects that cost more than $25 million and receive federal dollars, which includes most interstate roads and bridges. However, it does not give the new CPO the right to force individual agencies involved with projects to make decisions or move forward on projects in a timely manner.

“It’s a multi-headed federal bureaucracy that we have,” Howard said. “The problem with their bill is the CPO doesn’t have any authority. He can’t lean on one unreasonable agency if it’s holding up a project. There needs to be a dialectic here. If any one of 19 different agencies involved (in the Bayonne Bridge project in New Jersey) decides it’s going to dig in its heels in, there is no alternative but to give in to what they want. That feeds the paralysis. There needs to be a presumptive authority somewhere. There needs to be someone who can cut through that. If that authority is too high-handed that won’t work, either. You want an incentive for everyone to be reasonable and agree to make decisions within a reasonable timeline.”

In countries that rate higher on the Ease of Doing Business Index, interstate road or bridge projects there is a permitting officer or a department designated as the one stop for permitting and review. You can’t ignore it. There is an internal mechanism where agencies inside the permitting process can, essentially, complain if their concerns are being ignored by the overseeing agency and its CPO.

“If the question is the adequacy of environmental review, the decision maker to draw the line on that would be an environmental official,” Howard said. “If it’s a powerline running through several states, it should be the agency responsible for the adequacy of the power grid.”

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Ontario, Canada just decided to undertake a cap-and-trade approach in reducing their greenhouse gas emissions, joining its Frenchier neighbor Quebec and the US state of California under the so-called Western Climate Initiative and its cap-and-trade program, to invest further in a green future.

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It remains to be seen how Canada’s oil sector – and a host of other industrial sectors, especially those with operations in Ontario – will fare under the cap-and-trade scheme.

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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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Oil prices went up today. Tariffs were also placed on durable steel containers in today’s MetalCrawler.

Crude Oil Rising

Crude oil rose today after a forecast that US shale oil output would record its first monthly decline in more than four years and also on tensions in Yemen, where top oil exporter Saudi Arabia is embroiled in a civil war.

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Brent crude was up 32 cents at $58.25 a barrel this morning, while US crude was up 57 cents at $52.48.

The US Energy Information Administration (EIA) said on Monday it expected US shale production to fall by 45,000 barrels per day to 4.98 million bpd in May.

Shale production has helped boost US oil output by more than 4 million bpd since 2010 and has been a key factor behind the collapse in world oil prices over the last year. A collapse in oil prices from above $115 a barrel last June has now begun to hit exploration.

Commerce Places Tariffs on Shipping Containers

The Dept. of Commerce determined that imports of steel shipping containers from China have been sold in the US at dumping margins ranging from 107.19% to 111.22%. Commerce also determined that imports of containers from China have received countervailable subsidies ranging from 17.13% to 28%. The products covered by these investigations are 53-foot domestic dry containers, which are durable, reusable, weatherproof, closed van containers approximately 53 feet in exterior length, designed for the intermodal transportation via container ship, rail or trucking. Wisconsin-based petitioner Stoughton Trailers LLC filed the initial complaint against the Chinese manufacturers.

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Investments in automotive aluminum keep popping up in MetalCrawler.

Constellium Expands Plant

Aluminum manufacturer Constellium recently said it has invested $40 million for a 210,000-square-foot expansion of its Detroit are plant to meet the increasing demand for aluminum by automotive manufacturers.

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Constellium has hired nearly 200 additional workers at the Van Buren site and will employ a total of 370 there after it hires about 20 additional workers.

Freeport Plans to Expand

Freeport McMoRan Inc. is expanding and that has it poised to become the world’s biggest copper producer at a time of slowing China growth.

The Phoenix-based company will close the gap with current world No. 1 Codelco next year after expanding mines in Peru and the US and as the Chilean state-owned company runs out of profitable ore at a mine in the Atacama Desert.

US Dollar Climbing Again

Gold eased Monday as the US dollar gained ground against other currencies, sapping foreign investors’ interest in the dollar-denominated metal.

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While India’s recent growth has helped propel sales and exports of steel, the federal government here wants to maximize returns by creating a favorable atmosphere for research and development.

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As many as seven steel majors joined hands with the Ministry of Steel on Wednesday to set up a Steel Research and Technology Mission (SRTMI) in the Indian capital of New Delhi. The Steel Authority of India Ltd. (SAIL), Tata Steel, JSW Steel, Jindal Steel and Power Ltd., Rashtriya Ispat Nigam Ltd., the National Mine Development Corporation and MECON Ltd. are the first to join the project that many analysts say marks the start of a new chapter in steel research and development in India.

New Legislation

The government is considering introducing a bill in Parliament in the next session for the creation of an educational institute under the Ministry of Steel, on the pattern of India’s famous Indian Institutes of Technology, where students are able to formally learn and undertake research programs on steel.

The institute may offer graduate, post-graduate, doctoral and research programs. This is line with the recommendations of a ministerial committee instituted in 2014 that recommended such an institute to ensure a stream of knowledge workers for the domestic steel industry.

The planned outcome of these efforts goes beyond the quality of finished steel, too. The initiative is being taken, also, to find innovative uses for steel and create entire new fields of employment for India’s youth.

Investment in Research

Speaking at the signing ceremony involving the seven steel majors in SRTMI, Steel Minister Narendra Singh Tomar said the joint initiative of the steel industry and the government would also help it play a major role in new employment.

This industry-led initiative will promote collaborative research programs in the steel sector and aims to increase investment in research and development in the steel sector from the present level of 0.2-0.3% of turnover, progressively toward the international benchmark of 1-2% turnover.

The initial approximately $32 million (about Rs 200 crore) for the creation of the SRTMI will come in equal contribution from the Steel Development Fund of the Ministry and the participating companies.

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A three-nation trip by Indian Prime Minister Narendra Modi – to France, Germany and Canada – begins April 14, but metal analysts here are focusing on the Canadian leg. They expect India and Canada to sign a commercial deal for the supply of Canadian uranium for India’s nuclear power plants during Modi’s three-day visit.

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In 2010, Canada and India signed a civil nuclear cooperation agreement, followed by another agreement in 2012. Since then, Canada’s main uranium supplier Cameco has been in talks with Indian officials about supplying uranium to India. Diplomatic circles of both nations expect the deal to be sealed when Modi visits Canada next week.

Canadian Uranium

Modi dropped several hints about the deal in his Facebook posts. He said India was looking into resuming its civil nuclear energy cooperation with Canada, especially for sourcing uranium fuel for nuclear power plants. Canada, incidentally, was the first country to have completed all the formalities for civil nuclear cooperation with India in 2008. Canada sits on vast uranium reserves, and is one of the largest uranium producers in the world.

On this front, Canada, too, has been making overtures in the last few years. Late last year, Brad Wall, Premier of the province of Saskatchewan in Canada, let it be known that he was discussing sale of uranium to India along with proposals for partnering with India in clean coal technologies.

In fact, going by media reports here, Modi’s focus on this three-nation foreign tour will be garnering investments in energy, security, space and military sectors, under his favorite project’s mantle – Make in India.

One report also suggests that problems related to nuclear liability will be discussed by Modi and his French counterpart, President Francois Hollande. French company Areva is involved in the 9,900-megawatt Jaitapur power plant project in India.

In recent times, India has been bullish on acquiring fuel for its reactors, and Modi’s European and Canadian trip will only serve as one more opportunity for that.

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