Industry News

Any OEM or supplier currently purchasing tin, tungsten, tantalum or gold must now demonstrate via a third party audit that it (and its supply chain) does not source these metals from the DRC. The legislation, passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, will likely impact at least 1200 companies that already must comply with SEC regulations, and will now have to also file a Conflict Minerals Report. Experts suggest that for a second group of companies — suppliers to SEC-regulated companies — the number impacted could reach 12,000.  The legislation requires the use of private sector independent auditors. In short, the law “is aimed at conflict materials that are incorporated into a product necessary to the functionality or production of a product.

The SEC has announced it will publish the final rules on April 15. MetalMiner will continue to publish information regarding the legislation and how companies can comply.

In the meantime, feel free to download the MetalMiner Conflict Minerals Legislative Guide to learn important details not mentioned above.

Please review our General Disclaimer for additional details on how we use your information.

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Looks like there’s quite a development in US-China trade relations this week, as we continue to learn more about how the WTO ruled in an anti-dumping case that has a history all the way back to 2007 bottom line, the news is not so good for the US. Ultimately, this anti-dumping ruling could be another hit to the US economy amidst what is seen by many as a broken trade system.

The WTO’s appellate body, composed of the seven people who hear appeals from reports issued by panels in member-country disputes, ruled on March 11 that the US had unlawfully imposed anti-dumping and countervailing duties on Chinese steel in 2007 namely circular welded carbon quality steel pipe (“CWP) and light-walled rectangular pipe and tube (“LWR). (The US also slapped higher duties on woven sacks and car tires.) The tariffs ranged up to 20 percent on these items, and the Commerce Department’s (USDOC) case for imposing the duties rested on the fact that China operates as a non-market economy. According to the China Economic Review, China based its appeal on the claim that the US couldn’t impose “two different classes of duties – antidumping and anti-subsidy – on the same goods.

The ruling panel dissected that particular claim, calling it “double remedies, according to the dispute settlement page on WTO’s Web site:

“The Appellate Body completed the legal analysis and found that, by declining to address China’s claims concerning double remedies in the four countervailing duty investigations at issue, the USDOC had failed to fulfil [sic] its obligation to determine the “appropriate amount of countervailing duties within the meaning of Article 19.3 of the SCM [Subsidies and Countervailing Measures] and that, therefore, the United States acted inconsistently with its obligations under Article 19.3.

(To be clear, the term “double remedies doesn’t simply refer to the fact that both an anti-dumping and a countervailing duty are imposed on the same product; but instead to the circumstances in which the dual imposition results in the “offsetting of the same subsidization twice.)

But the biggest sticking point was the fact that the USDOC pursued its anti-dumping impositions based on classifying China as a non-market economy (NME). According to a Reuters piece republished by Business Day, keeping tabs on the domestic prices (of steel, for example) of a state-controlled economy such as China’s is much murkier than for regular market economies. Selecting surrogate prices, a contentious practice, is what the USDOC has been forced to do and obviously this has backfired. This treatment by the USDOC contradicts an earlier promise by the US to recognize China as a market economy (recognition that the WTO doesn’t give China until 2016).

Industrial metals are still at the center of most cases (the base metals sector accounted for the greatest percentage of new initiations and new measures applied, according to a WTO report at the end of last year). The US imposed new duties on oil country tubular goods stainless alloy products used for drillpipe, casing pipe and tubular applications in the petrol industry and prestressed concrete steel wire strand from China in the first half of 2010.

To have the WTO rule against the US in this case is certainly a blow, mostly in that it ostensibly gives credence to China’s nebulous mix of government and business or, more aptly, government-controlled business which is ever-harder for free trading economies to combat. While MetalMiner tries to avoid out-and-out China bashing, it would seem that it’s only getting tougher to level out the playing field between these two trading partners. Seems like 2016, as far as WTO equanimity is concerned, can’t get here fast enough.

–Taras Berezowsky

The rising cost and increasing scarcity of good coking coal supplies are pushing both mining firms and steel makers into competition with each other for the remaining resources in some pretty remote locations. Witness the fierce battle unfolding in Mongolia, where miners like Vale and Xstrata are competing head to head with steel makers like ArcelorMittal and Posco. Throw in various consortiums or trading companies and even the Russian Railways and utility firm Korea Resources Corp. and you have a pretty eclectic mix of bidders!

At stake is reported by Reuters to be the largest untapped coking coal reserve left in the world. Mongolia’s Tavan Tolgoi is estimated to hold some 6 billion tons of coal including coking coal and high-grade thermal coal. Tavan Tolgoi is only 270 kilometers from the Chinese border, although that is still a long way from any major steel manufacturing locations; China is generally considered the most viable market for Mongolian coal. Indeed, the country is already the No. 2 supplier of coking coal to China behind Australia, exporting 16.6 million tons last year, up nearly threefold from 2009 and just 2.5 million tons in 2005. Tavan Tolgoi, in Mongolia’s south Gobi region, consists of six coal fields and Tsankhi (the project currently up for bidding) is the main one, containing most of its coking coal resources. This first phase will add 15 million tons of coal per year to Mongolia’s total production, eventually rising to 30 million tons by the middle of the decade.

Coal is just part of Mongolia’s massive mineral wealth; others include iron ore, copper, gold etc., drawing increasing attention from resource hungry consumers and mining firms. The challenge for all of them is infrastructure. To put it simply, there isn’t any. Rail lines are very limited and roads even more so. Any successful bidder will have to include infrastructure as part of their development costs; consequently, estimates of this first stage project at Tsankhi are in the region of US $7.3 billion, according to one of the South Korean bidders quoted in the article.

Since the 1990s, Mongolia has adopted a largely democratic system and in recent years has begun to open up its economy to foreign investment. Inevitably, for what is in modern legal and voting terms a young country (although millennia old culturally), the challenge will be making the most of these natural resources while keeping the insidious forces of corruption at bay. Parts of Africa are an example of what can go horribly wrong when the curse of mineral riches is the only source of income. Let’s hope for our future security of supply and the well-being of the people of Mongolia that the next decade sees a sharing of the spoils and sympathetic exploitation of one of the last true wilderness regions of the world.

–Stuart Burns

The impact of the 8.9-magnitude earthquake in Japan undoubtedly has had — and will continue to have — broad ramifications across commodity markets, currency markets and stock markets, not to mention the bigger story involving radiation leaks from two nuclear plants (which we will cover in a follow-up post). In the meantime, we’ll attempt to cover a few angles with regard to this earthquake and tsunami as they specifically relate to global metals markets. We’ll examine both individual metal sectors and suggest readers take a look at Spend Matters’ accompanying coverage of the earthquake from a strategic sourcing perspective.

Based on our rather cursory analysis, we believe steel, copper and zinc production warrant the closest examination based upon Japan’s market share for each of those three metals. Japan remains a primary importer of key rare earth metals and does not produce much if any primary aluminum.

Let’s turn to steel. Japan produced nearly 90 million tons of steel in 2009. The country boasts two mills in the world’s list of top 10 steel producers – JFE and Nippon Steel. According to Friday’s Wall Street Journal, Tim Hard of The Steel Index has said, “five major steel mills have halted production including Nippon Steel Corp.’s Muroran and Kimitsu works, JFE Holdings Inc.’s Chiba and Keihin plants and Sumitomo Metal Industries Ltd.’s Kashima works in Tokyo Bay–have sustained structural damage and their port facilities are inoperable. However, JFE’s two plants should come back on-line over the weekend. Nippon has also come back on stream, though one plant in northern Japan remains down, according to a Reuters story. The article goes on to discuss the potential impact of these closures on the sea-borne iron ore market as being somewhat minimal. We’d concur, but the impact of these production shut-downs could have many more serious long term ramifications as these firms produce a broad range of steel products, including very specialized products such as ECCS (a tinplate-derivative steel) and various other electrical steels along with galvanized steel, as examples. The two JFE plants, Chiba and Keihin, produce 8 million tons of steel annually. Sumitomo Metals currently has two blast furnaces down due to a fire at its Kashima facility.

In terms of copper production, though Japan does not have any copper mines among the “Top 20, according to The World Copper Handbook from the International Copper Study Group, Japan has the second-largest copper smelting capacity (2009 figures) with an 11 percent share after China’s 24 percent share of world copper production. According to an article from Reuters, Japan would have produced approximately 1.6 million tons of refined copper this year, or 7.6 percent of world output. Though the article speculated that most of Japan’s copper production escaped serious damage, two operations — one with 250,000 tons of capacity at the Onahama plant and an operation with 217,000 tons of capacity, Hitachi (both owned by Pan Pacific according to the story) — could be at risk. The Reuters article stated the Hitachi plant had stopped operations due to a power outage. In addition, Mitsubishi Material suspended operations at its Onahama copper smelter also because of a power outage.

Zinc production at Japan’s largest producer of the refined metal also closed its operations at its Hachinohe zinc smelter, according to the Reuters article. That plant produces 112,000 tons per year. Ironically, another report released in January of this year indicated the plant would be come off-line anyway from March 15 May 15 for planned maintenance (the company may have more than planned maintenance to manage). Japan represents the 29th largest country by zinc production, approximately 5 percent of annual world output with a total of 670,000 tons produced annually.

With the closure of four plants at Nissan, production stoppages at six Sony plants, three auto supplier plant shutdowns impacting Toyota, a production stoppage at three of Honda’s plants, all production stopped for Toyota along with power outages affecting companies such as GlaxoSmithKline, Sapporo Breweries and several others, we’re sure to see additional supply chain volatility.

–Lisa Reisman

Three years ago, Zycus, one of the top sourcing / procurement software providers, asked MetalMiner if we would like to participate in a Purchasing.com webinar on Total Landed Cost. As strategic sourcing consultants engaged in metals-based projects and as former traders, we have learned some lessons the hard way over the years and thought why not share some of our internal models with a manufacturing/metal-buying audience? Little did we know how popular a webinar this proved to be, generating more than 1300 registrants and 900 live attendees. But as much as metal-buying organizations seek to understand price direction and market intelligence for the specific metals categories they purchase, so too must they have the tools, resources and infrastructure to support optimal sourcing strategies.

What do we mean by the tools, resources and infrastructure need to support optimal sourcing strategies? Zycus has built its reputation for customer responsiveness and ease of use with software solutions that enable organizations to “quickly find savings and compliance opportunities and strengthen spend statistics. From a MetalMiner perspective, we know the importance of identifying the external factors that impact major metals spend categories, but taking that external data and applying it internally requires more than just a decent steel price forecast. Zycus has provided these types of solutions with a major aluminum smelter as well as industrial products manufacturers such as GE (for an automated UNSPSC classification engine) and Modine.

Zycus, along with fellow lead sponsor Nucor, has already provided MetalMiner with the opportunity to engage its audience in a variety of new formats. For example, just a week ago, we conducted our first live/video conference, International Trade Policy Breaking Point (with the support of both Nucor and Zycus). The simulcast will become available on the site shortly for those that wish to only attend one session or a subset of the program. Another MetalMiner sponsor, O’Neal Industries, has supported key webinar programming covering the steel, aluminum, heat treat plate markets along with special programming on metal lean supplier programs.

As we welcome Zycus to the MetalMiner sponsor community, we look forward to continuing to work closely on a range of video programs. We’re very excited, for example, that they’ll be supporting a new MetalMiner video series examining commodity markets and trends on a regular monthly basis.

MetalMiner readers keep coming back to us not only to better understand the specific price trends and drivers within each of the major metal verticals, but also to identify sourcing strategies and tactics that enable practitioners to become more successful in their jobs. No one inhabits this unique space as well as MetalMiner. As we continue to expand the use of various media formats, we know that Zycus will make many valuable content contributions (which will all be properly disclosed at the time of a particular post) as well as inform some of our own practices.

Welcome Zycus!!

–Lisa Reisman

Rising metals prices are having many ramifications for miners, manufacturers and consumers, but one unwelcome result of rising metal values is also an increase in illegal mining. Just as higher metal prices encourage greater legal scrap generation and recycling, at the same time, it encourages the illegal stripping of lead from church roofs and copper cables from train line and power installations.

Within the mining and refining world, rising metal prices have encouraged a huge increase in capital expenditure and a welcome focus by the major mining companies on organic growth rather than acquisition. But at the same time, the improving returns to be had from rising metal prices have encouraged unscrupulous and even downright criminal elements to invest large sums of money and develop elaborate gangland “ownership around resources in developing countries. Often these resources are in locations too distant for the authorities to readily control what is going on and the consequences, both human and environmental, can be catastrophic.

A more graphic example probably does not exist than the illegal gold mining in the state of Madre de Dios, in Peru’s south-eastern Amazon jungle. Peru is the world’s sixth-largest producer of gold and Madre de Dios ranks as its second-largest gold producing region. While many of the miners are from poor mountainous parts of Peru, local authorities say big private investors from Peru, Mexico, China, Korea, and Brazil have moved in to control illegal mining activities. Tragically, the state of Madre de Dios is also known as the country’s capital of biodiversity. Among tangled vines, giant fig and cedar trees and deep lagoons live more than 200 mammals, 1,000 bird species and 15,000 species of flowering plants, but the illegal mining has left a moonscape of deforestation resulting in widespread soil erosion and poisoned water-filled pits covering an estimated 18,000 hectares.

According to an FT article, the authorities have tried to control mining activities, moving in with force to halt the gangs resulting in the death and injury of several miners. Armed forces blew up 19 river dredges each valued at some $250,000, but 15,000 rioting miners in many cases coerced by the gangs controlling the mines have forced Antonio Brack, the environment minister, to call a halt to the campaign for fear of further casualties. Meanwhile, mercury used in the rudimentary gold separation technology devastated wildlife with levels triple those considered safe in waterways.

In neighboring Colombia, the authorities are facing a similar battle against illegal gold mining that has caused the world’s highest levels of mercury contamination and similar lunar-like landscape of poisoned lakes and soil erosion. As in Peru, poor Colombian miners are controlled by local gangs; peasants employed as miners say they have two choices, illegal gold mining or the growing of illegal coca crops nothing else pays a living wage.

Ignoring environmental degradation for any sustained period can leave a legacy beyond the capacity of the country to repair itself, as South Africa is finding to its cost today, reports Mail & Guardian online. Acid-leached uranium-bearing residues from dozens of gold mine tailings left behind at Witwatersrand Reef from workings up to 100 years old are contaminating ground water and endangering health. Some are so dangerous that local families have had to be moved when radiation levels were recorded at levels higher than the Chernobyl exclusion zone. In fact, the concentration is so high that the ministry for mines has been approached by mining companies keen to re-work the tailings dumps, but, as local environmentalists say, that will result in two contaminated areas for every site, one where the original tailings resided and another where the new dump will be. It is doubtful South Africa will ever be able to afford a full cleanup and will end up with no-go areas around these contaminated tailings heaps.

Unlike Peru and Colombia, the mining in the Witwatersrand was not illegal, but to have allowed the uranium-contaminated tailings to be left in dumps where they could be leached into ground water would be a prosecutable offense today and the legacy of environmental destruction is an illustration of what mercury pollution in those South American mining areas could be creating by way of a legacy for the Amazon.

–Stuart Burns

Reports coming in from Brazil suggest Thyssen’s new 5 million ton-per-year steel mill at Santa Cruz near Rio may not be as environmentally well controlled as much older plants back home in Germany. According to the company, when it reaches full production, 3 million tons per year will be supplied to the processing plant also under construction near Mobile, Ala., and 2 million tons will go to ThyssenKrupp’s plants in Germany. Environmental controls in both the US and Germany are so strict, Thyssen’s apparent repeated violations reported by IPS News would not be tolerated, but in Brazil the company has so far gotten away with it.

“Air pollution in Santa Cruz is constant, and some days it is so intense that a silvery rain falls over the community, hurting people’s health, especially that of children and elderly people,” the protesters are reported as saying. Provincial lawmaker Marcelo Freixo of the Socialism and Freedom Party blames the dust pollution on graphite generated from the production of pig iron. Graphite is sometimes released as a byproduct of coke combustion in the blast furnace and although not carcinogenic, graphite dust is known to cause irritation to eyes, nose, skin and has been linked to respiratory problems such as pneumoconiosis. The plant has twice been fined for graphite dust releases, following the second of which the firm agreed to invest in better control equipment even though it claimed previous releases were one-offs.

The Rio de Janeiro state prosecutor’s office accused the company of polluting the atmosphere at levels “capable of harming human health.” IPS reports the charge was based on studies by the Federal University of Rio de Janeiro’s Institute of Geosciences, which found a 600 percent increase in the average iron concentration in the area around the ironworks, compared to the period before the plant opened. There are also reports of pollution in the local bay area resulting, it is claimed, in a dramatic decline in fish stocks compared to the period prior to plant opening. Some emission problems are bound to occur with such a major new installation, but Thyssen is going to have to resolve these issues promptly if they are not to be labeled as merely exporting their environmental degradation to emerging markets rather than face tougher controls at home.

–Stuart Burns

[youtube]http://www.youtube.com/watch?v=DP0_9uSfDTw[/youtube]

Watch Dr. Roland Strietzel of Germany’s Bego take us through a 3D metal sintering system. Video by Taras Berezowsky/MetalMiner

(Continued from Part One.)

So what does gold have in common with non-precious alloys being used more frequently by dentists (besides the fact that they’re both involved in molding crowns and the like)? Quite simply put, the higher price of one (gold) drives the demand for and use of the other (non-precious alloys) most notably, the so-called ËœCoCro’ alloys, or cobalt chromium.

I came to realize that this is indeed more than a passing trend while attending the 2011 Lab Day here in Chicago, a conference specifically designed for dental laboratory “decision-makers as LMT Communications, the organizing firm, puts it. A two-day affair that showcased various cutting-edge technologies, such as 3D printers (which was, honestly what I came to see), the conference mainly focused on plastics and ceramics from my perspective. (Side note: although EOS didn’t have a working 3D metal printer at the conference, Jessica Nehro, an EOS marketing associate, told me that “two of the fastest growing markets currently for [the company’s] laser-sintering solutions are medical (of which dental is a sub-market) and aerospace due to developments of such materials as EOS Ti64, Ti64 ELI, StainlessSteel PH1, PEEK HP3, Aluminum ALSi10Mg and NickelAlloy IN718 and IN625.”)

However, Dr. Roland Strietzel, a chemist and research developer at Bego in Germany, took dental lab technicians through the non-precious metal alloy sector, and how Bego and many other companies are constantly developing newer alloys to avoid the rising cost of gold. Strietzel said that something like 42 tons of precious metal alloy specifically for dental use had been produced in Germany in 1989, but last year, only 11 tons had been produced. Recently, Bego has taken the lead in alloy production by introducing SLM (selective laser melting) technology into dentistry in 2001 essentially metals-specific 3D printing.

“Milling is costly, and 90 percent of the material is thrown away, Strietzel said. “It makes no sense whatever economically.

Bad for cobalt producers but good for buyers, cobalt is set to face a large surplus this year, with predictions of a drastic price drop becoming more common in the analyst sphere. The LME cobalt spot price stood at $18.08 per pound on Mar. 1, as opposed to gold, which stands at a spot price of $1420.70 per ounce. A gram of CoCr alloy, for example, costs about 50 cents, Strietzel said.

As far as researchers are concerned, using CoCr and other such alloys (including NiCr) are not only cheaper but also more stable. For example, CoCr has higher mechanical values than precious metals, lower heat conductivity, more hardness, and higher stability, which makes it possible to work within a more delicate framework.

Now, as I mentioned in the previous post, here’s where we get into the international trade sphere: the world market gets much of its cobalt from the Democratic Republic of Congo (DRC) via China, and the recent conflict minerals rule which contributor Lawrence Heim has taken MetalMiner readers through in series of posts has spurred confusion among cobalt suppliers. The issue becomes compounded when considering Wikileaked cables in which Hillary Clinton “dubbed a cobalt mine in the DRC as critical to the security of the United States, prompting speculation over whether cobalt may be considered a conflict mineral in the future.

David Weight, the general manager of the Cobalt Development Institute, is quoted in the article as saying, “Industry wants to be sourcing from responsible, sustainable areas and [Dodd-Frank] has laudable aims, however, there is some confusion over different geographical regions of the DRC where this type of legislation is most likely to affect the cobalt industry. In his view, however, cobalt is not a conflict mineral.

–Taras Berezowsky

Source: americanrecycler.com

In the constant push to make greening technology not only effective but also profitable, one US company is taking advantage of a Japanese-pioneered innovation: using souped-up plasma torches to vaporize waste into fuel. The result of the plasma process is syngas, which is short for “synthetic gas (or “synthesis gas), a mixture of carbon monoxide and hydrogen, which can be burned to generate electricity.

As brought to our attention by a piece in the Economist, this process is becoming quite a business these days. The synthesis of syngas used to be pricey back when it was primarily used to get rid of heavy toxic waste such as oil sludge “costing as much as $2,000 per tonne of waste, according to SRL Plasma, an Australian firm that has manufactured torches for 13 of the roughly two dozen plants around the world that work this way. But now, prices have come down, and an effort led by Hilburn Hillestad of Atlanta, Ga.-based company Geoplasma has figured out how to create electricity from of the vaporization process by tweaking the , creating a dual-win proposition reducing landfill waste while providing additional value.

According to the Economist article, the metals that make this possible are nickel-based alloys that comprise the pair of electrodes in a plasma torch:

“A current arcs between them and turns the surrounding air into a plasma by stripping electrons from their parent atoms. Waste (chopped up into small pieces if it is solid) is fed into this plasma. The heat and electric charges of the plasma break the chemical bonds in the waste, vaporizing it. Then, if the mix of waste is correct, the carbon and oxygen atoms involved recombine to form carbon monoxide and the hydrogen atoms link up into diatomic hydrogen molecules. Both of these are fuels (they burn in air to form carbon dioxide and water, respectively).

According to an article in Biomass Magazine, which had already extensively reported on the MSW (municipal solid waste) vaporization, “about 12 commercial plasma waste processing facilities have been operating in Europe and North America, and about 10 in Asia over the past several years. “The waste processed at these facilities varies and ranges from MSW to medical waste, catalytic converters, asbestos and ammunition. Geoplasma, in fact, is planning to build the world’s largest facility in St. Lucie County, Fla., for $425 million, that will power about 25,000 homes. (Geoplasma has a deal with Westinghouse Plasma Corp. to provide the plasma torches and gasification reactors; that company’s equipment is used in two waste processing plants in Japan and in a GM plant in Ohio to melt scrap.)

If it works as efficiently as touted, this phenomenon has huge implications for cost-and-space-saving in the US, Canada and across Asia. Although more detail has yet to come to the surface, plasma-based “garbage burning technologies could be one of the most efficient cost-benefit green innovations.

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


During President Obama’s State of the Union speech, he mostly pressed on about advancing beyond our global peers by working hard to “innovate more than anything; he was notably much shorter and less specific on the manufacturing and fair trade fronts. He did mention, however, that as he would continue to work on US-Asia trade relations (China being the elephant, with other Southeast Asian nations taking a backseat on that train as well), he would simultaneously push for trade pacts with Latin American, notably Panama and Colombia.

Fascinatingly and not surprisingly this is exactly where China is getting another foothold for its own interests. Capitalizing on Colombia longing to build a replacement for the Canal for some time now, and on the fact that the US-Colombia free-trade agreement signed in 2006 has yet to be ratified, China has begun serious talks with Colombian officials to build an alternative “rail canal, so to speak, that would link the country’s Atlantic coast to the Pacific by train, according to the Financial Times.

Needless to say, if the countries complete the rail link, it would be a big deal for Colombia and for global trade in general. For context, a total of nearly 205 million long tons of commodities, including 17.3 million long tons of ore, metals, and iron/steel products, were shipped through the Panama Canal in (fiscal year) 2010, according to Panama Canal Authority data. With the US as its largest trading partner, Colombia feels road blocked by the stalled FTA between the two countries, and is that much more welcome to Chinese investment in its infrastructure and getting to move China’s goods through Colombia in exchange.

According to the article, the “dry canal would stretch for 220 kilometers, “from the Pacific to a new city near Cartagena where imported Chinese goods would be assembled for re-export throughout the Americas. Colombia-sourced raw materials would make the return journey to China¦Chinese and Colombian officials say talks are most advanced over a 791km railway and expansion of the Pacific port of Buenaventura. The $7.6bn project, funded by the Chinese Development Bank and operated by China Railway Group, would move up to 40m tonnes of cargo a year from Colombia’s economic heartland to the Pacific. Priority would be given to coal destined for China. As the world’s fifth-largest coal producer, Colombia would have more efficient entry into China’s market (and those of other emerging Asian economies) as a coal exporter, since most of its coal exports leave out the Atlantic side. China is already Colombia’s second-largest trade partner the FT points out that trade between the two nations stood at $5 billion in 2010, up from only $10 million in 1980.

China’s banks certainly have the money to spend, as evidenced by the country’s investment domestically and internationally in the rail sector. David Michael, writing in Bloomberg BusinessWeek, recently deemed this the Year of the Metal Rabbit, equating the country’s bullet trains with this year’s zodiac symbol. “Over the next four years, Japanese bank Nomura projects the Chinese government will spend $113 billion per year on railway infrastructure and rolling stock, he writes. “The new high-speed line connecting Shanghai to Hangzhou, opened in late October 2010, cost $4 billion and took just two years to build”an astonishingly rapid rate, given the glacial pace at which grand infrastructure projects proceed in most nations.

If this is any indication of how speedily China’s banks and builders will get infrastructure up and running in Colombia, then the South American nation will be sitting pretty having China invest in its economy while getting another bargaining chip in FTA ratification with the US (something the folks at the Brookings Institution, among others, think is a good idea) while the US deals with another major Chinese initiative in its backyard.

*Check out Stuart’s take on the international implications of this “Dry Panama Canal” tomorrow!

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point, on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event.

Click here to register for the live simulcast today!


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