Tag: minor metals

Renewables MMI: California Utilities Try to Shift to Solar Storage… Tesla’s Helping

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.

November Metal Price Trends: The Base Metal Bulls Take Over

Our November metal price trends report showed an industrial metals complex buoyed by strong Chinese demand and bullish on the future, thanks to the election of republican presidential candidate Donald Trump who promises to curtail regulations on metals producers and the energy suppliers that provide power for smelting, steelmaking and mining.

MM-IndX_TRENDS_Chart_November2016_FNL-TOPVALUE100

While some of the metals turned in a flat performance during the month of October, almost all quickly took off after the election. Now, as our lead forecasting analyst, Raul de Frutos, recently wrote, the industrial metal bulls are in full charge.

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The minor metals remained flat, but that’s no surprise to any buyer at this point. The fact that rare earth miner Lynas Corp. received a lifeline from a hedge fund and a Japanese state-owned enterprise was a minor (metals) surprise itself.

It’s a good time to be a producer of base metals as it looks like the bulls may continue to run in 2017. For more information on how to plan your purchases well into the New Year, consult our monthly metal buying outlook.

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Rare Earths MMI: Chinese Production Will Increase Even More

Our Rare Earths MMI was flat for a fourth straight month as the market remains oversupplied and stale ever since China lifted quotas on the magnetic and energy storage metals, the end of a long-running World Trade Organization dispute.

Rare-Earths_Chart_October-2016_FNL

That happened in January 2015 and rare earths have not moved much since. The elements are still highly important for defense, power and green energy applications but prices show no signs of jumping due to Chinese export embargoes or, really, anything else.

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This has caused a somewhat dangerous lack of urgency about fixing domestic supply problems as there’s currently no real urgency to create another U.S. supplier like Molycorp. U.S. Rare Earths Inc. looks like the only viable option for the foreseeable future.

This is by design, too, as China is still consolidating its rare earths industry and will likely drive prices even lower during that process.

What Does Consolidation Mean?

A report from BMI Research says the Chinese government will continue to ramp up exports even as it consolidates companies and shuts down some mines. Better management allowing better production at underperforming operations is what Beijing envisions.

Dysprosium and cerium have seen prices fall from $65,865 a metric and $883 per mt, respectively in May 2015, to $37,524 per mt and $685 per mt by September, according to BMI. If you’re not already a member, join MetalMiner membership to see how closely that mirrors or MetalMiner IndX values. See below for those of you in the know.

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BMI expects that, in a bid to regain pricing power, the Chinese government will pursue a strategy of consolidating the country’s domestic rare earths sector and increasing exports over the coming quarters. That means even lower prices than what we’ve seen over the last two years.

BMI believes that Australia, Russia, Greenland and the U.S. (U.S. Rare Earths) hold significant rare earths output growth potential over the long term. The analysts from BMI do not expect that these countries will be able to overtake China’s market share any time soon due to the low-price environment.

ATI Idles Utah Titanium Sponge Facility

ATI Idles Utah Titanium Sponge Facility

Allegheny Technologies, Inc. (ATI) has decided to idle its state-of-the-art Rowley, Utah, titanium sponge plant.

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Titanium sponge is a key raw material to produce ATI’s titanium products. While global titanium-sponge production has increased significantly in the last couple of years, the global industrial-grade titanium market has continued to be weak. As a result of these two factors, ATI is now able to purchase titanium-sponge in the global market at prices below Rowley’s cost of production.

[caption id="attachment_80768" align="aligncenter" width="585"]Extreme detailed surface of Titanium Aura Crystal Cluster Titanium sponge is now available at lower costs on the open market than for ATI to produce it themselves. Titanium cluster image courtesy of AdobeStock/Tomatito26.[/caption]

ATI stated that it is able to procure from qualified global producers even aerospace-quality sponge under long-term agreements. ATI has entered into competitive long-term agreements with qualified producers for both standard and premium titanium sponge. The Rowley facility will be idled by the end of 2016 in a manner that allows the facility to be restarted in the future if a reopening is supported by market conditions.

ATI Consolidation

In addition to the idling of Rowley, higher cost titanium hot-working operations in Albany, Ore., will be consolidated into other operations.

Albany was already impacted when the Rowley facility replaced Albany’s titanium sponge production with a more efficient process to produce it. Richard Harshman, ATI’s President and CEO, stated in the August 24 press release, the actions are expected to improve ATI’s operating earnings by approximately $50 million beginning in 2017.

Harshman believes that ATI’s High Performance Materials and Components (HPMC) business is well-positioned for profitable growth, especially in next-generation jet engine platforms. ATI was awarded 300 new airframe and jet-engine parts contracts which will represent over $1 billion of new business from 2016-2020. The long-term agreements will lead to significant growth in ATI’s components business in precision forgings and castings as well as in powder metal alloy.

Cost Savings

In addition to the expected $50 million improvement in annual operation income, ATI expects $50 million of cash flow to be generated when the titanium sponge inventory is reduced over the next several quarters.

Although the Rowley facility is a gem in the ATI facilities portfolio, global market dynamics have caused ATI to seek more cost effective ways to provide titanium sponge for its downstream operations. Harshman remains committed to returning ATI to sustainable, profitable growth and improved cash flow.

Harshman characterized the decisions pertaining to its titanium business as being part of disciplined process which reviews all ATI operations from both a strategic and cost competitiveness standpoint, while considering future market conditions.

“This disciplined process is a key part of our commitment to make the tough decisions that are required to strengthen and enhance ATI’s ability to deliver sustainable, profitable growth, and create value for our customers and our shareholders over the long-term,” he said.

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In the last year, ATI has chosen to exit unprofitable products in its Flat-Rolled Products (FRP) business: it has exited the grain-oriented electrical steel (GOES) as well as commodity stainless steel markets. The decisions ATI has made with regard to its titanium business are still attractive to the company; however, the way in which they produce its products has to be streamlined and optimized to reflect current market conditions.

August MMI: The Bulls Are Loose in Metals

We rarely see such positive growth in metal prices as we did in the August MMI Price Trends Report.

MM-IndX_TRENDS_Chart_August2016_FNL-TOPVALUE100

All the metals we track were up save for Aluminum, which fell only 1.3%, and renewables and rare earths, which held flat. The Stainless Steel MMI increased 9% amid uncertainty about Chinese nickel ore supply after mining crackdowns in top supplier, the Philippines.

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Meanwhile, the most bullish of bull runs continued for our Global Precious MMI which added a 7.2% increase to its jump last month to knock on the door of the top 10% of the IndX. The platinum group metals had strong increases along with gold and silver this month.

[caption id="attachment_53163" align="alignleft" width="228"]Wall Street Bull “Hey metal buyers, remember me?” Wall Street bull courtesy of iStock.[/caption]

Palladium, particularly, made higher highs and stumbled to lower lows in classic bull market fashion.

So buy quickly before prices increase more, right? Wrong. Our Raw Steels MMI posted a healthy 4% increase, but it’s still heavily dependent on China’s stimulus programs to keep demand up in the largest global consumer of steel products. If there is a pullback in stimulus, prices could fall dramatically. The same is true for copper.

Unlike diamonds, bullish trends in commodities and industrial metals don’t last forever. Continue to make informed buying decisions in this thriving market — watch China’s stimulus program and the strength of the U.S. dollar post- Brexit — and remember that today’s price strength might be tomorrow’s carpet getting pulled out from under your feet.

[download-button url=”https://agmetalminer.com/monthly-report-price-index-trends-august-2016/”] Price Trends in the August MMI Report[/download-button]

Few Companies Tracked Entire Conflict Minerals Supply Chain in Dodd-Frank Filings

Few Companies Tracked Entire Conflict Minerals Supply Chain in Dodd-Frank Filings

10% publicly-traded companies in the U.S. who filed form SDs with the federal government have proven it is possible to not only comply with Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, but to also perform supply chain due diligence in line with industry best practices, according to an analysis of public filings by Dr. Chris Bayer, PhD, of Tulane University.

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Yet, more than three years after U.S. companies began filing reports about their efforts to find conflict minerals linked to armed militias in Africa in their supply chains, more than 65% say they still can’t make a determination.

U.S.-listed companies are required to investigate their supply chain for the presence tin, tantalum, tungsten and gold (commonly known as 3TG in metals circles), under a rule stemming from the 2010 Dodd-Frank Act. The law is meant to choke off mining revenue to militia groups in the Democratic Republic of the Congo and adjacent countries.

As well-meaning as it is, even last year many companies were not able to fully vet their supply chains and have previously said so in their filings.

This year, 10% of Form SD and CMR (conflict minerals) filers were found to be 100% SEC Rule compliant 67% were at or above the 75% compliance threshold. In all, SD & CMR filers averaged a compliance score of 79%, a generally high degree of compliance.

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More than 100 companies said or implied they had conflict-free products, Bayer found. His study was advised by Assent Compliance, among others. But only 19 companies, including Intel, Qualcomm, Cree, Hasbro and Texas Instruments, actually underwent an audit for those claims on one or more of their products.

Anti-Dumping: Australian Silicomanganese Hit With 12% Duties

Anti-Dumping: Australian Silicomanganese Hit With 12% Duties

The Commerce Department recently announced an affirmative final determination, and anti-dumping duties, in the investigation of imports of silicomanganese from Australia.

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For anti-dumping investigations, dumping occurs when a foreign company sells a product in the U.S. at less than its fair value. Commerce determined that imports of silicomanganese from Australia have been sold in the U.S. at a dumping margin of 12.03%.

The sole mandatory respondent, Tasmanian Electro Metallurgical Company Pty Ltd. (TEMCO), received a final dumping margin of 12.03% Because there were no other respondents, TEMCO’s margin also serves as the final dumping margin for all other producers/exporters in Australia.

As a result of the final affirmative determination, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits equal to the applicable weighted-average dumping margins.

What’s Silicomanganese?

The petitioner for this investigation is Felman Production, LLC.

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The scope of this investigation covered all forms, sizes, and compositions of silicomanganese, except low-carbon silicomanganese, including silicomanganese briquettes, fines, and slag.

Silicomanganese is a ferroalloy composed principally of manganese, silicon, and iron, and normally contains much smaller proportions of minor elements, such as carbon, phosphorus, and sulfur. It is often used as a reducing agent in the manufacture of low-carbon ferromanganese.

Rare Earths: Maturing Markets Will Help Supply Chain Transparency

Rare Earths: Maturing Markets Will Help Supply Chain Transparency

David S. Abraham runs the Technology, Rare and Electronics Materials Center and is author of “The Elements of Power: Gadgets, Guns And the Struggle for a Sustainable Future in the Rare Metal Age.” His career spans from commodities trading and Wall Street to the White House where he oversaw international and natural resource programs. He is a frequent speaker on rare metals and technology demands. This is part two of a discussion about rare metals, particularly rare earth element production and other issues surrounding the metals that fuel the gadgets and technology we love, with MetalMiner Editor Jeff Yoders. Here is part one if you missed it.

This part of our discussion focuses on rare earths, environmental product declarations, conflict-free minerals certifications and the challenges for buyers, miners and refiners in very loosely defined markets.

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Jeff Yoders: Looking at solar panels, cell phones, wind turbines and other end-use products that use rare earth elements, do you feel that, in the near future, their production will require more readily available data about available supply, production and existing stockpiles of these elements or more transparent commodity markets? As we’ve seen in other maturing manufacturing industries?

David Abraham: With the increasing specialization of the materials we need — higher-grade, different specs — it’s going to be increasingly challenging to commoditize them. There is not a lot of interest among the producer companies to open the books and allow people to know what materials are being produced at what grade and so forth. Although it would be much more beneficial to have an open accounting, it’s a real challenge to do so. The London Metal Exchange is trying to commoditize certain minor metals but the challenge there is at what stage? What becomes the base commodity? What grade of neodymium? What grade of dysprosium? Because they are traded so lightly, the challenge is are vast. I would love to see it done, but I just don’t see it being done very well anytime soon.

[caption id="attachment_75333" align="aligncenter" width="550"]Circuit boards depend on minor metals such as tantalum. Source: Adobe Stock/Lionelpc Circuit boards depend on minor metals such as tantalum. Source: Adobe Stock/Lionelpc.[/caption]

JY: Too many hurdles to cross?

DA: The interests are there further downstream especially as companies need to report on conflict minerals. As I elude to in the book, the people who are buying and selling the metalsdon’t see much benefit without that pressure from further downstream.

JY: What about the trend toward environmental product declarations and conflict-free metal designations. Do they hold any hope for opening up the rare metal supply chain to transparency?

DA: We really want to make sure the products that we use aren’t causing unintended harm. That’s a wonderful thing in and of itself and it gets people thinking, ‘where did these materials come from?’ The challenge, though, for a company to know exactly where all its materials come from, it’s a huge hurdle. Right now, they have to know where the material doesn’t come from, which is a little easier.

To know where EVERY spec comes from is a lot harder, and unrealistic currently. Many parts of the world simply don’t document, and don’t really have a reason, honestly, to document. As you know, going seven or 10 layers deep in a supply chain is difficult and they are going to places that don’t understand conflict minerals or even what’s to understand about them. I appreciate the direction it’s going.

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JY: When Dodd-Frank conflict mineral certifications were due earlier this year we reported on the results and one of the companies that submitted a 1502 form SD was Party City. They wanted to disclose the supply chain for their mylar balloons. The company’s submission said “It is possible that certain of the company’s metallic balloon and novelty products may contain Conflict Minerals” while explaining the many layers of suppliers and sub-suppliers in their chain.

DA: Its a relatively easy thing to know where balloon material is coming from. Compared to, say, airplanes with really complex alloys with say, a sprinkling of titanium or rhenium in various components. It’s a challenge and hopefully we are pushing people in the right direction to ask the right questions, even though they’re not always going to be able to come up with the complete answer. The US Congress is saying to the Department of Defense ‘know where everything comes from.’ But supply chains are moving things and go through time. They’re not only seven to 10 layers deep, they’re years deep, in some cases. To know where everything comes from all of the time is more of an ideal than an end statement.

India is Expanding Rare Earths Production, But China Won’t Go Down Without a Fight

India is Expanding Rare Earths Production, But China Won’t Go Down Without a Fight

When China’s Ministry of Commerce announced that it had scrapped quotas restricting exports of rare earth minerals and would replace them with a system of export licenses many thought this would open up new markets to previously tightly regulated Chinese REs.

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The quotas had been in place since 2000. It was thought to be positive news for RE consuming nations such as Japan, the US and Taiwan. But the last word on that may be tied in to the announcement of yet another new RE policy by Beijing, likely to come in mid-2015.

Not So Friendly Neighbors

India and Japan, two nations China has had a strained relationship with when it comes to REs, have teamed up to jointly explore new rare earths production.

As reported by MetalMiner, India is miles behind market leader China in the RE production department, yet is the second-largest producer of the rare minerals contributing 2,800 metric tons per year to domestic and world markets. China, on the other hand, produces 105,000 mt.

According to official figures revealed by the Government of India (GoI) in its parliament earlier this month, the total production of RE in India by state-owned Indian Rare Earths Limited (IREL) between 2009 and 2014 was 310.145 mt, and the total sale in the same period was 285.90 mt.

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