Friday, July 09, 2010

Lithium and REE: China Cuts Rare Earth Export Quota 72% TNR.v, CZX.v, RM.v, LI.v, WLC.v, CLQ.v,, RES.v, TSLA, HEV, AONE, GOOG, AAPL, RIMM, FCX,

We guess it is the proven strategy by US Corp.: we wait until Lithium market will be controlled by China and Japan and will deal with it later. The only question is what will be the barganing power with China and Japan controlling more than 75% outstanding foreign debt between them and if they will jump out of Oil needle first? In this scenario Canadian juniors with dirt in the ground and world lithium in the name will command multiples to the recent valuation like in Uranium hey days, but with much longer lasting bull market.

"Electric Cars is a geopolitical play - who will be able to get off the Oil needle first China or U.S Corp? Obama knows it and he is pushing for new legislation, Big Oil will strike back for sure and here where people will be able to vote for real with their choice. What will be the adoption rate of EVs: one of Washing Machines or Mobile Phones one with an explosive growth? It will be the key to low profile small lithium development sector. Markets caps are so small that with one Tesla IPO you can get reasonable amount of control in the entire sector in Canada now. We do not think that it is for long any more. With Electric Cars available on the streets Lithium sector will pick up again into the next Bull Leg from recent consolidation stage. Not all wanna be in Lithium will make it and time is to pick the winners during the summer downturn. Scared Fed will help us with Catalyst as well: Helicopters are coming with cash again and markets will be probably saved again to fool investors with nominal returns. Watch the US Dollar for the answers as well."

Is it the sign of things to come not only in REE space, but in the lithium market as well? These materials are called strategic exactly because their supply is so crucial to new technologies: Energy Storage with lithium and super Rare Earth magnets for starters with REE. Japanese and Chinese companies are actively sourcing all available projects in Lithium and REE around the globe to secure supply. This M&A activity will ignite second Leg Up of this generational Bull Market. It is very disappointing that along with all political rhetoric from Washington US Corp is still years away from understanding the geopolitical implications of New World Order based Not Only on Oil any more.

"Asian lithium rush continues. One more Junior in Lithium is gone from the market for potential deals. We were not following geothermal as source of lithium so close as it is more risky than well defined extraction from brines and hard rock lithium deposits. Chemistry should be right and the process is much more complicated, but this move by Itochu shows that Japanese conglomerates are ready to go the distance in order to secure Lithium supply from different sources. After Korean Kores deal with lithium One we have on our radar screens two juniors involved in Lithium Brines in Argentina and Nevada are left for J/V deals: International Lithium and Rodinia Minerals. Japanese are using recent soft markets to grab all available lithium projects on the development stage and with this rate of deal announcement all reliable Canadian juniors in Lithium could be engaged by the end of this summer.

"Race for Strategic Materials is on and U.S. is not in the front seats now: China controls 97% of REE market and lithium mostly produced in Chile, Argentina and Australia at the moment. Bolivia - named the Saudi Arabia of lithium by some, has its own mind about its vast undeveloped resources of lithium. Japanese companies are buying into Canadian and Australian junior mining companies to secure lithium supply and Chinese are very active in Australia. When U.S. will look at domestic lithium development in Nevada? Government sponsored enterprise in U.S. Strategic Metals Development Corp. like a Japanese JOGMEC can do the trick and finance juniors like International Lithium, Western Lithium and Rodinia Minerals on J/V basis: otherwise it will be 80s with Japanese Fever all over again. This time Japanese conglomerates will control not only movie studious, but something little bit more essential in the time of peak oil - lithium supply for the Electric Mobility Revolution. Recent deal in Nevada by JOGMEC with Lomico Metals is the first step in that direction, properties are still under DD review, but appetite to be engage in lithium exploration and development in Nevada by Japanese is there. Who will be gone next? When GM, Ford, GE, Dow, Rio Tinto, Boeing and DOE will wake up?"

China Cuts Rare Earth Export Quota 72%, May Spark Trade Dispute With U.S.
By Bloomberg News - Jul 9, 2010

July 9 (Bloomberg) -- London Metal Exchange Chief Executive Officer Martin Abbott talks with Bloomberg's Rishaad Salamat about demand for commodities in Asia and the LME's growth strategy in the region. The London-based exchange, founded in 1877, has entered talks with Singapore Exchange Ltd. on possible cooperation in Asia, according to a statement yesterday. The LME opened its first overseas office in the Southeast Asian city-state this year. Abbott, speaking from Singapore, also discusses regulation for commodity trading. (Source: Bloomberg)
China, the world’s largest rare- earths producer, cut export quotas for the minerals needed to make hybrid cars and televisions by 72 percent for the second half, raising the possibility of a trade dispute with the U.S.

Shipments will be capped at 7,976 metric tons, down from 28,417 tons for the same period a year ago, according to data from the Ministry of Commerce yesterday.

Rising production of hybrid cars and music players such as Toyota Motor Corp.’s Prius and Apple Inc.’s iPod have driven up demand for rare earths even as China cut the quotas to shore up prices and ensure domestic supplies. The U.S. is looking at building a trade case on the restrictions, industry representatives said last month.

“The rare earths industry officials have realized that, after many years of continued growth in exports, the industry didn’t receive due profit returns,” Liu Aisheng, director of the Chinese Society of Rare Earth, said in an interview by phone from Beijing. “They adjusted the policy to ensure that the resources are optimally utilized.”

Shares of Lynas Corp., building a rare earth mine in Australia, rose 8.8 percent to close at 59.5 Australian cents in Sydney. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., the biggest Chinese producer, rose 1.4 percent to close at 36.69 yuan on the Shanghai stock exchange.

Baotou Steel, Baotou Huamei RE Products Co. Ltd. and Sinosteel Corp. are among the 32 local and foreign companies that are permitted by the government to export in the second half, according to the Ministry of Commerce statement.

Lynas Opportunity

“The tightening of supply regulations provides additional opportunities for Lynas to meet the supply deficit out of China,” Executive Chairman Nicholas Curtis said today in a statement filed to the Australian Stock Exchange. Sydney-based Lynas is building a rare earth mine at Mount Weld in Australia.

The total Chinese export quota for 2010 is 30,258 tons, 40 percent less than the 50,145 tons for 2009, Lynas said in the statement.

Rare earths are a group of chemically similar metallic elements, including lanthanum, cerium, neodymium and europium. They are used in radar, high-powered magnets, mini hard-drives in laptop computers, catalytic converters for vehicles, electric-car batteries and wind turbines. China, which accounts for more than 90 percent of the global production, started cutting output and exports in 2006 as prices fell.

“Reduced supply from China will trigger other rare earth producers to boost production to fill the gap,” said Liu of the Chinese rare earth society. Still, the policy will force some privately owned Chinese producers to shut down as they are not authorized exporters, he added.

Trade Tensions

The U.S. has asked business groups and unions to provide evidence that China is hoarding rare earths for a case that may be filed at the World Trade Organization, according to industry representatives who asked not to be identified.

A rare-earth mine in the U.S., in Mountain Pass, California, shut down most operations in 2002. Molycorp Inc., which owns the mine, plans to reopen it this year.

China needs to restrict exports and production because domestic supplies won’t be enough to meet its own needs, the Ministry of Industry and Information Technology said in September.

Below is a table of Chinese rare earth export quotas for 2009 and 2010. The numbers are in metric tons.

09/1H 09/2H TOTAL 10/1H 10/2H TOTAL
Foreign 6,685 10,160 16,845 5,978 1,768 7,746
Local 15,043 18,257 33,300 16,304 6,208 22,512
TOTAL 21,728 28,417 50,145 22,283 7,976 30,258
--Xiao Yu. Editors: Tan Hwee Ann, Indranil Ghosh."
Post a Comment