Gold, Oil and Lithium: Trade-Off - A Study In Global Economic Collapse

Gold: Reuters: Central Banks Preparing For Coordinated Action To Provide Liquidity After Greek Election If Needed GLD, SLV

Gold Catalyst: Eurozone finance ministers agree to 100 billion euro Spain bailout GLD, SLV

  

Reinventing Fire: The Business-led Transition Beyond Oil and Coal To Electric Cars and Alternative Energy

 "Can we make it this time? Will we buy our own technology, but made in China again? We are slipping dangerously behind the point of no return, blindfolded by special interests towards impending Oil Peak and following it Energy Crunch."

  We have an interesting study of the modern interconnected financial system - once it became insolvent the only way out is to pump liquidity in all forms to keep it running, debase the currencies and inflate the debt out covering the more and more uncovered losses along the way. Capital is eroded, banks are under constant "run" risk and nobody can take risk any more - the velocity of money drops with the real lending.
  The razor sharp edge between deflation and Inflation will be tilt by all means to the inflation side on the world wide base - Gold and Silver will be the store of value as thousand years before. The complication will come with Oil price and its Mega-trend: Inflation multiplied by peak Oil - there is No More Cheap Oil. With FED involved in QE and record low and Negative Real Rates Oil became the real FED who controls the economic cycle now.
  Now, try to add another input into your understanding of the global economic system - that all markets are rigged and manipulated:

Business Insider: Everyone Is Passing Around This 'Whistleblower' Letter Claiming To Know About Market Manipulation At JPMorgan

"With today's news from JP Morgan the old article from Business Insider is taking the new context at least - what revelations will be next now? JP Morgan's name is all over the place with the recent scandals - we can not tell yet that it will become the "Next Lehman moment" which will unleash QE3 - but company's involvements in MF Global bankruptcy, PFG bankruptcy, Trading Loss Revelations and today's announcement about "cooking the books" are not leaving any room for "error".

"Box 1 

When Trucks Stop, America Stops A Timeline Showing the Deterioration of Major Industries Following a Truck Stoppage 

The first 24 hours

• Delivery of medical supplies to affected areas will cease. • Hospitals will run out of basic supplies such as syringes and catheters within hours. Radiopharmaceuticals

will deteriorate and become unusable. • Service stations will begin to run out of fuel. • Manufacturers using JIT manufacturing will develop component shortages. • US mail and other package delivery will cease.

Within one day

• Food shortages will begin to develop. • Automobile fuel availability and delivery will dwindle, leading to sky-rocketing prices and long lines at

the gas pumps. • Without manufacturing components and trucks for product delivery, assembly lines will shut down putting

thousands out of work.

Within two to three days

• Food shortages will escalate, especially in the face of hoarding and consumer panic. • Supplies of essentials such as bottled water, powdered milk, and canned meat at major retailers will

disappear. • ATMs will run out of cash and banks will be unable to process transactions. • Service stations will completely run out of fuel for autos and trucks. • Garbage will start piling up in urban and suburban areas. • Container ships will sit idle in ports and rail transport will be disrupted eventually coming to a standstill.

Within a week

• Automobile travel will cease due to lack of fuel. Without autos and busses, many people will not be able to get to work, shop for groceries, or access medical care.

• Hospitals will begin to exhaust oxygen supplies. Within two weeks

• The nation’s clean water will begin to run dry.

Within 4 weeks

• The nation will exhaust its clean water supply and water will be safe only after boiling. As a result gastrointestinal illness will increase, further taxing an already weakened health care system.

Holcomb, R When Trucks Stop, America Stops American Trucking Association"

Overview

"This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply- chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.

It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large- scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

As the globalised economy has become more complex and ever faster (for example, Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.

The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a large- scale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.

We consider one scenario to give a practical dimension to understanding supply-chain contagion: a break-up of the Euro and an intertwined systemic banking crisis. Simple argument and modelling will point to the likelihood of a food security crisis within days in the directly affected countries and an initially exponential spread of production failures across the world beginning within a week. This will reinforce and spread financial system contagion. It is also argued that the longer the crisis goes on, the greater the likelihood of its irreversibility. This could be in as little as three weeks.

This study draws upon simple ideas drawn from ecology, systems dynamics, and the study of complex networks to frame the discussion of the globalised economy. Real-life events such as United Kingdom fuel blockades (2000) and the Japanese Tsunami (2011) are used to shed light on modern trade vulnerability."

Trade-Off

  Financial System Supply-Chain Cross-Contagion: a study in global collapse.

Rick Mills: Ahead Of The Herd: Graphite: Pencil It In lmr.v, ilc.v, tnr.v, czx.v, rm.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  

  Rick Mills is always looking forward and the name of his website says it all. He was one of the first to cover Gold, Uranium, Potash, Rare Earths and Lithium. Now he has written a very good introductory article on Graphite. With buzz about Electric Cars, lithium batteries and graphite spreading around he is putting industry insiders play on the investors radar screens again.

  Rick is covering TNR Gold and in the Copper, Gold, Rare Earths and International Lithium in Lithium space and we have put Lomiko Metals on our watch list again with its new graphite project acquisition recently.

  We are adding Graphite plays to our Strategic Commodities plays now with Lithium, Rare Earths and Copper. Next Big Thing - Electric Cars will drive the demand for these commodities in years to come and Energy Transition is the name of the game now.

Lomiko Metals: Graphite - The Driving Force Behind Green Technology.

Graphite: Pencil It In

Richard (Rick) Mills
Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

Sometime between 1500 and 1565 a large graphite deposit was discovered in Cumbria, England. Because the graphite was extremely pure and solid it could easily be sawed into sticks. The graphite was actually thought to be a form of lead and called plumbago - Latin for lead ore.

The Borrowable Mine was soon ordered to be put under armed guard by Queen Elizabeth because the “lead” could be used to line the moulds for making her armies cannonballs. But black marketers managed to smuggle out the graphite for continued use in pencils. Artists from all over the known world quickly learned to appreciate the qualities of Cumbria’s graphite but it wasn’t until 1795 that Nicholas Conte learned to mix graphite powder with clay and fire it in a furnace to actually make something with the equivalent quality of Borrowables plumbago.

Today graphite (named for the Greek word meaning "to write") is attracting the attention of investors, and for just as good a reason as it once attracted all those artists 500 years ago.

Carbon

By mass carbon is the fourth most abundant element in the universe (after hydrogen, helium, and oxygen) and it’s the 15th most abundant element in the Earth's crust. Carbon is present in all known life forms and is the second (oxygen is first) most abundant element by mass - about 18.5% - in the human body.

Carbon is the stuff of life, it is the foundation, the chemical basis, of every living thing on Earth, yet because of its pervasive familiarity we all take it for granted.

As investors we might want to rethink that.

Allotropes are structural modifications of an element - the allotropes of carbon include:

• Diamond - The carbon atoms are bonded together in a tetrahedral lattice arrangement
• Fullerenes - The carbon atoms are bonded together in spherical, tubular, or ellipsoidal formations
• Graphite - The carbon atoms are bonded together in sheets of a hexagonal lattice
• Graphene  - A flat two-dimensional sheet of carbon atoms

Graphite

Graphite has long been used in the aviation, automotive, sports, steel and plastic industries, as well as in the manufacture of bearings and lubricants. Graphite is an excellent conductor of heat and electricity, is corrosion and heat resistant and is also strong and light.

Currently, the automotive and steel industries are the largest consumers of graphite and demand across both industries is rising at five percent per annum.

The steel industry uses graphite as liners for ladles and crucibles, they use it in the bricks which line blast furnaces and to increase the carbon content of steel. Graphite has already replaced asbestos in automotive brake linings and pads and is used for gaskets and clutch materials. Sparks plugs are also made incorporating graphite.

But demand for graphite has been rising for other applications as well; Flexible graphite sheets, lithium-ion and vanadium batteries, fuel cells, semi conductors, nuclear, wind and solar power.

Graphoil 

Graphoil is flexible graphite sheets and one of the fastest growing graphite markets. Flexible graphite is desirable for compression packing and gaskets, whose ability to seal comes from filling gaps through which fluid might flow.

Flexible graphite products have valuable properties:

• Free from creep under constant load
• Stable from cryogenic temperatures far below zero to temperatures well above the melting point of most ferrous and non-ferrous metals
• Resists a wide range of corrosive materials
• Nuclear radiation resistant even when exposed to massive doses of radiation
• Fire-safe in the presence of highly volatile fluids and extremely high temperatures

Nuclear Power

Graphite plays a key role in many current, and future, nuclear reactor designs. The next generation nuclear reactor (the INL-led Next Generation Nuclear Plant (NGNP) and other proposed high-temperature, gas-cooled reactors) temperatures are expected to reach as high as 1,000 °C in their cores – graphite, having a higher melting point then steel, doesn't burn until 3,000 degrees Celsius. Because graphite has a huge heat-absorbing capacity it’s also used to keep nuclear fuel at safe temperatures during unexpected events - as an aside graphite is also used as a heat sink in computers.

China’s Pebble bed reactors (PBR) are a graphite moderated, gas cooled nuclear reactor. The base of the PBR's design is the spherical (billiard ball-sized) fuel elements called pebbles. In the PBR, thousands of pebbles are amassed to create a reactor core. The pebbles are made of pyrolytic graphite (a protective graphite coating which moderates the pace of nuclear reactions) and they contain thousands of micro fuel particles called TRISO particles. These TRISO fuel particles consist of a fissile material such as 235U. These reactors are cooled by non-explosive helium gas instead of depending on a steady source of water.

Substantial amounts of graphite are required to charge the reactor at startup – 3000 tons and a percentage of the balls must be replaced each year as the fuel is spent necessitating a further 600 to 1000 tons of graphite each year of operation. China has one operating prototype, is now building two commercial units and plans to have 30 Pebble Bed nuclear reactors in operation by 2020.

Fuel Cells

The two major types of fuel cells - the phosphoric acid fuel cell (PAFC) and the proton electrolyte membrane fuel cell (PEMFC) - currently under development rely heavily on graphitized carbon. PAFCs are for stationary power generation (primary or backup power for remote locations such as cell phone towers), whereas PEMFC's have attracted widespread interest for use in transportation applications.

A fuel cell is not a battery - a battery is an energy storage device, it will stop producing electrical energy when the chemical reactants are consumed or it needs to be recharged. The fuel cell is an energy conversion device and will produce electrical energy as long as the fuel, and the oxidant, are fed to the electrodes.

More and more fuel-cell applications are in development every year and fuel cell technologies rely heavily on graphite - the proton exchange fuel cell (PEMFC) requires 80-100 pounds of graphite per vehicle.

"Large-scale fuel cell applications are being developed that could consume as much graphite as all other uses combined." U.S. Geological Survey

Solar Thermal Collectors

The biggest limitation of Solar or Photovoltaic (PV) panels is that they can use only a fraction of the sunlight that hits them, the rest of the sunlight turns into heat which actually hurts the performance of the panels.

An alternative that can make use of all of the sunlight, including light frequencies PVs can't use, is the solar thermal collector – they collect heat that’s used to boil the water to make the steam which drives the turbine which creates the electricity.

To further increase the efficiency of solar collectors, nanoparticles - particles a billionth of a meter in size - are added into the heat transfer oils normally used in solar thermal power plants. In laboratory tests nanoparticles increased heat collection efficiency by up to 10 percent. 100 grams of nanoparticles provides the same heat-collecting surface area as an entire football field.

Graphite nanoparticles are very efficient heat collectors.

Vanadium Redox Batteries

When the sun doesn’t shine and the wind doesn’t blow neither solar or wind plants are generating electricity, these two green energies need batteries to store the excess energy they can produce under optimal conditions. The vanadium redox battery (VRB) could be the perfect answer as they:

• Have unlimited capacity simply by increasing the size of their storage tanks
• Can be left completely discharged for long periods of time with no ill effects
• Have low maintenance requirements
• Can be recharged by simply replacing the electrolyte
• Have a nominal environmental footprint

VRB’s also require almost 300 tonnes of flake graphite per 1,000 megawatts of storage capacity.

Lithium-ion Batteries

The most important application for increased graphite demand might come from the lithium-ion batteries found in electric vehicle batteries and used to power our modern consumer electronics.

While lithium is the cathode the anode is graphite and these batteries need 10 to 30 (depending on which expert you are listening to) times more graphite than lithium and the lithium-ion battery industry is growing at a 30 to 40% annual rate.

As many as six million electric vehicles might be manufactured in 2020, each of them requiring 40 pounds of graphite for its battery system – the electric motorcycle and scooter markets are growing even faster.

Lithium-ion batteries are also crucial to the consumer electronics industry – power tools, cell telephones, laptops, tablets and media players etc.

Graphene

If you took a close look, a very close look, at a graphite pencil lead you will see layer upon layer of carbon atoms, multiple two dimensional planes that are loosely bonded to their neighbors.

The reason graphite works so well as a writing material, and industrial lubricant, is because the layers of atoms slip easily over one another - the layered structure facilitates easy cleavage along the planes.

Each of those single layer of atoms is grapheme.

Separating the individual layers of graphite sets the electrons free and allows carbon to behave…differently.

Properties

Graphene has unique combinations of optical, electrical and mechanical properties:

• Astonishing electrical conductivity - Graphene has the highest current density (a million times that of copper) at room temperature; the highest intrinsic mobility (100 times more than in silicon); and can carry more electricity more efficient, faster and with more precision than any other material
• Graphene also beats diamond in thermal conductivity - it's better than any other known material
• It is the thinnest and strongest material known to man; 200 times stronger than steel, is almost invisible and weightless, stretches like rubber - graphene can stretch up to 20 percent of its length - and yet is the stiffest known material, even stiffer than diamond
• Graphene is the most impermeable material ever discovered

Uses

Touch  Screens

Graphene is transparent in infra-red and visible light, absorbing just 2.3 percent of light that lands on it. But, with your naked eye, you can see a single layer of graphene laid on a blank piece of white paper.

Indium Tin Oxide (ITO), the current touch screen material of choice, absorbs 10 percent of incident light, but it’s quite brittle, the exact opposite of graphene.  Graphene is ideal for use in touch screens.

According to some reports the world has only 5-10 years of ITO reserves remaining and prices already exceed US$700,000 per tonne.

Photovoltaic (PV) Cells

Graphene has no band gap - everything is accepted.

What this means is that graphene solar panels have a huge advantage over silicon solar panels - graphene can absorb light from all over the solar spectrum, whereas silicon is confined to just certain frequencies.

That makes graphene solar panels much more efficient than any other material - instead of waiting 10-12 years for payback it might come as quickly as 5 years. 

Transistors

It is possible to induce a small band gap in graphene by doping it, which means grapheme can be used a transistor - you need the band gap if you want to be able to turn the transistor off.

Spintronics

Spintronics is a technology for controlling not only individual electronics, but also their spin, this increases the amount of information that can be stored per electron - data is stored in the spin of an electron, not its presence. Since graphene has a long spin diffusion length the technology promises to increase the efficiency with which devices consume power and increase data storage capability.

Superconductivity At Room Temperature

The mean free path is the distance an electron can travel freely without bumping into something, or having its path disrupted by scattering – both cause resistance which means heat is generated.

In graphene, the mean free path is 65 microns — long enough that electronic components could be made that would operate at ambient temperatures with virtually no resistance.

We’re talking ambient temperature unimpeded conduction of electrons - superconductivity at room temperature.

Sensors

Graphene is the most impermeable material ever discovered, not even helium atoms can squeeze through. Highly sensitive gas detectors can be manufactured because the smallest quantity of a gas will get caught in its lattice producing an electrical signal that flags the presence of the chemical.

Medical imaging devices that won’t do the harm X-rays cause are possible, as are strain sensors – when you pull or push the strain can be monitored – this could be useful for buildings in earthquake prone areas or in airplane wings. 

DNA sequencing

If you pass a strand of DNA through a sheet of grapheme with a small gap in it the electrical properties of graphene change on exposure to each base pair. Because graphene is 2D, it can "read" one base at a time, making it much more accurate than anything used today.

Derivatives

All the chemical derivatives of graphene are useful. You can dissolve graphene and the solutions (fluorographene, graphene oxide, hydrogenated grapheme) have applications in printable electronics that are already ten times better than current state of the art technology.

Criticality   

In 2010 a European Commission included graphite among the 14 materials it considered high in both economic importance and supply risk. The British Geological Survey listed graphite as one of the materials to most likely be in short supply globally.

The US has also declared graphite a critical material. The U.S. Department of Homeland Security, and the State Department, said America could be hurt if terrorists were to disable graphite mines in China.

Market

The natural graphite market is 1-1.2 million tons per year and consists of several different forms of graphite – flake, amorphous and lump. Historical applications primarily use amorphous and lump graphite, most newly emerging technologies and applications use flake graphite. Of the up to 1.2 million tons of graphite that are processed each year just 40% is flake.

China, India and Canada are responsible for most graphite mining and processing with China producing the lion’s share at 70–80%. China’s production is 70% amorphous and lower value small flake graphite.

Currently China imports a significant amount of North Korea’s large flake graphite production raising considerable doubts in regards to China’s abilities to ramp up its graphite supply. Indeed China has already taken steps to retain its graphite resources by restricting its export quota - China imposed a 20% export duty, a 17% VAT and also closed state owned enterprises.

“The days of cheap, abundant graphite from China are over.” Industrial Minerals Magazine May, 2011

It’s thought that the increased use of lithium-ion batteries could gobble up well over 1.6 Mt of flake graphite per year by 2020 - only flake, upgraded to 99.9% purity and synthetic graphite (made from petroleum coke, a very expensive process) can be used in lithium-ion batteries.

“Annual flake graphite production will have to increase by a factor of six by 2020 to meet incremental lithium carbonate requirements for batteries.” Canaccord research report

The U.S. Geological Survey says large-scale fuel cell applications are being developed that could consume as much graphite as all other uses combined – a bold statement, but even if only half of the USGS demand is realized graphite use is going to explode just because of fuel cells, let alone other known demand drivers and new applications.

What if the current market almost doubles – new demand, between now and 2020, comes in at one million tonnes on top of the existing 1.2 million?

Today’s graphite producers, other than the ones in China, are going to have to produce more and junior companies are going to have to get busy and start to develop deposits. There will be a premium placed on mines in stable, safe areas for investment.

Since a large scale producer puts out 20,000 to 40,000 tons per year that’s a lot of new mines and a lot of opportunity for investors – one million tonnes divided by 40,000 could be the equivalent of up to twenty five mines worth of new production needed – and that’s a severe low-balling of the experts forecast increased usage numbers.

Consider also that most of the mines expected to come online, and the ones already in production, will not produce the highest grades of graphite - crystalline large flake – which runs between 94% and 97% carbon and starts at 80 or higher mesh size. Indeed most will produce medium, small-flake, lump and amorphous graphite.

Conclusion

The extraction of graphite and its processing is very well known in the west and western countries are the leaders in graphite and graphene application research.

China is not going to be much of a factor in the large flake graphite market, except perhaps as a future importer - the west has large flake graphite deposits, knows how to extract and refine the graphite and are the leaders in technological advancements regarding this space and demand is going to grow exponentially.

New, high-tech applications require more and more graphite production while graphene seems to be a wonder material and a lot of time, effort and money is being spent researching it – 3000 research reports were written just in 2010.

An investor needs to be doing his/her due diligence on junior resource companies with near surface, high grade large flake deposits close to all necessary infrastructure in politically safe jurisdictions.

Graphite should be on every investors radar screen. Is it on yours?

If not, maybe it should be.

Richard (Rick) Mills

rick@aheadoftheherd.com

www.aheadoftheherd.com

If you're interested in learning more about a specific graphite junior, the junior resource sector, bio-tech and technology sectors please come and visit us at www.aheadoftheherd.com

Site membership is free. No credit card or personal information is asked for.

 ***

Richard is host of Aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 400 websites, including: Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Uranium Miner, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, and Financial Sense.

 ***

 Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report."

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Peak Oil: Oil shock ‘likely’ within decade, warns UK Energy Secretary TNR.v, TSLA, CZX.v, RM.v, LIT.v, LI.v, WLC.v, CLQ.v, FCX, RTP, HEV, AONE, VLNC,

"Will we wait until it is too late? You would expect that with all recent news from the Gulf about Oil Spill there will be a very intensive discussion about alternative way of powering our lives and Green Revolution in transportation will be in focus of mass media. It is not the case yet - there will be a tough road ahead of us.


"This report: "Global Energy Crunch: How different parts of the world would react to a peak oil scenario" by Joerg Friedrichs is a must read for all investors and Obama administration. We guess that actually Obama knows better than many others that there is NO More Cheap Oil Left. With Oil Spill in the headlines and late realisation about the scale of this catastrophe all dreams about cheap oil will vanish, but question remains open: what Obama will be able to chose? Are we grown up enough to push him to endorse new technologies and get off from the Oil addiction or we will witness the Crash of Empire fighting wars which will benefit only few and destroy lives of billions?"

UK is very persistent in sounding an alarm about coming Peak Oil and what it means to the world economic system. Electrification of transportation is the only commercially available option to survive our life style now. It is well under way now in Asia and hopefully US corp will not lose this opportunity to reignite growth and save its economy from the Oil Shock. Access to Lithium and REE supply will gain a geopolitical significance as strategic advantage for basis of new electricity based mobility.

Image by madaboutasia via Flickr

"Jim Puplava has made a segment with James Dines on Uranium, Gold and Rare Earths recently. James Dines gave a very interesting description about beginning stage of the real Bull market. We think that Lithium is exactly at the same stage now: people look at the sector, but do not realise its real potential. James Dines has already started the fire in REE market space in Spring 2009."

FT:

Oil shock ‘likely’ within decade, warns Huhne
By Fiona Harvey and Alex Barker




Energy secretary Chris Huhne wants to toughen European Union emissions-cutting targets, angering some Tories


Britain is “very likely” to face an oil shock within the next decade, triggering economic volatility as fraught with “nasty surprises” as the 1970s, the energy secretary has warned.

Chris Huhne told the Financial Times that Britain was in danger of becoming as vulnerable to price spikes as before the discovery of big North Sea oilfields, leaving the economy open to “very severe blows”.

His forecast of a looming energy crisis came in an interview where Mr Huhne admitted that “nuclear is going to play a part in the energy mix”, but declined to guarantee state support for low carbon manufacturing.

The energy secretary is a pivotal figure in the coalition who must implement a nuclear policy his own party has opposed, while fighting his corner in one of Whitehall’s toughest budget negotiations to protect cherished green policies from the Treasury axe.

Mr Huhne is pushing to toughen the European Union’s emissions-cutting target from 20 per cent by 2020 to 30 per cent, angering some businesses and Tories, who fear rising costs.

But when asked whether energy bills must increase to meet the government’s green agenda, Mr Huhne instead highlighted the dangers of an era of erratic oil prices.

“The world we’re going into isn’t going to be a world where the oil price will be $80 a barrel flat for ever, or $150 a barrel flat for ever,” he said. “It will be a world where we will have very substantial oil price spikes, which have an enormous capacity to provide shocks to the domestic economy and to the world economy, exactly as they did in the 1970s and 80s.”

The only way in which to avoid such shocks, he said, was to invest heavily in energy efficiency and renewable sources of power.

“What worries me ... is that we’re moving from a world where the UK is dependent on imported energy for only 27 per cent of our needs, to a world where it’s going to be anything from 46 per cent to 58 per cent within 10 years,” he said.

“That puts us right back into the scale of energy import dependence that we were in back in the 1970s, when we suffered very, very severe blows as a result of the oil price shock.”

One of Mr Huhne’s biggest challenges is offering financial backing for low carbon, while at the same time finding 20 to 40 per cent savings from a budget that is in danger of being overwhelmed by nuclear decommissioning costs. Some “green” technology companies planning offshore wind turbine manufacturing facilities and carbon capture and storage plants are having second thoughts over investing in Britain because of the risk of the state withdrawing support.

Even so, Mr Huhne was unable to provide any assurances from a government that is borrowing “£1 of every £4” it spends. “Most businesses will recognise that when you are in that sort of situation with your cash flow, you have to take some pretty tough decisions,” he said.

However, Mr Huhne was confident that a new generation of nuclear power stations would be built, even without state subsidies – a condition of enforced austerity which some Lib Dems expected to scupper the programme.

“Nuclear will go ahead if investors come forward with proposals, as I think they will,” he said. “It’s very clear to me that nuclear is going to play a part in the energy mix, precisely because of the commitments that we’ve made in the coalition agreement.”

Rather than raising prices or imposing tough new laws, Mr Huhne promised to encourage take-up of energy efficiency measures and low-carbon technology through “a system of incentives, triggers and nudges”.

But government insiders admit that without a generous settlement from the Treasury, Mr Huhne will be forced to choose between ditching fuel poverty targets and his green ambitions or raising energy bills through increasing levies.

Mr Huhne said only that he would like to “simplify” the levies charged to businesses and consumers to help pay for low-carbon power."

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