July 15, 2010

The White House has released the  Department of Energy report yesterday called THE RECOVERY ACT: TRANSFORMING AMERICA’S TRANSPORTATION SECTOR - BATTERIES AND ELECTRIC VEHICLES. The report highlights the DOE's achievements to date, and their projections on the future impact of their investments.

The projections to 2015 include a 70% decrease in battery costs, a 33% decrease in batter weight, a 3.5x increase in battery lifetime (measured in years) and battery component manufacturing capability to support up to half a million electric vehicles per year. The report claims that in 2015, the US will have the capability to produce 40% of the world's advanced vehicle batteries.

All that will take a lot of resources. Is American resource policy ready?

Read the full report here:

http://www.whitehouse.gov/files/documents/Battery-and-Electric-Vehicle-Report-FINAL.pdf

UPDATE 14 July 2010

Listen to the conference call

6 June 2010

We recently reported that Senator Murkoswki introduced a Senate version of the RESTART Act. On Thursday July 15, 2010 at 1pm we will be hosting a conference call with a staff member on the US Senate Committee on Energy and Natural Resources to discuss the bill and its implications.

Original Article:

On June 22, 2010 Senator Lisa Murkowski (R-AK) introduced a bill (S.3521) called "A bill to provide for the reestablishment of a domestic rare earths materials production and supply industry in the United States, and for other purposes". The bill is a companion measure to HR.4866, the Rare Earth Supply-chain Technology And Resources Transformation (RESTART) Act introduced by Congressman Mike Coffman. Congressman Coffman announced his bill publically at TREM10 on March 17, 2010.

Senator Murkowski's bill would "require--under the leadership of the Secretary of the Interior--the Secretaries of Energy, Agriculture, Defense, Commerce, and State along with the Director of OMB and the Chairman of CEQ to expedite permitting, review supply chains, and consider strategic stockpiling of rare earths. The bill would also provide the rare earth industry with access to federal loan guarantee programs meant to advance clean energy technologies."

July 11, 2010

The Chinese Ministry of Finance has announced the export quota for rare earth metals for the second half of 2010. Exports of Rare Earths are capped at 7976 tonnes, and is limited to only 32 companies. The largest quota was for Shandong Pengyu Industrial Co., Ltd. at 738 tonnes, followed by Baotou Huamei Rare Earth Hi-Tech Co., Ltd. with 658 tonnes and Inner Mongolia Baotou Steel Rare Earth (Group) Hi-tech Co., Ltd. with 634 tonnes. According to a Bloomberg report, this figure is down from 28,417 for the same period a year ago - a reduction of 72%.

In related news, People's Daily Online reported that the central government is planning a unified rare earth pricing mechanism to help keep prices high. The policy will affect Jiangxi, Fujian, Guangdong and Hunan provinces, as well as the Guangxi Zhuang autonomous region, which are rich in the resource. The government run newspaper reported that "A unitary price based on negotiation will be published once a month to protect the natural resources from being depleted and to avoid cut-throat competition among the five affected areas, sources said."

Pricing is volatile. The report stated that some of the major rare earth oxides such as neodymium have rallied to 190,000 yuan ($28,000) a ton from the bottom low of up to 80,000 yuan a ton in 2008, driven by a crackdown on illegal mining as well as lower production and exports.

Export quotas here: http://wms.mofcom.gov.cn/accessory/201007/1278557408138.xls and http://www.mofcom.gov.cn/aarticle/b/e/201007/20100707011768.html

Price fixing here: http://english.peopledaily.com.cn/90001/90776/90882/7056931.html

July 6, 2010

The trend of resource hungry economies reaching out to control global resources is continuing. State-run companies like JOGMEC (the Japan Oils, Gas and Metals National Corporation), Korea Resources Inc., China Megtallurgical Group Corp and others are hunting for technology metals.

At the beginning of 2010, Toyota Tsusho acquired a 25% stake in Orocobre's Chilean lithium operation. Toyota Tsusho is a partially owned subsidiary (22%) of Toyota, the motor company. Additionally Toyota Tsusho will be responsible for securing a Japanese government-guaranteed low-cost debt facility for at least 60 percent of the Project‟s development costs. This facility is expected to be secured through the Japan Oils, Gas and Metals National Corporation (JOGMEC), a state-owned entity that provides assistance to Japanese companies in securing supplies of mineral resources.

Yesterday, another Japanese trading house (Itochu Corp) announced that it would buy a 20% stake in US lithium extractor Simbol Mining. The deal gives Itochu exclusive rights to market Simbol lithium in Asia. Simbol extracts lithium from geothermal brines in California. Note that at the time of publishing, there is no evidence that a state-owned enterprise is involved. However, Simbol Mining holds an exclusive license to patented silica extraction technology from the Department of Energy,

But it is not just Japan joining into the fray. Last week, a Korean company called Posco (Asia's third-largest steelmaker) purchased the 60% of China's Yongxin Rare Earth Metal Co., along with state-owned Korea Resources Inc.

China is internationally renowned as being the most acquisitive. The most recent news is that despite instability, violence and danger China is ploughing ahead with their resource development plans in Afghanistan. Their copper needs must be desperate. The Aynak copper mine, located in the valley where Al Qaida trained for the 9/11 attacks, will begin production by 2013. The mine is a joint venture between China Megtallurgical Group Corp and Jianxi Copper.

According to a recent Associated Press article, Ghullam Mohammad Yalaqi, the Afghan commerce and industry minister said, "China is the biggest buyer of raw materials in the world, whether that's in Africa, Asia or any other part of the world. So if China wants to come to Afghanistan, why not?"

To the rest of the world, China is seen as a stable partner and an investor. Meanwhile, America has a different reputation, as indicated by the AP article.

Beijing has reaped admiration for projects such as the 350-bed Jamhuriat Hospital. Inaugurated last summer, it was built in three years by 200 Chinese workers who lived on-site in temporary lodgings, said hospital director Ramazan Karimi. The hospital sits empty, though, because the government hasn't allocated any operating funds, he said.

"The Afghan people prefer this gift from China. The Chinese side has done streets, roads and clinics in Afghanistan," Karimi said. "They didn't bring their troops here."

Foreign direct investment and the international flow of capital drives development, and should be looked upon favorably. However, there is a difference between international investment by individuals and private companies, and those companies that are controlled by a foreign government. A problem arises if capital markets are distroted by government willing to invest at a premium in order to gain influence the geopolitical stage. Governments may make investments that are not designed to increase effiency, but rather to destroy it and kill a foreign country's competing industry.

According to IAGS Executive Director Gal Luft's testimony before the House Committee on Foreign Affairs in May 2008,

"Willingness to pay above market prices, use government assets to back up financial deals or manipulate prices to increase returns should all be red flags that trigger response. The U.S. already has a rigorous safeguard mechanisms against undesirable foreign investors. The Committee on Foreign Investment in the U.S. (CFIUS) protects national security assets in sectors such as telecommunications, broadcasting, transportation, energy and minerals in which there is a clear potential danger to national security."

Luft asserts that countries that seek to invest internationally should also allow foreign investment freely.