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SEC Receiving Public Comments on Frank-Dodds Act

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August 9, 2010

The Securities and Exchange Commission (SEC) has begun taking and posting public comments on the Frank-Dodds Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act includes provisions that require the SEC to undertake various initiatives, including rulemaking and studies touching on many areas of financial regulation.

Members of the public interested in making their views known on these matters, even before official comment periods may be opened, are invited to submit those views via the SEC website. The website lists the major regulatory topics of the bill, and has email addresses and web forms set up to take comments. This includes Title XV - Miscellaneous Provisions: Specialized Disclosures (conflict minerals, mine safety, and payments by resource extraction issuers).

The Commission will post all submissions on this page of the Commission's Internet Web site. All submissions received will be posted without change; they do not edit personal identifying information from submissions.

To make a submission, visit http://sec.gov/spotlight/regreformcomments.shtml. Title XV is near the bottom of the page, and comments already submitted are available for view.

 

Notes from the Chilean Lithium Seminar

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August 8, 2010

On Thursday, the Chilean National Society of Mines (SONAMI) held a seminar called "Lithium and the National Economy" in collaboration with the Ministry of Mines. The goal of the meeting was to outline Chile's role in the lithium economy, and to explore potential changes to the laws that govern the exploration and exploitation of lithium resources.

In his opening address, Albert Salas (President of SONAMI) mentioned that Chile produced 45% of the world's lithium, followed by Australia (25%), China and Argentina. The country's exports of lithium in 2009 totaled US$140 million. He also said that lithium demand could double by 2020 to 140,000-150,000 tons, or 7-8% growth per year on average. An inaugural address was also given by Laurence Golborne Riveros, the Chilean Mining Minister

The main purpose of the seminar was to look at the Chilean Law on Mining Concessions (1982) and the Mining Code (1983), which assert that lithium is reserved for the State and mining concessions cannot be granted. SONAMI believes that these provisions are a detriment to the Chilean economy. Many automotive industry manufacturers are seeking long term agreements with Chilean lithium producers, but they cannot be fulfilled under current laws.

Patricio de Solminihac, Chief Operating Office and Executive Vice President of lithium producer SQM, said "Today, lithium-based technologies are the winners...and Chile definitely has a role to play and is a force in this industry."

Monika Engel-Bader, president of Chemetall Gmbh said that if Chile can guarantee long term access to mining and water rights, Chile will be able to tap into the burgeoning Mexican and Brazilian auto markets.

The IAGS TREM Center was represented at the panel by Dr. Gal Luft. He said, "The continuation of the current regulatory environment could cause Chile to lose its competitive edge and miss out on an important business opportunity."

Chilean Senator Jaime Orpis (Independent Democratic Union Party) said, "there is a tradeoff between the state and its investments. The best way would be for the State to raise funds through taxes the resources they get private companies to exploit the mineral." He noted that globally, there are 14 lithium projects under development, 65 in exploration phase, and 21 exploration applications. Of these 100 projects, only one is in Chile.

Chilean Senator Baldo Prokurica (National Renewal Party) said, "What differentiates countries are not mineral resources, but it is the institutions that exist to make efficient use of resources available"

 

Conflict Minerals Reporting Signed into Law

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August 1, 2010

Update: To read the original Conflict Minerals section text, click here:

http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp111&sid=cp111nKmpD&refer=&r_n=hr517.111&item=&&&sel=TOC_2820495&

July 29, 2010

On July 21, 2010, US President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act contains 16 Titles, mainly dealing with, as the title states, reforming Wall Street, additional oversight on the practices of the financial industry, and protecting the public from financial indiscretions of various kinds.

 

For the TREM community, the part that stands out is Title XV - Miscellaneous Provisions. In particular, it calls on the SEC to create a set of rules on Conflict Minerals. More specifically, the SEC will need to determine if minerals coming from the region surrounding the Democratic Republic of the Congo are benefiting armed groups. Additionally, the SEC will also need to monitor safety performance in mining operations. Finally companies will need to report any payments made to receive licenses for minerals exploration and production.

The law was introduced by Representative Barney Frank and Senator Chris Dodd. The conflict minerals provision was added by Senator Sam Brownback.

White House photo below: President Barack Obama meets with Rep. Barney Frank, (D-Mass), Sen. Dick Durbin, (D-Ill), and Sen. Chris Dodd, (D-Conn), in the Green Room of the White House prior to a financial regulatory reform announcement June 17, 2009.

President Obama Speaking About Financial Reform

Chinese Lithium Growth Plan Reduced to 500%

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July 25, 2010

It seems being prudent is the intention over in China, where Liu Shanqing stated that "the original plan was to have a capacity of 60,000 tonnes by 2015, but since extraction technologies are not that mature we have scaled it down to 30,000 tonnes," Liu is Qinghai province's director of Land and Resources Department.

According to the Chinese newspaper People's Daily online, Citic National Security Lithium Technology Corporation will produce 25,000 tonnes of that. The global production of lithium in 2008 was also 25,000 tonnes.

With a name like Citic National Security Lithium Technology Corporation, it's clear that supply chain security is a national  priority in China.

Qinghai is high altitude arid province northeast of Tibet, and geographically is a part of the Tibetan plateau. It is the source of the Yangze, Yellow and Mekong rivers.

 

Prices of lithium carbonate are likely to increase by 16 percent year-on-year globally by 2013, due to the increased demand for lithium batteries, said a recent from China International Capital Corporation.

The original article is here:

http://english.peopledaily.com.cn/90001/90778/90860/7078143.html

 

DOE Secretary Chu Urged to Offer Loan Guarantees for Rare Earths

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July 20, 2010

In a bipartisan letter signed by 20 senators yesterday, Senators Evan Bayh (D-IN) and Lisa Murkowski (R-AK) urged Secretary Steven Chu to utilize the loan guarantee program to ensure a domestic supply of rare earth metals.

For your information, the letter is attached below.

White House Releases DOE Report on the Recovery Act

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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?

Energy Secretary Steven Chu

Read the full report here:

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

Chinese Rare Earth Quota and Price Fixing

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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


Conflict Minerals Amendment Accepted

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11 July 2010

On April 24, 2009, Senators Sam Brownback (R-KS), Dick Durbin (D-IL) and Russ Feingold (D-WI) introduced the Congo Conflict Minerals Act into Congress. The Congo Conflict Minerals Act calls on the United States to support multilateral efforts to investigate, monitor, and stop activities involving natural resources that contribute to illegally armed groups and human rights violations in eastern Congo. According to the press release from Senator Brownback's website, "Eastern Congo is rich in lucrative natural resources including cassiterite (tin), columbite-tantalite or coltan (tantalum), wolframite (tungsten), and gold. Metals derived from these minerals are used in common technological products, including mobile phones, laptops, and digital cameras."

On May 18, 2010, an amendment to the Financial Regulatory Reform Bill relating to Congolese conflict minerals was accepted. The amendment applies to companies on the U.S. stock exchanges for which these minerals constitute a necessary part of a product they manufacture. Those companies will be required to publically disclose annually to the Securities and Exchange Commission if the minerals in their products may have originated in Congo or a neighboring country. The companies will also need to establish a process to ensure that the transications did not finance or benefit armed groups.

Many of the minerals mined in the Congo are important parts of the defense and energy supply chaines. Important uses of cobalt include Nickel-Metal Hydride, Lithium ion and Nickel-Cadmium batteries, as well as in the turbines of jet engines. Samarium-Cobalt magnets are also important parts of the defense industry. Niobium is used in alloys for automobile structures, jet engines and rocket parts. Tantalum is commonly used in capacitors in most consumer electronics.

According to the CIA World Factbook, the Democratic Republic of the Congo has the following natural resources: cobalt, copper, niobium, tantalum, petroleum, industrial and gem diamonds, gold, silver, zinc, manganese, tin, uranium, coal, hydropower, timber. In 2008, most exports went to China (47.3%), Belgium (15.4%), Finland (9.6%) and the US (8.1%). An uncertain legal framework, corruption, a lack of transparency in government policy are long-term problems for the mining sector and the economy as a whole.

Another major issue according to the CIA is human traffic: "Democratic Republic of the Congo is a source and destination country for men, women, and children trafficked for the purposes of forced labor and sexual exploitation; much of this trafficking occurs within the country's unstable eastern provinces and is perpetrated by armed groups outside government control"

A Minor Miner in the Congo - Photo by Grassroots Group

UPDATE: Conference Call on Senate Rare Earth Bill

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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 Lisa Murkowski

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."

 

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