China H1 quota; China-US talks; Post-CNY price drop; Desperate hype and hot air from the usual suspects: MP, Hastings, ARR
Rare Earth 23 February 2024 #140
Capricious consultant reports
There are numerous sources offering reports on this and that in rare earth. The vast majority of these reports are faulty:
Market reports based on old numbers and include companies who have long gone out of business;
Reports that compare mining of resources with production of finished products;
Consumption forecasts of products in countries and territories where there is none;
ESG comparisons based on hearsay, comparing apples and eggs.
Most of these consultants have little to no experience or knowledge of rare earths.
But also in science there are bad apples. Like this careless, sloppy desk-job job here:
Secondary Deposits as a Potential REEs Source in South-Eastern Europe
There are so many things wrong with this report, incredible that MDPI even publish it.
Notice of the two ministries and commissions on issuing the first batch of total control indicators for rare earth mining, smelting and separation in 2024
China Rare Earth Group Co., Ltd., China Northern Rare Earth (Group) High-Tech Co., Ltd., relevant provincial and autonomous region industry and information technology departments, and natural resources authorities:
The first batch of total control targets for rare earth mining, smelting and separation in 2024 are now issued to you. The relevant matters are notified as follows…
The hard rock mining quota for first half 2023 was 109,057 t TREO, for first half 2024 it is 124,860 t TREO, up 15,803 t or 14.5%.
Ion adsorption clay (IAC) mining quota was 10,943 t TREO for first half 2023, for first half 2024 it is 10,140 t TREO, down 803 t or -7.4%
The smelting quota for H1 2024 is 127,000 t TREO, up 12,000 t TREO or 10.4% from H1 2023 115,000 t TREO.
Avid readers of this humble blog will know, that raw material under the a.m. mining quota is subject to the China resource tax. This is, what keeps imports of rare earth raw materials attractive.
The quota is such, that about ⅔ of rare earth raw material will be domestic, and ⅓ will be imported.
A quick reminder that China domestic single element mining of monazite is illegal. The monazite from the tailings of the Bayan Obo mine is commingled with bastnaesite, therefore it is legal, and it moves exclusively from Baotou Steel to China Northern Rare Earth Group. Consequently all monazite on China’s open market is imported - which should have an impact on monazite price negotiation strategies of smart foreign suppliers.
The reduction in the IAC quota shows, that MIIT expect more than enough proportionally higher heavy rare earth materials to come in from Madagascar, Myanmar, Malaysia and Laos, so China can preserve its domestic resources according to long-standing policy.
China could easily feed its rare earth industry from domestic resources. But they don’t want to, if they don’t have to.
The True Cost Of Mining Electric Car Battery Metals
//Politics
Kazakhstan Produces Over Half of Raw Materials Critical for EU Economy
Kazakhstan produces and processes 19 types of essential raw materials included in the list of critical raw materials for the European Union (EU), reported the Ministry of Industry and Construction on Feb. 6. The list updated by the EU in 2023 includes 34 critical raw materials.
The ministry noted it is working on the tasks for the next five years. Overall, 15 rare earth deposits registered in the state are spread across three regions of Kazakhstan: Turkistan, Kostanai, and Mangystau. Data from the National Geological Service also indicates Kazakhstan possesses a raw material base of rare metals, including tungsten with 2.2 million tons of reserves, molybdenum with one million tons, lithium with 75,600 tons, tantalum with 4,600 tons, niobium with 28,100 tons, beryllium with 58,000 tons, among others.
This is all very nice and wonderful, but in terms of de-risking, transport through either Russia, China or the Russian-controlled Caspian Sea seems a little bit counterintuitive, as we discussed in our previous issue.
What critical technologies lists can and can't tell us
The White House this week released its updated list of critical and emerging technologies across 18 areas. It is largely similar to the 2022 version, with some minor recategorizations, and features significant overlaps with the EU’s own list of 10 critical technology areas—not surprising given their close transatlantic cooperation on trade and tech.
a/symetric always has the finger on the pulse.
DOD Releases List of People's Republic of China (PRC) Military Companies in Accordance With Section 1260H of the National Defense Authorization Act for Fiscal Year 2021
Today, the Department of Defense released an update to the names of "Chinese military companies" operating directly or indirectly in the United States in accordance with the statutory requirement of Section 1260H of the National Defense Authorization Act for Fiscal Year 2021.
Updating the Section 1260H list of "Chinese military companies" is an important continuing effort in highlighting and countering the PRC's Military-Civil Fusion strategy. The PRC's Military-Civil Fusion strategy supports the modernization goals of the People's Liberation Army (PLA) by ensuring it can acquire advanced technologies and expertise developed by PRC companies, universities, and research programs that appear to be civilian entities. Section 1260H directs the Department to begin identifying, among other things, Military-Civil Fusion contributors operating directly or indirectly in the United States.
As far as we can see no rare earth or rare earth permanent magnet companies are on the list yet. The list is subject to updates, so nothing is edged in stone.
You can download the list of 31 January 2024 by clicking on this link.
Related:
China private investment firms face growing U.S. scrutiny, analysts say
In an updated Department of Defense (DOD) list of entities identified as "Chinese military companies" operating in the U.S., IDG Capital Partners is among 17 newly added names. They are seen as helping to support the "modernization goals" of the Chinese military by "ensuring it can acquire advanced technologies and expertise" developed by Chinese companies, universities and research programs "that appear to be civilian entities," the Pentagon said on Jan. 31.
The list previously comprised only technology companies and manufacturers. IDG Capital Partners is the first private equity and venture capital specialist to appear.
"This is the first case that a major Chinese-headquartered investment firm is being added to a sanctions list by the U.S. government," said Wilson Zhao, a Hong Kong-based associate focusing on sanctions and export control at law firm Steptoe.
"With IDG's designation, investment firms, especially those headquartered in China, now need to worry not only about [their] portfolio companies being sanctioned, but also [whether] they could be sanctioned as a result of investing in or co-investing with certain companies," Zhao said.
That may ultimately concern also Chinese investors of the likes of Gloryhope Capital or Conglin International Investment Group in Australia, who target junior rare earth miners.
Antidumping for all
Our revamped guide is here!
Exciting News! EU producers, gear up to level the playing field against dumped imports! This updated guide offers: Handy links to information sources, user-friendly data provision forms and step-by-step calculation guidance. The guide is available in all EU languages - and is free.
You can download the guide from this link.
READOUT: Third Meeting of the Economic Working Group Between the United States and the People’s Republic of China
U.S. officials also frankly raised issues of concern, including China’s industrial policy practices and overcapacity, and the resulting impact on U.S. workers and firms. U.S. officials reaffirmed that the U.S. is not seeking to decouple the two economies and instead seek a healthy economic relationship that provides a level playing field for American companies and workers. The meetings concluded with both sides agreeing to meet again in April.
China can not grant fair treatment to foreign companies in China, as this would allow foreign companies to fully play out each of their particular strenghts. Doing so would inevitably hinder progress of national Chinese companies in the same field - which runs counter to Xi Jin Ping’s lofty national security aspirations. Therefore the Chinese side can at best piece meal up to the threshold where a foreign company would likely take the plunge and invest in China.
This threshold, however, has risen a lot, ever since the Central Committee announced the need to decouple from the West, internally 2012, externally in 2013.
In the Chinese readout of the meeting it says:
The Chinese side expressed concerns about issues such as additional tariffs imposed by the U.S. on China, restrictions on bilateral investment, and sanctions against Chinese companies.
In terms of China dominance, we view tariffs as the only effective mean to keep markets balanced and rational. Tariffs should only be negotiated, after China has lived up to all its commitments under the WTO accession protocol of 2001 - in deeds, not again only in words.
Regarding WTO compliance, China is long past the 15 year implementation deadline, approaching 25 years.
China's exchanges restrict stock selling by some hedge funds
"Our line was unplugged," a quant hedge fund trader in southern China said. Orders to sell stocks on the fund's broking platform were declined, he said.
If the markets don’t do what the Communist Party wants, then this is what happens. The actors are the same people, who complain about foreigners selling their assets and withdrawing their funds from China.
In March 2022, amid a boom of rare earth prices, the Chinese government asked China Northern Rare Earth, China Rare Earth Group and Shenghe Resources to do their national duty and reduce prices and to guide the market down. Since then price indices have fallen 65% and there is no stop in sight.
The overall rare earth demand growth has not kept pace with capacity expansions, so after the initial kick-start the price-decline became self-propelled.
European solar, eclipsed?
Europe’s solar industry is warning of its own imminent collapse. At stake isn’t just solar dependence on China, but whether Europe can safeguard its industrial base and strengthen economic security.
This is what happens if you don’t take supply chains seriously and get entangled in discussion of idealistic notions, rather than acting on the issue.
Hype
Decreasing access to rare earth minerals put US munition production at risk
Lacking concrete data about ammunition applications, we speculate the retired general talks about potential rare earth usage in:
Ignition systems of ammunition (as part of primer composition);
Guidance systems of precision-guided munitions (rare earth permanent magnets);
Detonation devices to ensure reliable and precise detonation upon impact;
Tracer rounds.
Since we are at it, here are the contents of DFARS 225.7018 Restriction on acquisition of certain magnets, tantalum, and tungsten, latest edition. It says under “Exceptions”:
//Electric Vehicles
Chinese EV giant BYD to begin Vietnam sales in May
The world’s biggest electric vehicle maker, China’s BYD, will set up shop in Hanoi in May. It would sell its first cars in the sedan and SUV segments, sources familiar with the matter told VnExpress. Its SUV BYD Atto 3 is among the most sought-after cars globally. It has large demand in Sweden and is the best-selling EV in Thailand.
It has a 60.48-kilowatt-hour battery that allows travel of up to 480 kilometers. Its prices start from US$30,750 in Thailand.
In Vietnam, BYD cars will be imported as complete units from China.
Chinese EV maker Human Horizons suspends manufacture of luxury HiPhi brand for 6 months as market competition intensifies
Human Horizons, a Chinese maker of luxury electric vehicles, has become the latest victim of the cutthroat market, halting production of its cars amid a capital crunch.
The Shanghai-based company told its employees on Sunday that it was implementing a six-month suspension of its luxury HiPhi brand, effective immediately, according to local financial media outlet Jiemian.
Human Horizons declined to comment when contacted by the Post on Monday.
Two sources with knowledge of the electric car maker’s operations said the company was not able to pay its employees their salaries in January.
We’ll see more stories like this one in 2024.
Electric Vehicle Sales Review Q4-2023
In January 213.553 new passenger vehicles were registered in Germany, the share of EV was only 10.5%.
For some the glass is half empty, for others it is half full, like the “electrive”:
Europe: EV sales grow 29 per cent in January
A total of 92,741 battery electric cars were sold in the EU in January 2024. That is an increase of 28.9 per cent YoY, according to figures from the European Automobile Manufacturers’ Association (ACEA). The four largest markets were Belgium (+75.5%), the Netherlands (+72.2%), France (+36.8%), and Germany (+23.9%). Together, they accounted for 66 per cent of EV sales in the EU.
The General German Automobile Club (ADAC) quotes the German Federal Motor Transport Authority with this chart of the development of passenger car sales in Germany:
Myanmar's military regime promotes EVs with a heavy hand
About 85 companies now hold licenses for EV-related businesses, according to the regime's steering committee on national EV development. Showrooms without brand names represent operators preparing to enter the EV industry.
Import tariffs for EVs were scrapped in January last year, which is due to continue until this March. More than 2,200 EVs had been registered as of Jan. 31, according to the Ministry of Transport and Communications.
Myanmar's EV market is suddenly heating up, and Chinese brands are taking a dominant share. This appears to be less because of the cozy political relationship between the countries and more because Myanmar is a destination for the overflow of Chinese EVs -- a sector facing excess production.
Myanmar's military regime has banned imports of gasoline-fueled cars for more than two years, and also restricted foreign-currency transactions by local manufacturers, in the name of improving the country's trade balance and saving on foreign currency.
Big noise about a small market.
Pitching to Assist India to Develop EV Sector, Says Australian Envoy
Australia is pitching to become India’s key supplier of critical minerals, which would enable the country to develop the electric vehicle industry, said its high commissioner to India Philip Green.
Australia has the world’s highest lithium deposits and second highest cobalt deposits. It is also the fourth-largest producer of rare earths worldwide.
Last year, India and Australia identified five target projects – two for lithium and three for cobalt – for which to undertake detailed due diligence. The Australia-India Critical Minerals Investment Partnership was signed last year to support India’s investments in Australian critical minerals projects.
Aren’t Australian politicians concerned that no-one wants to build EVs in Australia?
//Companies
VHM Signs Binding Offtake Agreement
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