Hyperventilation over China RE rule; Pensana's finance; MP sink into loss; Shenghe's cheap deal with Vital; Peak resist Shenghe; Northern Minerals resist PRC shareholders; Western RE cos price revolt;
Rare Earth 10 November 2023 #132
The media are hyperventilating, even though nothing has happened. Relax!
As ever, we bring you here the original text, for you to judge yourself if something has happened or not:
Ministry of Commerce: Crude oil, iron ore, copper concentrate, and potash fertilizers subject to import license management will be included in the "Catalogue of Energy Resource Products Subject to Import Reporting"
In view of the import and export situation and management needs of products, the "Statistical Investigation System for Import Reporting of Bulk Agricultural Products" formulated in 2021 has been revised and renamed "Statistical Investigation System for Import and Export Reporting of Bulk Products".
The current implementation will continue to apply to 14 products including soybeans, rapeseed, soybean oil, palm oil, rapeseed oil, soybean meal, fresh milk, milk powder, whey, pork and by-products, beef and by-products, mutton and by-products, corn distillers grains, and sugar outside tariff quotas.
On the basis of the import reporting system, the main new contents are as follows:
1. Crude oil, iron ore, copper concentrate and potash fertiliser that are subject to import license management will be included in the "Catalogue of Energy Resources Products Subject to Import Reporting", and export licenses will be implemented.
The managed rare earths are included in the "Catalogue of Energy Resources Products Subject to Export Reporting".
Foreign trade operators who import and export the above-mentioned products shall fulfil relevant import and export information reporting obligations.
2. The Ministry of Commerce entrusts the China Chamber of Commerce for Import and Export of Mining, Minerals and Chemicals to be responsible for the daily work of collecting, sorting, summarising, analysing and checking the reporting information of the above-mentioned five new categories of energy resource products.
It will be implemented from October 31, 2023, and the implementation period will be until October 31, 2025.
Banal and boring. Not even a dual-use license requirement. There is nothing to see here. Why Japan’s Nikkei and Hong Kong’s South China Morning Post want to sensationalise this, is incomprehensible.
China depends on rare earth raw materials from all over the world, also from the US:
During the first half of 2023 China’s rare earth raw material imports have risen 68%.
The West’s core China-dependency is not rare earths, it is rare earth permanent magnets.
Could this happen to rare earths and permanent magnets?
Chinese Solar Firms Feel Squeeze on Profits as Overcapacity Hits
“Recent ‘irrational’ prices of PV modules have been hovering at near cost levels of 1 yuan (14 U.S. cents) per watt. At this current price, it is hard for anybody on the industry chain to make profit. Most companies are barely surviving,” Longi President Li Zhenguo said on a third-quarter earnings call Tuesday.
The solar manufacturer reported a 44% year-on-year plunge in profit for the three-month period.
Chinese solar-panel makers have been doubling down on their investment in the booming industry, but with capacity already exceeding demand, analysts and investors are worried whether companies have been too aggressive in an already saturated market.
Western miners target China’s rare earth metals grip with premium prices
A handful of Canadian, German and Australian critical mineral explorers plan to command premium prices for key metals used in electric vehicles, promising quality and consistency in exchange for shifting reliance away from China, the dominant producer and price-setter.
China controls 95% of the production and supply of rare earth metals, integral to manufacturing magnets for electric vehicles (EVs) and wind farms, and this monopoly has allowed China to dictate prices and stir turmoil among end users through export controls.
Now, mining companies such as TSX-listed Aclara Resources and Australia's Ionic Rare Earths are discussing plans that may on the critical minerals market, moving towards market-determined prices, company officials told Reuters.
Canadian miner Neo Performance Materials and Germany's Vacuumschmelze are also discussing similar plans, people familiar with the matter said. The two companies did not offer comment when reached by Reuters.
The previously unreported plans come as the miners seek to benefit from the Group of Seven (G7) countries' move to incentivize miners and automakers to produce and procure critical metals domestically or from friendly nations.
In exchange, these miners expect end users to pay a premium.
There are two pillars for rare earth growth: EV and offshore wind turbines. The rest of the growth-areas is dwarfed by these two. The problem here is EV.
In our view, the biggest obstacle to fair rare earth pricing ex-China is Big Auto.
Big Auto is stalling by ‘yes - but.’ They say ‘yes’ to western NdFeB magnets, ‘but’ only at Chinese prices, wining about Chinese EV competition.
The single largest cost factor in EVs is the battery and subsequently the battery materials, not the puny couple of kgs of NdFeB magnets.
According to our calculation, of the quantity of critical metals used in electric vehicles, rare earths have a share 0.29%. Yes, that is zero-point-two-nine percent.
No-one can tell us, that a few dollars more for rare earth and rare earth permanent magnets would lead to terrible losses at Big Auto. That is nonsense.
To add insult to injury, not only does Big Auto want China prices for western magnets, they also scream for taxpayer-funded subsidies, to make up for their very own higher-than-China cost.
Governments should get tough with Big Auto for this utterly twisted argumentation.
Anyway, at the time of this writing there is a tsunami of highly competitive Chinese EVs headed for the rest of the world, and their arrival at western shores will render any further discussion obsolete.
Is net zero leading the world to ruin?
Bryce steamrolls the net-zero agenda with his educated, down-to-earth approach and correctly bemoans a reality-detached idealism. He is rooted in a way of thinking that made America great and he is fervently pro-growth.
However, we would caution a bit. On occasions in recent history it has been naïve, idealistic, self-serving, narcissistic youth, who changed the course of history for the better. It hardly ever was entrenched, vested interest who brought about change.
Also Bryce himself ventures beyond reality with his advocacy of small thorium molten salt reactors (TMSR) for developing nations. This may not work, already in terms of nuclear non-proliferation. The TMSR actually is not in the interest of Big Nuclear, who he lobbies so passionately for.
The Rare Earth Market Outlook at the epic North American Rare Earth Day of Adamas Intelligence two years ago clearly shows, that the current quest for sustainability itself is not sustainable and not realistic from a materials view point.
Battery materials do not look much better.
Bryce is quite right that the availability and cost of energy will affect overall consumer behaviour and dampen growth substantially.
The detour via the evil spin of ‘sustainable development’ may eventually lead us to a realistic, low cost carbon output reduction measure, which had been available from the very beginning: thrift.
REIA speak up!
In their today’s newsletter REIA say:
Finally REIA take a position. Very good.
The System Keeps Working (and the Alternative Is Predictably Failing)
Interesting analysis, certainly food for thought. Food is a key word here, as there are obvious differences in finding alternative markets for food and finding alternative markets for industrial raw materials.
The Senkaku Rare Earth Incident myth
We do not agree with the rare earth part, as in our view the rare earth crisis 2011 was the result of China’s inward directed measures and actions, not targeting exports.
But China…
China will never put the record straight, because what happened was a mistake and, since the CCP is infallible, mistakes do not and did not happen. Also, the myth makes them look like the fearless, tough guys, and they enjoy the image.
Finland Finds Key Rare Earth Minerals For The First Time
Finnish Minerals Group said on Monday that Sokli and the Geological Survey of Finland had identified two new minerals, kukharenkoite and cordylite, through mineralogical characterization—the first such deposits identified in the country.
Sokli is the world’s largest carbonatite deposit, the company said.
“According to the results of our scoping study, Sokli could produce at least 10% of the amount of REE needed annually in Europe to make permanent magnets,” it added.
Finnish Minerals Group is a state-owned holding company with focus on battery materials.
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