Monday 18th June 2018

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Posts tagged ‘china’

Unapologetically unorthodox

April 30th, 2018

Jayant Bhandari rejects convention as he discusses economies, cultures and opportunities

by Greg Klein

There are contrarians and there are contrarians. But maybe Jayant Bhandari would be better called a controversian. As a prolific writer/commentator and an adviser to institutional investors, his comments reflect a mind unsatisfied with received wisdom. Now a resident of Singapore, his travels have taken him to 80 countries, seven of which he’s lived in. That background has influenced his perspective on a number of topics including the emerging markets—or emerging market singular. China’s the only one, he insists.

Jayant Bhandari rejects convention to discuss emerging markets, the West and China

Jayant Bhandari goes beyond the
mainstream to examine the West,
China, emerging markets and gold.

Speaking on the phone to ResourceClips.com while visiting central India, he used that country to illustrate what he considers to be the emerging market fallacy. With a per-capita GDP of about $1,800, the country enjoys 7.5% growth. Multiplying those numbers shows India’s economy increasing by $135 per capita.

“Now 7.5% looks very good, but look at America,” Bhandari points out. Although it’s growing at “only” 2.3%, its per-capita GDP reaches nearly $50,000. “That translates into $1,150 growth per capita, which means that America’s GDP, on a per-capita basis, is growing nine times faster than India’s.”

He argues that people and organizations—like the World Bank and IMF—are dead wrong in claiming the two countries shouldn’t be compared.

Taking a pessimistic view towards much of the globe, he emphasizes that “something like 75% of the world’s consumption of commodities happens in China. So it is China which is in the driver’s seat and in my view it will continue to do very well going forward.”

While Chile, Argentina and Peru hold out hope, the rest of South America shows little prospect, he believes. Central America faces serious crime and social unrest. “Just about everything in Africa is imploding. The international media are almost completely ignoring the problems of South Africa which is, in my view, rapidly moving in the direction of a civil war. And if South Africa implodes, it won’t take much for the rest of sub-Saharan Africa to implode.”

Bhandari adds that “Chinese money and Chinese businesses enforce some kind of stability in many of these countries.” Yet lingering problems bode poorly for the future “and it is a reason why Trump is asking for a wall between the U.S. and Mexico. The Third World is not in good shape at all.”

Consequently many of its people appreciate gold’s safe haven status. “They don’t trust their institutions and they don’t trust their social structures,” Bhandari maintains.

Jayant Bhandari disregards convention to discuss emerging markets, the West and China

“The biggest buyers of gold are in the Middle East and south Asia because institutions in these countries simply don’t work and people do not trust them. They do not even trust their families and friends, basically. Pakistan is imploding right now, India is rapidly moving in that direction and wealthy people of these countries will rapidly move their investment wealth into gold once they realize that economic growth isn’t happening anymore.”

Although he regards himself “ambivalent about buying gold in Western countries,” he says: “If enough gold-buying happens in these poor countries, the gold price will do quite well and that will benefit buyers of gold in Western countries.

“Of course you have to protect yourself from government interference and it’s wise to keep some of your wealth in a form that you can keep in your own pocket.”

Still, Bhandari sees too much emphasis on gold’s price in U.S. dollars. Non-American buyers “look at gold in the currencies that they use at home. When people focus too much on U.S. dollar pricing of gold they might not understand the technical future of gold.”

What could trigger a significant and sustained price increase? One possibility could be turmoil in South Africa “because those problems would very rapidly spread across sub-Saharan Africa. But I also see problems continuing to increase in India and if this country increases its consumption very slightly on a per-capita basis, it will start consuming a lot more gold. And social instability is increasing in this country.”

People should pay attention to what Western civilization stands for in hopes that they can preserve it.

Among Bhandari’s more optimistic endeavours is Capitalism and Morality, a philosophy seminar that he hosts in Vancouver each year. “My purpose is to bring people together to discuss Western civilization, what I consider to be the only civilization that has ever existed.”

Considering the West unique for its respect towards reason and individuality, Bhandari says, “People should pay attention to what Western civilization stands for in hopes that they can preserve it.”

What does Bhandari’s perspective mean to investors? He examines the mistakes people make in junior resource stocks at the International Mining Investment Conference, held in Vancouver on May 15 and 16. For a 25% admission discount click here and enter the code RESOURCECLIPS.

Read about conference speakers Simon Moores and Ed Steer.

Visual Capitalist: Elon Musk’s vision for the future of Tesla

April 26th, 2018

by Jeff Desjardins | posted with permission of Visual Capitalist | April 26, 2018

Tesla is currently stuck in “production hell” with Model 3 delays, as Elon Musk describes it.

But Winston Churchill had a great quote about facing what seems like insurmountable adversity: “If you’re going through hell, keep going.” This is certainly a maxim that Musk and Tesla will need to live by in order to realize the company’s longstanding mission, which is to accelerate the world’s transition to sustainable energy.

This giant infographic comes to us from Global Energy Metals TSXV:GEMC and it is the final part of our three-part Rise of Tesla series, which is a definitive source for everything you ever wanted to know about the company.

Part 3 shows Musk’s future vision and what it holds for the company once it can get past current production issues.

See Part 1. See Part 2.

 

Visual Capitalist: Elon Musk’s vision for the future of Tesla=

 

To understand Tesla’s ambitions for the future, you need to know two things:

1. Tesla’s mission statement: “To accelerate the world’s transition to sustainable energy.”

Tesla can accomplish this by making electric vehicles, batteries and energy solutions—and by finding ways to seamlessly integrate them.

2. Tesla’s strategy: “The competitive strength of Tesla long-term is not going to be the car, it’s going to be the factory.”

Tesla aims to productize the factory so that vehicle assembly can be automated at a revolutionary pace. In other words, Tesla wants to perfect the making of the “machine that builds the machine.” It wants to use these factories to pump out EVs at a pace never before seen. It aims to change the world.

The future of Tesla

If Musk has his way and everything goes according to plan, this is how the future of Tesla will unfold. Note: Keep in mind that Tesla sometimes overpromises and that the following is an extrapolation of Tesla’s vision and announced plans as of spring 2018.

A sustainable energy powerhouse

Tesla’s goal is to accelerate the world’s transition to sustainable energy—but simply making a few electric cars is not going to be enough to put a dent into this. That’s why the future of Tesla will be defined by bigger and bolder moves:

The Tesla Semi: Tesla has unveiled the Tesla Semi, which can go 0 to 60 mph with 80,000 pounds (36 tonnes) in just 20 seconds. Fully electric and with a 200-kWh battery pack, Musk says, it would be “economic suicide” for trucking companies to continue driving diesel trucks.

Mass transit: Musk said in his Master Plan, Part Deux blog post that he wants to design “high passenger-density urban transport.” It’s anticipated that this will come in the form of an autonomous minibus, built off the Model X concept.

A new energy paradigm: Tesla is not just building cars—it’s democratizing green energy by creating a self-dependent ecosystem of products. This way, homeowners can ensure their appliances and cars are running off of green energy, and even sell it back to the grid if they like.

As Tesla works on this sustainable future, the company isn’t afraid to show off its battery tech in the interim. The company even built the world’s largest lithium-ion battery farm (100 MW) in South Australia, to win a bet, in fewer than 100 days.

Other new models

Musk says that Tesla plans to “address all major segments” of the auto market.

Model Y: This will be a crossover vehicle built on the Model 3 platform, expected to go into production in 2019. It will round out the “S3XY” product line of Tesla’s first four post-Roadster vehicles.

Pickup truck: This will be Tesla’s priority after the Model Y and Musk says he is “dying to build it.” Musk says it’ll be the same size as a Ford F-150 or bigger to account for a “game-changing” feature he wants to add, but has not yet revealed.

Ultra low-cost model: Tesla has also announced that it will need a model cheaper than the Model 3 in the near future. This would allow Tesla to compete against a much wider segment of the auto market, and the future of Tesla hinges on its success.

Multiple Gigafactories

Tesla already has two: Gigafactory I in Reno, Nevada (batteries) and Gigafactory II in Buffalo, New York (solar panels).

The Gigafactory I started battery cell production in 2017. It will eventually produce enough batteries to power 500,000 cars per year. Meanwhile, the second factory is operated by Tesla’s SolarCity subsidiary, producing photovoltaic modules for solar panels and solar shingles for Tesla’s solar roof product.

Tesla said in 2017 that there will be “probably four” more battery Gigafactories in locations that would “address a global market,” including one in Europe. This makes sense, since the need for lithium-ion batteries to power these EVs is exploding. An important component of Tesla’s future will also be sourcing the raw materials needed for these Gigafactories, such as cobalt, lithium, graphite and nickel.

The Chinese market

The good news: Tesla already owns about 81% of the market for imported plug-in EVs in China.

The bad news: That’s only about 2.5% of the total Chinese EV market, when accounting for domestically made EVs.

China is the largest auto market in the world—and make no mistake about it, Tesla wants to own a large chunk of it. In 2017, China accounted for 24.7 million passenger vehicle sales, amounting to 31% of the global auto market.

Automation and the sharing economy

Finally, Tesla wants its vehicles to be fully autonomous and to have shared fleets that drive around to transport people.

Autonomous: Tesla aims to develop a self-driving capability that is 10 times safer than manual via massive fleet learning.

Shared: Most cars are used only by their owners and only for 5% of each day. With self-driving cars, a car can reach its true potential utility by being shared between multiple users.

Conclusion

The future of Tesla is ambitious and the company’s strategy is even considered naïve by some. But if Musk and Tesla are able to perfect building the “machine that builds the machine,” all bets will be off.

That concludes our three-part Rise of Tesla series. Don’t forget to see Part 1 (Origin story) and Part 2 (Rapid Growth). Special thanks to Global Energy Metals for making this series possible.

Posted with permission of Visual Capitalist.

Lithium in abundance, but…

April 25th, 2018

Bolivia’s huge resources face huge challenges, Simon Moores points out

by Greg Klein

Bolivia’s huge resources face huge challenges, Simon Moores points out

Estimates vary widely but attribute enormous lithium potential to Bolivia’s Salar de Uyuni.

 

It’s a testament to lithium market expectations that companies will compete with each other to do business in Bolivia. When news broke that the country wanted help to develop its fabled Salar de Uyuni, several firms showed willingness to overlook a history of investment confiscation. So has one of the world’s worst mining jurisdictions become serious about opening what just might be the world’s largest lithium resources?

Yes, an April 21 government announcement would seem to indicate. Media reports say the German firm ACI Systems GmbH had been selected out of five applicants from China and one each from Canada and Russia to team up with the state-owned Yacimientos de Litio Bolivianos, which would hold the lion’s share of a 51%/49% joint venture. The actual agreement has yet to be signed.

Bolivia’s huge resources face huge challenges, Simon Moores points out

After winning power in 2006, Bolivian President Evo Morales gained a reputation for nationalizing resource and infrastructure assets, sometimes without compensation. State-run and co-operative mining operations, meanwhile, have suffered problems ranging from inefficiency to
exploitive and even deadly working conditions.

Clearly there’s an incentive for Bolivia to change its approach to mining. According to la Razón, the deal calls for $900 million from YLB (all figures in U.S. dollars) and $1.3 billion plus expertise from ACI to develop facilities that would process lithium and manufacture batteries and cathodes, primarily for the European electric vehicle market.

Expected to come online within 18 months, the industry might eventually provide Bolivia with a forecasted $1.2 billion in annual revenues, 1,200 direct jobs and thousands of indirect jobs.

It takes enormous mineral potential to rationalize such optimism. While estimates can vary wildly, they all rate Bolivia highly. Uyuni has “likely the largest accumulation of lithium in the world,” according to the U.S. Geological Survey, citing a 2013 estimate of nine million tonnes at an average concentration of about 320 ppm. Another USGS report estimates a 2017 global total of 53 million tonnes, with 9.8 million tonnes in Argentina, nine million in Bolivia, 8.4 million in Chile, seven million in China, five million in Australia and 1.9 million in Canada. Comparing Bolivia with its Lithium Triangle neighbours, Industrial Minerals credits Uyuni with three times the resources of Chile’s Salar de Atacama and nearly 20 times that of Argentina’s Salar del Hombre Muerto. Some media reports say Bolivia holds as much as a quarter of global supply.

Resources mean little and economic reserves mean everything.

“There is no doubt that Bolivia has a huge lithium resource with Uyuni, most probably the biggest in the world,” notes Simon Moores, managing director of Benchmark Mineral Intelligence. “But resources mean little and economic reserves mean everything.

“In these economic terms—extracting the lithium in a usable form for the battery industry at a reasonable cost—Chile and Argentina are light years ahead of Bolivia,” he tells ResourceClips.com.

The country has been conducting pilot scale work, but nothing comparable to its neighbours. In contrast to Chile’s Atacama, Moores says, Uyuni’s high magnesium content and lower evaporation rate present processing challenges. “Most likely new or adapted processing methods will have to be employed, which adds a further layer of complexity.”

As for political risk, “the jury is out on any partnership in Bolivia,” he stresses. “In 2009, when this story first broke, there were a number of high-profile partners involved. Every partnership to date has failed. This is not to say any present or future partnership will share the same fate, but you are not only dealing with a challenging resource—despite its size—you are dealing with Bolivia and all the political problems that come with that. The risk is huge.

“Then when you are in production, the risk is even bigger. You just have to see the problems SQM has had with the Chilean government at a time of high prices and high demand. And they have been operating since the mid-90s.”

If Albemarle, SQM, Ganfeng, Tianqi, FMC get involved then you will have to stand up and take notice. Until that point, Bolivia will always be a lithium outside shot.

As for other companies entering Bolivia, Moores sees the possibility of “a handful of explorers becoming active and maybe one or two ‘industrial’ partners. But the key thing we always look for at Benchmark Mineral Intelligence is partners with lithium processing experience. If Albemarle, SQM, Ganfeng, Tianqi, FMC get involved then you will have to stand up and take notice. Until that point, Bolivia will always be a lithium outside shot.”

He regards Bolivia’s infrastructure as another significant challenge, but not the country’s worst. “If big mining groups can make this happen in Africa, they can make it happen in Bolivia. The biggest focus should be economic extraction and the long-term viability of Uyuni. This is the biggest hurdle.”

Simon Moores speaks at the International Mining Investment Conference in Vancouver on May 15, the first day of the two-day event. For a 25% admission discount click here and enter the code RESOURCECLIPS.

On May 16 Moores presents the Vancouver stop of the Benchmark World Tour 2018. Click here for the complete tour schedule and free registration.

Can’t live without them

March 23rd, 2018

The U.S. Critical Materials Institute develops new technologies for crucial commodities

by Greg Klein

A rare earths supply chain outside China? It exists in the United States and Alex King has proof on his desk in the form of neodymium-iron-boron magnets, an all-American achievement from mine to finished product. But the Critical Materials Institute director says it’s up to manufacturers to take this pilot project to an industry-wide scale. Meanwhile the CMI looks back on its first five years of successful research while preparing future projects to help supply the stuff of modern life.

The U.S. Critical Materials Institute develops new technologies and strategies for crucial commodities

Alex King: “There’s a lot of steps in rebuilding that supply chain.
Our role as researchers is to demonstrate it can be done.
We’ve done that.” (Photo: Colorado School of Mines)

The CMI’s genesis came in the wake of crisis. China’s 2010 ban on rare earths exports to Japan abruptly destroyed non-Chinese supply chains. As other countries began developing their own deposits, China changed tactics to flood the market with relatively cheap output.

Since then the country has held the rest of the world dependent, producing upwards of 90% of global production for these metals considered essential to energy, defence and the overall economy.

That scenario prompted U.S. Congress to create the CMI in 2013, as one of four Department of Energy innovation hubs. Involving four national laboratories, seven universities, about a dozen corporations and roughly 350 researchers, the interdisciplinary group gets US$25 million a year and “a considerable amount of freedom” to pursue its mandate, King says.

The CMI channels all that into four areas. One is to develop technologies that help make new mines viable. The second, “in direct conflict with the first,” is to find alternative materials. Efficient use of commodities comprises the third focus, through improvements in manufacturing, recycling and re-use.

“Those three areas are supported by a fourth, which is a kind of cross-cutting research focus extending across a wide range of areas including quantum physics, chemistry, environmental impact studies and, last but certainly not least, economics—what’s the economic impact of the work we do, what’s its potential, where are the economically most impactful areas for our researchers to address,” King relates.

With 30 to 35 individual projects underway at any time, CMI successes include the Nd-Fe-B batteries. They began with ore from Mountain Pass, the California mine whose 2015 shutdown set back Western rare earths aspirations.

The U.S. Critical Materials Institute develops new technologies and strategies for crucial commodities

Nevertheless “that ore was separated into individual rare earth oxides in a pilot scale facility in Idaho National Lab,” explains King. “The separated rare earth oxides were reduced to master alloys at a company called Infinium in the Boston area. The master alloys were brought to the Ames Lab here at Iowa State University and fabricated into magnets. So all the skills are here in the U.S. We know how to do it. I have the magnets on my desk as proof.”

But, he asks, “can we do that on an industrial scale? That depends on companies picking up and taking ownership of some of these processes.”

In part, that would require the manufacturers who use the magnets to leave Asia. “Whether it’s an electric motor, a hard disk drive, the speakers in your phone or whatever, all that’s done in Asia,” King points out. “And that means it is most advantageous to make the magnets in Asia.”

America does have existing potential domestic demand, however. The U.S. remains a world leader in manufacturing loudspeakers and is a significant builder of industrial motors. Those two sectors might welcome a reliable rare earths supply chain.

“There’s a lot of steps in rebuilding that supply chain. Our role as researchers is to demonstrate it can be done. We’ve done that.”

Among other accomplishments over its first five years, the CMI found alternatives to both europium and terbium in efficient lighting, developed a number of improvements in the viability of rare earths mining and created much more efficient RE separation.

“We also developed a new use for cerium, which is an over-produced rare earth that is a burden on mining,” King says. “We have an aluminum-cerium alloy that is now in production and has actually entered the commercial marketplace and is being sold. Generating use for cerium should generate additional cash flow for some of the traditional forms of rare earths mining.”

Getting back to magnets, “we also invented a way of making them that is much more efficient, greatly reduces sensitive materials like neodymium and dysprosium, and makes electric devices like motors and generators much more efficient.”

All these materials have multiple uses. It’s not like they don’t have interest in the Pentagon and other places.—Alex King

Future projects will focus less on rare earths but more on lithium. The CMI will also tackle several others from the draft list of 35 critical minerals the U.S. released in February: cobalt, manganese, gallium, indium, tellurium, platinum group metals, vanadium and graphite. “These are the ones where we feel we can make the most impact.”

While the emphasis remains on energy minerals, “all these materials have multiple uses. It’s not like they don’t have interest in the Pentagon and other places.”

But the list is hardly permanent, while the challenges will continue. “We’ve learned a huge amount over the last five years about how the market responds when a material becomes critical,” he recalls. “And that knowledge is incredibly valuable because we anticipate there will be increasing incidences of materials going critical. Technology’s moving so fast and demand is shifting so fast that supply will have a hard time keeping up. That will cause short-term supply shortfalls or even excesses. What we need to do is capture the wisdom that has been won in the rare earths crisis and recovery, and be ready to apply that as other materials go critical in the future.”

Alex King speaks at Argus Specialty Metals Week, held in Henderson, Nevada, from April 16 to 18. For a 15% discount on registration, enter code RARE2018.

Visual Capitalist looks at China’s staggering demand for commodities

March 4th, 2018

by Jeff Desjardins | posted with permission of Visual Capitalist

China’s staggering demand for commodities

 

Over 50% of all steel, cement, nickel and copper goes there

The Chart of the Week is a Friday feature from Visual Capitalist.

It’s said that in China, a new skyscraper is built every five days.

China is building often, and it’s building higher. In fact, just last year, China completed 77 of the world’s 144 new supertall buildings, spread through 36 different Chinese cities. These are structures with a minimum height of 656 feet (200 metres).

For comparison’s sake, there are only 113 buildings in New York City’s current skyline that are over 600 feet.

Unbelievable scale

It’s always hard to put China’s size and scope in perspective—and Visual Capitalist has tried before by showing you 35 Chinese cities as big as countries, or highlighting the growing prominence of the domestic tech scene.

This chart also falls in that category and it focuses on the raw materials that are needed to make all this growth possible.

Year of data Commodity China’s % of global demand Source
2017 Cement 59% Statista
2016 Nickel 56% Statista
2017 Coal 50% NAB
2016 Copper 50% Global X Funds
2017 Steel 50% World Steel Association
2017 Aluminum 47% MC Group
2016 Pork 47% OECD
2017 Cotton 33% USDA
2017 Rice 31% Statista
2017 Gold 27% China Gold Association, WGC
2017 Corn 23% USDA
2016 Oil 14% Enerdata

Note: Because this data is not all in one easy place, it is sourced from many different industry associations, banks and publications. Most of the data comes from 2017, but some is from 2016.

China demand > world

There are five particularly interesting commodity categories here—and in all of them, China’s demand equals or exceeds that of the rest of the world combined.

Cement: 59%
The primary ingredient in concrete is needed for roads, buildings, engineering structures (bridges, dams, etc.), foundations and in making joints for drains and pipes.

Nickel: 57%
Nickel’s primary use is in making stainless steel, which is corrosion-resistant. It also gets used in superalloys, batteries and an array of other uses.

Steel: 50%
Steel is used for pretty much everything, but demand is primarily driven by the construction, machinery and automotive sectors.

Copper: 50%
Copper is one of the metals driving the green revolution and it’s used in electronics, wiring, construction, machinery and automotive sectors primarily.

Coal: 50%
China’s winding down coal usage—but when you have 1.4 billion people demanding power, it has to be done with that in mind. China has already hit peak coal, but the fossil fuel does still account for 65% of the country’s power generated by source.

Posted with permission of Visual Capitalist.

Critical Quebec commodities

January 11th, 2018

Saville Resources moves into Commerce Resources’ niobium-tantalum target

by Greg Klein

A rare metal find on a property hosting a rare earths deposit becomes a project of its own under a new agreement between two companies. With a 75% earn-in, Saville Resources TSXV:SRE can now explore the niobium claims on Commerce Resources’ (TSXV:CCE) Eldor property in northern Quebec, where the latter company advances its Ashram rare earths deposit towards pre-feasibility.

Saville Resources moves into Commerce Resources’ niobium-tantalum target

A map illustrates the mineralized boulder
train’s progress, showing its presumed source.

Grab samples collected by Commerce on a boulder train about a kilometre from the deposit brought assays up to 5.9% Nb2O5. “That’s right off the charts,” enthuses Saville president Mike Hodge. “People in the niobium space hope for 1%—5.9% is excellent.”

He’s no newcomer to the space or even to the property. Hodge helped stake Commerce’s tantalum-niobium deposit on southern British Columbia’s Blue River property, which reached PEA in 2011.

“I did a lot of the groundwork for Commerce in the Valemount-Blue River area and I was one of the first guys on the ground at the camp that now supports Ashram,” he points out. “I’ve been involved with these two properties since 1999.” That’s part of a career including field experience on over 25 projects as well as raising money for junior explorers.

Miranna’s grab samples brought tantalum too, with a significant 1,220 ppm Ta2O5. Forty of the 65 samples graded over 0.5% Nb2O5, with 16 of them surpassing 1%.

The company describes the sampling area as a “strongly mineralized boulder train with a distinct geophysical anomaly at its apex.”

The 980-hectare Eldor Niobium claims have also undergone drilling on the Northwest and Southeast zones, where some wide intervals gave up 0.46% Nb2O5 over 46.88 metres and 0.55% over 26.1 metres (including 0.78% over 10.64 metres).

Samples from Miranna and the Southeast zone also show that niobium-tantalum occurs within pyrochlore, described by Saville as the dominant source mineral for niobium and tantalum in global mining. That’s the case, for example, at Quebec’s Niobec mine, one of the world’s three main niobium producers, with 8% to 10% of global production. Moreover, pyrochlore on the Saville project “is commonly visible to the naked eye, thus indicating a relatively course grain size, which is a favourable attribute for metallurgical recovery,” the company added.

Hodge already has a prospective drill target in mind. “I pulled the rig around with a Cat for a lot of the holes on Ashram itself so I’m very familiar with the ground. We’d of course do more prospecting and try to prove up some more numbers while we’re drilling.”

Saville Resources moves into Commerce Resources’ niobium-tantalum target

Should Saville find success, a ready market would be waiting. The company cites niobium demand growth forecasts of 7.66% CAGR from 2017 to 2021. A December U.S. Geological Survey report lists niobium and tantalum among 23 minerals critical to American security and well-being.

The country relies on foreign exports for its entire supply of both minerals, according to an earlier USGS study. From 2012 to 2015, 80% of America’s total niobium imports came from Brazil, where one mine alone produces 85% to 90% of global supply. Looking at tantalum imports during that period, the U.S. relied on China for 37% and Kazakhstan for another 25%. A troubling source of tantalum remains the Democratic Republic of Congo, from where conflict minerals reach Western markets through murky supply chains.

Days after the USGS released its December study, American president Donald Trump ordered a federal strategy “to ensure secure and reliable supplies of critical minerals.” Although he emphasized the need for domestic deposits and supply chains, Trump also called for “options for accessing and developing critical minerals through investment and trade with our allies and partners.”

Meanwhile Saville also sees potential in Covette, the company’s other northern Quebec property. Historic, non-43-101 grab samples reported up to 4.7% molybdenum, with some bismuth, lead, silver and copper. A 1,402-line-kilometre VTEM survey in late 2016 found prospectivity for base and precious metals. “The VTEM and some sampling that we did indicates that drilling could find something valuable,” Hodge says. “Although it is early-stage, the Geotech guys that did the VTEM survey said they hadn’t seen targets like that all year.”

Still, “the niobium claims are my first priority,” Hodge emphasizes. “I’m very excited about this. I believe we can have a winning project here.”

Subject to approvals, a 75% interest in the new property would call for $25,000 on signing, another $225,000 on closing and $5 million in work over five years. Commerce retains a 1% or 2% NSR, depending on the claim, with Saville holding a buyback option.

Last month the company offered private placements totalling up to $500,000, with insiders intending to participate.

Read more about the U.S. critical minerals strategy.

Copper crusader

December 29th, 2017

Gianni Kovacevic sees even greater price potential for the conductive commodity

by Greg Klein

Evangelist he may be, but Gianni Kovacevic’s hardly a voice crying in the wilderness. His favourite metal displayed stellar performance last year, reaching more peaks than valleys as it climbed from about $2.50 to nearly $3.30 a pound. But Kovacevic believes copper has a long way to go yet. That will be a function of necessity as the metal shows “the strongest demand growth of any of the major commodities.” Especially persuasive in his optimism, Kovacevic brings his message to the 2018 Vancouver Resource Investment Conference on January 21 and 22.

Gianni Kovacevic sees even greater price potential for the conductive commodity

Increasing copper demand will unlock
lower-grade resources, says Kovacevic.

As a researcher, commentator and investor who’s also the CEO/chairperson of CopperBank Resources CSE:CBK, co-founder of CO2 Master Solutions Partnership and author of My Electrician Drives a Porsche, he brings new approaches that link topics of energy demand, commodity supply and environmental stewardship.

Kovacevic sees a new paradigm driving copper’s future. “The invisible hand in commodities during the last cycle was China,” he says. “Its economic growth just came out of nowhere. This time the invisible hand is this pervasive use of copper in everything that’s electrified. That means even the smallest village in Africa, which per capita has negligible copper consumption, is becoming a line item. When you create, transfer and utilize greener and cleaner energy, it takes more copper by a power of magnitude. For example to establish a megawatt of windpower it takes five times more copper than it does a megawatt of conventional thermal-generated energy.”

Then there’s the battery-powered revolution and the attention it’s brought to lithium, cobalt and graphite. Saying “I like anything in electric metals,” Kovacevic stresses the importance of nickel as well. Still, “copper wins because the interconnectivity will always be copper and copper plays a role in each battery as well.”

That leads to a supply problem that can have only one solution. “I believe we’re going to have to make uneconomic deposits economic. And there’s only one way to do that—with a higher copper price.”

With no foreseeable hope of a copper mining “renaissance” comparable to the effect that fracking brought to oil and gas, the metal will simply require more money. “We’ve got the old legacy mines,” Kovacevic points out. “We’ve spent a lot of money on exploration in the last cycle and didn’t find a lot. What we do have is lower-grade resources. They are simply not economic at a low copper price.”

Gianni Kovacevic sees even greater price potential for the conductive commodity

Kovacevic: Electrical generation, storage and
connectivity put copper at the top of energy metals.

Apart from diminishing grades, the business of putting new mines into operation is “taking longer with water, electricity and permitting issues, and it’s getting into funkier places,” he continues. “The Elliott Wave [technical/fundamental analysis] on copper is $7.50 a pound. I find that very interesting. All the buy-out action in the copper space happened for the most part between 2006 and 2012. The mean price for copper during that time was about $3.50 a pound. The all-time high was about $4.50 for a short while, but the mean was $3.50.”

Copper’s 2017 performance makes that figure look viable again. Kovacevic, however, cites analysis from BHP Billiton NYSE:BHP stating that 75% of future projects will require more than $3.50. “Could we see a scenario in which the copper price goes past the old all-time high and stays there for a while? And will the buy-outs in the next wave, if they occur, be higher on average than those in the previous 2006-to-2012 cycle? I believe the answer will be yes. But if you look at the average grade that went through the top 15 copper producers’ mills in 2010, it was 1.2% copper. In 2016 it was 0.72% copper. So if you were mining 30 million tonnes a year, now you have to mine 40 or 45 million tonnes for the same metal yield. And without higher copper prices, that doesn’t make much of a business case.

“So the first question is, are we going to need more copper in the next five, 10, 15 years? The answer in my opinion is yes. In fact it has the strongest demand growth of any of the major commodities. And where will that copper come from? Well, it’s going to come from a mix of places but we’ll have to make these projects economic. That should bode well for people who have invested in the copper junior space.”

Addressing the topic of how investors might look at the energy revolution in 2018 and beyond, Kovacevic speaks at the 2018 Vancouver Resource Investment Conference, to be held at the Vancouver Convention Centre West from January 21 to 22. Click here for more details and free registration.

America’s long-overdue critical minerals strategy heralds wide-ranging advantages, says Jeff Green

December 22nd, 2017

by Greg Klein | December 22, 2017

A long-time advocate of national self-reliance on critical minerals, the Washington defence lobbyist and former USAF commander calls it the United States’ “most substantive development in critical mineral policy in 20 years.” As President Donald Trump ordered a national strategy to reduce the country’s dependence on unfriendly or unstable sources of crucial commodities, Jeff Green responded: “I don’t think you can overstate the importance of the executive order because the U.S. government has fundamentally shifted its minerals policy, which impacts natural resource policy, national security and the economy.” Speaking with ResourceClips.com, he outlined five major outcomes that he foresees.

America’s critical minerals strategy was long overdue and will show wide-ranging effects, says Jeff Green

“One, I think you will see regulatory streamlining in the very near future and I think that’s really important for permitting and opening mines in the United States.”

Just six days before Trump’s announcement, Green published an op-ed arguing that unwieldly permitting procedures affected national security.

“Two, with the fundamental shift in policy and the easing of regulatory burdens, I hope to see companies get increased access to capital markets and private sector investment,” he added.

“Three, this is a formalization of the nexus between national security and critical minerals, and that is something that the last administration refused to do. When you look at the rare earths crisis, the prior administration said there was no problem. This administration has said that critical minerals are fundamental to national security, and that’s very important.

“Four, I think this will lead to investment by the Department of Defense in critical minerals, largely because they have the funding to do this and they can best pinpoint where those areas of investment need to be.

“Five, I think you’ll potentially see the U.S. bring additional anti-dumping actions, particularly against the Chinese, for dumping minerals into our market below value.”

I do think that the direct actions from the executive order will largely benefit U.S. companies. But I also see efforts to collaborate on access to materials with companies that can provide it.—Jeff Green

Of course the U.S. national strategy primarily affects the U.S. “President Trump has said ‘America first,’ and to our friends in Canada that might be a little disappointing,” Green pointed out. “But he has also said that international co-operation and partnerships with our strongest allies will be really important. I do think that the direct actions from the executive order will largely benefit U.S. companies. But I also see efforts to collaborate on access to materials with companies that can provide it. I think pragmatically the administration is going to say, ‘If you’ve got a tantalum project in Canada that’s more advanced than anything we have in the U.S., we ought to work with you to bring that supply to market, rather than continue to rely on some other countries.”

Meanwhile the proposed Metals Act, a bill calling for U.S. government support to develop domestic resources and supply lines, has been languishing in multiple committees. But “many of the principles in the act worked their way into the executive order,” Green said.

“The president’s action marks the culmination of almost a decade of work by many of us who’ve been advocating for more access to critical minerals,” he added. “There’s been tremendous effort by people in the industry to get to this point and the hope is that regulatory streamlining and everything go quickly so we can see positive results.”

Pleased as he was, Green wasn’t surprised. “There was word here in Washington D.C. that this was coming, so it was a nice early Christmas gift.”

Read more about the U.S. federal strategy on critical minerals.

Critical attention

December 21st, 2017

The U.S. embarks on a national strategy of greater self-reliance for critical minerals

by Greg Klein

A geopolitical absurdity on par with some aspects of Dr. Strangelove and Catch 22 can’t be reduced simply through an executive order from the U.S. president. But an executive order from the U.S. president doesn’t hurt. On December 20 Donald Trump called for a “federal strategy to ensure secure and reliable supplies of critical minerals.” The move came one day after the U.S. Geological Survey released the first comprehensive update on the subject since 1973, taking a thorough look—nearly 900-pages thorough—at commodities vital to our neighbour’s, and ultimately the West’s, well-being.

U.S. president Trump calls for a national strategy to reduce foreign dependence on critical minerals

The U.S. 5th Security Forces Squadron takes part in a
September exercise at Minot Air Force Base, North Dakota.
(Photo: Senior Airman J.T. Armstrong/U.S. Air Force)

The study, Critical Mineral Resources of the United States, details 23 commodities deemed crucial due to their possibility of supply disruption with serious consequences. Many of them come primarily from China. Others originate in unstable countries or countries with a dangerous near-monopoly. For several minerals, the U.S. imports its entire supply.

They’re necessary for medicine, clean energy, transportation and electronics but maybe most worrisome, for national security. That last point prompted comments from U.S. Secretary of the Interior Ryan Zinke, whose jurisdiction includes the USGS. He formerly spent 23 years as a U.S. Navy SEAL officer.

“I commend the team of scientists at USGS for the extensive work put into the report, but the findings are shocking,” he stated. “The fact that previous administrations allowed the United States to become reliant on foreign nations, including our competitors and adversaries, for minerals that are so strategically important to our security and economy is deeply troubling. As both a former military commander and geologist, I know the very real national security risk of relying on foreign nations for what the military needs to keep our soldiers and our homeland safe.”

Trump acknowledged a number of domestic roadblocks to production “despite the presence of significant deposits of some of these minerals across the United States.” Among the challenges, he lists “a lack of comprehensive, machine-readable data concerning topographical, geological and geophysical surveys; permitting delays; and the potential for protracted litigation regarding permits that are issued.”

[Trump’s order also calls for] options for accessing and developing critical minerals through investment and trade with our allies and partners.

Trump ordered a national strategy to be outlined within six months. Topics will include recycling and reprocessing critical minerals, finding alternatives, making improved geoscientific data available to the private sector, providing greater land access to potential resources, streamlining reviews and, not to leave out America’s friends, “options for accessing and developing critical minerals through investment and trade with our allies and partners.”

Apart from economic benefits, such measures would “enhance the technological superiority and readiness of our armed forces, which are among the nation’s most significant consumers of critical minerals.”

In fact the USGS report finds several significant uses for most of the periodic table’s 92 naturally occurring elements. A single computer chip requires well over half of the table. Industrialization, technological progress and rising standards of living have helped bring about an all-time high in minerals demand that’s expected to keep increasing, according to the study.

“For instance, in the 1970s rare earth elements had few uses outside of some specialty fields, and were produced mostly in the United States. Today, rare earth elements are integral to nearly all high-end electronics and are produced almost entirely in China.”

The USGS tracks 88 minerals regularly but also works with the country’s Defense Logistics Agency on a watch list of about 160 minerals crucial to national security. This week’s USGS study deems the critical 23 as follows:

  • antimony
  • barite
  • beryllium
  • cobalt
  • fluorite or fluorspar
  • gallium
  • germanium
  • graphite
  • hafnium
  • indium
  • lithium
  • manganese
  • niobium
  • platinum group elements
  • rare earth elements
  • rhenium
  • selenium
  • tantalum
  • tellurium
  • tin
  • titanium
  • vanadium
  • zirconium

A January 2017 USGS report listed 20 minerals for which the U.S. imports 100% of its supply. Several of the above critical minerals were included: fluorspar, gallium, graphite, indium, manganese, niobium, rare earths, tantalum and vanadium.

This comprehensive work follows related USGS reports released in April, including a breakdown of smartphone ingredients to illustrate the range of countries and often precarious supply chains that supply those materials. That report quoted Larry Meinert of the USGS saying, “With minerals being sourced from all over the world, the possibility of supply disruption is more critical than ever.”

As both a former military commander and geologist, I know the very real national security risk of relying on foreign nations for what the military needs to keep our soldiers and our homeland safe.—Ryan Zinke,
U.S. Secretary of the Interior

David S. Abraham has been a prominent advocate of a rare minerals strategy for Western countries. But in an e-mail to the Washington Post, the author of The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age warned that Trump’s action could trigger a partisan battle. He told the Post that Republicans tend to use the issue to loosen mining restrictions while Democrats focus on “building up human capacity to develop supply chains rather than the resources themselves.”

Excessive and redundant permitting procedures came under criticism in a Hill op-ed published a few days earlier. Jeff Green, a Washington D.C.-based defence lobbyist and advocate of increased American self-reliance for critical commodities, argued that streamlining would comprise “a positive first step toward strengthening our economy and our military for years to come.”

In a bill presented to U.S. Congress last March, Rep. Duncan Hunter proposed incentives for developing domestic resources and supply chains for critical minerals. His METALS Act (Materials Essential to American Leadership and Security) has been in committee since.

Speaking to ResourceClips.com at the time, Abraham doubted the success of Hunter’s bill, while Green spoke of “a totally different dynamic” in the current administration, showing willingness to “invest in America to protect our national security and grow our manufacturing base.”

Update: Read about Jeff Green’s response to the U.S. national strategy.

“Shocking” USGS report details 23 minerals critical to America’s economy and security

December 19th, 2017

This story has been expanded and moved here.