Friday 19th April 2019

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Posts tagged ‘china’

Visual Capitalist and Benchmark Mineral Intelligence: Battery megafactory forecast for 400% increase in capacity by 2028

October 22nd, 2018

by Jeff Desjardins | posted with permission of Visual Capitalist

Battery megafactory forecast 400% increase in capacity to 1 TWh by 2028

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

 

When ground broke on the massive Tesla Gigafactory in Nevada in 2014, the world marveled at the project’s audacity, size and scope.

At the time, it was touted that the cutting-edge facility would be the largest building in the world by footprint, and that the Gigafactory would single-handedly be capable of doubling the world’s lithium-ion battery production capacity.

What many did not realize, however, is that although as ambitious and as forward-looking as the project sounded, the Gigafactory was just the start of a trend towards scale in the battery-making space. While Tesla’s facility was the most publicized, it would ultimately be one of many massive factories in the global pipeline.

Mastering scale

Today’s data comes to us from Benchmark Mineral Intelligence and it forecasts that we will see a 399% increase in lithium-ion battery production capacity over the next decade—enough to pass the impressive 1 TWh milestone.

Here is a more detailed projection of how things will shape up in the coming decade:

Region Capacity (GWh, 2018) Capacity (GWh, 2023) Capacity (GWh, 2028)
Grand total 220.5 658 1,102.5
China 134.5 405 631
Europe 19.6 93.5 207
North America 20.9 81 148
Other 0 0 5
Asia (excl China) 45.5 78.5 111.5

In just a decade, lithium-ion battery megafactories around the world will have a combined production capacity equivalent to 22 Tesla Gigafactories!

The majority of this capacity will be located in China, which is projected to have 57% of the global total.

The top plants globally

According to Benchmark, the top 10 megafactories will be combining for 299 GWh of capacity in 2023, which will be equal to almost half of the global production total.

Here are the top 10 plants, sorted by projected capacity:

Rank Megafactory Owner Country Forecasted capacity by 2023 (GWh)
#1 CATL Contemporary Amperex Technology Co Ltd China 50
#2 Tesla Gigafactory 1 Tesla Inc/Panasonic Corp (25%) US 50
#3 Nanjing LG Chem New Energy Battery Co. Ltd. LG Chem China 35
#4 Nanjing LG Chem New Energy Battery Co. Ltd. Plant 2 LG Chem China 28
#5 Samsung SDI Xian Samsung SDI China 25
#6 Funeng Technology Funeng Technology (Ganzhou) China 25
#7 BYD , Qinghai BYD Co Ltd China 24
#8 LG Chem Wroclaw Energy Sp. z o.o. LG Chem Poland 22
#9 Samsung SDI Korea Samsung SDI Korea 20
#10 Lishen TianJin Lishen Battery Joint-Stock Co. Ltd. China 20

Of the top 10 megafactory plants in 2023, the majority will be located in China—meanwhile the U.S. (Tesla Gigafactory), South Korea (Samsung) and Poland (LG Chem) will be home to the rest.

Reaching economies of scale in lithium-ion battery production will be a significant step in decreasing the overall cost of electric vehicles, which are expected to surpass traditional vehicles in market share by 2038.

Posted with permission of Visual Capitalist.

The new colonialists

October 19th, 2018

China’s overseas expansion raises concerns of influence and arrogance

by Greg Klein

The country boosts its domestic industries through state-sanctioned dumping along with lax environmental, health and safety standards. Aggressive overseas expansion provides money and infrastructure to struggling nations in return for resources and acquiescence. Espionage, counterfeit exports, currency manipulation, economic warfare, intellectual theft—“particularly the systematic theft of U.S. weapons systems”—that’s all part of China’s goal to gain “veto authority over other nations’ economic, diplomatic and security decisions,” according to a recent U.S. study ordered by President Donald Trump.

So it seems a bit anti-climactic to accuse the Red Dragon of arrogance.

But could that become China’s undoing, especially when the arrogance reflects racism? Examples from Kenya reveal a steady stream of racially charged incidents. Among the most recent was ongoing racist abuse from the manager of a Chinese-owned assembly plant. A Chinese company running a much bigger Kenyan operation, the Standard Gauge Railway, faces accusations of practising racial preferences and segregation. Further accounts relay instances of demeaning treatment, even assaults, on African workers in their own countries by Chinese bosses.

China’s overseas expansion brings allegations of influence and arrogance

That might be more a side effect than part of the official agenda, which is alarming in itself. According to Globe and Mail Africa correspondent Geoffrey York, Chinese influence “is sharply increasing in African media, academia, politics and diplomacy.” Earlier this month he reported that a South African newspaper chain backed by Chinese investors fired a columnist who denounced their country’s treatment of Muslims.

“In Zambia, heavily dependent on Chinese loans, a prominent Kenyan scholar was prevented from entering the country to deliver a speech critical of China. In Namibia, a Chinese diplomat publicly advised the country’s president to use pro-China wording in a coming speech. And a scholar at a South African university was told that he would not receive a visa to enter China until his classroom lectures contain more praise for Beijing.”

York pointed to “the huge number of African leaders who flock to the summit of China’s main African organization, the Forum on China-Africa Cooperation (FOCAC),” an annual conference featuring announcements of Chinese financial aid. At last month’s event, President Xi Jinping promised grants, loans and investments totalling $60 billion, equaling an amount pledged three years earlier.

China’s massive African infrastructure projects, built by Chinese companies that often enjoy Chinese government financial support, include railways and hydro-electric power. But Chinese interests also get their hands on Africa’s mineral resources as well as oil and gas reserves, not to mention new markets for Chinese exports. Chinese loans have been criticized for overwhelming African countries with debt.

In the values that it promotes, in the manner that it operates and in the impact that it has on African countries, FOCAC refutes the view that a new colonialism is taking hold in Africa, as our detractors would have us believe.—South African
President Cyril Ramaphosa

Then there’s the political influence. The spectacle of African leaders singing China’s praises has provoked cynicism that South African President and FOCAC co-chairperson Cyril Ramaphosa tried to dispel: “In the values that it promotes, in the manner that it operates and in the impact that it has on African countries, FOCAC refutes the view that a new colonialism is taking hold in Africa, as our detractors would have us believe.”

Those remarks might alternately challenge or support allegations of sycophancy. But York notes China’s success in convincing African countries to drop their support for Taiwan, promoting Chinese language and culture, increasing media ownership with attendant interference, and—laughably, considering the communist state’s journalistic standards—providing “‘training’ for 1,000 African media professionals annually.”

Such are the challenges faced by the developing world. And others too.

From Australia come additional examples. “The hubris of the Chinese Communist Party has reached a great and giddy high,” the Sidney Morning Herald declared last month. International editor Peter Hartcher recounted a meeting between Chinese finance minister Lou Jiwei and Australian treasurer Joe Hockey in which Lou lit a cigarette without asking permission, then badgered the Aussie with big talk that included offers to take over Rio Tinto, buy 15% of the top 200 ASX-listed companies or grab multi-billion-dollar positions in Australian banks.

Hartcher mentioned another incident a few years ago, when “a Chinese minister walked into the Parliament House office of an Australian Liberal Party minister in the course of a negotiation.

“The visitor sat on the sofa, reclined with his hands locked behind his head, and put his feet up on the coffee table. He crossed his ankles casually, the soles of his shoes pointed towards his Australian host. A mere detail, yes, but a telling one. It infuriated the Australian, who was still steaming as he recounted the story years later.”

Then there’s the threats. In a Sydney meeting last year, Hartcher writes, Labor opposition leader Bill Shorten and two of his key people heard Chinese Communist Party official Meng Jianzhu demand their party support an extradition treaty. They objected, largely due to China’s death penalty.

“To get his way, Meng threatened to mobilize the Chinese diaspora living in Australia to vote against the Labor party. The Labor leaders were unbowed and unimpressed. ‘We cannot let these bastards push us around,’ one later remarked to a colleague. Labor continued to oppose the extradition treaty.”

Score one for Down Under determination. Hartcher warns that China could meet its comeuppance once the country’s economic growth stops, possibly in a decade or so. Still, that gives the Middle Kingdom considerable time to expand its influence in acquiescent countries, which need not be limited to the developing world.

Like Canada, for example. Do our politicians match Australian Labor’s resolve? Do our media match the Sidney Morning Herald’s candour? Or would the example of HD Mining International, which planned to staff underground operations at a British Columbia mine exclusively with Chinese workers, typify Canada’s response?

Depending on the enemy

October 10th, 2018

The U.S. calls for new supply strategies to meet economic and defence risks

by Greg Klein

The goal might be summed up by a new slogan: Make America Self-Reliant Again. Or, with a tad less concision: Let’s Stop Relying on an Economic Rival that’s a Potential Military Threat for the Stuff We Need to Compete with an Economic Rival that’s a Potential Military Threat.

A newly released study from the U.S. Secretary of Defense illustrates that absurd dilemma. The dependency runs the gamut from sourcing raw materials to refining them, manufacturing key components, developing R&D, training workers, even setting prices. As the report says, “The central challenge to U.S. prosperity and security is the reemergence of long-term, strategic competition by what the National Security Strategy classifies as revisionist powers. It is increasingly clear that China and Russia want to shape a world consistent with their authoritarian model—gaining veto authority over other nations’ economic, diplomatic, and security decisions.”

The U.S. calls for new supply chain strategies to meet economic and defence risks

But Russia merits little mention in the 146-page document. China comes up again and again as the pre-eminent economic and military threat with a long-term hegemonic strategy.

That strategy’s been very successful, leaving the U.S. sorely unprepared for the resulting risks. Ordered by President Donald Trump in July 2017, the report urges a government-wide program to address the entire range of supply chain challenges.

The 2010 Senkaku incident, dramatic as it was, can be seen as a mere microcosm of a much bigger threat.

“China’s domination of the rare earth element market illustrates the potentially dangerous interaction between Chinese economic aggression guided by its strategic industrial policies and vulnerabilities and gaps in America’s manufacturing and defense industrial base,” the report warns. “China has strategically flooded the global market with rare earths at subsidized prices, driven out competitors, and deterred new market entrants. When China needs to flex its soft power muscles by embargoing rare earths, it does not hesitate, as Japan learned in a 2010 maritime dispute.”

It was a lesson learned by other countries too. The report describes rare earths as “critical elements used across many of the major weapons systems the U.S. relies on for national security, including lasers, radar, sonar, night vision systems, missile guidance, jet engines, and even alloys for armored vehicles.”

Rare earths figure prominently in the U.S. list of 35 critical minerals drafted last February and confirmed in May. American dependency was further highlighted when the country dropped rare earths from a revised list of tariffs on Chinese imports announced in September.

China’s soft power hardball has targeted other American allies as well, waging “aggressive economic warfare” against South Korea after the country installed an American air defence system. Other examples of “economic coercion” include “a ban on Philippine bananas over territorial disputes in the South China Sea; the aforementioned restriction of rare earth exports to Japan following the Senkaku Islands dispute in 2010; persistent economic intimidation against Taiwan; and the recent ceding of a Sri Lankan port.”

China can play nice too. But at a price. The country invests heavily in developing countries, often building infrastructure “in exchange for an encumbrance on their natural resources and access to their markets.”

As for Chinese electronics exports, they “lack the level of scrutiny placed on U.S. manufacturers, driving lower yields and higher rates of failures in downstream production, and raising the risk of ‘Trojan’ chips and viruses infiltrating U.S. defense systems.”

Technological expertise becomes a strategic weapon too. “As part of its industrial policy aggression, China has forced many American companies to offshore their R&D in exchange for access to the Chinese market.”

With an advanced-stage rare earths project in northern Quebec as well as advanced-stage tantalum-niobium in southern British Columbia, Commerce Resources TSXV:CCE president Chris Grove keeps tabs on Canada’s neighbour. “People in Washington tell me the anxiety level on these issues has never been higher,” he notes.

Here’s the world’s biggest military and they’re saying, ‘We need Chinese stuff to make it all work?’ That’s really for most Americans an absolutely untenable and unbelievable position of weakness.—Chris Grove,
president of Commerce Resources

“Apart from the trade imbalance between the U.S. and China, there’s the vulnerability of the U.S. military. Here’s the world’s biggest military and they’re saying, ‘We need Chinese stuff to make it all work?’ That’s really for most Americans an absolutely untenable and unbelievable position of weakness.”

Sources in Washington encouraged Grove to apply for a research grant from the U.S. Defense Logistics Agency. If successful, the application would bring up to $3 million to further metallurgical progress on his company’s Ashram rare earths project, advancing a potential source in a stable and allied country.

That would complement one of the report’s key recommendations, to “diversify away from complete dependency on sources of supply in politically unstable countries who may cut off U.S. access; diversification strategies may include re-engineering, expanded use of the National Defense Stockpile program, or qualification of new suppliers.”

Other recommendations include creating an industrial policy that supports national security, working with allies and partners on industrial development, expanding industrial investment, addressing manufacturing and industrial risk within the energy and nuclear sectors, encouraging home-grown scientific expertise and occupational skills, and exploring next generation technology for future threats.

In ordering the study, Trump stated the loss of key companies, over 60,000 American factories and almost five million manufacturing jobs since 2000 “threatens to undermine the capacity and capabilities of United States manufacturers to meet national defense requirements and raises concerns about the health of the manufacturing and defense industrial base.”

Commerce Resources’ rare earths metallurgy moves forward amid heightened supply concerns

August 20th, 2018

by Greg Klein | August 20, 2018

In an update on tests conducted by l’Université Laval, Commerce Resources TSXV:CCE reports another stage of progress with completion of crushing, grinding and large-scale flotation. About 1.5 tonnes of material were processed from the company’s Ashram deposit in northern Quebec, now moving towards pre-feasibility. With results meeting expectations, the project advances to a pilot-level hydrometallurgical component.

Commerce Resources’ rare earths metallurgy moves forward amid heightened concern for RE supply

Last month Commerce announced an important milestone in producing Ashram’s first concentrate of mixed rare earth oxides, showing the deposit’s amenability to different flowsheet approaches.

Laval’s next stage will use flotation concentrate to produce a purified solution containing rare earth elements, which will then be separated into light, medium and heavy rare earths. At the same time, the solution composition will be used to assess a solvent extraction separation pilot circuit using a software model simulator developed by the university. Results will allow further assessment of the economics of separating Ashram’s REEs into individual rare earth oxides.

Funding for the project comes through a $365,000 grant from Quebec’s ministère de l’Économie, de la Science et de l’Innovation.

As work continues, geopolitical developments bring increasing concern about rare earths supply. Trade hostilities between the U.S. and China have led to speculation about how the latter country, by far the world’s biggest rare earths producer, will use its resources as a weapon.

This year the U.S. included rare earths in a list of 35 minerals deemed essential to the country’s economy and defence, as part of a strategy to encourage production of critical minerals at home and among allied countries.

The list also includes tantalum and niobium, which Commerce has delineated at its advanced-stage Blue River project in east-central British Columbia. Back in Quebec, a few kilometres from Ashram, the company also holds an early-stage high-grade niobium project that’s conditionally subject to a 75% earn-in by Saville Resources TSXV:SRE.

Read more about Commerce Resources.

Senkaku II

July 23rd, 2018

How might a U.S.-China trade war affect rare earths?

 

At first glance, the rare earths aspect of the U.S.-China tariffs tussle looks like small change—a proposed 10% duty on American RE imports that might cause a smallish markup on some manufactured goods and wouldn’t necessarily apply to defence uses. But all that’s part of a much bigger battle that will probably target $250 billion of Chinese exports to the U.S. China used an incomparably smaller incident in 2010 to rationalize a ruthless sequence of rare earths trade machinations. Could something like that happen again, this time with different results?

How might a U.S.-China trade war affect rare earths?

Hostilities began earlier this month as the U.S. imposed a 25% tariff on approximately $34 billion worth of Chinese imports, with levies on another $16 billion likely to come. China retaliated with tariffs on equal amounts of American imports.

The U.S. re-retaliated with a threatened 10% on an additional $200 billion of Chinese imports in a process that would follow public consultation. The additional list includes rare earth metals along with yttrium and scandium, which are often considered REs but rate distinct categories in this case.

Last year the U.S. imported $150 million worth of 15 RE metals and compounds, up from $118 million the previous year, according to the U.S. Geological Survey. Some 78% came directly from China, with much of the rest derived from Chinese-produced concentrates. Yttrium shows a similar story, with 71% coming directly from China and nearly all the rest from Chinese concentrates. Although lacking hard numbers for scandium, the USGS states that too comes mostly from China.

Globally, China produced over 80% of world RE supply last year, but with less than 37% of the planet’s reserves.

Rare earths plus scandium comprise two of 35 mineral categories pronounced critical to the American economy and defence by Washington last May, after Donald Trump called for a “federal strategy to ensure secure and reliable supplies of critical minerals.” Now the same administration wants to slap those commodities with a 10% price hike.

And at risk of provoking powerful Chinese retaliation.

Rare earths watchers will remember the 2010 confrontation around the disputed East China Sea islands of Senkaku. The Japanese navy arrested a Chinese fishing crew captain who had twice rammed his boat against the military vessel. Within days, China banned all rare earths exports to Japan, crippling its globally important but RE-dependent manufacturers. China also imposed heavy cutbacks and duties on exports to other countries.

While some Western manufacturers relocated to China, Western resource companies strove to develop alternative supplies. Lynas Corp’s Mount Veld project in Western Australia and Molycorp’s Mountain Pass project in California both reached production in 2013. The following year the U.S. claimed victory as the World Trade Organization ordered China to drop its export restrictions on rare earths, as well as tungsten and molybdenum.

China complied with a vengeance, flooding the world with cheap RE supply. America’s WTO victory proved Pyrrhic as a burgeoning non-Chinese supply chain failed to compete. The most salient casualty was Mountain Pass, which went on care and maintenance in 2015.

So does China have more rare earths machinations in mind, this time responding not to a minor territorial dispute but tariffs affecting $250 billion of Chinese exports?

Maybe, but different circumstances might bring a different outcome. Since the Senkaku-induced RE crisis, advanced-stage projects have developed potential mines outside China. Work has progressed on non-Chinese supply chains, working to eliminate that country’s near-monopoly on processing expertise. Most recently, the U.S. has begun an official critical minerals policy to encourage development of supplies and supply chains in domestic and allied sources.

Of course any future scenario remains speculative. But this time the West might be better prepared for China’s tactics. Any new export restrictions might spur development of the deposits that now exist outside China. Any Chinese attempts to dump cheap supply could face further, far more punishing tariffs. While some other industries might suffer in the shorter term, Western resource companies might welcome Senkaku II.

Some Sprott takeaways

July 20th, 2018

Among them, Rick Rule foresees “the absolute heyday of prospect generators”

by Greg Klein

Miners have suddenly become “lean and mean” but not in a good way, according to Rick Rule. Twenty years of under-investment, an over-correction to a previous binge of M&A “insanity,” have left companies with declining resources. “This can’t continue,” the career contrarian contended. “Every day you mine, you shrink.” But the people who build and run mines prefer to outsource exploration. As a result, he says, “we are coming into the absolute heyday of prospect generators.”

Rick Rule foresees “the absolute heyday of prospect generators”

Rule presented his remarks at the Sprott Natural Resource Symposium, held in Vancouver this year from July 17 to 20 for an audience of gold bugs and resource investors. The two strategies can often be employed by the same individuals, showing a stark contrast between hedging against uncertainty and searching for opportunity. And opportunities are there to be had, Rule maintained. While a number of key commodities have gained in price, equities remain low, creating a more attractive ratio of price to value.

Looking at gold discoveries, Brent Cook sees a decline since 1980, with yearly mine production now about three times the annual ounces found in the ground. The pipeline of up-and-coming copper mines currently has the fewest projects of this century. Zinc discoveries peaked in 2016, then fell steeply. With majors showing heightened interest in explorers, he said, “this is a fantastic time to invest in juniors—but be careful.”

It’s very hard to know where the bottom of the market is until you come out of it.—Sean Roosen

Also emphasizing the declining success rate of exploration, Osisko Gold Royalties CEO Sean Roosen agreed that peak gold has arrived. That’s manifested not only in the relative lack of discoveries but the shortened average mine life of current operations. As for the state of equities, “it’s very hard to know where the bottom of the market is until you come out of it.”

Both sides of the gold bug/resource investor dichotomy found support in a slogan displayed by Byron King: “If you can’t save the world, go find some gold.” And from his perspective saving the world, the Western parts anyway, seems beyond hope. An editor with Agora Financial and Jim Rickards’ Gold Speculator, he focused largely on the U.S., which he said faces domestic conditions and foreign rivalry that put all aspects of American power at risk. The country barely resembles its post-WWII self when “we had the money, we had the gold and we had the friggin’ bomb.”

The U.S. and its allies have since squandered their prominence in banking, currencies, capital markets, manufacturing, technology, military prowess and space travel.

We have lost academia to a different form of thought.—Byron King

Where the West outperforms others, maybe, is in the flakiness of its institutions. Canadian and American universities lead the way: “We have lost academia to a different form of thought.”

In a momentous development that policymakers deny, he said, Russia has surpassed the U.S. in the aerospace and high-tech weapons industries. “Incredibly stupid people in Washington D.C.” believe against all evidence “that we can win a war with Russia.”

Mercifully, that kind of war might not happen. But another kind would show no mercy. Relaying Rickards’ ideas, King said real wars have become too expensive and dangerous to fight. So major powers instead sabotage their enemies’ currencies. As China and Russia continue to accumulate gold, the two could team up to defeat the West.

References to stupidity in high office recurred during the conference. Rule reminded the audience of Justin Trudeau’s statement that “the budget will balance itself” and Barack Obama’s notion that U.S. debt doesn’t matter because Americans owe the money to themselves.

Trey Reik of Sprott USA pegged that country’s federal debt at $20 trillion and U.S. total debt at $68 trillion. The country needs another $2.8 trillion in debt just to service the current amount, he added. With such unsustainable levels, he sees a tsunami of defaults coming.

One of the reasons I own gold is the future is much too interesting to be predictable.—James Grant

When the consequences of debt and the state of the economy become known, a gold bull market will return, argued James Grant. The editor of Grant’s Interest Rate Observer and Ron Paul’s choice to chair the Fed called interest rates “the most important aspect of capitalism…. Try to imagine a world without them. We do live in this world.” Today’s negative sovereign debt yields are unprecedented in history, he stated.

In a twist on the Chinese curse “may you live in interesting times,” Grant said: “One of the reasons I own gold is the future is much too interesting to be predictable.”

Throughout the conference speakers agreed, disagreed and overlapped in their perspectives. But no doubt everyone concurred with an insight elegantly expressed by Eric Fry of the Oxford Club: “It’s better to have more money than less money.”

The Sprott Natural Resource Symposium returns to Vancouver in July 2019.

Follow the money, distantly

July 13th, 2018

Regulators emphasize innovation and deterrence as financial sanctions fail

by Greg Klein

It was a momentous week for Canadian regulators, seemingly. In a ruling on “one of the largest corporate frauds in Canadian history,” the Ontario Securities Commission slammed Sino-Forest scamsters with over $81 million in sanctions. One day later the Canadian Securities Administrators announced a nationwide total last year of nearly $70 million in penalties and a roughly equal amount in payback orders. All that sounds impressive, but a troubling question remains: How much—or, more accurately, how little—will ever be collected?

Regulators emphasize innovation and deterrence as financial sanctions fail

TSX-listed Sino-Forest’s 2012 crash wiped out $6 billion of investors’ money. Six years of OSC reviews expanded on short seller Muddy Waters’ exposé to conclude that “the complexity, scale and duration of the fraud are simply stunning.”

This week the commission imposed disgorgements, penalties and costs on a quartet of Chinese executives totalling $81.4 million, with Gang of Four ringleader Allen Chan responsible for $67.3 million.

In a sense, the OSC showed leniency. “We do not generally apply our penalties to each misstatement or instance of fraudulent conduct occurring even over an extended period of time, as here,” the commission stated. “If that approach were taken, the sanctions sought by staff would be multiplied many times.”

But whether the amounts could be higher would seem a moot point without collection. In an e-mailed response to ResourceClips.com inquiries, OSC public affairs manager Kristen Rose stated: “In addition to the challenges inherent in collecting sanctions generally, there is added difficulty in matters where respondents are outside of North America, and there is uncertainty as to whether there are recoverable assets. That said, as with any such matter, the OSC will make every effort to identify recoverable assets.”

In addition to the challenges inherent in collecting sanctions generally, there is added difficulty in matters where respondents are outside of North America, and there is uncertainty as to whether there are recoverable assets. That said, as with any such matter, the OSC will make every effort to identify recoverable assets.—Kristen Rose,
OSC public affairs manager

She added that Chan faces a civil judgement of US$2.6 billion, as well as a class action suit. Wronged investors would get priority over OSC penalties.

This week’s annual enforcement report from the CSA—the umbrella group for securities commissions in 13 jurisdictions—shows $69.4 million in penalties imposed nationwide during the last calendar year, along with another $68.6 million in restitution, compensation and disgorgement orders.

The report doesn’t say how much was collected. CSA chairperson Louis Morisset doesn’t have the figures either, not even for previous years. But he emphasizes that collection efforts continue.

“Those sanctions don’t always align with a person or company’s ability to pay,” he tells ResourceClips.com. “I can certainly assure you that we’re deploying all efforts to collect those monetary sanctions.”

Among the barriers to collection are bankruptcy, competing claims, lack of recoverable assets or offshore residence.

Nevertheless the performance of securities commissions, especially in British Columbia and Ontario, has come under media scrutiny. Beginning late last year, a series of Postmedia stories by Gordon Hoekstra detailed several cases of B.C. Securities Commission sanctions remaining unenforced, despite offenders holding significant assets. Over the last decade the BCSC collected less than 2% of $510 million in fines and payback orders, while the OSC enforced about 18% of its penalties, Hoekstra found.

In December Globe and Mail reporters Grant Robertson and Tom Cardoso released their study of 30 years of regulatory records, finding scams with higher dollar values than the resulting penalties, which often went unenforced anyway.

Morisset declined to comment on the stories, referring only to a December CSA statement that took issue with some aspects of the G&M reports and emphasized the role of police in financial crime investigations.

Still, media coverage seemed to make an impact.

“Immediately after the Postmedia investigation, the BCSC filed at least 10 writs of seizure and sale in B.C. Supreme Court for financial fraudsters owing nearly $70 million in penalties, and renewed three enforcement orders,” Hoekstra reported last month. “Also following the investigation, B.C. Finance Minister Carole James ordered the BCSC to improve its collection record and called for new tools and modernization of the Securities Act to improve collection.”

Regulators emphasize innovation and deterrence as financial sanctions fail

CSA chairperson Louis Morisset:
“There is an array of means and we’re deploying
everything available in the circumstances
to ensure deterrence.” (Photo: CSA)

As the CSA report shows, regulators don’t just go after money. Last year courts handed out prison terms totalling 33 years for offences under provincial securities legislation, with sentences for the 17 individuals ranging from 30 days to five years. Criminal Code cases handled by regulators brought eight sentences totalling 14 years.

Six of the jailbirds were repeat offenders. But a low overall recidivism rate of about 4% shows the power of deterrence, Morisset says. And, regardless of whether it’s responding to media criticism about enforcement, the CSA emphasizes the importance of deterrence.

It’s “also achieved by other means like revoking, suspending or imposing restrictions on registration, imposing bans, freezing accounts,” explains Morisset. “There is an array of means and we’re deploying everything available in the circumstances to ensure deterrence.”

Last month the OSC stated its two-year-old whistleblower program brought 11 no-contest settlements, returning more than $368 million to investors.

Beyond that the CSA plays up its “innovative” approaches, to binary options for example. In addition to a public awareness campaign, the group approached Twitter, Facebook, Google, Apple, Visa and MasterCard. “We made them aware of the issues surrounding binary options and that they were used to a certain extent to facilitate fraud, and I think our approach was very innovative and effective in preventing fraudsters from reaching their targets,” says Morisset.

Also innovative was an outright ban on binary options. “It was the first time in Canada that we banned a product, giving a very strong message that these are toxic products.”

He says new approaches to fraud could expand the pool of potential victims, drawing in millennials with little or no investment experience. CSA publicity campaigns encourage awareness of the cryptocurrency world.

Through its Regulatory Sandbox, the CSA tries to streamline the entry of innovative fintech firms into the regulatory world. The CSA’s new Market Analysis Platform will use updated surveillance technology to monitor manipulation and insider trading. Canada’s first Pump and Dump Summit, held in Calgary last September, brought together four Canadian securities commissions and the RCMP, along with the U.S. SEC and FBI. Across Canada and abroad, inter-jurisdictional collaboration helps regulators join forces, says Morisset.

“We are innovative and we have to be, because the markets are innovative.”

But when the regulators fail, others might step in—with fraudsters on one side and, on the other, maybe opportunistic vigilantes like Muddy Waters.

Infographic: A new bull market in base metals?

July 11th, 2018

by Nicholas LePan | posted with permission of Visual Capitalist | July 11, 2018

Base metals are the most fundamental minerals produced for the modern economy and metals such as copper, zinc, nickel, lead and aluminum are the key components that support sustained economic growth.

During periods of economic expansion, these are the first materials to support a bustling economy, reducing inventory at metal warehouses and eventually their source, mines.

A base metals boom?

This infographic comes to us from Tartisan Nickel CSE:TN and it takes a look at the surging demand for base metals for use in renewable energy and EVs, and whether this could translate into a sustained bull market for base metals.

The base metals boom: Start of a new bull market?

 

Over the last three years, prices of base metals have risen on the back of a growing economy and the anticipation of usage in new technologies such as lithium-ion batteries, green energy and electric vehicles:

Cobalt: +232%
Zinc: +64%
Nickel: +59%
Copper: +45%
Lead: +34%
Tin: +36%
Aluminum: +42%

As goes the success and development of nations, so goes the production and consumption of base metals.

Why higher prices?

Development outside of the Western world has been the main driver of the base metals boom and it will likely continue to push prices higher in the future.

China has been the primary consumer of metals due to the country’s rapid economic expansion—and with recent efforts to improve environmental standards, the country is simultaneously eliminating supplies of low-quality and environmentally toxic metal production. India and Africa will also be emerging sources of base metal demand for the coming decades.

But this is not solely a story of developing nations, as there are some key developments that will include the developed world in the next wave of demand for base metals.

New sources of demand

Future demand for base metals will be driven by the onset of a more connected and sustainable world through the adoption of electronic devices and vehicles. This will require a turnover of established infrastructure and the obsolescence of traditional sources of energy, placing pressure on current sources of base metals.

The transformation will be global and will test the limits of current mineral supply.

Renewable energy technology

The power grids around the world will adapt to include renewable sources such as wind, solar and other technologies. According to the World Energy Outlook (IEA 2017), it is expected that between 2017 and 2040, a total of 160 GW of global power net additions will come from renewables each year.

Renewables will capture two-thirds of global investment in power plants to 2040 as they become, for many countries, the cheapest source of new power generation. Renewables rely heavily on base metals for their construction and would not exist without them.

Electric vehicles

Gasoline cars will be fossils. According to the International Energy Agency, the number of electric vehicles on the road around the world will hit 125 million by 2030. By this time, China will account for 39% of the global EV market.

Dwindling supply

Currently, warehouse levels in the London Metals Exchange are sitting at five-year lows, with tin leading the pack with a decline of 400%.

According to the Commodity Markets Outlook (World Bank, April 2018), supply could be curtailed by slower ramp-up of new capacity, tighter environmental constraints, sanctions against commodity producers and rising costs. If new supply does not come into the market, this could also drive prices for base metals higher.

New supply?

There is only one source to replenish supply and fulfill future demand, and that is with mining.

New mines need to be discovered, developed and come online to meet demand. In the meantime, those that invest in base metals could see scarcity drive prices up as the economy moves towards its electric future on a more populated planet.

An extended base metals boom may very well be on the horizon.

Posted with permission of Visual Capitalist.

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.