The Week That Was: Trade War….And A Time To Celebrate

The big news in rare earths this week was the mainstreaming of the phrase “rare earth.”

As Chinese Premier Hu Jintao touched down in Washington this week the phrase “rare earths” got quite a workout in the media.

The day before the  meetings Senator Charles Schumer spoke out against Chinese “mercantilist” trade policies. Schumer travelled to upstate New York to visit Sydor Optics, an American company that uses cerium oxide to grind lenses for 3-D movie projectors, to do it, blasted the Chineese for “not  playing by the rules” and “seeking unfair economic advantage.”

Schumers’ ‘bad cop’ bark didn’t have much effect however–no policy announcements follow on the meeting. Which was as many assumed. “The Chinese won’t alter their policy. The best thing anyone can hope for is some kind of agreement that there won’t be any unreasoanable shift in the flow of these materials. But as for actual concessions from China. I just don’t see that,” said industry player Anthony Marchese in an interview with RMB. “The Chinese won’t alter their policy. And I don’t think there’s anything Obama can do.” And that’s exactly what happened. Nothing.

Rare earths also made the news this week when the Japanese auto-maker Toyota announced it was developing electric motors for hybrid cars that would eliminate the use of rare earth metals.

That Toyota would do so makes sense. Prices have risen sharply in the past year as China began using rare earths as a trade weapon, and so it’s no surprise the Japanese to follow-up that line of research.  

But the story also drew out the skeptics at RMBblog, with some commentators questioning the timing and intent of the announcement.  As pointed out on RMB the “non-rare earth” electric motors are a long way from being usable (something that the media reports invariably mentioned). If induction motors really had any advantages Toyota and all the rest of the automakters would have developed motors along those lines in the first place. That the car makers  didn’t suggests electric induction motors (non-rare earth motors) will never be as cheap or efficient as a magnet motor with REEs.

The real story? the Japanese know this but put the story out there anyway as a conveniant bit of trade war propaganda on the part of a desperate country locked into a serious, ongoing trade war with the Chinese. Or to put it another way,  the impending technology shift isn’t as imminent as some of the stories may have suggested. Come to RMB for the real story. 

Also on RMB this week, Graeme Irvine updated us from London on possible new uses for rare earths, including a nano-wool that could double as a shirt…and a battery. Which is amazing.
Graeme also updated us on the latest wave energy generators. Many in the renewables sector seem to be coming around to a realization that wave-generated energy is preferable to wind power. And no wonder. As Graeme pointed out a 5-knot current has as much kinetic energy as a 350 km/h wind.


COMPANY NEWS:

Alkane Resources released a quarterly update on its projects, suggesting that, “Potential revenues from the DZP products continue to increase assisted by escalating zircon prices, the Chinese Government classification of zirconium as a strategic metal and further restriction of their rare earth exports.”

Tasman Metals Ltd. announced a third phase drill program is now underway at its Norra Karr heavy rare earth element (REE) project located in southern Sweden.

Great Western Minerals Group Ltd. announced a monthly payment under the terms of its advisory agreement with Byron Securities Limited to facilitate GWMG’s access to capital markets.

Rare Earth Metals Inc announced that its company information will be made available via Standard & Poor’s Market Access Program, an information distribution service that enables subscribing publicly traded companies to have their company information disseminated to users of Standard & Poor’s Advisor Insight (which gets the company’s info to financial advisors across the continent). 


MEDIA:

A fascinating story in the media this week concerns the announcement that China will nationalize eleven rare earth companies in its attempt to bring some order to an unruly, environmentally-damaging industry.

From an  article published in China, Sang Yongliang, an analyst with Guotai Jun’an Securities in Shanghai suggested “Prices will go up once (mining) concentration rises and the state strengthens control.” Sang was also quoted  as saying that the government may be targeting heavy rare earths, which are more expensive than the light elements because of their scarcity.

A New York Times article dealing with the same issue provides some colour around the Chinese decision: “The ease of digging up and refining some of the most valuable rare earths from the clay hills southernmost Jiangxi Province and northernmost Guangdong Province, together with soaring prices, has led to a surge in illegal strip-mining that has turned many hillsides into lunar landscapes. Crime syndicates have dumped the mine tailings, including powerful acids and other materials, into local waterways. The fields and farms of peasant farmers who live downstream have been contaminated.”

No wonder the authorities are cracking down–rare earth mining in China has become a crime scene.  Of course, the crackdowns don’t hurt the wallets of legitimate owners. Another media report this week suggested that soaring international prices have increased the value of Chinese rare earth exports by 171 per cent from 2009. But BusinessWeek article puts all of this into some context. The story quotes Chinese Commerce Minister Chen Deming, speaking in Washington this week, as saying that it’s no use playing the “blame game”–countries other than China need to ramp up production of rare earths. So there.

The  Prospectors and Developers Association of Canada put a press release announing  it’s annual conventional will be held March 6-9th at the Metro Toronto Convention Centre. Since 1932 the biggest party in the mining industry has been going on strong, and this year should be no different. Considering the strong year in commodities it can be expected to be a  buoyant affair. Commodities gurus Eric Sprott and Donald Coxe will be in attendance. But the big event is the cocktail party RMB will host during the event (more details on that closer to the event). 

Speaking of parties, the pubilsher of RareMetalBlog, Tracy Weslosky is appearing at an IR conference in Vancouver today. So if you’re in the city, stop by.

With values in the rare earth sector appreciating so impressively it’s been an amazing year in the industry. To set the mood for this weekend’s conference (and the upcoming PDAC affair)  here’s to  a hit from the only all-white act ever signed to Motown Records, Rare Earth performing I Just Want to Celebrate: