Better to stick with the battery metals right now, though nickel is going into surplus this quarter or next, copper is as sensitive to the slowdown in Chinese housing construction as it is to upside in the green revolution, cobalt is on the way out of battery chemistry if Mr. Musk has his way and lithium has gotten so expensive it is now a bottleneck on the final-price of electric vehicles.
Of the four we are betting copper trades down to last summer's low of $3.13, and maybe below $3.00 before turning into a shiny red rocketship.
On the headline stuff, somewhere between 2010 and today the U.S. and the West lost their way on the rare earths and we've only posted sporadically since the Happy Time™ with MolyCorp and all the little scams, all the while reflecting back on what's probably the best book on investing that's been written since de la Vega's Confusion de Confusiones (Amsterdam, 1688):
Our last post on rare earths was in June "Huge rare earth reserve discovered in Turkey, but experts caution that ‘grade is king’"
Not just grade. The composition of a deposit, the amounts of the 17 rare earth elements is critical. As one example, the Mountain Pass mine in the U.S. despite its relatively high grade (8% REEs) is actually not as valuable as some lower grade mines with a more profitable mix.
Additionally, exploitation of a REE resource is highly dependent on processing and supply chain factors that can not quickly be brought into being, it's one thing to have the deposit, quite another to have, for example, the end product, a neodymium magnet.
We have some experience with this stuff, if interested see after the jump....
(we've been tracking the doings of the big dog since 2009's "With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good (600111:Shanghai)"
If you are interested, I believe MolyCorp's Mountain View mine ended up in Chinese hands leaving Australia's Lynas Corp (LYC.ax) as probably the best in the West. (mentioned in the story below)
And from Bloomberg via Mining.com, the headline story and then another we've been following for a dozen years or so:
Australia’s resources minister said it was a “pipe dream” that Western countries could soon end their reliance on China for rare earths and critical minerals — vital for the defense, aerospace and automotive industries — due to the Asian powerhouse’s existing grip on global markets.
“That’s a country that has seen this need coming and made the most of it,” Resources Minister Madeleine King told Bloomberg News in an interview.
That won’t stop Australia and the US from working together to boost investment in these critical minerals in an attempt to break China’s monopoly on international supply chains, King said. It was Canberra’s aim to “make the most of the natural endowment we have of these resources, so that we can provide an alternative source of them from China,” she added.
Lithium and other critical minerals including cobalt, platinum and rare earths are used in the manufacturing of a wide range of products which are crucial for national security and the fight against climate change, including jet engines, solar panels and electric vehicles. Australia has some of the world’s largest reserves of these resources and is among the biggest producers of critical minerals globally.
Much of the country’s production capacity for lithium and rare earths is in Western Australia. Siriana Nair, the US Consul General in the state capital Perth, said Australia and the US shared a “strong strategic interest” in securing critical mineral supply chains.
While Nair wouldn’t specify China as the target of growing cooperation between the US and Australia, the US diplomat said having a single source of any critical resource was a “big drawback and a huge flaw.”
“I don’t think anybody in any country wants to have global supply chains dependent on kind of a single point of failure,” she said in a separate interview. “It’s just smart policy.”
Capacity growing
Australia’s King said some exploration was still underway for additional deposits and the peak could still be five or 10 years away. “This is going to be an ongoing demand for a long time. So we need to get there and keep pumping it out,” she said.....
....MUCH MORE
And some long ago posts:
October 2010:
"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai
Oct. 2010
"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals
July 2011
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)
June 2012
Japan Makes Huge Rare Earth Find
If interested, the extracts of Confusion de Confusiones at the Hathi Trust
is probably the most accessible version online. If your Spanish is up
to it the the version at the Digital Library for Dutch Literature is the
most complete. (508 page PDF)
And again, the analysis in The Confusion of Confusions : Between Speculation and Eschatology is a good introduction.
