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Monthly Archives: January 2012

No future without scarce metals

(Nanowerk News) It is not just in laptop computers, mobile telephones and LED screens that scarce metals are to be found but also in solar cells, batteries for mobile technologies and many other similar applications. The rising demand for these metals increases the risk of a bottleneck in supplies.

Empa researchers and representatives from industry explained at the “Technology Briefing” why scarce metals are essential for many key technologies and how an impending scarcity might be avoided.

“There is no future without scarce metals!” This was the very clear message with which Peter Hofer, a member of Empa’s Board of Directors, greeted guests at the recent Technology Briefing on scarce metals held at the Empa Academy. After all, it is scarce metals in batteries and motors that keep electric vehicles rolling and which, in automobile catalytic converters, clean up the exhaust gases. Hofer again: “Materials with special properties are essential if we are to find solutions to the problems caused by our ever-increasing mobility requirements.”

The term scarce metals includes gallium, indium, cobalt and the platinum metals, in addition to the rare earth metals which are used (together with iron and boron), for example, to make the very strong magnets needed in wind turbines. And manufacturers like to use tantalum for the capacitors on mobile telephone printed circuit boards (PCBs) because this transition metal, when used in these tiny components, enables them to store and release large amounts of electrical energy. The demand is high, with more than 60 per cent of the tantalum mined being used for this application.

The darker side

But, as Patrick Wäger, the initiator of this Technology Briefing and an expert on scarce metals, explained, everything has a darker side to it. Raw materials which can only be mined and refined in a few countries, for which alternatives are not easy to find and which have a low rate of recycling must are considered to be critical. China, for example, almost completely controls the supply of rare earth metals from which high-performance permanent magnets are manufactured. Wäger, who is a staff member of Empa’s Technology and Society laboratory, added that by imposing export restrictions the Chinese government has forced prices to rise, leading to delivery bottlenecks. Currently great efforts are being made to reduce this dependency by expanding supply capacities outside of China, such as in the USA, Australia or Greenland – with implications also for the environment.

Tantalum, required for high-performance micro-capacitors, is viewed in the microelectronics industry as a material which is difficult to substitute, and to date it has not been possible to recover it from end-of-life products. Particularly worrying are the facts that tantalum is illegally mined in certain Central African countries under degrading conditions, and the profits from its sale are used to finance civil wars.

“Swiss companies also need to think closely about how they can reduce this dependency and avoid the possibility of delivery bottlenecks, ” remarked Jean-Philippe Kohl, the head of Swissmem’s Economic Policy Group. A recent survey of the industry association’s members in the Swiss mechanical engineering, electrical and metal sectors showed that every single company contacted used at least one of the critical raw materials. In order to protect themselves from possible shortages many of the companies had signed long-term delivery contracts with their suppliers. The others are cooperating with research institutions, either to develop alternative raw materials and technologies, or to optimize existing processes.

Alternatives from research labs

As an example of this approach, Stephan Buecheler explained how Empa’s Thin-Films and Photovoltaic laboratory was working to reduce the thickness of the critical tellurium layer in flexible solar cells which use cadmium telluride (CdTe) as the active material. Similarly, efforts are being made in solar cells based on copper-indium-gallium-diselenide (CIGS) to replace the critical indium oxide with zinc oxide. In making these changes no loss of performance is expected. Quite the opposite, in fact – the aim is to increase the efficiency of these devices by optimal use of raw materials and fast processes. Researchers have already shown that this is possible, having set a new efficiency record last year.

Again with the aim of reducing scarce metal usage, the institution’s Internal Combustion Engine laboratory has developed an extremely efficient and economic foam catalyst. Changing the form of the ceramic substrate has enabled the use of less of the noble metals palladium and rhodium in comparison to conventional catalysts. In collaboration with Empa’s Solid-State Chemistry and Catalysis laboratory, the motor scientists are conducting research work on regenerative exhaust gas catalysts which employed perovskites instead of scarce metals. The former are multifunctional metal oxides which, because of their special crystal structure, are capable of transforming heat directly into electrical energy.

The “recycling” challenge

Despite all the doom and gloom, we will not have to do without scarce metals entirely. As Heinz Boeni, head of the Technology and Society laboratory, maintained there is of course a reserve of scarce metals to be found in end-of-life electrical and electronic products. While natural primary deposits are being used up, the “anthropogenic” secondary deposits created by man are increasing continuously. In a ton of natural ore as mined there is typically about 5 g of gold. In a ton of discarded mobile telephones, on the other hand, there is about 280 g, while the same weight of scrap PCBs contains as much as 1.4 kg of the precious metal!

But recovering scarce metals is anything but easy. “You can’t just pull them out from electronic waste with a screwdriver and a hammer. The recovery process is at least as complex as the design and development of the old appliances themselves”, recycling expert Christian Hagelüken made clear. A large percentage of scarce metals are to be found in the form of very thin layers or mixed with other substances in the form of alloys, added Hagelüken, whose employer, Umicore, is one of the largest recycling companies involved in the recovery of precious metals from complex waste material. Recycling scarce metals demands the use of complicated recovery processes.

Furthermore, suitable recovery processes alone are not enough to guarantee high recycling rates. According to the experts it is necessary to keep an eye on the whole recycling chain, from collection, disassembly and sorting of the scrap to the actual recovery process itself. The greatest efforts are in vain if, as is the case in certain countries, end-of-life computers and other electronic appliances are exported to developing and threshold countries where the scarce metals are lost through the inappropriate treatment of the electronic waste, which also represents a danger to human health and the environment. Or, if with a mechanical disassembly – which is common today in Switzerland – the scarce metals are dissipated into fractions from which they cannot be recovered.


WTO: China rare earth trade defies rules

In a picture taken on September 5, 2010 a man driving a front loader shifts soil containing rare earth minerals to be loaded at a port in Lianyungang, east China's Jiangsu province, for export.

(Financial Times) — The EU has demanded that China loosen its policy on sales of rare earth materials after the World Trade Organisation upheld a ruling that Beijing’s policies to limit raw material exports violated international trade rules.

The case, brought in 2009 by the EU, US and Mexico, touches on one of the biggest sources of tension in the world trading system: the use of export restrictions to hoard raw materials for the use of domestic manufacturers.

The WTO’s appellate body issued its decision on Monday, endorsing a previous finding that export duties, quotas and other policies enacted by Beijing to limit the foreign sale of nine raw materials were not justified on environmental or self-sufficiency grounds.

The EU, US and Mexico argued that the higher prices their manufacturers were forced to pay for goods such as bauxite, coke and zinc put them at a disadvantage across a wide swath of industries — from steel to batteries, chemicals and ceramics.

The case highlights the global scramble to secure supplies of raw materials after huge swings in commodity prices over the past few years. It also represents an example of the US and the EU joining forces to confront China on trade matters — a strategy that both Washington and Brussels believe will help maintain leverage over the world’s second-largest economy.

The WTO case has acquired even greater importance amid Beijing’s moves to impose similar restrictions on the export of a rare earths, a category of 17 elements that are found in an array of high-tech products, including solar panels, wind turbines and mobile phones. Such goods are themselves becoming an increasingly important battleground for trade conflicts, with the US having launched a wide-ranging investigation against China’s support for its renewable energy industry. Solar power companies in America have recently sought emergency anti-subsidy tariffs against imports of Chinese solar cells.

China accounts for more than 90 per cent of global production of rare earth materials. That dominance has unnerved its trading partners — particularly since Beijing has moved repeatedly over the past four years to tighten its supplies.

The EU and the US have so far refrained from filing WTO complaints against China over rare earths, hoping that their victory in the raw materials case would convince Beijing to revise its policies.

In a statement issued shortly after the ruling, Karel De Gucht, the EU trade commissioner, urged China to take action.

“China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime — including for rare earths — in line with WTO rules,” Mr De Gucht said.

Ron Kirk, the US trade representative, called the ruling “a tremendous victory” that “ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field”.

The Chinese mission in Geneva said expressed regret over the ruling but said that Beijing would respect the decision.

China agreed to cut export quotas and taxes when it joined the WTO in 2001.

The issue has been particularly sensitive for the EU because its manufacturers are so reliant on imported raw materials for production.

The commission estimated that the bloc’s annual imports of the materials cited in the case, which also include fluorspar, magnesium, manganese, silicon carbide, silicon metal and yellow phosphorous, exceeded €1bn.

In order to obtain such materials at competitive prices, European companies have been forced to relocate manufacturing operations to China, the commission said.

By: Joshua Chaffin and Alan Beattie

Cobalt, tantalum and rare earths among main topics at indaba’s commodities review

Cobalt a Rare Industrial Metal

The increased global interest in minor metals will shape the Commodities Review and Outlook ferroalloys and minor metals’ presentation at the 2012 Investing in African Mining Indaba, says commodity research and consultancy company Core Consultants.

Feature speaker, Core Consultants MD Lara Smith, tells Mining Weekly the company will particularly highlight minor metals cobalt and tantalum, as well as rare earths, as these metals are increasingly used in everyday technology and are experiencing an increase in demand.

“Cobalt, for instance, is used in lithium batteries and, with the manufacturing of electronic devices booming, we are seeing greater demand for cobalt as most electronic devices, such as mobile phones, tablets and laptops, rely on this type of battery for power,” she explains.

Further, she notes that 50% of global cobalt reserves are along the Copperbelt in the Democratic Republic of Congo (DRC) and Zambia, with only 5% of copper refined in the DRC and the rest refined in China.

However, Smith highlights that, although cobalt represents an opportunity for Central Africa through global demand, supply will be a challenge.

“Mining licences have been granted in the DRC but logistics are still a major concern,” she says.

Nevertheless, Smith predicts the price of cobalt will increase if supply is disrupted.

Meanwhile, tantalum, which is used in the production of capacitors for automotive and electronic equipment, is also experiencing increased demand.

“Supply of tantalum was traditionally supplemented by secondary sources, including DLA inventory sales and recycling. However, in 2007, the DLA ceased selling tantalum.

“Recycling has become increasingly costly as, in many instances, the recovery costs outweigh the extraction of tantalum owing to the miniaturisation of electronic devices.”

Also experiencing high demand are rare earths, the bulk of which are concentrated and produced in China.

Smith says substantial funds have been raised by Japan and invested in the research and development of rare earths recycling methods, as more countries attempt to diversify away from reliance on Chinese rare- earth material.

She notes that the introduction of new rare earths producers in other countries will be costly, compared with China, where the orebodies are more favourable and amenable to extraction and capital, and labour and environment costs are lower.

Smith will also provide Core Consultants’ price projections for these metals to attendees of this year’s Mining Indaba.

By: Reggie Sikhakhane

Clash on Dodd-Frank ‘conflict minerals’

Faith leaders and business groups are colliding over a coming SEC ruling on little-known provisions of Dodd-Frank which require companies to track the use of “conflict minerals” in their production of certain consumer products.

One section of Dodd-Frank requires businesses to track – but not halt – the use of so-called conflict minerals from the Democratic Republic of the Congo, including a private sector audit of tracking methods. Another requires those involved in the commercial development of oil, natural gas, or minerals to disclose payments made to governments.

“It’s terrible what we’ve allowed to go on over the last few years without the world paying more attention to it,” said Rep. Jim McDermott (D-Wash.), on a conference call Wednesday with faith leaders. “As many as 7 million people have been killed… this is a mechanism by which we could cut off the flow of money to the rebels [in the Democratic Republic of the Congo]. The rebels are controlling the mines, and selling minerals on the black market.”

The SEC will soon make a decision on how to interpret the law, and certain business groups are suggesting that the sections would needlessly increase compliance costs.

“We’re concerned that industry pressure on the SEC will be so intense that they’ll water down the law and it’ll become ineffective,”said Corinna Gilfillan, the head of Global Witness, a human rights group.

Conflict minerals are found in all sorts of consumer products, and are widely used in electronics. The four main minerals mined in the Congo are tin, tantalum, tungsten and gold. Tin is used in circuit boards, tantalum in electronic capacitors, tungsten to allow mobile phones to vibrate, and gold as a coating for wires.

Heavyweights like the Chamber of Commerce, the American Petroleum Institute and the National Association of Manufacturers have expressed concerns about the provisions.

On the other end, religious figures have stepped up to join human rights groups in urging for a full enactment of the conflict mineral provisions.

“There is broad consensus in the religious community that transparency of minerals coming from conflict regions is a vital responsibility… we’re all concerned with trying to get conflict minerals out of the system,” said Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, on the conference call.

The faith leaders emphasized that their religions called them to treat other human beings with respect, which compelled them to support the Dodd-Frank provisions.

“What would it mean for us to be a neighbor to everybody in the supply chain used to make the clothes we wear, the computers we type on, and the cars that we drive? Our call to love is not defined by geographical proximity,” said Lisa Sharon Harper, director of mobilizing for the Christian group Sojourners. “We are all responsible for being good neighbors. It doesn’t matter if we have a good excuse… the people in the Congo are made in the image of God.”

“In the Jewish tradition, according to the Talmud, it was absolutely clear that there has to be transparency in the way that businesses went about selling their products. There were explicit prohibitions against deception, against watering down wine, against claiming something was something that it was not,” added Saperstein, also an appointee to the White House Council on Faith-Based and Neighborhood Partnerships.

By: Tim Mak

CIGS market to double by 2015

While the solar photovoltaic market is tight and competitive, there is one arm researchers say is almost guaranteed to grow.

Copper indium gallium diselenide solar (CIGS) will double in installed capacity by 2015, according to a recently released research report from Lux Research. The market for CIGS is expected to be worth more than $2.3 billion by then.

“The big driver for us to look at this was all of the oversupply in the industry creating downward pressure,” said Lux analyst Pallavi Madakasiri. “For a new company to try to get in now is almost impossible.”

Traditional mono- and poly-crystalline solar photovoltaic modules have flooded the market causing dramatic price drops and lower profit margins for the companies building them.

In traditional thin-film technologies, First Solar completely dominates the market.

But CIGS have shown tremendous increases in conversion efficiency, reaching over 20 percent at the cell level, Madakasiri said.

Manufacturing and productions costs have also fallen off as processes have grown more efficient.

And most of the companies working in that market are still getting started.

“There has been a lot of interest and investment in CIGS,” Madakasiri said.

The technology is emerging with a lot of opportunity for growth, Madakasiri said, though it will face challenges, including a sharp fall in venture capital dollars.

Among those companies actively working in the market, some stand out.

“We used 12 different metrics to identify winners and losers,” Madakisiri said.

The criteria graded companies on their technical value, business execution, business maturity and capacity.

“Solar Frontier clearly leads the pack,” Madakasiri said.

That company has a solid position in the “dominant” quadrant of the Lux Research grid. Solar Frontier has already worked its way into emerging markets like India, where it is selling about 30 megawatts of CIGS cells a year.

“We also believe others have a very good chance of succeeding,” Madakasiri said.

Other contenders in the CIGS market are Global Solar, Avancis and Solibro. Madakasiri said she expects they could be very successful if they make good business decisions moving forward.

By: Amanda H. Miller

Gallium arsenide allows hot lasers to cool semiconductors

GaAS laser-cooled semiconductor

Researchers at the Niels Bohr Institute of the University of Copenhagen have succeeded in using the heating action of lasers to actively cool a semiconductor. The phenomenon is achieved using a special gallium arsenide (GaAs) semiconductor membrane paired with mirrors to create an optical resonance chamber. When laser light is shot at the membrane, most of it bounces off, is reflected back by the mirror, and then resonates between the mirror and the GaAs surface.

 Then the magic happens. Sometimes an atom in the membrane will absorb a photon of light, creating heat and a tiny bit of expansion. The movement of the membrane, the properties of the semiconductor, and the resonant frequencies then interact in a bizarre and wonderful way that cancels the molecular motion generated by heat, ultimately cooling the material to minus 269 degrees C. Although still in the experimental phase, this technique could be useful for cooling electrical components in super-sensitive sensors where thermal energy (as small as it is) creates more noise than the signal being detected. The results of the experiment are published in the January 2012 issue of Nature Physics.

By Joseph Parish

Conflict-Free Minerals Reform In The Congo: What You Can Do

The Democratic Republic of the Congo: a region marked by violent conflict since 1996 in which torture, mass rape, forced displacement, and mass murder have been going on for years without much relief. It is a region in which armed groups are able to propagate the violence through the sale of the Congo’s mineral resources.

According to the Enough Project’s Raise Hope for Congo Campaign,

“Armed groups earn hundreds of millions of dollars per year by trading four main minerals: the ores that produce tin, tantalum, tungsten, and gold. This money enables the militias to purchase large numbers of weapons and continue their campaign of brutal violence against civilians, with some of the worst abuses occurring in mining areas.”

Most of these “conflict minerals” are used in the production of electronic devices in a process involving supply chains marked by a disturbing lack of transparency, so that by the time products such as cell phones or laptops end up in the hands of consumers, there is no way to know whether the purchase of those products contributed to the income of armed groups in the Congo.

The goals of many concerned activists are to find a way to ensure transparency in companies’ supply chains and to pressure companies found to be using conflict minerals to discontinue purchasing those minerals. The market for conflict minerals then, ideally, would be limited in terms of profit, reducing resources available to the armed groups, and thus pushing the armed groups toward peaceful resolution of the conflict which could open the region to other reforms.

There have been arguments that the initial attempts toward conflict-free policies have actually been detrimental to the Congo, by driving companies to search for minerals elsewhere, therefore crippling the economy and reducing the income of the general population. However, the UN Group of Experts recently issued a report stating that a conflict-free resolution proves to be an “important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally,” and serves to reduce “the level of conflict financing provided by these minerals” in regions that have begun to comply to the due diligence guidelines. So, it seems that passing and implementing conflict-free resolutions are the first steps toward true reform and peace in the Congo.

Why not focus the fight for conflict-free reform on college campuses, which house a “particularly coveted demographic of electronics companies,” namely, students?

The Enough Project’s Raise Hope for Congo Campaign and STAND, a Student Anti-Genocide Coalition, have created the Conflict-Free Campus Initiative, a “nation-wide campaign to build the consumer voice for conflict-free electronics, such as cell phones, laptops, and other devices that will not finance war in eastern Congo.” By focusing on college campuses, the initiative “draws on the power of student leadership and activism to encourage university officials and stakeholders, both of whom are large purchasers of electronics and powerful spokespersons, to commit to measures that pressure electronics companies to take responsibility for the minerals in their supply chains.”

Organizing the student voice at the university level not only expresses the collective desire of individuals to ensure that they and their university do not participate in the perpetuation of the conflict in the Congo, but it also sends a powerful message to both political and corporate entities that consumers care about policies of those entities that may support the conflict. The Conflict-Free Campus Initiative explains:

“Universities are also a large client for most electronics companies and represent a large section of the buyers’ market for consumer electronics. By raising our collective voice as consumers, we can actually bring about a shift in corporate and government policy and help bring peace to Congo.”

Eight universities have issued conflict-free resolutions, including Stanford University, the University of Pennsylvania, and Duke University; more than sixty other colleges and universities throughout the United States and Canada have begun campaigns to do the same (including Yale University, Harvard University, Dartmouth College, Brown University, UC Davis, UCLA, UCSB, UCSC, Notre Dame, and Georgetown University).

The activism geared toward passing these conflict-free initiatives on college campuses has been successful in inspiring activity at the government level. California passed a bill prohibiting “state agencies from signing contracts with companies that fail to comply with federal regulations aimed at deterring business with armed groups in eastern Congo,” the first state bill to be passed regarding conflict minerals. Massachusetts is now also considering a conflict-free bill. Two cities, Pittsburgh, PA and St. Petersburg, FL, have also passed conflict-free resolutions.

If enough colleges, universities, towns, cities and states take the initiative in decisively acting to prevent the perpetuation of the conflict in the Congo by taking steps toward becoming conflict-free, perhaps the income of the armed groups committing mass rape and murder will be decreased sufficiently to prompt the beginnings of an end to the conflict.

Once the fighting ends, addressing the root causes of the conflict – including ethnic tensions – can be addressed through effective institutional reforms. But the fighting has to end before that can happen, and the fighting cannot end unless the actors in the conflict cannot afford to fight.

By: Cara Palmer

Hey US Treasury Leave the Pension Funds Alone

President Obama and Tim Geithner

Tim Geithner has announced that the US Treasury is dipping its fingers again into the Federal Employee Pension Fund.  Over the last few years governments are getting more and more comfortable raiding the funds set aside for its citizens.  The US has been raiding Social Security for years bringing it to the brink of insolvency or should I say a corpse.  Here is the breakdown of the nations that have decided to get careless with its citizens retirements.

  • Portugal raided its Pension Fund to meet its deficit requirements to the tune of 5.6 Billion Euros.
  • Ireland raided its Pension Fund to meet its deficit requirements to the tune of 24 Billion Euros.
  • Argentina raided its Privately managed Pension Fund to meets it deficit requirements to the tune of 29 Billion Dollars.
  • Hungary is attempting to change 15 Billion Dollars of Private Pension Funds back into the State system.

 The US Treasury decided it was ok to suspend reinvestments in the Federal Pension Fund.  Over the last 20 years the US Treasury put its fingers in the cookie jar six times to avoid hitting the debt ceiling.  The Obama administration has its back against the wall. I believe they fear another fight over the debt ceiling, during an election year. Tim Geithner has effectively kicked the can down the road for a few months. The debt ceiling needs to be addressed, this is not going away. We all know that they will just raise the debt ceiling again. Do you think they will ever cut spending? I have my doubts.

How about IRA´s and 401k´s Mr. Geithner? There is around 6 Trillion Dollars of assets residing in IRA´s and 401k´s. That is a substantial amount of money and seems ripe for the picking. The US Federal Government has shown that it has no reservations about taking what does not belong to them. If Social Security was a piggy bank for politicians just think how they might look upon our IRA´s and 401k´s.

What would the US Treasury do first? They might require US citizens who put a portion of their salary into 401k´s and IRA’s to invest a certain percentage into low paying US Treasuries. Then imagine that situations further deteriorate. The US Treasury then decides that you have to increase your purchases of US Treasuries. Then the worst case scenario happens and the US defaults or hyperinflation occurs rendering your retirement portfolio worthless. I hope it never gets this far, but we prepare for the worst and hope for the best. The Federal Reserve is looking more and more primed for QE3. They will not stop, it might as well be called QE Infinity.  Prepare yourself, I know I am.

By: Randy Hilarski – The Rare Metals Guy

Critical Metals Vital to Our Lives in Tight Supply

Rare Earth Elements

We begin 2012 similar to how we started 2011 when it comes to rare earth, rare technical metals and rare industrial metals. China has over 90% of production and refining. The US and EU governments are scrambling to legislate, source, produce, open and reopen mines. The West has decided to continue down the road of the idea that the markets will take care of the supply and price of these metals. What is alarming is how easily the West was lulled to sleep by China´s ability to supply the world its metals cheaply and efficiently. The West concentrated on making money trading stocks and futures that dealt with these commodities. China concentrated on building the most extensive mining industry in the history of man. Here in 2012 the Department of Energy in the USA has approved a spending bill that includes $20 Million to focus on the supply issues of these metals.

The metals I am speaking about are so vital to our everyday lives. These metals are found in your mobile phones, computers, LCD and LED TV´s, hybrid cars, solar power, wind power, nuclear power, efficient lighting and medical technologies. Here is a list of metals that have been deemed critical.

  • Indium RIM (Solar, Mobile Phones, LCD)
  • Tellurium RIM (Solar, Computers, Semi-conductors)
  • Gallium RIM (Solar, Mobile Phones, LED´s, Fuel Cells)
  • Hafnium RIM (Processors, Nuclear, Lighting, Plasma Cutting Tools)
  • Tantalum RIM (Capacitors, Medical Implants, Mobile Phones, Nuclear)
  • Tungsten RIM (Nuclear, Armaments, Aviation)
  • Yttrium REE (Lighting, Medical Technology, Magnets in Hybrids)
  • Neodymium REE (Magnets in Wind power, Super Magnets, Hybrid Vehicles)
  • Dysprosium REE (Computers, Nuclear, Hybrid Vehicles)
  • Europium REE (Lighting, LED´s, Lasers
  • Lanthanum REE (Hybrid Vehicles, Magnets, Optics)
  • Cerium REE (LED´s, Catalytic Converters, Magnets)

RIM=Rare Industrial Metal REE=Rare Earth Element

The supplies of these metals could hold back the production of green technologies. According to the latest report by the Department of Energy, ¨Supply challenges for five rare earth metals may affect clean energy technology deployment in the years ahead¨. If Green technology is to become main stream, the costs of these technologies have to reach cost parity with traditional energy sources. As long as there are serious supply issues with these metals the costs can´t reach these levels. The other option is finding alternatives like Graphene and Nanotechnologies.

The US and EU need supply chains of the metals that include both mining and refining of these metals. Relying on sovereign states for critical metals such as these, leave a nation vulnerable to outside influence in both politics and economics. Environmentalists have succeeded in influencing politicians to close mines throughout the West. Politicians have legislated the mining industry into the position it is in today. The Western nations must start now to build its supply chain or continue to be at the mercy of the BRIC (Brazil, Russia, India and China) nations for its metal needs.

The best the West can do now is provide, enough metals to meet its own demands. China has reached a point where it can now demand that certain industries produce their products there. If a company decides to try to produce the product in another country China will make producing that item cost prohibitive outside of China by raising the prices of the metals.

The demand for the products these metals are used to produce, are showing few signs of slowing down even in a so-called recession. Governments are subsidizing Green technology, people are buying mobile phones across the planet and everybody wants a nice flat screen TV. Will 2012 pass without countries truly taking this opportunity to fix the problem or will they step up and make the hard decisions which can put the countries back in control over their own destiny?

By: Randy Hilarski – The Rare Metals Guy

India’s rich eye gold

Precious Metal Gold in Bars

Precious Metal Gold

The emergence of young, entrepreneurial high networth individuals in India is leading to a more diverse investment appetite, with gold linked debentures and gold ETFs high on the list.

The amount of wealth held by high networth individuals in India has reportedly increased faster than that held by rich people globally, according to a report, which notes that India’s elite are looking to invest their cash in gold.

With Indians holding more than 18,000 tonnes of the precious metal, the report by Indian wealth management firm Karvy Private Wealth has noted that the demand for gold has risen by 13% on average over the past 10 years, and is likely to increase by 30% this year.

The report found that while the fortunes of high networth individuals internationally grew by around 9.7% during 2011, money held by India’s rich increased by more than 18%. The growth made India one of the fastest growing high networth populations in the world, accounting for 1.6% of global wealth, according to the report.

Even as these rich Indians look for risk averse ways to invest their cash, the rising demand for gold from this class has not gone unnoticed. Though much of the growth in wealth was thanks to the increase in investment in fixed deposits, bonds and equities, the most popular alternative asset was structured products in the form of equity and gold-linked debentures, which constituted nearly 72% of the total wealth invested.

Individual wealth of Indians surged to $1,683 billion (Rs 86.5 lakh crore) in 2010-11 fiscal. Investment in alternative assets has increased significantly, boosted by investors’ rising confidence and interest in a relatively newer class of assets, the report states. According to Karvy, total assets under management (AUM) in equity-linked debentures was estimated to have grown 21% year on year.

According to R Parandekar, group head of the Wealth Management and Asset Management team at Karvy, “India’s individual wealth in alternative assets is 0.34% of her total wealth in comparison to 6.2% globally. We believe that alternative assets will be a major investment avenue in India over the next few years. Alternative assets including Gold ETFs, structured products, private equity and venture capital funds, etc. which are expected to grow at a rapid pace of 100% per annum.”

Gold exchange traded funds (ETFs) have also seen a steady increase in interest. The asset base of gold ETFs, as per data from the Association of Mutual Funds in India, has surged 167% between January and November 2011 to $1.8 billion (Rs 9658 crore). In the last two years, gold mutual fund assets have grown nearly 570%.

Analysts say the gold fund category is the only one that has generated significant returns for investors in 2011, ending the year generating over 30% returns. Gold funds gained 27% to 31% over the past one year, as compared to large cap equity funds, short term bond funds and income funds which on an average returned minus (-) 23%, 9.04% and 8.2% respectively during the same period, according to data from Value Research.

Between now and 2016, the wealth of India’s richest is also expected to treble. As per the Karvy report, with current annual household savings of about 34%, and expected to grow 8% on average, India is well poised to lead wealth creation in the global arena.


Investing in Inefficient Markets and the Efficient Markets Hypothesis

Rare Earth Metal - Tantalum

There’s a nice little point being made here in the WSJ. We’ve all pretty much internalised the Efficent Markets Hypothesis: that markets are efficient at processing the information which might affect prices in a market. We’ve also all pretty much internalised the idea that as a result of this we’re not going to beat those markets. And nor are most fund managers most of the time.

To which, as the WSJ says, the come back is yes, but there are plenty of markets out there (weird foreign ones say, or small caps in certain industries) which are still inefficient because, well, there’s not enough players in them to make them efficient. And it’s certainly possibly true that this is so.

However, what the WSJ then points out is that if this were so then those funds investing in those inefficient markets should be beating the general market: and while certain funds do do so, no class of funds does so regularly.

All of which pretty much shoots down the contention that there are those inefficient markets in which excess returns can be gained. Or, perhaps, that the fund managers who claim to be following that strategy aren’t very good at following it.

There’s just one point I’d add to this. Something from personal business experience at the wierder end of the metals market. There are most certainly inefficient markets here. When the entire global market for lutetium (yes, I know, you’ve never heard of it) is three or four tonnes a year, worth maybe $1.5 million all told, yes, among 7 billion people we’d think that was a pretty inefficient market.

And it is a pretty inefficient market, truth be told. However, it doesn’t take much interest, much volume, for a market to become efficient in things like price discovery. Take, say, tantalum as an example. Global usage is of the order of 1,000 tonnes a year. Worth, well, depends upon which day you look at the price but in the $300 million to $500 million range perhaps? Yes, I know that looks like a lot of money but that’s the entire size of the whole global market: this is still a very small market indeed. But a pretty efficient one. Absent political problems you’ll not find prices varying by more than 2 or 3 % at any one time. The tantalum price in Hong Kong is roughly within transport costs of the price in Rotterdam, on the other side of the world.

Please note, I’m not saying that the tantalum market is “efficient” in the sense that the market for Apple stock is. Rather, just pointing out that a market doesn’t have to be very big before it’s much closer to that efficient end of the spectrum than the inefficient one at which you can make tonnes of money by exploiting the inefficiencies.

That is, inefficient markets are, almost by definition, small markets. Meaning that they’re just not open to profitable exploitation by any large number of people: for as soon as there’s a large number of people they’re not small markets and thus not inefficient.

By: Tim Worstall

Gallium Nitride (GaN) increasing its grip in commercial applications

Commercial applications revenues will grow from less than one million dollars to reach nearly $58 million till 2015, says Strategy Analytics

Besides military applications, another area which is witnessing widespread deployment of gallium nitride (GaN) technology is commercial applications, according to a report entitled GaN Microelectronics Market Update 2010-2015, released by Strategy Analytics.

Targeted at GaAs and compound semiconductor technologies service (GaAs) and its Advanced Defense Systems Service (ADS) subscribers, the report forecasts that the overall GaN device market to grow at a CAAGR of nearly 29% to reach $178m in 2015.

Revenues from commercial applications, led by CATV and high power electronics, will grow from less than one million dollars to reach nearly $58 million till 2015, it adds.

However, according to Strategy Analytics report, military applications will be the major deployers of GaN technology.

But percentage of revenues from military applications will fall to 67% by 2015 from the present 98%.

Revenue growth rates for GaN devices in wireless infrastructure, high power electronics and CATV/VSAT (very small aperture terminals) will all exceed 100%, it is forecasted.

Strategy Analytics Director of GaAs and Compound Semiconductor Technologies Service Eric Higham said driven by performance advantages like efficiency, power dissipation and operating temperature, GaN is finally starting to generate interest in commercial market applications.

“GaN developments by device manufacturers like RFMD and Nitronex (for CATV applications) and International Rectifier and EPC (for power converter applications) are displacing other technologies. Operators and equipment manufacturers are recognizing the operating cost advantage that GaN can provide,” Hingham added.


Electric cars to be hit by supply disruptions

The advancement of electric cars in the short-term could be affected by supply disruptions.

That’s the verdict of a new report from the US Department of Energy entitled 2011 Critical Materials Strategy, which looks at supply challenges for five rare earth metals – dysprosium, neodymium, europium, terbium and yttrium. These metals are used in magnets for wind turbines and electric vehicles or phosphors in energy efficient lighting. Meanwhile, other elements, including indium, lanthanum, cerium and tellurium, were found to be near critical.

According to the report, demand for almost all of the materials has grown more rapidly than demand for commodity metals such as steel – this has come from consumer products including mobile phones, computers and flat panel televisions, as well as clean energy technologies.

However, the report concludes that manufacturers of wind power and electric vehicle technologies are already looking into strategies to respond to potential shortages. It states that manufacturers are currently making decisions on future system designs, trading off performance benefits of elements such as neodymium and dysprosium against potential supply shortages.

As an example, wind turbine manufacturers are looking at gear-driven, hybrid and direct drive systems with varying levels of rare earth metal content while some electric vehicle manufacturers are pursuing rare earth free induction motors or using switched reluctance motors as an alternative to PM motors.

By: Paul Lucas

China, 14 Currency Swap Agreements and Counting

Renmimbi Yuan

Since the financial crisis of 2008 China has been signing agreement after agreement with other sovereign nations for bilateral currency swaps. China and these other nations are trying to diversify their central bank foreign – exchange reserves out of U.S. Dollars. China would like its currency, the Renmimbi, to play more of an important role in the world financial system. Here is a list of the fourteen nations that have already signed bilateral currency swap agreements with China.

  • Pakistan
  • Argentina
  • South Korea
  • Indonesia
  • New Zealand
  • Malaysia
  • Belarus
  • Hong Kong
  • Japan
  • Uzbekistan
  • Thailand
  • Turkey
  • Singapore
  • Kazakhstan

After the collapse in 2008 Chinese exporters were finding it difficult to do international trade as they were unable to settle their deals with Yuan (Renmimbi) and were forced to settle in Dollars. The currency swap agreements will make it easier for now for international companies and traders to receive financing in Yuan during difficult economic periods. If they can settle their deals in Yuan (Renmimbi) it would reduce their risk. China and these nations would like to keep trade flowing even in the event of another financial crisis.

What is a Currency Swap? Essentially a currency swap is a transaction between two nations to exchange the interest and principal payments on loans issued by two different nations. The two countries gain access to foreign exchange reserves. This limits the nations exposure to exchange rate fluctuations because they can pay back the liability associated with its currency instead of in Dollars.

Why is China so concerned about the U.S. Dollar? China has grown suspicious of the US government unwillingness to curb its spending and printing of its currency. This runaway printing has and will continue to devalue it dollar-denominated assets. Recently we are hearing that the US Federal Reserve will quietly implement QE3 (Quantitative Easing 3).

China would like the world to look upon its currency as a store of value similar to Gold and the Dollar. This privilege has given the US the ability to expand and borrow. China would also like this ability. If nations hold reserves in Yuan (Renmimbi) it is extending credit to the Chinese government. These currency swaps are the first steps in Yuan (Renmimbi) transforming in to a global currency. How many more countries will sign agreements with China in 2012? How will the USA and the IMF react? I look forward to seeing the results of China spreading its influence.

Randy Hilarski – The Rare Metals Rare Earth and Rare Industrial Metals Specialist

China, Japan, South Korea, ASEAN Agree on Wider Currency Swap Arrangements

Republic of China

ISTANBUL, May 4 (AFP) – Finance ministers from China, Japan, South Korea and the Association of Southeast Asian Nations (ASEAN) agreed Wednesday to expand their system of bilateral currency swaps under the Chiang Mai Initiative to a more multilateral system. The ministers, meeting as the “ASEAN-plus-3″ on the sidelines of the Asian Development Bank (ADB) annual meeting in Istanbul, said this would make the Chiang Mai Initiative a “more effective and disciplined framework.” Under the currency swaps, an Asian country hit by a foreign exchange crisis like the one in 1997 could borrow borrow foreign currency — usually US dollars — from another country to bolster its reserves until the crisis had passed. An ADB analyst remarked that Wednesday’s accord was a step towards setting up an “Asian Monetary Fund,” although such an institution might never actually be created.

In a joint press conference, the 1O ASEAN and three East Asian financial ministers also called for a review of the quota of Asian countries in the International Monetary Fund (IMF) “to properly reflect the current realities and their relative positions in the world economy.” The 13 ministers said an economic surveillance system would be put into place along with the Chiang Mai Initiative framework, to detect irregularities early and apply swift remedies. They also said a collective decision-making mechanism would oversee the current system of bilateral swap arrangements “as a first step towards multilateralization.”

This would make it easier to activate the bilateral swap arrangements in case of an emergency, the ministers said in a joint statement read after their three-hour meeting. Crisis-hit countries would also be able to draw down as much as 20 percent of the money under the bilateral swap arrangements without having to go through the IMF. Under the current arrangements, countries that draw more than 10 percent under their swap arrangements must have an IMF-supported program in place. The decisions of the ASEAN-plus-3 group apparently followed recommendations made during a meeting of the Chinese, Japanese and South Korean ministers a day earlier. Previously, the initiative launched in Chiang Mai, Thailand, in May 2000 involved only bilateral swaps but the Chinese, Japanese and South Korean ministers said they would look towards expanding this into multilateral swaps involving three or four countries. Asian countries had earlier proposed the creation of an Asian Monetary Fund after the 1997 fiscal crisis but the United States and the IMF had strongly opposed this. Chinese minister Renqing Jin said his country had already agreed to “double the scale of its currency swap,” from its current level.

However, when asked if they were setting up an Asian Monetary Fund, Japanese minister Sadakazu Tanigaki replied, “only the Chiang Mai Initiative was discussed”. The ministers said the initiative had been very helpful in maintaining the financial stability of Asian countries even if there had been no repeat of the 1997 crisis. Masahiro Kawai, special adviser to the ADB president, who monitored the ASEAN-plus-3 meeting, said the ministers wanted to increase the effectiveness of the Chiang Mai Initiative which now covers 16 bilateral swap arrangements. He called it a “step towards multilateralization,” adding that a “de facto Asian Monetary Fund,” may eventually be created. He said the United States and the IMF had opposed such a fund in the past partly due to fears it would increase the risk of moral hazard. But Kawai said this was why the ministers wanted to increase the surveillance function of the Chiang Mai Initiative. He remarked that in the past, China had not joined the move to create an Asian Monetary Fund and that if it joined with the other Asian countries, they might be more successful. mm/wai