by Andrew Pedler | Jul 29, 2021 | Blog by Andrew Pedler
Today, the global energy system is in the midst of a major transition to clean energy. The efforts of an ever-expanding number of countries and companies to reduce their greenhouse gas emissions to net zero call for the massive deployment of a wide range of clean energy technologies, many of which in turn rely on critical minerals such as copper, lithium, nickel, cobalt and rare earth elements. This World Energy Outlook special report on The Role of Critical Minerals in Clean Energy Transitions identifies risks to key minerals and metals that – left unaddressed – could make global progress towards a clean energy future slower or more costly, and therefore hamper international efforts to tackle climate change.
This paper, The Role of Critical Minerals in Clean Energy Transitions, by the IEA is a detailed look at the critical minerals and metals required for the perceived (forecast) growth in demand. It includes a host of references in its appendix as well.
It is very worth reading.
However it is Matau Advisory’s view that the report pays little attention to, and simply assumes the ability or capacity of the resources industry to supply the required raw materials (minerals & metals) at the proposed growth rates. On average it takes 6-10 years from discovery drill hole through evaluation, feasibility studies, permitting, environmental & heritage studies (often conducted in parallel), Financial Investment Decision, construction & development, commissioning, to production at name-plate rates. Many of the key commodities are currently in short supply (at current prices) even at the relatively low demand growth rates of the current time.
The supply of the key minerals and metals (Cu, Ni, Li, Mn, Co, graphite, Cr, Mo, Zn, REE, Si, and some others) will be critical to achieve those growth rates.
by Marg | Oct 14, 2019 | Commodity Review, Now Available
Lithium
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- Lithium: South American miners are struggling to put downstream added value projects into place.
- The USA – China tariff talks & trade wars The recent “phase 1” agreement details have yet to see the light of day.
- Base metal inventories continue to remain tight. Low base metal inventories are beginning to get more attention in the media than previously.
SUMMARY
*Copper Strikes in Peru to affect output. RIO exploring (JV) in China.
Cobalt GEM Co agreement with Glencore for provision of cobalt hydroxide. Supply is ‘precarious’.
*Nickel Ni market is concerned about potential future supply shortfalls.
Zinc & Lead ZMI hits high grade Zn. NCZ achieves stable Zn operation. EPA lead pipe rules changed.
*Tin Chinese refined Sn output down on reduced feedstock supply. Conflict minerals’ compliance.
Aluminium A gap between alumina prices in China and in rest-of-world. Alunorte returns to production.
Gold High gold price dampens Indian buying ahead of Diwali festival. The world is nervous.
Platinum & Palladium Merger agreed for Implats to acquire North American Platinum.
Oil Attacks on Iranian tanker escalates issues. USA to send troops to Saudi Arabia.
Coal Aust coking coal exports increased. Chinese buyers acting ahead of expected port restrictions.
Iron Ore China’s Tangshan city extended steel production restrictions, that may favour lump iron ore.
Shipping New fuel regulations making freight rates more volatile.
General
*Lithium: supply chain issues for South American countries.
Port Hedland Iron Ore: China extended restrictions on steel mills that may favour lump ore..
*PinchPoint Graphs: tightening further and beginning to get price responses.
*Japan – LNG prices: Higher oil prices and ship-fuel costs could boost LNG prices further.
by Marg | Oct 7, 2019 | Commodity Review, Now Available
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- OPEC+ participants are girding their loins for potentially more production cut commitments.
- The USA – China tariff talks & trade wars continue to stunt trade oriented decisions. Some unexpected consequences (see tin).
- Base metal inventories continue to remain tight. In a broad sense not much has changed. Base metal prices are struggling to cope with the negative fears driven largely by the USA-China trade tensions. Low base metal inventories are getting more attention in the media than previously.
SUMMARY
*Copper Trade wars continue to deter activity. Outlook for future supply remains tight.
Cobalt Co inventory from the previously failed Fanya Metal Exchange to be auctioned on Oct 5th.
*Nickel Ni prices responding to low refined Ni stocks and looming ban on ore exports.
*Zinc & Lead Northern Canadian infrastructure proposed to deliver remote new mine production. IBG Citronen.
*Tin A bad vegetable harvest stings tariff affected USA steel makers.
Aluminium Vietnam imposes anti-dumping tariffs on Chinee products.
*Gold “Global policy uncertainty is at an all-time high”.
Platinum & Palladium Pd prices have run to record highs, on demand growth and supply deficit.
*Oil Nigeria prepared to make cuts to meet its OPEC+ commitments.
Coal Chinese buying of low price met coal imports continues.
*Iron Ore India to auction mining leases. May disrupt local supply and require imports to balance demand.
Shipping Cape & Panamax rates reduced this week, on easier grain & iron ore demand.
General
*Port of Singapore Shipping Traffic: Bulk Carriers & Tankers +ve growth.
*USA – Construction Spending: public non-residential spending +ve, but private residential is -ve.
*USA – PMI: Still indicating a contracting manufacturing economy.
*Japan – Industrial Production: Overall modest contraction in IP.
by Andrew Pedler | Aug 19, 2019 | Commodity Review, Now Available
USA – Housing Starts, Industrial Production, Electricity End-Use, Bond Yields
Matau’s Comments:
- USA is slowing! Data this week reinforces last week’s OECD CLI implications.
- Base metal inventories continue to remain tight. Most prices are in the ‘nose of pinch-point graphs. Pinchpoint positions are mostly less than 1 week’s consumption. However sentiment (geopolitical) continues to drive prices over fundamentals.
- Several metals (Ni & Co this week) are showing signs that reduced supply is likely to lead to higher prices.
- Outlook is for ‘not enough’ new mine supply in coming years (the next decade), for several key commodities.
The theme of the Resources Rising Stars conference at the Gold Coast earlier this year is appropriate: “Pick the stock, not the market”.
SUMMARY
*Copper Codelco optimistic about long term price for Cu. Short term prices pressured by growth concerns.
*Cobalt Co price is up on news that Glencore is shutting its large DRC mine.
*Nickel Philippines’ largest exporter of ‘high’ grade Ni laterite ore is to shut upon depletion of its Reserves.
*Zinc & Lead ORN calling for ongoing need for more Zn & Cu production. Nyrstar Pb smelter stopped again.
*Tin Trump acknowledges that tariffs increase domestic prices. Delays new tariffs till after Christmas.
Aluminium Beijing announced additional import scrap quotas.
*Gold Gold price gains as faith in Central Banks is about to be tested again.
Platinum & Palladium Progress … of sorts … being made in wage negotiations with AMCU..
*Oil .Russia & China have stuck by Venezuela, though that may change.
Coal A weaker CNY, a safety campaign, shipment restrictions, though premium HCC is preferred.
Iron Ore Beijing’s stimulus restraint driven by low infrastructure spend, impacting prices.
Shipping Baltic indices, Cape, Panamax & Handymax up this week.
*General
Port Hedland – Iron Ore shipments: Shipments down in July after a bumper June effort.
USA – Electricity End-Use: Total demand slowing, mostly in residential demand.
USA – Bond Yields: A historical review + Current 10yr-2yr curves ‘almost’ inverted. 10yr-3mo is!
USA – Industrial Production – Capacity Utilisation: Really slow IP growth. Cap Util is sub optimal.
USA – Housing Starts: House starts almost stalled.
by Andrew Pedler | Aug 4, 2019 | Blog by Andrew Pedler
Contango is when forward prices (3mo fwd) are higher than cash (spot) prices, i.e. the market is more confident of supply now than into the future. Backwardation is the reverse, when cash prices > fwd prices, i.e. markets are more worried about (prepared to pay more for) near term supply than future supply.
Last Friday, after Trump’s decision to tax / tariff all imports from China, markets appear to have capitulated in frustration, at trying to determine what direction the market(s) will move next. We have seen previously that when a base metal (Cu, Zn, Pb, Ni, Sn, Al) market cannot figure out the direction of the market, that the prices (cash & 3mo fwd) move to parity (cash = 3mo fwd). I cannot recall seeing all six base metals markets heading so close to parity as they have last Friday. Such convergence is very unusual.
For some further detail see this week’s commodity review Commodity Review – 02 August 2019 .
