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Rudd to nationalise Australia's Rare Earth Elements?
"Australia Commits Rare-Earth Supply to Japan " was the headline in a spate of articles in the world press.
"CANBERRA—Australian Foreign Minister Kevin Rudd vowed Tuesday to clear the way for the long-term supply of the country's rare-earth metals to Japan amid supply worries surrounding China, the world's biggest producer of the metals. " "Australia stands ready to be a long-term, secure, reliable supplier of rare earths to the Japanese economy," Mr. Rudd told reporters following meetings with Japanese Foreign Minister Seiji Maehara in Canberra. While we can all sympathize with Japan's and indeed many other countries' plight in facing a critical supply shortage of Rare Earth Elements I wonder how Mr Rudd could expedite supplies of Rare Earth Elements to a particular country within our current legal framework. Australian Rare Earths are under the control of Australian listed companies and they have a duty to their shareholders to maximize their gains. They must act in the interests of their shareholders and are outside any real framework where the current government can control the distribution of their products. True the Government can block exports of Uranium to specific foreign countries that are not parties to the relevant United Nation charters but there is no such mechanism in place for the Rare Earth Elements. Also blocking something is far different from compelling that an export commodity go to a specific country. So I wonder:
The only really obvious mechanism that the Australian government has at its disposal to adequately supply Japan (and the rest of the world) would be to encourage investment into Australian Rare Earth companies in order to help them build mines, concentration and refining plants on a scale to meet the world's rapidly emerging needs. But to date our Australian government has shied away from the concept of helping our Australian companies to build vertically integrated supply chains..... Perhaps the time has come, but even though Australia controls a very large portion of the world's economic rare earth resources (http://www.australianrareearths.com/...urces-reserves) and may even have moral obligation to expedite supply, I wouldn't hold your breath waiting for our Australian government to come to the party. Yesterday's announcement that: Sojitz had agreed to pay about $US300 million for the right to buy about 8500 tonnes of rare earth metals annually from Lynas for 10 years is very significant and is at the least an indication of the degree of worry that Japanese companies are experiencing. But the Sojitz announcement also spotlights Rudd's grandstanding: "Australian Foreign Minister Kevin Rudd vowed Tuesday to clear the way for the long-term supply of the country's rare-earth metals to Japan" To be clear the agreement between Sojitz and Lynas Corp had nothing to do with Rudd. Government's simply cannot move that quickly.... But it also exposes the weakness of Rudd's promise that I pointed to earlier. Lynas has now tied up for the next decade 70% of their coming production of around 22,000 pounds per annum of refined rare earth metals and concentrated rare earth oxides. That leaves just on 6,600 tons. Lynas is going to be the first to production and will be the world's sole new provider in 2011 - 2012. Ask yourself Is 6,400 tons going to satisfy the rest of the world's REE demands? Is an Australian foreign minister in the position to make Japan the king of the coming electron-economy by dictating that the rest of Lynas' production must go to Japan? As said above the only way that Mr Rudd can help is to advocate for a change in governmental attitudes towards our rare earth elements companies aimed at helping them progress rapidly towards production. With a positive rather than an inhibitory government attitude several Australian companies with large REE resources could also come into production much sooner. But be very clear on this Mr Rudd - We the shareholders of ASX listed companies will not tolerate a quasi nationalization of our companies resources... so no more grandstanding or hollow promises. (Criticality matrix for selected imported metals (USA National Research Council, 2008) In two recent studies the USGS and European Union studies of mineral supply risk, REE rank highest as mineral raw materials of critical concern, given uncertain future supplies and their importance to advanced industrial economies. http://www.australianrareearths.com/current-issues.html
Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice. |
#2
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Rudd's emerging megalomania? Time for Lithium?
Recent commentary surrounding Wikileaks and Rudd's comments re China has many suggesting that Rudd is a dangerous person to have as our foreign minister... I agree with them and wonder if Rudd's Rare earth's announcement re Japan was part of his megalomania?
Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice. |
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