"Investors take note. The need for additional new electric power generating capacity is immediate everywhere in the world. Just as an example of what can happen when there is insufficient energy supply for both industrial and public demand, look at the Republic of South Africa (RSA). A recent power shortfall in the RSA has caused its government to both reduce the total supply to and allocate power among its heavy mining industry’s end users. Those industries bringing the RSA the most export revenue per kilowatt, such as the production of platinum, rhodium and gold are getting a large proportion of what they need to maintain production. RSA companies that produce critical metals for global industry, such as ferromanganese and ferrochrome, are getting lesser allocations of power because they produce less export revenue per kilowatt. The global prices of all commodities dependent for their production on the supply of electric power in the RSA have skyrocketed.
The situation in the RSA is not unique, and cannot be solved overnight - anywhere on earth - even if all of the political barriers to the construction of power plants were suddenly removed.
Oil has become too expensive to burn as fuel for power plants, and even in places, where oil is cheapest like Saudi Arabia, the money to be foregone as export revenue from selling oil, is becoming a serious impediment to building additional oil fired power plants.
Hydroelectric dams produce large amounts of power but are extremely expensive to construct and take a very long time to do so; in addition they impact food production and interrupt society immediately as their construction begins and the benefits are a long way off in the future. As the Chinese have discovered, hydroelectric dams can also have economically massive negative unintended consequences. Finally there are very few places left where hydroelectric dams are practical where they haven’t already been built or are under way.
Uranium fuelled nuclear power plants take so long to be permitted and so long to construct and so long to repay their costs of construction that they can only be built with massive governmental subsidies; and until the military and waste storage problems are politically, not just technologically, resolved, they are not going to be a solution to the global energy shortfall crisis even though they immediately solve the so-called greenhouse gas emission issue for power plants, since they do not emit greenhouse gases, other than water vapour!
So what is left? It is clearly only coal, and the efficient market mechanism operating in every economic system on earth, free market capitalist, mixed free market and demand capitalism, socialism and even fascism have come to the same conclusion: A huge number of, as clean and efficient as currently possible, coal burning electric generating plants must be built as soon as possible or the economies of the world’s nations, no matter which type they are, will slow and in the worst cases cease growing and, perhaps, even move backwards. This, not nuclear weapons or terrorism, is the greatest fear of all of the leaders of the world’s nations from the democratically elected to the self appointed.
The production of any and all metals and their movement, no matter how small or how great, in the world’s markets depend on the availability of economically priced energy.
No matter what the elites who control the biases of and the stories printed in the New York Times think, or command their subordinates to write, or write themselves there will now be a massive increase in the demand for coal. The demand for coal miners and coal mining equipment will now skyrocket in every country with plentiful and accessible supplies of coal, America included.
Investors in metals need to look at the consequences of the coal fired power plant revolution under way.
Here are some new and additional demands just for minor metals that the coal fired power plant boom will be driving:
1. Molybdenum for high temperature, high strength, crack and creep resistant, corrosion resistant alloys for (water utilizing) cooling systems including high temperature steam management. Every new plant’s - and the refurbishing of every old plant’s - cooling systems will require high molybdenum steel pipe. This demand will grow and compete with the demands of the oil industry for oilfield tubular goods (OTGs) for drilling, transporting, refining, and distributing petroleum. Molybdenum’s price is going to keep going up. Tungsten (and cobalt) for the huge cutting heads for coal mining which rapidly wear out and must be replaced. All of the tungsten today comes from China, but there are new and reopened mines in North America, South America, and Asia outside of China. Rhenium for high temperature turbine blades but mostly for catalysts used to liquefy coal for transportation by high molybdenum pipe or, if the research being conducted by the U.S. Air Force is successful, even to create direct use liquid fuels based on coal. Rhenium has been ignored by most companies that could produce it. That will now change. The current shortfall of rhenium due to high demand by the aerospace industry will keep rhenium’s price in the stratosphere. Platinum, palladium and rhodium to manage the emissions from burning coal to eliminate particulate materials, unburned materials, and acid forming nitrogen oxide emissions. South African energy supplies and Chinese demand growth will keep the platinum group metals at high prices. Antimony, beryllium, boron, chromium, cobalt, manganese, neodymium and samarium, among others for the structural steels, generator construction components, batteries, and magnets, both permanent and electro- all of which go into the construction of a coal fired power station in significant and sometimes very large quantities. Minor metals are mostly byproducts; their production cannot be increased simply. Look for prices of these metals to stay high and go higher.
ZGM Price at posting:
0.0¢ Sentiment: None Disclosure: Held
