The Metal That Could Spark a New Resource War
FN Media Group Presents Oilprice.com Market Commentary
LONDON, May 11, 2020 /PRNewswire/ -- While the United States is slowly working towards ending the lockdown and restarting the economy, the federal government is quietly fighting a second war with China over critical metals. One of those critical metals in particular is the extremely rare key to global technological dominance because it's crucial to winning the 5G war--the national security battle of the century. Mentioned in today's commentary includes: Teck Resources Limited (NYSE: TECK), Turquoise Hill Resources Ltd. (NYSE: TRQ), Agnico Eagle Mines Limited (NYSE: AEM), Pretium Resources Inc. (NYSE: PVG), Magna International Inc. (NYSE: MGA).
The metal is cesium (Cs), the most active metal on Earth, and it's so rare that it's hard to even put a price on it. It's also a vital ingredient in our ability to make 5G happen.
Despite this, America has none, and it dropped the ball a long time ago. At the 11th hour, the Trump administration is now bent on reversing the loss of cesium to China, spanning the globe for lower-risk venues with potential reserves. And that desperate search for cesium potentially makes one particular Canadian junior miner--Power Metals (PWM.V,PWRMF.PK)--a highly critical component.
There are only three cesium mines in the world and Power Metals owns three of the five cesium occurrences in the province of Ontario.
In February this year, PowerMetals started drilling for what is hoped to become the only potential cesium mine that China doesn't already control.
"There is a global shortage of this rare metal and we are very lucky to have found it at our 100% owned Case Lake Property with grades as high as 14.7 % Cs2O," PowerMetals Chairman Johnathan More said in a recent press release.
Cesium: The Star of the Critical Minerals Show
Unlike some other commodities, cesium is immune to the demand-decimating effects of the coronavirus pandemic because it is critical to everything from the 5G revolution, healthcare advances and defense to oil and gas drilling--and even time itself.
In healthcare, cesium is a key element in strategic organic chemistry, including in x-ray radiation for cancer treatments, while the oil and gas industry uses it for drilling fluids to prevent blow-outs in high-temperature, high-pressure wells.
But cesium's applications in the 5G war, and in measuring time, make it the stuff of critical metal legend and a valuable weapon in the race for technological dominance. It's the "cesium standard" that allows us to measure time accurately. That means it's the key to mobile networks, the internet, and GPS.
For investors, that means understanding exactly what the 5G war means to the world, and how it will reshape the global balance of power. The new 5G cellular wireless tech will transfer data and the correct time faster than ever before--fast enough and accurately enough to transform industries.
5G technology means that very soon we will be living in a new reality with a continuous, real-time connection for every single device in existence, and everything to come as a result. It will forever change healthcare (think: real-time connection pacemakers among many other things), and it will open up vast opportunities for giant and emerging tech companies across every segment of commerce and industry, not to mention national security applications. But for now, China controls it all.
The Chinese Connection
As suggested by heightened rhetoric coming out of every corner of the political playing field in the United States, the post-COVID-19 environment isn't going to be one of global unity. More than ever, swords are being drawn, both in Beijing and in Washington. There's simply too much at stake, and things are about to go way beyond the Trump administration's earlier battle against Chinese tech giant and 5G star Huawei.
In fact, the pandemic is now threatening a new cold war between the U.S. and China, with Trump accusing Beijing of a COVID cover-up and Beijing is accusing Washington of blackmail. The Trump administration is also moving to cut global industrial supply chains from China and is cooking up new tariffs. But while the US has been desperately warning Europe off Chinese-connected 5G plans, Brussels doesn't seem to be listening in another potential win for Beijing.
Cesium was only added to the United States list of critical minerals in 2018 despite the fact that it will be a factor in the 5G revolution, a revolution that will generate trillions of dollars in new products along the way.
Despite the fact that it is so strategic, there are only three pegmatite mines in the world that can produce cesium: Tanco in Manitoba, Bitika in Zimbabwe, and Sinclair in Australia. Two of them, Tanco and Bitika, are no longer producing, and the stockpiles at Tanco and Sinclair are largely controlled by China. Not only is there limited supply, but there are a very limited number of companies in the supply chain itself.
That positions Power Metals to potentially be a major North American supplier of cesium, possibly right at the crucial moment in the 5G revolution. Known for its major hard rock lithium deposit in Canada, Power Metals hopes to very soon be known as the company that broke China's monopoly on the critical cesium metal.
Power Metals is sitting on what could become only the fourth deposit of its kind in the world. The company discovered the pegmatites at West Joe Dyke in August 2018, intersecting high-grade cesium mineralization in six drill holes when it was targeting lithium instead.
The 2018 drill program intersected high grade cesium mineralization in six drill holes at West Joe: PWM-18-111, 112, 116, 123, 124 and 126 with up to 14.70 % Cs2O over 1.0 m in drill hole PWM-18-126.
In February, right before the COVID-19 outbreak turned into a pandemic, Power Metals started drilling, and it's world-class geologist, Dr. Julie Selway, says the three properties the company is drilling are hoped to have similar finds to the strategically important Sinclair mine in Australia.
Power Metals has intersected cesium (Cs) mineralization in 6 drill holes on West Joe Dyke, with "exceptionally high-grade" Li and Ta intervals. They also found Cs mineralization in drill core samples in the first new dyke below Main Dyke, as well as in the drill core in Northeast Dyke. Now, they're working to expose, sample and assay that cesium mineralization on the surface outcrops to find more cesium-bearing pegmatite dykes nearby.
When and if that happens, North America could finally get a leg up in the war for a key component in the global technological dominance that will define this century, and a single junior minor will have helped that happen.
While cesium very well may be the most exciting metal at the center of this revitalized resource face-off, other metals are just as important.
Germanium, Indium, Rhenium, And Molybdenum
With the battery revolution reaching a critical level, some lesser-known metals, and the companies that produce them, may be flying under some investors' radars. Take Teck Resources, and Turquoise Hill Resources, for example.
One of Teck Resources (TECK) lesser known strengths lays in its production of three metals essential in semiconductors and transistors. And in this day and age, that is extremely important. Teck is one of the world's largest producers of germanium and indium. Without these, the technological revolution would be at a stand-still. Though it doesn't make up a huge part of Teck's business now, the simple fact that it is producing these metals at any significant volume could spell good news for the company down the line.
Turquoise Hill Resources (TRQ ) is a major producer of another three key metals in the modern clean energy boom. While most people know that uranium is absolutely essential in today's nuclear power generation, they may not know much about rhenium and molybdenum. These two elements also play a critical role in our development of cleaner energy, and will likely grow in demand over time. Both are critical in battery production, and without them, we could say goodbye to global climate change goals, considering how much of a role energy storage will play in going emissions free by 2050.
Gold And Silver
Though gold did not make the U.S. critical metals list, there is a huge push for it to be included. Why? Because the iconic yellow metal is not only used in numerous electronics, but it also carries tremendous geopolitical weight. Just last year, a number of countries, including China and Russia, stockpiled gold in record amounts. Though gold is a flashy metal often associated with wealth, it is also one of the world's most widely beloved safe haven assets.
That's why companies like Agnico Eagle Mines and Pretium Resources can't be ignored. To put it simply, gold fares well in times of crisis. And it always has.
Agnico Eagle Mines (AEM),
for example, is one of Canada's top gold and silver producers. It has operations in Canada, Finland and Mexico, and is always working to take care of its shareholders. One thing that sets Agnico apart from the competition is its policy of no-forward gold sales. This means that the company's share price has full exposure to higher gold prices. And with investors continuing to flock to safe haven assets, Agnico stands to benefit.
Pretium Resources (PVG), for its part, sits alongside Agnico as another one of Canada's most prominent gold producers. It has an impressive portfolio of assets spread out across the globe, and if you can catch the stock while the price is right, there could be huge opportunity for upside. Not only that, the company is always looking to expand.
As the global pandemic reaches epic proportions, the economy is likely to suffer even more. Already 30 million Americans are jobless, and the stock market hasn't quite recovered from its early-year highs. This means safe haven assets, and precious metals miners, are poised for a bump.
Don't Underestimate The Buyers
While producers get all of the credit for the critical metal boom, where would they be without the companies that know how to use them? Magna International (MGA) may just be one of the more underappreciated players in this revolution. While it doesn't produce metals itself, it is a leading supplier of mobility technology for automakers. In fact, it's a major developer of some of the key components that will be driving the electric vehicle revolution into its next stages. Better still, Magna has operations in over 27 countries, meaning it has the potential to supply automakers across the globe.
By. Nick Pulver
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This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for cesium will retain value in future as currently expected; that PWM can fulfill all its obligations to maintain its properties; that PWM's property can successfully mine commercial quantities of cesium; that the three properties the company is drilling are hoped to have similar finds as the strategically important Sinclair mine in Australia; that occurrences and indications of a commercially sized deposit become reality; that high grades found in samples are indicative of a high grade deposit; and that PWM will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that aspects or all of the properties' development may not be successful, mining of the cesium may not be cost effective, the price of cesium may not stay high and it may never be profitable to mine cesium; PWM may not raise sufficient funds to carry out its plans, changing costs for mining and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and mineral recoveries assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper cesium; more production of Cesium could reduce its price; alternatives could be found for cesium; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties, or that the required permits to build and operate the envisaged mines cannot be obtained. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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