Mineral And Mining Legislation Highly Likely To Hamper US Business

Analytic Question:

How will mineral and mining legislation affect United States businesses in the next three to five years?

Overall Finding:

It is highly likely that mineral and mining legislation will hamper the US business sector over the next three to five years.

Key Findings:

• Re-opening dormant mines will likely remain the most attractive method to procure strategic minerals domestically
• Mining industry must adhere to over 80 laws through 20 agencies
• Opening mines in the US takes, on average, seven years
• It is likely that the effects of the Dodd-Franks bill on conflict minerals will be far-reaching, across many industries. 
• Dodd-Franks legislation creates a competitive disadvantage for US public industries
• US industries could incur between USD 3 and 4 billion in implementing Dodd-Franks legislation
• It is likely that passage of US Congressional bills relating to strategic and rare earth minerals would improve the job market; however it is unlikely legislation will be implemented
• Only 29 percent of bills sent to the floor for a vote pass both the US Senate and Congress
• Ten strategic mineral-related bills have been introduced to the 112th Congress
• In spite of growing non-Chinese supply of minerals, US businesses are likely to remain heavily dependent on Chinese rare-earth sources.
• A number of strategic minerals, including Rare Earths, are 100 percent imported
• China supplies 79 percent of the rare earths used by US industries, increasing trade tensions

Mineral and Mining Legislation Highly Likely to Hamper US Businesses

Nevada's Safe Bet On Gold

Mining operations create jobs that pay approximately
double the national average income for an individual.

LAS VEGAS (Las Vegas Review Journal) -- While Nevada is famous for its tourism, it is little known that the state makes just as much off of its mining industry. Gaming and mining bring in approximately $10 billion a year, each. Most of the money brought in from mining goes into state coffers to support many social programs. In 2011, Nevada processed approximately $24 million in gold each day, helping make the United States the third largest gold producer behind China and Australia. It is estimated that Nevada has 15 years of gold reserves left and is continuing to search for more throughout the state. Production of gold in Nevada is of critical strategic importance, as the United States strives to become less dependent on foreign countries for its minerals. Source: Nevadans Have Long Bet Their Lives, Fortunes On Mining (Reliability: High)

Comment: Nevada acknowledges that mining has its booms and busts, and so it is continually searching for new places to mine, replenishing resources, and being strategic in its operations to make the industry last well into the future.

China Pursuing Arctic Mineral Riches

NUUK, GREENLAND (New York Times)--Although China does not currently hold any Arctic territories, it is deploying its wealth and diplomatic clout to secure a foothold. The country sees its involvement as important so that it is not shut out of mineral and shipping decisions. The Arctic region has risen rapidly on the country's foreign policy agenda: this year alone diplomats have visited Denmark, Sweden, Iceland, and also Greenland, where Chinese companies are investing to create a mining industry. Retreating of Greenland's ice cap has made accessible deposits of many valuable minerals; so far there has been little exploitation of Arctic resources. Greenland's proximity to the US is also of concern to American officials, who have accordingly stepped up diplomatic efforts with Arctic countries. Source: China Joins Nations Seeking Treasure in Warming Arctic (Reliability: High)

Comment: If China is successful in establishing a significant presence in the Arctic region, the supply of critical minerals such as cobalt and rare earth minerals, over which China already holds considerable control, will almost certainly become more skewed in favor of the Chinese. Furthermore, in light of the recent flare-up of the Senkaku (Diaoyu) Islands dispute with Japan, China will highly likely double its efforts to gain Arctic territory, and its scramble for Arctic territory will likely be a source of diplomatic tensions among prominent nations.

Future Rare Earth Processing Plants Likely to Trigger Public Protests In Concerned Countries Due To Health And Environmental Concerns; Companies Likely To Decrease Their Dependence On China

Executive Summary:
While rare earth mining and processing companies like Australian Lynas and US Molicorp tend to decrease their dependence on Chinese resources, they are likely to face multiple challenges.  Costs are highly likely to be one of the decisive factors for the location of rare earth processing plants. However, the public opinion’s safety concerns are likely to remain a major  challenge for rare earth companies. Moreover, social media, in countries with significant Internet access and government controlled news sources, is likely to remain one of the most effective tools for public campaigns.

Discussion:
Lynas, an Australian based company, received a temporary operating license for the world’s biggest rare earth processing facility in Malaysia. Production will begin in October 2012. Molycorp recently reopened its rare earth mine in Mountain Pass, California which was closed down in 2002 because of low-cost Chinese production. It is believed that the increased activity of Lynas and Molycorp in the production of light rare-earth elements will weaken world market prices due to the growth in supply. Lynas will likely face the following challenges: health and safety concerns for locals, renewing the temporary license and activists trying to shut plant down after Malaysia’s elections.

Protesters at the Lynas’ office in Australia

While Lynas’ Mount Weld mine  is located in Western Australia, the company established its processing plant in Malaysia. According to Lynas, the main reason for this move was Malaysia’s lower costs. As the mining related costs are highly likely to be higher in Australia than in China, Lynas had to decrease its rare earth processing costs to remain competitive in the world market.
Malaysian activist are geared up to blockade the ore shipments from Australia once it has been mined and to demonstrate one of the biggest examples of civil obedience in the nation. This has been sparked by major health and safety concerns for the locals. Mitsubishi mined rare earths in the 80’s in Malaysia’s Perak State and it is thought that they were responsible for birth defects and and leukemia among residents. Malaysia’s Prime Minister, Najib Razak, has said that the plant is “factually and scientifically safe”.
It is likely that health risk related concerns about rare earth processing plants will be one of the key agendas for future plants all over the world.
The example of Malaysia shows the role of  social media where the ruling political parties have a tight grip on traditional news sources but they were unable to handle social media so average Malaysians were able to carry out a huge protest against Lynas’ rare earth processing plant.  While Lynas ultimately received the temporary operating licence from Malaysian authorities, the country’s Facebook and Twitter users were able to postpone the licence grant, causing financial damages to the company. Nevertheless, Lynas’ underestimation of the role of social media also contributed to the protesters’ success.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked in a team. The subject is highly complex and the time available for the task was adequate.

Methods And Processes:
Using Gmail - our group shared contact information amongst ourselves. This included e-mail address, phone numbers, twitter handles and google plus information. That way, we had multiple methods of communication. We used google docs to create, share and work on our SFAR and called each other to coordinate our next steps. We then used google hangouts whilst simultaneously working in google docs to write our SFAR. We then independently brushed up and refined our work before submitting to the Blogger platform.
The use of these collaborative tools was essential as we have very different schedules. The ability to work on things separately was useful but the ability to work simultaneously without being in the same room was essential. The combination of google docs and hangout were perfect for our needs and allowed us to work without any communication delays that we would have found with e-mail or texting. I found the screen share function of google hangouts particularly useful for sharing pictures that I thought we could insert into the final product.

Authors:
Dean Atkins - deanatkins88@gmail.com
Google+     Twitter

Mineral Rich Afghanistan Contains Promise And Problems

Infrastructure must be created throughout
much of the country before mining efforts
may commence.

AFGHANISTAN (NYT) -- It is estimated that Afghanistan possesses nearly one trillion USD in untapped minerals such as gold, lithium, and copper. Though there is potential for Afghanistan to use these resources to become a self-sustaining country and player in the global market, overwhelming concerns regarding government corruption, lack of existing infrastructure, and violence overshadow this hope. Fears of a countrywide civil conflict exist as various factions recently started fighting over mineral rich territory, scaring off international investors. The government rejected legislation that it considered too favorable to Western interests. However, it since allowed Chinese companies to mine for oil, copper, and rare-earth, all while arguing other contracts awarded through spoils and regional political influence. In addition, there are concerns about proven illegal mining and smuggling of minerals to neighboring countries in order to fuel insurgencies.  Despite the negatives, the people of Afghanistan eagerly await for more mining to begin, as it is estimated that such activity could bring as many as 50,000 jobs helping to lift many of the families out of poverty and provide education to their children. Source: Potential for a Mining Boom Splits Factions in Afghanistan (Reliability: High)

Comment: As long as Afghanistan continues to experience violence and instability, the mining industry will be very slow to come to fruition, if ever, crushing the hopes of the people who want a better life.

Northern Minerals finds Highest Grade Heavy Rare Earth (HRE) Intersection to Date

Locations and % TREO of drill sites at Brown's Range

Northern Minerals (Western Australia) - In an attempt to address the increasing global demand for HRE minerals, Australian mining company Northern Minerals is exploring new deposits in the north-eastern section of Western Australia. Their most recent diamond drilling cores, at the Brown's Range show the highest grade HRE to date, at 4.15% Total Rare Earth Oxide (TREO) containing high levels of yttrium and one instance at 9.58% TREO.  These most recent prospect drillings are an extension of a 2011 program by Northern Mineral to target high margin mineralization at Brown's Range. Northern Mineral owns all of the rights to this range, and is conducting an analysis of 22 drilled core samples to gather data for a Joint Ore Reserves Committee (JORC) resource report.
Source: http://www.northernminerals.com.au/new/index.php?option=com_edocman&task=document.download&id=359&Itemid=135
(Reliability: Medium)

Comment: If China continues to restrict its export of Rare Earths, Australia could quickly move in to fill the demand for critical minerals. Companies like Northern Mineral are positioning themselves to take advantage of this gap.

Greenland, Supplier of Rare Earths

VANCOUVER, CANADA. (RAREEARTHINVESTINGNEWS.COM) -- Greenland hosts enough of the rare earth minerals to supply a quarter of global demand for the next 50 years. While it has a rich history with minerals - very little has been done to advance projects. However, one of the biggest challenges is that only 15% of Greenland is free of ice.

Mining and exploration in Greenland is limited
to the coastal portions of the island.

According to Dr. Damien Degeorges (an academic who has worked extensively on Greenlandic issues) 25% of demand could be met by Greenland each year until 2062. Greenland is looking to become more financially independent from Denmark and mining could be a big part of that freedom.
Although there is not a great deal of mining going on already - there is a wealth of potential as the government is pro-mining and hosts gold, base metals, rare earths and diamonds. Greenland is similar to Canada and includes Archaean craton (a crust layer known for its riches in minerals). Despite its geological appeal - it is still vastly unexplored.
The bulk of Greenland is frozen under the Inland Ice Cap and has thus far hindered exploration. Mining would be limited to coastal portions of the island. There are also concerns as to whether mining could occur without damaging the country's pristine Arctic environment. One further problem could be the dispersion of Uranium dust which may be found whilst mining for minerals.
Source: Rare Earth Mining in Greenland. (Reliability: High)

Comment: It is reported that there is favorable mix of rare earths, yttrium and heavy rare earth oxides. According to the latest survey, a lot of rare earths were overlooked in the 1990's when exploration began.

Canadian Group Working To Increase Transparency In Mining And Exploration

Mines such as this Cricket Resources mine in
Canada provide the US with  critical minerals.

OTTAWA, CANADA (Mining Association of Canada)--On September 6, 2012, a working group of Canadian national-level mining and exploration associations and transparency-focused NGOs announced it has signed a Memorandum of Understanding to improve Canada's transparency in extractive company payments to governments. The group intends to develop a framework for disclosure of payments for Canadian oil and mining companies by June 2013. There is currently no mandatory framework in place in Canada, although many companies participate in voluntary reporting such as EITI. Involved parties state that this working group's collaboration will likely allow citizens, investors, and communities "achieve accountable, responsible and sound management of natural resources." Source: Canada's mining industry joins forces with NGOs to improve transparency (Reliability: Moderate)

Read more here: http://www.sacbee.com/2012/09/06/4792762/canadas-mining-industry-joins.html#storylink=cpy

Comment: As the US is 100 percent import-reliant on Canada for such critical minerals as Cesium and Rubidium (Source: USGS), an increase in transparency among Canadian sources would almost certainly improve the risk analysis capacity of American officials and investors.