Experts Now Openly Identify Critical Strategic Minerals for Taxpayer Funded Study
By Jack Lifton
05 Apr 2007 at 02:20 PM GMT-04:00
resourceinvestor.com
DETROIT (ResourceInvestor.com) -- Private investors and professional purchasing staff have been given a rare opportunity this week to look at the thinking of a very experienced and successful manager with broad experience in finance and commodity, as well as nonferrous, metal purchasing at America’s largest heavy industrial manufacturer, General Motors.
I have written before about this individual’s accomplishment in revolutionizing the recovery of non ferrous metal values from industrial scrap. He did this as his approach and contribution to his last assignment at GM prior to his retirement after 37 years with the company, and it, mining nonferrous values from scrap, is slowly, and surely, turning the nonferrous metal scrap, ferroalloy in particular, world on its ear.
Six years ago this man was invited to give a presentation on the future of platinum group metals to the PDAC in Toronto. He predicted accurately and gave the reasons precisely for the then-soon-to-be precipitous drop and non-recovery (to this day!) in the price of palladium. He was the only representative of a major end-user of nonferrous metals invited to speak. His predictions were ridiculed by all of the financial analysts present all of whom turned out to be wrong.
I have been writing for Resource Investor during the last month about projects underway at the National Academies (NA) which include an attempt to identify the impact on the U.S. economy of shortages or, worse, the secession of availability of materials that are either not found within the U.S. or are found but no longer extracted and/or smelted and refined within our borders.
I complained that the NA was not allowing open public participation in its deliberations on this matter, and I said that although I understand that such discussions may well include subjects that would be of value to those who seek to undermine the military preparedness and security of the U.S., I was troubled by the broad curtain of secrecy that seemed to me to be imposed arbitrarily on topics mainly of industrial and investor concern. I was not satisfied at all with statements within the NA websites promising to issue reports in the future, because I think the public has a right to confront the political class with regard to how urgent they consider these issues to be for the civilian economy, how they could affect our standard of living and what they intend to do about it now.
I am therefore pleased to tell you that the NA has decided to publish on the Internet, most of the raw written presentations upon which the active participants in the March meeting on “Critical Mineral Impacts on the U.S. Economy” based their oral presentations. This will allow us to see, at least in outline, and in some cases in rather extensive detail:
1.
Which metals industrial experts consider critical to our economy;
2.
Why they have chosen these particular metals, and;
3.
What those responsible for sourcing these metals can due to minimize the impact of shortages on our economy.
This, of course, is not only vitally important to America’s future, but is the key to any and all sound investment strategies in commodities both for end users and private investors. It is imperative that government understand and adhere to pro-active policies based on the trends and objectives revealed in these NA projects.
There is too much to cover in one article, so I am going to abstract for you what I consider to be the best presentation published so far, which, unsurprisingly to me, was the one submitted as a speaking outline by Mr. Ivan Herring, GM’s current global scrap manager, and prior to that its commodity manager for nonferrous metals, and prior to that a member of first the finance staff and then of purchasing management.
When I saw the Internet publication of these documents I contacted Mr. Herring for permission to use his presentation, and he granted permission, but said that he could not expand upon it until after July 1, 2007, the date of his retirement from General Motors. We scheduled an interview for just after July 4, 2007, and I will report our discussion to you shortly after that.
Mr. Herring told me that he was asked to prioritize his list of critical metals for his oral presentation, which was part of a subgroup of the project entitled: “Critical Mineral Sources and Materials Flow.”
He listed five metals with notes on their application and supply and demand:
1.
Rhodium
2.
Platinum
3.
Lithium
4.
Molybdenum, and
5.
Rare Earth Metals
Here are his two pages on rhodium (page 5 and 6 of 22):
Mr. Herring’s notes are objective. “No build condition,” by the way means that without rhodium motor vehicles powered by internal combustion engines cannot be built. I would also place the fact that 95% of our supply comes from the Republic of South Africa and Russia as a “Secondary Concern,” ahead of price, under his “Nature of Criticality” heading.
Note also that when Mr. Herring lists “recycling” in parentheses it is to emphasize that the producers consider contributions to supply from recycling to be a negative, since they are not yet in total control of that aspect of supply. This, by the way, is the reason that primary producers are so concerned with Pro-Or [TSXv:POI], which I wrote about late last year.
Mr. Herring does not give investment advice outside of GM, but you can see that rhodium has in two years sextupled in price. It is a byproduct of platinum and palladium mining (and also recycled poorly until the Pro-Or process becomes proven and accepted), so that it is still today, as we slowly come off the peak of production of vehicles powered by internal combustion engines running on petroleum hydrocarbons, a pretty good investment for the strong of heart. It is difficult to find as a pure investment play.
I want to draw your attention to Mr. Herring’s list of critical metals beyond the “top five:”
He assures me that are not prioritized in this list, but, rather, represent a compendium of what must be looked at holistically by heavy industry. This means, I believe, that you can’t look at what is happening with any one of these metals on its own. They are all tied together as critical to some important aspect of the American way of life.
Mr. Herring and I agree on most commodity metal criticality, but he doesn’t at this point speculate, or wish to, about the long term future. Platinum group metals, for example, are today critical to car manufacturing, and as such they feature prominently in Mr. Herring’s prioritized list. I think, however, as I have written here before, that we are at the period of peak platinum. I am in total agreement with Mr. Herring, though, that for the moment metals such as rhodium and platinum, itself, are “no build” critical and thus good short term investment opportunities.
Print this article and by all means print out Mr. Herring’s presentation for reference when you are thinking of investing in metal mining, refining, production or use. You will not find a list that is more succinct, better thought out or devised by anyone who is more qualified to create it.
Here's a link to the presentations -- dels.nas.edu |
