Wednesday, April 21, 2010

Challenging China in Rare Earth Mining

Challenging China in Rare Earth Mining

The New York Times
April 21, 2010
By Keith Bradsher

On a high plateau wandered by burros and jack rabbits an hour’s drive southwest of Las Vegas, a chasm hewn from volcanic rock sits at the center of an international policy debate.

The chasm, in Mountain Pass, California — 400 feet, or 120 meters, deep — used to be the world’s main mine for rare-earth elements, minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars. Molycorp Minerals, which owns the mine, announced Monday that it had registered with the U.S. Securities and Exchange Commission for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine.

Molycorp is making a big bet that its mine, now a rusting relic, can be made competitive again. Global demand is surging for the minerals. And customers, particularly the U.S. military, are seeking alternatives to China, which now mines 97 percent of the world’s rare-earth elements.

Sunday, April 18, 2010

Chinese Dams in this issue of "Science"

Science 12 March 2010:
Vol. 327. no. 5971, p. 1311
DOI: 10.1126/science.327.5971.1311



Severe Drought Puts Spotlight on Chinese Dams

Richard Stone
XISHUANGBANNA, CHINA—Smoky haze hangs over the hills in this subtropical corner of China bordering Laos and Myanmar. The smoke is familiar: During the dry season, farmers across Yunnan Province burn fallen leaves, banana fronds, and more to make ash-based fertilizer. More unusual here, and more troubling, are the sickly yellow bamboo stands and the exposed bed of the Lancang River. "It's the worst drought in that region since 1949," the founding of the People's Republic of China, says Lu Juan, vice director of the Institute of Water Resources and Hydropower Research in Beijing.
Southwest China's monsoon-driven climate doesn't bring much precipitation in autumn and winter. But this year's dry season—coupled with a late start and early end to last year's rainy season—has left the region parched. Yunnan officials estimate that some 6 million people are short of drinking water and that the dry spell has ravaged winter wheat and other crops, inflicting $1.5 billion in losses.
The drought's effects have spilled across China's borders, stoking tensions with neighbors and prompting scientific debate. Rice yields in Thailand are expected to take a big hit, and the Mekong River—the name for the Lancang south of China—is in many stretches less than a meter deep, its lowest level in decades, making it impassable to tour boats and cargo ships. Researchers worry about how the low water level may affect fisheries and critically endangered species such as the Mekong giant catfish, which in the coming weeks would normally spawn in the upper Mekong.
Environmental groups in Thailand and elsewhere lay at least part of the blame on China's doorstep. They claim that China's management of a series of dams on the Lancang has aggravated the unfolding crisis. The Thai media has helped stir up emotions; one editorial in the Bangkok Post last month was headlined "China's dams killing Mekong." Yet Chinese engineers and some other scientists say the criticism is unfounded.
Rising tensions in Asia could usher in a protracted regional conflict over resources, especially as many key rivers cross several borders. In Asia, "competition for transboundary water utilization will be fierce," says He Daming, director of the Asian International River Centre of Yunnan University in Kunming. China will be at the center of many squabbles. With some 110 rivers and lakes straddling its borders with 19 countries, says He, "China is the most important upstream riparian country in Asia, even in the world."
A major feature in this vast waterworks is the 800,000-square-kilometer Lancang-Mekong basin, home to some 60 million people. From glacier-fed headwaters on the Qinghai-Tibetan plateau, the Lancang wends 2160 kilometers through southwestern China before entering the Golden Triangle region of Burma, Laos, and Thailand. The river finally spills into the South China Sea off Cambodia. In the late 1980s, China began work on eight cascades, or hydroelectric dams, on the Lancang's lower reaches, aiming to supply 15.6 gigawatts a year. Four have been completed, including Xiaowan, the tallest at 292 meters.

Some environmental groups contend that the Mekong flow regime has been altered by dredging and dam construction, suppressing fish catches. Living River Siam, a nonprofit based in Chiang Mai, Thailand, has called on governments to "immediately stop all works on hydropower and river development on the Lancang-Mekong."
Yet the dams on the lower Lancang reduce runoff only during the rainy season, when reservoirs are filling, according to Chen Guanfu of Hydrochina Corp. Dry season water releases should increase river volume by 35%. "There are a lot of accusations that the dams in China are exacerbating the current low water levels, but the Chinese have informed [downstream nations] that they will not fill any reservoir during the dry season," says Roger Mollot, a fisheries expert with the World Wide Fund for Nature in Vientiane, Laos. The dams would also help rein in flooding, says Zhou Shichun of the General Institute of Hydropower and Water Resource Planning and Design in Beijing.
The biggest ecological impact could be less sediment swept downstream as silt accumulates in the reservoirs. But that would be a good thing, Zhou insists: It would "facilitate irrigation and navigation" on the Mekong. Others, however, point out that decreased sediment loads will likely lead to erosion of downstream riverbanks and the Mekong Delta.
Hydropower authorities have taken ecological effects into consideration, Zhou says. Work on one dam—the Mengsong Cascade, which would be sited nearest the border—has been postponed indefinitely, he says, to protect four species of migratory fish, including the giant pangasius (Pangasius sanitwongsei), whose conservation status is uncertain (Science, 22 June 2007, p. 1684). The freshwater goliath has not been reported above the Mengsong dam site, so the other dams would not affect it, Zhou says.
The first victim of an ecological crisis could be the Mekong giant catfish, which has been on the ropes for years. "It isnot clear if the current drought conditions will impact successful spawning of the wild population of giant catfish, but low water levels may make them more vulnerable to fishing pressure," says Mollot.
Things may get worse due to climate change. After examining weather and tree ring data, Fan Ze-xin, a tree physiologist at Xishuangbanna Tropical Botanical Garden, has found that in the past 40 years Yunnan has grown warmer and drier—a trend that started long before the dams were built. In a nature reserve near the botanical garden, he grabs leaves from a seedling; dry as parchment, they disintegrate. "Some of these leaves are fresh," Fan says. "I haven't seen it as bad as this."

Thursday, April 15, 2010

China + Brazil = Oil!

Just a random doc that may pique some people's interest.
More international cooperation beyond Shell & PetroChina.

Cooperation Agreement with China
Rio de Janeiro, April 15th, 2010 – Petróleo Brasileiro S.A. – Petrobras announces that today it signed a Strategic Cooperation Agreement with China Petrochemical Cooperation (SINOPEC) and China Development Bank Corporation (CDB) aimed at assessing mutually beneficial opportunities on the areas of cooperation. The Agreement is a development of the Memorandum of Understanding (MOU) signed between Petrobras and SINOPEC on May 19th, 2009.
The Agreement includes the cooperation between Petrobras and Sinopec in the following areas: Exploration & Production (E&P); Downstream; Petrochemical and fertilizers; and Services and Procurement.
In the E&P area there stands out the intention of the parties to assess future partnerships, including the possibility of selling part of Petrobras’s interest in blocks BM-PAMA-3 and BM-PAMA-8, located in the Pará-Maranhão Basin.
In Downstream and Petrochemical, the parties intent to assess opportunities for partnership in the Petrochemical Complex of Rio de Janeiro – Comperj, besides the possibility of new oil supply contracts to SINOPEC.
In addition, the Agreement includes the cooperation with CDB in relation to the possibility of bilateral financing under the scope of the Cooperation Agreement, to be negotiated between the parties by Petrobras demand.
Investors Relations

Wednesday, April 7, 2010

More Capital/Overcapacity for Wind in China?

From the Wall Street Journal's China RealTime Report
(March 31, 2010)

Gone With The Wind: Capital for China’s Turbine Makers

“A great wind is blowing, and that gives you either imagination or a headache.” Catherine the Great surely was referring to capital raising for China’s wind turbine makers. As Dow Jones Investment Banker reports, for them, a headache is more likely.

Wind turbines in Gansu province, China
Last year was a good time for China when it became the largest wind market by annual installed capacity at 13 gigawatts, according to the Global Wind Energy Council.

Unfortunately that growth heralds overcapacity for Chinese turbine makers, suggesting a shake-out for some smaller names after 2009’s aggressive build out. That should, of course, play to survivors’ advantage in the long-term.

Meanwhile, for the clutch of wind-farm operators reportedly toying with a Hong Kong listing the business outlook is probably better, though the recent IPO market hasn’t been forgiving.

Favorable macro-tailwinds and preferential policy over the last five years have helped China’s wind industry. For example, farm operators are aided by on-grid tariffs for wind being higher than fossil fuels’, while local component-makers gain from rules ensuring at least 70% of turbine components by purchase value are made domestically.

And in the seven years to 2008 electricity generation grew at a compound annual growth rate of 12.8%, eclipsing China’s real GDP CAGR of 10.5% over the period.

And the bad news?

First: friendly market-share rules don’t translate into supporting margins when new entrants flood in.
Turbine makers, for example, have increased from six before 2005 to around 70 today. Meanwhile Xinjiang Goldwind Science & Technology Co. Ltd., one of the country’s top three turbine manufacturers by sales, saw its Ebit margins decline to 16.7% last year against 21.5% in 2006.

Smaller, unlisted firms likely experienced a similar trend, aggravated by lower margins given their higher operating leverage.

With farms shifting toward larger turbine sizes manufacturers are being pushed into capex for new production and R&D in an already highly competitive market.

Additionally, big farm operators gravitate to suppliers with a performance history, which favors larger, established outfits. China Longyuan Power Group Corp. - China’s largest wind-farm operator by capacity - sourced three-quarters of its turbine capacity from Gamesa and Goldwind at the end of June last year. This implies the domestic component sector is primed for realignment, especially among the second tier makers. That isn’t a great backdrop for listings or capital raising but survivors’ margins should benefit from less competition.

Wind farm operators -China Huaneng Group and China Datang Corp,’s renewable power unit - may have better prospects given superior earnings visibility over turbine assemblers.

Longyuan floated in Hong Kong in December. It has outperformed the MSCI China index by 5.9% since debuting - yes, with a somewhat erratic trajectory -making it one of the Hong Kong’s more successful IPOs since December.

A composite index of renewable energy power providers China Windpower Group Ltd. and China Power New Energy Development Co. has outperformed the MSCI China by about 30% over the past six months.
However, in contrast with most of Asia, both mainland and Hong Kong equity markets have logged negative returns since January and foreign fund flows into Chinese equity markets have been poor lately, underscoring the tougher environment for IPOs there.

Moreover, internal rates of return for 50 megawatt farms are around 10%, industry observers say, which sounds respectable, until you read Credit Suisse’s estimate that a 40%-equity financed 50MW Chinese wind farm probably generates a return on equity of some 4-6%.

That could be juiced with leverage but, with Chinese monetary and lending policy tightening, that mightn’t be so easy or appealing for equity investors.

So Chinese wind farm operators may still have their work cut out convincing investors that now is the time to bet on wind.

– Jamie Miyazaki

Tuesday, April 6, 2010

Berkeley-Stanford CleanTech Conference on EVs & China!

Hi Everyone,

Some of you know this but I'm chairing the next Berkeley-Stanford CleanTech Conference on Cinco de Mayo. Our topic is on electric transportation with a special panel on China - Opportunities and Challenges. I'm excited to have the CEO of Simbol Mining, who will speak to the issue of lithium and China's rare earth metals policy.

Please help spread the word! Also, we're seeking sponsorship funds, so if anyone has any contacts, I would love to hear about them.

See you at Jane's,



The Berkeley-Stanford Cleantech Conference team is excited to announce our next conference series, Car 2.0 - The Race for Electric Transportation Leadership, to be held on May 5, 2010 at the PG&E Headquarters in downtown San Francisco. This conference will provide information on the past, current and future state of the electric transportation industry from technology, policy and global business perspectives. Dian M. Grueneich, Commissioner of the California Public Utilities Commission, will be delivering the keynote address. Below are the conference details:

Theme: Car 2.0 - The Race for Electric Transportation Leadership
Date: Wednesday, May 5, 2010
Time: 11AM - 6PM
Location: PG&E General Office Conference Center, 245 Market Street, Rm105, San Francisco, CA

Tickets for the event will go on sale shortly. For more information, please see the attached press release, and visit . We hope to see you there!

Keynote Address by
  • Dian Grueneich, Commissioner of CPUC

Technology and Infrastructure Development

  • Mark Duvall, Director at Electric Power Research Institute
  • John Boesel, Pres/CEO at Calstart
  • Saul Zambrano, Director Integrated Demand Side Management Product Portfolio at PG&E
  • More speakers still to confirm

China - Opportunities & Challenges

  • Eric Wesoff, Journalist at GreenTech Media
  • Jit Bhattacharya, CEO of Mission Motors
  • Roland Hwang, Transportation Program Manager at the Natural Resource Defense Council
  • Marc Gottschalk, Partner at Wilson Sonsini & Rosati
  • Luca Erceg, President, CEO & Founder of Simbol Mining Corp.

Panel 3: Policy and Economics of Electric Transportation

  • Lee Schipper, Professor at Stanford University
  • Mike Granoff, Head of Oil Independence Policies at Better Place
  • Bob Hayden, Clean Transportation Advisor to SF Government
  • Rod Diridon, Executive Director of Mineta Transportation Institute (MTI)
  • More speakers still to confirm

Sunday, April 4, 2010

One consequence of China's coal imports - the risks of shipping

Chinese Freighter Slams Into Great Barrier Reef

The Chinese carrier Shen Neng 1 ran aground and was leaking oil around the Great Barrier Reef off of Australia.

By Keith Bradsher
Published: April 4, 2010 (The New York Times)

HONG KONG — A large Chinese freighter carrying coal to China ran aground late Saturday on a section of the Great Barrier Reef off Australia, raising fears that it might leak engine fuel on coral in its immediate vicinity.

The Shen Neng 1 crashed into the reef at full speed a few hours after leaving the port of Gladstone, the Australian authorities said. The ship, which was nine miles outside its authorized shipping lane, was hauling 72,000 tons of coal and had 1,000 tons of bunker fuel aboard.

Australian officials warned that the vessel was in danger of breaking apart, and there were reports on Sunday night of traces of oil already leaking from the vessel. An Australian aircraft reportedly dropped chemical dispersants on the oil.

Basil M. Karatzas, a project manager at Compass Maritime Services, a ship broker in Fort Lee, N.J., said that it was not unusual that the 755-foot Shen Neng 1 would be carrying that much oil. A ship of that size and design would burn about 35 tons of fuel a day, he said, and would require at least two weeks to sail from eastern Australia to China.

Ships headed to China carry extra fuel to be ready for long delays on arrival, as port delays are common because commodities are pouring into the country to sustain its economic boom. Depending on the fuel’s density, the amount carried by the Shen Neng would equate to about 300,000 gallons.

“Weather permitting, they should be able to pull the oil off the vessel,” Mr. Karatzas said. As to the ship’s cargo, he added, coal is much less toxic than oil, but it could blanket the sea bottom if the ship comes apart.

China is the world’s largest consumer of coal, burning more than the United States and the European Union combined. China has rapidly increased its imports in the past year, partly because domestic supply has not increased fast enough to keep up with power plants coming into use.

Coal imported from Australia, Indonesia and the Philippines also tends to burn much more cleanly than the mostly low-quality coal mined in China, and the Chinese government has been putting ever greater pressure on coal-fired power plants to manage their pollution.

Relations between China and Australia have frayed since a Chinese court imposed prison sentences of seven to 14 years on four executives of Rio Tinto, an Australian mining company. The executives pleaded guilty to accepting $13.5 million in bribes to influence their allocation of scarce iron ore to Chinese steelmakers.

Rio Tinto dismissed the executives, but the Australian government criticized the harshness of the seven-year sentence for bribery imposed on Stern Hu, an Australian citizen who was among the four.

Australia’s environmental movement is very sensitive to any threat to the Great Barrier Reef, making it likely that a full investigation will be carried out into how the Shen Neng 1 strayed so far off course. It ran aground near Great Keppel Island off eastern Australia, nearly halfway off the coast between Brisbane and Cairns, in an area of the reef that is subject to especially stringent environmental restrictions and that is popular with sport fishermen.

“Australia is one of those jurisdictions that doesn’t take these things lightly,” Mr. Karatzas said.

An Australian police boat was nearby to rescue the crew of 23 if the vessel did break up.