Last update: 4-2-2017y 10:28 A.M.
Investing in Europe our model of stability by the Baltic-Room.
China has attempted to engineer what the media is calling a "soft landing", to try to weaken real estate prices and restrain inflation. To some extent, it seems that its policies have been successful. If inflationary pressurer in China continue to moderate, then the central bank should have room to loosen credit conditions. This should help to offset economic weakness. When you look at the strenght in copper, the Australian dollar and other leading or coincident indicators of Chinese economic activity, it`s very hard to take a bearish outlook on China. Major Chinese stock indexes have held at support levels and are starting to bounce. So, overall, we expect China`s economy to be somewhat constructive for commodity prices. About East African oil in 2003, there have been a number of very large, important discoveries, the most famous of which was Heritage Oil Corp. discovery in Uganda, which proved the existence of world-class oil basins in the great Rift Valley, precipitating a wave of strategic interest in East Africa. At the same time, evolv geopolitical dynamics are now supportive to East African oil development. For example, South Sudan`s independence created momentum for a new pipeline that can potentially link offshore East African oil fields to export markets, creating a platform for monetization of otherwise stranded oil deposits. Mongolia has a host of remnants of the sea that vanished when the Indian and Asian subcontinents collided a long time ago. Those remnants formed a vast sedimentary basin that has been transformed into one of the world`s largest undeveloped coal provinces, with both thermal and coking coal. Mongolia`s thermal coal story is quite interesting. China is now the world`s largest importer of thermal coal, while India has very limited supplies of thermal coal. Mongolia will inevitably emerge, in our view, as an important regional thermal coal supplier. China will continue to dominate the industry, but it may become a net importer of rare earths after 2015. as it cuts back on supply, prices are likely to remain elevated for an extended period of time. China will not stops producing rare earths altogether. China likes the manufacturing and jobs associated with rare earths: high-tech applications, cars, windmills and electric bicycles. It`s goalis to keep rare earths affordable within the borders of China in order to incentivize manufactures to move within its borders. China will never completely shut down the rare earths industry, but it will look to control supply as much as possible. The great irony of this sector is that while mining these elements has been far from environmentally friendly, rare earths are used for "green" technology like electric cars, hybrid cars and wind turbines. Maintaining high environmental safety standards is more costly for companies, but they have the opportunity to make attractive long term returns after a large initial investment given the current pricing environment. Despite the name, rare earth elements are actually quiteplentiful in the earth`s crust-it`s the companies that are close to producing these critical metals outside of China that are truly rare. The Chinese government is now enforcing environmental standards at its rare earth element mines. Inner Mongolia Batou Steel Rare-Earth (Group) Hi Tech Co. Ltd., China`s biggest rare earths producer, even halted production last years. Yet the scarity of these metals continues to provide China with unprecedented economic opportunity. China will continue to dominate the industry, but it may become a net importer of rare earths after 2015. As it cuts back on supply, prices are likely to remain elevated for an extended period of time. It takes the U.S. government an extremely long time to put procedures in place and determine exactly what`s needed, how materials will be stored, what sort of databases will be required and so on. The process has already taken so long, the tightness of these markets may have been alleviated by the time it is ready. Nevertheless, given the critical nature of these metals in defense applications, the U.S. may want some sidelined for inventory. A power solution for one of Rio Tinto`s most prospective mines remains elusive, raising doubts over whether plans to be in production within six months can be achieved. The Oyu Tolgoi copper and gold mine in Mongolia looms as one of Rio Tinto`s most exciting growth projects on the back of the company`s recent takeover of Oyu Tolgoi`s majority owner Ivanhoe Mines. But difficulties in delivering power to the mine site, which includes concentrators and a large workers village,connected to the power grid on the Chinese side of the border for the first four years of the mine`s life. But such a deal requires an agreement between Chinese and Mongolian authorities, and Ivanhoe confirmed today that officials from the two nations had still not agreed terms. Codelco and the National Mining Company of Equador signed an agreement to explore that country`s copper potential, which could be as high as 200 bln in untapped deposits. Under the agreement, Codelco will invest between 10 mln and 30 mln in Ecuador over the next four years. This is in addition to the 3.5 mln Codelco has already spent since 2008 in basic exploration of 20 prospects, including in El Palmar, an area located north of the capital, Quito. Over the past 15 years, mining in Ecuador`s north has been strongly opposed by the local communities, with several international mining companies failing to establish a foothold in the area. Colombia`s minister of Mines and Energy Mauricio Cardenas invited Codelco to visit his country with a view to reaching an agreement on copper exploration. "Codelco doesn`t have much activity outside of Chile." Cardenas said to El Mercurio, a Chilean newspaper. "So it would be significant if in its first ventures abroad it came to Colombia to develop our copper mining." Colombia`s copper production is virtually non-existent, Cardenas added. Instead, the country is known for its coal and gold production.