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Japan embarks on rare earth search as China tightens supply
A Japanese mining vessel left on Monday for an atoll coral to explore mud rich in rare earths. This is part of Tokyo’s efforts to reduce its dependence on China as Beijing restricts the supply. The Chikyu test vessel will be on a month-long mission near Minamitori Island, some 1,900 km (1200 miles) south of Tokyo. This is the first time in the history of mankind that a seabed sludge of rare earths can be continuously lifted from?6km (4 miles) depth onto a ship. Japan has reduced its dependency on China, as have its Western allies. These minerals are vital for the production of smartphones, military equipment and cars. This effort has become more urgent due to a major diplomatic disagreement with Beijing. After seven years of preparation we can now begin the confirmation test. Shoichi Ishii said, "It's deeply moving," as the vessel left the port city Shizuoka, on a sunny, bright day with Mount Fuji snow-capped in the background. He said that if the project is successful, it would have a great impact on diversifying Japan's procurement of rare earth resources. Recovering key minerals 6 km beneath sea level was a significant technological achievement. The vessel with 130 crew members and researchers is scheduled to return?to the port on February 14th. It won't be easy to reduce dependence on China China has banned the export of some minerals that are critical to Japan's military. The Wall Street Journal reported that Beijing has begun to restrict rare-earth exports more broadly. Japan condemned China's ban on dual-use but refused to comment about reports of a wider ban. China has neither confirmed nor denied the report. Chinese state media have reported that Beijing is weighing this measure. Sources familiar with the issue have confirmed that the finance ministers of the industrial powers in the Group?of Seven will meet on Monday to discuss the supply of rare-earth elements. Japan has faced China's anger over?rare Earths before. China halted exports in 2010 after an "incident" near disputed islands of the East China Sea. Japan's dependence on China has been reduced from 90% to 60% by investing overseas in projects such as the trading house Sojitz's tie up with Australia's Lynas Rare Earths, and promoting rare earths recycling and manufacturing methods that depend less on minerals. However, the Minamitori Island Project is the first attempt to source rare Earths domestically. Takahide Kiuchi is the executive economist of Nomura Research Institute. He said that if the new export controls end up covering many rare earths, Japanese firms will once again try to get away from China. But I don't believe it will be an easy task. Analysts say that Japan's automotive industry is at risk because it is so dependent on China for?heavy rare earths such as magnets used in electric and hybrid vehicle motors. LONG-TERM PROJECT The Japanese government and private firms have been stockpiling the minerals since the 2010 scare. However, they don't disclose the volume. Several executives at a New Year’s party held for the mining industry in Japan on Wednesday said that they were more prepared than ever to deal with any disruptions. They cited Japan's stockpiles and diversification efforts. Kazumi Nishikawa is the principal director of economic security in the Trade Ministry. He said that the government must constantly remind businesses to diversify their supply chain. "Sometimes you know, an event happens, and then the business reacts. But the event ends, and the business forgets." Nishikawa said on this week's China Talk podcast that we must maintain our efforts. The government's Minamitori Island Project, which has cost 250 million dollars in 40 billion yen since 2018, is a long-term investment. No production goal has been established and the estimated reserves of the mine have not been revealed. If the trial is successful, full-scale mining will begin in February 2027. The high cost of mining mud made it uneconomical. If the supply disruption from China continues and more buyers are willing to pay higher price, then this project may become viable within the next few years, according to Kotaro Shiimizu, principal consultant at Mitsubishi UFJ Research and Consulting. China keeps a close eye on the situation. Ishii stated that a fleet Chinese naval ships were nearby when the ship conducted surveys around the island last June. He said: "We are deeply disturbed by the intimidatory actions taken." China claimed that its actions were compliant with international law, and called upon Japan to "refrain" from making threats. (Reporting from Yuka Obayashi, Shizuoka. Katya Golubkova in Tokyo. Writing by John Geddie. Editing by William Mallard.)
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Dollar tips, stocks wobble as Trump-Fed fight deepens
Dollar fell and U.S. equities?futures dropped after Federal Reserve chair Jerome Powell claimed that the Trump administration had threatened him with an?indictment. This stoked investor concerns about the independence of the central bank. S&P futures fell 0.5% while?European Futures dropped 0.1% during the morning of Asia and the dollar fell roughly 0.2% against major counterparts, sending it to below 158 yen, and $1.1660 for the euro. The news is unsettling for traders, but the immediate impact on interest rates is not known. Benchmark 10-year Treasury Futures rose by 3 ticks, resulting in an implied yield of 4.15 percent. This is approximately a basis-point below the close on Friday for the cash market. Fed fund futures have cut by about three basis point this year. This is small, but indicates that the Fed could be pushed to become more aggressive. Unrest in Iran boosted precious metals prices and supported oil. Powell claimed that the Trump administration threatened him with a criminal prosecution and issued grand jury subpoenas for Congressional testimony he provided last summer about a Fed 'building renovation project. He called this action a 'pretext' to pressure the central bank into cutting interest rates. These developments represent a dramatic increase in the 'fight between Powell and U.S. president Donald Trump that dates back to Powell's first year as chairman in 2018. Andrew Lilley is the chief rates strategist of Barrenjoey Investment Bank, a Sydney-based investment bank. The only reason he is taking these actions is because he knows he won't be able to control the Fed. He wants to exert all of the undue pressure he can. Investors will not be pleased, but this shows that Trump does not have any other levers at his disposal. The majority of FOMC members want the cash rate to remain at that level. The dollar's reaction was the most dramatic, even when compared to currencies that are typically more risk-averse like Australian and New Zealand dollar. This helped the yen escape from intervention-risk terrain on the lower side of 158 dollars. Ray Attrill, head of currency strategies at National Australia Bank, said: "This open war between the Fed and U.S. Administration... is not good for the U.S. Dollar." Trump's threats of intervening?in Iran where protests appear to be intensifying against the clerical regime, have helped oil prices maintain recent gains, and highlighted the swirling geopolitical risk for the coming year. Brent crude futures, the benchmark for oil prices, were down 40 cents at $62.90 per barrel after recent sharp gains. The broadest MSCI index of Asia-Pacific stocks outside Japan climbed 0.5%, while Japanese markets closed for the holiday. The second week of the new year will feature U.S. inflation figures, trade data from China, and a number of U.S. earnings starting with JPMorgan Chase on Tuesday and BNY. (Reporting and editing by Thomas Derpinghaus; Tom Westbrook)
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Silver, gold reach record highs amid Fed rate cut bets and safe-haven demand
Gold prices broke the $4,600-per-ounce barrier on Monday, for the first time. Silver also reached a new record high. This was boosted by geopolitical, economic, and betting trends that the U.S. will cut interest rates. By 0203 GMT, spot gold had risen 1.3% per ounce to $4469.49. Bullion reached a record-high of $4,600.33 during the day. U.S. Gold Futures for February Delivery firmed by 2% to $4.591.10. Kelvin Wong is a senior analyst at OANDA. He said that the geopolitical risks are driving the bullish intraday momentum in the gold and silver market today. A rights group reported that more than 500 people have been killed in the unrest in Iran, while Tehran warned to target the U.S. If President Donald Trump follows through on his threats to strike the country in support of protesters, military bases will be affected. Iran's unrest is a result of Trump flexing his muscles abroad, after he ousted Venezuelan president Nicolas Maduro and discussed acquiring Greenland through purchase or force. Data released on Friday showed that the U.S. job growth was slower than expected in December. This is due to job losses in construction, retail, and manufacturing. A decline in unemployment rates suggests that the labour market is not rapidly degrading. Investors expect that the Federal Reserve will cut rates at least twice this year. Rate cuts are more likely with a softer job market. Fed Chair Jerome Powell stated on Sunday that the Trump administration threatened him with a criminal indictment for Congressional testimony. Powell called this action a "pretext", aimed at putting more pressure on the central banks to 'lower rates. The dollar has retreated to its lowest level in over a month, which also supported the rise in precious metals. Non-yielding investments tend to perform well in low-interest rate environments and when there are geopolitical or economic uncertainties. Spot silver rose 3.5% to $82.72 an ounce after reaching a record high of $83.96 per ounce earlier in the day. After reaching a record high of $2,478.50 per ounce on December 29, spot platinum increased by 3.2%, to $2,345.40. Palladium rose 3.3%, to $1.875.68 an ounce. (Reporting by Ishaan Arora in Bengaluru; Editing by Subhranshu Sahu)
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Oil steady, investors weigh Venezuela export resumption versus potential Iran supply disruption
Prices were not much changed Monday, as investors watched for potential disruptions in supply from OPEC member Iran. However, efforts to resume Venezuelan oil exports quickly kept prices under control. Brent crude futures fell 5 cents, to $63.29 per barrel at 0131 GMT. U.S. West Texas intermediate crude dropped 6 cents, to $59.06 per barrel. Both contracts rose more than 3% in the last week, clinching their largest weekly increase since October. This was due to Iran's clerical regime stepping up its crackdown against the largest demonstrations since 2012. Saul Kavonic is the head of MST Marquee's energy research. He says that while oil prices have increased in recent days, the market still underestimates the geopolitical risks from a wider conflict with Iran, which could impact oil shipments through the Strait of Hormuz. He added, "The market says show me disruptions in supply before I respond materially." A rights group reported on Sunday that the civil unrest has resulted in more than 500 deaths. In a note, ANZ analysts headed by Daniel Hynes stated that there have been calls to stop working in the oil sector amid the protests. The report added that "the situation places at least 1.9 millions barrels per day of oil exports in danger of disruption." Donald Trump, the U.S. president, has repeatedly warned that he will intervene if violence is used against protesters. A U.S. official said on Sunday that the?president will meet with senior advisers to discuss options regarding Iran on Tuesday. Venezuela will resume oil exports as soon as possible after the ouster President Nicolas Maduro. Trump said last week that the Caracas government is ready to deliver 'as much as fifty million barrels' of sanctioned crude oil to the United States. Four sources familiar with these operations say that this has sparked a race between 'oil companies' to find tankers, and to assemble the necessary operations to safely ship crude oil from the vessels and the dilapidated Venezuelan port. Trafigura told the White House in a Friday meeting that the first vessel would be loaded in the coming week.
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FOCUS: Rio Tinto's bid to buy Glencore puts pressure on BHP
Rio Tinto's plans to acquire Glencore to?create a global industry leader? could encourage consolidation in the copper-hungry sector, and put pressure on BHP to act. The bid, depending on the final value, could be one of the largest?10?M&A transactions ever. It reflects a desire for scale, which bankers say could lead to mega-deals by 2026. Mark Kelly, CEO of advisory firm MKI Global said, "This is another example that mining is consolidating, and big firms are forced to take corporate action in order to create value." Anglo American, a London-listed company, announced in September last year what was at the time, the second largest M&A deal for that sector. The plan was to merge with Canada-based Teck Resources, and create a global heavyweight focused on copper. The deal is awaiting regulatory approval. Some analysts say BHP is under pressure to act BHP's $161 billion market capitalisation is the biggest threat to Rio's talks with Glencore. This could create a company valued at almost $207 billion. If BHP does not participate in the current negotiations, it might consider another deal for its leadership. Unnamed banking sources said this was the most likely outcome. They stated that Glencore's portfolio, which they viewed as too diverse, would benefit from asset sale. The regulatory authorities would most likely require some dispositions to alleviate competition concerns. BHP has declined to comment. Richard Hatch is an analyst at Berenberg. He said that BHP was the most likely to interfere in this deal. BHP may be tempted to bid against Glencore in order to keep the copper and divest the rest of the deal. The talks between Rio and Glencore have reached a preliminary phase. Rio has until the 5th of February to submit a formal proposal, but this deadline could be extended. Both sides have failed to reach an agreement in previous talks. George Cheveley is the Natural Resources Portfolio Manager at Ninety One. Ninety one, which owns Glencore, stated that BHP might feel compelled to intervene but may also find it emotionally difficult, given its repeated failures to purchase Anglo American. BHP attempted to buy Anglo American for months in 2024 to try and strengthen its declining dominance in the copper industry. It briefly revived the effort last November. Sources say that BHP is also preparing to name a new CEO. It will most likely be an internal candidate, who must deliver on the promise of change. BHP has declined to comment about its CEO succession. SIZE DOES MATTTER? AND SO DOES COPER Copper is the main reason for mining tie-ups, aside from the desire to scale up and increase margins while containing costs. Copper is the metal of choice for conducting electricity because it's the least expensive and most widely used. Mergers can be a good way to gain access to assets that are producing, and avoid the long, expensive, and uncertain process of searching for new reserves. Kelly said, "The copper deal was the real takeaway from this and Anglo-Teck. We know that copper is appealing and buyers want to access it." There are alternative targets that could be considered if it fails to bid for Glencore. Kelly said that "Vale and Freeport will both be on the agenda - but it is unlikely that they are for sale." Analysts say that BHP could decide to do nothing. Analyst Kaan Peker at RBC said that BHP had a better growth profile for copper than Rio/Glencore merged. "I don't believe they need to change anything," he added. "That being said, if you are successful in the transaction, you may face some pressure from shareholders who will ask: 'How is it that Rio was able to pull this off, but you weren't able to with Anglo ?'." Reporting by Anousha Saoui in London, Clara Denina and Melanie Burton in Sydney. Charlie Conchie contributed additional reporting. Editing by Veronica Brown (and Barbara Lewis).
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Concerns about oil supply are heightened by the rising price of crude and the intensifying unrest in Iran
The oil prices rose on Monday due to a?growing 'concern that the intensifying protests against Iran could disrupt the OPEC producers supply. However, efforts by Venezuela to resume exports of crude oil are limiting gains. Brent crude futures rose 31 cents or 0.49% to $63.65 per barrel at 0006 GMT, while U.S. West Texas Intermediate crude was up 30 cents or 0.51%, at $59.42. The two contracts both rose by a combined 3% in the last week, their largest weekly increase since October. This was due to Iran's clerical establishment stepping up its crackdown against the largest demonstrations since 2012. A rights group reported on Sunday that more than 500 people have been killed in the civil unrest. Donald Trump, the U.S. president, has repeatedly threatened to intervene in case force is used against protesters. A U.S. official said on Sunday that the president will meet with senior advisers to discuss Iran options on Tuesday. In a recent note, ANZ analysts headed by Daniel Hynes said that workers in the oil sector were also being asked to put down their tools in protest. They added that "the situation puts at least 1,950,000 barrels of oil per day at risk of disruption." Venezuela will resume oil exports as soon as possible following the ouster?of President Nicolas Maduro. Trump stated last week that the Caracas government is ready to hand over?as much as 50 million barrels sanctioned oil? to the United States. Four sources familiar with these operations say that oil companies are now racing to find tankers to transport the crude from the vessels to the dilapidated Venezuelan port. Trafigura told the White House in a Friday meeting that the first vessel would be loaded in the coming week.
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Stars' penalty kill is a pain point for the next Kings
The Dallas Stars are looking for a way to end their three-week slump. They have put a priority on improving their penalty kill. When they play the Los Angeles Kings in a Monday night match, the Stars will try to avoid the penalty box. If and when they are?short-handed, the Stars hope to minimize the damage. Dallas has killed just?7 out of 13 penalties over the last three games. In the Stars' last eight games they have allowed 11 power play goals. In that time, the Stars have gone 1-3-4 and are now 12 points behind Colorado Avalanche in the Central Division. Dallas lost 5-4 to the San Jose Sharks on Saturday after conceding four goals, including the game-winning overtime goal. Dallas coach Glen Gulutzan explained: "When you stop skating, you reach and take penalties." "You're reaching instead of using your feet, and we had several of these (against Sharks) from start to end. We'll take a look at it and try to fix it. It was evident in the 6-3 defeat we suffered on Tuesday (against Carolina), and it was again (in San Jose). The Stars and Kings will meet for the third time in this season. Adrian Kempe's goal 37 seconds into overtime gave the Kings a 3-2 victory in Dallas on October 23. On Dec. 15, the Stars defeated Los Angeles 4-1. The Kings are back home after a short trip to Canada, where they played the Winnipeg Jets and Edmonton Oilers in two games on Friday. Los Angeles was not motivated in Winnipeg, and the Jets won 5-1 to end an 11-game losing run. The Kings recovered the following night and won a shootout 4-3 in Edmonton. Jim Hiller, Kings coach, said: "I believe the back-tobacks are a great way to test your team's character." "We arrived really late Friday night. We don't use an excuse. We haven’t done this, and I’m really proud of our effort. It was a hard-fought match (Friday night), despite the result. We were late for the first time, but we were ready to play from the moment the puck dropped. Corey Perry returned to the Kings after missing two previous games due to a family illness. Perry scored on a power play late in the 1st period to tie the score at 1-1. Hiller stated that "he's going through a difficult time and is a hockey fan through and through." "He shows up, he is eager to play hockey and he wants his team to succeed in tough circumstances. Then he scores a goal." He plays for 15-16 minutes and often against the line of (Connor) McDavid. It's incredible. "I just have such a great deal of respect for him." Field Level Media
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Japan embarks on a rare earth search as China restricts its supply
The Japanese ship left on Monday to explore a coral atoll rich in rare Earths. This is part of Tokyo's efforts to reduce its dependence on China as the latter tightens up supply. The Chikyu test vessel will spend a month near Minamitori Island, 1,900 km (1200 miles) south of Tokyo. This is the first time in the history of mankind that sludge from the seabed can be continuously lifted onto a ship. Japan has reduced its dependency on China, as have its Western allies. These minerals are vital for the production of smartphones, military equipment and cars. This effort has become more urgent due to a major diplomatic disagreement with Beijing. The head of this government-backed project, Shoichi Ishii told reporters that one of their missions was to create a supply network for rare earths produced domestically to ensure a steady supply of minerals vital to industry. This was last month before the vessel left the port of Shizuoka, on a sunny, bright day with Mount Fuji, a snowy peak, in the distance. It won't be easy to reduce your dependence on China China banned last week the export of certain minerals and items that are used in both civilian and military applications, destined for Japan. According to The Wall Street Journal, Beijing has begun restricting exports of rare-earth minerals to Japan in a more general way. Japan condemned China's ban on dual-use but refused to comment about reports of a wider ban. China has neither confirmed nor denied the report. Chinese state media have reported that Beijing is weighing this measure. Sources familiar with the situation said that the finance ministers of the Group of Seven industrial power will meet in Washington, D.C. on Monday to discuss rare-earth supply. Japan has faced China's anger over rare earths before. China halted exports in 2010 after an incident occurred near disputed islands located in the East China Sea. Since then, Japan's reliance on China has been reduced from 90% to 60% by investing in overseas projects like the trading house Sojitz's tie up with Australia's Lynas Rare Earths, and promoting rare earths recycling and manufacturing methods that rely less minerals. However, the Minamitori Island Project is the first attempt to source rare Earths domestically. Takahide Kiuchi is the executive economist of Nomura Research Institute. He said that if the new export controls end up covering many rare earths, Japanese firms will once again try to get away from China. But I don't believe it will be an easy task. Analysts say that Japan is almost totally dependent on China for some rare earths such as magnets used in electric and hybrid vehicle motors. This poses a serious risk to its automotive industry. LONG-TERM RESOURCES PROJECT The Japanese government and private firms have been stockpiling the minerals since the 2010 scare. However, they don't disclose the volume. Several executives at a New Years party for Japan's Mining Industry on Wednesday said that they were better prepared to deal with any disruptions, citing Japan’s diversification efforts. Kazumi Nishikawa is the principal director for economic security in the Trade Ministry. He said that the government must constantly remind companies to diversify supply chains. "Sometimes you know, an event happens, and then the business reacts. But the event ends, and the business forgets." Nishikawa stated this week on the China Talk Podcast that we must maintain our efforts. The Minamitori project, into which the government has invested 40 billion yen (about $250 million) since 2018 is also a play for the long term. The estimated reserves of the company have not been revealed and no production target has yet been established. If the trial is successful, then a full-scale mine will be set up in February 2027. The high cost of mining mud made it uneconomical. Kotaro Shimizu is a principal analyst at Mitsubishi UFJ Research and Consulting. He said that if the supply disruptions from China continue and buyers are willing to pay higher prices in future years, then this project may become viable. China keeps a close eye on the situation. Ishii stated that a fleet Chinese naval ships were nearby when the ship conducted surveys around the island last June. He said: "We are deeply disturbed by the intimidatory actions taken." China claimed that its actions were compliant with international law, and called upon Japan to "refrain" from making threats. (Reporting from Yuka Obayashi, Shizuoka. Katya Golubkova in Tokyo. Writing by John Geddie. Editing by William Mallard.)
China to boost consumer demand with new policy measures
Prices of copper rose on Monday as the dollar fell and expectations of better demand grew. China, the world's largest copper buyer, plans to introduce a package?of policies designed to boost domestic consumer demand.
By 0151 GMT, the most traded?copper contracts?on Shanghai Futures Exchange had risen 2.91%, to 103200 yuan (US$14,792.94) a metric ton. On January 6, it reached a record-high of 105,500 Yuan.
Benchmark three-month Copper on the London Metal Exchange rose 1.22% to $13,156 a ton. The benchmark reached its highest level at $13,387.5 per ton on January 6
China's cabinet met on Friday under the leadership of Premier Li Qiang to discuss a number of financial and fiscal policies that will boost domestic demand. These include initiatives to encourage household consumption.
The fall in production by Chilean state-run copper miner Codelco, in November, also helped to support the prices of copper. Copper is used in power, construction, and manufacturing.
The market also focused on Rio Tinto’s talks to acquire Glencore. If the deal is successful, it could make the world’s largest mining company, with a combined market worth of approximately $207 billion.
Base metals were supported by a weaker U.S. dollar, which made commodities priced in dollars less expensive for buyers who used other currencies.
SHFE nickel surged by?3.63%, to 142 060 yuan.
Two analysts, who spoke on condition of anonymity because they were not authorized to speak with the media, stated that Shanghai tin has hit its highest level since Mach 9, 2020 at 371,870 Yuan per?ton due to concerns about supply.
SHFE Aluminium gained?1.93%. Lead advanced 1.65%. Zinc added 0.48%.
($1 = 6.9763 Chinese yuan) (Reporting by Amy Lv and Lewis Jackson; Editing by Subhranshu Sahu) $1 = 6.9763 Chinese Yuan (Reporting and editing by Amy Lv, Lewis Jackson)
(source: Reuters)