China’s Secret Weapon In The Looming Tech War
FN Media Group Presents Oilprice.com Market Commentary
London – April 16, 2020 – The next quantum leap in technology is 5G, and America’s lack of one critical metal threatens its supremacy. New 5G cellular wireless technology will transfer data and the correct time faster than anything we’ve seen before. And if you didn’t think that the keeping of accurate time was that important a goal for global superpowers – think again. Mentioned in today’s commentary includes: Teck Resources Limited (NYSE:TECK), Turquoise Hill Resources Ltd. (NYSE:TRQ), Pretium Resources Inc. (NYSE:PVG), Magna International Inc. (NYSE:MGA), Agnico Eagle Mines Limited (NYSE:AEM).
5G will not just revolutionize our connectivity and crown the next superpower, but it will forever change time, with Coordinated Universal Time (UTC) being overtaken by something eerily accurate. Cesium is the critical element in all of this, and it means the difference between real-time responsiveness and 5G failure. Yet, China controls 100% of its existing supply, with only one junior Canadian miner – Power Metals (PWM.V, PWRMF) – emerging with the potential to develop a supply of this critical mineral outside of China’s influence.
Time Is Money
5G isn’t simply a step up from 4G technology. We’re not talking about something in line with the release of the next version of the iPhone. This is a major leap forward. It’s quantum in nature.
This new technology spells world tech domination for a reason: It’s not just about your Apple (AAPL) Watch connection. It’s about continuous, real-time connection for every device on the planet. That also means every digital healthcare device under the sun, from surgical bandages to pacemakers. It will revolutionize healthcare, and just about everything else.
Right now, the time that elapses between a device asking for and receiving information is about 50 microseconds. 5G turns that into one microsecond or less. It’s instant feedback.
But it will also generate trillions of dollars in new products along the way. That’s a lot of pressure riding on cesium, which was only added to the United States’ critical minerals list in 2018.
Cesium is “the most electropositive of all stable elements in the periodic table”, and the heaviest of the stable metals. Cesium is “extremely pyrophoric, ignites spontaneously when in contact with air, and explodes violently in water or ice at any temperature above -116 ° C”, according to the German Institute for Strategic Metals (ISE).
It’s critical not only to 5G, but to the healthcare industry, which uses cesium compounds in medical imaging, cancer therapy, positron emission tomography (PET), and in catalyst promoters, glass amplifiers, photoelectric cell components, crystals in scintillation counters and getters in vacuum tubes. It’s also vital to the oil and gas industry, which uses cesium formate brines in drilling fluids to prevent blow-outs in high-temperature, over-pressurized wells.
The “cesium standard” is also the key to time: It’s the standard by which the accurate commercially available atomic clocks measure time, and it’s vital for the data transmission infrastructure of mobile networks, GPS and the internet.
But the bulk of new critical metals supply will be in risky investment venues, and what’s already out there is controlled by China.
Worldwide, only three known pegmatite mines can produce cesium: Manitoba’s Tanco mine, Zimbabwe’s Bitika mine and Australia’s Sinclair mine. China controls them all, beyond its own borders. Tanco and Bitiki are no longer producing, but Sinomine Resources Group controls all their cesium ore stockpiles.
Canada is the only hope for North American production right now, and Power Metals happens to be sitting on prime pegmatites discovered in August 2018 at its West Joe Dyke play, where it intersected high-grade cesium mineralization in six drill holes while it was looking for lithium.
Larger companies are diving into the strategic metals game, as well, with Teck Resources (TECK) arguably taking the lead. Teck could be one of the best-diversified miners out there, with a broad portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum assets. Its free cash flow and a lower volatility outlook for base metals in combination with a potential trade war breakthrough could send the stock higher in H2 of this year.
Teck’s share price stabilized last year and many investment banks now see the stock as undervalued. Low prices for Canadian crude and disappointing base metals prices weighed on Q4 earnings. Despite its struggles, however, Teck Resources recently received a favorable investment rating from Fitch and Moody’s, and will likely benefit from its upgraded score. “Having investment grade ratings is very important to us and confirms the strong financial position of the company,” said Don Lindsay, President and CEO. “We are very pleased to receive this second credit rating upgrade.”
Turquoise Hill Resources (TRQ) is another Canadian mineral exploration and development company headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim where it is in the process of developing several large mines. The company mines a diversified set of metals/minerals including Coal, Gold, Copper, Molybdenum, Silver, Rhenium, Uranium, Lead and Zinc. One of the fortes of Turquoise hill is its good relationship with mining giant Rio Tinto.
When talking about Canadian miners, however, Pretium Resources (PVG) can’t be ignored. This impressive Canadian company is engaged in the acquisition, exploration and development of precious metal resource properties in the Americas. Pretium has an impressive portfolio and if you can catch the stock while the price is right, there could be huge opportunity for upside. Additionally, construction and engineering activities at its top location continue to advance, and commercial production is targeted for this year.
The EV edge can’t be ignored, either. Magna International (MGA) is a global automotive supplier is gutsy and innovative–and definitely tuned to the obvious future–clean transportation. Not only will it play a part in the tech revolution, it will likely have a say in the industrial metal demand, as well. A great catalyst is its development of a combo electric/hydrogen vehicle–a fuel cell range-extended EV (FCREEV). It’s not going to produce them (for now, at least) but plans to use the model to show off its engineering and design prowess and produce elements of the electric drivetrain and contract manufacturing. It’s insightful, forward-thinking and smart value/low cost for shareholders.
Agnico Eagle Mines Ltd (AEM) Agnico Eagle Mines is an especially noteworthy company for investors. Why? Between 1991-2010, the company paid out dividends every year. With operations in Quebec, Mexico, and Finland, the company also is taking place in exploration activities in Europe, Latin America, and the United States.
While Agnico primarily focuses on gold, it’s worth noting that gold is still used in a number of electronics, including cell phones. Though it’s already in the mainstream, unlike cesium, it’s still important to keep an eye on as the battle for tech dominance heats up.
Drilling Down for Global Supremacy
Power Metals owns 100% of three of the world’s small number of new potential cesium plays (West Joe, Tot Lake and Marko).
And Dr. Julie Selway, a key geologist for the Ontario Geological Survey during the tantalum boom of the early 2000s, and now VP of exploration for Power Metals, says the three properties the company is drilling are likely to have similar finds as the strategically important Sinclair mine in Australia.
“They are shipping their resource, which they say is higher than 10% cesium-oxide, and ours have some assays that are between 12% and 14% of cesium-oxide,” Selway–one of the world’s most renowned experts on pegmatites–told Oilprice.com.
Power Metals has intersected cesium (Cs) mineralization in 6 drill holes on West Joe Dyke, with “exceptionally high-grade” Li and Ta intervals. They also found Cs mineralization in drill core samples in the first new dyke below Main Dyke, as well as in the drill core in Northeast Dyke.
On February 20th, Power Metals announced its exploration plans and will begin stripping and channel sampling on West Joe Dyke in Q2 of this year already. That’s when they’ll expose, sample and assay the cesium mineralization on surface outcrops to locate more cesium-bearing pegmatite dykes nearby.
That means that Canada could be the difference between cesium and none for North America. It means cesium could remove another looming threat to Washington’s technological domination: critical choke points.
China has a virtual monopoly over cesium, producing no less than 95% of the world’s supply. “One earthquake and all of a sudden, you close down a whole industry,” Dr. Sherman Robinson, senior fellow with the Peterson Institute for International Economics, told ZDNet..
Dr. Kevin Anderson, a senior semiconductor analyst with Omdia (formerly IHS), describes it as the perfect setup for Beijing to keep the rest of the world in a cesium stranglehold. And while governments see the chokepoints, private enterprises are more about instant gratification: They don’t care where supply is ultimately coming from as long as they can get it.
“They were buying these supplies from all over,” Anderson told ZDNet, “but they weren’t aware that it was all coming from one place in the end.” That means that China’s control of cesium is a supply bombshell waiting to explode, and one way to potentially diffuse it is sitting underground in Ontario, where drilling began in February.
That makes Canada the likely answer to America’s looming cesium choke point problem, and Power Metals, with a world-class geologist known as the “Pegmatite Queen” at the helm, is positioned to move to the forefront of the critical metals battle that will inform America’s role in global technological domination.
By. Steven Taylor
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This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for cesium will retain value in future as currently expected; that PWM can fulfill all its obligations to maintain its properties; that PWM’s property can successfully mine commercial quantities of cesium; that the three properties the company is drilling are hoped to have similar finds as the strategically important Sinclair mine in Australia; that occurrences and indications of a commercially sized deposit become reality; that high grades found in samples are indicative of a high grade deposit; and that PWM will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that aspects or all of the properties’ development may not be successful, mining of the cesium may not be cost effective, the price of cesium may not stay high and it may never be profitable to mine cesium; PWM may not raise sufficient funds to carry out its plans, changing costs for mining and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and mineral recoveries assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper cesium; more production of Cesium could reduce its price; alternatives could be found for cesium; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties, or that the required permits to build and operate the envisaged mines cannot be obtained. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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