The REE London Report: Demand for Rare Metals to Rise, China Passes USA as World’s Biggest Energy Consumer.

In this little series on my rare metals view from London, I was intending day three to cover why demand for rare metals is likely to rise for several decades to come. As luck would have the Wall Street Journal and the Paris based International Energy Agency, manage to pretty nearly make the case for me. Below recent coverage on more of the rise of China.


China Passes U.S. as World’s Biggest Energy Consumer
(WSJ: Source – July 19, 2010) — China is now the world’s biggest energy consumer, knocking the U.S. off a perch it held for more than a century, according to new data from the International Energy Agency.

The Paris-based agency, whose forecasts are generally regarded as bellwether indicators for the energy industry, said China devoured 2,252 million tons of oil equivalent last year, or about 4% more than the U.S., which burned through 2,170 million tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear, coal, natural gas and renewable sources such as hydropower.

The figures reflect, in part, how the global recession hit the U.S. more severely than China and hurt American industrial activity and energy use. Still, China’s total energy consumption has clocked annual double-digit growth rates for many years, driven by the country’s big industrial base. Highlighting how quickly its energy demand has increased, China’s total energy consumption was just half the size of the U.S. 10 years ago.

    China’s voracious energy demand helps explain why the country—which gets most of its electricity from coal, the dirtiest of fossil-fuel resources—passed the U.S. in 2007 as the world’s largest emitter of carbon dioxide emissions and other greenhouse gases.

The U.S. is still by far the biggest energy consumer per capita, with the average American burning five times as much energy annually as the average Chinese citizen, said Mr. Birol, who has been in his current role for six years.

China 3G phone-user total up sharply to 25 million
(Source — July 19, 2010, 10:20 p.m. EDT) — BEIJING (MarketWatch) — China’s Ministry of Industry and Information Technology said Tuesday the country had 25.2 million users of third-generation mobile wireless technology at the end of June, up from 18.08 million at the end of March.

China’s three telecommunications giants are in a race to recruit users of their 3G services, which allow faster data downloads and attract higher fees. Each of the three companies uses its own 3G standard, with China Mobile Ltd., the country’s largest mobile company by subscribers, promoting a locally developed standard.

Earlier Tuesday, China Mobile said it had 10.46 million 3G users at the end of June. On Monday, China Unicom (Hong Kong) Ltd. said it had 7.56 million 3G users.

The data imply that China Telecom Corp, which doesn’t publicly disclose the figure, had 7.18 million 3G users at the end of June. But government data can vary slightly from the figures provided by the carriers.

Both energy production and the mobile phone industries involve heavy usage of rare earths and metals. China’s usage of these rare metals is on the cusp of an exponential usage boom, hence China’s announcement that it is increasingly going to restrict exports from here on out. By 2015, China anticipates that 700 million of its then 1.4 to 1.5 billion people will be urban dwellers. Roughly two and a bit times the size of the entire US population in 2015. Urban dwellers tend to be amongst richest sector of society, and among the fastest adopters of new technology. As impressive as China’s stats are on adopting 3G cell phone technology, the world is fast moving on from simple 3G.

High Speed Packet Access (HSPA) is the next widespread advance rolling out, with the Global mobile Suppliers Association (GSA,) already reporting that 116 phone operators have committed to HSPA, with 63 systems already launched. For HSPA alone, some 235 suppliers already offer some 2579 devices as at the last available figures. Each device needs one or other form of a few grams of a rare metal. But HSPA itself is not the end of what will rapidly happen this decade. The Long Term Evolution (third generation partnership project,) dubbed LTE is effectively 4G and where we are all headed. (I know purists still call it 3.9G, with Advanced LTE strictly speaking the arrival of 4G.) LTE networks just launched in Sweden and Norway, with 110 operators already investing in LTE involving 80 firm commitments in 33 countries. Another 30 pre-commitment trials are underway. Not to belabour the point, but it’s looking pretty good for neodymium magnets for the next few years.

China knows that they can stick an extra zero on the 25 million cell phone users, and that they still might be grossly under estimating the number of 4G users by mid decade. It simply doesn’t make any sense anymore for them now to be exporting away the very rare metals they will all too soon need shortly ahead. Least of all for yet more dodgy dollars to add to the two point something trillion they already have. In forcing the rest of the world to address its rare metals supply problem, China is actually doing the rest of us a big favour. They have identified a major supply problem early and given all the other G-19 time to act. As we inferred yesterday, for those decisive enough to act, there’s the chance to get in on the next Microsoft, Apple, or Rio Tinto, or Vale, over the coming months, perhaps years.

I’ll end on this subject today, with this news yesterday from Apple that just adds to the lifestyle case.

Apple earnings jump on strong iPhone, iPad sales
Shares rise as revenue forecast for September quarter beats estimates
(July 20, 2010, 7:07 p.m. EDT) — SAN FRANCISCO (MarketWatch) — Apple Inc. reported a big surge in earnings for its third fiscal quarter on Tuesday, blowing past Wall Street’s estimates thanks in large part to booming demand for the company’s iPhone and iPad devices.

“The numbers are spectacular,” said Shaw Wu of Kaufman Brothers in an email. “They were able to post very strong results despite an inventory drawdown on the iPhone 4 — looks like they managed the iPhone 3GS to 4 transition smoother than expected.”

The company also sold 3.27 million iPads for the period — roughly in line with the units predicted by analysts.

“We’re selling them as fast as we can make them,” Chief Operating Officer Tim Cook said on a conference call with analysts Tuesday. He added that Apple is “working around the clock to bring supply and demand into balance.”

More tomorrow or the day after. — Graeme Irvine. London.