A Tale of Two Metals

Source: MetalMiner, Stuart Burns (10/6/10)

"Or more accurately, a tale of two metals and one country."

Brazil's been in the news this week following comments by Finance Minister Guido Mantega that a currency war is being waged as countries devalue their currencies in a beggar-thy-neighbor race to export. Mantega, through good management and good fortune, guided the country through a great recession. The economy briefly dipped along with the world's but bounced back strongly, powering ahead for the last year or more. By keeping a close control on inflation, currency reserves and capital inflows—Brazil was praised by IMF for its economic management. Brazil has been riding the crest of a resource wave as iron ore, metals and agricultural exports helped power it to >7.5% growth this year. Inflation is edging up, but for an open economy like Brazil's it's still a respectable 4.57%—particularly when the labor market is as tight as 6.7% unemployment and falling.

What does this have to do with metals? In addition to Brazil's growing economy, steel demand has been strong. Surely the same dynamics must apply to other metals, right? Wrong, aluminum production has remained stagnant this year. YOY production edged up 1.4% in May but was down in the first five months of 2010. While smelters are clearly struggling, demand is rising. Associação Brasileira do Alumíni (Brazilian Aluminum Association) fears the country could become a net importer by 2014 if investments in new capacity are not made.

Brazil's resource wealth

Brazil's problem is power costs. With imports rising, lower-cost suppliers are setting the market price for aluminum domestically and Brazil's smelters are can't compete. Smelters are calling for reduced power costs and taxation to spur investment but with a rising population placing every larger demand on the countries hydroelectric resources the government may be reluctant to subsidize aluminum production at the expense of domestic supply.

It would seem Brazil has an old world problem in a new world setting.

Announcing Streetwise Live! Events
Source: Streetwise Reports (07/13/2020)

Streetwise Reports is offering 100 investors—at no charge—the opportunity to meet via Zoom with executives of precious metals companies as they discuss recent developments at their companies and upcoming catalysts.

"China's export quota could be opportunity for Canadian miners"

Latin America: Six Gold Juniors Amass 100M+ Ounces
Source: Marc Davis, BNW News (05/25/2010)

Latin America, the world's last great mineral frontier for prolific gold discoveries, is proving a godsend for some lucky investors.

Mexico: Gold's Next Powerhouse Player
Source: Marc Davis, BNW News (11/03/2009)

As the world's key gold producing nations struggle mostly in vain to replenish dwindling below-ground supplies, Mexico is bucking the trend in a big way.

Where Have All the Gold Mines Gone?
Source: Brent Cook, Exploration Insights (04/14/2009)

Given the declining global gold production, mining companies’ demand for reserve replacement and the acute dearth of new gold discoveries, there is no doubt that real economic discoveries will be exceptionally valuable. . .the opportunity for stellar profits is the best it has probably ever been. Identifying the few successes, however, will require vigilant and constant technical assessment of geology and drill results, always with an eye to mine economics.

Congo Completes Mining Review, Says Majors Quit Talks
Source: Reuters (12/20/2008)

"Review process is extended an additional 45 days to allow six companies to return to the negotiating table for direct talks with government ministers."

I haven’t spoken to my old mining stock friend, noted and universally respected gold stock guru, Bob Bishop, about Rare Element in a year, but I hear he is still a supporter and very large shareholder. I don’t believe he will hold it against me to remind you that this was one of his favorite holdings when he left the newsletter writing business. . .

It's Only the Beginning for Uranium
Source: www.financialinsights.com (06/03/2005)

Dr. Richard S. Appel, author of Financial Insights, first became bullish on uranium in mid-2003, when it appeared obvious that its supply versus demand equation was fated to seriously drive higher its price. Since then, a series of events in the uranium industry has led Appel to believe that uranium prices will reach never before seen levels.

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