13 June 2023 – The US government has withdrawn a permit from a copper-nickel project due to environmental concerns. Could the project, which is supposed to reduce dependence on external suppliers, possibly still be saved by the right approach? What is the aluminium market doing at the moment? And the US car market continues to be robust.
Aluminium: What is currently happening in the market?
Despite challenges, the aluminium industry in China continues to perform well and sales of raw and semi-finished aluminium are expected to increase further in the coming months. Also, the supply of aluminium scrap, which is readily used as a substitute for raw aluminium in the manufacturing industry, remains tight and demand is steady.
Predicted alumina surplus fails to materialise
After analysts had predicted that there could be a surplus of up to 200,000 MT of alumina in China in May 2023, these assumptions have now had to be reversed. Currently, the figures show that although there was a surplus of alumina, it was almost 70% lower than assumed. This should support prices.
Russian aluminium a slow seller in the West?
Looking to the West, to the commodity exchange LME, there is currently a certain pressure due to rising stocks of Russian aluminium. Western producers are reluctant to use Russian aluminium because of the possibility of new and existing sanctions. At the same time, stocks of Indian aluminium have declined in LME warehouses as buyers seek alternatives.
Caution needed on the origin of the precursor material
However, reaching for Chinese or Indian aluminium could become problematic for downstream processors as Russian aluminium producers have diverted and are still diverting a lot of material to India and China due to Western sanctions. Here, EU, UK and US aluminium buyers must be very careful that they stay within the legal framework of economic sanctions and adapted rules of origin. Otherwise, a visit by the customs authorities and severe penalties can quickly ensue.
USA car market shows promising signs of resilience
Despite recent declines in used car prices, the USA car market shows promising signs of resilience. The low inventory of used cars and strong demand indicate a potential stabilization in prices. With limited supply and consistent interest, retailers can maintain profitability while providing appealing options for consumers.
Additionally, the overall demand for vehicles remains robust, as evidenced by a significant increase in new car sales, particularly in the business segment. These favorable conditions allow car manufacturers to weather economic slowdowns with reduced profit losses, positioning the market for future growth and success.
Permit for US copper-nickel mine withdrawn
The Biden administration has revoked a Clean Water Act permit for a major copper-nickel mining project in northeastern Minnesota, believed to be the largest copper-nickel discovery in the world. The administration claims that the permit did not meet the tribe’s stricter water quality regulations, which aim to protect fish and wild rice that are important to their culture and diet. The minerals from this mining project are crucial to the production of electric vehicles and the batteries that power them, in line with President Biden’s climate change agenda.
China currently dominates supply for processed minerals like nickel
China currently dominates the global supply chain for these minerals, providing 80 per cent of the processed minerals, like nickel, needed for electric vehicles. This reliance on China raises concerns due to the lack of environmental and labour standards in China, as well as the use of minerals that are sourced through child labour. The US is now four times more dependent on China for critical minerals than it used to be on Middle East oil, affecting national security and economic stability.
Could subsidies and technological support still save the project?
In the light of all these facts, it is difficult to draw conclusions about what the real agenda is. Providing the necessary government subsidies and technological support for clean water could help reduce the cost of raw materials, encourage US companies to go green and provide low-cost electric vehicles, and give companies better options in this race to the EV era. And would further reduce dependence on external suppliers, such as China.
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