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South Korea hunts tungsten treasure in race for rare minerals

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© Reuters. An employee guides inside a tungsten mine in Gangwon Province, South Korea, March 31, 2022. Picture taken March 31, 2022. REUTERS/ Heo Ran

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By Ju-min Park and Joe Brock

SANGDONG, South Korea (Reuters) – Blue tungsten winking from the walls of abandoned mine shafts, in a town that’s seen better days, could be a catalyst for South Korea’s bid to break China’s dominance of critical minerals and stake its claim to the raw materials of the future.

The mine in Sangdong, 180 km southeast of Seoul, is being brought back from the dead to extract the rare metal that’s found fresh value in the digital age in technologies ranging from phones and chips to electric vehicles and missiles.

“Why reopen it now after 30 years? Because it means sovereignty over natural resources,” said Lee Dong-seob, vice president of mine owner Almonty Korea Tungsten Corp.

“Resources have become weapons and strategic assets.”

Sangdong is one of at least 30 critical mineral mines or processing plants globally that have been launched or reopened outside China over the last four years, according to a Reuters review of projects announced by governments and companies. These include projects developing lithium in Australia, rare earths in the United States and tungsten in Britain.

The scale of the plans illustrates the pressure felt by countries across the world to secure supplies of critical minerals regarded as essential for the green energy transition, from lithium in EV batteries to magnesium in laptops and neodymium found in wind turbines.

Overall demand for such rare minerals is expected to increase four-fold by 2040, the International Energy Agency said last year. For those used in electric vehicles and battery storage, demand is projected to grow 30-fold, it added.

Many countries view their minerals drive as a matter of national security because China controls the mining, processing or refining of many of these resources.

The Asian powerhouse is the largest supplier of critical minerals to the United States and Europe, according to a study by the China Geological Survey in 2019. Of the 35 minerals the United States has classified as critical, China is the largest supplier of 13, including rare earth elements essential for clean-energy technologies, the study found. China is the largest source of 21 key minerals for the European Union, such as antimony used in batteries, it said.

“In the critical raw material restaurant, China is sitting eating its dessert, and the rest of the world is in the taxi reading the menu,” said Julian Kettle, senior vice president for metals and mining at consultancy Wood MacKenzie.

‘HAVE TO HAVE A PLAN B’

The stakes are particularly high for South Korea, home of major chipmakers like Samsung Electronics (OTC:SSNLF). The country is the world’s largest consumer of tungsten per capita and relies on China for 95% of its imports of the metal, which is prized for its unrivalled strength and its resistance to heat.

China controls over 80% of global tungsten supplies, according to CRU Group, London-based commodity analysts.

The mine at Sangdong, a once bustling town of 30,000 residents that’s now home to just 1,000, holds one of the world’s largest tungsten deposits and could produce 10% of global supply when it opens next year, according to its owner.

Lewis Black, CEO of Almonty Korea’s Canadian-based parent Almonty Industries, told Reuters that it planned to offer about half of the operation’s processed output to the domestic market in South Korea as an alternative to Chinese supply.

“It’s easy to buy from China and China is the largest trading partner of South Korea but they know they’re over-dependent,” Black said. “You have to have a plan B right now.”

Sangdong’s tungsten, discovered in 1916 during the Japanese colonial era, was once a backbone of the South Korean economy, accounting for 70% of the country’s export earnings in the 1960s when it was largely used in metal-cutting tools.

The mine was closed in 1994 due to cheaper supply of the mineral from China, which made it commercially unviable, but now Almonty is betting that demand, and prices will continue to rise driven by the digital and green revolutions as well as a growing desire by countries to diversify their supply sources.

European prices of 88.5% minimum paratungstate – the key raw material ingredient in tungsten products – are trading around $346 per tonne, up more than 25% from a year ago and close to their highest levels in five years, according to pricing agency Asian Metal.

The Sangdong mine is being modernised, with vast tunnels being dug underground, while work has also started on a tungsten crushing and grinding plant.

“We should keep running this kind of mine so that new technologies can be handed over to the next generations,” said Kang Dong-hoon, a manager in Sangdong, where a “Pride of Korea” sign is displayed on a wall of the mine office.

“We have been lost in the mining industry for 30 years. If we lose this chance, then there will be no more.”

Almonty Industries has signed a 15-year deal to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a supplier to the U.S. military, which variously uses the metal in artillery shell tips, rockets and satellite antennae.

Yet there are no guarantees of long-term success for the mining group, which is investing about $100 million in the Sangdong project. Such ventures may still struggle to compete with China and there are concerns among some industry experts that developed countries will not follow through on commitments to diversify supply chains for critical minerals.

SUPPLY-CHAIN DIPLOMACY

Seoul set up an Economic Security Key Items Taskforce after a supply crisis last November when Beijing tightened exports of urea solution, which many South Korean diesel vehicles are required by law to use to cut emissions. Nearly 97% of South Korea’s urea came from China at the time and shortages prompted panic-buying at filling stations across the country.

The Korean Mine Rehabilitation and Resources Corporation (KOMIR), a government agency responsible for national resource security, told Reuters it had committed to subsidise about 37% of Sangdong’s tunnelling costs and would consider further support to mitigate any potential environmental damage.

Incoming President Yoon Seok-yeol pledged in January to reduce mineral dependence on “a certain country”, and last month announced a new resource strategy that will allow the government to share stockpiling information with the private sector.

South Korea is not alone.

The United States, European Union and Japan have all launched or updated national critical mineral supply strategies over the last two years, laying out broad plans to invest in more diversified supply lines to reduce their reliance on China.

Mineral supply chains have also become a feature of diplomatic missions. 

Last year, Canada and the European Union launched a strategic partnership on raw materials to reduce dependence on China, while South Korea recently signed collaboration deals with Australia and Indonesia on mineral supply chains. 

“Supply-chain diplomacy will be prioritised by many governments in the coming years as accessing critical raw materials for the green and digital transition has become a top priority,” said Henning Gloystein, director of energy and climate resources at the Eurasia Group consultancy.

In November, China’s top economic planner said it would step up exploration of strategic mineral resources including rare earths, tungsten and copper

ENVIRONMENTAL OPPOSITION

Investment globally of $200 billion in additional mining and smelter capacity is needed to meet critical mineral supply demand by 2030, 10 times what is being committed currently, Kettle said.

Yet projects have faced resistance from communities who don’t want a mine or smelter near their homes.

In January, for example, pressure from environmentalists prompted Serbia to revoke Rio Tinto (NYSE:RIO)’s lithium exploration licence while U.S. President Joe Biden’s administration cancelled two leases for Antofagasta (LON:ANTO)’s copper and nickel mines in Minnesota. 

In Sangdong, some residents are doubtful that the mine will improve their lives.

“Many of us in this town didn’t believe the mine would really come back,” said Kim Kwang-gil, 75, who for decades lived off the tungsten he panned from a stream flowing down from the mine when it operated.

“The mine doesn’t need as many people as before, because everything is done by machines.”

GRAPHIC-S.Korea’s reliance on China for critical minerals (jpeg) https://tmsnrt.rs/3kSb2qN

GRAPHIC-S.Korea’s reliance on China for critical minerals (interactive) https://tmsnrt.rs/3FuaNfm

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Stock Markets

Dow Futures Tick Higher as Major Indices Rebound

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By Oliver Gray 

Investing.com – U.S. stock futures moved modestly higher on Tuesday evening after major benchmark indices rebounded from recent losses during regular trade, however, traders remain cautious of a potential recession after Federal Reserve Chair Jerome Powell noted at a Wall Street Journal conference on Tuesday that “there won’t be any hesitation” about raising rates until inflation is under control.

By 6:45pm ET (10:45pm GMT) Dow Jones Futures and Nasdaq 100 Futures were up 0.1% apiece while S&P 500 Futures gained 0.2%.

In extended deals, QualTek Services Inc (NASDAQ:QTEK) popped 23.1% after reporting Q1 losses of 20 cents per share, beating expectations of a 48 cents loss, while revenue came in at $148.2 million versus $137.51 million expected.

Corporacion America Airports (NYSE:CAAP) lifted 0.2% after reporting Q1 EPS of $0.16 versus x expected on revenues of $258.1 million versus $226.74 million expected.

QuickLogic Corporation (NASDAQ:QUIK) fell 6% after report Q1 losses of 6 cents per share versus losses of 7 cents expected. Revenue for the quarter came in at $4.1 million versus estimates of $4 million.

Agilysys Inc (NASDAQ:AGYS) gained 11.3% after reporting Q4 EPS of 24 cents, beating estimates of 17 cents, with revenues coming in at $46.6 million versus estimates of $43.78 million.

Corporate earnings are set to continue on Wednesday, with Target Corporation (NYSE:TGT) and Lowe’s Companies Inc (NYSE:LOW) reporting results before the opening bell. Ahead in the week, investors will be monitoring fresh data for housing starts and building permits due out Friday morning.

During Tuesday’s trading session, the Dow Jones Industrial Average jumped 431.17 points, or 1.34%, to 32,654.59, the S&P 500 added 2% to 4,088.85 and the NASDAQ Composite added 2.76% to 11,984.52.

Major financial players were boosted after Warren Buffett’s conglomerate revealed it added a nearly $3 billon stake in Citigroup Inc (NYSE:C) during the first quarter. Citizens Financial Group Inc (NYSE:CFG) gained 3.7% JPMorgan Chase & Co (NYSE:JPM) added 3.3%, Bank of America Corp (NYSE:BAC) lifted 3.4% and Morgan Stanley (NYSE:MS) gained 3.8%.

Travel related companies popped after United Airlines raised its revenue outlook for the second quarter on improved consumer demand. JetBlue Airways Corp (NASDAQ:JBLU) lifted 8.2%, Delta Air Lines Inc (NYSE:DAL) gained 6.7%, American Airlines Group (NASDAQ:AAL) added 7.7% and United Airlines Holdings Inc (NASDAQ:UAL) lifted 7.9%.

On the bond markets, United States 10-Year yields were at 2.995%.

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Stock Markets

Glass Lewis backs McDonald’s directors in boardroom fight with Carl Icahn

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© Reuters. FILE PHOTO: A sign with the logo is on display near a McDonald’s restaurant in Moscow, Russia May 16, 2022. REUTERS/Evgenia Novozhenina

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By Svea Herbst-Bayliss

BOSTON (Reuters) – Proxy advisory firm Glass Lewis on Tuesday recommended McDonald’s Corp (NYSE:MCD) investors vote for the company’s directors, dealing a setback to billionaire investor Carl Icahn’s efforts to replace two directors.

“The Dissident (Icahn) has failed to make a sufficiently compelling case to warrant the boardroom changes it is seeking here,” Glass Lewis wrote in the report seen by Reuters.

A representative for Icahn did not immediately have a comment.

The report came one day after Institutional Shareholder Services, Glass Lewis’ larger rival, also recommended that shareholders back the company’s nominees. McDonald’s shareholders will meet on May 26.

Icahn nominated candidates to the fast-food restaurant’s board to hold the company accountable for pledges it made a decade ago on sourcing pork.

McDonald’s says it has worked to change its pork sourcing. But it is behind schedule on a plan to stop buying pork from suppliers that confine pigs in small crates during pregnancy. Both ISS and Glass Lewis say Icahn has raised awareness for animal rights.

“We acknowledge (Icahn’s) efforts to seek improvements to animal welfare conditions is a worthy and noble endeavor,” Glass Lewis wrote. But the advisory firm also criticized Icahn, saying he had taken a “decidedly simplistic and myopic view of ESG concerns, with no substantive regard given to the economics of the Company’s business nor to the creation of shareholder value.”

McDonald’s said Icahn’s two nominees lack the broader expertise needed to serve on the company’s board. Glass Lewis wrote that Icahn’s candidates “lack the requisite background, qualifications and experience for serving on the board of a large multinational firm” like McDonald’s.

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Stock Markets

China Eastern crash probe eyes intentional action – sources

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© Reuters. FILE PHOTO: Rescue workers work at the site where a China Eastern Airlines Boeing 737-800 plane flying from Kunming to Guangzhou crashed, in Wuzhou, Guangxi Zhuang Autonomous Region, China March 24, 2022. REUTERS/Carlos Garcia Rawlins/File Photo

By David Shepardson

WASHINGTON (Reuters) -Investigators probing the crash of a China Eastern Airlines (NYSE:CEA) jet are examining whether it was due to intentional action taken on the flight deck, with no evidence so far of a technical malfunction, two people briefed on the matter said.

The Wall Street Journal reported earlier Tuesday that flight data from one the Boeing (NYSE:BA) 737-800’s black boxes indicated that someone in the cockpit intentionally crashed the plane, citing people familiar with U.S. officials’ preliminary assessment.

Boeing Co , the maker of the jet, and the U.S. National Transportation Safety Board (NTSB) declined to comment and referred questions to Chinese regulators.

The Boeing 737-800, en route from Kunming to Guangzhou, crashed on March 21 in the mountains of Guangxi, after a sudden plunge from cruising altitude, killing all 123 passengers and nine crew members aboard.

It was mainland China’s deadliest aviation disaster in 28 years.

The pilots did not respond to repeated calls from air traffic controllers and nearby planes during the rapid descent, authorities have said.

The Civil Aviation Administration of China said on April 11 in response to rumours on the internet of a deliberate crash that the speculation had “gravely misled the public” and “interfered with the accident investigation work.”

China Eastern could not immediately be reached for comment Tuesday. The Wall Street Journal said the airline had said in a statement that no evidence had emerged that could determine whether or not there were any problems with the accident aircraft. The Chinese Embassy declined to comment.

The 737-800 is a widely flown predecessor to Boeing’s 737 MAX but does not have the systems that have been linked to fatal 737-MAX crashes in 2018 and 2019 that led to a lengthy grounding of the MAX.

China Eastern grounded its entire fleet of 737-800 planes after the crash, but resumed flights in mid-April in a move widely seen at the time as ruling out any immediate new safety concern over Boeing’s previous and still most widely used model.

In a summary of an unpublished preliminary crash report last month, Chinese regulators did not point to any technical recommendations on the 737-800, which has been in service since 1997 with a strong safety record, according to experts.

NTSB Chair Jennifer Homendy said in a May 10 Reuters interview that board investigators and Boeing had traveled to China to assist the Chinese investigation. She noted that the investigation to date had not found any safety issues that would require any urgent actions.

Homendy said if the board has any safety concerns it will “issue urgent safety recommendations.”

The NTSB assisted Chinese investigators with the review of black boxes at its U.S. lab in Washington.

Shares of Boeing closed up 6.5%.

A final report into the causes could take two years or more to compile, Chinese officials have said. Analysts say most crashes are caused by a cocktail of human and technical factors.

Deliberate crashes are exceptionally rare. Experts noted the latest hypothesis left open whether the action stemmed from one pilot acting alone or the result of a struggle or intrusion but sources stressed nothing has been confirmed.

In March 2015, a Germanwings co-pilot deliberately flew an Airbus A320 into a French mountainside, killing all 150 on board.

French investigators found the 27-year-old was suffering from a suspected “psychotic depressive episode,” concealed from his employer. They later called for better mental health guidelines and stronger peer support groups for pilots.

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