The Pulse: Shadow over lithium-ion; India's gold passion - ProEdgeWire

A new ban or restrictions on the use of lithium-ion batteries? That would be bad news for lithium, worse for graphite (of which there’s at least 10 times the quantity in such batteries). That’s the worry posed by Roger Bade, analyst at London brokers Whitman Howard.

He makes the point after one of the three safety scares that have hit Boeing’s new 787 Dreamliner involved a lithium-ion battery catching fire. Fortunately, it happened on the ground, where the Japan Airlines 787 was parked. As the wire story coverage pointed out, the lithium-ion battery technology is one of the cost-saving features on the new aeroplane. The 787 uses 20% less fuel due to lighter weight, and the batteries are part of that: they enabled electrical systems to supplant hydraulic ones.

As reported by The Denver Post, “lithium-ion batteries can catch fire if they are overcharged and, once alight, they are difficult to extinguish because the chemicals produce oxygen”, it said, quoting Boeing’s chief engineer for the 787, Mike Sinnett.

The newspaper said a similar challenge may now confront automakers and other users of lithium-ion batteries, which are used in laptops and other electronics. But it is the hybrid and electric cars for which lithium-ion batteries are crucial.

Said Bade: “A new ban or restrictions on lithium-ion battery use could derail growth in this new technology“

Just how important this technology is has been shown in news about the auto technologies. Next month Honda Motor Co. will roll out its CR-Z subcompact in Indonesia, the first hybrid vehicle released in that country. Last September the lithium-ion battery was added to the CR-Z to boost the power of the motor.

And last week Marubeni Corp. signed a long term contract with Canada Lithium Corp (TSX:CLQ) to buy lithium carbonate from the planned mine in Quebec. The Nikkei news service says there is growing competition with Chinese and South Korean companies as Japanese battery makers seek to obtain lithium supplies. Marubeni will sell the lithium to domestic manufacturers of lithium-ion batteries.

GOLD: We’ve heard a good deal about Chinese demand for gold. Now Nick Trevethan, senior commodity strategist based in Singapore for the Australia New Zealand Banking Corp., says short-term demand from India should underpin prices. The bottom line is that Indians are buying gold now at such a rate that importers are charging heavy premiums for immediate delivery. Why? India has a current account deficit running at $80 billion a year, and a large chunk of that is due to the large gold imports. The Reserve Bank of India is drafting new restrictions aimed at stemming the flow of gold into the country. Gold imports reached a record of 969 tonnes in 2011. That represents (a) about one-third of world mine production for that year and (b) 60% of India’s current account deficit also for that year.

Trevethan says ANZ Bank expects a rise in black market importing (there is already considerable illegal traffic over the Bangladesh border) and for more gold to move in India in the form of doré, a semi-pure gold product which attracts a much lower duty of 1%. No one is expecting Indians to abandon their 2,000-year affair with gold.

CLEAN ENERGY: The world’s nuclear reactors now get about 15% of their uranium needs from the Megatons to Megawatts program, the agreement by which Russia’s highly enriched uranium from dismantled warheads has been recycle for use in power generation. The program comes to an end this year, which means the world’s miners will have to come up with enough uranium to make up the difference.

There is no guarantee they will be able to.

Meanwhile, China appears to have resumed its efforts to get the nuclear construction program back on track. And they’re also looking at new technologies. Some $350 million has been committed to thorium reactor development, and Xinhua news agency reports construction has begun on a high-temperature gas-cooled reactor. The $476 million nuclear project, with a generating capacity of 200MW, is being built in Shandong province. The technology was developed at Tsinghua University.