China’s Battle for African Uranium

As reported by the Wall Street Journal, Sunday night’s revelations that China National Nuclear Corp (CNNC) may strengthen its ties to UraMin could represent a broader picture than an ordinary acquisition of a near-term uranium producer.

There is an ongoing global war for energy security, which appears to be politically inspired. China and Russia are the main opponents, especially in Africa, but have rivaled each other, over the past several years, in Central Asia. The goal for both nations is not only energy security but political influence and alliance over their targeted territories.

On May 12th, Russia, Kazakhstan and Turkmenistan signed a declaration to upgrade and expand transport pipelines along the Caspian Sea coast directly to Russia. The project relies mainly upon the vast Turkmen gas reserves. This is part of Russia’s growing monopoly of Central Asian gas. Although Europe was shocked by Vladimir Putin’s new arrangement, the Chinese were flabbergasted.

We’ve been following developments in Central Asia, and had reported upon milestone events in both of our uranium publications, and again (with far greater details) in our soon-to-be-released Investing in China’s Energy Crisis.

After more than two decades in power, Turkmen strongman Saparmurat Niyazov passed away this past December. In April 2006, Niyazov had signed a framework agreement on oil and gas cooperation. By August, Niyazov had announced a pipeline, designed to pump gas to China, would be opened in 2009. The deal died with the dictator, it appears.

A few weeks ago, a spokesman for China’s National Reform and Development Committee announced China was unlikely to reach its natural gas target of a 10-percent portion of the country’s energy portfolio by 2010. Increasingly, Russia has shut China out of Central Asia in obtaining long-term, multiple energy sources.

Aside from South America, where China has strengthened the country’s ties with Venezuela and others, Africa is a prime hunting ground for China’s future energy security. China has established a strong foothold in the Sudan for petroleum. But, Africa is rich in uranium deposits.

According to a report published by the International Atomic Energy Agency in 2005, Africa has 18 percent of the world’s known recoverable uranium resources – about six percent less than Australia and one percent more than Kazakhstan. We began coverage on both Namibia and Niger, after Russia sent a delegation to Egypt to discuss the nuclear renaissance. At the time, our research pointed to Africa, particularly those countries, as ripe for future uranium production. Chinese prospectors raced to Niger within weeks after our initial coverage.

During 2006, Namibia became saturated with numerous exploration plays hoping to capitalize on the country’s uranium resources and relaxed environment. Consequently, the Namibian Minister of Mines and Energy closed the country’s exploration window. Since then, Niger has become a new hunting ground. We expect this country to become just as saturated as Namibia has been.

China is eager to capitalize upon the continent’s uranium resources before Russia outmaneuvers them as has been accomplished in Central Asia.

According to an email we received from TradeTech’s Gene Clark, after presenting at the China Power & Alternative Energy Summit on May 18th, he told us China’s official target for nuclear power capacity was ’40 GWe by 2020 and another 18 GWe in the following five-year plan.’ This confirms China’s aggressive plans to acquire sufficient uranium to reach this capacity, and would be foolish to rely on just Australia.

Typically, China has built its energy portfolio through numerous deals across multiple regions. This past October, Yang Changli, vice president of China National Nuclear, said it would seek uranium not only from Australia, but from Canada, Kazakhstan, South Africa and Namibia. In an interview Yang gave during the 15th Pacific Basin Nuclear Conference, he said, “China won’t rely on any single supplier of uranium because of energy security considerations.

Namibia is the First African Focus of Uranium Politiques

On May 14th, Russia’s second-largest bank Vneshtorgbank and Russia’s state-run nuclear exporter Tekhsnabexport announced they were considered a joint venture to operate in Namibia through licenses they directly hold and through investments in other companies which have obtained licenses in Namibia.

In March Russian Prime Minister Mikhail Fradkov announced his country was prepared to building nuclear plants in Namibia. Neighboring South Africa had previously warned Namibia to expect reductions in energy supplies. Namibia is dependent upon South Africa for electricity and has forecast an energy deficit of 300 megawatts within the next three years.

On May 10th, Russia and Kazakhstan signed an agreement to set up the International Uranium Enrichment Center, anticipated to come onstream by 2013. As part of this announcement, Sergei Kiriyenko, head of the Federal Nuclear Power Agency, said, “Any country can become a member of the center by signing an intergovernmental agreement granting it guaranteed access to uranium enrichment services.” We conclude Namibia may wish to participate in this arrangement.

Enter CNNC on Sunday night. The Chinese company’s deputy general manager for uranium procurement announced to Bloomberg News that CNNC and UraMin will start ‘more formal’ talks this week.

UraMin is a prime acquisition candidate for the Chinese because of its uranium prospects in both Namibia and Niger. The company also has holdings in South Africa and the Central African Republic.

We are now facing a new era of uranium politics or rather ‘Uranium Politiques.’ And there is good reason for this to escalate. Yesterday, the U.S. Energy Information Administration issued ‘International Energy Outlook 2007.’ The report announced, “World marketed energy is expected to grow by 57 percent between 2004 and 2030.”

The most rapid growth in energy demand is anticipated in non-OECD Asia. The majority of this energy demand growth would come from China and India. This was the reference case – the middle ground of growth.

Also on Monday, leading Russian nuclear expert Yevgeny Velikhov, head of the Kurchatov Institute, told reporters at a news conference that the recent surge in uranium prices “may still grow by another order of magnitude.” He believes the uranium price will continue to rise as global uranium demand soars while supplies remain tight. “The global energy market is very turbulent,” Velikhov said. “The uranium price can hit any mark at a time of crisis.” Ironically, both crisis and turbulence have come about because of the Asian and Russian scramble to lock-up the uranium resources of entire countries.

The energy battle in Africa is good news for the two front-runners in Namibia: UraMin and Forsys Metals. We’ve called this a horse race, over the past several months. Both endeavor to become the ‘next miner’ following Paladin Resources in this country.

Yet, both companies are vulnerable to acquisition efforts by Russian or Chinese companies. Or either could be acquired by one or more majors hoping to build up their uranium reserves. In the case of Rio Tinto, acquiring one or both could mean expanding uranium operations in this country.

Acquisition Candidates

Just as the announcement by Energy Metals Corp, regarding a potential sale of the company, fueled weekend speculation as to the ‘next’ takeover candidates, the same could occur this week with African acquisition candidates.

One might be misled into believing China would focus on Niger, where the company has built a foundation, and Russia’s focus would remain in Namibia. However, in a state visit to China this week, Namibian Defense force chief exchanged views with Guo Boxiong, Central Military Commission vice chairman, on promoting relations between the two countries.

In February, Chinese President Hu Jintao visited Namibia to sign an economic deal with Namibia giving the country a grant of US$4.3 million and an interest-free loan of the same amount. Reportedly, some of the money would be used to boost group tourism from China to Namibia. This is the same tactic China has utilized in courting relationships in South America to help develop natural resource deals.

With US$1.2 trillion in foreign currency reserves, China is exercising its financial biceps. In March, the country formed the Huijin Fund as the state’s investment arm. Up to US$400 billion have reportedly been placed in this fund for investment purposes. On Sunday night, the Huijin Fund invested US$3 billion to purchase a stake in about 9.9 percent of the Blackstone private equity firm. Our research suggests the fund is likely to strongly invest in natural resources.

On this basis, we can not rule out a simple carving of Africa. We don’t believe China will quietly step back and focus the country’s uranium acquisition efforts in Niger, permitting Russia to concentrate on Namibia and South African uranium.

In Niger, we covered two ‘early days’ prospective uranium juniors over a year ago. North Atlantic Resources acquired a uranium permit in the 1900-square kilometer Abelajouad in this country. This past April, the company increased its holdings to nearly 3,000 square kilometers. In late April, Northwestern Mineral Ventures announced uranium mineralization in assays from rock samples after a first-pass reconnaissance on its In Gall and Irhazer uranium properties. Both would need to further explore their properties before attracting serious interest from the Chinese.

However, in Namibia both UraMin and Forsys Metals are actively progressing toward mining uranium on their properties. Either could be the first, but we believe both should become winners in the uranium bull market. Because China has carefully aligned with UraMin, or at least shown an inkling to do so, we suspect Russia might begin to look more carefully at Forsys Metals. This is purely speculation based upon our premise of ‘uranium Politiques.’ We do not have any ‘inside track’ on this matter.

Fortunately, we had the opportunity to chat with Forsys chief executive Duane Parnham late last week. His company had announced the completion of the pre-feasibility study on the company’s Valencia uranium deposit in Namibia. We missed the company’s conference call, but were allowed the opportunity to discuss his company’s prospects and future plans during a telephone call.

The company’s pre-feasibility study was prepared by Australia-based Snowden Mining, which used the guidelines of Australia’s JORC code. Subsequently, the Valencia uranium mineral reserve was classified as Probable Reserves. These were calculated at 24 million pounds U3O8.

We asked about production. “We are now modeling 2.4 million pounds per year,” Parnham told us. He expects to payback in less than two years. With Forsys as with all near-term producers, some early conversations have begun about pre-selling the company’s uranium production after production has commenced.

His company’s news release talked about six month of stripping during the initial part of the operation so we started there. “We’ll start when we get a mining license and then looking at production.” When will the company complete its ongoing environmental assessment? “We are hoping to have an environmental decision by year end,” Parnham told us. “We are hoping to have enough data to apply for a mining license in early 2008. If that’s successful, then obviously the decision to go forward will be made at that time.”

For the time being, the company plans to expand its resource. “The pre-feasibility is just the first snapshot of the situation,” he said. “We are finding the pit optimization study is only looking at a very small portion of the overall resource.” Does that mean the resource is actually larger, then? “It’s a heck of a lot bigger,” he told us. “It’s just a function of how much data you have available to punch into the model. Then, how much does the model give you back? The evaluation process is ongoing. You’ll probably see a change in the pit design very shortly because we have the ability to move more resource into the reserve category.”

We talked about his company’s horse race with UraMin. How does it look? “Neck and neck, toe to toe,” Parnham said. “I think it shows there’s opportunity in Namibia, and that’s good that there are a number of us working for a common goal.”

Finally, we asked what has emerged as the key question: Is Forsys a ripe plum for the picking. He offered both sides of the coin. “Where the real opportunity lies is putting a property into production,” he responded. “The operation isn’t all that difficult so it’s not a deposit that our expanding team couldn’t put into production.” And then Parnham left the door open. “Anything can happen. It’s an open market, and we are a public company. But, we are certainly geared toward putting this into production.”

And from what we’ve seen among the recent, significant consolidations, those companies who have commenced production, and those closest to production, are the prime acquisition candidates. Why should companies developing projects in Africa become the exception instead of the rule? Especially when two super powers are both eagerly trying to establish stronger uranium footholds in this continent.

Singapore Home Prices and Rents to Fall?

Singapore is a massively preferred location for innovation, due to the work and commitment of its inhabitants. In the near future, though, it could be facing an oversupply in the residential market, which is mostly because of the population growth, that increased at its slowest in the last 9 years. In June 2013 the population of Singapore reached 5.4 million, and very noteworthy is that the non-resident population rose a mere 4 %, in comparison with previous years, when it rose up to 20%.

The population growth is likely to exceed demand in the following years, which will have a few consequences, such as higher vacancy rates, declines in rents and prices. Another factor that may contribute to this is the large number of homes to be completed between years 2013 and 2017 – approximately 100,000 homes, which means that a bumper supply of homes is due to be completed.

Singapore is known for having one of the most expensive real estate markets in the world, but because of this, home property prices could be headed for a correction of up to 20 % by 2015, according to Barclays. This has a positive impact on home buyers who would like to purchase their house using a home loan, because banks forecast a fall of up to 15 in prices by year 2015.

The URA (Urban Redevelopment Authority) predicts that up to 95,000 private units will come in the following years, as well as 25,000-27,000 public housing flats a year. The housing supply is expected to average 40,000 units annually, experiencing a peak of 47,000 in 2015. This will lead to vacancy rates rising up to 10 %, as opposed to the current 5.6 %. Historically, it has been observed that rents and prices decline at vacancy rates of 8 percent.

It is a common fact that Singapore mortgage rates are normally pegged to SIBOR (Singapore Interbank Offered Rate), which is the interest rate at which banks that are subject to Asian time zones are able to borrow from other banks located in the region. It is a daily reference, set by the ABS (Association of Banks in Singapore). Because of its political correctness and stability, location, and strict regulations, as well as the large amount of foreign investments undertaken in this city state, Singapore is a major location of Asian finance, which makes SIBOR a reference rate for borrowers or lenders involved in the Asian market.

Business Start Up!

The most common question I’m regularly asked is “what is the best business to start”? I always respond with “what’s the biggest problem you encounter on a day to day basis”? The way to get a business idea is not to try to think of an idea, but to look for a solution to a problem. The best business ideas usually have a number of things in common & this usually includes a solution to a problem or an improvement to an existing solution. The most common mistake start-ups make is to solve problems no one has or to operate in a market saturated with business offering a similar solution.

The way to look at things and the way a social entrepreneur would see things is by living in the future and then build what’s missing. This is the way many of the well known start-ups grew to become global giants. Apple, Google & Facebook grew out of ideas their founders built because they were living in the future & they saw a progressive gap in the world with the advances of technology. A good start-up idea should seem obvious, when you find one but you may feel that you’re too late. Never let that deter you. Everyone will have a different perception to a problem but often don’t realise it until they see a solution. Worrying that you’re late is one of the signs of a good idea. Do your research & a browse the Internet for 10 minutes or so, this will usually answer the question. Even if you find someone else working on the same thing, you’re probably still not too late. It’s exceptionally rare for start-ups to be squashed by competitors, so rare that you can almost discount the possibility.

Once you’ve found your start-up Idea. You’ll be spending day and night in the office, fuelled by energy drinks and pizza. However I suggest you ditch the crazy working hours and instead build a productive and incredibly solid daily routine which will make you much more efficient. “You shouldn’t sacrifice today for tomorrow”. Many people often assume that if you run your own business you’re “in the money”, this isn’t always the case especially at the infancy of your start-up with limited capital. You should be focusing your attention on growth and reinvest, reinvest and reinvest. This is the most important thing for any start-up.

With technology making the world a smaller place it’s considerably easier to take your business global with the power of social media and you can do this at very little or no cost… if you know how. The cost of starting a company is minimal. You can work from home (for most start-ups), marketing online, websites & hosting is cheap & with the number of loans now available in the market all the tools are there to get you started. There are number of organisations including those that are government backed to help get you started. Some of these Include: A government backed scheme to fund and mentor young entrepreneurs & help kick-start and support a new generation of entrepreneurs, aged 18-30. The Federation of Small Businesses is the UK’s largest campaigning pressure group promoting and protecting the interests of the self-employed and owners of small firms. Formed in 1974, it now has 200,000 members across 33 regions and 194 branches.

All you need now is the motivation, passion and resilience to make your start-up idea a reality.

The Decoupling Of US And Asian Market? Part 2

There are much debates and rhetoric about potential decoupling of the largest market in the word from Asian market. Many of the like discussions attempt to address concerns of the Asian markets would stand strong or escape with modest effect from the recession in US. Many of these doomsayers inappropriately painted the worst economic scenario in US and boasted the robustness of Asian market which could withstand the economic recession in US by their domestic demand and subsequently decouple from the world’s largest market.

The weak economic indicators reported in the press and the corporate meltdowns have been employed to justify their arguments. The 5% unemployment rate in December, slower than expected retail sales, Citigroup and Merill Lynch’s write down of bad loans, credit crunch and others, undeniably are indicators of potential recession, which some of the doomsayers say the recession could last until the next first or second quarters. During this downturn, many emerging countries would very likely to take over the role played by US as the largest buyer in the world. Obviously these countries are China and India, and some focuses on Eurozone as the appreciating Euros increases the purchasing power.

However, the decoupling scenario is rather far fetched, at least not in this near five to ten years. Asian market as a whole, which is now being engined and propelled by China could not possibly absorb the overall Asian’s supply. Since China was admitted to WTO and its role in world production network increases, many manufacturers have shifted their operation to China to reap on the advantage of low cost and other benefits that the country offers. Most of these companies are hardly indigenous; they are owned by Taiwanese, US, Europeans, and others. It is safe to say that China is a global factory, and many of the products produced are shipped to developed countries, such as US and Europe.

The relocation to China is seldom caused by the mass market. Places except Shanghai, Hong Kong, Shenzen, and other coastal provinces, are either undeveloped or outright neglected in the course of development. Thus, the overall purchasing power of the mass population is very low. The idea that China could replace US as largest market is impossible.

Robust economic growth of China in the past decade has created concern of potential price bubbles. The growth has increased the business sentiments and potential of the economy, which has caused the inventories to build up, increase of production, positive potential has helped to buoy the demand further and the whole economy boasted a more than 10% growth in the past decade. As the result, price of property has been artificially shot up by speculation and hot money, corruption has been wide spread. Recognizing the danger of business cycle and the looming bubble burst, policies have been drawn up to curb the over exposure of the economy; control of prices of essential goods, stricter environmental regulations to curb excessive production of manufacturers, more stringent export rules, higher quality assurance and inspection on exporting products, and higher reserves required in conventional banks. These steps are being taken amid financial crisis in the US market. Expectedly, the policies are to cool the economy in the next quarter or so, and the domestic demand dynamics which were witnessed in the past decades would be reduced tremendously.

At the other front, the overall Asian markets are gripped with potential high inflation rate. Singapore, Taiwan, Malaysia are seeing their purchasing power being eroded by edging price of crude oil. The depreciation of Greenbacks has caused the price of oil expensive in these economies. The notion that domestic demand could offset the demand evaporated due to US recession is therefore not so promising. Contrasting with the positive perceptions that the markets are undergoing structural shifts and become more robust, and thus could decouple from US market, the local Governments are now face with the potential inflation ( due to price surge in oil), and since US has been the largest export market, the potential of lower external demand is looming large. In other words, the local Governments are juggling with either increase the short term rate to combat the inflation or reduce to boost local demand to cushion the US recession. Either way, the economies in the region are very much exposed to the recession due to their long history of depending on US market.

This dependence can be seen in technology sector. High number of manufacturers in the region depends on tech spending in the US market. Since the mortgage crisis, the spending has proven to be very slow or outright negative. The crisis is not confined to mortgage market, its spread is seen in manufacturing, retail, and general business. The securitization of the sub prime loans, and coupled with the grading of these securities had supported the investments. The sudden drop due to the dry up of demand, and the revelations of so many unscrupulous practices in granting of loans and investment practices have caused one to question the integrity of grading of these investment tools. The lost in sentiment is further enhanced by the evaporating asset values, which its appreciation had fueled demand in the past decades. These have caused the cut down in expansion of businesses, lower demand in retails, and most importantly the cut down in tech spending which causes a large impact on import of the gadgets from Asian markets. Thus, the demand of the core sector of Asian economies is quickly running out.

The focus is now on two other developed nations to help cushion the impact; Europe and Japan. However, Japan has been experiencing economic slow down since early 1990s. Its short term rate has been low and has raised concern of potential high price in the economy. With the expected slower demand from US market, it has been tough for the economy to raise rate in the short term. The other factor relates to the concern of putting pressure on Greenback if Japan increases the short term rate. The effort could trigger higher re-purchase of Yen due to unwinding of carry trades, and put a downward pressure on dollars, thus aggravating the recession. European markets are facing high unemployment rate since relocation of manufacturers to low cost emerging markets such as Asia, and Eastern Europe. The recession and depreciation of dollar has caused huge damage to the businesses exposed to the US market but operating in Europe. Further, the idea that the continent could offset the demand drop and absorb the shocks is impossible.

In this gloomy environment, it is best that one does not predict any miracle could emerge that could absorb the goods that the region produces, or rather to debate on the possible decoupling of the markets. The most important lesson learnt from the past crisis was the evolution of new industrial structure, which is resulted from phasing out of obsolete and incompetent industries, businesses becoming more lean, and therefore, improvement of overall business environment.

Types of Education Or Business Grant Money

Anyone who wishes to further their education, map out a path toward a new career goal, or even start a business should apply for the federal grant money available to assist in all endeavors desired. Grants, such as the student loan programs, do not need to be repaid, they are yours to keep and for those with low income, the money is invaluable as it will be applied toward tuition and books. Some students will also apply for an individual small loan to supplement their Pell Grant and in almost every case funds will be left over which the student may spend as he/she wishes. Grants are usually funded by school districts and public or private institutions of higher education.

Grant money and loans are numerous for individuals wishing to apply for a business loan startup. It is a fact that more women than men are beginning to open up a small business and becoming quite successful at it, therefore there are several grants suited specifically for them. For example, there are grants that differ from state to state, and some websites will gladly list the money that is available. There are grants for African American women and men, Hispanic women and men, Asian women and men, immigrants, and low income women in general. Some great up to date information can be found on the website. In addition to women’s grants there are grants for men too. You should never have to pay for any information when applying for assistance to college, requesting information as a first time home buyer, applying for a farm grant, or any minority grants. This information is always free.

First home buyers usually are young couples or low income families who just cannot afford the huge down payment and closing costs usually required when buying a home. With the first time home buyers grant money, the future home owners can purchase a home with 0 to 5 % down and the seller will often pay for the closing costs. The interest rates are low on approved credit, and the down payment is added to the lifetime of the loan. These types of loans help the economy recover, allow families to put down roots, involve themselves in their communities and create safe environments in which to raise children. Sometimes, as the family grows or the children move out, homeowners may sell their homes to young couples which stimulates the economy. Thanks to the federal government and higher education institutions, this is all made possible.