Latest news with #rawMaterials
CNA
12 hours ago
- Business
- CNA
Slow rate hikes could cause wage-price spiral, BOJ paper says
TOKYO :Hiking interest rates only gradually as raw material costs rise could heighten the risk of an upward spiral in wages and consumer prices, the Bank of Japan said in a research paper released this week. The paper's publication on Thursday comes as the central bank faces an increasingly complicated policy environment, with inflation at a more than two-year high and U.S. tariffs fanning economic uncertainty. While the staff papers do not represent the BOJ's official view on monetary policy, they provide hints on key topics of attention within the central bank in setting interest rates. The BOJ staff paper, using data from 2002 to 2024, analysed trends in Japan and Europe - which both rely heavily on imported commodities - to study the extent to which rising material costs led to second-round effects on inflation. In Japan, the pass-through of prices from rising raw materials was more moderate than in Europe, the paper said. The second-round effects were moderate but sustained in both Japan and Europe, it said. "Both in Japan and Europe, the initial effects of high raw material costs were the main cause of inflationary trends since 2020. The second-round effects may have heightened the sustainability of price rises," the paper said. Central banks typically raise interest rates to avoid second-round effects on inflation, or a state in which initial price shocks like higher energy costs trigger a spiral of rising wages and inflation that could lead to a broad-based, persistent inflationary environment. A closer look at Japan's data suggested the BOJ's slow pace of interest rate hikes could be enhancing the second-round effects on inflation, the paper said. Structural changes in Japan's labour market could also be making wages less rigid - or more likely to move flexibly reflecting a tight job market - and enhancing the second-round effects on inflation than in the past, the paper said. The analysis comes amid heightening attention within the BOJ board on how persistent rises in food and raw material costs could affect underlying inflation, and households' perception of future price moves. While uncertainty over U.S. tariff policy has put the BOJ on hold in raising interest rates, Governor Kazuo Ueda has signaled the bank's resolve to keep pushing up borrowing costs if Japan stays on course to durably hit the bank's 2 per cent inflation target. Japan's core inflation hit a more than two-year high in May and exceeded the central bank's 2 per cent target for well over three years, keeping it under pressure to resume rate hikes despite economic headwinds from U.S. tariffs.
The Independent
04-06-2025
- Business
- The Independent
Greenland earmarked for new minerals project as US eyes island
The European Union has announced Greenland will be among the nations selected for 13 new raw material projects, which are designed to bolster its supply of critical metals and minerals. The initiative, which includes nations outside the bloc, aims to ensure the EU remains competitive in key sectors such as energy transition, defence, and aerospace. The announcement follows China 's decision in April to impose export restrictions on rare earth magnets, requiring new licenses for export. This move has prompted European diplomats, car manufacturers, and other businesses to urgently seek meetings with Beijing officials to avoid potential factory closures. European Commissioner for industry, Stephane Sejourne, stated, "We must reduce our dependencies on all countries, particularly on a number of countries like China... The export bans increase our will to diversify." China currently controls more than 90 per cent of the global processing capacity for these magnets, which are essential components in a wide range of products from vehicles and fighter jets to household appliances. Additionally, China is the primary supplier of many key components for renewable energy technologies, including rare earth minerals, batteries, and solar panels. Brussels is eager to change this dynamic to secure its supply chains. The EU list is part of the implementation of the Critical Raw Material Act agreed in 2023 under which the bloc aims to mine 10 per cent, process 40 per cent and recycle 25 per cent of its needs by 2030. Ten of the new projects will be focused on materials essential for electric vehicle batteries and battery storage, including lithium, cobalt, manganese and graphite. Two projects for rare earths are located in Malawi and South Africa. Other projects are located in Britain, Canada, Greenland, Kazakhstan, Madagascar, Norway, Serbia, Ukraine, Zambia, Brazil and the French territory of New Caledonia. The British project is to extract tungsten and the ones in Ukraine and Greenland will be for graphite, with the project in Greenland run by GreenRoc Strategic Materials GROC.L. Tungsten is key for the defence industry. Greenland has been a point of tension between Brussels and Washington this year after US President Donald Trump repeatedly said he wants to acquire the Danish overseas territory. US officials have discussed a plan to pull Greenland into America's sphere of influence with a type of agreement called COFA that the United States has used to maintain close ties with several Pacific Island nations. Under COFA, the US government offers essential services and in exchange, the US military operates freely while trade with the US is largely duty-free. The Serbian project, run by major miner Rio Tinto, could produce 90 per cent of Europe's lithium needs. However, the project nearly fell apart after the government revoked the miner's licence in 2022. A Serbian court restored Rio Tinto's rights last year. Many Serbs oppose the Jadar project, saying its development will damage the environment. "With an estimated production of 58,000 tons of lithium carbonate annually, Serbia has the potential to become a key player in the electric vehicle supply chain," Rio Tinto said in a statement. The EU has estimated that the projects would need an overall capital investment of 5.5 billion euros ($6.3 billion) to get off the ground. They would receive coordinated financial support and buyer interest from the European Commission, member states and lenders. The new list brings the EU's total number of strategic projects to 60. In March, the Commission announced 47 projects within the EU.
Reuters
04-06-2025
- Business
- Reuters
EU picks 13 new critical material projects, including in Greenland
PARIS, June 4 (Reuters) - The European Commission on Wednesday announced 13 new raw material projects outside the bloc to increase its supplies of metals and minerals essential for it to stay competitive in the energy transition as well as defence and aerospace. The EU's announcement follows China's decision in April to impose export curbs on rare earth magnets until new licences are obtained, leaving diplomats, carmakers and other executives from Europe and elsewhere scrambling to secure meetings with Beijing officials and avert factory shutdowns. China controls more than 90% of global processing capacity for the magnets, used in everything from vehicles and fighter jets to home appliances. Beijing is also the main supplier of many key inputs for renewable energy, especially rare earths, batteries and solar panels, a situation Brussels is keen to change. The EU list is part of the implementation of the Critical Raw Material Act agreed in 2023 under which the bloc aims to mine 10%, process 40% and recycle 25% of its needs by 2030. Most of the new projects will be focused on materials essential for electric vehicle batteries and battery storage including lithium, cobalt, manganese and graphite. Two projects for rare earths are located in Malawi and South Africa. Rare earths are used to produce magnets in wind turbines. The projects are located in Britain, Canada, Greenland, Kazakhstan, Norway, Serbia, Ukraine, Zambia, Brazil and the French territory of New Caledonia. The British project is to extract tungsten and the ones in Ukraine and Greenland will be for graphite, with the project in Greenland run by GreenRoc Strategic Materials (GROC.L), opens new tab. Greenland has been a point of tension between Brussels and Washington this year after U.S. President Donald Trump repeatedly said he wanted to acquire the Danish overseas territory. U.S. officials have discussed a plan to pull Greenland into America's sphere of influence with a type of agreement called COFA that the United States has used to maintain close ties with several Pacific Island nations. Under COFA, the U.S. government offers essential services and in exchange, the U.S. military operates freely while trade with the U.S. is largely duty-free. The EU has estimated that the projects would need an overall capital investment of 5.5 billion euros ($6.27 billion) to get off the ground. They would receive coordinated financial support and buyer interest from the Commission, member states and lenders. The new list brings the total number of strategic projects to 60. In March, the Commission announced 47 projects within the EU.
