Thursday, November 29, 2007

Tellurium: A Supernova In The Making

Tellurium, one of the rarest elements on earth, was once not thought to be very useful. According to USGS and a Mining Journal Review article, half of its traditional use is as an alloying agent in iron and steel to improve machinability; 25% of it is in catalysts and chemical use; 10% of it in alloying with non-ferrous metals like copper and lead; 8% of it is in electronic application and the remaining 7% in other applications, including as pigment agent in ceramics.

Annual global tellurium production is about 170 tons to 200 tons, based on various different estimates. It's mainly produced from the anode slime accumulated during electrolytic process of copper refining. According to this detailed analysis, copper produced from different places contain vastly different tellurium content. Typically, one ton of copper contains 100 grams of tellurium and only 33 grams are extracted and produced using existing technology. That caps the current global tellurium production at no more than 400 tons, without major investment to improve the tellurium extraction efficiency, assuming globally 12.4 million tons of copper is produced using electrolytic process per year. Because of the low quantity and thin revenue of tellurium in comparison to the revenue from main copper product, copper refineries are UNLIKELY to invest money, time and effort to improve the tellurium extraction rate, unless tellurium price goes up a lot from here, approaching gold price levels.

According to USGS, tellurium price started 2004 at $10 a pound. By the year-end it reached $22.50 a pound. In 2005 the price quickly rallied to $130-$180 a pound in mid year, then flat down to $100-$130 a pound. In 2006, it once again ran up to $155 a pound and then settled for the year at $50-$75 a pound.

So what prompted the rapid price raise? First Solar's (FSLR) CdTe solar panel was one of the demand factors. FSLR produced 60 MW in 2006 and about 20 MW in 2005. At 8 grams of tellurium per panel and 60 watts per panel, that's 8 tons tellurium consumed in 2006 and 2.7 tons in 2005. That's barely 4% and 1.4% of the supply. It's a factor in demand increase, but not the major factor.

The main Te demand increase was from other applications. CD-RW discs use tellurium, as do DVD-RW discs. And even later, ReWritable Blu-Ray DVD discs were developed by Panasonic, using a material called tellurium-suboxide-palladium.

Recently, Intel (INTC) announced a new type of phase change memory chips to start mass production in later 2007. This also uses tellurium. To understand the background of this break through, you need to read an old article: A 30-year memory problem solved?

All those electronic applications mentioned above, CD, DVD and memory chips, relate to the same phase change material called chalcogenide, which contains tellurium. Chalcogenide, the material used in ovonics, is really the cultimation of decades of scientific research on amorphous materials, which was once considered of very little practical use, but of academic interest only.

I originally connected these dots from an article I read entitled "Is There a Tellurium Rush in the Making?". Kudos to Sergio Garcia de Alba for submitting the article Energy Conversion Devices: An Amorphous Gem, which finally allowed me to connect the dots. It's all related to tellurium. Energy Conversion Devices Inc. (ENER) was funded by Stanford Ovshinsky, who invented the amorphous semiconductor materials and coined the name Ovonics. He has numerous important inventions. Chalcogenide, which is a tellurium containing material, is one of them.

Today, after many decades of quiet research and perfection, chalcogenide has suddenly become a very very useful material, having revolutionized and is continuely revolutionizing the whole electronic industry. I like to compare the precious element tellurium to a supernova. It's been quiet and ignored for so long, but all of a sudden it erupts into an extremely bright superstar. The tellurium supernova shines so brightly that it could KILL.

Let's follow the ENER article a little bit:

...a little company called Ovonyx...licensed its memory technology to
semiconductor giants like Intel (which is a partner in Ovonyx), Samsung, Elpida,
Hynix, Qimonda, and ST Microelectronics. The memory technology is based on
chalcogenidephase change memory. It is expected to replace NOR flash memory, and could also eventually replace DRAM and NAND flash. Samsung has announced
production of a 512Mbit part in 2008, and Intel a 128Mbit part that could arrive
as soon as the end of this year or early 2008 (Intel's part codename is
Alverstone). ...What's interesting for investors is that phase change memory
could become a $40 billion+ market in a few years.
This phase change material thing is really HUGE! $40B+ market just in memory chips and we have not even included all the rewritable CDs, DVDs and Blu-Ray DVDs. And it ultimately could also replace the hard disk drives so future computers would no longer need a hard disk drive.
If you are not shocked so far, then read this article about phase change memory. Let me quote from page 2:

A person using a computer with PRAM could turn it off and back on and pick up
right where he left off -- and he could do so immediately or 10 years later.
Such computers would not lose critical data in a system crash or when the power
went out unexpectedly. 'Instant-on' would become a reality, and users would no
longer have to wait for a system to boot up and load DRAM. PRAM memory could
also significantly increase battery life for portable devices.

How wonderful it would be!

Needless to say, this whole new chalcogenide based electronic industry will consume a lot of tellurium, probably all the global tellurium production and then some more. It will drive the price of tellurium to a crazily high level, maybe at gold price, maybe at platinum price, and in doing so, it will kill a lot of trivial, low added value industry users of tellurium.

The kill of this tellurium supernova will probably include FSLR. This company is most vulnerable because it uses a lot of tellurium in its solar panels, any dramatic tellurium price will increase its cost to the level that it can no longer have a profit margin. When a business no longer has a profit margin, it cannot survive. But the tellurium kill probably will go behind that. Tellurium as an alloying agent will probably have to end, as will tellurium used in portable electronic beverage coolers.

My advice to people would be to buy and hoard some tellurium metal ingots if you can still find anything at decent price. If you have FSLR long positions, I recommend that you sell them before it is too late. Tellurium, such a scarce and precious natural resource, is one of nature's best gifts to human kind, and it was never meant to be used on trivial things like generating a few watts of solar electricity; rather, it should only be used in high value added and far more useful things like advanced computer memory chips.

FSLR started on the wrong technology using the wrong material, the extremely toxic cadmium plus the extremely rare tellurium, a deadly combination leading this otherwise aggressively growing company onto a death march. It's a tragedy of nature's making, not the management's fault. But the FSLR management really need to wise up and realize that their sole CdTe product will lead them to nowhere. They must diversify into other technologies, or they may have to shut down business just a few years down the road.

Full disclosure: I currently do not have any ENER position but is looking for opportunity to buy some. I have short positions in FSLR and am planning to short more when it starts the eventual collapse. I am also actively buying physical tellurium metal ingots as investment.

P.S. This article is now on Seeking Alpha.

Monday, November 26, 2007

Cadmium Telluride Casts Shadow of Death on First Solar

First Solar Inc. (FSLR) produces CdTe (Cadmium Telluride) based solar panels as their sole product. In a previous Seeking Alpha article I wrote that although Cadmium is extremely toxic, but the mildly toxic tellurium is lethal to FSLR, due to a potential global tellurium shortage. It comes out that cadmium is indeed not just extremely toxic to human, but more fatal to FSLR as well, once I discover and understand what is RoHS and what it means to FSLR.

In simple words, the RoHS directive is a European Union environmental regulation that took effect on July 1, 2006. It deals with not any average hazadous material, but only the worst of the worst, the evil of the evils, only 6 hazadous materials made it into the top wanted list, cadmium is one of them. Needless to say, the restriction and enforcement is very tough, bringing any offending business to their knees. The full text of RoHS is only 5 pages and is pretty clear. The last page lists a very short list of products that are exempt from the restriction. FSLR's CdTe solar panel does NOT make it to that short list.

Read the wikipedia entry on RoHS! The restrictions are very tough. It separates a product into individual parts of homogeneous materials. Each part must not contain the banned substance exceeding a maximum concentration limit. The limit is 1000 ppm (parts per million) for other 5 materials but only 100 ppm for cadmium. For example, if a radio contains one little screw which contains more than 1000 ppm of lead, the whole radio is banned for sale in the EU. No matter that the lead in the screw inside the radio is unlikely leaked out during usage.

Clearly all products must fall into one of three categories:

1. It is in full RoHS compliance and hence not restricted.
2. It does not comply with RoHS, and hence must be put in a restricted product list.
3. It does not comply with RoHS, but an exemption is granted and is on the exemption list.

Since FSLR's solar panels are mainly sold in Europe, where does it stand on RoHS? Let's look at their Aug. 13, 2007 SEC filing 424B3, on bottom of page 17, regarding the risks with the RoHS directive:

The use of cadmium in various products is also coming under increasingly stringent governmental regulation. Future regulation in this area could impact the manufacture and sale of cadmium-containing solar modules and could require
us to make unforeseen environmental expenditures or limit our ability to sell
and distribute our products. For example, the European Union Directive
2002/96/EC on Waste Electrical and Electronic Equipment, or the “WEEE
”, requires manufacturers of certain electrical and electronic
equipment to be financially responsible for the collection, recycling, treatment
and disposal of specified products sold in the European Union. In addition,
European Union Directive 2002/95/EC on the Restriction of the Use of Hazardous
Substances in electrical and electronic equipment, or the “RoHS Directive”,
restricts the use of certain hazardous substances, including cadmium, in
specified products. Other jurisdictions are considering adopting similar
legislation. Currently, photovoltaic solar modules in general are not subject to
the WEEE or RoHS Directives
; however, these directives allow for future
amendments subjecting additional products to their requirements and the scope, applicability and the products included in the WEEE and RoHS Directives are
currently being considered and may change. If, in the future, our solar
modules become subject to requirements such as these, we may be required to
apply for an exemption
. If we were unable to obtain an exemption, we would be
required to redesign our solar modules in order to continue to offer them for
sale within the European Union, which would be impractical. Failure to comply
with these directives could result in the imposition of fines and penalties, the
inability to sell our solar modules in the European Union, competitive
disadvantages and loss of net sales, all of which could have a material adverse
effect on our business, financial condition and results of operations.

In summary, the CdTe solar panel does not comply with RoHS, the homogenous material of the portion of CdTe layer contains 470000 ppm (47%) of cadmium, far exceeds the 100 ppm limit. By virtue of simply mentioning RoHS, FSLR implied that it is not in RoHS compliance. By mentioning a possible future need to apply for an exemption, FSLR confirms that the product does NOT comply with RoHS.

FSLR made an incorrect statement that the product is not subject to RoHS directives. Any product sold within the territory of European Union, of course, is subject to any regulation that EU imposes on its territory. What FSLR meant to say is that the product currently is NOT explicitly listed in the restricted product list. It is certainly NOT in the exemption list either. Anything not RoHS compliant must be exempted and added to the exempt list, or be added to the restricted list. If it's on neither list, then it's an overlook and a loop hole to be plugged.

FSLR does acknowledge that EU periodically review their RoHS restricted product list and so in the future, they may discover that the CdTe solar panel needs to be put into the restricted list. If that happens, then FSLR must apply for an exemption. If they apply for an exemption, and fail to get one, then, the consequence will be devastating. The business is basically DOOMed in that case, because they have no other viable product.

FSLR is in a very dangerous situation. They are basically playing with fire. They understand their product is non-RoHS compliant and acknowledged that fact by implying future need to apply for an exemption. None-compliant products should be explicitly put into the restricted product list, unless an exemption has been granted and it is listed in the exemption list.

I call on First Solar management to come out and clarify the RoHS compliance situation publically. I think this is clearly a loophole. The product is in neither the list of restricted products nor the list of exempt products. I urge them to contact the EU authority to get a clarification of the status of their product, is it RoHS compliant, or is it non-compliant? Should it be put into the restricted product list and was overlooked? Does it qualify for an exemption or not? Should they apply for an exemption now? Please surrender yourself to the EU authority, let them make a determination. If you don't go forward yourself and obtain a clarification letter, when the EU authority comes forward to you instead, it could be much more devastating to the company's business. So please don't take a chance and don't take advantage of a possible loop hole. You have a wonderful management and engineering team. But please execute your business in an open and honest way free of legal huzzles!

More over I call on the CEO to consider diversifying First Solar's business from the sole CdTe solar panels. This is a deadly combination, an extremely toxic cadmium metal nobody is willing to touch, and an extremely rare tellurium element on earth, supply of which is so limited that it could suffocate FSLR's future growth. I have been trying to buy a few hundred pounds tellurium as a speculative small time investor, I could not find any ready to deliver inventory any where in the world, and have to wait several months for delivery, despite of the small quantity I tried to order. You have been searching around the world to buy tellurium supply to babysit and spoon feed your own CdTe suppliers, so you must know how touch it is to get the supply, more so when your Malaysia factories open next year. This academic paper says that you really don't have terawatts level of tellurium availability despite what the CFO said.

For further readings on RoHS, read this.

Here is a technical article analyzing impact of RoHS on solar PV products.

Full disclosures: I am short in FSLR and plan to add to short positions when it starts to collapse. I am also trying to buy tellurium metal ingots as an investment.

Thursday, November 22, 2007

A Cinderella Metal That Breaks Physics Laws

Frank McAllister, CEO of Stillwater Mining (SWC), would call palladium a Cinderella Metal. I agree with him not only on reasons he cited, but more importantly, palladium (Pd) really is a very romantic fairy tale metal that breaks several known physics laws, literally! I am not a crackpot theorist trying to overthrow modern science. But let me explain why palladium defied several physics laws.

First, palladium defies the oldest known physics law, Isaac Newton's gravity law. The Russians have accumulated large strategic stockpile of palladium since the Soviet Era, they have been selling off the stockpile ever since late 90's. In 2000, a rumor that the Russians may stop the government sale caused a global market panic and drove the price up to $1100 a troy ounce. In the chaos Ford (F) and GM purchased large amount of palladium right at the top of the price. The Russians promptly resumed export of the stockpile palladium. The global market was flooded with huge surplus of palladium supply, and the price collapsed, forcing Ford to write down a $1B loss as a result. The price bottomed in 2003 at $142. It's the law of gravity in the economy of supply and demand: When something is over-supplied, the price has to fall.

The Russians continued to sell about 2 million ounces from the stockpile per year, on top of mine production. Global mine production was roughly 7 million ounces a year. So the total supply was about 9 million ounces while demand was only 7 million ounces. So in a huge surplus situation, the gravity law says the price must continue to fall. That was the conclusion of Allan Williamson in 2003. He was non-reservedly pessimistic in prediction that palladium price should continue to fall, due to continuing massive oversupply condition.

But palladium defied the gravity and rallied off the $142 bottom of 2003, and pushed toward $400, and proved Allan Williamson as well as all other metal analysts wrong. Why was it so? It really shocked me and forced me to research the reason why it defied gravity. And I found many good reasons of why. One of the reasons is as shown on this futures chart, palladium open interest dramatically increased starting in the middle of 2003. Some strong hands started to hoard all the excessive palladium because they see some huge potential in the future. These are not speculators. They have a firm belief in palladium's future, and have been driving price up in the past few years. One of the potential is increased demand of palladium used in jewelries, like in China. But it's way much more than that. I also came to realize that the Russian stockpile is not an infinite supply. It will come to an end. We will then see structural deficit in palladium.

Palladium's many emerging usages relate to the fact that it defies another physics law. It is a solid metal. But it absorbs hydrogen gas, lots of it! Palladium can absorb up to 900 times its own volume of hydrogen. It also absorbs deuterium, a heavier form of hydrogen with an extra neutron in its nucleus. Palladium's absorption of deuterium is extremely important that I will talk about later.

Since palladium absorbs hydrogen, that makes it very useful. Like platinum it can be used as catalyst in many important industry chemical reactions, like oil refinery and fertilizer production, synthetic fiber etc. It is most widely used in autocatalysts to reduce air pollution.

Palladium is also used in hydrogen purification. Both platinum and palladium can be used as catalyst in fuel cell batteries, a red hot industry sector being developed. There are already hydrogen fuel cell vehicles being driven on American roads, and hydrogen refueling stations in New York and Shanghai. Commercial hydrogen fuel cell vehicles will come to the mass market next year. There are also miniature fuel cell batteries, called Direct Methanol Fuel Cell (DMFC), being developed for mobile electronics, like cell phones, laptop computers and digital cameras, providing extremely long lasting battery power, such consumer fuel cell devices will also go to the mass market beginning next year! This will be a great hit because who wouldn't want a cell phone that does not need recharging overnight? See the Fuel Cell Today web site for lots and lots of exciting news stories about fuel cell, and Platinum Today for any news related to PGM metals.

The point is all fuel cells must consume PGM metals as catalyst. So that will be a booming demand to drive PGM metal prices to crazily high levels, which will definitely help the stock prices of SWC and PAL in the long term.

Coincidentally the middle of 2003 was a very important pivotal point for SWC and palladium. Palladium price bottomed in mid 2003 and rallied strongly up, defying gravity. Strong hand investors suddenly become interested in palladium in 2003, and open interest in the futures market boomed. Russian Norilsk acquired 54% stake in SWC, with the blessing of the Bush administration, thus dominate more than 50% of the global palladium market, and Mr. Craig Fuller, former White House Chief of Staff to the senior President Bush, was elected to the Board of Directors of SWC. And in that year President Bush started to pitch hydrogen economy to the nation, and tried to get America weaned of dependency on Middle-East oil. All in the same year.

There was also another coincidence in the year 2003 that few people except maybe the palladium strong hand noticed. That was that there were experimental breakthroughs reported in the field of Cold Fusion, a 1989 science discovery that was too quick to be denounced as science hoax and be dismissed. The repeatable new experiments re-ignited the science community's renewed interests in Cold Fusion. The reseach activities boomed.

That brings us to the last, and most shocking deed of our fairy tale metal, palladium, in totally defying the ultimate physics law, the modern quantum mechanics and nuclear physics. The textbook of physics says that nuclear fusion, where two deuterons fuse into one helium nucleus, releasing tremendous energy doing so, could not happen at room temperature, because the positively charged deuterons will expel each other. You must pack the deuterons to high density and raise to extremely high temperature, let the nucleuses smash into each other at high speed in order to fuse them together against the Coulumb Barrier. How could it be possible at room temperature?

But palladium defied the known physics and proved scientists wrong. Palladium absorbes 900 times its own volume worth of deuterium. When driven by an electric current, the heavily packed deuterium atoms within palladium, with the catalyst of the palladium crystal lattice, was able to fuse and release huge amount of energy. The experiments were done, repeatedly, by the US NAVY researchers and hundreds of other research groups worldwide. Excessive heat and energy was measured, helium was detected, neutron release detected, some experimental instruments blowed up, a successful failure that proved there's huge energy released. There are also amazing YouTube videos showing the effect of cold fusion. You MUST watch the video series The War Against Cold Fusion, part 1, part 2, part 3, part 4 and part 5. Read all about cold fusion on LENR-CANR web, and on New Energy Times.

The business of science is that when experiments are done, repeatedly, defying the theory, it must be accepted as real science and the theorists must scratch their heads to come up with some new physics to explain the experiments. Beginning in 2007, the American Physical Society conducted dedicated Cold Fusion sessions in their March Meetings. They will continue to have Cold Fusion sessions again in March, 2008. Cold Fusion is gaining footstand and is being accepted by the main stream scientific community as a legitimate science.

It's relevant because cold fusion must use palladium. A success soon in commercial cold fusion products, as claimed by private companies like D2Fusion, or by a Russian scientist, will provide humanity with virtually inexhaustible new energy from the ocean water, and overcome the Peak Oil Crisis althgether. But it will also drive the palladium price to unimaginably high level. A residential cold fusion device of the size of a washer machine, containing just 1/10 of an ounce of palladium, will provide your energy need of your whole family for the life of the house and you never have to pay for electricity, natural gas or winter heating ever again. How much you are going to pay for it? I am willing to pay $100K for that device containing 1/10 ounces of palladium. That figures to a palladium price ONE THOUSAND TIMES current gold price.

You would be very glad that you have hoarded some palladium. You would be even happier that you invested in PGM producers SWC and PAL if cold fusion happens. You would regret that you invested in high flying solar companies like First Solar (FSLR) which uses an extremely rare metal tellurium to make solar panels, the business probably will break down due to a tellurium shortage crisis. You would also regret that you followed the mob and invested into expensive and red hot solar players like AKNS AMAT ASTI BTUI CSIQ CSUN DSTI ESLR FSLR HOKU JASO LDK SOLF SPWR STP TSL WFR YGE, a whole bunch names which was once hot, but going no where selling expensive solar panels when governments cut down spending and eliminate solar subsidies. You were chasing those fly fliers but you missed the real alternative energy gem, SWC and PAL. Frankly the whole solar energy sector will not provide us much energy, and will become obsolete when we have virtually inexhaustible cold fusion energy.

So if you are really inteterested in alternative energy play, the absolutely unbeatable future winners will be the little heard about SWC and PAL, due to fuel cell technology and cold fusion development. You need to buy these two stocks while they are dirt cheap right now. I often like to compare SWC in 2007 to PCU in 2003. PCU was bearly profitable in 2003 and stock was flat for 8 years, but it was the best time to get into PCU as it was poised to go on an incredible rally on copper bull.

You also need to contact your Congressional Representatives and Senators, and the President. Urge them to fund and support the cold fusion research and speed up the adaptation of a hydrogen economy, wean us of the dependency on fossil fuel. Cold Fusion is the best and last hope we have to acquire abundant alternative energy source to replace the quickly depleting fossil fuels, saving us from the Peak Oil Collapse. For the sake of the humanity's future, and of course for the sake of our own prosperity for those of us invested in SWC/PAL, we'd better hope that Cold Fusion will be a beautiful dream come true!

Palladium is really a magical and romantic fairy tale Cinderella Metal which the humanity can not live without! It works silently in the catalyst converters of our cars to reduce air pollution; It works in water treatment factories to clean our ground water to save our environment; It provides fuel cells so we can drive pollution free, high energy efficient hydrogen fuel cell cars; It may also provide cold fusion energy to replace our fossil fuel energy sources. It's the nature's best gift to the human race. We should cherish it.

Please buy your loved one a palladium ring for the ThanksGiving, and tell him/her the romantic story of palladium, the Cinderella Metal.

On this ThanksGiving Day, I have a lot to be thankful, among which I am thankful for the existance of this magic metal, and for that I finally learned the facts about the metal, 18 years after I first heard about Cold Fusion in 1989. I am thankful that America is still the world's best country and I wish our prosperity will continue into the future.

Full disclosure: I am heavily invested in SWC and PAL, and I have short positions in FSLR and may also short other over-priced solar players. I hoard palladium metal and tellurium metal.

P.S. This article is now published on Seeking Alpha.

Saturday, November 17, 2007

First Solar Has a Dark Future

First Solar Inc. (FSLR) is a solar panel manufacturer. Its sole business is production of CdTe based solar panels. Its stock price rallied about 10 folds since the IPO about a year ago. I believe the FSLR stock is overpriced. More over, this company has a very dark future prospect if you understand the fundamental of its business. That's because it rely on cadmium telluride as its raw material. Cadmium is extremely toxic, but the mildly toxic tellurium is lethal to FSLR. FSLR is extremely vulnerable due to a possible shortage and price run on tellurium. It could be forced to go out of business in a few years due to competing demands on tellurium.

Tellurium, the No. 52nd element, is extremely rare on earth, rarer even than platinum the No. 78, according to Web Elements. Tellurium's crust abundance is 1 pbb versus 37 ppb for platinum (pbb is "parts per billion"). Tellurium is mainly produced as a byproduct from the anode slime accumulated during copper refining. But not all copper mines contain significant amount of tellurium. Chile produces 1/3 of the world's copper but virtually nothing in tellurium. According to USGS and Arizona State Geologist Lee Allison, the world produces any where from 160 to 215 metric tons of tellurium a year.

Tellurium was traditionally used in metal alloys and other uses. Demand from emerging new applications, like DVD discs, digital camera, computer flash memory and CPU thermoelectric cooling, among other things, has caused a severe shortage in recent years, and drove the price from below $4 a pound to over $100 in 2006, according to Lee Allison. Jack Lifton on Resource Investor suggested that investors could sense the shortage and start to hoard physical tellurium, adding fuel to the fire and causing a huge tellurium price run.

How much tellurium does FSLR use? They use about 7 grams of cadmium and about 8 grams of tellurium in each of the 2 feet x 4 feet CdTe solar panel. That's roughly 135 metric tons per each 1 gig watts (GW) of products. They have signed a bunch of sales contracts with per watt price fixed and mandated to go down 6.5% yearly, and they are aggressively building new factories and expanding production capacity. After finishing a new factory in German they are building 4 brand new factories in Malaysia.

Alright, they have plenty of customers, plenty of sales contracts to keep them busy for 5 or 6 years, and Malaysia has plenty of land for them to build new factories. The growth potential looks like unlimited. That's why investors bid up FSLR stock price like crazy.

But, where are they going to obtain all the new tellurium supplies needed for future expansion, at a price cheap enough to ensure profitability, and a quantity large enough to keep the new factories running? On Nov. 8, 2007, the CFO publicly commented that "We (FSLR) have identified "terawatts levels of tellurium availability". He had no idea what he was talking about. It's rather unfortunate that a CFO would mislead the investor community by such an audacious and outrageous false claim. One terrawatt is 1000 GW. No where on earth this amount of tellurium even exists underground, let alone available in a secret vault some where.

FSLR has a very dark future ahead for itself if a tellurium rush occurs as expected. If you own FSLR stock, sell immediately to avoid a total loss.

Full disclosure: I am short in FSLR and I plan to invest in physical tellurium metal ingots.

P.S. This article is now published on Seeking Alpha, on News Bad, and on The Big Hype. If you know any places else that this occurs, let me know.

On Nov. 24, Arizona Republic published a news article citing my Seeking Alpha article.

Friday, November 16, 2007

I am a Big Fan of Jack Lifton

Jack Lifton is an analyst at Resource Investor. While studying tellurium, I recently noticed a number of articles that Jack wrote. I really like his very insightful thoughts.

I am listing links to his articles here:
Nov. 15, 2007: Minor Metals
Oct. 18, 2007: Critical Metals for the U.S. ...Industries: An Opportunity or Problem?
Oct. 11, 2007: Demand Drivers for Critical Metals: A Report to Congress
Oct. 9, 2007: Tectonic Shift Looming for Rare Earth Market Dynamics
Oct. 4, 2007: Byproducts IV: Rhenium, a Byproduct of a Byproduct
Sep. 28, 2007: Molybdenum Myopia Redux
Sep. 13, 2007: Identifying Peak, Critical and Strategic Metals, Part I: Gallium and Rhodium
July 26, 2007: Why Not to Buy Indium for Speculation
July 19, 2007: Umicore: The Best Way to Invest in Exotic Metals
July 18, 2007: Tantalum: A Tantalizing Commodity Investment Opportunity
July 5, 2007: Consuming Passions and the Composition of the Earth’s Crust
June 14, 2007: Byproducts IV: Gallium
June 7, 2007: Geodex Scooping Up Indium-Uranium N.B. Properties
May 25, 2007: Byproducts III: Rhodium
May 17, 2007: Pick a Technology, any Technology, Please!
May 14, 2007: China Establishes Indium Exchange to Combat Markdowns
Apr. 26, 2007: Byproducts II: Another Germanium Rush?
Apr. 19, 2007: Byproducts Part I: Is There a Tellurium Rush in the Making?
Apr. 12, 2007: How the Global Warming Agenda Affects Critical Nonferrous Metal Demand
Apr. 5, 2007: Experts...Identify Critical Strategic Minerals for Taxpayer Funded Study
Mar. 15, 2007: Critical Mineral Impacts on the U.S. Economy
Feb. 22, 2007: Thorium: An Alternative to Uranium, 2007 Update
Jan. 19, 2007: Tap Into Tantalum
Jan. 11, 2007: Tiomin Reviewing "Strategic Options" for Flagship Project
Dec. 13, 2006: Investing in U.S. Natural Resources, Part 1: A Lithium Supply Crisis

Saturday, November 10, 2007

First Solar and Rare Metal Investments

I am a PGM metal bull. But I am also watching other stocks. I am also bullish on natural gas players. Recently I had been watching the solar sector and paying attention to First Solar, FSLR. While studying FSLR I became interested in a critical metal that FSLR uses, tellurium. Seeing that FSLR is ridiculously overpriced and that its future is confined by the extremely limited tellurium supply, I shorted FSLR, and doubled my shorts before the earnings release, believing that it's performance in past three quarters were lukeworm and there is no way they could have beaten the street. To my surprice, they did put out a smash out quarter, earning 58 cents per share. My shorts were quite under water. But I hold on and shorted more.

Why I hold on with the FSLR short? For one thing anything that raises in a hyperbolic fashion falls back down fast. But more importantly, the smashout quarter seems to be a one time aberration, the next few quarters will be much less impressive due to lower sales price and raising cost. Especially there seems to be some book cooking going on for Q3. I will dig out exactly how the book cooking was done. Here is the earnins conference call transcripts. FSLR is now under a NASD investigation for suspected insider trades.

The CFO of FSLR made a flat out LIE about "terrawatts levels of tellurium availability", on the Nov. 8th Pacific Growth Equities Clean Technology & Industrial Growth Conference. Here is the audio recording. The comment occured at 22'58". The exact words are "We have identified terrawatts levels of tellurium availability".

About tellurium, there are a few interesting articles. Invested in tellurium yet. And this one: Arizona Tellurium Rush. I think I might consider buying some physical tellurium. But this thing is toxic so caution is warranted.

Here are some good readings related to tellurium:
Global tellurium statistics by USGS.
Is There a Tellurium Rush in the Making?
Arizona Tellurium Rush.
An article on Mining Journal Review.
Phase change memory from Intel later this year
Panasonic says that its 100GB Blu-ray discs will last a century
Thermo material may replace heat sinks, fans in electronic gear
Imation HD DVD and Blu ray media
The New Indelible Memories

Do you know DVDs have something to do with tellurium? Read this.

Some one meantioned a tellurium metal vendor. I hope their door not be knocked down by the mobs of want-to-be tellurium investors tomorrow. (Update: They are sold out)
Some one on Seeking Alpha meantioned a list of tellurium vendors. Check it out.

A May 1st, 2007 article on Seeking Alpha: Forget Gold - What About Cobalt? Indium? It recommended a monthly Mining Journal Review, and even a Minor Metal Trade Association in Estonia. Estonia? Interesting! I found out by search "tellurium" on Seeking Alpha.

(to be finished)