Mark Latham Commodity Equity Intelligence Service

Tuesday 23rd June 2015
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    Indonesia seeks to mend fences with wary investors in resources

    Nationalistic policies imposed by Indonesia's previous administration - including a ban on unprocessed mineral exports - threw the resources sector into turmoil last year.

    Now, there are signs under President Joko Widodo that the government is trying to mend fences with wary investors and entice more money back into resources.

    Indonesia's resources sector contributed about 12 percent of GDP last year, or about $101 billion, but investment slipped and the ban on exporting minerals cost $6 billion in lost revenue.

    The government now plans to relax parts of the ban, as well as pushing to resolve some protracted mining disputes and dealing with a backlog of expiring energy contracts that have frustrated foreign investors.

    "There are still lots and lots of difficult hurdles to overcome, but we are seeing something of a change in mindset and that's good news," said mining law expert Bill Sullivan, foreign counsel at Christian Teo Purwono & Partners.

    The more open approach was on show at a recent global coal conference in Bali, where Indonesia's energy and mining minister, Sudirman Said, candidly answered questions on a host of issues concerning the packed auditorium after his speech.

    While supporting the plans, Widodo's government now admits there were mistakesimplementing them and is looking to push back a 2017 deadline banning copper concentrates exports and could ease its ban on bauxite exports.
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    The person in charge of IPOs and share offerings in China was just arrested

    One of China's top stock market regulators has been arrested.

    The head of the division in charge of IPOs on the Shanghai and Shenzen stock markets, Li Zhiling, is accused of violating rules and letting her husband trade stocks, according to a statement by the China Securities Regulatory Commission (CSRC).

    Li has been in charge of approving IPOs on the Chinese stock market, as well as requests by companies to sell additional shares, since 2014.

    “She’s suspected of breaking the law by taking advantage of her position,” said a statement by the CSRC posted on Weibo. “Once we discover such violations, we will immediately take action to punish them. We do not take this lightly.”

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    Li-ion: change manufacturing method not design?

    Chiang and Wilder are about to embark on a third round of investment, seeking $20 million to $30 million. They would spend the money to scale up to production of a new machine that makes a cell every two to ten seconds. This machine, to be available for sale in two years, would be for stationary electric batteries—used to power businesses, neighborhoods and utilities, rather than cars.

    The machine would have a capacity of 79 megawatt-hours a year and produce any kind of lithium-ion battery for a cost of about $160 per kilowatt-hour. By 2020, Chiang says, that will be down to about $85, 30% below where conventional lithium-ion batteries—whose cost is also dropping—may be by then. But most importantly, the machine would be priced at about $11 million. Hence, the startup cost of getting into lithium-ion battery manufacturing would plummet. “It’s so far out of the paradigm, you just don’t believe it,” said Wilder.

    If 24M creates this machine, and if it can sell it into the market—an entirely different question—it will clearly shake up big industries, including stationary and electric car batteries, not to mention utilities. How quickly is anyone’s guess.

    Chiang seems ambivalent as 24M begins to disclose what it’s been doing all these years. Until now, the entire industry has had a singular idea of how batteries are manufactured. Chiang’s own rivals were, until today, convinced that he was on a far-fetched crusade to figure out flow batteries.

    But now, if they look hard at what he is really doing, and accept his approach, they may attempt to copy him. “If you haven’t seen the movie play out before, you don’t have the confidence it can be done,” he said. But staying a step ahead is also part of the startup game.

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    Economic Strength: San Diego

    San Diego County's economy is continuing its strong start to 2015, a report released Thursday by the University of San Diego says.

    The university's index of leading economic indicators measures six factors related to the region's growth, including the labor market, building permits, stock prices and consumer confidence. All six of the economic factors were positive in April, the third time this year that has been the case.

    "This shows that the economy is going to be strong for the rest of 2015 and into 2016," said University of San Diego economist Alan Gin.

    The index, a composite of those measures, rose 0.9 percent from March to 138.9 in April. It's now approaching its record 144.2 set in March 2006. The monthly measure bottomed out at 100.7 in March 2009.

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    Sixth mass extinction 144x greater than any previous event.

    The world is embarking on its sixth mass extinction with animals disappearing about 100 times faster than they used to, scientists warned Friday, and humans could be among the first victims.

    Not since the age of the dinosaurs ended 66 million years ago has the planet been losing species at this rapid a rate, said a study led by experts at Stanford University, Princeton University and the University of California, Berkeley.

    The study "shows without any significant doubt that we are now entering the sixth great mass extinction event," said co-author Paul Ehrlich, a Stanford University professor of biology.

    And humans are likely to be among the species lost, said the study -- which its authors described as "conservative" -- published in the journal Science Advances.

    "If it is allowed to continue, life would take many millions of years to recover and our species itself would likely disappear early on," said lead author Gerardo Ceballos of the Universidad Autonoma de Mexico.

    The analysis is based on documented extinctions of vertebrates, or animals with internal skeletons such as frogs, reptiles and tigers, from fossil records and other historical data.

    The modern rate of species loss was compared to the "natural rates of species disappearance before human activity dominated."

    It can be difficult to estimate this rate, also known as the background rate, since humans don't know exactly what happened throughout the course of Earth's 4.5 billion year history.

    For the study, researchers used a past extinction rate that was twice as high as widely used estimates.

    If the past rate was two mammal extinctions per 10,000 species per 100 years, then the "average rate of vertebrate species loss over the last century is up to 114 times higher than it would be without human activity, even when relying on the most conservative estimates of species extinction," said the study.

    "We emphasize that our calculations very likely underestimate the severity of the extinction crisis because our aim was to place a realistic lower bound on humanity's impact on biodiversity."

    - See more at:
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    Oil and Gas

    Origin Energy's APLNG project faces headache as Sinopec said unable to take gas

    Sinopec, which is contracted to buy almost all the LNG from APLNG, is said to have suffered delays to the import terminal it is building to receive the gas. 

    Serious doubts have arisen over the ability of the biggest customer for Origin Energy's $24.7 billion liquefied natural gas project in Queensland to take delivery of the gas, leading to speculation the Chinese buyer may seek to slow the ramp-up of production, causing a hit to Origin's 2015-16 earnings.

    The risks come just months ahead of the long-awaited start-up of the Australia Pacific LNG project, which has been in construction for more than four years and has stretched Origin's balance sheet almost to the limit.

    If demand is weak in China and the spot market is also weak it may not be a terrible outcome for offtakers to consider using a take-or-pay provision, waiting for a time that their markets improve.

    The problems lie partly in reported delays in the construction by Sinopec of an import terminal in the southern Guangxi province to receive the gas.

    But a broader difficulty lies in the unexpected weakness in Chinese gas demand because of high local prices, which means that Sinopec would have difficulty selling it to end-users or finding alternative buyers.

    Trade publications in Asia have suggested Sinopec may seek to slow the ramp-up of output at APLNG, or may defer taking commercial deliveries of gas. Otherwise it may seek approval from the APLNG venture to re-sell LNG into Asia, which could result in a loss because oversupply has depressed spot prices.

    Production from APLNG, 25 per cent owned by Sinopec, is due to commence next quarter. Some 7.6 million tonnes a year of the 8.6 million tonnes a year capacity is due to be shipped to China, with Kansai Electric taking the rest.

    An Origin spokeswoman played down the concerns, pointing to the long-term "take-or-pay" nature of the sales contracts, which mean the LNG has to be paid for by the buyers even if they don't take the gas.

    In an analysis of potential outcomes, Credit Suisse energy analyst Mark Samter calculated that if all the LNG had to initially be sold on the spot market instead, fetching a price $US2 per million British thermal units lower than the contract price, then Origin's earnings per share for 2015-16 would be cut by 18 per cent.

    Sinopec would need approval from APLNG to be able to re-sell the gas outside of China but that would depress prices in the already weak spot market.

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    Russia's Bashkortostan to get stake in Bashneft oil firm- Interfax

    Russian President Vladimir Putin has signed a decree on transferring a 25 percent plus one share stake in medium-sized oil producer Bashneft to the region of Bashkortostan, Interfax news agency said on Monday.

    A Moscow court transferred shares in Bashneft from Sistema - a conglomerate owned by billionaire businessman Vladimir Yetuvshenkov - to the state last year after ruling its privatisation was unlawful. Bashneft is based in Bashkortostan in Russia's Ural mountains.
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    Lukoil to use cash flow on projects, dividends, loans-VP

    Russian oil producer Lukoil plans to use its cash flow for its most effective investment projects, dividends and paying off loans, Lukoil's vice president for finance said on Monday.

    Alexander Matytsyn also said the oil firm, Russia's second largest, had been handed a five-year loan worth 350 million euros ($398 million) from Italy's Unicredit bank in the spring but that it did not plan to borrow any big sums during the rest of the year.

    Lukoil's cash flow stood at $750 million in the first quarter.
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    Output at Groningen gas field to be capped at 30 bcm in 2015

    Dutch Economy Minister Henk Kamp will propose a further tightening of production at Groningen, Europe's largest gas field, the Dutch news agency ANP reported on Monday, sending European gas prices higher.

    Output at the gas field, the world's 10th largest, will be capped at 13.5 billion cubic metres (bcm) in the second half of this year and at 30 billion bcm for the whole of 2015, ANP said.

    In February Kamp had ordered production to be cut to an annualised rate of 33 bcm for the first half of the year, from 39.4 bcm previously, after the Safety Board said gas companies, regulators and the government had all failed to take the threat of earthquakes seriously enough.

    The report of a production cut of 3 bcm in the second half of 2015 led to a tightening of liquidity on the Title Transfer Facility (TTF) gas hub and sent prices in Europe higher.

    A government spokeswoman declined comment on the figures. A formal decision was expected on Friday. A spokesman for the NAM Shell /Exxon Mobile joint venture, which exploits the Groningen field, was unavailable for comment.

    Speculative buying by banks and traders drove gas prices higher on Monday, despite weak underlying fundamentals in regional gas markets, which are heavily oversupplied.

    "There are no numbers to click on the TTF," one trader said, referring to a trading platform that enables buying or selling of gas at the Dutch gas trading hub.

    "It seems like every trader is waiting, nobody wants to offer, they are waiting to see which way the market will move."

    Dutch gas prices at the TTF hub were higher in early afternoon trade. The July contract was up 1.48 percent at 20.60 euros per megawatt hour, while the September contract gained 1.63 percent, also to 20.60 euros/MWh.

    The NBP Winter 2015 contract rose 1.9 percent to 48.65 pence per therm while the 3Q 15 contract climbed 2.7 percent to 43.50 pence per therm.

    The ANP report, citing anonymous sources in The Hague, said the latest decision was based on a projection that temperatures will remain mild this year and that demand can be met by tapping 3 bcm in overcapacity at the Norg storage facility in Drenthe.

    In a conflicting report, local television channel RTV Noord said Kamp would propose a production cap of 33 bcm.
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    Carlyle Invests $500 Million in South Asia Focused Magna Energy

    Carlyle Group LP said it plans to invest up to $500 million in a South Asia-focused energy company led by former Cairn Energy Plc executives.

    The equity investment in unlisted Magna Energy Ltd. will help the U.K. company develop its oil and gas projects across the Indian subcontinent, Carlyle said in a statement.

    Magna was founded in 2013 by Mike Watts and Jann Brown, former executives of Cairn Energy, for oil and gas development and production, with a secondary focus on exploration.

    “We believe there is strong growth potential in countries such as India, Bangladesh and Myanmar, which seek to grow their local energy markets,” the two Magna executives said in a statement.

    Watts and Brown stepped down from Cairn in April last year amid a tax dispute with India. The country’s tax authorities have claimed that Cairn failed to pay sufficient tax on its $2 billion sale of shares in Cairn India Ltd. in December 2006. Cairn disputes the tax claim.

    Funding for the Magna investment will come from Carlyle International Energy Partners, a fund that focuses on oil and gas investments in Europe, Africa, Latin America and Asia.

    In April, Carlyle reported a 5.4 percent drop in first-quarter profit, weighed down by lower fees from managing hedge funds and by losses on its energy holdings. Carlyle’s largest announced investment in South Asia was the 2007 purchase of a $607 million stake in Indian home-loans provider Housing Development Finance Corp., according to data compiled by Bloomberg.
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    U.S. industrial natural gas usage falls unexpectedly

    U.S. industrial natural gas usage falls unexpectedly

    U.S. manufacturers have not soaked up as much excess shale gas in the first half of 2015 as expected, but the shortfall may be an anomaly as a Gulf Coast manufacturing boom is poised to insulate the sector from seasonal demand fluctuations.

    Average industrial demand for gas in 2015 was expected to increase nearly 4 percent over 2014, according to federal energy forecasts. But almost halfway through the year, it has eased about 1 percent to 21.7 billion cubic feet per day from 22 bcfd a year earlier, according to Thomson Reuters Analytics.

    The primary reason for the decline was a milder winter this year than last year's brutal cold in the heavily industrialized U.S. Midwest and Gulf Coast.

    "The industrial sector has become more temperature-sensitive over the years, so it's not surprising industrial demand was a little disappointing this winter," said Kyle Cooper, managing director of research at energy consultancy IAF Advisors in Houston.

    Experts, however, expect the industrial sector to become less weather-sensitive as more manufacturing facilities enter service along the Gulf Coast, where heating is in less demand than in the Midwest.

    Power generators and manufacturing companies will consume most of the gas in the United States over the next 25 years, according to the U.S. Energy Information Administration. So far this year, however, only the power sector had gobbled up its share of near-record output from shale fields.

    Power generators accounted for 33 percent of U.S. gas consumption, burning on average 23.9 bcfd so far in 2015. That compared with 20.1 bcfd a year earlier and a 10-year average of 19.0 bcfd.

    With the retirement of dozens of U.S. coal plants for economic and environmental reasons, power generators used near-record amounts of gas this year because the fuel was relatively cheap.

    Futures at the Henry Hub benchmark supply point in Louisiana averaged $2.77 per million British thermal units so far this year, the lowest since 2012. That compared with $4.66 per mmBtu for the same time in 2014.

    And the market expects prices to remain low for years as shale gas output grows, with futures trading below $4 through 2022.

    Plentiful and affordable gas supplies from shale plays have transformed the United States from one of the world's highest-cost producers 10 years ago to among the lowest-cost today.

    Chemical companies alone expect to spend more than $100 billion to build or expand more than 200 U.S. projects and create more than 300,000 jobs by 2023, according to the American Chemistry Council lobbying group.

    "The boom in industrial demand will not take off until 2017 to 2020, when many new manufacturing facilities, especially chemical plants, enter service," said Gregory Shuttlesworth, executive director of natural gas at consultancy PIRA Energy Group in New York.

    The EIA said it expected U.S. industrial companies to continue to consume about 30 percent of the nation's gas over the next 25 years, compared with more than 35 percent 15 years ago.
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    Continental looks for Canyon shale exit

    Shale giant Continental Resources is marketing its entire position in the "stealth" Canyon shale of Texas.
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    Itochu Exits U.S. Shale Selling Biggest Energy Purchase for $1

    Itochu Corp. ended its $1 billion foray into U.S. shale by selling its 25 percent stake in Samson Resources Corp. back to Samson for $1.

    The sale reverses the Japanese trading company’s biggest purchase of an energy asset when it was made in 2011. The decision to exit was made because of the state of operations at Samson and the outlook for gas prices in North America, the Tokyo-based company said in an e-mailed response to questions.

    Since joining with KKR & Co. to buy Samson in what ranked as the biggest leveraged buyout of an oil and gas producer at the time, Itochu has written down all of the 78 billion yen, worth $1.04 billion at the time, it spent on shares of Tulsa, Oklahoma-based Samson. U.S. gas prices fell to the lowest level in more than a decade in 2012, while crude oil halved in price last year.

    With bets on commodities misfiring, Japan’s third-largest trading house is relying on other businesses for momentum. The investor in Dole-brand fruit and Paul Smith fashionwear expects to post a record annual profit of 330 billion yen ($2.7 billion) this fiscal year ending in March 2016.

    Rival Japanese trading companies have also lost money on their U.S. shale investments. The losses from one investment in U.S. shale pushed Sumitomo Corp. to declare its first net loss in 16 years in the fiscal year ended March.

    Itochu’s writedowns on the Samson asset were spread over several years. As such, the book value of the asset was already at zero and the sale will have no impact on Itochu’s net income target for this year, the company said.

    Itochu said it will be “extremely careful” with any future investment in U.S. shale and make a close investigation of risks associated with development and energy prices.
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    Energy XXI sells Gulf pipeline system for $245 million in cash

    Energy XXI will sell a subsea pipeline system in the shallow waters of the Gulf of Mexico for $245 million as part of a broader campaign to shed assets and increase cash.

    The offshore oil company, headquartered in Houston, will sell its Grand Isle Gathering System, which moves oil and water from six of Energy XXI’s offshore fields and one field run by ExxonMobil. CorEnergy, a real estate investment trust that owns pipelines and other midstream facilities, plans to pay for the assets in cash. The deal, which is expected to close by the end of the month, boosts Energy XXI’s liquidity to $1 billion.

    The announcement is the first step in the company’s previously announced strategy to move away from pipelines and non-core exploration and production assets.

    Energy XXI will continue operate the 153-mile pipeline system, which includes the Grand Isle terminal near the company’s shore base operations. In addition, the company will earn revenue by transporting oil for other companies.

    “Continuing to maintain operatorship of the (system) is important to us, ensuring transportation of a significant portion of our production, ” CEO John Schiller said in a statement.

    Meanwhile, the company also announced Monday that it reached an accord with federal regulators to double its insurance covering potential liabilities associated with decommissioning offshore facilities and plugging and abandoning wells.
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    Alternative Energy

    SoftBank, partners eye $20 bln investment in Indian solar projects

    Japan's Softbank Corp , together with Bharti Enterprises and Taiwan's Foxconn , will invest about $20 billion in solar projects in India, in one of the biggest investment pledges to date in the country's renewable energy sector.

    Softbank, which previously said it would invest $10 billion in India over time, said on Monday the companies had agreed a minimum commitment of generating 20 gigawatts of energy.

    SoftBank will have majority control in the newly formed company, SBG Cleantech, with Bharti and Foxconn as minority stakeholders.

    "India has two times the sunshine of Japan," Softbank Chief Executive Masayoshi Son told reporters in a conference.

    "The cost of construction of the solar park is half of Japan. Twice the sunshine, half the cost, that means four times the efficiency."

    Son said the timeline for investments would depend on state and central governments and on acquiring land needed for the plants.

    The rapidly falling cost of solar power, expected to reach parity with conventional energy by 2017, has ignited interest in its potential in India, as the country steps up its own efforts to encourage investment in renewable energy.

    Despite more than 300 days of sunshine a year, India relies on coal for three-fifths of its energy needs, while solar supplies less than 1 percent.

    On Monday, Son said Foxconn would help with planned solar equipment for the projects. The companies are looking at manufacturing equipment in India, a further boon for Modi who has sought to boost the portion of equipment made at home.

    "India can become probably the largest country for solar energy," Son said.
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    US DOE announces new clean energy initiatives

    The US Department of Energy has announced several new and expanding initiatives as part of the Administration’s Clean Energy Investment Summit, including the launch of a Clean Energy Impact Investment Centre (CEII), which will work to make the Department’s resources more readily available to the public, as well as mission driven investors.

    Clean energy finance is a key part of the solution set on climate change. The announcement builds off the Clean Energy Investment Initiative that was announced by Senior Advisor Brian Deese at the ARPA-E Summit in February 2015, highlighting expanded private sector investment in solutions to climate change, including innovative technologies with breakthrough potential to reduce carbon pollution.

    “The US and other countries are providing substantial financial support to the development and commercialisation of clean energy technologies but, if we are to achieve our climate goals, it is imperative that we find ways to incentivise the global capital markets to invest in clean energy,” said Energy Secretary Ernest Moniz. “The US government is addressing the need for new financing through a variety of programmes that support clean energy technology through the research and development, demonstration, and deployment stages.”

    The CEII centre will provide technical assistance, a single point of access for information, connections to other relevant government programmes across the Administration, and consolidate public information on early stage projects and companies that are currently engaged in partnerships with DOE. Moving forward, DOE will work to mobilise a broad range of philanthropists and impact investors to scale up investments throughout the energy innovation pipeline, from laboratory R&D to start up funding to growth stage financing.
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    Japan is building huge floating solar power plants

    Japan has been working to shift more of its energy generation to renewable sources in the years since the Fukushima nuclear plant disaster, aiming to double its renewable energy output by 2030. In that rush, the country has come up with some smart ways to install distributed solar power. The latest idea has been to develop floating solar power plants that cover small inland bodies of water like ponds and reservoirs.

    Solar power company Kyocera has been leading the charge and just recently launcheda solar power plant
    that floats on a reservoir and will produce about 2,680 megawatt hours per year, enough for 820 typical households. The installation consists of almost 9,100 waterproof solar panels atop a float made of a high-density polyethylene.

    Kyocera previously installed this technology in two smaller power plants over ponds earlier this year.

    Why make floating solar power plants when the land-based ones do just fine? Well, there are three major benefits to marine solar tech. The first is that they don't take up any land space. In Japan where cities are dense and rooftop solar has really taken off, water-based solar power is another way to rack up some clean energy, without taking up extra space.

    The second, and most important, is that the water helps the solar panels perform better. The water keeps the panels cool, which makes them operate more efficiently and helps them last longer.

    The third benefit is to the body of water itself. When panels are placed over reservoirs, they discourage water evaporation and algae growth, both of which keep the reservoirs fuller and healthier.

    Kyocera has even bigger plans for floating solar power. The company is working on a 13.4-megawatt project on the Yamakura Dam reservoir, which will be the largest floating solar installation in the world when it starts operation in March 2016.

    The plant will be comprised of approximately 50,000 Kyocera modules over a water surface area of 180,000m2. It will generate about 15,635 megawatt hours (MWh) per year, the equivalent of the energy demand of 4,700 typical households.
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    250 UK wind projects to be cancelled

    Around 250 onshore wind projects already in development are likely to be cancelled because the Government is ending subsidies which would aid their completion, Energy Secretary Amber Rudd has announced.

    The cancellation of subsidies for onshore wind offered under the Renewables Obligation (RO) is likely to mean that 2,500 turbines which were due to be built are scrapped, Ms Rudd said.

    She said consumer bills will not rise and insisted the move would save taxpayers hundreds of millions of pounds in subsidies that would otherwise have been paid out to energy projects.

    Acting on a Tory manifesto commitment to scrap subsidies for onshore wind, the Government is closing the RO to new projects from April next year.

    Ms Rudd said a grace period was put in place, allowing projects which had planning consent, a grid connection and land rights by June 18 to continue to be supported under the RO.

    But the 250 projects delivering 2,500 turbines do not meet this criteria and are now “unlikely to be built”, she said.

    The Energy Secretary told the Commons: “By closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs.
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    New wind turbine material to mimic owls

    A new material that could make wind turbines and even aircraft quieter by mimicking the design of owls’ wings that allows them to silently hunt their prey has been developed by scientists.

    The Cambridge University-led Anglo-American team studied the feathers of the stealthy nocturnal airborne predators to produce the coating, due to be unveiled at a US conference today.

    Because of the noise they make, wind turbines are often braked to make them turn more slowly and quietly, but the team behind the new material say that it could enable the machines to turn faster and boost their output without increasing noise as a side-effect.

    “Many owls – primarily large owls like barn owls or great grey owls – can hunt by stealth, swooping down and capturing their prey undetected,” said Professor Nigel Peake of Cambridge’s department of applied mathematics and theoretical physics, who led the team.

    “While we’ve known this for centuries, what hasn’t been known is how or why owls are able to fly in silence.”

    The team, which also included scientists from Virginia Tech, Pennsylvania’s Lehigh and Florida Atlantic universities, said they used powerful microscopes to look at owl wings. They found that they have a “downy covering” to their flight feathers, plus bristles on their on the leading of their wings and an “elastic fringe” on the trailing edges.

    Prof Peake added: “No other bird has this sort of intricate wing structure. Much of the noise caused by a wing – whether it’s attached to a bird, a plane or a fan – originates at the trailing edge where the air passing over the wing surface is turbulent. The structure of an owl’s wing serves to reduce noise by smoothing the passage of air as it passes over the wing – scattering the sound so their prey can’t hear them coming.”

    The discovery enabled the team to make a 3D printed plastic cover for a wind turbine, which reduced the noise it generated in wind tunnel tests by 10 decibels. They believe it can be adapted for other types of wings and blades and want to move on to improve the coating further and test it on a working turbine.

    Their research, funded by the US National Science Foundation and the US Office of Naval Research, will be unveiled later at the American Institute of Aeronautics and Astronautics (AIAA) Aeroacoustics Conference in Dallas, Texas.
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    French nuclear watchdog upsets industry with straight talk

    The head of France's nuclear watchdog has upset the industry by taking an increasingly assertive approach that critics say could jeopardise efforts to win more business overseas.

    The tensions at the top of a key French industry bring into focus the role of the ASN, an independent body set up in 2006, whose decisions can cost nuclear companies billions of euros.

    The ASN shocked the country's mainly pro-nuclear establishment in April when it disclosed that state-controlled Areva had found weak spots in the steel of its flagship European Pressurised Reactor (EPR) which is being built in Normandy.

    ASN head Pierre-Franck Chevet made no attempt to play down the importance of the anomalies in a series of subsequent media interviews, calling them "serious, even very serious."

    Chevet's decision to be so vocal about his concerns rather than wait for the outcome of further tests ruffled feathers in an industry which accounts for about 100,000 jobs across France.

    Nuclear provides around 75 percent of France's electricity but times are hard after the 2011 Fukushima disaster in Japan prompted concerns about the technology in a number of countries.

    Areva has lost money for four consecutive years and is going through a major restructuring, with fellow state-owned EDF poised to buy its nuclear reactor arm.

    Chevet's intervention prompted retired EDF executives to write him an unusually blunt letter, calling the ASN's decision to go public on the EPR's problems an "abuse of power".

    "Allowing oneself to publicly heap opprobrium on the industrial abilities of a national economic player like Areva based on fragile presumptions at a strategic moment in its history does not seem to be in the remit of ASN," wrote André Pellen, a former member of EDF's national crisis team.

    Although the ASN's sole responsibility is safety, its decisions can have material consequences for Areva and EDF.

    Chevet said the French industry should see the close supervision as a guarantee of quality.

    For Yannick Rousselet of Greenpeace France, the increasingly blunt tone is due to the responsibility of supervising a country with 58 nuclear reactors in a post-Fukushima world, rather than to Chevet's personality.

    "He does not want to be the guy who wakes up tomorrow having the responsibility to deal with an accident like Fukushima."
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    WHO unit finds 2,4-D herbicide 'possibly' causes cancer in humans

    A widely used farm chemical that is a key ingredient in a new herbicide developed by Dow AgroSciences "possibly" causes cancer in humans, a World Health Organization research unit has determined.

    The classification of the weed killer, 2,4-dichlorophenoxyacetic acid, known as 2,4-D, was made by the WHO's International Agency for Research on Cancer (IARC).

    The IARC said it reviewed the latest scientific literature and decided to classify 2,4-D as "possibly carcinogenic to humans." That is a step below the more definitive "probably carcinogenic" category but two steps above the "probably not carcinogenic" category.

    IARC's findings on 2,4-D have been awaited by environmental and consumer groups that are lobbying U.S. regulators to tightly restrict its use, as well as by farm groups and others that defend 2,4-D as an important agent in food production that does not need more restrictions.

    Since its introduction in 1945, 2,4-D has been widely used to control weeds in agriculture, forestry, and urban and residential settings.

    In March, IARC said it had found another popular herbicide -glyphosate - was "probably carcinogenic to humans." Glyphosate, the world's most widely used weed killer, is the key ingredient in Monsanto Co's Roundup herbicide and other products.

    IARC classifications do not carry regulatory requirements but can influence regulators, lawmakers and the public. Following the glyphosate classification, some companies and government officials moved to limit glyphosate use.

    Dow AgroSciences, a unit of Dow Chemical Co, has had a particular interest in IARC's review. The company is using both glyphosate and 2,4-D in a herbicide it calls Enlist Duo that received U.S. approval last year. Enlist Duo is designed to be used with genetically engineered, herbicide-tolerant crops developed by Dow.

    Dow said in a statement that IARC's classification was flawed and was "inconsistent with government findings in nearly 100 countries" that have affirmed the safety of 2,4-D when used as labeled.
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    Egyptian Cotton: A disappearing crop

    Egyptian cotton once dominated the colonial economy in the age of Queen Victoria, eventually becoming the gold standard for the world’s finest linens and clothing. Two centuries later, everyone from Martha Stewart to Christian Dior still prizes the supple fiber for its softness and durability.

    In Egypt, not so much. Farmers are abandoning a crop that was as much a part of the nation’s identity as the Pyramids. They’re switching to grains because long-fiber cotton isn’t profitable without government aid, and cash subsidies are ending as the country wrestles with one of the biggest budget deficits in the Middle East. Production probably will tumble 35 percent in the next season to the lowest on record, the U.S. Department of Agriculture said.

    “The quality characteristics are unique,” said Andrei Guitchounts, director of trade analysis at the International Cotton Advisory Committee in Washington. “If they lose this production, I don’t think any other producer can replicate it.”Image title

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    Base Metals

    Chile environmental regulator eyes sanctions for Teck copper mine

    Canada's Teck Resources is facing sanctions that could include revoking its permit over environmental infractions at its Carmen de Andacollo copper mine in Chile, the local regulator said on Monday. 

    Problems at the mine, located in the north-central region of Coquimbo, included openings in the deposit where the ore was stored and a failure to build sufficient water infrastructure, the regulator said in a statement. Some of the charges were classified as "serious," which carries a maximum penalty of a $4-million fine or the withdrawal of the project's environmental permit. 

    Teck is reviewing the regulator's notice and will respond "appropriately," a spokesperson said in an emailled response to questions from Reuters. "We take this issue very seriously and will work to address any concerns identified," Teck spokesperson Chris Stannell said. 

    Carmen de Andacollo is one of Teck's five copper mines, and contributed nearly 6% of the miner's total 2014 revenue. The announcement of the sanctions process comes at a time when many miners operating in Chile, the world's top copper exporter, are trying to accommodate community concerns, against a backdrop of increased activism and a tougher stance on environmental damage by courts and government. 

    Teck has ten days to present its plan to address the issues or 15 days to provide evidence.
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    Royal Nickel chooses Swedbank Norway to advise on $600m bond financing

    Base metals project developer Royal Nickel Corporation (RNC) has appointed Swedbank Norway (Swedbank) as adviser for a senior bond financing of about $600-million, with a five-year maturity, for its Dumont nickel project, in the Abitibi region of Quebec. 

    Swedbank would work closely with RNC to arrange the senior project bond finance facility and support RNC’s efforts to secure the further equity and other capital required to complete the financing in international markets. 

    "With the receipt of the main environmental permit expected before the end of this month, we are now focusing on the final task of raising sufficient financing to begin construction of Dumont, which is expected to be one of Canada's largest base metals mines,” RNC president and CEO Mark Selby said. 

    Swedbank and the company were planning to complete both the cornerstone financing and the rest of the capital required to allow construction to start at Dumont by early 2016. “Dumont will be well-positioned to take advantage of the significant improvements expected in the nickel markets through the balance of this decade,” Selby said.

    The project was expected to cost $1.2-billion to develop, but could attract the attention of mining majors looking to replace dwindling resources. Last month, Australian diversified miner Sirius Resources announced that Independence Group would acquire its Nova Bollinger mine for $1.4-billion – a projecrt pale in comparison with Dumont. 

    When in production, Dumont would rank as the fifth-largest nickel sulphide operation in the world by yearly output 33 000 t/y in the first phase, and 54 000 t/y when the second-phase expansion had been completed. Only the mining operations at Norilsk (Russia), Jinchuan (China), Sudbury (Ontario, Canada), Voisey’s Bay (Newfoundland and Labrador, Canada) would be larger.
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    Steel, Iron Ore and Coal

    Steel Dynamics forecasts fall in quarterly profit

    Steel Dynamics Inc forecast a drop in second-quarter adjusted profit, citing a fall in average selling prices due to steel imports staying higher than anticipated.

    The company's shares fell nearly 2 percent to $20.99 in premarket trading on Monday.

    The steelmaker said it expected adjusted earnings of 20-24 cents per share for the current quarter, significantly less than the 31 cents per share it earned in the same period a year ago.

    The dollar's strength over the past few quarters has left U.S. steelmakers reeling as cheaper imports from China, the biggest producer of the metal, flood the U.S. market, hurting prices.

    Nucor Corp, the No. 1 U.S. steelmaker by market capitalization, also forecast a fall in quarterly profit last week.
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