Mark Latham Commodity Equity Intelligence Service

Thursday 30th July 2015
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    Vedanta reports $136 mln Q1 profit, looks to restart Goa mines

    India's Vedanta Ltd said on Wednesday its quarterly profit more than doubled from a year-ago comparison weighed down by a one-time charge, and that it was on track to restart mining in key producing state Goa after monsoons.

    The mining and energy group, which has been hit by a slump in crude prices and mining bans in key producing states, posted a consolidated net profit of 8.66 billion rupees ($135.61 million) for its fiscal first quarter to June 30.

    That compared with a profit of 3.76 billion rupees in the same period last year, which was hurt by a one-time charge of 21.28 billion rupees.

    Excluding the impact of one-off charge, the company's first- quarter profit was 35.4 percent lower than a year earlier.

    Consolidated net sales fell marginally to 169.52 billion rupees from 170.56 billion at Vedanta, which has interests in oil and gas, iron ore, zinc, copper, power and aluminium.

    Chief Executive Tom Albanese said the company saw continued volatility in commodity prices in the first quarter.

    "We continue to focus on improving efficiency, costs, and enhancing production across our well-invested asset base," he said, adding Vedanta was on track to restart iron ore production at Goa following the monsoons.

    He did not give a specific time frame, but the monsoons in India typically last until September.

    The Indian government cut export tax on low-grade iron ore by a third from June, in a big boost for companies in top exporting state Goa, which is close to restarting its mining industry.

    Vedanta, part of London-listed miner Vedanta Resources Plc , in June made a $2.3 billion offer to buy out minorities in its cash rich oil and gas unit, Cairn India Ltd.

    Albanese told Reuters last week that Vedanta's offer was fair, dismissing reports that opposition from minority shareholders in Cairn India, including ex-parent Cairn Energy , could scupper the deal.

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    Scorpio Bulkers takes major financial hit - Report

    Maritime 360 reported that NYSE-listed Scorpio Bulkers has booked a major write-down on divested newbuilding contracts and remaining orders held for sale.

    The Emanuele Lauro-led company posted a net loss of USD 138.6 million for Q2 15 versus a loss of USD 15 million in Q2 14. Excluding one-time items, the adjusted net loss was USD 16.6 million.

    Losses related to the sale of newbuilding contracts for eight Capesizes, one Ultramax and two LR product tankers, plus write-downs on assets held for sale, totalled USD 119.6 million in the latest quarter.

    Scorpio Bulkers has a remaining orders for 48 bulkers, with USD 994.3 million in yard instalments due in Q3 2015 to Q3 2016. The company has credit agreements to finance all but four of these newbuildings.

    In addition to the 16 vessel contracts it has already sold, Scorpio has four additional newbuilding contracts (for three Capesizes and one Kamsarmax) that are held for sale. These vessels have remaining yard payments due of USD 148.5 million.

    Twelve of the company's newbuildings have already been delivered and 11 additional vessels are chartered-in. Average time charter equivalent rates averaged USD 6,737/day in Q2 2015, down 32% from USD 8,867/day in Q2 2014.
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    Oil and Gas

    PIRA: LNG balances continue to tilt toward supply overhang

    PIRA: LNG balances continue to tilt toward supply overhang

    NYC-based PIRA Energy Group said it believes that liquefied natural gas supply/demand balances continue to tilt toward a major supply overhang.

    While the length in the market has not led to lower spot prices in the past 30 days, the methods required to dispose of incremental LNG supply are becoming more creative, according to PIRA.

    European Gas Price Scorecard

    PIRA said it has argued for some time that this year’s leisurely attitude toward storage accumulation is based on three principles and it believes these principles are still holding in place.

    One is that at least 15 years of gas demand has been lost to a combination of power sector deterioration (renewables), industrial migration to North America (lower gas prices), and efficiency gains (E.U. policy mandates) in the R/C sector.

    These losses have made higher storage injections somewhat superfluous for a market that is not growing and has shown over consecutive winters that the amount of incremental gas demand per heating degree day is dropping.

    Central Asian Gas Major Looks to Ramp Up Gas Usage

    Turkmenistan is currently implementing several major projects aimed at increasing the production and export of natural gas, as well as the projects for deep processing of gas, the country’s Ministry of Oil and Gas Industry and Mineral Resources said July 23.

    The total cost of these projects is $20 billion. Moreover, these projects include the second stage of Galkynysh field’s development, construction of Turkmen sector of the fourth branch of Turkmenistan-China gas pipeline with the total capacity of 30-bcm of natural gas, a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province.
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    Russia's Novatek Q2 net profit up 31 pct to 42 bln rbls

    Novatek, Russia's No. 2 gas producer, made second-quarter net profit of 41.9 billion roubles ($703 million), up 31 percent year-on-year on stronger sales, it said on Wednesday.

    Analysts had expected the firm to post 38 billion roubles in quarterly net profit.

    The company said its revenues were at 112.2 billion roubles, up from 88.4 billion roubles in the same period last year.

    "The growth was mainly due to an increase in liquids sales volumes and net prices in Russian rouble terms," Novatek said. Russian exporters are benefiting from the weak rouble as their sales are mainly denominated in U.S.-dollars.

    In the second quarter of 2015, liquid hydrocarbon sales were up almost 73 percent to 2.9 million tonnes, the firm said.

    Novatek, Russia's largest independent gas producer, said its earnings before interest, taxes, depreciation and amortization (EBITDA) reached 50.2 billion roubles versus 40.3 billion a year earlier.

    Novatek's largest shareholders are its Chief Executive Leonid Mikhelson, businessman Gennady Timchenko and France's Total.
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    Eni swings to loss as low crude prices and Saipem weigh

    Eni SpA swung to a loss in the second-quarter as low crude oil prices and the poor performance of a unit continued to hammer the Italian oil and gas company's financial results.

    Eni had a net loss of 113 million euros ($125 million) in the second quarter, compared with a EUR658 million profit in the corresponding period last year. Revenue fell 19% in the quarter to EUR22.19 billion

    Adjusted net profit, which strips out special items and the change in the value of oil inventories, was EUR139 million, a drop of 84%. Excluding the results of Saipem SpA, Eni's troubled oil and gas services unit, the adjusted net profit was EUR448 million.

    Eni, which is 30%-owned by the Italian government, set its interim dividend on this year's results at 40 European cents. Eni has said its total dividend for this year will amount to 80 cents.

    Production in the second quarter rose 11 % to 1.75 million barrels of oil and equivalent natural gas volume a day. Eni raised its forecast for production growth this year to more than 7% from 5%.

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    Tepco's Q1 LNG use down 5% to 5.13 million mt on weak demand

    Japan Tokyo Electric's LNG consumption fell 5% year-on-year to 5.128 million mt in the first quarter to June as its power sales slipped 1.9% on the year to 58.6 billion kWh, the power utility said Wednesday.

    Slow pick-up in demand from industrial users and growing competition have contributed to the decline in electricity sales for Tepco, the utility said.

    Its use of coal was up 4.9% from a year ago to 1.752 million mt for the three months to June.

    During this quarter, Tepco used 350,000 kl or 24,192 b/d of fuel oil, down 38.5% from a year earlier, while its consumption of crude oil rose 24.5% year-on-year to 146,000 kl or 10,091 b/d.

    Recent drops in oil and LNG prices have helped Tepco to lower Q1 fuel costs to 401.8 billion yen ($3.2 billion), the lowest since the first quarter of fiscal year 2010-2011, Tepco said.

    For the first quarter, Tepco bought 2.1 billion kWh of electricity generated by solar, compared with 1.2 billion kWh for the same period last year.

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    Idemitsu to buy Royal Dutch Shell's 1/3 stake in Showa Shell -Nikkei

    Idemitsu Kosan Co Ltd, Japan's second-biggest refiner, has agreed to buy about a 33 percent stake held by Royal Dutch Shell in fifth-ranked Showa Shell Sekiyu for about 160 billion yen ($1.3 billion), the Nikkei business daily reported.

    The deal will be announced later on Thursday, the Nikkei said.

    Showa Shell shares soared as much as 13 percent on the report, while Idemitsu fell 3 percent.
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    Ecopetrol discovers hydrocarbon in Colombian Caribbean ultra-deepwater

    Ecopetrol has informed that at a depth of 3720 m, the Kronos-1 well verified the presence of hydrocarbons in ultra-deepwater of Colombian south Caribbean area.

    This discovery proves the geological model proposed for an unexplored area with high hydrocarbon potential.

    Kronos-1 is located in block Fuerte Sur, 53 km offshore, where partners Anadarko, operator, and Ecopetrol, each hold 50% interest.

    According to operator's quarterly operations report, after drilling at a water depth of 1584 m, the well reached total depth of 3720 m and encountered a net pay thickness between 40 m to 70 m of gas bearing sandstones. Ecopetrol and Anadarko's integrated technical teams are continuing to evaluate the Kronos discovery results. Nowadays the drilling operation continues, aiming to reach a deeper target to determine possible additional results.

    Juan Carlos Echeverry, Ecopetrol's President, said, "This discovery adds to the one accomplished in December at the Orca-1 well, located in the deep water of Tayrona block offshore Guajira, where we are partners with Petrobras, Repsol and Statoil. These results are very important and confirm the potential of the Colombian Caribbean petroleum system in a vast area and are aligned with Ecopetrol´s new strategy, in which one of the key areas is the exploration on high potential marine basins."
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    Saipem Shares Drop After Unexpected Loss, Profit Target Cut

    Saipem SpA, Italy’s biggest oil and gas contractor, plunged in Milan trading after saying it will cut jobs and exit businesses as writedowns led to an unexpected loss and an earnings-target reduction.

    The company, controlled by Italian oil producer Eni SpA, on Tuesday reported a second-quarter net loss of 997 million euros ($1.1 billion), after total writedowns of assets for 929 million euros. Analysts were expecting a 39.1 million-euro profit.

    “The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term,” Chief Executive Officer Stefano Cao, who replaced Umberto Vergine in April, said in a statement. This “has resulted in clients taking an increasingly rigid approach in the operational and commercial management of contracts.”

    The Milan-based company fell as much as 9.9 percent to 7.34 euros, heading for the lowest closing price since January.

    Saipem expects a loss before interest and taxes of 450 million euros in 2015, compared with a previous forecast of as much as 700 million euros in profit. That marks at least the third time the company lowered its guidance since 2013 and comes after PJSC Gazprom canceled a $2.2 billion Black Sea project earlier this month.

    Saipem plans 1.3 billion euros of savings through 2017, including a workforce reduction of 8,800 people. The company will exit businesses, downsize its presence in Brazil and Canada, where lower-margin contracts led to previous target cuts, and scrap five vessels. It forecasts a net loss this year of 800 million euros.

    Net debt rose to 5.53 billion euros at the end of June. Chief Financial Officer Alberto Chiarini said the sale of bonds or shares are options to cut debt, during a conference call with analysts.

    Brazilian prosecutors allege bribes of artworks and cash were paid on behalf of Saipem, the Italian oil services company, to secure contracts with the Latin American country’s state-owned oil company, Petrobras.

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    Summary of Weekly Petroleum Data for the Week Ending July 24, 2015

     U.S. crude oil refinery inputs averaged about 16.8 million barrels per day during the week ending July 24, 2015, 108,000 barrels per day less than the previous week’s average. Refineries operated at 95.1% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.

    U.S. crude oil imports averaged over 7.5 million barrels per day last week, down by 396,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.5 million barrels per day, 1.0% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 613,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.2 million barrels from the previous week. At 459.7 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 0.4 million barrels last week, but are in the middle of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 2.6 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 0.1 million barrels last week.

    Total products supplied over the last four-week period averaged 20.1 million barrels per day, up by 3.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.5 million barrels per day, up by 6.2% from the same period last year. Distillate fuel product supplied averaged over 3.7 million barrels per day over the last four weeks, down by 3.6% from the same period last year. Jet fuel product supplied is down 3.1% compared to the same four-week period last year.

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    EIA reports sharp drop in US domestic production

                                           Latest week  Last week   Year ago

    Domestic Production ......9,413           9,558        9,443
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    Hess Sees Second-Quarter Loss as Bakken Helps Lift Oil Output

    Hess Corp., which sold off fueling stations and refineries to focus on production, reported its second consecutive quarterly loss as higher oil output failed to compensate for lower prices.

    The second-quarter loss was $567 million, or $1.99 a share, compared with net income of $931 million, or $2.96, a year earlier, New York-based Hess said in a statement Wednesday. Excluding one-time items, the loss was 52 cents a share, less than the 71 cent average of 21 analysts’ estimates compiled by Bloomberg.

    The loss came as the company pumped more oil to make up for crude prices that fell 44 percent from a year earlier. Output rose 23 percent, led by North Dakota’s Bakken Shale where production was up a 49 percent to the equivalent of 119,000 barrels of oil a day.

    Total production rose to 391,000 barrels a day, beating the highest analyst estimate of 361,600 barrels a day.

    Hess also sold a half interest in operations that include a gas-processing plant, a crude rail terminal and rail cars to Global Infrastructure Partners for $3 billion in a deal that closed July 1.

    One-time items for the quarter included a $385 million writedown on the value of onshore U.S. assets. Capital and exploratory spending fell 15 percent from a year earlier to $1.07 billion as the company reduced drilling.

    “We achieved strong operating performance in the quarter and delivered significant and immediate value to our shareholders with the sale of a 50 percent interest in our Bakken midstream assets,” Chief Executive Officer John Hess said in the statement.
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    Range Resources Corporation announces second quarter 2015 results


    • Production volumes reached a record high, averaging 1,373 Mmcfe per day, a 24% increase over the prior-year quarter.
    • Unit costs declined $0.36 per mcfe, or 11% compared to the prior-year quarter.
    • Two Marcellus dry gas wells in southwest Pennsylvania were turned in line, each at 34.2 Mmcf per day, 1.8 Bcf per well of cumulative production in 90 days.
    • Full-year 2015 capital budget of $870 million is on track to deliver 20% annual growth.
    • Spectra's Uniontown to Gas City project is anticipated to open ahead of schedule allowing Range as anchor shipper to move approximately 170 Mmcf per day of net natural gas production, or approximately 28% of its average net second quarter production in the southwest Marcellus, to Midwest markets with improved realized prices.
    • Mariner East I expected to start the commissioning process in late third quarter expanding Range's access to NGL markets outside the Appalachian basin with Range being the only producer directly holding capacity on the project.

    Commenting, Jeff Ventura, Range's Chairman, President and CEO, said:

    'Operational results in the second quarter continued to be excellent, as we lowered costs, improved capital efficiencies, exceeded production guidance and achieved great drilling results, especially in the dry gas area. Conversely, the oversupply of natural gas and NGLs in Appalachia challenged commodity prices during the quarter. Importantly, Range expects relief later this year as two key marketing events are projected to commence -- Mariner East I which is expected to improve our NGL pricing in the fourth quarter and Spectra's Uniontown to Gas City project which is expected to improve our natural gas pricing is anticipated to commence ahead of schedule on August 1st. The Spectra project is expected to be impactful since that capacity would equate to about 28% of our second quarter average net production in our Southern Marcellus Division when it comes on line, while Mariner East I is expected to cover almost all of our propane production and add a major ethane market to our already industry-leading ethane sales portfolio. Both projects are expected to provide substantial pricing improvements for Range.

    'Range is on track to spend $870 million in 2015, approximately $700 million less than 2014, while still generating 20% year-over-year production growth. We believe this makes Range one of the most capital efficient producers in the industry. This capital efficient growth combined with our dry, wet and super-rich drilling inventory across the Marcellus, Utica and Upper Devonian give us great optionality to maximize returns throughout any commodity cycle. We believe this inventory, coupled with our capital discipline and diversified portfolio of marketing arrangements, allows Range to create value as we move forward into an expected better market that balances supply, demand and infrastructure.'
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    Suncor Deepens Spending Cuts for 2015 as Oil Price Languishes

    Suncor Energy Inc., Canada’s largest oil producer, cut its spending plan for 2015 for a second time and eliminated some non-essential projects as part of cost-reduction efforts.

    The company now plans to spend between C$5.8 billion ($4.5 billion) and C$6.4 billion from an earlier range of C$6.2 billion and C$6.8 billion, Calgary-based Suncor said Wednesday Canadian time in a statement on Marketwired.

    Suncor has already cut about 1,000 jobs and previously lowered its 2015 capital budget by C$1 billion while delaying projects to weather collapsing prices. Still, it’s pressing ahead with the C$13 billion Fort Hills oil-sands mine.

    The move to cut spending comes after the price of West Texas Intermediate moved back into a bear market, dropping below $50 a barrel earlier this month for the first time in about a quarter. The U.S. benchmark, averaged about $58 in the second quarter compared with about $103 in the year-earlier period.

    WTI for September delivery was at $48.90 a barrel in electronic trading on the New York Mercantile Exchange, up 11 cents, at 11:32 a.m. Thursday in Sydney.

    Even with the spending reductions, Suncor’s oil sands production in the quarter rose to 423,800 barrel a day from 378,800 barrels in the year-earlier period. The improvement was helped by better operational reliability, the company said.

    Second-quarter net income more than tripled in the quarter to C$729 million as it booked gains from reassessed debt and asset disposals.
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    3 Surprises From Whiting Petroleum Corporation's Earnings Report

    Whiting Petroleum Corporation's unleashed its second-quarter earnings report after the market closed on Wednesday. In that report, the shale-focused driller unveiled a number of surprises for investors. Here are the top three that investors need to know.

    1. Surprise: We made money!
    Before the report, the consensus among Wall Street analysts was that Whiting Petroleum would basically break even during the quarter on an adjusted earnings-per-share basis. However, Whiting earned $9.2 million, or $0.04 per share, which was quite a surprise. Still, earnings per share were down 97% from the year-ago quarter, so there's not a whole lot to celebrate.

    Among the drivers of the surprising profit was better-than-expected production and lower expenses. Overall, Whiting did a solid job cutting costs, with its lease operating expenses falling from $11.85 per barrel of oil equivalent, or BOE, last year to $9.25 per BOE this quarter. Meanwhile, general and administrative expenses fell from $3.13 per BOE to $2.46 per BOE over the past year.

    2. Surprise: We outproduced our guidance!
    As I already mentioned, Whiting Petroleum delivered surprisingly stronger production during the quarter. In fact, its production set a new record at 170,245 BOE per day, which was 2% higher than last quarter and exceeded the high end of the company's guidance. That performance comes even as it sold 8,300 BOE/d worth of oil and gas properties during the quarter. It's the second time this year the company's production exceeded the high end of its guidance.

    Two factors are fueling this stronger-than-expected production. First, the company's Williston Basin operations have been testing larger sand volumes for completions, which is resulting in a 40% to 50% surge in initial production against the previous completion method. The other big driver is the company's DJ Basin field, which delivered a 31% production increase from just last quarter.

    3. Surprise: We're cutting our just-increased capex budget!
    The final surprise might have investors scratching their heads at first glance. That's because just two weeks ago, the company increased its capital budget from $2 billion to $2.3 billion as a result of selling $300 million in assets so far this year. However, it has decided to pull back the reins on its capex budget a bit, as it now plans to spend only $2.15 billion.

    As a result of the reduction, the company expects to run eight drilling rigs during the second half of the year, down from the 11 in the original plan. Further, full-year production growth is expected to be 6.5%, as opposed to the previous plan for 7% production growth. The company doesn't specify a reason for the reduction, but it probably isn't due to financial constraints, as the company boosts of strong liquidity consisting of undrawn borrowing capacity of $4.5 billion on its credit facility, as well as future plans for additional non-cash asset sales. Instead, the cut probably has to do with the slide in the price of oil over the past few weeks, as crude has now fallen more than 20% off its recent peak.
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    Calfrac sees lower activity and pricing in Q2

    Revenue in the second quarter of 2015 was $319.6 million, a decrease of 36 percent from the same period in 2014. The Company's fracturing job count decreased by 30 percent due to lower activity in Canada and the United Stateswhile consolidated revenue per fracturing job decreased by 12 percent primarily due to significantly lower pricing inCanada and the United States, partially offset by an increase in job size and the appreciation of the U.S. dollar.

    Pricing in Canada declined by an average of approximately 20 percent in the second quarter of 2015 from the second quarter of 2014. In the United States, pricing was lower by an average of 30 percent compared to the second quarter of 2014. In Argentina, pricing was down by less than 10 percent as the Company agreed to a pricing reduction during the first quarter of 2015 in light of lower crude oil prices in that market. In Russia, pricing is determined by contract awards which resulted in the Company achieving a nominal pricing increase during the most recent contract renewal process.

    Operating loss for the second quarter of 2015 was $7.0 million, a decline of 116 percent from the comparable period in 2014. Operating income as a percentage of revenue was lower by 1,110 basis points compared to the same period last year due to significantly lower pricing in the United States and Canada, and to a lesser extent, Argentina, combined with lower utilization in the United States.

    Net loss attributable to shareholders of Calfrac was $43.3 million or $0.45 per share diluted, compared to $12.9 millionor $0.14 per share diluted in the same period last year, primarily due to lower pricing for the Company's fracturing services.

    In the second quarter of 2015, Calfrac declared a quarterly dividend of $0.0625 per share.
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    Alternative Energy

    Nuclear Deal Opens Market as Big as France for Iran Wind

    Iran’s quest to rejuvenate its energy industry after decades of sanctions is attracting renewable energy developers eager to plant turbines on windy ridges across the country.

    Since 2012 the government has pushed renewables as an alternative to the fossil fuels that supply 94 percent of its electricity. Developers such as GI Umweltconsult and turbine suppliers including Nordex SE are preparing to enter the market.

    While Iran’s renewables industry is concentrated mainly on hydro plants, the government plans to bolster wind as a way of preserving crude oil for export, and feeding the electricity needs of its more than 80 million people. With an ambition to install 5 gigawatts of renewable capacity by 2020, Iran would rank alongside France and the U.K. as an industry leader.

    “Every kilowatt-hour of extra wind power allows them to export more oil, meaning more foreign currency,” Michael Tockuss, managing director of the German-Iranian Chamber of Commerce, said in an interview in Hamburg.

    Umweltconsult, a renewable energy developer based in Berlin, is planning wind farms requiring investment of 300 million euros ($331 million) in Iran starting next year, Shahnaz Horvath, co-head of the company, said in an interview.

    Iran’s government set its renewable energy target in 2012 and has just 150 megawatts of clean power plants operating now. It adopted Germany’s feed-in-tariff model 10 years ago, granting developers a fixed price for electricity from renewables, and recently boosted the payout for wind by 3.9 percent to 5,300 rials (18 cents) per kilowatt-hour.

    With about 1,000 megawatts of new capacity planned a year, Iran’s onshore wind market may compare with France and the U.K., said Oliver Kayser, spokesman for the German turbine maker Nordex SE. The two European markets have contributed installation of about that much in most years for most for the last decade, according to data compiled by Bloomberg.

    “Iran does have some high-wind locations, for example in the mountainous regions north of Tehran,” said David Hostert, an analyst for Bloomberg New Energy Finance in London.

    Denmark’s Vestas Wind Systems A/S is eager to explore the Iranian market, said Michael Zarin, a company spokesman. The biggest turbine maker has installed 37 of its machines in the country, most recently in 2004, according to its website.
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    EDF and Areva agree outlines of alliance - sources

    French utility EDF and nuclear group Areva have reached an agreement on the broad outlines of a cooperation deal between the two state-controlled companies, two sources said on Wednesday.

    Nothing has been signed yet, but both sources with knowledge of the situation told Reuters the companies are finalising an agreement after months of difficult negotiations.

    "There is an agreement on the broad outlines of a deal," one of the sources said.

    Four consecutive years of losses have wiped out Areva's capital and the firm has a 1.25 billion euro ($1.4 billion)bond to repay in September 2016 and another 900 million euro matures in October 2017.

    As ordered by the government, EDF will buy a majority stake in Areva's nuclear reactor business. One source said EDF had agreed to value the division at 2.7 billion euros but did not know how big a stake EDF would buy.

    French newspaper Le Figaro reported on Wednesday that EDF would buy 75 percent of the Areva reactor unit.

    The same source also said the deal included an agreement on the terms under which Areva would provide nuclear fuel recycling services for EDF, which is its only client for that activity.

    The deal is expected to be announced on Thursday, when both companies report first-half results.

    There is no agreement yet on who will be responsible for charges related to Areva's long-delayed reactor project in Olkiluoto, Finland.

    Areva has a 3.5 billion euro claim against its Finnish customer Teollisuuden Voima (TVO), which has a counter-claim for 2.3 billion euros.

    Economy Minister Emmanuel Macron said earlier this month the Finland-related risks will not be passed onto EDF, but could not be left to Areva alone, meaning they may end up as a liability for French taxpayers.
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    K+S asks German government to fend off takeover-Handelsblatt

    German potash and salt miner K+S has turned to economy minister Sigmar Gabriel for help in resisting an unwanted takeover approach by Potash Corp of Saskatchewan Inc, and has discussed the option of German state bank KfW taking a stake in K+S, a newspaper reported on Wednesday.

    K+S earlier this month rebuffed Potash Corp's 7.9 billion euros ($8.7 billion) proposed bid of 41 euros per share as too low and suggested the suitor was planning to shrink the company.

    K+S last week said it had rejected a new attempt by its Canadian suitor, which is due to report second-quarter results on Thursday, to entice it into takeover talks.

    KfW could take a blocking minority stake but Germany's economy ministry and finance ministry are doubtful they could come up with a "common-good" justification for such an intervention, Handelsblatt cited people familiar with the matter as saying.

    K+S declined to comment while the economy ministry only said there had been talks with the company about a "corporate matter" and would not comment further.

    A person familiar with the matter told Reuters that state development bank KfW had never before acted as a "white knight" to scupper a takeover and was unlikely to play such a role.
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    Base Metals

    Freeport's Indonesia export permit may be delayed

    Reuters reported that the implementation of an export deal reached earlier this week by Indonesia and Freeport-McMoRan has been delayed indefinitely due to the sickness of a senior trade ministry official.

    Mr Didi Sumedi, director of export industry and mining product at the trade ministry told reporters on Wednesday “The recommendation from the mine ministry came yesterday. With the current situation, perhaps we'll need some more time. The director general is currently recovering from a health condition, but I think it won't be long.”

    He added that the permit would need the director general's signature.

    Mr Partogi Pangaribuan is the Indonesian trade ministry's director general for foreign trade and Mr Sumedi said Mr Pangaribuan is due to retire on Aug. 1 and be replaced soon after.

    Arizona-based Freeport, which runs one of the biggest copper mines in Papua, reached an agreement with the Indonesian government to export 775,000 tonnes of copper over the next six months on Monday, after proving sufficient progress on the construction of a second domestic smelter.
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    Indonesia's Timah says rule delays to halt tin exports until mid-Aug

    Indonesia's PT Timah will be unable to export tin for much of August due to bureaucratic delays in the implementation of new rules for shipments, a senior official at the country's top tin miner said on Thursday.

    Indonesia, the world's top exporter of the solder material, is introducing new rules for shipments from Aug. 1, but delays in the issuing of export documents by the mines ministry could impede all exports.

    "Earliest mid-August or latest by end of August," Corporate Secretary Agung Nugroho told Reuters in a text when asked when Timah would be able to make shipments next month.

    A new license that will track export volumes for individual companies was still to be issued by the mines ministry, said Nugroho, adding that it would likely be completed this week but then take a month to be rolled out.

    Indonesia is tightening its rules for tin shipments in a fresh bid to crack down on environmental damage and smuggling, and to enforce payment of royalties and taxes on shipments.

    The Southeast Asian country is concerned about the scale of illegal tin mining and smuggling, while green groups and electronics firms have expressed worries over the environmental damage it can cause.

    The new government rules, which were first announced in May, also include the need for tin producers to hold "clean and clear" (CnC) certification from Nov. 1 to show that the tin ore they use originates from government-certified mines.

    Government guidance for tin exporters was unclear, Jabin Sufianto, president of the Indonesian Association of Tin Exporters (AETI) told Reuters, adding that discrepancies were found in separate trade and mines ministry tin decrees relating to the new rules.

    "This will cause all exporters to not be able to export (from) Aug. 1," Sufianto said about the delays, adding that his group had held two meetings with the mines ministry to discuss the matter.

    Coal and Minerals Director General Bambang Gatot told reporters this week that the mines ministry was processing the registration of tin exporters "one by one", but said he was unable to say how many had been completed.

    Benchmark tin hit $16,345 a tonne earlier this week, its highest since May 6 and a gain of more than 20 percent since the contract hit a six-year low of $13,365 on June 30.

    Given that tin suppliers have been ramping up exports ahead of the change in rules, any impact on supply was likely to be minimal for a disruption lasting less than three months, said a Shanghai based trader.
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    Aluminium Bahrain H1 net profit doubles

    Aluminium Bahrain (Alba) posted a net income of BD66.9 million ($178 million) in the first half of the year as compared to BD32.3 million ($86 million) for the same period in 2014, marking a year-on-year increase of 107 per cent. Net income for the second quarter (Q2) of 2015 stood at BD29.8 million ($79 million) compared to BD15.2 million ($41 million) in Q2 2014, an increase of 96 per cent.

    The board has recommended an interim cash dividend of 5.5 fils per share, which is BD7.9 million ($21 million) to be paid in September.

    Alba’s total sales for the first half of 2015 were up by 8 per cent year-on-year to reach BD405.9 million ($1.080 billion) versus BD376.4 million ($1.001 billion) in H1 2014 thanks to favourable management performance, a company statement said.

    Total sales for the second quarter of 2015 were BD199.3 million ($530 million) compared to BD193.6 million ($515 million) for the same period in 2014.

    Daij bin Salman bin Daij Al Khalifa, chairman Alba, said: “Alba was able to outperform the industry and continue to deliver on safety. We plan to use this positive momentum as we gear-up for Line 6 Expansion Project which will make Alba the largest single-site aluminium smelter in the world.”

    Alba’s chief executive officer Tim Murray said: “Alba continues to excel in what we control -- which is Safety, Production and Cost. As we look ahead for the remainder of 2015, we see a large drop in the all-in-aluminium prices; however, we expect to deliver solid results despite these challenges.” – TradeArabia News Service

    Attached Files
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    Steel, Iron Ore and Coal

    Iron’s Back in a Bull Market -- Just Don’t Expect It to Last

    Call it the world’s most unlikely bull market. Iron ore advanced for a third day, taking gains to 25 percent from a six-year low even as the world’s top shipbroker predicted renewed losses.

    Ore with 62 percent content delivered to Qingdao climbed 4.6 percent to $55.89 a dry metric ton on Wednesday, according to Metal Bulletin Ltd. That was the biggest increase since July 9. While the gain of more than 20 percent from the July 8 low met the common definition of a bull market, prices remain 22 percent lower this year.

    “The rebound will be short-term and lower prices are expected, we still have an oversupply market,” Kelly Teoh, an iron ore derivatives broker at Clarkson Plc in Singapore, said on Wednesday before the price data. “It seemed there’s still some tightness in the physical spot cargoes.”

    Iron ore’s been whipsawed this year, tumbling to a then six-year low in April on rising supply and stalling demand growth, before rebounding into a bull market later the same month. Since then, it’s shifted back into bear-market territory, set a new low, and rallied again. Banks including Goldman Sachs Group Inc. forecast further losses, with Citigroup Inc. saying last week that bets on iron ore declines were its top commodity trade as raw materials traded at the lowest level since 2002.

    “I see around $50 in the second half as a reasonable average but expect volatility,” said Daniel Morgan, an analyst at UBS Group AG in Sydney. “The entry of Roy Hill slated for October will be a catalyst to watch,” he said, referring to the mine backed by Australian billionaire Gina Rinehart that’s scheduled to begin shipments before year-end.

    Stand Out

    Iron ore’s latest rally stands out amid losses in raw materials tracked by the Bloomberg Commodity Index, which fell 11 percent this year. Oil in New York entered a bear market last week, while copper in London fell to a six-year low on Monday.

    Gains for iron ore contracts on the Dalian Commodity Exchange preceded the advance in the Metal Bulletin price, which is issued once a day. Futures in China advanced 2.6 percent to close at 369 yuan ($59.43) a ton. Prices are up 5.9 percent from this year’s closing low on July 24.

    “Speculation steel mills are purchasing iron ore at ports has supported futures and physical markets,” said Huang Huiwen, a Shanghai-based analyst at Shanghai Cifco Futures Co.

    While maintaining its bearish outlook over the rest of 2015 and into next year, Goldman Sachs highlighted what it said were disappointing exports from Australia this month, according to a report on Monday. Scheduled maintenance at some terminals may be affecting shipments, analyst Christian Lelong wrote. The bank sees lower prices for each quarter through to June 2016.

    Port stockpiles in China will probably extend a rebound as supply rises, according to Clarksons Platou Securities Inc. analyst Jeremy Sussman, who predicted a drop to $35 a ton this half before Wednesday’s gain. The inventories, at 82.5 million tons last week, may climb to 95 million tons by September, said Australia & New Zealand Banking Group Ltd.
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    Cliffs Natural posts Q2 profit on lower costs

    Iron ore and coal producer Cliffs Natural Resources Inc reported a second-quarter profit, compared with a year-ago loss, on lower costs and said it expects "improved" profitability in the second half of the year.

    The company's shares were up 5 percent at $3.18 before the bell.

    "As actions are taken to combat the influence of unfairly-traded steel in the United States, we expect to see improved industry operating conditions and profitability in the second half of this year," Chief Executive Lourenco Goncalves said in a statement.

    U.S. steel companies in June had filed a complaint with the U.S. government over cheaper imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan, kicking off a process that could end in import duties.

    Cliffs has taken a hit from weak prices for iron ore, caused by excess supply from major iron ore miners such as Vale SA , Rio Tinto Plc and BHP Billiton Plc and a drop in demand from steel mills.

    Cliffs cut its 2015 sales volume forecast for its U.S. iron ore operations by 1.5 million tons to 19 million tons of iron ore pellets on Wednesday, blaming a supply glut created by heavy steel imports.

    The company its cost of goods sold fell nearly 22 percent to $440.8 million in the second quarter ended June 30.

    The company said net profit attributable to shareholders was $60.2 million, or 39 cents per share, compared with a loss of $1.9 million, or 2 cents per share, a year earlier.

    The Cleveland, Ohio-based company's revenue fell 33.4 percent to $498.1 million.
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