Mark Latham Commodity Equity Intelligence Service

Wednesday 20th May 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    $50 Billion Mega Project Could Change South America Forever

    Infrastructure is a critical part of mining -- often making the difference between profitable and pitiful projects.

    And in that respect, one part of the world got a lot more interesting late last week: South America.

    Particularly Brazil and Peru, which are set to get a major new rail corridor. Thanks to a massive investment from China, one of the world's most resource-hungry nations.

    The BBC reported that Chinese and Brazilian interests will construct a rail line running across the continent -- all the way from Brazil's Atlantic coast to Peru's Pacific waters.

    The project will reportedly be backed by a $50 billion commitment from banks in China and Brazil. Which will be officially signed during a visit by Chinese Prime Minister Li Keqiang to Brazil this week.

    Few additional details were given. With Brazil's undersecretary of state for Asia, Jose Graca Lima, quoted as saying that the governments would elaborate on this mega-project at the end of the Chinese visit.

    If the project does indeed offer a rail link crossing from Atlantic to Pacific, it would be a game changer for miners in both Brazil and Peru -- and possibly beyond.

    Brazil is rich in bulk commodities like iron ore. The majority of which is currently shipped from Atlantic ports -- with China being a major buyer.

    The Pacific route would save considerable time in sending supplies to China. And it could also provide an outlet for mines that aren't positioned to ship to the Atlantic coast -- or which lack shipping infrastructure entirely at the moment, both on the Brazil and Peru sides.

    We'll have to wait for more details on the routing of the line to see which projects could benefit. Watch for an announcement prior to Thursday, when the Chinese delegation leaves Brazil for Colombia.

    http://oilprice.com/Metals/Commodities/50-Billion-Mega-Project-Could-Change-South-America-Forever.html
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    Mined Gold, Copper and Iron Ore production falls in last Qtr

    If early production announcements for the three months to end-March turn out to represent the entire mining industry, then there has been a significant fall in quarter-on-quarter production for the three most important mined metals: gold, copper and iron ore.

    However, the production results published to-date suggest that gold and iron ore production is still higher than the year-ago quarter, up almost 12% in the case of iron ore.

    In the State of the Market report for the three months to end-March, published May 18, SNL notes that the 46 most significant gold producers — those with a March quarter output of over 50,000 ounces — reported a combined 11.2 million ounces, compared with an equivalent 12.5 moz in the December 2014 quarter, equivalent to a fall of over 10%.

    Much of this overall decline in reported gold production was due to a significant quarter-on-quarter decline in output from AngloGold Ashanti Ltd., Goldcorp Inc. and Sibanye Gold Ltd. The three miners registered a combined fall in production of 476,000 ounces compared to the linked quarter.

    Another four producers registered quarter-on-quarter reductions in gold production of over 100,000 ounces.

    Compared to the December 2014 quarter, Barrick Gold Corp., whose production of 1.39 moz was the largest for the March quarter, registered a fall of 137,000 ounces. Centerra Gold Inc. saw production drop 130,553 ounces, output by Polymetal International Plc fell 113,000 ounces and Freeport-McMoRan Inc. reported a 109,000-ounce decline.

    While registering a quarter-on-quarter decline in gold production, the top 46 companies still reported a 3% year-over-year rise in aggregate output.

    By mid-May, SNL had recorded production data for the March quarter from 49 copper-producing companies. The 22 largest listed companies — companies with quarterly output of over 10,000 tonnes — had combined production of 2.41 million tonnes, a decline of 4% on the previous quarter, amounting to 88,807 tonnes.

    Of these largest producers, 13 companies, or about 59%, reported lower output between the December and March quarters.

    Glencore Plc booked the largest absolute decline in output compared to the previous quarter, amounting to 46,700 tonnes; Antofagasta Plc's output was down by 41,000 tonnes; and Freeport-McMoRan's output fell by 37,648 tonnes. Nevsun Resources Ltd. booked the largest quarter-on-quarter percentage decline of 28%, while Antofagasta's output was down by 22%.

    Of the top seven copper producers in the March quarter, only the largest, BHP Billiton Group, reported a quarter-over-quarter increase in production, which was up 9%, or 36,300 tonnes, to 460,000 tonnes.

    There has been a welcome decline in iron ore production. According to SNL data, 15 companies have reported iron ore output of over 1.0 million tonnes in the March quarter. These companies produced a total of 308.5 million tonnes, compared to 324.4 million tonnes in the preceding quarter — equivalent to a fall of 5% or 15.84 million tonnes. However, this quarterly tonnage represents a year-on-year increase of almost 12%.

    Of the leading iron ore producers, only BHP Billiton reported a quarter-on-quarter increase in production, but all of them saw significantly higher year-on-year output.

    BHP Billiton reported a rise in iron ore production of 5% compared with the December quarter, rising 2.63 million tonnes to 58.98 million tonnes, and 20% on the year-ago quarter. The company has driven production for the first three quarters of fiscal 2015 to a record 172.4 million tonnes, despite iron ore prices sinking to record lows.

    https://www.snl.com/InteractiveX/Article.aspx?cdid=A-32706466-10548
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    China’s energy guzzlers Apr power use down 3% on yr

    Power consumption of China’s four energy-intensive industries dropped 3% year on year to reach 139.4 TWh in April, accounting for 31.6% of the nation’s total power consumption in the month, the China Electricity Council (CEC) said May 19.

    The ferrous metallurgy industry consumed 42 TWh of electricity in April, down 7.1% year on year, compared to the growth of 0.7% in the previous year; while the non-ferrous metallurgy industry used 36.1 TWh of electricity, up 5.2% year on year but lower than the growth of 6.5% a year ago.  
     
    The chemical industry consumed 34.2 TWh of electricity in the month, up 1.4% year on year but lower than the growth of 4.6% a year ago; while power consumption of building materials industry dropped 11.1% year on year to 27.1 TWh, compared to the growth of 9.8% in the preceding year.
     
    Over January-April this year, the four industries consumed a total 525 TWh of electricity, dipping 1.8% year on year, holding 30.3% of China’s total power consumption in the same period.
     
    The ferrous metallurgy industry consumed 163.2 TWh of electricity over this period, down 6.9% year on year; while the non-ferrous metallurgy industry used 139 TWh of electricity, up 3.7% from a year ago.
     
    The chemical industry consumed 135.1 TWh of electricity, rising 2.9% year on year; while the building materials industry used 87.7 TWh of electricity, down 6.5% from a year prior.  

    http://en.sxcoal.com/0/119093/DataShow.html
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    Steel, rare earth sectors face reshuffle amid SOE consolidation

    Mergers among China's central State-owned enterprises (SOEs) will be fast tracked over the next few years as the country overhauls the underperforming sector to deepen economic reforms.

    Experts say sectors such as steel, electricity and railways will bear the brunt amid massive restructuring, the Shanghai Securities News reported on Tuesday.

    Meanwhile, the rare earth industry, with its national strategic significance, will also be consolidated in a bid to streamline the market and improve its competitiveness, said the report, quoting SOE reform expert Zhou Fangsheng.

    According to a document issued late last month by the State-owned Assets Supervision and Administration Commission, the country's SOEs will undergo classified consolidation, with the final number being cut from 112 to 40.

    Mergers and acquisitions (M&As) among State-owned enterprises are surging, with the number hitting 481 last year, a compound average growth rate of 72.9 percent from 2008. The scale of M&As assets exceeded $30 billion last year, according to a report by the Zero2IPO Research Center.

    The number may continue to grow as a new wave of M&As is imminent in the second half of this year, boosted by the country's "Made in China 2025" strategy and the Belt and Road Initiative, the report said.

    State firms' consolidation is at the heart of China's economic transformation that entails a relocation of resources to cut overcapacity amid meager domestic demand, especially in traditional heavy industries.

    Iron and steel, among others, has been struggling in recent years. Statistics show the industry's profit in the first quarter stood at 18.1 billion yuan ($2.92 billion), down 36 percent from a year earlier. About 50 companies shared a loss of 10.3 billion yuan during the same period, said the newspaper.

    The predicament is unprecedented for the sector which can only be saved through restructuring and M&As, the newspaper cited industry insiders as saying.

    For the rare earth industry, necessary restructuring will largely help enhance its competitiveness globally, ensuring sound and sustainable development.

    The country's pricing power of rare earth is of great significance, not just economically, but politically and diplomatically, experts said.

    http://en.chinamining.com.cn/News/2015-05-20/1432101769d72272.html
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    Oil and Gas

    Natural gas rises in prominence

    The IEA has called this era “the golden age of natural gas,” and for good reason. Consumers are increasingly choosing natural gas for its versatility, efficiency and availability as well as its cleaner-burning properties. Global demand for natural gas is projected to rise by 65 percent from 2010 to 2040, the largest volume growth of any energy source. We expect half of that increase will come from the Asia Pacific region, particularly China.

    Natural gas resources are abundant and geographically diverse. Like oil, estimates of recoverable gas have grown over the last decade as the application of horizontal drilling and hydraulic fracturing technology has enabled economic extraction of unconventional gas resources that were previously considered too difficult or too costly to produce. The IEA estimates the world’s remaining recoverable natural gas resources to be about 28,500 trillion cubic feet (TCF) as of year-end 2013 – more than 200 times the natural gas the world currently consumes in a year.

    Full article:

    http://corporate.exxonmobil.com/en/energy/energy-outlook/diverse-resources/natural-gas-rises-in-prominence?parentId=4ce0720c-0d78-4648-9b08-d04bfb056eef
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    Platts Japan-Korea Marker for June-delivered LNG fell 3.5% : A short idea.

    Prices of spot liquefied natural gas to northeast Asia averaged $7.12 per million British thermal units for June, according to latest Platts Japan/Korea Marker data for month-ahead delivery.

    The Platts Japan/Korea Marker is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and sellers in the open market prevailing at the close of the trading day.

    According to Platts the marker slid 3.5% month over month as demand from end-users remained slow even in the run up to the traditionally stronger summer season – a time when demand from electricity generators rises as air conditioning use increases in the northern hemisphere.

    The Japan/Korea Marker opened the trading month at $6.875/MMBtu, and climbed 15 cents before falling back as prices in alternative markets – such as the UK onshore National Balancing Point (NBP) values – fell.

    Abundant availability from projects in Malaysia, Indonesia, Brunei and Nigeria was largely absorbed by traders and sellers who were looking to cover short positions in both the Atlantic and Asia Pacific basins.

    Coupled with many buy tenders released by newer entrants to the market, a brief production outage at Australia's North West Shelf LNG facility and a rally in NBP values – stemmed the losses on JKM and began to reverse the downtrend.

    The Japan/Korea Marker closed at $7.425/MMBtu as a result, with the bulk of increase seen towards the end of the end of the assessment period. However, prices struggled to move beyond the $7.50/MMBtu mark in northeast Asia, as end-users were seen to be under no pressure to procure cargoes.

    "The North West Shelf outage, coupled with an existing force majeure in Yemen LNG, didn't appear to have much of an impact on the end users," said Stephanie Wilson, managing editor of Asia LNG at Platts. "In fact, it may have actually provided some respite, as many market participants in Japan and South Korea are heard to be grappling with high inventories. Buyers appear to have ample term deliveries and have taken an opportunistic stance in their purchasing."    

    This was particularly apparent in India, which remained the premium market in the Asia Pacific basin. Importers had released numerous tenders for June-delivery and retendered for prompt cargoes when they were unable to find prices that matched their expectations.

    However, with NBP closer to $6.70/MMBtu by the end of the trading month, Indian buyers were forced to show higher bids in order to tempt cargoes over from the Atlantic.

    http://www.lngglobal.com/latest/platts-japan-korea-marker-for-june-delivered-lng-fell-3-5-from-previous-month.html

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    Gazprom Trims 2015 Gas Production Plan Again

    Russia's top natural gas producer Gazprom has cut its 2015 production plan to 450 billion cubic metres (bcm) after warmer weather hit demand, company officials said on Tuesday, the second such downward revision in a week.

    The forecast is still higher than the 444.4 bcm of gas the company produced last year, an all-time low. Last Thursday, Gazprom had revised its production plan for 2015 to 471 bcm.

    "In total we expect around 450 billion (cubic metres) this year," said Vsevolod Cherepanov, a member of Gazprom's management board.

    Vitaly Markelov, another management board member, said Gazprom had suffered from a mild winter, which hit gas demand.

    As of 0900 GMT on Tuesday, Gazprom's shares were down 1.1 percent, underperforming the broader Moscow stock market which lost 0.65 percent.

    Gazprom, which accounts for 8 percent of Russian gross domestic product, has faced stiff rivalry from other domestic gas producers, such as Novatek, as well as from sluggish demand in Europe.

    Sberbank CIB investment bank says Gazprom's rivals have almost doubled their share of the Russian gas market to 35 percent in 2014 from 18 percent in 2009.

    Gazprom said gas pipes initially ordered for the South Stream underwater pipeline that was scrapped in December would now be used for its planned replacement, Turkish Stream.

    Gazprom reached an agreement with Turkey to start gas supplies via the Turkish Stream pipeline in December 2016. It plans to start laying pipes for the project in early June.

    Gazprom plans to supply up to 63 bcm of gas per year via Turkish Stream and to create a gas hub on the Turkish border with Greece, through which it wants to transit 47 bcm annually.

    - See more at: http://www.rigzone.com/news/oil_gas/a/138662/Russias_Gazprom_Trims_2015_Gas_Production_Plan_Again?rss=true#sthash.ksYbdplg.dpuf
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    Chevron Australia boss Roy Krzywosinski sounds fresh warning on LNG

    Chevron's head in Australia, Roy Krzywosinski, is set to sound a fresh warning about a lack of progress on improving the competitiveness of its LNG industry, which is threatening a potential $100 billion of projects in the pipeline, especially given the drop in oil prices.

    "As we look ahead, we need to claw back competitiveness and create the investment environment here in Australia that helped us harness the gas boom in the first place," he will tell the APPEA oil industry conference in Melbourne on Wednesday.

    "We can no longer rely on strong commodity prices to bail us out."

    Chevron, which is leading $80 billion of investment in two LNG projects in Western Australia, Gorgon and Wheatstone, has repeatedly raised the alarm over rigid and inflexible industrial relations systems, uncompetitive taxation, red and green tape, high labour costs and inadequate productivity. Its $US54 billion Gorgon project, due to start up later this year, has run $US17 billion over budget.

    The Gorgon partners, which include Shell and ExxonMobil, have delayed moving ahead with an expansion as they focus on bringing the foundation project into production.

    Mr Krzywosinski is also set to raise concerns about the service sector's ability to cope with the rapid surge in LNG production in Australia as the plants built in the $180 billion wave of construction move into production. Australia's LNG sector is set to go from seven producing LNG units to 21, including one floating LNG venture, within little more than two years. The projects will require hundreds of millions of dollars a year of investment, in operations, maintenance and upstream work.

    "The industry's capacity has never before been stretched or tested with the addition of 13 new gas trains," he says.

    Forging a successful services industry, is not just a matter for that sector, but for everyone in the industry. It "requires all hands on the wheel," Mr Krzywosinski will say.

    An updated study by ACIL Tasman carried out for Chevron on the economic benefit of the Gorgon and Wheatstone projects has found that they will contribute more to GDP than originally expected. Across the life of the projects, the GDP contribution from Gorgon is now expected to be about $400 billion, with another $150 billion from Wheatstone.

    http://www.afr.com/business/energy/gas/chevron-australia-boss-roy-krzywosinski-sounds-fresh-warning-on-lng-competitiveness-20150519-gh53q1

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    Energy explorers bemoan cost of labour disputes in Argentina

    Labour disputes are on the rise in Argentina and costing foreign energy companies millions of dollars as they explore the country's vast but barely-tapped Vaca Muerta shale oil and gas field, company officials said.

    Trade Unions are a powerful force in Argentina, Latin America's No. 3 economy, where the frequency of industrial disputes are a deterrent to explorers already unsettled by President Cristina Fernandez's heavy-handed trade and currency controls.

    Argentina's state-run energy company YPF estimates $200 billion is required over the next decade to exploit Vaca Muerta, which covers an area the size of Belgium, but so far foreign firms have made little more than foothold investments.

    "In the last few years labour disputes have cost us in the region of $10 million, enough to drill a well," Maximiliano Hardie, venture lead and operations manager at Shell Argentina, said at an industry conference in Buenos Aires.

    "Between 2013 and 2014 the number of strike days, and therefore the amount of unproductive time, increased," he said.

    Years of under-investment in Argentina's energy sector have left the South American country a net energy importer. Mired in a decade-long debt battle, the cash-strapped country needs the deep-pockets of energy companies like Chevron Corp, Royal Dutch Shell and Exxon Mobil.

    Investor confidence is unlikely to improve before October's presidential election. Fernandez is constitutionally barred from a third straight term and the three front-running aspirants all tout more investor-friendly policies.

    Javier Iguacel, vice president of business development at Pluspetrol, told the conference an explorer's survival depended on maximizing drilling time.

    "And for this, changes are needed. We have to be working 365 days a year, 24 hours a day," Iguacel said.

    The next disruption, however, is likely to come in the next few weeks.

    An official at Argentina's main oil workers union, the Private Oil and Gas Union of Rio Negro, Neuquen and La Pampa, on Tuesday told Reuters that members would take part in a national strike that is expected to take place in early June.

    The government is currently locked in lengthy negotiations with big business and unions over the size of salary increases in the face of one of the world's highest inflation rates.

    http://www.reuters.com/article/2015/05/19/argentina-energy-labor-idUSL1N0YA1SW20150519
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    San Leon Rawicz-12 update and field reserves

    Following the Company's announcements dated 25 February and 6 March 2015, describing the highly positive preliminary well test results for Rawicz-12, Ryder Scott Company has finalised a Competent Persons Report ('CPR') on the Rawicz Gas field for Palomar Natural Resources ('PNR'), the operator. Ryder Scott has issued an estimate of the gross Proved plus Probable (2P) reserves for the Rawicz field of 50.3 billion cubic feet (Bcf) based upon a five-well development plan (including the Rawicz-12 well). Both San Leon and PNR expect to move reserves to Proved (1P) based upon a signed gas contract, which is currently under negotiation. All estimates produced by Ryder Scott comply with the 2007 Petroleum Resources Management System (PRMS) prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE).

    PNR, together with the Company, is currently in the advanced stages of the planning and design of several development scenarios focused on bringing gas online in early 2016. A development plan will be submitted to the Polish regulators, based on the CPR. The current development plan is based upon building a scalable central processing facility to handle the gas production from adjacent prospects on the Rawicz Concession, which PNR estimates to be in excess of 100 Bcf.

    The Rawicz project is operated by Palomar Natural Resources with 65% equity, and San Leon has no up-front drilling costs for its 35% equity share of the first two wells.

    Oisin Fanning, San Leon Energy Executive Chairman, commented:
    'We are quickly moving forward with the development of the Rawicz gas field, and the confirmation of reserves from the CPR is a very positive step. San Leon and PNR are focused on first production and expanding our development using modern drilling and completion technology to unlock the significant remaining reserves in this under-explored basin, where some of the best gas prices in Europe can be found.'

    http://www.oilvoice.com/n/San-Leon-Rawicz12-update-and-field-reserves/60c6ac25e2e5.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29
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    Flood of new cash sustains US oil firms; energy deal makers gripe

    U.S. oil companies, still smarting from the crude price rout, are attracting a wave of new investment from unlikely sources - hedge funds and private equity firms flocking to the energy market for the first time to bet on a rebound.

    By pouring billions of dollars into energy shares and bonds in the past few months these newcomers, dubbed "energy tourists" by Houston's seasoned dealmakers, have thrown a lifeline to scores of companies that a few months ago looked like potential targets for bigger rivals or distressed debt and restructuring specialists.

    "You've got generalist funds that have never invested in energy coming out of the woodwork," Michael Ames, an energy investment banker at Raymond James, told a meeting of oil and gas executives this month.

    So far this year, 40 oil and gas companies raised $18.7 billion in new share sales, while 35 firms issued $26.4 billion in debt in the first four months, Thomson Reuters data show. The share sales are the highest in at least 15 years while bond issuance is on track to be the heaviest in three years. Ames estimated private equity firms have raised about $35 billion in dedicated U.S. energy sector funds in the past six months.

    Among those that see opportunity in energy are distressed investor Marc Lasry at Avenue Capital Group and hedge fund Och Ziff Capital Management Group LLC.

    With record-low interest rates and stock indexes near record highs, energy assets are one of the few sectors to offer a significant upside because of heavy losses of more than 50 percent suffered during the crude price slide, investors say.

    But local veterans, mindful of past busts, worry a 34 percent rise in U.S. crude since mid-March to nearly $60 a barrel might not continue. Some also point out that debt and equity valuations imply oil prices of $85 to $90 and warn of an industry shakeout if crude prices stall.

    "There's too much money in the system," said one principal at a private equity firm that has long owned oil assets but is holding off now. "We're not living in a world of reality right now."

    He and others question the newcomers' ability to fully assess the risks involved in investing in the sector. The manager recalled how one investor asked him recently to explain how to calculate the worth of oil acreage. "That's like showing up at the Masters and asking how to play golf," he said.

    Yet the buyers say the sell-off in energy stocks was a classic case of market overshooting. They argue that over the next decade demand for oil will grow, fueled by emerging economies' rising energy use.

    http://www.reuters.com/article/2015/05/20/usa-energy-investment-idUSL1N0Y41HC20150520
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    Alternative Energy

    GE Launches the Next Evolution of Wind Energy: the Digital Wind Farm

    GE today announced the launch of its Digital Wind Farm, a dynamic, connected and adaptable wind energy ecosystem that pairs world-class turbines with the digital infrastructure for the wind industry. The technology boosts a wind farm’s energy production by up to 20 percent and could help generate up to an estimated $50 billion of value for the wind industry.

    “Every business—including our own at GE—and every industry is being transformed by smarter digital technologies, and the greatest opportunity lies in energy”

    The Digital Wind Farm uses interconnected digital technology—often referred to as the Industrial Internet—to address a long-standing need for greater flexibility in renewable power. The technology will help integrate renewable power into the existing power grid more effectively.

    “Every business—including our own at GE—and every industry is being transformed by smarter digital technologies, and the greatest opportunity lies in energy,” said Steve Bolze, president and CEO of GE Power & Water. “The question is not whether to start down this path … it’s about knowing how to get the most out of your digital transformation. That’s what will separate industry leaders from those left behind.”

    GE is leading the transformation of the wind power industry with today’s launch of the world’s first Digital Wind Farm. This new wind ecosystem pairs world-class turbines with a digital infrastructure to enhance production, reduce costs and boost operating efficiency over the life of the wind farm.

    The Digital Wind Farm ecosystem begins with the production of the turbines themselves. With the next generation of Brilliant wind turbines, GE’s new 2-megawatt platform utilizes a digital twin modeling system to build up to 20 different turbine configurations at every unique pad location across a wind farm in order to generate power at peak efficiency based on the surrounding environment. Additionally, each turbine will be connected to advanced networks that can analyze turbine operations in real time and make adjustments to boost operating efficiencies.

    Once the turbines are built, their embedded sensors are connected and the data gathered from them is analyzed in real time with GE’s Predix software, which allows operators to monitor performance from data across turbines, farms or even entire industry fleets. The data provides information on temperature, turbine misalignments or vibrations that can affect performance.

    As more data is collected, the system actually learns over time, becoming more predictive and “future-proofing” wind farms by maintaining top performance and avoiding the maintenance issues that typically occur as turbines age. It also reduces costs by customizing maintenance schedules to ensure preventive maintenance is done only when needed.

    http://www.businesswire.com/news/home/20150519005474/en/GE-Launches-Evolution-Wind-Energy-Making-Renewables#.VVtDx7lVhBc
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    Yingli: Not Pretty

    "There is substantial doubt as to our ability to continue as a going concern."

    "Our ability to continue as a going concern is dependent upon our continued operations, which in turn is dependent upon our ability to meet our financial requirements, raise additional capital, and the success of our future operations, which in turn are subject to various risks discussed herein including, among others, risks relating to economic conditions in our target markets as well as the supply and prices of PV modules in the market, our ability to obtain additional capital or other funding to meet our payment obligations under our debt instruments, our ability to renew our short-term borrowings when they mature, our ability to restructure some of our existing debts if needed, the ability of guarantors of our debt to maintain their financial condition, and our ability to comply with all covenants of our loan agreements or obtain waivers if needed."

    "Facts and circumstances including recurring losses, negative working capital, net cash outflows, and uncertainties as to the repayment of debts raise substantial doubt about our ability to continue as a going concern. The audited financial statements do not include any adjustments that might result from the outcome of these uncertainties. If we become unable to continue as a going concern, we may have to liquidate our assets, and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our audited consolidated financial statements. Our lack of cash resources and our potential inability to continue as a going concern may materially and adversely affect the price of our ADSs and our ability to raise new capital or continue our operations."

    "As of December 31, 2014, we had cash, cash equivalents and restricted cash of RMB2,401.5 million (US$387.0 million) and short-term borrowings, including current portion of medium-term notes and long-term debt of RMB10,112.1 million (US$1,629.8 million). Our two major manufacturing subsidiaries, Yingli China and Tianwei Yingli, both have medium-term notes that will mature and become payable in 2015. Yingli China's RMB denominated unsecured three-year medium-term notes of RMB 1.2 billion matured on May 3, 2015, and the principal and interest payments in the aggregate amount of RMB1.27 billion had been paid in full before its due date. Tianwei Yingli's RMB denominated unsecured five-year medium-term notes of RMB 1 billion will mature on October 13, 2015, and the principal and interest payments in the aggregate amount of RMB1.06 billion will become due and payable on October 13, 2015. Our liquidity is primarily dependent on our ability to maintain adequate cash flows from operations, to renew or rollover our short-term borrowings and to obtain adequate external financings to support our working capital and meet our obligations and commitments when they become due.

    We have carried out a review of our cash flow forecast for the twelve months ending December 31, 2015. In preparing the cash flow forecast, our management has considered our historical cash requirements, our expected debt repayment obligations in 2015, our plan to further reduce operating costs and expenses, as well as the alternative financing plans discussed in detail below. The Company's management also made the assumption that there will be no significant decrease in the Company's shipments of modules and gross profit margin. Facts and circumstances including recurring losses, negative working capital, net cash outflows, and uncertainties on the repayment of the debts raise substantial doubt about our ability to continue as a going concern."

    "We have issued, and may issue in the future, equity securities or securities convertible into or exchangeable for our ordinary shares, the conversion of which may cause our existing shareholders to incur further dilution of their holdings."

    "We have issued, and may issue in the future, equity securities or securities convertible into our ordinary shares. In the event that the securities convertible into our ordinary shares are converted, our existing shareholders may incur further dilution of their holdings."

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    Hanergy shares plunge nearly 50 pct, trade halted

    China's Hanergy Thin Film Power Group said its shares were suspended for trading on Wednesday after its stock fell nearly 50 percent.

    Before the plunge, Hanergy had seen its value soar six-fold in the past year to $37 billion - more than its nearest two dozen rivals combined, even as analysts and market watchers questioned the validity of some of its bullish proclamations.

    Controlled by Li Hejun, the firm has mainly relied on its parent - Hanergy Holdings Group Ltd - for revenue and profits.

    Trade was active with more than 170 million shares traded in the first hour of Wednesday's session, far more than the daily average for the stock over the past month, according to Thomson Reuters data. The broader market was down 0.4 percent.

    The company is involved in the manufacturing of equipment and production lines used to make thin-filmed solar panels that convert sunlight into electricity.

    http://www.reuters.com/article/2015/05/20/hanergy-tfp-stocks-idUSL3N0YB1OI20150520
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    Canadian Solar: An inkling of an investable business?

    Image titleThe Yield co process may effectively turn these stocks into solar receivable generators.Image titleBeleive it or not, this is one of the few attempts we've seen at explaining a solar stock as a business. There's still way too many sermons out there on how wonderful Solar is as a technology. Canadian Solar actually has process, strategy and some credibility.Image titleThis is the first time we've really seen a Solar aim at the enormous diesel generation market at remote sites. Now we've seen projects, but this is the first time we've seen it as business strategy. Its highly economic, makes sense, and requires no subsidies.Image titleCanadian Solar actually presents business metrics that we as analysts can comprehend and relate too.

    I am repeatedly asked which stocks are investable as businesses, and I think Canadian Solar is addressing that issue here in these slides from their investor day. 


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    Uranium

    EDF to propose buying Areva reactor unit in coming days-CEO

    French utility EDF will propose buying the nuclear reactor business of fellow state-controlled group Areva but it is too early to put a price tag on it, EDF Chief Executive Jean-Bernard Levy said.

    Levy said on that he would present a proposal to Areva Chairman Philippe Varin in the coming days for EDF to buy Areva's reactors business and that EDF would offer a "market price" for the business.

    The French government has been pushing to find a solution to deep problems in the country's once-mighty nuclear sector.

    Hit by lower demand for nuclear energy after the Fukushima accident in Japan in 2011, the French industry has also suffered from strategic errors and the rise of new competitors.

    "We owe it to our shareholders to pay the right price for these activities," he told Europe 1 radio ahead of EDF's annual meeting.

    A source told Reuters last week that pinning down a precise value for the business was proving difficult, with the figure in a range of 2-3 billion euros ($2.2-3.3 billion).

    EDF, which is 85 percent state owned, will propose putting the reactor business in a separate company. That would be majority-owned by EDF but open to other investors.

    "We already have people who are asking us to be our partner," Levy said.

    The new firm would also would try to win export contracts for Areva's flagship EPR reactor. Areva itself is 87 percent owned by the state.

    "We want to conquer new markets. Several countries, including Egypt, India, China have publicly said they are interested in the EPR," he said.

    In separate comments to Le Figaro newspaper, Levy said EDF planned to make two proposals.

    The first would be a complete takeover of Areva's nuclear reactor division, Areva NP, which employs about 15,000 people, of whom some 10,000 are in France.

    The second would consist of bringing 1,200 Areva engineers who specialise in nuclear safety into EDF.

    Levy said the more ambitious proposal would preserve Areva's technical expertise and create the possibility of partnerships with outside groups from France or elsewhere.

    Levy also told the paper EDF wanted guarantees against any claims against Areva, in particular from its Finnish customer TVO, which claims billions of euros from Areva over delays to the Olkiluoto reactor.

    http://www.reuters.com/article/2015/05/19/edf-areva-idUSL5N0YA0UU20150519
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    Japan approves third nuclear plant for restart

    Japan's nuclear regulator signed off on the basic safety of a reactor at a third nuclear plant on Wednesday, as the country inches toward rebooting its atomic industry more than four years after the 2011 Fukushima disaster.

    The decision will be a boost for operator Shikoku Electric Power Co, which relied on its sole Ikata nuclear power station in southwestern Japan for about 40 percent of its electricity output before the meltdowns at Fukushima led to the shutdown of all the country's reactors.

    For the government of Prime Minister Shinzo Abe, resuming nuclear power, which provided about a third of Japan's electricity supply before Fukushima, is key to lifting the economy out of two decades of anaemic growth.

    The country has switched to fossil fuels to compensate for the closure of reactors, pushing imports of liquefied natural gas to a record-high 7.78 trillion yen ($65 billion) in the financial year ended March 31.

    The safety approval is still only one of three needed before the Nuclear Regulatory Authority (NRA) gives its final sign off. The consent of local authorities, which is seen as a formality, is also required, along with operational checks.

    At a regular meeting on Wednesday, the NRA's commissioners signed off on a provisional assessment that the Ikata reactor meets new design standards introduced after Fukushima. The decision will be open to public comment for about a month before being formalized.

    Located about 700 kms (660 miles) west-southwest of Tokyo on Shikoku island, the Ikata No. 3 reactor started operations in 1994 and has a capacity of 890 megawatts.

    The future of the Ikata plant's two other reactors, each with capacity of 566 megawatts, is unclear. One is almost 40 years old, which is the lifetime limit for reactors in Japan without a special extension that will be costly to achieve.

    Shikoku Electric hasn't applied for restarts of that reactor or the No. 2 unit, which began operations in 1982.

    Two other nuclear plants operated by Kansai Electric Power and Kyushu Electric Power have passed through the first stage of regulatory checks.

    Operators also have to overcome legal hurdles. Anti-nuclear activists have stepped up petitioning the judiciary to block restarts, with a majority of the public opposed to atomic power.

    Residents near the Ikata plant in December 2011 filed a lawsuit to mothball the station, but a decision will take time.

    http://www.reuters.com/article/2015/05/20/japan-nuclear-restarts-idUSL3N0YA38220150520
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    Base Metals

    Entree Gold Welcomes Agreement to Advance Oyu Tolgoi Underground Development

    Greg Crowe, President and CEO of Entrée, stated: "Achievement of this major milestone signals that the parties involved are firmly committed to moving the underground development forward. Oyu Tolgoi's immense size and exceptionally high grades are seldom seen in our industry and this project is poised to benefit the country of Mongolia for decades to come. Successful development of the underground operations is critical to realizing the full potential of Oyu Tolgoi."

    Entrée has a 20% carried interest in mineralization extracted from the Hugo North Extension and Heruga deposits, which are located along the Oyu Tolgoi trend of copper-gold-molybdenum mineralization. Oyu Tolgoi is the world's largest and richest, undeveloped porphyry copper-gold±molybdenum project. Some of the highest grade copper-gold mineralization lies within the Hugo North Extension deposit and the highest molybdenum grades occur within the Heruga deposit.

    Additionally, as a joint venture partner with a carried interest on a portion of the Oyu Tolgoi mining project in Mongolia, Entrée has a unique opportunity to participate in one of the world's largest copper-gold projects managed by one of the premier mining companies - Rio Tinto. Oyu Tolgoi, with its series of deposits containing copper, gold and molybdenum, has been under exploration and development since the late 1990s.

    Sandstorm Gold, Rio Tinto and Turquoise Hill Resources are major shareholders of Entrée, holding approximately 12%, 11% and 9% of issued and outstanding shares, respectively.

    http://finance.yahoo.com/news/entree-gold-welcomes-agreement-advance-121013062.html
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    Steel, Iron Ore and Coal

    China coking coal prices edge up by 5-10 yuan/t

    China’s coking coal prices rebounded a little of 5-10 yuan/t recently, as some major production regions adjusted up prices amid short supply and temporary downstream restocking demand.

    One source said some producers in Luliang, one major coking coal production base in Shanxi, have increased the price of low-ash, low-sulphur lean coal by around 10 yuan/t, as demand improved due to the short supply of imported coking coal.

    One trader from Shouyang, Jinzhong said local lean coal prices have climbed 5-10 yuan/t, as output dropped amid safety checks launched by the provincial government from May 1.

    One Jinzhong-based washing plant said some miners have increased raw coal prices by 5-10 yuan/t amid production cut recently, but the prices of washed coal haven’t ceased falling, which have almost reached to the bottom.

    The ex-washplant price of fat coal with 1.8% sulphur was 410-420 yuan/t, while that of coking coal with 1.6% sulphur was 420-430 yuan/t, VAT-excluded, a second Jinzhong-based source said.

    However, many enterprises expected stable market late this month. One supplier said its end users would not change purchase prices in the short run; another producer said few end users showed buying interests amid high stocks.

    One Hebei-based buyer said the price rebound was in reasonable range and may not last long, as imported products may increase in June. Another Hebei-based buyer said the purchase price may stay unchanged for a while.

    http://en.sxcoal.com/0/119108/DataShow.html
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    Ex-Fines iron ore is not in oversupply

    The price of iron ore suffered its seventh down day in a row on Tuesday amid a brouhaha in Australia between the government and producers over a proposed probe into pricing in the 1.3 billion tonne seaborne iron ore trade.

    The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin lost $0.60 or 1% to $58.40 a tonne according to data provided by The SteelIndex, a two-week low.

    Steel mills are unlikely to absorb any further increase in the volume of fines material entering the market

    A slowdown in China which consumes 70% of the seaborne iron ore trade is partly to blame, but most industry watchers have laid the blame for the weakness on the supply side. Led by the Big 3, iron ore miners invested north of $100 billion in new projects and expansions since the start of the decade.

    A trenchant new report by Minerals Value Service, a London-based research firm, urges a more nuanced reading of the iron ore supply picture.

    Fines drive the iron ore price and it makes up the bulk of supply, but MVS points out that concentrate, pellets and lump output has remained fairly consistent since 2010.

    Blame for the current price slump should therefore be laid squarely on fines producers which are on course to almost double output from 2009 to just shy of 800 million per annum by the end of this year.

    Pellet production has hovered around 200 million tonnes per year since 2010

    That compares to lump output of around 280 million tonnes last year, up by only some 20 million tonnes from 2009. Similarly pellet production has hovered around 200 million tonnes per year since 2010, while annual concentrate has only increased by around 10% over the same period according to MVS data.

    In contrast to fines, demand for lump and particularly pellets are expected to rise as steel mills, particularly in China, battle to reduce pollution and increase plant efficiency, the authors note.

    Significantly, according to the report, the abundance of cheap fines – particularly grades between 56%–62% – won't displace other classes at mills:

    Blast furnace operators are reluctant to make large scale, sudden changes to their burden mix due to the risk of an unforeseen negative impact. Therefore, steel mills are unlikely to absorb any further increase in the volume of fines material entering the market.

    Fines material achieves the lowest price in the market, tends to provide the least desirable suite of chemical and physical specifications and is the most readily available iron ore class in the market place. For these reasons, steel mills may continue to use their current lump and pellet supply, regardless of how low the price of fines becomes, as they seek to maintain a consistent blend.

    http://www.mining.com/iron-ore-is-not-in-oversupply/
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    Vale to sell 4 large iron ore carriers to China's CMES

    Brazilian miner Vale said on Tuesday it agreed to sell four large iron ore carriers to China Merchants Energy Shipping Co (CMES) , as it looks to raise cash in the midst of an iron ore price slump.

    The world's largest producer of iron ore said in a statement the details of the contract had not yet been finalised and will be released in the coming months.

    In a separate statement on Tuesday, the miner said it had completed the sale of four other large iron ore carriers to China Ocean Shipping Company (Cosco), which was agreed last September. Vale said it expected to receive the $445 million from the sale in June.

    Vale is in the process of selling its ore carriers, known as VLOCs or Valemaxes, as it looks to raise cash and improve relations with China's shipping companies which had previously lobbied to block access of the ships to Chinese ports.

    The 400,000-deadweight-tonnne vessels are some of the largest ships ever built. They were designed to help reduce the cost of shipping ore to China from Brazil, helping Vale better compete with Australian rivals who are closer to the largest market for the steelmaking ingredient.

    http://www.reuters.com/article/2015/05/19/vale-china-ships-idUSL1N0YA1I520150519
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    Vale signs MoUs with Chinese firms

    Brazil's mining giant Vale, the world's leading iron ore producer, signed memorandums of understanding (MoUs) Tuesday with the Industrial and Commercial Bank of China (ICBC), the Export-Import Bank of China (China EximBank) and two leading Chinese shipping firms.

    According to Vale, the deal with ICBC is for cooperation on global financing arrangements.

    Under the terms of the memorandum, ICBC will provide Vale with up to $4 billion in "syndicated loans, bilateral loans, export credit, trade finance, among other potential financing arrangements and services."

    The document was signed by Murilo Ferreira, president and CEO of Vale, and Yi Huiman, president of the ICBC, during Chinese Premier Li Keqiang's official visit to Brazil. It takes effect immediately for a three-year period.

    In addition, Vale signed two three-party MoUs for potential financing and loans with China EximBank and shipping giants China Ocean Shipping Company (Cosco) and China Merchants Group.

    Vale said both memorandums call for financing cooperation on iron ore shipping and "define the basis for future cooperation between Vale and its Chinese partners."

    "According to each memorandum, China EximBank will consider providing a loan of up to $1.2 billion to both Cosco and China Merchants respectively to facilitate the two shipping companies' provision of iron ore shipping services to Vale," the mining company said.

    Brazil's President Dilma Rousseff and Premier Li Keqiang presided over the signing of the agreements, part of many business deals struck between Brazilian and Chinese companies during Li's visit.

    http://en.chinamining.com.cn/Investment/2015-05-20/1432101620d72270.html
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    Anshan Steel produced 450 tonnes of auto plate to Great Wall Motor

    It is reported that Anshan Steel successfully developed high strength CR300/500DP auto plate for the Great Wall Motor, with all the performances meeting relevant standards.

    http://steelguru.com/steel/anshan-steel-produced-450-tonnes-of-auto-plate-to-great-wall-motor/424349
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