Mark Latham Commodity Equity Intelligence Service

The World Trade Organisation (WTO) warned on Thursday that growth in the volume of world trade was likely to remain sluggish in 2016 at 2.8%, unchanged from levels recorded in 2015, which was the fourth consecutive year where growth in world merchandise trade remained below 3%.

WTO economists expected global trade growth to rise to 3.6% in 2017, well below the yearly average of 5% since 1990. In addition, risks to the forecast “tilted to the downside, including further slowing in emerging economies and financial volatility”.

The 2016 forecast was premised on world gross domestic growth of 2.4%. Director-general Roberto Azevêdo described the 2015 performance and the 2016 outlook as disappointing, noting, too, that while the volume of global trade had grown, its value had fallen as a result of shifting exchange rates and falls in commodity prices.

The dollar value of merchandise trade fell 13% to $16.5-trillion in 2015, from $19-trillion in 2014, while trade in commercial services declined 6.4% to $4.7-trillion. “This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow," Azevêdo said.

Developed economy imports rose 4.5% last year, but developing countries stagnated at 0.2%, with South America recording the weakest import growth of any region, owing to the recession in Brazil depressing demand. The volume of developed economy exports grew by 2.6% in 2015, while exports from developing countries expanded by 3.3%.

http://www.miningweekly.com/article/sluggish-2016-outlook-for-world-trade-wto-warns-2016-04-07

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Brazil's top prosecutor opposes Lula cabinet appointment

Brazil's top prosecutor recommended on Thursday that the Supreme Court block the appointment of former president Luiz Inacio Lula da Silva as cabinet minister because it was intended to disrupt a corruption investigation.

Lula's protégée and successor, President Dilma Rousseff, last month named him to be her cabinet chief, ostensibly to help her raise dwindling support among her coalition allies to fight off the threat of impeachment in Congress.

The appointment would have given Lula some immunity from prosecution by crusading anti-corruption lower court Judge Sergio Moro because ministers and elected officials can only be tried by the Supreme Court in Brazil.

A recording made public by Moro of a telephone conversation between Lula and Rousseff discussing the appointment appeared to confirm that they were seeking to shield the Workers' Party leader from prosecution and possible arrest in a graft probe.

In his recommendation to the Supreme Court, Prosecutor General Rodrigo Janot said the cabinet appointment was intended to remove the investigation from the lower court judge and "disrupt" the corruption probe known as "Operation Car Wash."

Lula is under investigation for allegedly benefiting, in the form of payments and a luxury seaside penthouse, from a massive graft scheme uncovered at state-run oil company Petrobras.

The widening investigation has caused a political storm that threatens to topple Rousseff, who is facing impeachment over an unrelated accusation of doctoring government budget accounts.

A Supreme Court judge suspended Lula's appointment on March 18, arguing that it was an illegal move to shield him. The full court must rule on April 20 whether to uphold the injunction issued by Justice Gilmar Mendes.

It must also decide whether to return the Lula investigation to the lower court.

Lula, Brazil's first working class president from 2003 to 2010, is still the country's most influential politician, but the delay in his appointment limited his ability to help Rousseff weather the political crisis.

http://www.reuters.com/article/brazil-politics-lula-idUSL2N17B02E

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EU watchdog expands oversight of energy market trading

The European Union started on Thursday to amass information about all so-called over-the-counter trades in the region's energy markets in a bid to crack down on suspected price manipulation.

EU watchdog the Agency for the Cooperation of Energy Regulators (ACER) began collecting data about trades on official energy exchanges within Europe in October but says it can only get a full picture once informal transactions are tracked too.

Over-the-counter (OTC) trades account for at least two thirds of Europe's multi-billion dollar wholesale power and gas trading markets. The EU has been concerned energy prices could be rigged with inside information, or with tactics used in stock markets such as "layering" where traders bombard systems with orders they do not intend to execute to try to shift prices.

As a result, the EU launched the Regulation on Wholesale Energy Integrity and Transparency (REMIT) in December 2011, and the watchdog hopes the collection of OTC data will improve the integrity and transparency of the markets.

There are several hundred companies involved in wholesale electricity and gas trading in Europe with up to 10,000 transactions a day, all of which makes it difficult to nail down whether there has been market manipulation.

ACER said the REMIT market monitoring framework was unprecedented, not only for the energy sector and its geographic scope, but also for its complexity.

Since it started tracking exchange transactions on Oct. 7, the EU watchdog had received data on more than 79 million orders and 23 million of trades on the EU's power and gas exchanges by Feb. 15, according to a presentation by the agency.

The agency declined to say how many alerts had been triggered by its surveillance software so far, or potential market breaches detected, citing confidentiality.

According to ACER's annual report published last September, out of 58 potential breaches in 2013 and 2014, 26 were related to suspected market manipulation.

ACER said it proved market manipulation in two out of the 14 cases it closed in 2014, though neither was sanctioned. Estonia and Spain sanctioned two REMIT breach cases in 2015. Both companies in question have appealed.

The EU watchdog uses market surveillance software SMARTS to monitor trading for suspicious behavior. SMARTS, developed in Australia, was acquired by the U.S. Nasdaq Inc. (NDAQ.O) and is also used to monitor trading in Nordic power derivatives.

ACER said the surveillance software has been adapted and customized to fit the monitoring of EU wholesale energy markets, though some industry sources were skeptical about whether it would actually spot price manipulation.

"The agency is confident that the software enables an efficient monitoring of EU energy markets," ACER told Reuters in an emailed statement.

Still, some industry sources say the software used by the watchdog will have trouble pinpointing transgressions, partly because many of the traded power contracts overlap.

For example, the price of a quarterly power contract could be moved by trading in monthly contracts, and those can be broken up into weekly contracts, making it more difficult to trace manipulation through trades.

"ACER will drown in false alarms," one source familiar with the system said. "It will be up to market whistleblowers to bring cases to the prosecution."

http://www.reuters.com/article/us-eu-energy-remit-idUSKCN0X40SV

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China's foreign reserves post surprise rise in March

China's foreign exchange reserves rose slightly in March to $3.21 trillion, the central bank said on Thursday, the first monthly increase since November as cooling expectations of U.S. interest rate hikes eased pressure on the yuan.

The level of reserves beat a Reuters poll forecast of a drop to $3.18 trillion, and compared with $3.20 trillion in February.

The mild increase leaves reserves still down sharply from their peak of $3.99 trillion in June 2014.

Capital outflows from China have moderated, according to recent official data, in part helped by expectations the Fed will slow the pace of interest rate rises this year. Federal Reserve Chair Janet Yellen's comments last week that the U.S. central bank should proceed cautiously in adjusting policy have caused a broad-based retreat in the dollar.

Central bank governor Zhou Xiaochuan said last month recent data showed a significant easing in capital outflows and short-term speculative money leaving China was not worrisome.

The central bank reported its net foreign exchange sales fell sharply to 228 billion yuan ($35.2 billion) in February, down from 644.5 billion yuan in January, a sign of decreased government intervention in support of the yuan.

To be sure, analysts believe that China still faces a tough job keeping the yuan stable, particularly at a time of persistent supply glut and tepid domestic demand. A future U.S. rate hike remains a risk for more disruption to the world's second-largest economy.

The People's Bank of China has moved to curb currency speculation since late December 2015, including limiting yuan-based funds' overseas investments and implementing a reserve requirement ratio on offshore banks' domestic yuan deposits.

The foreign exchange regulator is also studying the introduction of a currency trading Tobin tax, part of efforts to penalise speculators.

China's gold reserves stood at 57.79 million fine troy ounces at the end of March, up from 57.5 million at the end of February, the central bank said on Thursday.

China began updating its reserve figures on a monthly basis in June 2015. Prior to that, the reserve figures were not updated regularly.

http://www.reuters.com/article/china-economy-forexreserves-idUSL3N1782KK

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Animal Spirits Awaken

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Dirty Truth about the Tesla.

But this is only true of the car itself; the electricity powering it is often produced with coal, which means that the clean car is responsible for heavy air pollution. As green venture capitalist Vinod Khosla likes to point out, “electric cars are coal-powered cars”.

If the USA had 10 per cent more petrol cars by 2020, air pollution would claim 870 more lives. A similar increase in electric ones would cause 1,617 more deaths a year, mostly because of the coal burned.

If we were to scale this to the UK, electric cars would cause the same or more air pollution-related deaths than petrol-powered cars. In China, because their coal power plants are so dirty, electric cars make local air much worse: in Shanghai, pollution from more electric-powered cars would be nearly three-times as deadly as more petrol-powered ones

Moreover, while electric cars typically emit less CO₂, the savings are smaller than most imagine. Over a 150,000 km lifetime, the top-line Tesla S will emit about 13 tonnes of CO₂. But the production of its batteries alone will emit 14 tonnes, along with seven more from the rest of its production and eventual decommissioning.

Compare this with the diesel-powered, but similarly performing, Audi A7 Sportback, which uses about seven litres per 100km, so about 10,500 litres over its lifetime. This makes 26 tonnes of CO₂. The Audi will also emit slightly more than 7 tons in production and end-of-life. In total, the Tesla will emit 34 tonnes and the Audi 35. So over a decade, the Tesla will save the world 1.2 tonnes of CO₂.

Reducing 1.2 tonnes of CO₂ on the EU emissions trading system costs £5; but instead, the UK Government subsidises each car with £4,500. All of the world’s electric cars sold so far have soaked up £9 billion in subsidies, yet will only save 3.3 million tonnes of CO₂. This will reduce world temperatures by 0.00001°C in 2100 – the equivalent of postponing global warming by about 30 minutes at the end of the century. Electric cars will be a good idea, once they can compete – which will probably be by 2032. But it is daft to waste billions of pounds of public money on rich people’s playthings that kill more people through air pollution while barely affecting carbon emissions. The Tesla 3 is indeed a “zero emissions” marvel – but that is only because it does not yet exist.

Williams Companies Inc has sued Energy Transfer Equity LP to block a private preferred share offering disclosed last month, saying it was a breach of their merger agreement.

The lawsuit comes after the two U.S. pipeline companies clashed publicly last month over Energy Transfer's efforts to finance its $14 billion takeover of Williams.

The offering provides certain Energy Transfer investors preferential treatment on its distributions, Williams said in a statement on Wednesday.

Williams also said it was suing Kelcy Warren, chairman of the general partner of Energy Transfer.

Energy Transfer said last month it had originally intended to offer the units to all of its shareholders, but Williams did not consent to a public offering.

Energy Transfer said it has not asked Williams for its consent on the private offering.

Shareholders, including Warren, who hold around 31.5 percent of Energy Transfer's units participated in the offering and agreed to take smaller distributions for up to nine quarters.

Williams said the lawsuit is intended to ensure that Williams' stockholders receive the consideration to which they are entitled under the merger agreement.

http://www.reuters.com/article/us-williams-de-m-a-energy-us-idUSKCN0X31NR

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South African FirstRand's retail bank closes accounts held by Zuma friends

A South African company owned by friends of Jacob Zuma, said on Wednesday First National Bank has closed its accounts, the latest local company to shun the Gupta family due to a scandal over its relationship with the president.

"Oakbay has received no reason whatsoever justifying FNB's actions. We are already in the process of moving our accounts to a more enlightened institution," Oakbay Investments said in a statement. FNB is a unit of FirstRand

Three other South African companies, including KPMG and Barclays Africa, have severed ties with a firm owned by the Guptas, a family of Indian-born businessmen.

http://www.reuters.com/article/safrica-zuma-companies-idUSL5N1792C8

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Another Brazil State-Run Giant Readies Its Own Graft Write-downs

A year after Brazilian oil giant Petroleo Brasileiro SA took a writedown of $2.1 billion because of the sweeping corruption scandal known as Carwash, another state-run company is getting closer to reporting its own price tag from graft losses.

The team of lawyers and specialists hired by Centrais Eletricas Brasileiras SA has finished the bulk of its investigation to assess the size of losses from corruption committed by some builders the company contracted, according to a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified. Before it can finish its work, the group needs one more piece to the puzzle: testimony given to federal prosecutors last month by executives from Andrade Gutierrez SA, a construction firm that worked on key projects, from the Belo Monte dam deep in the Amazon jungle to the Angra nuclear plant tucked in a Rio de Janeiro bay, said the person.

That testimony is likely to be made public in coming weeks after prosecutors send it to a Supreme Court judge to sign off on this week, said a second person with direct knowledge of the process. The executives, who admitted to paying bribes to win lucrative contracts at Petrobras, reached plea bargains to testify about other graft losses, including at Eletrobras, as the utility is known, said the two people. Andrade’s press office declined to comment.

While the kickback scheme at Petrobras has exploded publicly and received almost daily coverage in every major newspaper in Brazil, the saga playing out at its counterpart in the electric sector has unfolded largely out of the international spotlight. The larger investigation has helped tip Brazil into its worst recession in a century and paralyzed its political institutions.

Eletrobras’s press office in Rio de Janeiro, where the company is based, didn’t respond to requests for comment.

Almost a dozen Andrade executives testified last month for five days, and at least two of them described an illegal pay-to-play scheme in energy projects like Belo Monte, which is controlled by an Eletrobras unit, said one of the people. According to the testimony, builders agreed to pay kickbacks equal to 1 percent of the 15 billion-real ($4.2 billion) project, which were then allegedly routed to the PT and PMDB political parties as official donations, said the person. The PT and PMDB have repeatedly denied any accusations of wrongdoing.

http://www.bloomberg.com/news/articles/2016-04-05/another-brazil-state-run-giant-readies-its-own-graft-writedowns

The Panama Papers

The Panama Papers reveal:

Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend – a cellist called Sergei Roldugin - is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort where in 2013 Putin’s daughter Katerina got married.
Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
Six members of the House of Lords, three former Conservative MPs and dozens of donors to UK political parties have had offshore assets.
The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
Twenty-three individuals who have had sanctions imposed on them for supporting the regimes in North Korea, Zimbabwe, Russia, Iran and Syria have been clients of Mossack Fonseca. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.
A key member of Fifa’s powerful ethics committee, which is supposed to be spearheading reform at world football’s scandal-hit governing body, acted as a lawyer for individuals and companies recently charged with bribery and corruption.
One leaked memorandum from a partner of Mossack Fonseca said: “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”

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Unicorns, Social Networks and Righteous Indignation

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The Sum of all Fears.

Shannon McConaghy, a portfolio manager with Horseman Capital Management, a London-based$2.75 billion hedge fund, says that it will be Japan's banking-industry collapse that "blindsides the market."

"I do think there will be a banking crisis in Japan," McConaghy told Business Insider.

And according to him, it will likely be a global event too.

He said:

We have seen Japan have banking crises in the past without destroying global economic trends, but at this moment I think the emerging market fragility and low growth could see a crisis in Japanese banks trigger sustained risk-off in global markets, particularly given the importance of Japan as the world's largest net foreign creditor.

Risk-off suggests that we would enter an environment where risk assets fall and safe assets rally. Historically, Japan tends to fall more when markets move in to risk-off mode.

"In the last four major risk-off environments — Asia financial crisis, tech bubble, global financial crisis, euro crisis — Japan fell more. Japan always falls more," McConaghy said.

A bear among bulls

Regional banks remain the fund's largest short grouping. Investors I meet tend to think they have missed the opportunity to short Japanese regional banks. I feel there is substantial downside remaining as real earnings and book values are likely negative for many. They are poorly understood with limited analyst coverage and are a very non-consensus shorts with limited reported short interest.

Before he joined Horseman in 2014, McConaghy spent his career working in the treasury, credit, and risk-management departments of investment banks, giving him a glimpse into how they work. At Horseman, he's spent the last year and a half digging into the Japanese banking system.

"I worry for Japan's economic outlook as I compiled the complete picture of the bank system," he told Business Insider, adding, "I get queasy at the idea of how this is going to play out."

A ticking 'time bomb'

According to McConaghy, there's a confluence of factors at play, including regional banks overstating recurring earnings, a shrinking mortgage market because of demographic changes, rising competition from semi-government players, the impact of monetary policy causing cash hoarding among households to accelerate, and a massive amount of hidden nonperforming loans that will be a "time bomb" as baby boomers start to turn 70.

McConaghy said that he has come to the conclusion that, in the last year, Japan's regional banks have vastly overstated their core recurring earnings with one-off equity gains. As interest rates have fallen in the last four years under the Bank of Japan's quantitative easing, he noticed that the regional banks have somehow reported an increase in "Interest and Dividends on Securities."

It's especially surprising, according to McConaghy, because 75% of the regional-banks securities holdings are in fixed income: 53% government bonds and 22% corporate bonds. Interest rates have fallen to essentially zero.

McConaghy said that banks have been using private-investment trusts' profits from equities to hide the decline in core-interest income. This will backfire now that equity markets have fallen. Japan's Topix index has fallen nearly 11%, while the Nikkei has more than 9.4%.

Kim Kyung Hoon/Reuters

"To me, it seems clear that the recurring earnings that the banks have been reporting are unsustainable and, in fact, may now become negative if they correctly reflect the equity lossesthey have," he said.

Another factor at play is that the regional banks are likely to see their largest market — mortgages — decline significantly because of demographic changes. Japan has a low birthrate and an aging population.

He wrote in another note:

Japan's regional banks face an accelerating population decline. Some will see their key mortgage market (30-49 year olds) decline by over 20% over the next 10 years. As the playing field shrinks, regional banks will also now face a reinvigorated Japan Housing Finance Authority and a new mega-contender in Japan Post Bank. Many will not be able to stay in the ring.

Then there's also the impact of the Bank of Japan's monetary policy. Regional banks, which make money from lending money at higher rates than they charge to depositors, have been squeezed by low interest rates. There's also been an acceleration of cash hoarding among households, he noted.

The biggest worry

What worries McConaghy the most, though, is the huge number of hidden nonperforming loans (NPLs).

"The ignition point for this time bomb will likely come with the mass retirement of bankrupt 'baby boomer' small to medium size enterprise (SME) owners that have just started turning 70," he wrote in another note to investors.

Those borrowers are already not making payments on loans, according to McConaghy. As they age, they can no longer run the company, and it has to close because there's no one else who can run the business.

The regional banks have beenasked to extend credit even though they haven't been getting repaid. As the bankrupt baby-boomer borrowers retire, the banks will have to do a write down of whatever they're not getting paid back, according toMcConaghy.

He said:

Japan has been an economy that's living on borrowed time via hidden nonperforming loans and irregular accounting of equity gains as interest income. The inefficient allocation of labor resources to zombie companies amidst a rapidly declining working age population will continue to dampen economic activity until we see a washout of economically unjustified borrowers.

These are just a few of the "tremendous problems" in the Japanese regional-banking system. A number of these issues are coming to a head, meaning that it's no longer sustainable, according to McConaghy.

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Abe meets the big Keynesians Noble Prize winners.

“Shinzo, my friend,” the prime minister said as he arrived for the lunch meeting, with both leaders in Washington for a two-day nuclear safety conference.

“Japan and Canada are aligned in focusing on investment as opposed to austerity,” he continued, as they sat down. “I know there will be interesting and useful conversations around the table.”

The Japanese leader has signalled his intention to stimulate lagging domestic demand. He’s recently met with famous anti-austerity economists Paul Krugman and Joseph Stiglitz amid reports he might delay planned consumption-tax hikes.

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Oil and Gas

India's Thirst for Oil Is Overtaking China's

In the energy world, India is becoming the new China.

The world’s second-most populous nation is increasingly becoming the center for oil demand growth as its economy expands by luring the type of manufacturing that China is trying to shun. And just like China a decade ago, India is trying to hedge its future energy needs by investing in new production at home and abroad.

India may have one advantage its neighbor to the northeast didn’t. While China’s binge came during a commodity super-cycle that saw WTI crude reach a high of $147.27 a barrel in 2008 -- due in no small part to its demand -- India’s spurt comes during the biggest energy price crash in a generation. While oil has tumbled more than 50 percent from mid-2014 levels, the South Asian nation spent $60 billion less on crude imports in 2015 than the previous year even while buying 4 percent more.

“In addition to the boost from low oil prices, structural and policy-driven changes are under way which could result in India’s oil demand taking off in a similar way to China’s during the late 1990s, when Chinese oil demand was at levels roughly equivalent to current Indian oil demand,” said Amrita Sen, chief oil analyst for Energy Aspects Ltd. in London.

In 1999, China’s economy was less than a 10th of its current size of more than $10 trillion, and bicycles vied for space with taxis and buses on crowded streets in major cities like Shanghai. In the ensuing 17 years the economy, spurred on by foreign investment in manufacturing, grew from the seventh largest in the world to No. 2. Vehicle sales surged and oil demand has nearly tripled since then, positioning the country to overtake the U.S. as the world’s largest crude importer this year.

China’s thirst for energy sent its companies on an unprecedented buying binge on every continent (except Antarctica), scooping up $169 billion worth of energy assets overseas in the past 10 years, according to data compiled by Bloomberg.

India’s rise dovetails with a reopening by Iran, once the second-biggest producer in OPEC until sanctions choked output and investments. Indian Oil Minister Dharmendra Pradhan will lead a delegation this month to the country, he said in an interview. India is working with the Persian Gulf state to develop a port in Chabahar, near Iran’s border with Pakistan and about 800 kilometers from India’s west coast. The two countries are also discussing economic zones and joint projects on fertilizer plants and petrochemical projects, Pradhan said.

“Our engagement with Iran will be multi-dimensional,” Pradhan said.

India appears to be in the same position China was at the start of its growth binge. Asia’s third-biggest economy consumed 4 million barrels of oil last year, according to the International Energy Agency, and is expected to surpass Japan as the world’s third-largest oil user this year. It will be the fastest-growing crude consumer in the world through 2040, according to the IEA, adding 6 million barrels a day of demand, compared to 4.8 million for China.

Just like China’s ascent, the growth is being driven by manufacturing. Indian Prime Minister Narendra Modi’s “Make in India” campaign aims by 2022 to create 100 million new factory jobs and increase manufacturing’s share of the economy to 25 percent from about 18 percent when he took office in 2014.

Manufacturing drives oil use both by increasing the amount of goods that need to be moved around on ships and trucks, and by raising living standards of workers. Rising wages allowed Indians to purchase a record 24 million new vehicles in 2015.

“In a growing economy, where there is so much of emphasis on manufacturing, naturally the demand for energy will grow,” B. Ashok, chairman of Indian Oil Corp., the nation’s largest refiner, said in an interview. “The emphasis on manufacturing and infrastructure building contributes a lot to increasing the employment potential, besides bringing in a lot of investments. There is bound to be a lot of more movements on the roads, in terms of goods and services and passengers.”

http://www.bloomberg.com/news/articles/2016-04-07/india-echoing-pre-boom-china-as-new-center-of-oil-demand-growth

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Halcon Update on “Charting a New Course”

In March MDN reported Halcon Resources had hired a prominent law firm with a specialty in bankruptcies to assist the company to “chart a course” through the current downturn in gas and oil prices.

Yesterday Halcon issued an update on their progress. According to the update, the company is “in discussions” with “certain stakeholders” to negotiate terms of a “potential transaction” to “materially reduce the Company’s indebtedness.”

What does all of that coded language mean? You would think the company whose CEO is famous for his blunt language would just spit it out. We’re left to wonder…

http://marcellusdrilling.com/2016/04/halcon-update-on-charting-a-new-course-i-feel-good/?utm_source=dlvr.it&utm_medium=twitter

Halliburton faces $3.5B break-up fee after failed merger

Halliburton, blocked by federal regulators from buying rival oil-services company Baker Hughes, is staring at another huge disappointment — a $3.5 billion break-up fee.

That figure amounts to the largest cash break-up fee in history — beating the previous champ, the $3 billion in cash plus $1 billion in spectrum paid by AT&T when it was blocked from buying T-Mobile in 2011, according to Dealogic.

On Wednesday the Department of Justice filed a suit to stop the $35 billion merger.

“The proposed deal between Halliburton and Baker Hughes would eliminate vital competition, skew energy markets and harm American consumers,” said federal Attorney General Loretta Lynch.

Halliburton and Baker Hughes, in a joint statement, said they intend to “vigorously contest” the lawsuit.

But the companies, in the same statement, said they “may terminate the merger agreement” if the review extends beyond the April 30 date when Baker Hughes can contractually exit the deal and pocket the cash — something insiders believe will happen.

A federal trial would likely not begin until August, sources said.

What’s more, if the European Commission, which is reviewing the merger, moves to block the deal it could force a two-year delay.

“Fighting a war on multiple fronts is a bridge too far,” said a source following the case. “I don’t know how they can fight this.”

If Halliburton is forced to pay the record break-up fee it would mark a major misstep by its lawyers.

After failing to buy Baker Hughes in 2014 via a hostile bid, Halliburton reached a merger deal sweetened with a 10 percent break-up fee.

The normal fee is close to 3 percent.

http://nypost.com/2016/04/07/halliburton-faces-3-5b-break-up-fee-after-failed-merger/

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API: natural gas well completions down 70 pct in Q1

Estimated natural gas well completions decreased 70 percent in the first quarter of 2016 compared to year-ago levels, the American Petroleum Institute (API) said on Tuesday.

According to API, which represents the interests of the oil and natural gas industry in the U.S., exploratory oil completions fell 90 percent compared to 2015 first quarter estimates.

Total feet drilled decreased 73 percent, with the largest decrease seen in the footage of exploratory wells, API said.

“America’s shale energy revolution has helped the U.S. lower our greenhouse gas emissions while making energy cheaper for American consumers,” said Hazem Arafa, director of API’s statistics department.

“To continue this progress, we must revisit current energy policy, speed up the LNG export approval process and avoid unnecessary regulations to help U.S. producers to compete effectively in the global market under the low-price environment,” Arafa said.

According to API, the oil and gas industry supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.

http://www.lngworldnews.com/api-natural-gas-well-completions-down-70-pct-in-q1/

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Moody’s Oil & Gas Liquidity Stress Index Hits New Worst Level

In March Moody’s Oil & Gas Liquidity Stress Index, a measure of the liquidity health of oil and gas companies, hit a worst-ever high of 27.2%. A month later and the same index has topped the previous bad record–now at 31.6%. Translation: there are a record number of energy companies stretched to the limit, ready to run dry in the cash department. If prices don’t turn around soon, some (many?) of these companies will go under…

http://marcellusdrilling.com/2016/04/moodys-oil-gas-liquidity-stress-index-hits-new-worst-level/?utm_source=dlvr.it&utm_medium=twitter

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Glass Lewis tells shareholders to vote against BP CEO's $19.6mln pay

Proxy advisory firm Glass Lewis has recommended shareholders in BP vote against Chief Executive Bob Dudley's proposed $19.6 million remuneration for 2015 after the British oil and gas company recorded its biggest annual loss.

Shareholders will be asked to vote on the pay of the company's executives at it annual general meeting in London on April 14.

"Given our concerns regarding bonus payouts and the overall incentive structure, we do not believe shareholders should support the remuneration report at this time," Glass Lewis said in a report,

http://www.reuters.com/article/bp-pay-idUSL5N17949F

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TransCanada delays restart of Keystone crude pipeline to Tuesday -traders

TransCanada Corp is delaying the restart of its 590,000 barrel per day Keystone crude pipeline to Tuesday from Friday, four traders familiar with the matter said on Wednesday.

The line, which delivers crude from Hardisty, Alberta to Cushing, Oklahoma, and to Illinois, was shut over the weekend after a potential leak. TransCanada in a meeting on Tuesday afternoon with committed shippers said the pipeline would restart by next Tuesday at the earliest, sources said.

A TransCanada spokesman confirmed in an email that the company had informed its customers that the earliest restart date is early next week.

Time spreads in the benchmark U.S. crude futures contract rallied late on Tuesday following the news, with prompt West Texas Intermediate (WTI) trading as tightly as a 98 cents a barrel discount to the forward month, up from a $1.46 a barrel discount earlier in the day CLc1-CLc2. It settled at $1.22 a barrel.

On Wednesday, the discount for May barrels relative to June, a structure known as contango, was trading around $1.10 a barrel.

TransCanada on Tuesday issued a letter notifying shippers of a force majeure on the line as of 1:30 PM EST, April 2. The company will hold another meeting with committed shippers on Wednesday, sources said.

Canadian heavy crude differentials widened on Wednesday morning on news of the prolonged shut down. Western Canadian Select heavy blend crude for May delivery in Hardisty, Alberta, last traded at $14.90 per barrel below the WTI benchmark, according to Shorcan Energy brokers. That compares with a settlement of $14.20 on Tuesday.

The outage has also disrupted crude supplies to Midwest refiners, forcing refiner Phillips 66 to cut run rates at its 306,000 bpd Wood River refinery in Roxana, Illinois. On Tuesday, Phillips shut a 64,000 bpd sour crude unit and a 16,000 bpd coker at that facility.

TransCanada has said it will only restart the line after receiving approval from the Pipeline Hazardous Materials Safety Administration (PHMSA). A spokesman for PHMSA said that it had no updates as of midday.

http://www.reuters.com/article/usa-oil-transcanada-keystone-idUSL2N1790W5

The Thames Oilport terminal near London opened on Wednesday after nearly four years of development, at a time a global oil glut and a collapse in fuel prices is making storage an attractive investment.

A first tanker, the Seaconger, carrying 21,000 tonnes of diesel was discharging at the terminal, built on the site of the Coryton refinery whose owner Petroplus went bankrupt in 2012, operator Greenergy said.

The terminal is due to be filled to its current capacity of 176,000 cubic metres with fuel, predominantly to serve the London region and southeast England, Thames Oilport said in a statement.

Thames Oilport is operated and partly owned by Britain's largest oil storage company, Greenergy, while Royal Dutch Shell owns a third.

The companies plan to add 64,000 cubic metres of capacity by the end of September this year and while the terminal will initially be used to hold diesel, other fuels will be added.

"Significant progress has been made over recent months, both on site and in the planning process, and we now have a route map to turn Thames Oilport into a fully-fledged import terminal," Greenergy Chief Executive Andrew Owens said.

The terminal will be capable of taking vessels of up to 60,000 tonnes, Greenergy said.

Thames Oilport is also connected to pipelines that feed other parts of the United Kingdom, including the CLH Pipeline System and the UKOP system, but neither Shell nor Greenergy have said if they intend to use them.

NEW TRANSACTIONS

The Coryton project has had a bumpy path since its start almost four years ago, with partners scrapping an initial plan for a larger terminal and Dutch storage company Vopak selling its stake.

But the launch comes at a time when oil producers and traders are scrambling to store fuel as global supplies swell, a fact that has made investments in tanks highly attractive in recent years.

It also provides a much-needed import point for the United Kingdom, which relies heavily on diesel imports.

Greenergy last year formed a partnership with Macquarie Capital, the investment arm of Macquarie Group to buy Vopak's UK assets, including its 33 percent stake in Thames Oilport, as well as the North Tees storage assets in Teeside.

Owens told Reuters he plans to expand Greenergy's operations in the United Kingdom and abroad and was looking for "material transactions".

Greenergy also operates in Canada, the United States and Brazil.

Greenergy's sales volumes rose in 2015 to 15.6 billion litres from 15 billion a year earlier while operating profit climbed to 16.4 million pounds ($23.1 million) from 13.6 million in 2014, according to the company's annual report.

http://www.reuters.com/article/oil-storage-idUSL5N1772D7

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Huge oil tanker traffic jam builds at Iraq's Basra port

A traffic jam of nearly 30 large oil tankers has built up outside the Iraqi port of Basra due to loading delays, with some waiting up to three weeks and costing ship operators around $75,000 a day per vessel.

Shippers and port sources said more delays are expected throughout April as the city's facilities struggle to cope with Iraq's soaring crude output.

The problems at Basra, coupled with continuing storage tank shortages in China, have pushed supertanker rates from the Middle East to Asia to unseasonal highs as the delays disrupt future sailing schedules and charterers cover future tonnage requirements.

"The VLCC (very large crude carrier) market is being sustained by a whole pattern of delays and congestion, affecting ports in Basra," said Ralph Leszczynski, head of research at ship broker Banchero Costa in Singapore, adding that there were further delays in China and South Korea.

There are 27 VLCCs and suexmax tankers with a combined capacity of 43 million barrels, waiting off Basra, shipping data on the Reuters Eikon terminal showed, about twice the norm.

The delays are likely to continue throughout April and could only ease in May, said Omar Al Jarah, a surveyor at maritime consultancy Alwan Marine in Sharjah, as the port struggles with the country's rising crude output.

Iraq exported an average of 3.26 barrels of oil per day (bpd) through its southern terminals in March, up from 3.22 million bpd the previous month and just 2.5 million bpd in 2010.

Port officials were not immediately available for comment.

EIGHT KILOMETRE QUEUE

Some of the tankers, which would stretch more than 8 kms (5 miles) if placed end-to-end, have been waiting three weeks to load crude from Basra Oil Terminal, according to ship tracking data and port agents.

Sources said the current waiting time to load Basra heavy crude is 18-19 days, compared with an average time of 5-10 days.

Basra Oil Terminal has seven loading berths but only a single point mooring facility, SPM No. 3, is being used to load Iraqi heavy crude, port agents and brokers said.

Three of the terminal's berths are closed for maintenance, a Singapore-based tanker broker said.

Rough weather is making it difficult for pilot boats to operate which is adding to the delays, Al Jarah said.

As the delays bind tankers outside Basra, rates for very large crude carriers (VLCCs) jumped from around 50 on the Worldscale measure on March 1 to around 90 on April 1, doubling in cost from $37,250 to $74,700 per day, shipping data showed.

The captain of one ship that has been waiting for two weeks told Reuters by phone he had been given no information when the ship would be allowed to moor and load cargo.

http://www.reuters.com/article/iraq-oil-tanker-traffic-idUSL3N1781VT

Vitol Said to Post Highest Profit Since 2011 as Oil Prices Swing

Vitol Group BV earned $1.6 billion last year, the most since 2011, as the world’s largest independent oil trader profited from price swings in the energy market, according to a person familiar with the matter.

As oil-producing companies and energy-rich nations suffered amid the rout in crude and petroleum-product prices, closely held Vitol benefited from a market that Chief Executive Officer Ian Taylor earlier this year said “favors” traders.

Oil traders such as Vitol, Trafigura Group Pte, Glencore Plc, Gunvor Group Ltd., Mercuria Energy Group Ltd. and Castleton Commodities International LLC are profiting from increased price volatility. They are also filling storage to take advantage of contango -- a situation where future prices are higher than current levels, allowing investors to buy oil cheap, store it in tanks and lock in a profit for a later sale using derivatives.

The combination of contango and oil price swings allowed Vitol, which handles enough crude and refined products to meet the combined needs of Germany, France, Italy and Spain, to increase net income by 15 percent from $1.39 billion in 2014. The 2015 profit is the company’s fourth highest ever, only trailing earnings posted in 2006, 2009 and 2011.

Taking Writedowns

While Vitol only publicly releases its traded volumes and revenue, it does provide financial information to its lenders and some other groups. The person familiar with the accounts asked not to be named, citing confidentiality clauses.

Andrea Schlaepfer, a Vitol spokeswoman in London, declined to comment.

In an interview in February, Taylor said that Vitol, which celebrates its 50th anniversary this year, would report net income for 2015 above that earned in 2014. However, he said the company wouldn’t match the record of 2009.

The company, which is owned by its senior staff, planned to take writedowns in its exploration and production business and make provisions against customers defaulting on contracts, Taylor said. Vitol’s operating profit rose 22 percent to $1.82 billion last year, the person said.

Vitol said last month its traded volumes of crude and oil products rose 13 percent from a year earlier to a record high of 303 million metric tons, equal to about 6.2 million barrels a day. Revenue, which rises and falls in parallel with commodity prices, plunged 38 percent to $168 billion as crude slumped.

The trading house, which is formally incorporated in Rotterdam but has its main operations in Geneva, London, Singapore and Houston, has experienced strong growth over the last 20 years on the back of expanding oil trade, large price swings and, more recently, investment in storage and refining. In 1995, Vitol earned just $20 million.

http://www.bloomberg.com/news/articles/2016-04-05/vitol-said-to-post-highest-profit-since-2011-as-oil-prices-swing

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Saudi Aramco Reduces Pricing for Arab Light Crude to Asia Buyers

Saudi Arabia, the world’s largest crude exporter, cut pricing for May sales of its Arab Light oil grade to Asia as producers get set to meet in Doha to discuss a proposed output freeze.

State-run Saudi Arabian Oil Co. widened the discount for Arab Light crude to Asia by 10 cents a barrel to 85 cents below the regional benchmark, the company said in an e-mailed statement on Tuesday. That matched the expectation in a Bloomberg survey of six refiners and traders.

Brent crude has slid about 50 percent since Saudi Arabia led a 2014 decision by the Organization of Petroleum Exporting Countries to maintain production amid a global supply glut to defend market share and drive out higher-cost producers. Saudi Arabia and other OPEC members will meet with Russia on April 17 in Doha to discuss a proposal to freeze oil output to stabilize prices.

Saudi Arabia will freeze output only if Iran follows suit, Mohammed bin Salman, the Saudi deputy crown prince, said in an interview with Bloomberg. Saudi Arabia’s output rose to 10.21 million barrels a day in February from 10.19 million barrels a day in January, while Iran’s climbed to 3.22 million barrels a day from 3 million barrels, according to International Energy Agency data. Russia’s production was 11.22 million barrels a day in February, the data show.

Saudi Aramco widened the discount for Arab Heavy crude to Asia by 35 cents a barrel to $3.65 less than the benchmark, according to the statement.

Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia, its largest market. Producers in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia, the benchmark is the average of Oman and Dubai oil grades.

http://www.bloomberg.com/news/articles/2016-04-05/saudi-aramco-reduces-pricing-for-arab-light-crude-to-asia-buyers

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China firm wins Myanmar approval for $3 bln refinery

Chinese state-controlled commodity trader Guangdong Zhenrong Energy Co has won approval from the Myanmar government to build a long-planned $3 billion refinery in the Southeast Asian nation in partnership with local parties including the energy ministry, company executives said on Tuesday.

The project, which also includes an oil terminal, storage and distribution facilities, would be one of the largest foreign investments in decades in Myanmar. Myanmar currently imports most of its fuel.

The Myanmar Investment Committee granted the Chinese firm approval to build a 100,000 barrels-per-day (bpd) refinery in the southeast coastal city of Dawei, Li Hui, a vice president of Guangdong Zhenrong and head of the company's refining business, told Reuters.

The Chinese firm will hold 70 percent of the project, and the remaining 30 percent shared by three Myanmar firms - military-linked Myanmar Economic Holdings Limited, Myanmar Petrochemical Corp, an entity affiliated with the country's energy ministry and Yangon Engineering Group, controlled by privately-run HTOO Group of Companies, Li said.

As the approval came before the government led by Aung San Suu Kyi's National League for Democracy was sworn in, Li said his firm was ready to work with the new Myanmar authorities to ensure the project gets off the ground.

"We are confident (about the project) as it has taken into considerations interests from all parties and the refinery will benefit the local people as well as the economic development of the country," said Li.

Guangdong Zhenrong, which first announced the project in 2011, won the green light from Beijing in late 2014 to proceed with the plan.

The firm, which had a turnover of more than 100 billion yuan ($15.45 billion) in 2013, is 44.3 percent owned by Zhuhai Zhenrong Corp, one of China's top four state petroleum traders, which was until the late 1990s an affiliate of the military.

Xiong Shaohui, the company's chairman, has said the project may attract financing from state policy banks such as China Development Bank and China Export & Import Bank, as the investment fits into Beijing's "marine silk road" policy that aims to connect China to neighbouring economies like Myanmar, India and Sri Lanka.

It would be the first foray into refining for Guangdong Zhenrong, which is largely a trader of petroleum products and metals, and more recently the operator of oil storage facilities and a shipyard.

Company executives have also said the firm was open to working on the project with established Chinese energy companies.

China's largest energy group CNPC is among the largest foreign investors in Myanmar, Asia's second-poorest nation, having built oil and gas pipelines that connect the two countries.

http://www.reuters.com/article/china-myanmar-refinery-idUSL3N1782MS

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U.S. judge approves BP settlement for 2010 Gulf of Mexico oil spill

U.S. Judge Carl Barbier granted final approval on Monday to BP Plc's civil settlement over its 2010 Gulf of Mexico oil spill after it reached a deal in July 2015 to pay up to $18.7 billion in penalties to the U.S. government and five states.

"Today's action holds BP accountable with the largest environmental penalty of all time while launching one of the most extensive environmental restoration efforts ever undertaken," U.S. Attorney General Loretta Lynch said in a statement.

The company at the time said its total pre-tax charges from the spill set aside for criminal and civil penalties and cleanup costs were around $53.8 billion. (link.reuters.com/duz94w)

Under the terms of the original agreement with the U.S. Department of Justice and the Gulf Coast states, BP will pay at least $12.8 billion for Clean Water Act fines and natural resource damages, plus $4.9 billion to states. The payouts will be staggered over as many as 18 years.

The rig explosion on April 20, 2010, the worst offshore oil disaster in U.S. history, killed 11 workers and spewed millions of barrels of oil onto the shorelines of several states for nearly three months.

http://www.reuters.com/article/us-bp-spill-idUSKCN0X1274

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TransCanada shuts Keystone pipeline after leak in South Dakota

TransCanada, the company behind the controversial Keystone XL pipeline proposal blocked by the Obama administration, has shut down its pipeline in South Dakota indefinitely following the detection of a possible leak Saturday afternoon.

The Calgary-based firm said it is investigating the incident near its Freeman pump station, in a remote area of Hutchinson County, Reuters reports.

It is not clear how much oil was spilled, but clean-up is underway, the article adds.

TransCanada has advised affected shippers the line will remain closed until at least Friday.

The Keystone pipeline carries oil south from Canada through eastern North Dakota, South Dakota and Nebraska. The pipeline is not the same as the proposed Keystone XL project.

http://www.mining.com/transcanada-shuts-keystone-pipeline-after-leak-in-south-dakota/

U.S. Oil Rig Count Down by 10

The U.S. oil-rig count fell by 10 to 362 in the latest week, according toBaker Hughes Inc., maintaining a trend of declines.

The number of U.S. oil-drilling rigs, viewed as a proxy for activity in the sector, has fallen sharply since oil prices began to fall. But it hasn’t fallen enough to relieve the global glut of crude.

There are now about 72% fewer rigs of all kinds since a peak of 1,609 in October 2014.

According to Baker Hughes, the number of U.S. gas rigs declined in the latest week by four to 88.

The U.S. offshore-rig count was 26 in the latest week, down two from the previous week and down five from a year earlier.

Oil prices tumbled Friday after comments from a Saudi royal family member cast more doubt on a deal for major global exporters to cap output. Saudi Arabia’s deputy crown prince, Mohammed bin Salman, said in an interview with Bloomberg News that the kingdom will freeze its oil output only if Iran and other major producers agree to curb theirs.

http://www.wsj.com/articles/u-s-oil-rig-count-down-by-10-1459532160

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Iran oil minister says will keep raising production

Iran will continue increasing its oil production and exports until it reaches the market position it enjoyed before the imposition of sanctions, Oil Minister Bijan Zanganeh was quoted by the semi-official Mehr news agency as saying.

Zanganeh was speaking at the weekend ahead of an April 17 meeting of OPEC and non-OPEC oil producers in Doha to discuss a possible output freeze to prop up prices, and his comment appeared to further threaten the prospect of an effective agreement at the meeting.

On Friday, Bloomberg quoted Saudi Arabia's deputy crown prince Mohammed bin Salman as saying Riyadh would agree to freeze crude oil production levels only if Iran and other major producers did so. A global glut has pulled down oil prices by as much as 70 percent since 2014.

However, Zanganeh was also quoted by Mehr as saying that "the agreement between the world's top OPEC and non-OPEC exporters such as Saudi Arabia and Russia to freeze output at January levels is a positive step".

On the possibility of his attending the Doha meeting, he said he would certainly attend the meeting "if he had time", Mehr reported.

OPEC secondary sources put Iran's current output at 2.93 million barrels per day (bpd). It is working to regain market share, particularly in Europe, after the lifting of international sanctions in January. The sanctions had cut crude exports from a peak of 2.5 million bpd before 2011 to just over 1 million bpd in recent years.

http://www.reuters.com/article/iran-oil-opec-idUSL5N1770E8

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Libyan oil firm NOC says it will work with new unity govt

Libya's National Oil Corporation said on Saturday it was working with the U.N.-backed unity government, which arrived in Tripoli this week, to coordinate future oil sales and "put a period of divisions and rivalry behind us".

NOC Chairman Mustafa Sanalla also welcomed the U.N. Security Council's renewal on Thursday of measures to prevent illicit oil exports from Libya, a reference to efforts by Libya's eastern government to sell oil independently.

"Combined with the recent announcement by the Petroleum Facilities Guard (PFG) that it intends to reopen export ports it has been blockading, I hope NOC and the country's oil resources can provide a solid platform on which the country's recovery can be built," Sanalla said in a statement.

The new government received the endorsement of the PFG, a semi-official armed faction that controls key oil installations in the east, some of which it has shut down amid political disputes.

Libya descended into political turmoil and armed conflict following an uprising that toppled long-time strongman Muammar Gaddafi in 2011, with two pairs of rival parliament and governments operating in Tripoli and the country's east.

Its oil production has been slashed by rivalry between armed factions, attacks by Islamic State militants and labor disputes, falling to less than a quarter of the 1.6 million barrels per day produced before the uprising.

Hours after Sanalla's statement, two guards were killed in an attack on Bayda field, about 250 km (155 miles) south of the major oil terminals of Es Sider and Ras Lanuf, a guards spokesman said.

Militants loyal to Islamic State have carried out repeated attacks in the area, but have not taken control of any oil facilities, and spokesman Ali al-Hassi said Saturday's attack had been repelled.

The unity government emerged from a U.N.-mediated deal signed in December that has faced continuing opposition from hardliners inside Libya.

Its leaders traveled to Tripoli on Wednesday and have been operating out of a heavily secured naval base in the capital as they seek to gain control of government ministries and financial institutions.

PFG spokesman Ali al-Hassi said on Thursday that the guard was prepared to reopen eastern oil terminals at Zuetina, Es Sider, and Ras Lanuf, though he could not say when this might happen.

The latter two ports have been repeatedly attacked and damaged by Islamic State.

Libya's eastern government issued a statement on Saturday saying that if any ports were reopened, oil should only be exported with the approval of a parallel NOC that it has tried to set up in Benghazi.

The parallel NOC's efforts to export oil have so far been unsuccessful, with major oil trading firms and the international community continuing to support the NOC in Tripoli.

However, boosting Libya's oil sales with the support of the east will be a challenge for the new government. It has so far failed to win approval from the parliament in the east, as required by the U.N.-mediated deal, and the eastern government has indicated that it opposes any transfer of power unless such a vote is obtained.

The U.N. Security Council issued a resolution on Thursday stating that the unity government had the "primary responsibility" for preventing illicit oil sales, urging it to communicate any such attempts to the U.N. committee overseeing Libya-related sanctions.

The resolution also restated a call for member states to cease contact with any "parallel institutions".

http://www.reuters.com/article/us-libya-security-idUSKCN0WZ0AJ

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Alberta's Great Oil-Sands Boom Is Poised to End in 2018: Chart

http://www.bloomberg.com/news/articles/2016-04-01/alberta-s-great-oil-sands-boom-is-poised-to-end-in-2018-chart

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Brazil's Petrobras says to save $9 bln with voluntary layoffs

Executives of Brazil's state-run oil producer Petroleo Brasileiro SA approved a voluntary layoff program to cut about 12,000 jobs and save 33 billion reais ($9.20 billion) by 2020, the company said in a statement on Friday.

The program will cost 4.4 billion reais ($1.23 billion) to be implemented, Petrobras said.

The layoffs will help Petrobras adjust its workforce to a smaller investment plan, generate value for the company and boost productivity, the company said.

Petrobras plans to slash its five-year investment plan by about one-fifth to about $80 billion in the 2016-20 period, an average of about $16 billion a year, according to sources a month ago.

Petrobras had its biggest-ever quarterly loss in the fourth quarter of 36.9 billion reais ($10.2 billion) after booking a large writedown for oil fields and other assets as oil prices slumped and refinery projects faltered.

A year earlier, writedowns were also the cause of Petrobras losses, although they were largely related to the giant price-fixing, bribery and political kickback scandal that has roiled the company and help fuel calls for the impeachment of Brazilian President Dilma Rousseff.

http://www.reuters.com/article/petrobras-layoffs-idUSL2N1740JW

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Alternative Energy

China Three Gorges Plant Q1 output hits new high

China’s largest hydropower project Three Gorges Power Plant generated 15.59TWh of electricity in the first quarter, Xinhua News Agency reported, citing China Three Gorges Corporation.

The output is 2.16TWh higher than Q1 last year, hitting the highest record.

The last generator of the plant started operation in July 2012, enabling the plant to reach combined generating capacity of 22.5 GW.

Besides, another leading Gezhouba hydropower plant generated 3.41 TWh in the first quarter, up 385 GWh from the year before.

The increasing hydropower output will continue to squeeze coal-fired power output.

http://en.sxcoal.com/0/143997/DataShow.html

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IKEA Global Solar Push

"Ikea's ambition is to help and inspire their customers to live a more sustainable life at home and the residential solar program is one step on the way to reach that ambition," the magazine quoted Håkan Nordkvist, head of sustainability innovation at Ikea, as saying. "Last year there were 770 million visits to Ikea stores worldwide and the company sees that as a great platform to fulfill our ambition and for people to be able to live a more sustainable life at home."

Nordkvist also revealed the company would work closely with suppliers to push down solar technology costs.

"To be able to deploy residential solar in a big scale we need to have a very simple and transparent purchase process for the customer and the offer needs to be very affordable, this is what our customers normally get when they visit Ikea and this is what we will continue to have, including the residential solar offer," he said.

A spokeswoman for IKEA confirmed to BusinessGreen the company was working on plans to expand its solar offering.

"Offering solutions for residential solar is part of IKEA Group's sustainability strategy and we have successfully rolled out a pilot offer to stores in three markets; the Netherlands, Switzerland and the United Kingdom," she said via email. "During 2015 we evaluated the pilot and decided on a new business model, offering an expanded range of technologies and a more integrated sales model. In the process we also researched the market to identify suppliers that can provide the most competitive offer for our customers."

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Graphene layer could allow solar cells to generate power when it rains

Solar energy is on the rise. Many technical advances have made solar cells quite efficient and affordable in recent years. A big disadvantage remains in the fact that solar cells produce no power when it's raining. This may change, however: In the journal Angewandte Chemie, Chinese researchers have now introduced a new approach for making an all-weather solar cell that is triggered by both sunlight and raindrops.

For the conversion of solar energy to electricity, the team from the Ocean University of China (Qingdao) and Yunnan Normal University (Kunming, China) developed a highly efficient dye-sensitized solar cell. In order to allow rain to produce electricity as well, they coated this cell with a whisper-thin film of graphene.

Graphene is a two-dimensional form of carbon in which the atoms are bonded into a honeycomb arrangement. It can readily be prepared by the oxidation, exfoliation, and subsequent reduction of graphite. Graphene is characterized by its unusual electronic properties: It conducts electricity and is rich in electrons that can move freely across the entire layer (delocalized). In aqueous solution, graphene can bind positively charged ions with its electrons (Lewis acid-base interaction). This property is used in graphene-based processes to remove lead ions and organic dyes from solutions.

This phenomenon inspired researchers working with Qunwei Tang to use graphene electrodes to obtain power from the impact of raindrops. Raindrops are not pure water. They contain salts that dissociate into positive and negative ions. The positively charged ions, including sodium, calcium, and ammonium ions, can bind to the graphene surface. At the point of contact between the raindrop and the graphene, the water becomes enriched in positive ions and the graphene becomes enriched in delocalized electrons. This results in a double-layer made of electrons and positively charged ions, a feature known as a pseudocapacitor. The difference in potential associated with this phenomenon is sufficient to produce a voltage and current.

https://www.sciencedaily.com/releases/2016/04/160406075516.htm

France to launch third offshore wind tender

France plans to launch a tender to build turbines for the country's third offshore wind farm, Energy Minister Segolene Royal said in a statement on Monday.

The wind farm is to be off the northern harbour town of Dunkerque, Royal said without specifying the size of the tender nor when bidding would close.

France, unlike Britain, Germany and Denmark, does not yet have any offshore wind turbines installed. But it has already awarded two other tenders for offshore wind farms.

Royal said the new tender would include a new procedure of "competitive dialogue" with the bidders to fine tune bidding requirements and to give bidders the chance to improve their bids during the process.

She also said that studies of wind, wave and soil conditions would be done by public authorities before bidders have to make final bids. The government will also simplifyprocedures for building permits for the tender.

France awarded a first offshore wind tender for 2,000 megawatts of capacity in 2012, representing investment of about 7 billion euros ($8 billion).

A consortium of EDF and Alstom won three of the four sites, at Fecamp, Courseulles-sur-Mer (Normandy) and Saint-Nazaire (Loire). Spain's Iberdrola, in partnership with nuclear group Areva, won the fourth site at Saint-Brieuc (Brittany).

A second tender awarded 1,000 MW, for investment of 4 billion euros to a consortium led by French gas and power group Engie in 2014.

The Engie consortium included Portugal's EDP Renovaveis, France's Neoen Marine and Areva and will build 500 MW off the town of Le Treport in northern Normandy and 500 MW off the islands of Noirmoutier and Yeu on the Vendee coast.

http://www.reuters.com/article/france-wind-idUSL5N1771SG

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Tesla secures 180 000 orders for new EV in 24 hrs,

Twenty-four hours after launching, US electric vehicle (EV) maker Tesla Motors has secured more than 180 000 orders for its new Model 3 vehicle, making it the biggest driver of potential lithium demand from the auto sector to date.

By Friday afternoon, that figure had risen to above 198 000 orders, South Africa-born entrepreneur Elon Musk tweeted. "Thought it would slow way down today, but Model 3 order count is now at 198k. Recommend ordering soon, as the wait time is growing rapidly," he posted to Twitter.

“The numbers are really incredible. That’s over $7-billion of potential revenue in one day,” UK-based Benchmark Mineral Intelligence market analyst Simon Moores told Mining Weekly Online.

Tesla on Thursday unveiled its latest model EV, saying the most basic version of the Model 3 would start at $35 000, though the first ones delivered could fetch far higher prices, perhaps even as much as $55 000 or $60 000 owing to customers adding more features like a bigger battery pack with greater range.

The automaker promised the base model would have a range of nearly 350 km fully charged. Musk estimated the average car would sell for about $42 000, including optional features, for total sales of about $7.5-billion, should all customers who made a deposit complete the order.

Moores noted that while Tesla did not discuss the battery size – they were keeping the details for later in the year – based on the assumption that it would be a 60 kWh lithium-ion battery, the pre-orders alone would hypothetically increase demand for lithium hydroxide by 20% to 30%, if Tesla could deliver.

The overwhelming demand prompted Musk to comment on Twitter that Tesla was “definitely going to need to rethink production planning…” Moores said the most interesting aspect would be the wider impact the Model 3 will have on other vehicle sales and, most importantly, the auto sectors’ major producers. “They will feel the need to react, perhaps with an even lower priced car,” Moores hypothesised.

Now the Gigafactory was open, Moores expected to see rapid progress on raw material deals being made. There had been a resurgence of lithium activity through staking and mergers and acquisition – more a result of the present shortage in the market and lithium prices surging, and Tesla’s plans and its Gigafactory progress had also been an added driver.

According to Moores, Australian spodumene projects had seen a surge of activity, starting from around last September. There had also been a rush on Nevada brine projects since the start of the year. “There is of course no guarantee that these mines will come to production – most won’t – but the world does need more lithium,” Moores stressed.

http://www.miningweekly.com/article/tesla-secures-180-000-orders-for-new-ev-in-24-hrs-drives-auto-sector-demand-for-lithium-2016-04-01

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Molycorp another step closer to emerging from Chapter 11 protection

The US Bankruptcy Court for the District of Delaware has confirmed the fourth joint amended plan of reorganisation filed by bankrupt US rare earths producer Molycorp, marking one of the final steps before the company will be able to emerge from Chapter 11 protection as a newly reorganised company.

"The plan confirmation is a major step forward for the company. Throughout this nine-month process, we have made every effort to continue to run our business and service our customers and we thank them for our support and patience,” Molycorp president and CEO Geoff Bedford stated.

The confirmed plan would allow Molycorp's downstream business units, Chemicals & Oxides, Magnequench, and Rare Metals to reorganise under new ownership with a significantly stronger balance sheet.

Under the confirmed plan, which entailed a settlement agreement between an affiliate of funds managed by Oaktree Capital Management, a secured creditor, and unsecured creditors, Oaktree would receive 92.5% of the equity and the unsecured creditors would receive 7.5% of the equity in the reorganised company.

Molycorp had also reached a settlement also was reached with an ad hoc group of the company's 10% secured noteholders to buy through a credit bid the mineral rights and certain intellectual property of Molycorp. The group of 10% secured noteholders was the last significant secured creditor group with which the company had not reached a settlement in a mediation process that spanned several months.

Molycorp advised that its flagship Mountain Pass mine was excluded from the plan, and the equipment and surface property rights at the mine were excluded from the sale. When the plan becomes effective, Molycorp will emerge as a privately held company with a sustainable balance sheet and strong financial partners, the company stated.

http://www.miningweekly.com/article/molycorp-another-step-closer-to-emerging-from-chapter-11-protection-2016-04-01

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Appaloosa raises stake in SunEdison unit TerraForm Power

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Monsanto profit, revenue miss estimates on seed discounts

Monsanto Co, the world's largest seed company, reported lower-than-expected quarterly profit and revenue, as it steeply discounted its seeds to cater to farmers who are cutting spending, sending its shares down about 2 percent in premarket trading.

Farmers in the U.S. have been spending less on everything from fertilizers to seeds as the prices of grains hover near five-year lows and incomes have fallen to their lowest since 2002.

This has forced companies including Monsanto and DuPont Pioneer to offer the steepest discounts in at least six years.

Monsanto has also been under pressure to look at acquisitions as the global seed and crop protection market continues to suffer from high inventories and low prices for agricultural commodities.

Monsanto had approached Bayer AG and expressed interest in its crop science unit, including a potential acquisition worth more than $30 billion, Reuters reported in March, citing sources.

Switzerland's Syngenta AG, which rejected Monsanto's takeover approaches last year, agreed in February to be acquired by ChemChina for $43 billion.

Monsanto raised its 2016 earning per share guidance on Wednesday to $3.72-$4.48 from $3.42-$4.29, primarily due to a change in timing for accounting restructuring expense. It reiterated its ongoing earning per share guidance of $4.40-$5.10.

Net income attributable to the company fell to $1.06 billion, or $2.41 per share, in the second quarter ended Feb. 29, from $1.43 billion, or $2.92 per share, a year earlier. Earnings on an ongoing basis was $2.42 per share.

Total net sales of the company, which is known for its genetically engineered corn, soybeans and the Roundup herbicide, fell 12.8 percent $4.53 billion.

Analysts on average had expected a profit of $2.44 on revenue of $4.76 billion, according to Thomson Reuters I/B/E/S.

Up to Tuesday's close, Monsanto's shares have fallen more than 25 percent in the last one year.

http://www.reuters.com/article/monsanto-results-idUSL3N1793FA

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Precious Metals

Indonesia Bumi Resources Minerals' shares up on hopes of Newmont unit stake sale

Shares of PT Bumi Resources Minerals Tbk surged as much as 22 percent on Wednesday on hopes that the Indonesian miner would reap profits from selling a stake in Newmont Mining Corp's Indonesian operations to a consortium.

The deal is expected to be announced this week, Indonesian businessman Arifin Panigoro, a key member of the group, told reporters on Tuesday. A unit of Bumi ResourcesMinerals owns a 24 percent stake in Newmont Nusa Tenggara, which operates the second-biggest copper mine in Indonesia.

Shares of Bumi Resources Minerals hit 62 rupiah on Wednesday, the highest level since October last year. The broader Jakarta stock exchange was up 0.4 percent.

Bumi Resources Minerals is controlled by family-owned conglomerate Bakrie Group.

http://www.reuters.com/article/bumi-resources-stocks-idUSJ9N16U008

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Silver Is A Coiled Spring, Poised To Catch And Surpass Gold

Silver was battered so low in recent years’ gold bear that it’s spent 2016 trading near stock-panic levels relative to gold. Such super-low prices aren’t sustainable.

So silver is due for a massive mean reversion higher as investors start to return. Their lagging buying finally began in March, and will soon accelerate and become self-feeding.

These big new capital inflows squeezing into such a small market will drive up silver prices faster than gold’s, eventually catching then surpassing gold's gains as in the past.

Silver's reluctant, sluggish participation in early 2016's powerful gold rally has been glaringly obvious. Instead of amplifying the yellow metal's big gains as in the past, silver largely failed to even keep pace. The lack of silver confirmation for gold's big move has certainly raised concerns. But despite silver's vexing torpidity in recent months, it is a coiled spring ready to explode higher to catch and surpass gold.

Silver has always been something of an investing enigma, somehow combining attributes of a highly-speculative investment, a conventional industrial commodity, and an alternative currency. Silver trades like each from time to time, stymieing attempts to classify it. Silver tends to grind sideways boringly for long periods of time, and then skyrocket higher in bulls of such magnitude that they are celebrated for years.

Silver's primary driver has always been the price of gold. While silver can decouple over the short term, these two precious metals have very-high correlations across most multi-year spans. This is the result of silver's unique supply-and-demand profile. Silver's industrial demand, including all fabrication, jewelry, and silverware, accounts for around 4/5ths of total global demand. This tends to be fairly constant over time.

Thus the relatively-static lion's share of silver demand has little impact on its price. But while investing is responsible for just the other 1/5th, it varies wildly depending on sentiment. So it effectively sets silver's price at the margin. And the overwhelmingly-dominant driver of how bullish or bearish investors feel about silver is the price of gold. Silver effectively acts like a gold sentiment gauge, mirroring gold's action.

http://seekingalpha.com/article/3962602-silver-coiled-spring-poised-catch-surpass-gold

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Mag Silver & Fresnillo: Bonanza deposit much larger.

Four new exploration step-out holes were targeted approximately 100 metres below the existing "Deep Zone" Indicated and Inferred Resources (see press release dated May 27, 2014). The four holes were drilled on 150 metre centres over a strike length of approximately 500 metres below the en echelon overlap zone between the East and West Valdecañas Veins and include the three widest and deepest intercepts to date on the property (see Table 1). This new zone appears to be the extension of the southwest dipping Valdecañas Vein system and it remains open to depth along the entire strike length within the Joint Venture boundary.

These intercepts widen progressively up to 32.09 metres (true widths) towards the east in the central portion of the property, significantly extending the widening Deep Zone to depth. The intercepts also show significant amounts of calc-silicate (skarn) alteration in and around the veins and the first significant copper values for the entire area; both indications of higher temperature mineralization conditions. The high silver and gold in Holes P2 and P3 coincide with zones of overprinted quartz veins that cut across earlier base-metal rich calc-silicate vein stages, indicating superimposition of an additional precious-metals rich vein stage.

"We are extremely pleased to see such a dramatic widening in tandem with strong grades in the Valdecañas Vein at these depths. The geological providence of this system continues to deliver significant results." said George Paspalas, President and CEO of MAG Silver.

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Base Metals

Malaysia extends bauxite mining ban by another three months

Malaysia will extend its ban on bauxite mining by another three months, effective April 15, in order to clear stockpiles and remove the risk of the aluminium-making ingredient contaminating the country's rivers, the environment minister said on Friday.

While lower output at the world's top exporter of bauxite threatens to interrupt supply to the world's biggest aluminium producer, China, traders expect the impact to be limited given China's ample stocks of the raw material.

Malaysia's largely unregulated bauxite mining industry has boomed in the past two years to meet demand from China, filling in a supply gap after Indonesia banned exports, but the frenetic pace of digging has led to a public outcry with many complaining of water contamination and destruction of the environment.

Late last year, bauxite mining was blamed for turning the waters and seas red near Kuantan, the capital of Malaysia's third-largest state and key bauxite producer Pahang, following which, in January, the government imposed its first three-month ban on mining the commodity.

"The cabinet today agreed to the ministry's suggestion that the bauxite moratorium in Kuantan be extended by three more months," said Wan Junaidi Tuanku Jaafar, Malaysia's natural resources and environment minister at a press conference.

"One reason for the moratorium extension is to clear the stockpile, only then can we clean the stockpile areas. This is so that we remove the possibility of remnants of the bauxite stockpile contaminating the river and sea in the event of rain."

Existing bauxite stockpiles in Kuantan must be exported before the moratorium can be lifted, Wan Junaidi said, adding that there were 3.6 million tonnes of stocks in Kuantan.

Malaysia had shipped out around 3.5 million tonnes of the commodity to China in December, but exports dwindled to slightly under 1 million tonnes in February.

Malaysia will resume issuing bauxite export permits to help miners clear existing stockpiles, Wan Junaidi said. It had frozen export permits during the first moratorium.

If producers are unable to clear up stockpiles within three months, it is up to them to apply for additional extension, the minister added.

A Singapore-based alumina trader said he expected the impact of the extended ban to be limited due to China's ample stocks as well as low metal prices on the London Metal Exchange (LME) that have curbed production.

Aluminium prices sank 18 percent last year on a China-driven supply overhang and have not made any gains so far in 2016.

China may hold more than 20 million tonnes of imported bauxite stocks, said Xu Hongping, an analyst at China Merchants Futures. "Their stocks could support five months of production."

"China has also started importing bauxite from Guinea, which should replace the bulk of demand from Malaysia," Xu said.

http://www.reuters.com/article/malaysia-bauxite-idUSL3N17B1TW

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Chile's Escondida copper mine looks to counteract falling ore grades

Chile's Escondida, the world's biggest copper mine, said it is banking on a new $4.2-billion concentrator, its third, and $3-billion water desalination plant to counteract falling ore grades and help boost production over the coming years.

Once all three of its concentrators are up and running, Escondida expects to produce around 1.2-million tonnes of copper annually for the next decade. The mine, nestled high in Chile's arid Atacama desert, produced 1.15-million tonnes in 2015.

"Escondida has the potential to operate its three concentrators in the medium term, this will compensate for the natural decline in ore grade and contribute to recovering production in the medium term," the company said on Thursday as it unveiled its third concentrator.

The mine halted its first concentrator in February for renovation work and other adjustments, and the company expects it to be back in operation from July 2017.

Boosting production is also dependent on the completion of Escondida's second water desalination plant, which is slated to be ready in 2017. BHP Billiton controls Escondida with a 57.5% stake, while Rio Tinto owns 30%.

http://www.miningweekly.com/article/chiles-escondida-copper-mine-looks-to-counteract-falling-ore-grades-2016-04-08

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Workers at Freeport’s copper mine in Peru to down tools

Workers at Freeport-McMoRan's Cerro Verde copper mine in Peru will begin Friday a 48-hour strike to protest what they describe as the near disappearance of their profit-sharing bonus this year.

The Arizona-based company, which own a majority stake in the mine, has informed workers they are scheduled to receive an average bonus of $146 (483 soles) this year based on 2015 profits, down from about $9,090 (30,000 soles) they obtained in 2014, local newspaper La Republicareported (in Spanish).

The union said it would stop all activities for an initial period of 48 hours, which would then be extended to 72 hours and finally moved into an indefinite strike until its members demands are heard.

While Freeport has reacted to low copper prices by making several cutbacks at existing operations, the miner has gone ahead with a $4.6 billion expansion of its Cerro Verde open pit mine, which has been in production since the mid-1800s.

The project, which should be close to completion, would triple capacity at the concentrator plant to 360,000 tonnes per day and it is set to catapult Cerro Verde to the top three global copper operations by 2017.

About $22 billion worth of projects have been cancelled or delayed in Peru in recent years due mainly to anti-mining protests.

The copper and molybdenum mine produced 41,873 tonnes of copper in February, up 180% when compared to output during the same month the previous year, according to official data published this week (in Spanish).

Mining investments in Peru, which drove economic growth during the past decade, has fallen dramatically in the past two years as violence linked to relentless anti-mining sentiment keeps scaring investors away.

It is estimated that about $22 billion worth of mining projects have been cancelled or delayed in the South American nation in recent years as a result of social conflicts and red tape.

Peru is the world’s No 3 copper producer and mining accounts for about 60% of its export earnings.

http://www.mining.com/workers-freeports-copper-mine-peru-tools/

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Copper Demand: Better than the market thinks?

The Largest Copper Gold Deposits in the World.

Property	Company	Reserves & Resources (Au Oz.)
Pebble	Northern Dynasty Minerals	107,630,000
Potchefstroom Goldfield	Sibanye Gold	76,149,204
KSM	Seabridge Gold	75,282,000
Sukhoi Log	Government of Russia	61,729,000
Baimskaya	Millhouse Capital	49,834,000
Donlin	Novagold Resources, Barrick Gold	45,000,000
Reko Diq	Antofagasta, Balochistan Dev. Authority, Barrick Gold	41,373,000
Klerksdorp	Sibanye Gold	39,671,492
ERPM Extension	DRDGold	39,112,207
Natalka	Polyus Gold	36,800,000
Snowfield	Pretium Resources	35,097,000
La Colosa	AngloGold Ashanti	33,150,000
Cerro Casale	Barrick Gold, Kinross Gold	32,607,000
Armgold/Orkney	Black Economic Empowerment	31,764,000
Oyu Tolgoi	Turquoise Hill Resources, Government of Mongolia	30,126,300
Evander	Pan African Resources	29,743,000
Tujuh Bukit	Private Interest, PT Indo Multi Niaga	29,531,250
Wafi-Golpu	Newcrest Mining, Harmony Gold Mining	28,458,000
Las Cristinas	Crystallex De Venezuela	27,061,000
Caspiche	Exeter Resource	25,081,600
Lookout Hill	Turquoise Hill Resources, Entrée Gold, Sandstorm Gold	24,667,000
Buffelsfontein	Village Main Reef	23,156,000
Pascua Lama	Barrick Gold, Silver Wheaton	22,818,000
Frieda River	Guangdong Rising Assets Manage, Highlands Pacific	20,497,020
Bougainville	Rio Tinto, Private Interest, Government of Papua New Guinea	20,175,850
Livengood	International Tower Hill Mines	20,147,087
Metates	Chesapeake Gold	19,827,900
Far Southeast	Gold Fields, Lepanto Consolidated Mining	19,800,000
Elang-Dodo	Newmont Mining, Sumitomo	19,711,000
Barlevsky	Supatcha Resources, Local Interest	19,700,000

China's coal offtake from Australia's Gladstone port recovers strongly in March

Australia's Gladstone port shipped 415,000 mt of coal exports to China last month, spiking 176% from February's 150,000 mt, which was a seven-year low at the time, Gladstone Ports Corporation said in an operating report.

China's offtake of coal exports at Gladstone port last month was less than half its 983,000 mt in March 2015, GPC data showed.

Over January-March, China took delivery of 1.13 million mt of Gladstone coal shipments, down 56.5% year on year from 2.6 million mt in January-March 2015, according to the data.

India's offtake of coal exports at Gladstone port rose 10% month on month in March to 1.3 million mt from 1.18 million mt in February, and its shipment volume was 1.25 million mt in March 2015, the data showed.

A total of 3.6 million mt of coal exports were shipped to India from Gladstone port in the January-March quarter, up from 2.8 million mt in the corresponding 2015 period.

Customers in Japan booked 1.99 million mt of Gladstone's total coal shipments of 5.66 million mt in March, making it the leading destination for coal exports, according to the GPC operating report.

Japan's offtake was up 27.5% month on month from 1.56 million mt in February, said the report.

Shipments to South Korea from Gladstone's coal terminals were steady in March at 1.3 million mt, from 1.26 million mt in February, bringing its total for the January-March quarter to 4.1 million mt.

For the year-ago quarter, Gladstone had shipped 2.58 million mt of coal cargoes to South Korea.

Fifteen mines operated by companies including BHP Billiton-Mitsubishi Alliance, Ensham Resources, Jellinbah Resources, Wesfarmers and Yancoal Australia supply coal exports to Gladstone port and its three coal terminals in Queensland.

http://en.chinamining.com.cn/News/2016-04-06/1459909162d75979.html

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Brazil wants Samarco to stop leaks before operations resume

Samarco Mineração SA will not receive Brazilian government authorization to resume iron ore mining operations at the site of a dam burst that killed 19 people until leaks of tailings are stopped, environmental protection officials said on Wednesday.

Samarco, which is jointly owned by mining companies Vale SA and BHP Billiton Plc, hopes to resume operations at the start of the first quarter to be able to pay for a 20 billion real (US$5.53 billion) damages settlement.

The restart depends on authorization from the Minas Gerais state environmental agency Semad, which told Reuters that the miner needs to find a solution for the leaks from dikes built after the dam burst. Tailings are mineral waste and water sludge left over from mining operations and stored in ponds.

Samarco has taken first steps toward reopening the mine, applying for permission to use old mining pits to store tailings. A permit, however, will only be issued once the leaks are stopped, Semad deputy director Geraldo Abreu said.

Abreu said he expected Samarco to find a solution to the leaks in the six months that it will take to issue a permit.

Federal environmental protection agency Ibama said the leaking was allowing water with above-permitted turbidity levels to flow down to the Rio Doce river.

Ibama coordinator for emergencies, Fernanda Pirillo, said half of the 24 million cubic meters of tailings that remained in the dam after it burst have leaked into the provisional dikes, which are leaking the turbid water into the environment.

Samarco representatives said provisional measures taken by the miner comply with environmental norms and a final solution was being sought.

Samarco Chief Executive Roberto Carvalho said last month that iron ore pellet production for the initial two to three years would likely be at a reduced 19 million tonnes per year as the company develops a long-term plan to store the mining waste known as tailings. Before the dam disaster, Samarco was producing about 30 million tonnes per year.

http://www.reuters.com/article/us-brazil-damburst-samarco-environment-idUSKCN0X32P6

Iron ore shipments to China rise 12 pct in March -Pilbara Ports

Iron ore shipments to China from Australia's Port Hedland, used by miners such as BHP Billiton , rose nearly 12 percent in March, data showed on Tuesday.

Exports to China from the port - the world's largest of its kind - reached 32.59 million tonnes in March, up from the 29.14 million tonnes in February, Pilbara Port authority figures showed.

Stronger Australian iron ore exports helped underpin an upturn in prices for the steelmaking raw material. Iron ore .IO62-CNI=SI ended January-March with a 24-percent gain after pushing above $50 a tonne.

It is still the top performing commodity this year despite falling 16 percent from last month's peak, but the wild swings have kept miners wary about the longevity of the price recovery.

BHP has set a production target of 237 million tonnes and Fortescue Metals Group 165 million tonnes in fiscal 2016, ending June 30.

http://www.reuters.com/article/australia-hedland-iron-idUSL3N14O0OO

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China March steel sector PMI rises to 23-mth high

The Purchasing Managers Index (PMI) for China’s steel industry rebounded to 49.7 in March from 49 from February, posting a 23-month high since May 2014, the fourth consecutive monthly increase, showed data from the China Federation of Logistics and Purchasing (CFLP) on April 1.

While indicating an apparent upturn in China’s steel industry, it was still the 23rd straight month below the 50 threshold, signaling the whole industry was still trapped in the woes.

China’s domestic steel prices climbed in March, driven by low stocks at traders and end users before the Chinese Lunar New Year holidays, and intensive restocking activities and slow production recovery after the holidays.

The output sub-index increased to 49.8 in March from 49.5 in February, the highest in recent 19 months, yet still below the 50 mark for 19 straight months.

The new order sub-index also experienced a four-month rise, hitting 53.3 in March from February’s 509, the highest level since May 2014, indicating continuous rebound of steel demand at domestic market.

While the new export order index decreased 9.3 on month to 36.9, the lowest in recent 14 months, mainly attributed to the narrowing price gap between domestic and overseas products amid weak demand and intensified international anti-dumping activities.

This means that, as the release of production capacity accelerates at steel mills, increased domestic supply and low exports may curb the upward strength of steel prices.

The sub-index for steel products stocks stood at 37.7 in March, down from 44.8 last month. It remained below the 50-point threshold for eight straight months, a result of the nationwide destocking in the steel sector.

Daily crude steel output of key steel mills averaged 1.66 million tonnes in mid-March, up 4.71% from ten days ago, the highest since 2016, according to China Iron and Steel Association (CISA).

The rising crude steel output, mainly due to the expanded production recovery spurred by the rebound of steel prices, may exert pressure on further price increase, analysts said.

Steel products stocks in key steel mills stood at 13.76 million tonnes on March 20, a decline of 5.94% from ten days ago and 20.72% lower than the same period last year, showed the CISA data.

Domestic steel prices are expected to gain further upward strength in April, given the rising demand and low inventories lately observed at domestic market. Yet, the room of growth may be limited due to the potential increase of operation rate at steel mills, constrained exports and stricter macro-control of housing sector at China’s big cities.

http://en.sxcoal.com/0/143845/DataShow.html

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China’s 2016 coal output targeted at 3.65 bln T, NEA

China was expected to produce 3.65 billion tonnes of coal in 2016, down 0.82% from 3.68 billion produced last year, said the National Energy Administration (NEA) in a guideline.

http://en.sxcoal.com/0/143823/DataShow.html

Anglo American continues coal divestment's

Diversified major Anglo American on Monday announced plans to divest of its 70% interest in the Foxleigh metallurgical coal mine, in Queensland.

The company has entered into a sale and purchase agreement with a consortium led by Taurus Fund Management. The transaction would be effected through a share sale in Anglo American subsidiaries, which hold the Foxleigh mine.

While the terms of the transaction remained confidential, Anglo American noted that the transaction was subject to a number of conditions precedent. Anglo American in 2007 spent $620-million to acquire a 70% interest in the Foxleigh opencut mine, which delivered 1.86-million tonnes of saleble production to Anglo American’s bottom line in 2015.

Korean steel company POSCO and the Japanese trading and mining investment company Itochu hold the remaining 20% and 10% interests respectively. The divestment of the Foxleigh mine comes after Anglo American earlier announced a re-focus on its core diamond, platinum group metal and copper assets, with the miner pointing out that it would dispose of its Moranbah and Grosvenor metallurgical coal projects.

Anglo American in January this year entered into a sales agreement for its Callide thermal coal mine, also in Queensland, selling the asset to Batchfire Resources. It also sold its Dartbrook coal mine, in New South Wales, to Australian Pacific Coal, in December of last year, in a deal valued at A$50-million.

http://www.miningweekly.com/article/anglo-american-continues-coal-divestments-2016-04-04

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Australia's green groups keep heat on Adani after mine approval

Environmental campaigners say they hope two outstanding court cases can still stop India's Adani Enterprises Ltd from developing a A$10 billion ($7.6 billion) coal project, even after it received a key state government approval.

The granting of a mining lease by the state government marked another step in Adani's long-running bid for approval to mine and ship an estimated 11 million tonnes of coal reserves, building roads, power lines and pipelines to do so.

But activists - some 200 of which protested outside the Queensland parliament on Monday - say the ongoing federal court challenges could still throw Adani's plans into doubt.

Benedict Coyne, a lawyer for the Wangan and Jagalingou people, who have rejected a land use agreement with Adani, said he was surprised a decision had come while the cases were still in process.

"If it is found that the decision was not made lawfully, then any (further) decisions are called into question," he said.

Adani said in a statement on Sunday that it had a "clear and positive" commitment from the government and welcomed the approval as an important milestone.

The group said it expected appeals to be resolved in 2016, allowing construction to begin in 2017.

Adani, which has battled opposition from green groups since work on the project began five years ago, will now need to resolve its financing, with banks under increased pressure not to provide loans for coal in particular.

Several international banks have said they will not provide financing for coal mining in the Galilee Basin, while Standard Chartered and Commonwealth Bank of Australia pulled out of the project in August.

Adani has said tough market conditions should not put pressure on the project because most of its coal is already earmarked for Adani-owned power plants in India, rather than for sale on the open market.

http://www.reuters.com/article/adani-ent-australia-coal-idUSL3N17718M

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Shanxi power installed capacity to reach 100 GW by 2020

Northern China’s coal-rich shanxi province plans to boost its installed capacity of power generation to 100 GW or so by 2020, the ending year of "13th Five-Year Plan" period (2016-2020), state media Xinhua News Agency reported.

The move was part of the province’s efforts to advance the supply-side structural reform in its coal industry, which has been hit hard by a plummet in prices of the fossil fuel, to absorb its surplus coal production capacity and help miners get out of the red.

Shanxi had total coal capacity of 1.46 billion tonnes per annum by November last year, with excess capacity reaching 400-500 million tonnes per annum.

The coal industry across the province has been in overall deficits presently, and coal producers are burdened with great pressure amid high debt ratios.

Pinglu district in Shanxi’s Shuozhou city, ranking top three of counties across the nation in terms of its raw coal output saw its coal output drop 20% on year to 92 million tonnes last year, with losses averaging 40 yuan/t.

"Fifty out of the total fifty-one operating coal companies in the district were in deficit, with combined losses amounting to 4.8 billion yuan ($744.4 million)," said Wang Haifu, assistant of the district’s head.

Major thermal power producers in Shanxi, on the contrary, turned losses into profitability, a robust support for the province to further implement the coal-electricity integration.

By end-February this year, the province’s installed capacity of power generation reached 70.2 GW, ranking 8th in China.

Shanxi has started construction on nine UHV power transmission projects. By 2017, the province will see four UHV lines connecting the Central China Grid, Beijing-Tianjin-Tangshan Grid, Shandong Grid and Eastern China Grid, with outbound transmission capacity reaching 45.8 GW.

Additionally, Shanxi will accelerate direct power sales to end users inside the province and pilot trans-provincial and trans-regional direct power sales, allowing the market to determine the electricity sales price.

More market participants will be seen entering the power generation and sales arena, which will increase competition, and perfect the market-determined electricity pricing mechanism.

http://en.sxcoal.com/0/143682/DataShow.html

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