Mark Latham Commodity Equity Intelligence Service

Tuesday 26th May 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    China rolls out more policies to stabilize economy

    China has been intensively releasing policies since May to secure steady economic growth, with the focus on accelerating investment, as economic indicators in the first quarter and April were far from satisfactory.

    On May 11, the People's Bank of China (PBC) lowered RMB loan and deposit rates for the second time this year, following a previous cut on March 1, aiming to foster a better financing environment for domestic enterprises.
     
    One day after, the Ministry of Finance, the PBC and the China Banking Regulatory Commission (CBRC) jointly announced that local government bonds would be included into collateral framework.
     
    At an executive meeting of the State Council on May 13, it was decided that China will add 500 billion yuan of credit assets securitization pilot.
     
    On May 15, the Ministry of Finance, the PBC and the CBRC said in a statement that banks should not cut or suspend loans to local government financing platforms.
     
    On May 18, China's top economic planner -- the National Development and Reform Commission -- approved the construction of six railways stretching more than 1,000 km and likely to cost about 250 billion yuan.
     
    Government authorities implemented such policies after seeing "the Economic Troika" – consumption, investment and export slowing continuously till April. Consumption usually contributes to 50-60% of China’s GDP growth.
     
    Over January-April, total retail sales of consumer goods in China only grew 10% on year, hitting a new low since February 2006, showed data from the National Bureau of Statistics (NBS).
     
    During the same period, China’s investment in fixed assets rose 12% on year, the slowest growth rate since December 2000, said the NBS.
     
    Export value in April declined 5.4% on year, compared to 14.6% decrease in March but 48.9% increase in February.
     
    China's economic growth slowed to 7% in the first quarter this year, down from 7.3% in the previous quarter.

    http://en.sxcoal.com/0/119308/DataShow.html

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    China invites private investors to help build $318 bln of projects

    China's state planning agency on Monday released a list of more than 1,000 proposed projects totalling 1.97 trillion yuan ($317.75 billion) that it is inviting private investors to help fund, build and operate.

    The National Development and Reform Commission said the 1,043 projects, in sectors such as transport, water conservancy and public services, will be done as public-private partnerships (PPP).

    An NDRC statement on its website did not say whether private investors will include foreign firms.

    As its economic growth slows, China is increasingly turning to PPP, a model not commonly used, to fill a widening funding gap as Beijing clamps down on traditional off-balance sheet borrowing methods used by local authorities.

    The list includes projects planned for 29 areas including capital Beijing and southeastern Jiangxi province.

    "The publication of this library of PPP projects is to help speed up the adoption of the PPP model, and to encourage and guide social capital into the provinces, autonomous regions and municipalities," the NDRC said.

    Among items on the lists, which include contact details, are a 51.9 billion yuan project to build two subway lines in the eastern city of Hangzhou, and a 6.4 billion yuan hospital in Urumqi, the capital of Xinjiang.

    Beijing is striving to rein in local government debt, estimated at around $3 trillion, but there are signs that the clampdown is having an adverse impact on existing projects.

    Chinese policymakers on May 15 ordered banks to keep lending and not reduce the size of their loans to local government projects under construction, especially urban subways and affordable housing.

    http://www.reuters.com/article/2015/05/25/china-economy-infrastructure-idUSL5N0YG03G20150525
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    Oil and Gas

    Missing 100m barrels.

    Oil-market watchers are struggling to reconcile the large estimated oversupply in the market with the much smaller buildup of reported inventories and narrowing contango in futures prices.

    Some blame the barrel counters who compile official statistics on supply, demand and stocks. But the truth is that information on the world oil market is incomplete and it is easy for hundreds of millions of barrels of oil to disappear from the supply chain without being counted.

    According to the three main statistical agencies, the global market has been oversupplied by between 1.5 million and 2.5 million barrels per day (bpd) since the start of the year.

    Stockpiles should have increased by between 200 million and 350 million barrels, according to the International Energy Agency, OPEC and the U.S. Energy Information Administration.

    U.S. crude stocks have indeed increased by around 100 million barrels since the start of the year while China's stocks appear to have risen by between 50 and 100 million barrels.

    But that still leaves more than 100 million barrels that have simply vanished from the international statistical system.

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    Peak Oil Demand?

    Image title

    The world’s economy is experiencing transformational changes that, I believe, will dramatically alter patterns of energy use over the next 20 years. Exponential gains in industrial productivity, software-assisted logistics, rapid urbanization, increased political turmoil in key regions of the developing world, and large bets on renewable energy are among the many factors that will combine to slow the previous breakneck growth for oil.

    The result, in my opinion, is as startling as it is world-changing: Global oil demand will peak within the next two decades.


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    Saudi Arabia rewrites its oil game with refining might

    Saudi Arabia's rapid transition into one of the world's largest oil refiners adds an extra dimension to the oil exporter's role as the driver of OPEC policy.

    When it attends OPEC's next meeting in two weeks, it does so with major new state-of-the-art oil refineries that can profit from cheaper crude and reviving world fuel demand - exactly as international oil firms have over the past six months.

    The kingdom now has stakes in more than 5 million barrels per day (bpd) of refining capacity, at home and abroard, landing it a place among the global leaders in making oil products. Its own target of 8-10 million bpd of refining firepower would eclipse even ExxonMobil.

    "Saudi have moved into the product business in a big way," said Fereidun Fesharaki, chairman of FGE energy.

    Its oil trading arm, Aramco Trading, could soon find at least two thirds of its trading focused on products such as diesel, gasoline and heating oil rather than crude, Fesharaki said.

    Years of investment was designed to fuel the transport, air conditioning and power generation for the kingdom's economic growth. But as OPEC members fight for market share, Aramco's refineries also give it a natural outlet for its 10 million bpd of crude production.

    "In contrast with the crude market which is shrinking, the product market is becoming more global," said Antoine Halff, chief oil analyst with the International Energy Agency.

    The crude oil price rout this year catapulted refining to the fore; trading and refining last year soared to 60 percent of integrated oil companies' first quarter earnings, compared with 18 percent last year, according to Reuters calculations.

    "The crude is so cheap it's pretty much free for them," said Amrita Sen of Energy Aspects. "The margins are going to be massive. It makes trade flows in products very different."

    "The Saudis have a much wider market there because they are competing globally," Halff said. "They diversify vertically by capturing different parts of the value chain and it becomes a hedge and it gives them a lot more market access."

    Aramco has added more than 1 million bpd in capacity through a controlling stake in Korea's S-Oil as well as its two heavy hitting refineries at home, Yanbu and Yasref, both with 400,000 bpd in throughput. Jizan, due on in the Kingdom in 2018, would add a further 400,000 bpd.

    The growth puts Aramco's owned or equity stakes refining at 5.4 million bpd, at least 40 percent above a decade ago. Aramco itself markets more than 3 million bpd of that, tying it with Shell as the world's fourth largest oil refiner.

    http://www.reuters.com/article/2015/05/22/saudi-refining-evolution-idUSL5N0YC4AI20150522
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    Chinese independents get foothold in LNG trade as restrictions lifted



    China's independent buyers of liquefied natural gas (LNG) are taking their first cargoes of the fuel as Beijing permits third-party use of idle capacity at import terminals and approves the new players' long-term plans to build their own facilities.

    Privately run city gas distributor ENN Group and onshore LNG investor Guanghui Energy Co Ltd were among the first to start importing spot cargoes, renting space at PetroChina's underutilised receiving terminals at Rudong and Dalian and each bringing in at least one cargo since late 2014, according to company officials.

    Other new importers include trader JOVO Group and independent oil and gas company Pacific Oil and Gas as China works to meet clean energy targets calling for natural gas' share in its energy mix to double.

    Beijing is freeing up the nation's LNG trade as part of broad reforms that allow private companies to invest in oil and gas exploration as well as pipelines and tank farms, and to engage in importing and exporting. The aim is to help secure supplies while boosting competition and efficiency in an energy sector long dominated by state firms.

    Last year in April, Beijing said parties such as ENN Group - parent of Hong Kong-listed ENN Energy Holdings - and Shenzhen Gas could lease and use that idle infrastructure, and independent energy companies and small buyers are taking advantage of Asia's low spot prices to bring in LNG at a lower cost than some of the supplies contracted by state importers such as PetroChina.

    Companies are also building and planning their own receiving and storage facilities so they can have more control over their future purchase prices and volumes.

    While welcoming the new buyers, suppliers remain cautious, especially when negotiating longer-term supplies with the independent companies.

    "They don't really have a strong balance sheet, or lack a pipeline network," said a marketing executive with a North American exporter.

    Recently a small Chinese buyer had to turn away an LNG delivery from Spain's Gas Natural Fenosa because it lacked the credit rating to swing the deal, according to industry sources and ship tracking services on the Thomson Reuters terminal.

    http://www.reuters.com/article/2015/05/22/china-lng-independents-idUSL3N0YD48P20150522
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    India plans new oil subsidy rules to push ONGC stake sale

    India plans to reform rules governing the level of discounts upstream state oil firms including ONGC offer to retailers, a senior finance ministry official said on Friday, a move that could expedite the sale of a stake in the company.

    The government hopes to sell shares in ONGC and India Oil Corp. to raise about a third of its budget target for asset sales of $11 billion - and reduce its fiscal deficit to 3.9 percent of GDP in the 2015/16 fiscal year.

    Currently ONGC (Oil and Natural Gas Corp), Oil India and GAIL (India) sell crude and fuels like cooking gas at discounted rates to partly compensate retailers for losses they incur on selling fuels at government-set rates.

    But the finance ministry and oil ministry are in talks to work out a mechanism for easing the subsidy burden for the upstream companies, Ratan P. Watal, expenditure secretary at the Ministry of Finance, told reporters on Friday.

    Earlier, sources told Reuters that the oil ministry had set a new subsidy formula for the April-June quarter that would exempt upstream companies from discounting sales of crude oil and refined products if global oil prices are up to $60 per barrel.

    Reuters reported exclusively earlier that the oil ministry had set interim rules to exempt upstream state firms from giving any discounts on crude and refined fuels if global oil prices average up to $60 a barrel this quarter.

    For prices beyond $60 a barrel the companies will have to give a discount of 85 percent of the incremental oil prices and this discount will rise to 90 percent for additional prices beyond $100 a barrel.

    ONGC chairman D.K. Sarraf later confirmed receiving a government order concerning the subsidy formula and said the details were in line with Reuters' reporting.

    On the top of the discount, state-run fuel retailers - Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum - are compensated by the finance ministry for selling cooking gas and kerosene at cheaper rates.

    http://www.reuters.com/article/2015/05/22/india-energy-idUSL3N0YD1QG20150522
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    China's natural gas consumption down 5.9% in Apr

    China's consumption of natural gas decreases 5.9% year on year to 12.7 billion cubic meters (cu m) in Apr 2015, according to the National Development and Reform Commission.

    Last month, the country's natural gas output declined 2.0% year on year to 9.8 billion cu m, while its natural gas imports plunged 20.3% to 3.8 billion cu m.

    In Jan-Apr 2015, China's consumption of natural gas reached 62.9 billion cu m, up 2.4% than that in the same period of previous year.

    The country saw its natural gas output increase 4.7% to 45 billion cu m in the first four months. Its natural gas imports totaled 19.8 billion cu m in the period, reflecting a year on year growth of 7%.

    http://en.chinamining.com.cn/News/2015-05-25/1432517584d72312.html
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    Inpex, Chevron facing delays as worries grow on LNG start-ups

    Japan's Inpex Corporation is thought to be struggling to keep its $US34 billion ($A43.5 billion) Ichthys liquefied natural gas project in northern Australia on schedule because of bottlenecks at a South Korean shipyard that is manufacturing a massive offshore platform.

    The problems highlight the huge risks that remains in the start-up of $US180 billion worth of LNG projects in Australia during the next two or three years.

    Respected energy consultancy Wood Mackenzie is predicting delays not just at Ichthys but at Chevron's large Wheatstone LNG project in Western Australia, and a likely slower-than-expected ramp-up at the over-budget $US54 billion Gorgon project amid various challenges at the sites. The combined impact would be an 11-million-tonnes reduction in Australia's 2015-19 LNG output  than the consultancy was forecasting six months ago.

    The 120,000-tonne offshore platform for Ichthys, the world's largest semi-submersible platform, is due to set sail for Australia in early 2016 from the Samsung Heavy Industries shipyard in Geoje, South Korea. But the yard is stretched with other major construction projects, including Royal Dutch Shell's giant Prelude floating LNG vessel, also to be sited off the far north-west Kimberley coast.

    A second large structure, a ship to be used to produce light oil at the Ichthys field in the Browse Basin, is being built at the Daewoo shipyard, also in Geoje.

    Inpex chief executive Toshiaki Kitamura told investors earlier this month that the Ichthys project was 68 per cent complete and confirmed the start-up for late 2016, a date reiterated by Inpex's head in Australia, Seiya Ito, last week.

    But the overstretched shipyard  has long been seen as a problem, with Ichthys managing director Luis Bon last year describing it as a "hot-point issue".

    Inpex general manager external affairs Bill Townsend said on Friday that areas of the project were "somewhat behind" and pointed to the "heavy workload" at the Korean yards.

    http://www.afr.com/business/energy/gas/inpex-chevron-facing-delays-as-worries-grow-on-lng-startups-20150525-gh7t8e
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    Offshore Rigs Nosedive in US.

    The U.S. Offshore rig count is 29, down 5 rigs from last week, and down 31 rigs year over year.
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    US land rigs up, offshore down

    Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 885 for the week ended May 22, 2015. This was down by three from the previous week’s rig count and indicates the lowest level in almost six years.

    Following the latest decline, the current nationwide rig count is now less than half of the prior-year level of 1,857. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep 12.

    Rigs engaged in land operations rose by 3 to 853. Inland waters activity was down by 1 to 3 rigs and offshore drilling was down by 5 to 29 units.

    Natural Gas Rig Count: The natural gas rig count decreased by 1 to 222. As per the most recent report, the number of natural gas-directed rigs is down 73% from its recent peak of 811 reached in 2012. In fact, the current natural gas rig count remains 86% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 325 active natural gas rigs.

    Oil Rig Count: The count which rocketed to 1,609 in Oct 2014, the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987, dived further (by 1) to 659. As a result of this drop, the current tally is now the lowest in more than four and a half years and well below the previous year’s rig count of 1,528.

    Miscellaneous Rig Count: The count (primarily drilling for geothermal energy) was down by 1 from the previous week to 5.

    Rig Count by Type: The number of vertical drilling rigs was up by 3 to 117, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was down by 6 to 768. In particular, directional rig units decreased by 4 from last week’s level to 85.

    Gulf of Mexico (GoM): The GoM rig count was down by 5 to 28.

    http://www.zacks.com/stock/news/176016/record-fall-in-us-rig-count-down-for-twentyfourth-week

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    Core Bakken assets remain economical despite low oil prices,

    While the 12 counties with Bakken production between North Dakota and Montana have lost the majority of their horizontal rigs over the last eight months, core areas of the shale play remain attractive, especially as oil prices creep towards $70/bbl, says an analyst with research and consulting firm GlobalData.

    According to Jonathan Lacouture, GlobalData’s upstream analyst for onshore Americas, IP30 rates, which measure a well’s average production over its first 30 days of active life, show that there are clear productivity differences between each county.

    Lacouture explained, “Mountrail and Mckenzie Counties both possess median IP30 values of 550 bopd, between 17% and 50% greater than the other counties which contain productive Bakken areas.

    “Both counties possess break-even prices that still generate profit in the current market; however, the margin of this financial gain is dramatically lower than the same date last year. This is reflected starkly by the over 50% drop in active rigs capable of multi-stage lateral drilling in the Bakken.”

    The analyst adds that rig activity will likely remain depressed until prices are up to twice their break-evens. Rig counts have already begun to level off in core areas as the price continues to slowly rise and economic returns increase with it.

    Lacouture continued, “The scalable nature of the Bakken affords it a flexibility, which allows marginal cost barrels to be gradually added or removed, as quickly or slowly as prices allow.

    “However, the more frontier counties, which have lost virtually every active rig, may not see renewedexploration and production efforts in the near term, as they require higher oil prices to remain worthwhile investments.”

    Bakken crude also sells at a relatively large discount to WTI crude due to high transportation costs, contributing further uncertainty to already wary investors and operators.

    The analyst concluded, “If a given Bakken well produces over 50% of its total estimated ultimate recovery in the first nine months of activity, withholding on drilling and completing wells by a few months to a year, until prices climb to, say, above $70/bbl, will prove more economically fruitful than the alternative.”

    http://www.worldoil.com/news/2015/5/22/core-bakken-assets-remain-economical-despite-low-oil-prices-globaldata-says
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    Wildfire shuts down about 9 pct of Alberta crude output

    A wildfire raging in northeastern Alberta has shut down around 233,000 barrels per day (bpd) of production at three oil sands projects and is expected to remain out of control for "some while yet," a provincial government spokesman said on Monday.

    Over the weekend, Cenovus Energy Inc and Canadian Natural Resources Ltd evacuated staff and halted output at two sites as a precaution against the rapidly spreading forest fire.

    On Monday, CNRL said it also cut production at its nearby Kirby South thermal project to 12,000 bpd from around 30,000 bpd.

    In total, roughly 9 percent of Alberta's crude output is offline as a result of the fire, with no clear indication of when production can resume.

    The Alberta government's wildlife information officer, Geoffrey Driscoll, said the fire, which started on Friday, has grown to more than 8,000 hectares and is still out of control.

    "With the warm weather, it's not going to be under control (on Monday) for sure, at least until we get some more firefighters and or we get some weather that helps cool down the area," Driscoll said.

    Cenovus evacuated about 1,800 workers and shut down production at its Foster Creek oil sands site, situated on the Cold Lake Air Weapons Range (CLAWR) about 25 kilometers (15.5 miles) north of the wildfire.

    The project, a 50-50 joint venture with ConocoPhillips , averages about 135,000 bpd.

    "We continue to monitor the situation and we're preparing to get back in there quickly to start up our operations whenever we get word that the situation is under control," Cenovus spokesman Brett Harris said.

    Harris said the full impact on Cenovus production would not be clear until the fire is under control, but the company estimated if the shutdown lasts five days and a gradual ramp-up starts after that, the impact would be about 5,000 bpd for the quarter.

    CNRL evacuated personnel from its Primrose oil sands project due to the nearby fire and shut in about 80,000 bpd of crude production.

    The government declared a province-wide fire ban on Monday after an unusually hot dry spring.

    http://www.reuters.com/article/2015/05/25/canada-oil-sands-idUSL1N0YG0P120150525
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    Alternative Energy

    Saudi Arabia's solar-for-oil plan is a ray of hope

    So what to make of the statement by Saudi Arabia’s oil minister that the world’s biggest oil exporter could stop using fossil fuels as soon as 2040 and become a “global power” in solar and wind energy?

    Ali Al-Naimi’s statement is striking as Saudi Arabia’s wealth and influence is entirely founded on its huge oil wealth and the nation has been one of the strongest voices against climate change action at UN summits.

    “In Saudi Arabia, we recognise that eventually, one of these days, we’re not going to need fossil fuels,” said Naimi at a business and climate conference in Paris on Thursday. “I don’t know when - 2040, 2050 or thereafter. So we have embarked on a program to develop solar energy,” he said in comments reported by the Guardian, Bloomberg and the Financial Times. “Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts of electric power.”

    Naimi also said he did not think that continuing low crude oil prices would make solar power uneconomic: “I believe solar will be even more economic than fossil fuels.”

    Paris is the venue for a crunch UN climate change summit in December and Thursday’s conference was part of the French government’s preparations. The Saudi signal provides a ray of sunlight for those hoping for a strong deal to tackle global warming.

    “Saudi Arabia is sending a strong signal to all oil producers and companies they must plan for an energy transition,” said Mark Fulton, former head of research at Deutsche Bank and advisor to the Carbon Tracker Initiative (CTI).

    “If Saudi Arabia is starting to hedge its bets by developing solar capacity, this could change the fundamentals of the oil market,” said James Leaton, CTI head of research.

    http://www.theguardian.com/environment/damian-carrington-blog/2015/may/22/saudi-arabias-solar-for-oil-plan-is-a-ray-of-hope
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    Biomass is Germany's largest renewable






    Bioenergy generally comes from two sources: forestry and agriculture. Within the EU, Germany is the greatest producer of wood, and wood is by far the greatest source of bioenergy in the country. Roughly 40 percent of German timber production is used as a source of energy, with the rest used as material. Germany is also the leading biogas market – in 2010, more than 60 percent of Europe’s electricity from biogas was produced there, with further dynamic growth to come.

    In 2011, Germany was already using nearly 17 percent of its arable land for energy crops. Studies show that this share can be increased as a result of the decrease in population in the next few decades and increasing hectare yields in the agricultural sector. Environmental organizations, however, point out the environmental impacts of energycrops; for instance, the large increase in the cultivation of corn for use in energyproduction (and the problems associated with corn monocultures) is frequently associated with the plowing of valuable grassland. Energy crops can also have adverse effects on the quality of groundwater and cause soil erosion. To prevent these effects, Germany’s revised Renewable Energy Act (EEG) limits the amount of corn and grain eligible for special compensation. In addition, a set of incentives seeks to encourage increased use of less environmentally polluting substrates, such as material from landscape management activities and residues.



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    Agriculture

    John Deere warns the farm business is about to go from bad to worse

    Deere just put out an ugly outlook for farming and agriculture.

    The maker of construction and farming equipment reported second quarter earnings on Friday morning, crushing expectations for earnings and revenues.

    In the release, Deere noted a rise in sales of construction equipment, which offset losses in sales of agriculture machinery.

    The latter segment suffered because of a plunge in commodity prices.

    And Deere expects things in the farming industry to go from bad to worse.



    Read more: http://uk.businessinsider.com/deere-outlook-on-agriculture-and-farming-2015-5?r=US#ixzz3asJGSDiU
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    Vertical Harvest: Multi-Story Urban Farm Promises Produce and Impact

    For those who view urban farming as a niche movement, here is some surprising news: according to the Food and Agriculture Organization of the United Nations, 800 million people grow fruits and vegetables or raise animals in cities around the world. Urban farms now produce 20% of the world’s food. The report notes that urban farms yield up to 15 times more food per acre than their rural counterparts by reducing obstacles such as insect and animal interference, shorter and less expensive transportation, and more densely planted plots. A startup in Jackson, Wyoming is adding year round growing season to the list of urban farming benefits.

    Vertical Harvest of Jackson Hole, recently broke ground on one of the world’s first vertical farms. The three-story stack of hydroponic greenhouses will run unencumbered by Jackson’s harsh winters and four month growing season. With a 365-day growing season and 5 acres of farmland condensed to a 30 x 150 foot (or 1/10 of an acre) plot of land, Vertical Harvest will provide Jackson with up to 100,000 pounds of locally-grown produce. Through pre-purchase agreements, 95% of this produce has already been committed to local restaurants and grocery stores.

    The Vertical Harvest project is not without its high costs. Greenhouses use a large amount of energy, plus limited land and high demand have caused Jackson’s real estate costs to skyrocket. In addition, the town rests on a site of high seismic risk that requires an expensive steel super-structure. However, Yehia and McBride believe the $3.7 million price tag is worth the social and environmental benefits. With the support of city and state leaders, community members, and a successful Kickstarter campaign, Vertical Harvest is well underway. The farm will open in early 2016, with its first crops harvested a few months later.

    http://groundupproject.net/2015/05/21/vertical-harvest-multi-story-urban-farm-promises-produce-and-impact/?utm_content=bufferf420f&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Base Metals

    Australian miner Independence launches $1.4 bln bid for Sirius

    Australia's Independence Group Ltd on Monday launched a friendly A$1.8 billion ($1.4 billion) scrip and cash takeover of fellow Australian miner Sirius Resources Ltd.

    The acquisition, which has the blessing of both boards, is aimed at forming a diversified base metals and gold mining group, Independence said in a statement.

    Sirius ignited interest in the Australian nickel sector three years ago when it made a major discovery, found by prospector Mark Creasy while looking for debris from NASA's Skylab space station.

    Creasy, a major shareholder in Sirius, has indicated he will endorse the acquisition in the absence of a superior proposal, Independence said.

    Sirius shareholders will receive 0.66 Independence shares for every one Sirius share, plus 52 Australian cents, for an indicative value of A$4.38 per share, or A$1.8 billion, Independence said.

    http://www.reuters.com/article/2015/05/25/independence-grp-ma-sirius-resources-idUSL3N0YG05N20150525
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    Mincor warns of output cut unless nickel price turns

    Shares in Australia's Mincor Resources dropped more than 3 percent to a three-week low on Tuesday after the nickel miner said it was considering production cuts due to persistent low prices for the steel-making metal.

    Australia's sixth-largest nickel miner said it still expected to reach its fiscal 2015 production target of about 8,500 tonnes of contained nickel, but may need to reduce future output unless prices turn around.

    Nickel is down 12 percent since January, extending a protracted plunge that has more than halved the metal's price since 2011.

    Mincor said its flagship Miitel and Mariners mines will be subjected to a review that could lead to lower output starting in November.

    A freeze on capital development during the review meant 50 jobs would go, according to the company.

    Mincor Managing Director David Moore in a statement said he regretted the job losses, "but after four years of falling nickel prices, changes were required in order to safeguard the future of the company."

    To date there is little sign of a turnaround in nickel. London Metal Exchange warehouse stocks of the metal used in manufacturing stainless steel MNI-STOCKS stood at a record 455,790 tonnes, according to the latest Reuters data, reflecting sluggish global demand.

    http://www.reuters.com/article/2015/05/26/mincor-australia-nickel-idUSL3N0YH1R320150526
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    Steel, Iron Ore and Coal

    China’s Apr coking coal imports slump 42pct on yr thermal coal 25.7pct

    China’s coking coal imports slumped 42% year on year but up 27.1% from March to 3.75 million tonnes in April – the second consecutive year-on-year drop, showed the latest data from the General Administration of Customs (GAC).

    Imports from top supplier Australia dropped 45% from the previous year but up 10.5% from a month ago to 1.69 million tonnes in April.

    Over January-April, China’s coking coal imports fell 24.5% on year to 14.67 million tonnes.

    Top supplier Australia exported a total 7.04 coking coal to China during the same period, down 26.7% year on year.

    http://en.sxcoal.com/0/119417/DataShow.html

    China’s thermal coal imports, including bituminous and sub-bituminous coal, dropped 25.7% on year but rose 20.6% on month to 8.76 million tonnes in April – the second straight monthly increase, according to the latest data released by the General Administration of Customs (GAC).

    Australia remained the largest supplier, exporting 4.62 million tonnes of bituminous and sub-bituminous material to China in April, rising 22.0% on month but down 0.5% on year.

    In the same month, China's imports of Indonesian thermal coal rose 15.1% from March but fell 17.7% from a year ago to 3.05 million tonnes.

    Top supplier Australia exported a total 14.81 million tonnes of thermal coal to China during the same period, down 22.1% from the year before.

    Lignite imports from the top supplier Indonesia stood at 16.11 million tonnes between January and April, down 33.45% on year.

    http://en.sxcoal.com/0/119416/DataShow.html
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    China Gaining Influence In This Key Emerging Coal Market

    Another bank, Credit Agricole, voted this week to stop financing coal mining. Suggesting this is becoming a space with little competition for investment -- and perhaps therefore considerable opportunity.

    Like the newly opening coal fields of Kenya. Where this week the government awarded two new exploration blocks -- just the second and third ever offered in the country.

    Kenya's energy and petroleum ministry said Tuesday it has chosen developers for the so-called A and B blocks of the Mui Basin, in the country's eastern region.

    The two coal licenses will go to a consortium including China's HCIG Energy Investment Company -- and also including local player Liketh Investments Kenya. The Chinese developers are reportedly also providing up to $2 billion in funding for a coal-fired power plant to be fed by supply from these blocks.

    The move is a critical one for politics in this emerging energy supply region. Showing that China is further cementing its influence here -- after Chinese firm Fenxi Mining was previously awarded mining rights for Kenya's first-ever coal license in 2011.

    A number of Chinese engineering firms have also partnered with local investors on a proposed 1,000 MW coal-fired power plant near the coastal town of Lamu.

    Such influence could be important here. Given that eastern Africa -- and particularly Kenya -- is shaping up as one of the only untapped coal supply sources for Asia.

    http://oilprice.com/Energy/Coal/China-Gaining-Influence-In-This-Key-Emerging-Coal-Market.html
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    Arch Coal in talks with restructuring advisers to cut debt

    U.S. miner Arch Coal Inc is in talks with restructuring advisers as it seeks to reduce its debt, the Wall Street Journal reported on Friday, citing sources familiar with the matter.

    Arch Coal and its rivals have been under pressure as power utilities switch to cheaper natural gas and big consumers such as China reduce imports.

    The company is working with lawyers at Davis Polk & Wardwell LLP and financial advisers at Blackstone Group LP, the report said, citing the sources. 

    However, Arch Coal is not looking at bankruptcy for a broad restructuring of its debt load, and is exploring ways to cut debt through deals with bondholder groups, the Journal reported.

    The company is in discussions with holders of its bonds due in 2020, the report said. Advised by investment bank Moelis & Co , they include Blackstone's credit arm, GSO Capital Partners and hedge fund Hutchin Hill Capital LP, the Journal reported, citing one of its sources.

    Arch Coal said in a statement after the market closed that it does not satisfy the New York Stock Exchange's continued listing standard.

    Arch Coal, which posted a bigger-than-expected quarterly loss last month, had a total debt of $5.15 billion as of March 31.

    https://mail.google.com/mail/?shva=1#inbox?compose=14d8bd35e89e194e
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    China looking to invest in Fortescue?

    The Australian Financial Review reported that Chinese-linked companies had sought permission from the Foreign Investment Review Board (FIRB) to invest in Fortescue, Australia's third-largest iron ore producer.

    "Fortescue is not aware of FIRB applications by third parties and is in compliance with its continuous disclosure obligations," the company said in a statement to the Australian stock exchange.

    Fortescue's shares touched a two-week high of A$2.495 after the report, which said Fortescue had held talks with China's Baosteel and CITIC about a recapitalisation of the company.

    One or both had applied to FIRB to proceed with an investment, following discussions with Fortescue that only concerned buying a stake or increasing an existing stake, not a full takeover, the paper cited unnamed sources as saying.

    Baosteel and CITIC could not immediately be reached for comment. FIRB declined to comment.

    Fortescue has been struggling to manage its debt following a 55 percent slump in iron ore prices over the past year and a half and its executives have said they would be willing to sell down stakes in mines.

    Fortescue is the only major iron ore producer that does not have any partners in its mines.

    The company built itself from scratch with the help of Chinese funding, as Beijing wanted to ensure that its steel makers would not be wholly dependent on the mega miners, Brazil's Vale, Rio Tinto and BHP Billiton .

    China is unlikely to let Fortescue sink, but any Chinese move to gain more influence over such an important player would be sensitive and regulators would scrutinise it carefully.

    China's Hunan Valin is already Fortescue's second-largest shareholder with a 14 percent stake, while Baosteel has a joint venture with Fortescue on undeveloped magnetite iron ore assets.

    http://www.reuters.com/article/2015/05/26/fortescue-china-investment-idUSL3N0YH0B020150526
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