Mark Latham Commodity Equity Intelligence Service

Friday 7th October 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Renzi's referendum

     This time, though, investors shouldn’t be caught by surprise. A
    > barometer of online chatter that correctly anticipated most
    > Britons would opt to quit the European Union is now suggesting
    > that Italians are so fed up with Prime Minister Matteo Renzi
    > they are willing to vote on Dec. 4 against a slimmed-down
    > legislature just to see him sent home.
    >
    > This measure of discontent was developed by Predata, a New York-
    > based predictive analytics firm founded in early 2015. It scours
    > around 1,000 sources to quantify how much the online activity of
    > the “Yes” and “No” camps is correlated to the ebb and flow of
    > overall interest in the referendum.
    >
    > Since Sept. 29, when Renzi officially kicked off the referendum
    > campaigning, Predata’s measure shows “No” gaining ground and
    > “Yes” plummeting.
    > These signals include content posted to sites such as
    > Twitter and Wikipedia by the likes of Basta un Sì (the official
    > “Yes” campaign) and Beppe Grillo (“No” campaigner and founder of
    > the anti-establishment Five Star Movement), explained Aaron
    > Timms, Predata’s director of content. “There’s a sign that ‘No’
    > at this stage is just a more competent and efficient digital
    > outfit than ‘Yes’ is,” Timms said.
    > A look at Predata’s Brexit signals  — where a less-
    > organized “Leave” camp consistently dominated the online debate
    > amid tight polls — suggests a strong starting position for
    > Italy’s “No” campaign.
    > “What we do know from the experience with Brexit,” Timms
    > said, “is that when you have a digital-rich, content-rich
    > political campaign, the shifting momentum between different
    > sides can really be a good indicator of where public opinion is
    > heading in a way that polls can’t necessarily catch up with.”
    > While not enough to move the Predata dial, Renzi has
    > intensified his Twitter campaign to woo younger voters, whom
    > polls say are the most likely to reject the referendum. The
    > #BastaUnSi (“It takes just one yes”) hashtag, helped by Renzi’s
    > 2.65 million Twitter followers, had largely prevailed the “No”
    > camp’s #IoVotoNo hashtag (“I vote no”) up until this week when
    > it was overtaken in terms of impressions — likes and retweets,
    > for example — according to data from analytics site Keynote.
    > Roberto Baldassari, president of pollster Istituto Piepoli,
    > disagrees that social media is truly representative.
    >  “The ‘No’ vote is ahead but the electorate behind that
    > camp, in particular the Five Star movement, is very fluid,” he
    > said. “I think, looking at the trend, that ‘Yes’ is more likely
    > to win.”
    >
    > Almost 40 percent of those surveyed in Piepoli’s latest poll,
    > which had “No” ahead 54 percent to 46 percent, said they might
    > switch sides .
    > “No” led in five of the last six polls, but within the
    > margin of error. “The recent trend is for the ‘Yes’ vote on the
    > rise, up four to five points from a month ago,” said Antonio
    > Noto, Director of IPR Marketing, whose Sept. 30 poll found 40
    > percent still undecided. This is several times larger, as a
    > share of respondents, than in the final days before Brexit.
    > Investors, meanwhile, seem to trust what Predata’s seeing
    > and that polls won’t ultimately switch in Renzi’s favor. Italian
    > government bond yields recently climbed to a three-month high
    > and the spread with equivalent Spanish securities increased to a
    > two-year high.
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    Power imports into UK hit lowest point in three years


    Imports of electricity into the UK hit a three year low last month but were offset by increased domestic wind, coal and gas-fired power generation.

    The situation arose in September due to outages on the French and Dutch inter-connectors restricted supply.

    Image title

    Platts reported that total electricity imports fell to 1.1 TWh, the lowest recorded since February 2013 when imports were 1 TWh. At the same time last year, total imports reached 1.95 TWh.

    The 2 GW UK-France Interconnector was running at half its capacity between September 19-30, and is currently undergoing a planned outage, which began on October 3 for 19 days, National Grid said.

    Also in September, the 1 GW Dutch-UK BritNed interconnector operator reduced the link's supply to zero for the annual planned maintenance outage, which started on September 19 and ended on September 21.

    Several maintenance outages also reduced nuclear power supplies to 5.72 TWh in September from 5.86 TWh in August, Platts data showed.

    Despite the aforementioned events, wind power production rose on the month to 1.73 TWh in September, which was more than 36 per cent higher than 1.27 TWh recorded during the same month last year.

    Coal-fired power generation recovered from record lows seen in August to rise to nearly 1 TWh in September, but tumbled 76.6 per cent below last year's levels.

    http://www.powerengineeringint.com/articles/2016/10/power-imports-into-uk-hit-lowest-point-in-three-years.html?hootPostID=0f71da78da557ae2a0160ee27a3b3e0a

    Attached Files
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    Total sells Atotech speciality chemical arm to Carlyle for $3.2 bln


    Total has agreed to sell its speciality chemicals arm Atotech for $3.2 billion to private equity firm Carlyle Group, part of a programme under which the French oil company hopes to divest $10 billion worth of non-core assets by 2017.

    Total said the sale price was equivalent to 11.9 times 2015 EBITDA earnings for the business which specialises in metallization, panel plating and corrosion protection.

    http://www.reuters.com/article/total-atotech-carlyle-group-idUSL5N1CD0OZ
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    NWE olefin producers choose naphtha, propane over butane: market sources


    Northwest European olefin producers have largely shifted to naphtha and propane as a marginal feedstock for their steam crackers, turning down more expensive butane, market sources said this week.

    "Butane is definitely out [of the cracking pool], it is going to blenders," a petrochemical end-user said Tuesday, while another added that propane was still in.

    This comes as gasoline blenders' incremental buying interest has tightened both the light naphtha market as well the butane barge complex in the Amsterdam-Rotterdam-Antwerp region as well as Northwest European butane seagoing CIF coasters.

    "The naphtha market has been stronger due to blending demand for West Africa and the US Atlantic Coast," another market participant said, adding it had been a combination of factors with US gasoline commercial stocks at record lows, higher demand for the motor product and issues with US Colonial Pipeline Lines 1 and 2 -- which bring refined products from the Gulf Coast to the Midwest and East Coast.

    he CIF Northwest Europe physical cargo rose $10.75/mt on the day to be assessed sat an almost one-year high of $442.75/mt Wednesday. The last time it was assessed higher was October 10, 2015,according to S&P Global Platts data In terms of physical premium, the CIF NWE naphtha cargo was assessed at $6.50/mt above the front-month swap, up from $4.75/mt the previous day, which represents the highest premium in over three months.

    In the meantime, butane barges were assessed at 101.4% CIF ARA versus physical naphtha Wednesday and CIF coasters stood at 96% relative to naphtha. This is both well above the typical threshold of around 90% below which olefin producers prefer to crack gas as opposed to naphtha.

    Having said this, butane prices have been retreating over the last days as gasoline blenders focused on mixed aromatics exports to Asia as opposed to blending of winter specification gasoline. Overall, however, the butane complex should remain a blenders market in the weeks to come. According to one market source, spot demand from blenders should pick up next week again and support prices.

    For the time being, however, lower prices saw some olefin producers looking for butane on CIF coasters if offer levels were sufficiently low.

    "I think petchems is still buying butane on coasters when they can," a second market source said. This opportunistic buying interest comes as olefin producers are not in a rush to buy with naphtha being an attractive alternative as well as propane, for those with required steam cracker flexibility.

    The November propane/naphtha spread -- the difference between the front-month CIF ARA propane swap and the CIF NWE naphtha swap -- widened to minus $93.25/mt Wednesday from minus $90.25/mt Tuesday. This saw the November propane swap valued at 78.6% relative to respective naphtha swap, thus making propane a viable feedstock for crackers with the required flexibility.

    http://www.platts.com/latest-news/petrochemicals/london/nwe-olefin-producers-choose-naphtha-propane-over-26563591
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    Oil and Gas

    Saudi oil policy?

    Saudi oil policy?

    SAUDI DEPUTY CROWN PRINCE AUTHORIZED OPEC PACT; GAVE GREENLIGHT FOR DEAL WITH IRAN -- SOURCES

    but... SAUDI PRINCE MOHAMMED BIN SALMAN TOLD OIL MINISTER TO NOT GIVE UP MARKET SHARE -- SOURCES

    @zerohedge
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    OPEC could cut output more in Nov if needed: Algeria


    OPEC could cut production at its late November meeting in Vienna by another one percent more than the amount agreed in Algiers last month, if producers reckon it is needed, Algeria's Energy Minister Nouredine Bouterfa has told local Ennahar TV.

    He also told Ennahar that OPEC and non-OPEC members would hold an informal meeting in Istanbul Oct. 8-13 to discuss how to implement the Algiers deal, though he did not give details about who would attend.

    OPEC producers agreed in Algiers in September to reduce output by around 700,000 barrels per day to a range of 32.5-33.0 million barrels per day, its first cut since 2008. OPEC estimates its current output at 33.24 million bpd.

    "We will evaluate the market in Vienna by the end of November and if 700,000 barrels are not enough, we will go up. Now that OPEC is unified and speaks in one voice everything is much easier and if we need to cut by 1 percent, we will cut by 1 percent," Bouterfa told Ennahar in an interview to be broadcast later on Thursday.

    Algeria is one of OPEC's price hawks and this was the first suggestion of a possible further decrease in output. Before the Algiers meeting Bouterfa had been pressing for a one million bpd OPEC production cut to stabilize prices.

    http://www.reuters.com/article/us-oil-opec-algeria-idUSKCN1260QC
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    EIA's Sieminski calls US shale response key to OPEC freeze deal's sucess


    The response of US shale production over the next two months may well impact how OPEC decides to finalize the tentative production freeze it announced last week in Algiers, the head of the US Energy Information Administration says.

    "Shale has dramatically changed the kind of strategy that OPEC was employing," Adam Sieminski told S&P Global Platts on Wednesday.

    "OPEC will be looking at our production statistics and if they saw US production beginning to recover, would make difference to what they were doing," Sieminski said an energy seminar at Japan's Institute of Energy Economics.

    Amid recovering oil prices, Sieminski said "there is still financing available in the US oil drilling activities and upstream investments."

    Sieminski's comments came after OPEC agreed on a blueprint for its first production cut in eight years at an extraordinary meeting in Algiers on September 28.

    OPEC ministers agreed to cut production to between 32.5 million b/d and 33 million b/d. The deal would mean a total cut of 200,000-700,000 b/d, when compared with OPEC's 33.2 million b/d August production, based on OPEC secondary sources.

    Final details of the freeze -- including individual country allocations and which production estimates are used to verify compliance--are to be decided by OPEC's next formal meeting, November 30 in Vienna.

    OPEC has also said it will seek support for the cut from non-OPEC producers.

    Sieminski, who served as chief energy economist at Deutsche Bank for almost seven years before being named EIA administrator in 2012, said the OPEC deal appears aimed at putting a floor under oil prices.

    CAPEX CONCERNS

    But Sieminski added: "We would have to know how effective those cuts going to be," referring to uncertainties over production levels in Libya, Nigeria and Venezuela, which have been racked by domestic turmoil.

    While EIA is maintaining its view on the timing of rebalancing oil markets towards the end of this year and into the middle of 2017, Sieminski said, "If OPEC is successful in reducing production, it might cause that happen sooner."

    But OPEC would need to be careful about its production cut because it could not only send oil prices but also US shale oil production higher, he added.

    US production has proved resilient even without higher prices as the EIA has revised higher its US production forecast for 2017 due to increased drilling activity, rig efficiency and well-level productivity.

    EIA forecast 2017 production would be 8.5 million b/d per its latest Short-Term Energy Outlook in September, which was 200,000 b/d higher than its August forecast for next year.

    "EIA's long term projection says oil price will likely to go up so if OPEC cuts too much production, the prices are going to go high," Sieminski said. "We are going to have more oil production in shale in the US, [which would result in] the less demand so it's a self-correcting mechanism."

    He reiterated a long-standing concern that he and many other market watchers have had as the oil price slump has persisted: Will the industry's drastic cuts in capital investments make it unable to support mid-term global oil demand growth?

    EIA analysis has suggested that sustained prices below $50/B may not be enough to sustain enough supply, with the global economy starting to pick up.

    "EIA's view is that there [will be] big growth in global oil demand unless we have some kind of global recession, which we are not forecasting," he said.

    "To me an interesting question is goes beyond some of these short-term questions about OPEC's cut in oil production activities in the near term more towards: 'Are we going to have enough capital investment in oil area to provide for likelihood of demand for petroleum continues to grow globally over the next five to 10 years because of growth in economy?'"

    http://www.platts.com/latest-news/oil/tokyo/interview-eias-sieminski-calls-us-shale-response-26563578
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    Libya's Zueitina loads first crude export cargo since 2015


    A tanker on Thursday loaded the first crude export cargo at Libya's Zueitina oil terminal since late last year, a port official said.

    Zueitina is one of three previously blockaded ports in Libya's oil crescent region that reopened last month after forces loyal to eastern commander Khalifa Haftar took control of the terminals.

    The port official said the Ionic Anassa was loading 800,000 barrels of oil for export to China.

    The reopening of Zueitina, Ras Lanuf and Es Sider has helped boost Libya's oil production, which had been slashed to a fraction of the 1.6 million barrels per day (bpd) that the OPEC member was producing before its 2011 uprising.

    Zueitina had been shut since early November 2015, and Ras Lanuf and Es Sider since December 2014. Exports have already resumed at Ras Lanuf but are yet to restart at Es Sider, which was badly damaged in fighting.

    A Libyan oil official said national production stood between 505,000 bpd and 510,000 bpd on Thursday, just up on levels recorded at the start of the week. Before the ports changed hands on Sept. 11-12, Libya's output had been hovering between 200,000 and 300,000 bpd.

    Haftar's forces have pledged to leave the ports in control of the National Oil Corporation (NOC) in Tripoli.

    The NOC has said it hopes to raise production to as much as 900,000 bpd by the end of the year, but that reaching this target depends on funding for operating costs and the reopening of blockaded pipelines in western Libya.

    http://www.reuters.com/article/libya-security-oil-idUSL5N1CC43F

    Attached Files
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    Oil curves move above $50 as financial confidence in crude rises

    Oil curves move above $50 as financial confidence in crude rises

    U.S. oil futures held above $50 per barrel on Friday as the entire crude forward curve pushed above above that level in a sign that financial markets have increasing confidence in the sector.

    U.S. West Texas Intermediate (WTI) futures CLc1 settled at $50.44 per barrel on Thursday - the first settlement above $50 since June 24 - and were up 6 cents on Friday at $50.50 per barrel at 0542 GMT.

    Brent futures LCOc1 already moved over $50 at the start of this week, and were trading at $52.57 per barrel at 0542 GMT on Friday, also up 6 cents.

    With both front-month contracts above $50 per barrel and each forward curve in contango, in which contracts for future delivery are more expensive than those for immediate sale, the entire crude futures complex has moved back over $50 per barrel. 

    "There is still no end in sight for the current bullish run. Speculators have been buying every short-term dip, a strategy that has evidently been working very well so far," said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

    "This trend could well continue for some yet as after all crude oil's fundamental outlook continues to improve: as well as the planned OPEC oil output cut, we have seen surprise inventory destocking in the U.S. for five straight weeks now. Consequently, U.S. oil stocks have now fallen below 500 million barrels for the first time since January," he added.

    The Organization of the Petroleum Exporting Countries (OPEC) plans to agree on a coordinated production cut when it next meets in late November, in a bid to rein in a global fuel supply overhang that has dogged prices for the last two years.

    "OPEC kept the heat on oil prices overnight. The Algerian Energy Minister saying that OPEC could cut by more than the 0.5 million barrels per day initial agreement," said Jeffrey Halley of brokerage OANDA.

    "More significantly representatives of both OPEC and Non-OPEC producers will meet for a tete-a-tete on the sidelines of yet another energy conference next week."

    Despite the increasing confidence by financial oil traders in higher prices, the physical market remains relatively weak.

    In a sign of ongoing oversupply, top exporter Saudi Arabia cut its benchmark crude prices to Asia this week, and analysts at JBC Energy warned there was "a growing disconnect between the physical and the financial (oil) market" which would likely converge.

    HSBC on Friday said recent gains in Brent and WTI should be kept in perspective, cautioning that seasonal aspects of the price rally would fade again soon.

    http://www.reuters.com/article/global-oil-idUSL3N1CD0UP
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    Will Russia's 'staggering' hike in oil production dampen recovery?


    Russia's output has raised concerns that non-OPEC producers will offset any cuts by the cartel.

    Russia is smashing post-Soviet oil records, producing more crude in September than it has in decades and raising questions of whether promised output cuts by OPEC would succeed in reducing the worldwide oil glut.

    Russia produced 11 million barrels per day in September, a 200,000-barrel or 2 percent jump over its previous post-Soviet record, set in January, and a 400,000-barrel or 4 percent increase on the year, the country's energy ministry reported. Analysts at Tudor Pickering Holt pegged the rise to a weak ruble, meaning Russia, which depends heavily on oil to support its economy and finance its government, has to pump more oil to generate the same amount of revenues.

    Investment banking firm Piper Jaffray & Co. called the increase "staggering."

    The Organization of the Petroleum Exporting Countries last month reached a preliminary agreement to cut production by up to 750,000 barrels a day, with plans to formalize the reduction at OPEC's formal meeting in Vienna in November. That agreement has helped push oil prices toward $50 a barrel again. Also supporting prices has been a steady drop of petroleum stockpiles in the United States.

    The Energy Department reported Wednesday that commercial crude inventories fell by about 3 million barrels, the fifth consecutive week of declines amid strong energy demand. Crude settled at $49.83 a barrel, the highest close more than three months.

    Russia's record production, however, has raised concerns that non-OPEC producers will offset any reductions in output by the cartel. U.S. shale drillers, for example, have put scores of rigs back to work as prices have come off their February low of $26 a barrel and hovered between $40 and $50 a barrel in recent months.

    Russia has at times promised to cut production and aligned itself with OPEC to reduce supply and drive up oil prices. If so, it didn't last month.

    The rise was driven in part by an 8 percent bump in production on the North Pacific island of Sakhalin, analysts said. State-owned oil companies Rosneft and GazpromNeft, plus the private giant Lukoil, contributed the largest increases.

    Still, analysts aren't convinced the Russian production spike will last. Piper Jaffray said September figures were, in fact, a few thousand barrels lower than the International Energy Agency expected. Tudor Pickering said Russian Energy Minister Alexander Novak has discussed freezing production just under 11 million barrels per day. And Rosneft and Lukoil have predicted their volumes would decline in the second half of this year due to financial constraints.

    http://www.houstonchronicle.com/business/energy/article/Russian-oil-production-spikes-U-S-drillers-9802156.php?t=1541eb104c438d9cbb&utm_content=buffer04fd6&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Russia's Rosneft to pay up to $5.3 billion for Bashneft stake: Ifax


    Russian oil producer Rosneft may pay up to 330 billion roubles ($5.29 billion) for a controlling stake in mid-sized oil company Bashneft, Interfax news agency cited two sources familiar with the planned deal as saying on Thursday.

    The deal to buy a stake of just over 50 percent in Bashneft, and all other accompanying agreements, are to be signed by Oct. 15, the agency reported.

    http://www.reuters.com/article/russia-bashneft-privatisation-idUSR4N1C900Z
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    Chief exec of Norway Oil Industry Association warns over oil revenues


    The chief executive of the Norwegian Oil Industry Association has warned access to new area of exploration is essential in order to boost revenue in the Scandinavian country.

    Karl Eirik Schjoot-Pedersen made the comments after the government put estimated of oil revenue in the state budget at NOK138billion.

    The boss of the Association said the decrease any imbalance between revenue from petroleum industry and spending should be taken seriously.

    He said revenue from the sector was essential in order to maintain and further develop the Norwegian Continental Shelf (NCS).

    Schjoot-Pedersen added flagging revenue, regardless of the oil price, would mean in years to come there would be less income from the industry as a number of fields also come towards the end of their life.

    In 2014, revenue from the industry was NOK312billion and oil spending was NOK156billion.

    In the budget for next year, revenues are estimated at NOK138billion.

    Schjott-Pedersen also warned declining revenue could lead to a rise in taxes adding it showed “how important” it was to maintain large revenues from oil and gas operations.

    https://www.energyvoice.com/oilandgas/north-sea/121193/chief-exec-norway-oil-industry-association-warns-oil-revenues/
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    Exxon Is Hit With Fine From Chad Five Times Country’s GDP


    Exxon Mobil Corp. was ordered to pay a record $74 billion fine in Chad for underpaying royalties in the central African nation where the company has been drilling for 15 years, according to a court document.

    The fine is about five times more than Chad’s gross domestic product, which the World Bank estimates at $13 billion. The High Court in the capital, N’Djamena, announced its ruling Oct. 5 in response to a complaint from the Finance Ministry that a consortium led by Exxon hadn’t met its tax obligations. The court also demanded the Texas-based oil explorer pay $819 million in overdue royalties, according to the document.

    The penalty exceeds the $61.6 billion financial blow BP Plc incurred after the Deepwater Horizon disaster in 2010 killed 11 rig workers and fouled the Gulf of Mexico with crude for months, and is more than 70 times larger than the $977.5 million Exxon was ordered to pay fishermen and other victims of the 1989 Valdez oil spill in Alaska. Chad is unlikely to collect most of the fine, said Jeffery Atik, who teaches international law at Loyola Law School in Los Angeles.

    “Nobody is going to cooperate outside of Chad in enforcing this judgment,” Atik said in a telephone interview. “This leaves Exxon exposed to possibly losing everything it has inside Chad but that’s such an extraordinary number, I can’t imagine the assets they have there are worth that much.”

    Marine Terminal

    Exxon, the world’s biggest oil producer by market value, began exploring Chad for crude in 2001 and has been pumping oil there since 2003. The company also operates a pipeline that hauls Chadian oil to a marine terminal in Cameroon for export. The two other companies named in the case are Chevron Corp. and Malaysia’s state-owned Petroliam Nasional Bhd. Chevron sold its stake in Chad in 2014 and spokeswoman Isabel Ordonez declined to comment.

    “We disagree with the Chadian court’s ruling and are evaluating next steps,” Exxon spokesman Todd Spitler said by e-mail Thursday. “This dispute relates to disagreement over commitments made by the government to the consortium, not the government’s ability to impose taxes,” he said in a later e-mail, declining to comment on the $74 billion figure.

    The president of the court, Brahim Abbo Abakar, confirmed the ruling by phone on Thursday.

    “It’s correct, however, the provisional enforcement is lower than the amount demanded by the tribunal,” he said, referring to the sum of $669 million also cited in the document. He didn’t elaborate.

    Chad’s Finance Minister Ngabo Seli Mbogo said the court ruling was clear and he didn’t want to comment further.

    “It’s not a realistic thing and it will never be collected,” said Robert Amsterdam, a lawyer at Amsterdam & Partners LLP who has represented international corporations and sovereign governments. “This is much more about signaling that a renegotiation is in order than something that should trouble shareholders in any way.”

    http://www.bloomberg.com/news/articles/2016-10-06/exxon-mobil-disagrees-with-chadian-court-royalties-ruling-itydgz6c
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    Fracking go-ahead: Government approves Cuadrilla plans, overruling Lancashire council


    Fracking in Lancashire by energy firm Cuadrilla has been approved by the Government, overruling the decision of local councillors.

    Sajid Javid, the Communities Secretary, decided the shale gas explorer should get planning consent to drill and frack its site at Preston New Road.

    A final decision on a second site, Roseacre Wood, has been delayed to allow Cuadrilla to give more evidence about the traffic impact.

    However, if the company can address concerns raised by the planning inspector, Mr Javid has said he is also minded to grant consent.

    The four wells Cuadrilla plans to drill at Preston New Road would be the first horizontal shale wells to be fracked in the UK.

    http://www.telegraph.co.uk/business/2016/10/06/fracking-by-cuadrilla-approved-at-one-lancashire-site-overruling/
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    Tokyo Gas considers swapping LNG cargoes


    Tokyo Gas of Japan could swap its United States LNG volumes with equivalent quantities of Asian sourced liquefied natural gas.

    Michiaki Hirose, Tokyo Gas president said the company would deliver its US sourced LNG to a number of locations while bringing Asian sourced LNG to Japan, Platts reports.

    The company has booked 0.72 million tons of LNG per year from the Cameron LNG project and an additional 1.4 million tons of LNG per year from the proposed Cove Point LNG terminal.

    Hirose was reported as saying that swapping cargoes could provide resistance to price movements resulting in cheaper LNG cargoes. He added that the company could consider forming alliances for LNG business.

    A number of Japanese companies have already made arrangements to deliver USA LNG to other destinations.

    Kansai Electric and Engie agreed to cooperate on LNG procurement. Engie agreed to buy 0.4 million tons per annum of LNG from Kansai’s North American LNG. Depending on markets conditions, Engie could then sell an equivalent amount of LNG to Kansai Electric in Japan.

    The transaction will start in 2019 for an initial period of four years which can be extended up to 20 years.

    Earlier this year, Jera, a joint venture between Chubu Electric and Tepco, agreed to sell about 1.5 million mt to EDF Trading at European LNG terminals for a period of approximately two and a half years beginning in June 2018. The volumes will be sourced from the Freeport LNG project in the United States.

    http://www.lngworldnews.com/report-tokyo-gas-considers-swapping-lng-cargoes/
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    Undaunted by Gas Price Cut, ONGC Firm on $4.5 Billion Capex


    India’s largest oil and gas producer will continue with its record investment plan despite a cut in domestic gas prices, which were reduced for the fourth consecutive time last week.

    Oil and Natural Gas Corp. plans to invest about 300 billion rupees ($4.5 billion) in the year beginning April 1, including investment in its gas-rich Krishna-Godavari block off India’s east coast, ONGC’s Director for Finance A.K. Srinivasan said in a phone interview. It will spend as much as 293 billion rupees this financial year as part of its plan to boost oil and gas production.

    “Gas prices are cyclic. Capex will continue,” Srinivasan said, adding that the company’s profit falls by about 24 billion rupees for every $1 cut in the gas price. “You can’t produce for one year and choke up and then continue again.”

    The company has previously said it plans to invest $5 billion in its block in the Krishna-Godavari Basin. Its plans to spend 11 trillion rupees by 2030 to raise output is key to Prime Minister Narendra Modi’s target of cutting import dependence by 10 percent in the next six years. India, which imports most of its oil, will be the fastest-growing crude consumer in the world through 2040, according to the International Energy Agency.

    On Friday, India cut the price of locally-produced natural gas by 18 percent for the six months beginning Oct. 1 to $2.5 per million British thermal units based on its gross heat value. It also reduced the ceiling price for natural gas extracted from difficult fields by 20 percent to $5.3 per million Btu.

    “At such low gas prices, the upstream producers will be hit the most as gas production will turn loss making for most fields,” K. Ravichandran, senior vice president for corporate ratings at Mumbai-based credit assessor ICRA Ltd., said in a note on Monday.

    ONGC’s shares rose 0.9 percent to 269.15 rupees at the close in Mumbai.

    http://www.bloomberg.com/news/articles/2016-10-06/biggest-india-explorer-to-push-record-spend-as-gas-price-is-cut

    Attached Files
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    Tanzania Plans to Commission Natural Gas Plant by 2025


    Tanzania, which has at least 57 trillion cubic feet of natural gas reserves, plans to commission a plant by 2025 to process as much as 11.1 trillion cubic feet.

    The Ministry of Energy’s plan estimates that the East African nation can recover as much as 70 percent of the resource. It also projects total demand at 32.5 trillion cubic feet over three decades, with 8.8 trillion cubic feet going to power generation, according to a document handed to reporters in the commercial capital, Dar es Salaam.

    Tanzania utilizes about 33 billion cubic feet each year to generate 711 megawatts of electricity, according to the document. The nation plans to export at least 3.1 trillion cubic feet of natural gas to East and Southern Africa in the 30 years through 2045 as global prices drop.

    “Declining global prices mean regional markets maybe be a better option to monetize the resource,” according to the plan.

    Global production of natural gas is forecast to grow 7.6 percent each year to reach 500 million tons per year in 2030, according to the International Gas Union.

    “Tanzania should not necessarily start allocating gas ratios as that might encourage the growth of unsustainable industries,” Paul Hogarth, an upstream commercial team leader at London-based BG Group said at a conference in Dar es Salaam Wednesday.

    http://www.bloomberg.com/news/articles/2016-10-06/tanzania-plans-to-commission-natural-gas-plant-by-2025
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    BP to set up fuel stations in India, challenge state firms' dominance


    Global oil major BP plans to open up to 3,500 fuel stations in India, becoming the second overseas firm drawn to rising demand for gasoil and gasoline in the world's fastest growing major economy.

    BP will join European oil major RoyalDutch Shell as the only foreign firms selling fuel in the country, challenging the market share of state refiners that control 93 percent of India's more than 56,000 outlets.

    An oil ministry official told Reuters BP would be issued permission to set up the stations by Monday. A BP India spokeswoman confirmed the company had applied for a license to set up the fuel stations.

    India is replacing China as the driver of global oil demand growth as its economy expands and a rising middle class buys motor vehicles. The International Energy Agency expects India to account for a quarter of global energy use by 2040.

    "There is space for everybody as our fuel demand is growing," said M.K. Surana, chairman of state-owned Hindustan Petroleum Corp, adding that the entry of new players will make the retail market more competitive.

    "State refiners will have to adopt novel ways to boost sales and retain their market share," added Surana, whose firm signed a deal this week to sell milk products at its retail outlets to attract customers.

    India ended control over gasoline prices in 2010 and on diesel in 2014, making retail fuel attractive for private players like Essar Oil and Reliance Industries which are expanding their retail presence.

    India recently allowed private firm Haldia Petrochemicals Ltd to see up fuel stations.

    STRENGTHENING CONFIDENCE

    BP pulled out of a refinery and marketing joint venture with HPCL in 2006, when retail prices were way below market rates and federal financial support was given only to state firms.

    "It is highly unlikely that India will revert to the subsidies regime, more so because of low oil prices. This strengthens the confidence of new players to enter the Indian fuel market," said Tushar Tarun Bansal, director at Singapore based consultancy Ivy Global.

    Oil minister Dharmendra Pradhan said in June that global oil majors including Saudi Aramco and Total planned to tap the retail fuel market in India.

    Indian fuel markets could be a lucrative prize for BP, which reported a 45 percent drop in second-quarter earnings. It has also received an Indian licence for jet fuel sales.

    It is not clear where BP will source fuels for local sales. India's pricing formula gives higher profits to retailers with refining plants or domestic supply sources.

    "BP already has a tie up with Reliance on the gas side so there is a possibility they may strengthen this relationship further to the downstream side of the business," said Bansal.

    BP in 2011 acquired a 30 percent stake from Reliance in some exploration blocks and formed a gas sourcing and marketing tie-up with the Indian conglomerate. Reliance operates the world's biggest refining complex in western India, but controls only a small share of retail fuel markets.

    "Any refining or product sale tie-up with BP will suit Reliance which recently decided to exit from the African market, leaving it to explore new geographies and clients for its fuel," Bansal said.

    http://www.reuters.com/article/bp-india-oil-idUSL3N1CC2QG
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    NGSA winter outlook sees colder temperatures, demand pushing US natural gas prices higher


    Colder temperatures this winter are likely to drive up residential and commercial demand for natural gas and provide support for wholesale prices, compared with 16-year lows seen last winter, the Natural Gas Supply Association said in its winter outlook released Wednesday.

    NGSA projects overall demand will rise 3.2 Bcf/d, or 3.6%, to a record average of 92.3 Bcf/d in the coming season as a winter that is forecast to be 12% colder than the year-ago period boosts demand from the residential and commercial sectors by a combined 4 Bcf/d, the group said in its winter 2016-17 outlook.

    The trade association's outlook evaluates impact of weather, economic growth, customer demand, storage inventories and supply on prices. It expects support from weather and overall demand, while seeing a "neutral" impact from the economy, storage and winter supply.

    The projection is based on published data from independent and government sources including the US Energy Information Administration and National Oceanic and Atmospheric Administration. NGSA used to Energy Ventures Analysis and EIA data for its demand and supply projections, and IHS Economics data for its economic projections.

    The projected demand increase in the outlook is tempered by a decline in power sector consumption, as the expected rise in gas prices will lead to reduced coal-to-gas switching.

    "NGSA anticipates temporary fuel switching to natural gas to continue this winter, but at about half the volumes that took place during last winter's record-setting fuel switching," said Bill Green, chairman of NGSA and vice president, downstream marketing for Devon Energy, in a statement.

    EVA projected the decline in the power sector demand to be 3.3 Bcf/d, or 13%.

    Residential demand is "the biggest change from last year," Green said in a briefing for reporters. The outlook projected residential demand will grow by 12% compared with last winter's levels.

    The EVA data underpinning the outlook puts average residential demand for the season at 22.8 Bcf/d, up 2.8 Bcf/d from last winter. It also points to a 2.4% rise in industrial demand to 22.9 Bcf/d, driven by new facilities coming online, including capacity expansions in the gas-intensive petrochemical and fertilizer industries.

    Weather remains a major wildcard, according to Green, who said last year's outlook "failed miserably," because of what proved to be the second-warmest winter on record, with the average price at $1.98/MMBtu at Henry Hub, he said. This year's forecast of colder weather is still 3% warmer than the 30-year average, he noted.

    "If it got 20% colder than normal I still think that with storage and all the production we have, we'll be fine," he said. There could still be some regional issues such as capacity constraints in the Northeast, he added, but the prices spikes seen in the past are less likely, he said.

    Overall, Green said the market is well positioned, with robust production, full storage and new infrastructure adding flexibility.

    "Somebody might say [prices will be] 50% higher. At $3 it's still an excellent price for generators and residential customers," he said.

    The EVA report said that based on recent NYMEX futures prices, gas prices for the winter are expected to be 50% higher than they were last year.

    On the storage and supply front, the NGSA outlook projected a small decrease in production of 0.5 Bcf/d, and a potential for record inventory of gas in storage.

    Exports to Mexico are projected to grow 800 MMcf/d, Green said, adding the group expects that number to rise going forward as new infrastructure is built to carry gas to Mexico.

    http://www.platts.com/latest-news/natural-gas/washington/ngsa-winter-outlook-sees-colder-temperatures-26563559
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    FERC updates on Plaquemines LNG project


    The US Federal Energy Regulatory Commission (FERC) has released an update on its pre-filing environmental review of Venture Global Plaquemines LNG’s application to construct an LNG export terminal and the Gator Express Pipeline interconnected pipeline.

    FERC states that it is continuing to conduct its review of the planned project based on the information that it has have received from Plaquemines LNG and Gator Express Pipelin, as well as the comments that it has received from stakeholders. FERC received one set of draft Resource Reports (RRs) from Plaquemines LNG and Gator Express Pipeline Project and provided its comments in February 2016. The companies provided revised draft RRs in August 2016 and FERC is currently reviewing these to provide its comments to Plaquemines LNG and Gator Express Pipeline.

    After Plaquemines LNG and Gator Express Pipeline file their formal application, FERC will issue a Notice of Application and identify the CP Docket number for the project. This Notice of Application will outline how interested parties can become intervenors and how persons can continue to comment on the project.

    When FERC has all of the information necessary to complete its analysis and write the Environmental Impact Statement (EIS), it will issue a Notice of Schedule for Environmental Review that will identify the date for issuing the EIS.

    Venture Global Plaquemines LNG LLC plans to construct and operate an LNG terminal on the west bank of the Mississippi River in Plaquemines Parish, Louisiana, US. Venture Global Gator Express LLC (Gator Express Pipeline) plans to construct and operate two natural gas supply pipelines that would connect the LNG terminal to the existing interstate natural gas grid. The two pipelines would be mostly parallel and adjacent to one another. These co-located pipelines are identified as Southwest Lateral Texas Eastern Transmission LP (TETCO) and Southwest Lateral Tennessee Gas Pipeline LLC (TGP). Each of these pipelines would have a nominal gas supply capability of 1.97 standard billion ft3/yr of natural gas.

    https://www.lngindustry.com/liquefaction/06102016/ferc-updates-on-plaquemines-lng-project/
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    Oil company dealt another blow on plan to ship crude by train


    For the second time in a month, a California community has rejected an oil company’s plans to ship crude oil on long trains through Sacramento and other cities to coastal refineries.

    The San Luis Obispo County Planning Commission on Wednesday voted to reject a request by Phillips 66 Co. to build a facility at its Nipomo Mesa refinery that would allow it to receive oil shipments via three trains a week, some of which likely would have traveled through Sacramento and other Northern California communities.

    The 3-2 vote to deny Phillips can be appealed by the company to the county Board of Supervisors.

    Two weeks ago, the City Council in Benicia unanimously rejected a proposal by Valero Refining Co. that would have allowed it to receive oil from two 50-car trains daily on rail lines through downtown Sacramento, Roseville, West Sacramento, Davis, Dixon and other Northern California communities, as well as through the Feather River Canyon watershed.

    Both oil companies were seeking local approval to build spur rail lines and oil transfer stations at their refineries to access oil from North American crude-oil fields, which have seen a boom from new hydraulic fracturing – or fracking – technology.

    The requests pitted the oil companies against anti-oil activists, environmentalists and leaders of communities along rail lines, including officials in Sacramento and Davis who said they were concerned about the potential for catastrophic derailment and fires involving the volatile liquid.

    The increase in crude-oil train shipments nationally has led to more derailments and explosions over the last half-dozen years. The worst of those accidents killed 47 people in a Canadian town three years ago. Although oil trains have become common in many areas, large oil shipments on rail remain rare in California, due in part to opposition. Several 100-car trains of volatile oil from the Bakken region of North Dakota traveled through midtown Sacramento in 2014 to the Bay Area, but those shipments stopped late that year.

    Local leaders cheered the decisions by Benicia and San Luis Obispo to reject the plans. Yolo County Supervisor Don Saylor said the Benicia council decision, in particular, sends a message nationally that local communities can have a say over whether or not mile-long oil trains will travel through their communities.

    “The community of Benicia, in the crosshairs of history, made one of those decisions that will make a difference for the country. They stood up and said the safety of our communities matters,” Saylor said.

    In a letter this week, a Valero oil company attorney contended the city of Benicia acted illegally when it rejected Valero’s plan to ship two 50-car oil trains a day through Northern California to the company’s Benicia refinery. Benicia officials, however, said they believe their decision is legally solid.

    Valero officials have suggested in the past they might sue the city. Valero spokesman Chris Howe in an email this week to The Sacramento Bee said the company “continues to consider all of its options.”


    Read more here: http://www.sacbee.com/news/local/article106475912.html#storylink=cpy
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    Precious Metals

    The world's largest gold project, just got a whole lot bigger


    During the final days of 2014 Canada's minister of the environment gave the green light to Seabridge Gold's KSM project in northern British Columbia, the world's largest undeveloped gold-copper project by reserves.

    The federal and provincial environmental assessment process took nearly seven-years and KSM was only the second metal mine in five years to receive approval.

    A new preliminary economic impact study released by Toronto-based Seabridge on Thursday, the already ambitious project takes another leap forward.

    During the first seven years of operation annual gold output would top 1 million ounces

    According to a statement, Seabridge now envisages a much larger operation than the one outlined in the preliminary feasibility study released last month and in the process improves both the environmental impact and economics of KSM.

    The PEA calls for mill throughput of 170,000 tonnes per day, 40,000 tonnes more than the earlier study which Seabridge says can be done without significant redesign of facilities. Initial capital costs have been increased by just less than 10% to $5.5 billion.

    In the PEA the bulk of the operations are moved underground and using the block-cave method Seabridge says it can reduce waste rock by a whopping 81% or 2.4 billion tonnes over the 51 year life of the mine.

    By vastly increasing the amount of copper mined life of mine operating costs are now a negative $179 an ounce while all-in costs fall to just $358 an ounce.

    Measured and Indicated Mineral Resources at KSM are estimated at 2.9 billion tonnes grading 0.54 grams per tonne gold, 0.21% copper and 2.7 grams per tonne silver which translates into 49.8 million ounces of gold, 13.6 billion pounds of copper and 253 million ounces of silver.

    During the first seven years of operation annual gold output would top 1 million ounces and life of mine annual production is estimated at 592,000 ounces of gold, 286,000 pounds of copper and 2.8 million ounces of silver.

    http://www.mining.com/the-worlds-largest-gold-copper-project/?utm_source=twitterfeed&utm_medium=twitter

    Attached Files
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    Fund managers, analysts weigh political risk in SA mining


    The undue influence of politics on South African mining was highlighted by fund managers and analysts at the Joburg Indaba today, but Allan Gray portfolio manager, Sandy McGregor, stressed the most important aspect of a decision to invest in mining was the orebody.

    Taking part in panel discussions, the fund managers and analysts also emphasised investors had a choice between mining and non-mining shares. Non-mining shares were being more favourably viewed because of the meltdown in mining shares over the past three years.

    According to Fiona Perrott-Humphrey, senior adviser to the mining team at Rothschild, London: “The London view is that optimal capital allocation in mining is an oxymoron. Their view is that miners should get real with themselves and the first sector to get real has been gold. Investors now want to see the rest of the mining industry perform.”

    Stephen Arthur, head of equity; asset management at ABSA Asset Management commented: “My decision every day is: do I buy Shoprite or do I buy a South African mining share? I learnt a new buzzword the other day – optics – and the optics on Shoprite are far better than the optics on a South African mining company.

    “You have all these legislation and political issues that take up management time with very little management time being spent on actually running the mining operations. One mine manager told me he spent up to 70% of his time on community issues.

    “That’s not good enough for me and I think the reason the majors have moved out of South Africa is because there’s too much hassle – too much noise. We need to eliminate the noise and get back to mining.

    “I know PicknPay [South African retail business] will be open 365 days a year. I cannot say with certainty how many days a mine will be able to operate each year because of issues like Section 54 safety shutdowns.”

    Perrot-Humphrey added: “There is a perception in London that that capital allocation in the South African mining industry is being affected by political decisions. They would like to see pure supply and demand issues driving capital allocation.”

    But Allan Gray portfolio manager Sandy McGregor stressed that “what matters is the ore deposit”.

    “Mining has been going on in South Africa for 130 years and the number of great deposits remaining is relatively few. There are some really great deposits in the Congo.

    “There’s a small problem with the country but, in the long term, the mining business is likely to be in the Congo because that’s where the deposits are. A great deposit can make a lot of money for shareholders.”

    Arthur pointed out the “biggest slug” of the financial benefits from mining actually went to government with shareholders only getting 9% of the benefits.

    “What I cannot believe is that government is not bending over backwards to promote the mining industry and get things working properly,” he said.

    Arthur’s comments were built on by Cadiz Corporate Solutions mining consultant Peter Major who said: “It’s the environment here which is so anti-mining. You keep thinking government cannot miss all the benefits of mining but they have; month after month, and year after year.

    “We have a government that is totally oblivious. Every one of the 2,000 pieces of legislation makes mining harder and harder. If that’s not fixed nobody has any reason to invest here,” he said.

    http://www.miningmx.com/top-story/28155-fund-managers-analysts-weigh-political-risk-sa-mining/
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    AMCU says platinum wage talks at a critical stage


     Wage talks are at a "critical stage" between South Africa's Association of Mineworkers and Construction Union (AMCU) and Anglo American Platinum, Impala Platinum and Lonmin, the union's president said on Thursday.

    Speaking to journalists on the sidelines of a mining conference, Joseph Mathunjwa would not say if AMCU had moved from its original demands of close to 50% pay hike. Amplats' chief executive said on Wednesday that his company was "fairly close" to sealing a wage agreement with AMCU and other unions.

    http://www.miningweekly.com/article/amcu-says-platinum-wage-talks-at-a-critical-stage-2016-10-06
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    Base Metals

    Rio CEO says Mongolia won’t receive mine dividend for ten years


    Rio Tinto Group said Mongoliawon’t receive any dividend from the giantOyu Tolgoi mine for ten years as the world’s second-biggest mining company prioritizes completing a $5.3-billion underground expansion.

    Oyu Tolgoi, which at its peak will be one of the top five coppermines in the world, is partly owned by the government andTurquoise Hill Resources , which is majority controlled by Rio. In the past, Rio has said the project, the biggest in the country’s mining history, could account for about one-third of Mongolia’s gross domestic product.

    “We shouldn’t forget that Oyu Tolgoi is a long-term project,”Jean-Sebastien Jacques, Rio’s CEO said in an interview with Bloomberg Television Mongolia in Ulaanbaatar on Thursday. “It will take us five years to build the infrastructureand seven to nine years to ramp it up.”

    “Until we get to a steady state, which is clearly ten years down the road, we will not pay a dividend to anybody,” he said.

    Rio reported net earnings of $53-million from Oyu Tolgoi in the first half of this year. Mongolia owes Turquoise Hill about $1-billion, Jacques said.

    Rio and Mongolia have been embroiled in various disputes since the miner took control of the project in 2010. When Jacques was previously head of the copper unit, he was able to diffuse much of the tension after inviting former Prime Minister Chimediin Saikhanbileg to his west London home. The gesture helped pave the way for a crucial $4.4-billion financing accord last year to fund the underground expansion.

    Rio’s board has been in the country this week visiting the mine located about 340 miles (547 km) south of Ulaanbaatarand 50 miles north of the border with China. Jacques said he had met with new Prime Minister Erdenebat Jargaltulgain the city earlier this week.

    “We had a very open conversation on where we are in relation to our joint project,” he said. Construction of the underground expansion is “well underway” and about 1 600 people are working on the project, he added. Staffing is expected to reach 2 400 by year-end.

    Frustrated voters swept the Democratic Party from power in June, giving the Mongolian People’s Party an overwhelming mandate to address the deterioration of the economy. This month, the country requested assistance from the International Monetary Fund to help it deal with an economic crisis stemming from a downturn in mining since 2011.

    Following the change of power, the government recently ousted three board members at the State-owned miningcompany that helped steer Oyu Tolgoi out of the long-standing dispute between Rio and the government.

    Last December, Rio said it paid a total of $1.3-billion in taxes, fees and other payments to the government of Mongolia. In 2015, taxes to the country were $278-million. Rio has been shipping concentrates by road to customers, mostly in China, since 2013. The mine is expected to be in operation for more than 75 years.

    Turquoise Hill Resources owns 66% of the Oyu Tolgoideposit. Mongolia’s State-owned Erdenes Oyu Tolgoi holds the share of the mine not owned by Turquoise Hill. Rio owns 51% of Turquoise Hill.

    http://www.miningweekly.com/article/rio-ceo-says-mongolia-wont-receive-mine-dividend-for-ten-years-2016-10-07
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    Return of power to BHP's Olympic Dam mine delayed due to high winds


    Oct 7 Power is unlikely to be restored to the area near BHP Billiton's Olympic Dam copper mine in South Australia before Monday, nearly two weeks after a massive outage forced it to shut down, power supplier ElectraNet said on Friday.

    BHP said the time taken to restore power was "regrettable," and that most operations remained on care and maintenance.

    ElectraNet said crews were working to erect temporary towers and restring transmission lines but winds in the area were causing delays.

    "Work is progressing steadily and while we are continuing with our best efforts to aim for Sunday, we expect a completion date of Monday may be more realistic, provided weather conditions remain stable," ElectraNet's manager of network services, Simon Emms, said.

    BHP is losing an average of 567 tonnes of copper production at a cost of $2.7 million a day, based on last year's output of 203,000 tonnes and current metals prices of around $4,800 a tonne.

    The restoration of power could also see the neighbouring Prominent Hill copper mine resume operations.

    The blackout occurred after strong winds destroyed major power lines and lightning struck a power plant.

    http://www.reuters.com/article/bhp-billiton-australia-storm-idUSL3N1CD196
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    US zinc recycler Horsehead emerges from bankruptcy, turns attention to Mooresboro

    US zinc recycler Horsehead emerges from bankruptcy, turns attention to Mooresboro

    US zinc recycler Horsehead Holding Corp has emerged from nearly eight months in bankruptcy and now is expected to turn its attention to mapping plans to repair and restart its idled Mooresboro plant in North Carolina, according to court filings.

    The Pittsburgh-based company exited Chapter 11 reorganization on September 30, the effective date of a final reorganization plan approved on September 9 by Judge Christopher Sontchi of the US Bankruptcy Court for the District of Delaware, the company's attorneys said in a filing.

    Under the plan, substantially all of Horsehead's long-term debt was wiped out with about $205 million in senior secured debt converted to equity in the newly named company -- Horsehead Holding LLC.

    The company will attempt to chart a new course for its most valuable asset, Mooresboro, idled in late January prior to Horsehead and certain of its subsidiaries filing for bankruptcy on February 2, less than a month after they defaulted on loan agreements with two banks.

    S&P Global Platts metals market reports feature global news, analysis, daily pricing, and commentary on major metals including aluminum, copper, lead, tin, zinc and precious metals, as well as ferroalloys and steel.

    If you would like to learn more about Platts nonferrous metals products or services, fill out our contact form and a member of Platts staff will be in touch.

    Platts metals reports will help you monitor global events and quickly spot opportunities or potential pitfalls, and help you make better, well-informed business decisions.

    http://www.platts.com/latest-news/metals/washington/us-zinc-recycler-horsehead-emerges-from-bankruptcy-26563582
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    Court finds Eritreans' case against Nevsun can proceed in Canada


    A Canadian court ruled on Thursday that a lawsuit against Nevsun Resources Ltd by Eritreans who say they were forced to work at the company's Bisha mine can proceed in British Columbia, but not as a single case, according to a copy of the judgment seen by Reuters.

    The Vancouver-based miner argued that the case should be dismissed and that any lawsuit should be heard in Eritrea, not Canada, an argument the court rejected.

    But the judge granted an application by Nevsun asking the court to find that the case could not continue as a representative action, similar to a class action, noting that the six workers named in the case made slightly different allegations. The Eritreans will need to file separate lawsuits, which could make the case more complex and expensive.

    Joe Fiorante, one of the lawyers representing the workers, said he was not concerned about that part of the decision.

    "We're reviewing that aspect of the decision but the case will certainly go forward," he said. "This is a big win for us."

    Nevsun said it is studying the ruling and considering an appeal of the decision that the action can proceed at all.

    If Nevsun loses at trial, the company could be forced to pay compensation for "severe physical and mental pain and suffering."

    Nevsun says its mine is a model development. In legal filings, it said the Eritrean military never provided labor to the mine. Even if it did, the company argues, Nevsun was not directly responsible for employing the workers.

    In affidavits filed with the court, six men, who have since left Eritrea, said they were forced to work at Bisha from 2008 to 2012 and that they endured harsh conditions at the Eritrean gold, copper and zinc mine, including hunger, illness and physical punishment at the hands of military commanders.

    They said they were conscripts in the country's national service system when they worked at Bisha, working not for Nevsun directly but for government-owned construction firms subcontracted to build the mine.

    Some workers backed up the company in affidavits, saying they worked at the mine voluntarily and never experienced mistreatment.

    The United Nations has said Eritrea's national service program is "similar to slavery in its effects" - an allegation the government rejects. Eritrea, ruled by a former Marxist guerrilla leader since its independence from Ethiopia, sees conscription as crucial to its security.

    http://www.reuters.com/article/eritrea-mining-nevsun-idUSL2N1CC27U
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    Steel, Iron Ore and Coal

    Coal, iron-ore price spikes to boost Australia’s commodity export earnings


    Australia’s resources and energy commodity exportearnings are forecast to increase to A$176-billion in 2016/17, up 12% from an estimated A$157-billion in 2015/16.

    In its latest Resources and Energy Quarterly, the Department of Industry, Innovation and Science shows that spikes in metallurgical coal and iron-ore prices are likely to boost earnings in the year ahead.

    The spikes reflect unexpected supply disruptions in Indonesian coal mines and the strength of the Chinese construction sector, chief economist Mark Cully said on Friday.

    “Prices for most construction and steel-making raw materials continued to grow in the last three months, despite expectations of decline, because of unexpectedly resilient demand from China’s construction sector and unforeseen supply disruptions.”

    Cully noted that the speculative activity in China’s commodity futures markets that led to high spot price volatility in the first half of 2016, had tapered off. This was supported by measures to reduce speculative trading, including increased commission fees, margin requirements and trading restrictions.

    “Commodity prices should, therefore, better reflect market fundamentals going forward,” he added.

    China’s economy and its demand for construction raw materials was slowing, as it transitions away from investment-led growth to consumption-led growth, Cully added. While any slowdown in the short-term remained sensitive to government policy and stimulus measures, Cully said that the likelihood of significant increases in demand from China for resource commodities was limited.

    “Australia’s suppliers are well-placed to satisfy demand forresources and energy over the next fifteen months, despite difficult operating conditions. In particular, production of most bulk commodities is forecast to increase, even as prices decline.”

    Export values have also been supported by the Chinese government’s efforts to stimulate its economy. Given the temporary nature of many of these factors, it is likely that price increases will be temporary, with falls in coal and iron-ore prices expected in 2017.

    Coal, iron-ore, and liquefied natural gas (LNG) producers are forecast to deliver higher export volumes and earnings.

    The strongest growth in export earnings is expected to come from LNG, which is forecast to increase 41%, from A$17-billion in 2015/16 to A$23-billion in 2016/17, supported by additional production at the Gorgon project and new capacity coming on line on the east coast.

    Continued growth in the volume of most bulk commodities exports is also expected to contribute to higher exportearnings over the outlook period. The value of Australia’s exports of iron-ore is forecast to increase 13%, to A$54-billion in 2016/17.

    However, although the price recovery in the first half of 2016 delivered some support to producers, the generally subdued outlook for prices means producers are likely to remain underfinancial pressure in the near term.

    In its quarterly report, the Department of Industry,Innovation and Science noted that global bulk commodities markets were likely to remain well supplied over the outlook period as major investments undertaken over the last decade reached full production capacity.

    However, there may be some tightness in global coal supply in the near term owing to production constraints in Indonesiaand further declines in the volume of exports from the US

    Production volumes for metals commodities are also generally expected to grow over the next 15 months.

    Gold production is forecast to increase, supported by further growth in recycled supply, while copper supply is also expected to grow as additional supply from new investments in Peru and Kazakhstan offsets declines elsewhere.

    In contrast, world nickel production is forecast to fall over the remainder of 2016 as a result of shutdowns in thePhilippines. Nickel production is forecast to increase again in 2017 in line with returning capacity in the Philippines andIndonesia.

    Markets for energy commodities are expected to remain well-supplied over the outlook period owing to additional LNGproduction associated with new projects, and elevated stocks of crude oil and petroleum products.

    The Australian Petroleum Production and ExplorationAssociation (Appea) said on Friday that the latest report provided equal measures of optimism and disappointment.

    Appea CEO Dr Malcolm Roberts said rising LNG exports were underpinning Australia’s economic growth, but the continuing fall in petroleum exploration was alarming.

    http://www.miningweekly.com/article/coal-iron-ore-price-spikes-to-boost-australias-commodity-export-earnings-2016-10-07
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    Australian competition watchdog concerned over Glencore's sale of GRail coal haulage unit

    Australian competition watchdog concerned over Glencore's sale of GRail coal haulage unit

    The Australian Competition and Consumer Commission has expressed concerns about Australian freight companies Aurizon or Pacific National acquiring Glencore Coal's Hunter Valley GRail coal haulage business and set a deadline for a decision on the matter for December 15, the ACCC said Thursday.

    The competition watchdog is assessing proposals in the bidding process against the alternative scenario of a new player entering the market by acquiring GRail, it said.

    "The Hunter Valley coal haulage market appears to have high barriers to entry, so we would expect the addition of a third competitor to have a significant effect upon the market," ACCC chairman Rod Sims said.

    "In contrast, an acquisition by Aurizon or Pacific National would essentially be a continuation of the status quo where there are two active players in the Hunter Valley coal haulage market," he said.

    Pacific National hauls the majority of the coal on the Hunter Valley Rail Network in the Australian state of New South Wales, with Aurizon hauling the second largest volumes and there has been little or no new entry before or since, Sims said.

    "There are some examples of coal producers acquiring their own rolling stock, but Glencore Coal is the only Hunter Valley coal producer to have done so for a majority of its coal haulage requirements," he said.

    "Coupled with the fact that Glencore Coal is the largest coal producer in the Hunter Valley, this is a platform for entry that is unlikely to be replicated in the foreseeable future," he said.

    But, the ACCC said it also recognises that coal producers, generally well-resourced and sophisticated parties, may be able to protect their own interests, even if Aurizon or Pacific National acquires GRail.

    "We are going to be exploring their ability to leverage competition between Aurizon and Pacific National or to bypass both haulage providers by acquiring their own rolling stock or by sponsoring new entry," Sims said.

    US-based Genesee & Wyoming is also bidding for the network, Australian media reports say.

    G&W has teamed up with Macquarie Infrastructure and Real Assets, according to the Australian Financial Review.

    G&W is also the current operator of GRail's rolling stock.

    The business unit has grown from three coal trains in 2010, to a modern fleet of nine locomotive units and is now the third largest coal haulage operation in Australia, Glencore says.

    GRail has an estimated market value of A$1.1 billion-A$1.5 billion ($840 million-$1.1 billion) based on the unit's annual earnings before interest, tax, depreciation and amortization of A$100 million, according to industry sources.

    http://www.platts.com/latest-news/coal/sydney/australian-competition-watchdog-concerned-over-26563586
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