Mark Latham Commodity Equity Intelligence Service

Wednesday 3rd August 2016
Background Stories on www.commodityintelligence.com

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Macro

Britain is going to have to learn to live with China – insulting them is not the best way to start


The champagne was on ice. The marquees were ready. The board had given approval. Everything was set for Hinkley Point C – the biggest nuclear power station in the UK in decades – to be given the go ahead. Then, in the manner of an American Governor in a movie issuing a last minute reprieve to a prisoner in the gas chamber, No 10 overruled Greg Clark, Secretary of State for Business, Energy & Industrial Strategy, and announced a review of the project.

What on earth was going on? The economy, faced with post-Brexit uncertainty, needs a big investment boost and Hinkley Point is just the kid of "shovel ready" project that is always called for. There is also an energy supply crunch coming. Demand is rising and old power stations are being decommissioned – new supply is urgently needed and when complete this new station will supply 7 per cent of UK energy needs. A country which regards respect, or "face", as a critical component to a relationship had been deeply insulted. Something huge must have come up to force this pause for reconsideration.

No 10 sources confirm that this was a decision by the Prime Minister alone, a captain’s call. It was, however, heavily influenced by a briefing note from one Theresa May’s most senior advisers – Arthur Henry Ward – which I have obtained. This note crystalised security concerns about Chinese influence in the UK in one powerful paragraph:

Imagine a person, tall, lean, and feline, high-shouldered, with a brow like Shakespeare and a face like Satan, a close-shaven skull, and long, magnetic eyes of the true cat-green: invest him with all the cruel cunning of an entire Eastern race, accumulated in one giant intellect...

This is the Government’s real problem with Hinkley Point – an attitude to China which is virtually indistinguishable from the“Yellow Peril” panic of the late nineteenth century. There is a distinct strain of paranoia in the briefing about “security” concerns. Take the fears that China, in some way, will be able to shut down the whole UK electricity grid via a “backdoor” in Hinkley or other power stations they may finance and construct. Cyber-security is a real concern, but the biggest proximate threats are to our existing infrastructure which is absolutely inadequately defended – constructed, as most of it was, in an earlier era.

We should defend ourselves against all these threats. But let’s not pretend we have only one enemy and only one form of recourse – the boycott. Unless we plan to isolate China – which we don’t – we must live with them. Business, trade and finance are greatest and most successful ways to do that. Globalisation means that our economy is profoundly influenced by what happens in China. The challenge is how best to benefit. Buying their goods is one way – low prices benefit all consumers. Receiving their investment in critical projects is another.

Long term, the most crucial integration will be social. Last weekend I was in East Sussex – in Rye, Winchelsea and Great Dixter. In every place there were Chinese tourists, some obviously students, but mostly members of the new middle classes. They are the key – our post-war relationship with Japan was cemented by tourism. When Japanese tourists – with their ubiquitous cameras – started flocking to our shores, we established a new relationship and a trust with the country.

For the last thousand years China has been the biggest economy in the world – with the exception of the last century when they were almost destroyed by Mao. They are back and because they are so large you cannot help bumping into them, whatever way you turn. We can’t live without them, so we had better get much smarter about living with them. Suspicion, innuendo and insult are not the way. Time for the May government to execute its first u-Turn and start to co-operate without kowtowing.

http://www.telegraph.co.uk/news/2016/08/02/britain-is-going-to-have-to-learn-to-live-with-china--insulting/?utm_campaign=Contact+SNS+For+More+Referrer&utm_medium=twitter&utm_source=snsanalytics
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Q3: "Save me the Waltz"

Image titleFitzgerald said her novel was "plagiaristic, unwise in every way... should not have been written."[11] Zelda asked, "didn't you want me to be a writer?" Though Scott once had, he lashed out "No, I do not care whether you were a writer or not, if you were any good... you are a third-rate writer and a third-rate ballet."[11] The psychiatrist agreed with Scott. Zelda was devastated; she never published another novel.


Attached Files
Commodity Intelligence-thinking aloud (12).pdf
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Oil and Gas

Russia Oil Output Posts 24th Month of Year-on-Year Gains in July

Russia Oil Output Posts 24th Month of Year-on-Year Gains in July

Russian oil output rose 1.8 percent in July, extending a run of year-on-year gains to 24 months.

Production climbed to 10.85 million barrels a day, according to data from the Russian Energy Ministry’s CDU-TEK unit. That was little changed from June and compares with a post-soviet record of 10.91 million barrels a day in January.

Russia’s oil output has proven resilient since crude’s 2014 collapse as a weaker ruble and a progressive tax regime cut costs at existing developments. Projects commissioned by companies such as Novatek OJSC and Gazprom Neft PJSC when oil was trading near $100 a barrel continue to bolster production.

Exports rose 4.7 percent to 5.28 million barrels a day in July from a year earlier, according to the data. That was 3.2 percent down on June.

Russian oil production will probably increase to 11.65 million barrels a day by 2018, according to research last month by Goldman Sachs Group Inc.

http://www.bloomberg.com/news/articles/2016-08-02/russia-oil-output-posts-24th-month-of-year-on-year-gains-in-july
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Sinopec to sell stake in gas pipeline business under reform push


China's Sinopec Corp said on Tuesday it would sell half of its premium natural gas pipeline business to investors, a move spurred by Beijing's reform push to boost efficiency and increase infrastructure investment in cleaner fuel.

Sinopec, the country's second-largest oil and gas group, said it would hold 50 percent in the Sichuan-East China pipeline project after the completion of the divestment plan that has won board approval.

It did not give a value of the target assets, or a timeline for when the sale would be completed.

The government is keen to boost investment in the country's patchy 90,000-km gas grids, which are less than a fifth the size of the system in the United States. This has created a major bottleneck that limits consumption of gas, which has half the greenhouse gas emissions of China's biggest energy source, coal.

Sinopec has said it spent 62.7 billion yuan ($9.45 billion) to build the pipeline that runs 2,200-kilometres (1,370 miles) from the southwestern province of Sichuan, a top gas producing basin, to Shanghai on the east coast.

Its Sichuan-East China pipeline project, which started commercial operation in 2010, is able to carry about 12 billion cubic metres of natural gas a year, or about six percent of the country's total gas consumption.

Industry experts said Sinopec's plan, similar to that of its larger domestic rival PetroChina announced seven months ago, was a prelude to reform packages Beijing is expected to roll out that targets sectors including oil and gas pipelines.

One of the government reforms on the agenda, experts said, would likely be to break the dominance of PetroChina and Sinopec over key pipeline assets, and also cut the state-supervised transportation costs.

"It's a good time for Sinopec to recoup at least part of its investment over the years and finance more pipeline capacity building while still able to maintain a controlling stake," said Li Yao, founder and Chief Executive Officer of Beijing-based consultancy SIA Energy.

Under the reform plans, the two energy giants would be also under pressure to separate gas transportation from sales, which they currently bundle together. This would effectively lower the cost of fuel for consumers and allow third-party access, experts said.

Sinopec's pipeline sale is likely to attract institutions or funds that are seeking steady, fixed returns, Li said.

After PetroChina's pipeline spin-off at the end of last year, the company held 72.26 percent in a restructured pipeline division, called PetroChina Pipeline, while other partners, including institutional investors and non-state firms, held the remaining 27.74 percent.

http://www.reuters.com/article/sinopec-pipeline-divestment-idUSL3N1AJ3CK
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China's Unipec to give up oil megatanker storage lease


The UK-based trading arm of Beijing-backed Sinopec will give up the megatanker it booked to park crude in Asia at the onset of the drop in global prices two years ago, sources told Reuters.

Unipec UK took over a lease on the TI Europe, one of just two Ultra Large Crude Carriers capable of holding more than 3 million barrels of oil, in the Straight of Malacca in late 2014, just as oil prices began to slide below $100 per barrel and the excess of crude was filling the world's on shore tanks.

The UK arm handles most of the crude oil purchased from West Africa and the North Sea that is shipped east.

It used the ship for "floating storage", as oil traders do when they need logistical flexibility, do not have space in cheaper land tanks or expect the price of oil to fall so significantly in the near term that it is better to store it wherever they can rather than sell.

Since then, Unipec, which declined to comment on the booking, has moved oil from around the world onto the ship as either a stopping off point for its own refineries, or to trade on to other refiners when prices rose.

The lease on the vessel, owned by Belgian tanker operator Euronav, will expire in September, the sources said, when another trading firm or even another part of Unipec, such as the its branch that deals with Middle Eastern and Far Eastern crudes, could book it.

Unipec's time charter was booked at $40,000 per day, and new bidders were already asking for closer to $36,000 per day, according to sources.

Rates for Very Large Crude Carriers, the next-size-down supertankers and a much more widely traded market, have also fallen significantly due to an excess of ships and waning demand for them.

Hauling crude on the benchmark Middle East to Japan route fell to $16,900 on Friday, according to data from British shipping services firm Clarkson. That is the lowest since October 2014 and compared with $102,000 per day on the same route on January 1-4, according to Clarkson data.

But even as prices drop, which makes it more affordable to use ships as storage, brokers said some are holding off in booking long-term time charters, preferring to store oil in tanks on land or book ships for individual journeys in the hope that rates could drop further.

"It's too risky for anyone to lock anything in," one ship broker said.

http://www.reuters.com/article/oil-storage-unipec-idUSL8N1AE9ND
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BP Aims to Increase Gas From India’s KG-D6 Fourfold by 2022


BP Plc is working with its partner Reliance Industries Ltd. to increase natural gas production from the deepwater D6 block in the Krishna Godavari basin as much as fourfold by 2022, according to the chief of the British company’s India unit.

The companies aim to produce 30 million to 35 million metric standard cubic meters a day of gas from the block on India’s east coast after they develop three new fields, Sashi Mukundan, head of BP’s India unit, said Monday in New Delhi. Gas production from KG-D6 averaged about 8.7 million cubic meters a day in the April to June quarter, said in a July 15 presentation.

The companies are preparing to restartwork in four offshore oil and gas blocks as they seek to revive development activity stalled for seven years by disputes with the government. Reliance and BP intend to withdraw from multiple arbitration proceedings against the government related to KG-D6 people with knowledge of the plan said in May. Reliance spokesman Tushar Pania declined to comment Monday on the production target.

The effort to resolve disputes with the government “has created confidence for us to move forward,” Mukundan said. BP and Reliance are looking to develop three discoveries in three different fields and invest "several billion dollars,” he said.

Production from the KG-D6 block, discovered in 2002, has tumbled since hitting a peak in 2010 of around 62 million cubic meters a day. The companies continued with offshore exploration activities there, while pausing development drilling because of disputes with the government over gas prices and cost recovery.

http://www.bloomberg.com/news/articles/2016-08-01/bp-aims-to-increase-gas-from-india-s-kg-d6-fourfold-by-2022
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Petronas May Delay Canadian LNG Project


Malaysia’s state oil company is considering delaying a Canadian liquefied-natural gas project over concerns about oversupply and cheap competing fuels, according to two people familiar with the matter.

Petroliam Nasional Bhd., known as Petronas, so far has put up roughly a third of the estimated $27.5 billion cost of the Pacific NorthWest LNG project in British Columbia, which will liquefy and export natural gas. The plan has been to begin commercial operations in 2019, according to the Pacific NorthWest website.

The Canadian government is weighing approval. The next step would be for Petronas and its partners—Brunei National Petroleum Co., China Petroleum & Chemical Corp., Indian Oil Corp. and Japan Petroleum Exploration Co.—to confirm the final investment decision.

In calculating the project-price estimate, Petronas said it included what it paid in 2012 for Calgary-based Progress Energy Resources Corp. which will produce the gas, as well as the cost of the proposed two liquefaction plants, marine terminal, pipeline and storage tanks.

People familiar with the matter told The Wall Street Journal that the oversupply of LNG and lower oil and gas prices have rendered the project unattractive at the moment. They declined to say how long the delay might be.

Other companies have already pushed back big LNG plans. Anglo-Dutch giant Royal Dutch ShellPLC last week said it was deferring a final investment decision on an export facility in Lake Charles, Louisiana, after earlier in July doing the same for an export project in Kitimat, British Columbia.

LNG prices have been softening since 2014 as demand has weakened, and over the next five years new supply from Australia, the U.S. and Russia is set to hit the market. Although Asian spot LNG prices climbed last week, driven by new demand from Argentina, falling crude-oil prices—down more than 20% since early June—may weigh on them going forward.

Weaker oil prices have already taken a toll on Petronas, Malaysia’s only Fortune 500 company. Its first-quarter profit after tax was down 60% from a year earlier, to 4.6 billion ringgit (US$1.13 billion) from 11.4 billion ringgit.

The unlisted company, which generates most of the Malaysian government’s oil and gas revenue, warned that oil prices and currency volatility would continue to affect its performance. Petronas is expected to announce its second-quarter results Aug. 22.

The company said in January that it would cut its spending by some $11.4 billion over the next four years, and in March that it was cutting 1,000 jobs.

http://www.wsj.com/articles/petronas-may-delay-canadian-lng-project-1470128896
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Asian bookings of West African crude to slip lower in August


Cargoes of West African crude oil sailing east are on track to fall in August on fierce competition, shaky demand and disruptions in Nigerian loadings
that forced at least one cancelled cargo, according to a Reuters survey of shipping fixtures and traders on Tuesday.
   
A total of 55 cargoes, for 1.685 million barrels per day (bpd) are booked to sail to Asia this month. The total is just under 2 percent lower than the planned bookings in July, but is more than 8 percent lower than August last year.

Overall buying in Asia is in question as refinery margins hit five-year lows last month due to a growing excess of refined products. Some refineries are already processing less crude, while others are preparing for maintenance later in the third
quarter.

At the same time, nearly all crude oil sellers are targeting Asia. Imports of Iranian crude from China, India, Japan and South Korea increased markedly in June, the latest month of data available, as Iran's efforts to regain market share lost during
years of snactions paid off.

As a result, some West African oil has been edged out. The biggest difference from a year earlier was in bookings for India, due in part to the unpredictability of Nigerian oil loadings.

While the shipments to India were slightly higher than July, they are some 36 percent lower on a barrels per day basis compared with August 2015. State-run refiner HPCL was forced to cancel its booking of the VLCC Desh Vaibhav last month after ExxonMobil declared force majeure on Qua Iboe crude due to a
pipeline problem.
 
While IOC rebooked the same vessel to carry other Nigerian grades, including Agbami, to India, Exxon has yet to reissue Iboe loading programme. India is set to take an almost equal amount of Angolan and Nigerian cargoes in August, with six of the former and seven of the latter.

China's bookings fell slightly from July. Key trader Unipec had offered some of its August-loading Angolan oil cargoes for sale elsewhere in the Asia, which sources said was related in part to flooding across China that disrupted some refinery
operations.

Energy Aspects had estimated that refinery throughput would fall by around 200,000 bpd in July, which others said would have a knock-on effect on the crude the country chose to import later.
       
 COUNTRY    August       BPD '000s  July         BPD '000s
            cargoes                 cargoes      
 CHINA       30           919        32           981
 INDIA        16           490        15           460
 INDONESIA  2            61         4            123
 TAIWAN     4            123        3            92
 JAPAN        0            0          0            0
 S. KOREA   0            0          0            0
 OTHERS     3            92         2            61
 TOTAL       55           1,685      56           1,716

http://www.reuters.com/article/oil-west-africa-exports-idUSL8N1AJ4OY
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Guerrilla Pipeline Attack Forces Colombia to Shut In Oilfields


Colombia, South America’s third-largest oil exporter, shut in production in at least three oilfields after attacks by Marxist guerrillas blew up one of the country’s main outlets to ship crude.

The attack on the Cano Limon-Covenas pipeline, which transports oil to Colombia’s Caribbean coast for export, forced production to be shut at the Cano Limon, Chipiron and Caricare oilfields, according to Humberto Alvarez, an oil workers’ union official who also works in one of the fields. The fields were producing a combined 56,000 barrels daily, or about 6 percent of the country’s output.

Colombia’s second-largest pipeline was attacked in early July and repairs have been dragging on for almost a month because of bad weather and because the Armed Forces need to guarantee security of personnel working on the repairs, Alvarez said. The pipeline is “likely to restart today or tomorrow,” he said Tuesday, allowing fields to ultimately resume production.

The Marxist rebels often attack oil infrastructure as a means of hitting the government’s finances and the nation’s biggest source of export revenue. The current attack was the third this year.

The guerrilla attack has spoiled Colombia’s plans to keep oil output above 900,000 barrels a day until the end of this decade. The country, once a star producer in Latin America, saw oil output fall 12 percent to 888,000 barrels a day in June from a year earlier, according to data to the country’s Mines and Energy Ministry. Production fell due to lower oil prices, Minister German Zapata said.

It’s bad news for exports as well. Ecopetrol, the operator of the Cano Limon pipeline, issued a force majeure, a commercial term to say it won’t be able to meet its contractual obligations to transport crude to the Covenas oil terminal for export.

Brent crude settled at $41.80 a barrel Tuesday on the London-based ICE Futures Europe exchange, down about 20 percent in the past year and around 60 percent in the past two

https://mail.google.com/mail/u/0/?shva=1#inbox?compose=1564f03905e9e273
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Pemex loses U.S. appeal of $406 million arbitration award


A U.S. appeals court on Tuesday upheld a decision confirming a $406 million arbitration award won by a unit of KBR Inc in a contract dispute with Mexico's national oil company, Pemex.

The 2nd U.S. Circuit Court of Appeals in New York let stand a decision confirming an award of $300 million even though a Mexican court had nullified it, and upheld a lower court ruling that added $106 million to the judgment.

Representatives of Pemex and KBR, a U.S. engineering and construction company, did not immediately respond to requests for comment.

The ruling came after years of litigation between COMMISA, a Mexican subsidiary of KBR, and , a Pemex subsidiary, that began in 2004 and resulted in court challenges in two separate countries.

The dispute stemmed from agreements COMMISA reached with Pemex beginning in 1997 to build oil platforms in the Gulf of Mexico.

Difficulties between the two companies emerged as Pemex insisted the platforms be fully constructed before being placed in the Gulf of Mexico, which COMMISA considered impractical, according to court papers.

In 2004, Pemex gave notice that it intended to rescind the contract, saying COMMISA had failed to meet various terms and had abandoned the project. Pemex also seized the platforms, which were largely complete, and ejected COMMISA from the work sites.

COMMISA subsequently began legal proceedings, including an arbitration demand filed with the International Chamber of Commerce (ICC). An ICC tribunal in 2009 found that Pemex breached its contracts with COMMISA and awarded $300 million.

U.S. District Judge Alvin Hellerstein in Manhattan subsequently confirmed the award in August 2010. Pemex appealed to the 2nd Circuit and also challenged the award in Mexico, where a court nullified it.

The 2nd Circuit then sent the case back to Hellerstein to consider the effect of the Mexican court's ruling. He ultimately declined to defer to that decision and again confirmed the award.

The case is Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Produccion, 2nd U.S. Court of Appeals, No. 13-4022.

https://mail.google.com/mail/u/0/?shva=1#inbox?compose=1564c077a8298b3a
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Sabine Pass Train 2 produces first LNG, Genscape says


The second train at Cheniere’s Sabine pass liquefaction and export plant in Louisiana has started producing liquefied natural gas, according to analytics firm Genscape, that has infrared cameras pointed at the facility.

“Genscape’s IR cameras witnessed the methane stacks come online with the increased pipeline nominations to Sabine the past two days (average 984 MMcf/d) up from the previous thirty day average of 640 MMcf/d,” the analytics firm said in a notice issued on July 29.

Genscape said in the notice it now expects the second liquefaction train to have three months of startup where the engineering procurement and construction checklist is completed allowing for the sign over from LNG engineer Bechtel to Cheniere.

“This sign over would represent the pre-commercial status as seen at Train 1 right now,” it added.

Cheniere said earlier this year that the first cargo from the second train is expected to be shipped in mid-August.

The Houston-based company took over control of the first liquefaction train in May from Bechtel. First commercial delivery is expected to occur in November when the 20-year LNG sales and purchase agreement with Shell commences.

Sabine pass export plant, first of its kind to ship U.S. shale gas overseas, shipped 20 cargoes since it started producing the chilled fuel in February.

The majority of these exports went to South America, followed by the Middle East, Asia, and Europe.

Cheniere plans to build over time up to six liquefaction trains at Sabine Pass, which are in various stages of development. Each train is expected to have a nominal production capacity of about 4.5 mtpa of LNG.

http://www.lngworldnews.com/sabine-pass-train-2-produces-first-lng-genscape-says/
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NGL Exports Driving Pipeline Projects in OH & PA


NGLs (natural gas liquids, including ethane, propane and butane) are changing the midstream game in Ohio.

We spotted a story in the Youngstown Business Journal that talks about shipping NGLs out of the Marcellus/Utica region–exporting them to other markets both domestic and international.

A fascinating part of the article is an interview with Sunoco Logistics Partners about their Mariner East 1 and 2 projects and what Sunoco LP has planned…

http://marcellusdrilling.com/2016/08/ngl-exports-driving-pipeline-projects-in-oh-pa/
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Devon Energy posts surprising adjusted profit on cost cuts


U.S. oil producer Devon Energy Corp posted an unexpected adjusted quarterly profit on Tuesday and narrowed its net loss as drastic cost cuts, especially in labor and supply expenses, offset the slump in crude prices.

The cost cuts highlight the stark choices facing Devon and the rest of the oil and natural gas industry, with commodity prices mired in a steep slump.

Devon said it cut lease operating expenses, which include labor, supply and other costs, by 26 percent in the quarter and is on track to cut costs by $1 billion this year.

The company reported a second-quarter net loss of $1.57 billion, or $3.04 per share, compared with a loss of $2.82 billion, or $6.94 per share, a year earlier.

Excluding asset impairment charges, restructuring costs and other one-time items, Devon earned 6 cents per share.

By that measure, analysts expected a loss of 19 cents per share, according to Thomson Reuters I/B/E/S.

Shares of Devon rose slightly in after-hours trading on Tuesday to $36.13 per share.

Production during the quarter fell 5 percent to about 644,000 barrels of oil equivalent per day.

Last month Devon sold its stake in a Canada pipeline for $1.1 billion.

That deal came after Devon bought 80,000 acres in Oklahoma in late June from a private owner for $1.9 billion.

Both deals are part of Devon's plan to realign its portfolio by selling more than $3 billion in assets and focusing on areas where management thinks the company has the best chance of success.

Devon plans a conference call to discuss the quarterly results at 1500 GMT (11 a.m. ET) on Wednesday.

http://www.reuters.com/article/us-devon-energy-results-idUSKCN10D2C6
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Nabors reports smaller-than-expected loss as costs fall


Contract driller Nabors Industries Ltd reported a smaller-than-expected quarterly loss as costs fell, sending its shares up 3.6 percent in extended trading.

The company said the near-term rig count would increase gradually only when oil prices stabilize at $50 per barrel.

Nabors averaged 159.1 rigs in the second quarter, down from 187.9 rigs in the first quarter.

Nabors added that it expected near-term volume and pricing to decline when U.S. term contracts expire and it adjusts to spot market prices.

The company also said it reduced debt by $87 million in the second quarter. Its long-term debt was $3.5 billion as of June 30.

Nabor's total costs fell 11.2 percent to $744.85 million.

Net loss attributable to Nabors widened to $184.7 million, or 65 cents per share, in the second quarter ended June 30, from $36.8 million, or 13 cents per share, a year earlier.

The bigger loss was largely due to an impairment charge related to the company's investment in C&J Energy Services Ltd.

Total revenue fell 40 percent to $517.1 million.

The company's loss was 35 cents per share, excluding a gain of 9 cents related to renegotiation of two contracts as well as early termination revenue, smaller than the average analyst estimate of 45 cents, according to Thomson Reuters I/B/E/S.

Up to Tuesday's close of $8.69, Nabors' shares had fallen 24.6 percent over the last 12 months.

http://www.reuters.com/article/us-nabors-inds-results-idUSKCN10D2II
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Federal report slams Tesoro for failing basic safety protocols


“These incidents provide evidence of deficiencies in the refinery’s organizational policies and practices governing safe work,” the U.S. Chemical Safety and Hazard Investigation Board, or CSB, wrote in a 60-page report released Tuesday. “The fact that these incidents continued for an extended period demonstrates a culture that does not effectively prioritize worker safety.”A federal safety board slammed Tesoro Corp. for failing to follow basic safety procedures at a California refinery that led to multiple sulfuric acid accidents over several years that burned or injured 19 employees.

A lack of safety protocols led to two sulfuric acid releases at Tesoro Corp.’s Golden Eagle Refinery in Martinez, California in 2014 that burned workers and released 84,000 pounds of sulfuric acid in one incident, according to the investigation.

The agency said the second accident that year on March 10 was similar to a 1999 incident at the refinery when it was under different ownership that killed four people, indicating that the Tesoro hadn’t changed practices to prevent similar acid spills after it purchased the Martinez facility in 2002.

“Similarities between the two incidents suggest that the Tesoro Martinez refinery did not effectively continue to implement or communicate important safety lessons” from the 1999 accident, investigators wrote.

Brendan Smith, spokesman for San Antonio-based Tesoro, said the refiner has made a number of improvements since 2014, including standardizing tubing assembly and testing and updating protective equipment and standards.

“Safety is an integral part of everything we do at Tesoro,” he said in an emailed statement. “We strive for an injury-free workplace by proactively managing risks, following rigorous standards, ensuring our leadership is committed and our employees have a personal responsibility for safety.”

Smith also said the report contained inaccuracies, but he declined to specify what they were.

CSB investigators examined multiple accidents at the company’s Martinez refinery from 2010 through 2014.

On February 12, 2014, two employees at the refinery suffered first and second degree chemical burns while working to put a sulfuric acid sampling system back into service at the alkylation unit in the refinery. As they were working on a valve, tubing that was by them came apart at a connector and sprayed them.

The two workers were transferred by ambulance and helicopter for treatment of their burns. Both workers wouldn’t return back to work for more than 150 days. Meanwhile acid continued to spray from the tubing for more than two hours and approximately 84,000 pounds of sulfuric acid were released.

Investigators faulted the company for reporting the incident to federal regulators as a “minor personal safety event” instead of a process safety event that would have required additional follow up.

“Despite the serious nature of the employee injuries and quantity of hazardous chemicals released from the loss of containment, Tesoro challenged the CSB’s authority to investigate the incident and failed to preserve key evidence,” the report said.

The California Occupational Safety and Health Administration investigated the incident and issued citations totaling $51,450.28 The citations were later reduced to three general and one serious, for a total penalty of $43,400.

During the CSB’s investigation, workers told investigators they weren’t issued proper personal safety protection, such as acid suit jackets. They also said the sodium hydroxide solution or “caustic” sampling systems were even more hazardous than the sulfuric acid sampling systems.

“You crack it open a little bit and it just spits out,” one worker told the CSB. “And you have to hide yourself behind piping to shield yourself from anything. It’s like one of the only defenses that you have.”

Another worker told investigators that numerous caustic spray incidents had occurred but employees at the refinery were fearful of reporting the incidents and said they were instead just “washing their hands.”

“You know you’re not washing your hands,” the employee said. “You don’t wash your hands out there. Okay. But if they’re getting it off their face, and they don’t want to report it, you know, just like I said, in fear of Tesoro.”

After the concerns were brought to OSHA’s attention, Tesoro modified the caustic sampling stations to minimize worker exposure, developed a procedure for workers to take caustic samples and gave sample takers acid suits and air-purifying respirators.

A little less than a month later on March 10, a similar incident at the refinery occurred when sulfuric acid sprayed two contract workers while they conducted planned non-routine maintenance work to remove piping in the same alkylation unit. The workers received first and second degree burns. OSHA fined Tesoro $45,970 and the contractor was fined $13,500.

“We have, and continue to, share information with industry groups to ensure that others in our industry can also learn from these events,” Tesoro’s Smith said. “We are committed to continuing our journey toward an injury-free work place by nurturing a positive process safety culture and employing the right tools and processes.”

http://fuelfix.com/blog/2016/08/02/federal-report-slams-tesoro-for-failing-basic-safety-protocols/
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Alternative Energy

Xiluodu hydropower station's output reaches 144 TWh


Xiluodu hydropower station, a key project of the "West-to-East power transmission", generated 144 TWh of power as of July 28, showed data from China Three Gorges Corporation.

The output is equivalent to a save of 46 million tonnes of standard coal, decreasing 1,180 million tonnes of CO2 emission and 13 million tonnes of SO2 emission.

The station has eighteen units, all on-grid and performing well.

It has run safely and stably for three years since July 15 in 2013, aiming at building the worldwide first-class power station.

Entering 2016, Xiluodu has been fully involved in flood control system of the Yangtze River amid frequently severe weather in the middle and lower reaches.

The hydropower station has intercepted flood by amount to above 1.5 billion cubic meters since the end of June, contributing to easing flood prevention pressure of the Yangtze River.

http://old.en.sxcoal.com/0/150705/DataShow.html
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Agriculture

Indian farmers cotton on to new seed, in blow to Monsanto


In a tiny hamlet at the heart of the cotton belt in northern India, Ramandeep Mann planted Monsanto's genetically modified Bt cotton seed for over a decade, but that changed after a whitefly blight last year.

Mann's 25-acre farm in Punjab's Bhatinda district now boasts "desi", or indigenous, cotton shrubs that promise good yields and pest resistance at a fraction of the cost.

Mann is not alone.

Thousands of cotton farmers across the north of India, the world's biggest producer and second largest exporter of the fiber, have switched to the new local variety, spelling trouble for seed giant Monsanto in its most important cotton market outside the Americas.

The Indian government is actively promoting the new homegrown seeds, having already capped prices and royalties that the world's largest seed company is able to charge.

"Despite the whitefly attack, farmers in northern India are still interested in cotton, but they are moving to the desi (indigenous) variety," says Textile Commissioner Kavita Gupta.

Official estimates peg the area planted with the new variety at 72,280 hectares in northern India, up from roughly 3,000 hectares last year.

That is still a tiny percentage overall, and most farmers in the key producing states of Gujarat and Maharashtra are sticking to Monsanto's GM cotton, which has been instrumental in making India a cotton powerhouse.

And the impact of whitefly, a pest that thrives in dry weather, may not be as big this year, as monsoon rains are likely to be plentiful. Experts said two straight droughts fanned last year's infestation.

But the new seed is still a setback for Monsanto, which has also been hit by a roughly 10 percent decline in cotton acreage in India this year as farmers switch to crops like pulses and lentils in the aftermath of the whitefly blight.

SEED SALES SLIDE

Monsanto's Bt cotton sales in India have fallen 15 percent so far in 2016, said Kalyan Goswami, executive director of the National Seed Association of India.

The firm, which last year sold some 41 million packets of Bt seeds in India, could stand to lose up to 5 billion rupees ($75 million) due to lower sales and the steep cut in royalties enforced by the government earlier in 2016, according to Reuters calculations. The company, which unsuccessfully challenged India's decision to slash royalties in the courts, declined to comment for this article.

But in the wake of the whitefly infestation, Mahyco Monsanto Biotech (India) Pvt Ltd (MMB), a joint venture with India's Mahyco, said last year that Monsanto and its Indian licensees marketed their product as resistant to bollworms, not other pests.

Some experts were optimistic the indigenous cotton seeds developed by the Central Institute for Cotton Research (CICR), which comes under the farm ministry, would catch on over time.

"Just wait for the crucial three to four years to see a complete, natural turnaround. By then most farmers will give up Bt cotton and go for the indigenous variety," said Keshav Raj Kranthi, head of CICR.

Kranthi said planting a hectare with the Indian variety cost less than half the 80,000 rupees farmers paid to sow Bt cotton over the same area, and the crop yield was almost as high.

Unlike GM seeds, farmers could also store and replant the local seeds the following year, he added.

Some experts voiced caution over the new variety, however.

"By all accounts, the indigenous cotton looks pretty promising, but it will be put to test this year," said Devinder Sharma, an independent food and trade policy analyst. "It's a potential game changer, but it has to succeed first."

BOLLWORMS REAPPEAR Experts began raising doubts last year about the resilience of Monsanto's lab-altered Bt seeds, which still account for more than 90 percent of the cotton seeds sold in India.

Monsanto's Bollgard II technology, introduced in 2006, was slowly becoming vulnerable to bollworms, they said, as any technology has a limited shelf life.

Kranthi cited the increase in insecticide consumption as a sign of rising pink bollworm infestation.

In 2015 cotton farmers used an average 1.20 kg of insecticides per hectare, up from 0.5 in 2006, when Bt cotton seeds were at the pinnacle of their productivity.

Between 2006 and 2015, fertilizer consumption for the cotton crop doubled to 270 kg per hectare, said Kranthi, indicating rising costs of cultivation and stagnating yields of Bt cotton.

But the more pressing concern for many has been whitefly, with farmers like Mann answering the call from India's farm ministry and state agriculture universities to switch to local seeds to fight it.

"The only other option we had this year was to plant the Bt cotton again or leave the land fallow. Both were fraught with economic risk, and to obviate that risk we decided to plant the desi (indigenous) variety," he said.

http://www.reuters.com/article/us-india-monsanto-idUSKCN10E05C
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Mosaic says worst may be over for fertilizer markets


U.S. fertilizer company Mosaic Co reported a quarterly loss on Tuesday as phosphate and potash prices remained weak, but the company joined larger rival Potash Corp of Saskatchewan in saying that the worst appeared to be over.

Mosaic, the world's largest producer of finished phosphate products, said it expects sales volume and prices of phosphate and potash to rise in the current quarter from the second quarter.

The company also said it would slash its 2016 capital budget and cut other expenses to preserve cash.

"While the environment is challenging, we see signs of stabilization in the second half of the year, with fertilizer prices bottoming and solid demand for our products," Chief Executive Joc O'Rourke said on Tuesday.

Profits at fertilizer producers have tumbled due to falling prices, triggered in part by weak currencies in importing countries such as Brazil and excessive supplies.

Last week, Potash Corp cut its full-year profit forecast and dividend for the second time this year.

Mosaic's chief financial officer, Rich Mack, said the company continued to look for new growth opportunities during the bottom part of the cycle.

Reuters reported in June that the company was in talks to buy Vale SA's (VALE5.SA) fertilizer unit, in a renewed push to grow in South America and Africa.

Mosaic forecast phosphate sales volume of 2.4 million to 2.7 million tonnes for the third quarter, up from 2.4 million tonnes in the second quarter.

The company said it expects potash sales volume of 1.8 million to 2.1 million in the current quarter, compared with 2.0 million tonnes reported in the three months ended June 30.

Mosaic slashed its 2016 forecast for selling, general and administrative expenses on Tuesday to $330 million to $350 million, from $350 million to $370 million.

The company reduced its capital spending forecast to $750 million to $850 million, from $800 million to $900 million.

Mosaic reported a net loss attributable to the company of $10.2 million, or 3 cents per share, for the second quarter, compared with a profit of $390.6 million, or $1.08 per share, a year earlier.

The company booked $69 million in after-tax charges related to cost cuts during the quarter.

Mosaic's revenue fell 32.7 percent to $1.67 billion in the quarter.

http://www.reuters.com/article/us-mosaic-results-idUSKCN10D11D
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Mosaic CEO sees opportunities to buy miners' fertilizer assets


Miners that produce a diverse commodity mix may be willing to part with fertilizer assets, creating buying opportunities for producers of potash and phosphate, Mosaic Co (MOS.N) Chief Executive Joc O'Rourke said on Tuesday.

Profits of fertilizer producers have tumbled because of falling prices, weak currencies in importing countries such as Brazil and excessive supplies.

Mosaic, the world's largest producer of finished phosphate products, reported lower-than-expected adjusted profit on Tuesday as crop nutrient prices remained weak. But the company joined larger rival Potash Corp of Saskatchewan Inc (POT.TO) in saying that the worst was over.

Bigger miners may be unwilling to wait for recovery, O'Rourke said in an interview. Some of them question whether fertilizer fits their core portfolios as they look to sell assets and pay down debt, he said.

"We think some of these opportunities might come to fruition, and if they do, they may add some long-term value to us,” O'Rourke said.

Reuters reported in June that Plymouth, Minnesota-based Mosaic was in talks to buy Vale SA's (VALE5.SA) fertilizer unit, in a renewed push to grow in South America and Africa.

O'Rourke declined to comment on any talks with Vale.

Mosaic shares jumped 2.8 percent at $27.37, after executives told analysts that better demand was ahead in the second half.

Mosaic expects sales volume and prices of phosphate and potash to rise in the current quarter from the second quarter.

Potash volumes would be helped by a long-overdue 2016 sales agreement between Chinese buyers and Canpotex Ltd, the offshore sales arm of North America's Mosaic, Potash Corp, and Agrium Inc (AGU.TO).

Some rivals have already settled at a sharply lower price of $219 per tonne, and the focus of Canpotex negotiations now is on volume, O'Rourke said.

"Once the price gets set, that is the price, and your participation choice is how much volume" to commit, O'Rourke said.

Mosaic reported a net loss of $10.2 million, or 3 cents per share, for the second quarter, compared with a profit of $390.6 million, or $1.08 per share, a year earlier.

Excluding certain items, profit was 6 cents per share, compared with analysts' average estimate of 12 cents, according to Thomson Reuters I/B/E/S.

Revenue fell 32.7 percent to $1.67 billion.

Mosaic said it would slash its 2016 capital budget and cut other expenses to preserve cash. The company idled production in July at its Colonsay, Saskatchewan potash mine for the rest of 2016.

http://www.reuters.com/article/us-mosaic-results-idUSKCN10D11D
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Intrepid Potash Q2 loss deepens

Intrepid Potash Q2 loss deepens

US-based Intrepid Potash Inc’s net loss in the second quarter this year deepened despite higher potash sales volume. The company will continue production ramp up of its speciality fertiliser product to replace lower potash output in order to optimise the group’s cost profile.

Net loss nearly tripled to $13.4m in Q2, compared with a loss of $4.9m in the same period in 2015.

http://www.indmin.com/Article/3575516/Intrepid-Potash-Q2-loss-deepens.html
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Precious Metals

Silver Wheaton bulks up on Brazilian gold


Silver Wheaton saw its stock price jump almost 3% on Tuesday, following a report that the company will increase its goldstream from the Salobo mine in Brazil. The $800 million deal with a Vale subsidiary provides Silver Wheaton an additional 25% of output of gold equivalent over the mine’s life.

This latest acquisition will add to Silver Wheaton’s existing 50% of gold production from Salobo; Brazil’s largest known copper deposit. President and CEO of Silver Wheaton, Randy Smallwood, announced on Tuesday that; “We did not hesitate at the opportunity to increase our exposure to a mine with one of the lowest copper cash costs in the world, 50 years of mine life on reserves alone, and what we believe to be substantial exploration and expansion potential.”

The Vancouver based company has revised its production guidance to reflect the new stream. The forecast for 2016 has been upped to 305,000 ounces, while projected annual gold production over the coming 5 years is expected to reach an average of 330,000 ounces a year.

The deal will be concluded with an upfront cash payment of $800 million, while the 10 million Silver Wheaton common share purchase warrants previously issued to the Vale subsidiary will be amended, allowing the company to buy Silver Wheaton stock and reducing the strike price per common share from US$65 to US$43.75. Silver Wheaton will finance the payment with a mixture of cash and funds from its US$2 billion revolving credit facility, the Canadian company said on Tuesday.

A jump in gold and silver prices over the last few months have continued to lift Silver Wheaton shares. The gold stream sale will now help Brazil based Vale reduce its hefty debt load from $27 to $15 billion. The company has felt the strain of low iron ore prices and construction costs from a new mine development over the previous months. Shares in Vale were also up on Tuesday following news of the deal.

http://www.mining.com/silver-wheaton-bullish-on-brazilian-gold-after-800-million-buy/
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Fresnillo's CEO says silver has bottomed


Fresnillo Plc's chief executive said the price of silver had bottomed, and added the miner would report a stronger core profit in the second half than the first if prices remained at current levels.

Silver and gold prices jumped to two-year highs in the days following Britain's vote to leave the European Union, buoyed by demand for the metals seen as safe havens in times of volatility.

"We think the price of silver could remain at current levels," CEO Octavio Alvidrez said on a media call on Tuesday.

Fresnillo, which mines silver and gold from six mines in Mexico, reported a 49 percent jump in first-half core profit to $474 million, helped by higher production and gold prices .

Shares in the company rose 1.6 percent on the London Stock Exchange to 1,953 pence, near the top of the FTSE, having nearly tripled this year to their close on Monday.

RBC analysts said the results were positive, adding the company's core profit beat their estimates.

http://www.reuters.com/article/fresnillo-results-idUSL3N1AJ2N0
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R3 Consortium: Blockchain again.

Consortium

The consortium started on September 15, 2015 with 9 financial companies:[3][4][5][6] BarclaysBBVACommonwealth Bank of AustraliaCredit SuisseGoldman SachsJ.P. Morgan,[7] Royal Bank of ScotlandState Street, and UBS.

On September 29, 2015 an additional 13 financial companies joined:[8] Bank of AmericaBNY MellonCitiCommerzbankDeutsche BankHSBCMitsubishi UFJ Financial GroupMorgan StanleyNational Australia BankRoyal Bank of CanadaSkandinaviska Enskilda Banken,[9] Société Générale, and Toronto-Dominion BankFinancial Times reporter Kadhim Shubber wrote that the new additions are "a sign the industry is gathering behind R3 in one potential implementation of the distributed ledger technology behind the currency bitcoin."[10]

On October 28, 2015 an additional 3 financial companies joined:[11] Mizuho BankNordea, and UniCredit.

On November 19, 2015 an additional 5 financial companies joined :[12] BNP ParibasWells FargoINGMacquarie Group and the Canadian Imperial Bank of Commerce.

On December 17, 2015, an additional 12 financial companies joined :[13] BMO Financial GroupDanske BankIntesa SanpaoloNatixisNomuraNorthern TrustOP Financial GroupBanco SantanderScotiabankSumitomo Mitsui Banking CorporationU.S. Bancorpand Westpac Banking Corporation.

As of April 25, 2016, three additional financial companies had joined:[14] SBI Holdings of Japan, Hana Financial of South Korea, and Bank Itau of Brazil.

As of June 23, 2016, Toyota Financial Services has joined.[15]

The bank-backed R3 blockchain consortium has expanded its partnership network to the market data business, recruiting Thomson Reuters as a new member.

Mark Rodrigues, MD, strategic customers and solutions, Thomson Reuters, says the firm has been collaborating with customers on blockchain and distributed ledger initiatives and proof-of-concept projects for some time.

“The opportunities afforded by this emerging technology are enormously exciting for us and for our customers," he says. "Our goal with R3 is to collaborate together with the consortium and our customers in these key industry discussions as we shape the future of financial transactions.” 

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Base Metals

Oyu Tolgoi copper, gold production drops


Turquoise Hill Resources on Tuesday released its operational overview and financial results for its Oyu Tolgoi copper-gold mine in Mongolia that came in above expectations despite showing production declines for both metals.

The Vancouver-based company said Oyu Tolgoi's second quarter concentrator throughput was in line with the first quarter at roughly 105,000 tonnes per day, but copper production declined 10.3% quarter on quarter reflecting lower grades relative lower recovery.

As expected, gold production from open pit operations in Q2 declined approximately 52% compared to the first three months of the year due to lower grades.

Oyu Tolgoi recorded revenue of just under $330 million during the quarter, a decline of 22% over the first primarily as a result of lower gold sales volumes that came in slightly above expectations.

TheRio Tinto-controlled company  generated operating cash flow before interest and taxes of $161.6 million during and income from continuing operations attributable to shareholders of $29.8 million.

Margins at operating level remains juicy with second quarter cash costs of $1.12 per pound of copper and all-in sustaining costs of $1.55 per pound of copper although both figures are substantially higher than previous quarters.

Sales contracts have been signed for essentially all of Oyu Tolgoi’s expected 2016 concentrate production according to the company statement.

Oyu Tolgoi is expected to produce 175,000 to 195,000 tonnes of copper and 255,000 to 285,000 ounces of gold in concentrates for 2016 (the mine also produces small quantities of silver).

During peak production 2025–2030 Oyu Tolgoi is expected to be among the top three copper mines in the world.

Operating cash costs for 2016 are expected to be approximately $800 million, lower than previous guidance. Turquoise Hill said capital expenditures for 2016 on a cash-basis are expected to be approximately $300 million, of which approximately $280 million relates to sustaining capital.

The board of Rio Tinto, which owns just over half of Turquoise Hill, in May approved the $5.3 billion underground development and 2016 feasibility study for Oyu Tolgoi. First sustainable underground production is expected around 2021 and the project has a five to seven-year ramp up period.

In June 2016, Oyu Tolgoi signed a critical contract with Jacobs Engineering Group to provide engineering, procurement and construction management services for the planned 95,000-tonne-per-day underground block-cave mine.

"Major contractor mobilization for the sinking of Shafts #2 and #5, underground development, critical construction works and maintenance are all progressing."

Oyu Tolgoi underground phase is where the bulk of the resources lie – the feasibility study shows recoverable copper of 25 billion pounds, 12 million ounces of gold and 78 million ounces of silver over a mine life of 41 years. During peak production 2025–2030 Oyu Tolgoi is expected to be among the top three copper mines in the world.

Turquoise Hill is worth $7 billion on the New York Stock Exchange and the stock is up 36% in 2016. Turquoise Hill owns 66% of the mine in the Gobi Desert 80km from the Chinese border and the Mongolian government the rest. Oyu Tolgoi will represent 30% of Mongolia's economy in full production.

http://www.mining.com/oyu-tolgoi-copper-gold-production-drops/
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Kenmare lifts H1 production


LSE-listed Kenmare Resources production surged in the first half of the year as powersupply stabilised and recoveries increased, while improvement is being seen in the sulphate ilmenite market as supply/demand conditions continue to tighten.

Kenmare on Tuesday posted considerable increases in production as the Moma titanium minerals mine, in northern Mozambique, bounced back from debilitating powerinstability last year and continued to report higher tonnes mined and increased grades, as well as higher nonmagnetic recoveries and maximisation projects.

The total shipments of finished products in the first six months of this year increased 7% to 441 700 t, with second-quarter shipments up 133% to 309 000 t on the preceding quarter and setting a new quarterly product shipment record.

Heavy mineral concentrate production in the first-half under review increased 33% to 606 100 t, while ilmenite production increased 24% during the first half of 2016 to 402 900 t.

Kenmare posted a 20% rise in zircon production to 23 800 t and rutile output of 3 000 t, a 7% uptick on the corresponding half-year in 2015.

The titanium miner mined 14.4-million tonnes of ore during the half-year under review – a 26% jump on the prior corresponding period last year.

Production in the second half of the year is expected to increase further on the back of an uptick in dry mining, grade and operating time.

“The strengthening of the balance sheet, allied with falling cash costs and consistent productivity gains at Moma, positions Kenmare to benefit from the improvement in the titanium feedstock market we are currently experiencing as higher ilmenite prices are reflected in revenues for the second half of 2016,” said MD Michael Carvill.

Kenmare saw improvement in the sulphate ilmenite market in the second quarter of the year, with supply and demand conditions tightening, as a result of improved offtake, price increases, improved global demand conditions and a continued decline of ilmenite supply owing to mine closures, depletion and poor mining economics.

Excess ilmenite inventories have also seemingly dwindled, with Kenmare’s market intelligence pointing to low inventory levels at other ilmenite producers, explained Carvill.

Meanwhile, as the company sells the bulk of its ilmenite production on long-term contracts with yearly or six-monthly price renegotiations, the first-half price increases registered for ilmenite will feed through into revenues during the second half of the year.

Chinese domestic ilmenite prices have been steadily increasing since the beginning of the year and Kenmare implemented price increases on spot sales during the second quarter to be shipped in the third quarter.

Meanwhile, the zircon market experienced further price weakness owing to competitive positioning for sales among producers.

“It is anticipated that a recent price increase announcement by a major zircon producer will reverse the downward price trend seen in recent months and help to provide some stability to the market,” Carvill said.

http://www.miningweekly.com/article/kenmare-lifts-h1-production-2016-08-02
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Steel, Iron Ore and Coal

Indonesia's August HBA thermal coal price jumps 10% from July to a year-high


Indonesia's Ministry of Energy and Mineral Resources has set its August thermal coal reference price, also known as Harga Batubara Acuan or HBA, at a year-high of $58.37/mt FOB and up 10.1% from July.

August's HBA price is however, 1.3% lower from a year earlier.

The HBA price has been on a rise since May this year as seaborne coal prices continue their upward trend amid supply cuts and strong demand from China.

The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg gross as received assessment; 25% on the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR); 25% on the Newcastle Export Index -- formerly the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy Publishing -- and 25% on the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

In July, the daily Platts FOB Kalimantan 5,900 GAR coal assessment averaged $50.28/mt, up from $47.39/mt in June, while the daily 90-day Platts Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $62.29/mt, up from $53.17/mt in the previous month.

The HBA for thermal coal is the basis for determining the prices of 75 Indonesian coal products and for calculating the royalties Indonesian producers have to pay for each metric ton of coal they sell locally or overseas.

It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.

http://www.platts.com/latest-news/coal/singapore/indonesias-august-hba-thermal-coal-price-jumps-27640067
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PWCS's coal exports to China reach 18-month high in July


Australian coal exports from the Port Waratah Coal Services (PWCS) terminals (Carrington and Kooragang) at Newcastle to China reached 1.80 million tonnes in July, up 75% from June and hitting an 18-month high when 2.16 million tonnes was shipped, PWCS said in a performance report on August 1.

The coal terminals exported 9.31 million tonnes of coal in July, up from 8.31 million tonnes in June.

Of this, 45% (4.23 million tonnes) was from Japan, up 6% from June; followed by China with 19% of the total, and South Korea at 14% or 1.30 million tonnes, rising 1% on month.

Over January-July, PWCS shipped 62.71 million tonnes of coal, growing 1.39% from the corresponding period last year. Among exports destinations for PWCS, Japan was still the largest coal importer during the period with 47% of the total shipment, while China's offtake is 13%, South Korea's offtake is also 13%.

Of July's shipments, 89% were thermal coal and the remainder was coking coal, PWCS said.

Newcastle port has another coal terminal operated under the Newcastle Coal Infrastructure Group banner that does not publish regular information on its shipping data.

The NCIG terminal has a capacity of 66 million tonnes per year and is operated by five coal producers including BHP Billiton, Peabody Energy and Whitehaven Coal.
 

http://old.en.sxcoal.com/0/150706/DataShow.html
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Coal giants profit from overcapacity reduction


China's coal giants seem to have turned their losses into profits as the industry improved helped by a reduction in overcapacity, according to the National Development and Reform Commission yesterday as well as companies' annual earnings reports.

Shaanxi Coal Industry Co indicated a net profit of 280 million yuan ($42.2 million) in the first half of the year in its interim earnings report while China Coal Energy Co predicted a net earnings of 520 million yuan.

The coal companies are mining profitability as overcapacity is being cut. The NDRC said that the output of coal across China has shrunk 9.6 percent over the first six months from the same period of last year.

By the end of July the Bohai-Rim Steam-Coal Price Index, a benchmark for China's coal prices, surged 15.9 percent since the beginning of 2016, equivalent to a growth of 59 yuan per ton.

Deng Shun, an analyst at ICIS, a global consulting company in energy, forecast coal prices in China to rise in coming months as the reduction in overcapacity continues.

His view was echoed by Shenwan Hongyuan Securities which said in a recent report that efficiently-managed coal companies could expect more profits.

"The coal industry as a whole is upgrading with the closing of poorly operating companies," the report pointed out.
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Rio Tinto to invest $338 mln in Silvergrass iron ore mine


Rio Tinto Plc/Ltd said on Tuesday it would invest $338 million to complete the development of its Silvergrass iron ore mine in Western Australia.

The company, which aims to produce about 350 million tonnes of iron ore this year, said the mine would add about 10 million tonnes of capacity.

A massive global supply glut has dragged prices of iron ore to record lows, with producers such as Rio Tinto and BHP Billiton Plc/Ltd slow to cut production in order to stem supply.

The Silvergrass mine is part of Rio Tinto's Pilbara operations, which make up the vast majority of the miner's iron ore production.

Rio's situation has eased in recent months as the company has paid down debt and benefited from a recovery in commodity prices.

Some of the financial pressure is off, but there is no growth implied. (The investment) is maintaining stability," said Hunter Hillcoat, an analyst at Investec in London.

http://www.reuters.com/article/rio-tinto-plc-silverglass-idUSL3N1AJ3LX
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China July steel sector PMI rebounds to 50.2


The Purchasing Managers Index (PMI) for China's steel industry rose 5.1 to 50.2 in July from the lowest level this year in the previous month, indicating an upturn of China's steel sector, showed data from the China Federation of Logistics and Purchasing (CFLP).

In July, the steel industry output sub-index was 50.1, gaining 7.6 from 42.5 in June.

Meanwhile, the new orders sub-index reached 50.2, compared with 43 in the previous month, supported by rising steel prices, amid high temperature and heavy rains, despite the slack season.

Besides, the purchase price index bounced up from 50.4 in June to 55.3 in July, indicating increased pressure on steel mills' cost.

Prices of raw materials used for steel-making grew substantially in July, among which prices of iron ore and steel billets rose dramatically, pushed by factors including the Brexit, the meger of Baosteel and WISCO, production restriction in Tangshan, increasingly strict de-capacity campaign, and the reconstruction after rainstorms.

As of July 31, the Tangshan steel billet price stood at 2,050 yuan/t, up 60 yuan/t on month.

China's steel market has been seen bullish in the long term, with demand increasing and supply decreasing, boosted by macroeconomic factors. Steel prices are likely to remain rise in August.
 
http://old.en.sxcoal.com/0/150680/DataShow.html
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