Mark Latham Commodity Equity Intelligence Service

Monday 20th March 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Workers at France's EDF to strike again for 24 hours from Mar 20 evening



    Workers at France's EDF will strike for 24 hours starting Monday at 9:00 pm local time (2000 GMT), the company said in a note posted on the website of French grid operator RTE Friday morning.

    The strike will end at 9:00 pm on Tuesday, EDF said, without giving any details on how much capacity could be affected.

    The last strike began on Monday, March 13, at 4:00 pm, with it being initially announced for 9:00 pm and it ended Tuesday at 9:00 pm.

    The event had little if any impact on prices, as strong solar output and high temperatures helped offset the impact of a drop in nuclear, hydro and fossil fuel capacity.

    On Tuesday, 12 nuclear reactors were seen operating at reduced capacity, all citing the strike as a reason. Combined nuclear capacity slashed at the 12 reactors amounted to 4.355 GW Tuesday, according to data from French grid operator RTE.

    With one coal plant and two fuel oil units taken down because of the strike as well, the total capacity cuts during Tuesday's industrial action amounted to 8.12 GW.

    Hydro capacity was also impacted by the strike, with the latest update from the grid operator showing a drop of 540 MW in hydro availability.

    All 12 reactors, hydro and other units were seen operating normally again on Wednesday.

    REFLECTS SECTOR-WIDE STRIKE CALLED FOR TUESDAY

    The notice of the latest EDF action comes as labor unions representing professionals in the energy industry called on Thursday for a national action day on Tuesday. The call to strike comes against the backdrop of a proposal to freeze the national base salary this year.

    "No to the freezing of the national base salary, a fundamental element of the social regulation for all people in the electricity industry! On March 21, 2017, the struggle continues. The FNME CGT calls on all the staff to strike...This must be extended to all categories of staff," France's main energy trade union, FNME-CGT said in a statement on its website Thursday.

    The statement said the unions were asking for the reopening of negotiations on the national basic salary, and an end to job cuts.

    EDF workers have joined several recent calls for national action days organized by FNME-CGT and other unions, with the strike next week the sixth for EDF workers this year.

    http://www.platts.com/latest-news/electric-power/london/workers-at-frances-edf-to-strike-again-for-24-26687872
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    3D Printed Excavator.

    Image title
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    Blockchain and Electricity.

    Energy Sector Gets Blockchain Boost

    As with many sectors, the energy industry is turning its attention to the blockchain to improve on its services.

    Last month, it was reported that Wien Energie, Austria’s largest regional energy company, was joining a group of others to take part in a blockchain pilot that aims to reduce costs related to energy trading.

    In October, Spanish energy company Endesa revealed plans to open a blockchain laboratory to encourage the creation of blockchain-based solutions for the sector.

    While Australian electric company, Power Ledger, announced last August that it was undertaking trials via the blockchain to see how people buy, sell or exchange excess solar electricity.

    As knowledge of the distributed ledger increases, more sectors are keen to use the technology to further the services they provide to consumers. And the energy industry is no different.

    While this in the early days of development, the technology appears to be on its way of reshaping the energy sector. Not only that, but if people can receive compensation from the sector as a way of helping the sector, so much the better.

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    China Feb power consumption up 17.2pct on year, NEA


    China consumed 448.8 TWh of electricity in February, increasing 17.2% year on year, showed data from the National Energy Administration (NEA) on March 15.

    Over January-February, China's total electricity consumption gained 6.3% from a year ago to 935.6 TWh.

    Of this, 146.7 TWh was consumed by the residential segment during the same period, gaining 3.5% from a year earlier, data showed.

    For the non-residential segment, the primary industries – mainly the agricultural sector – used 13.4 TWh in the first two months this year, rising 12% from the previous year.

    The secondary industries – mainly the industrial sector -- consumed 632.7 TWh, increasing 6.7% year on year.

    Power consumption by tertiary industries – mainly the service sector – increased 7.3% from a year earlier to 142.8 TWh.

    From January to February, the average utilization hours of power generating units across the country was 578 hours, 3 hours more than a year ago, according to the NEA data.

    Of this, hydropower plants logged average utilization of 397 hours, a decrease of 49 hours; the average utilization of thermal power plants increased 21 hours year on year to 678 hours.

    http://www.sxcoal.com/news/4553643/info/en
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    Oil and Gas

    Bullish Crude Bets Cut by Most Ever as Price Falls Below $50


    Money managers cut bets on rising West Texas Intermediate crude by a record amount during the week ended March 14, while wagers on a further price drop doubled as oil remained below $50 a barrel.

    "It’s sort of a negative feedback loop, where money managers were selling because the price was falling, and the price was falling in part because money managers were selling,” said Tim Evans, an analyst at Citi Futures Perspective in New York, in a telephone interview.

    Bets on rising WTI crude during the report week were reduced by the most on record in data going back to 2006, the U.S. Commodity Futures Trading Commission announced Friday. The cuts came as prices tumbled below $50 a barrel for the first time this year, and anxious executives discussed rising U.S. rig counts at an industry meeting in Houston.

    On Monday, oil slid 39 cents, or 0.8 percent, to $48.39 a barrel on the New York Mercantile Exchange at 12:48 p.m. in Hong Kong. Saudi Arabia and Russia sent mixed messages as the week ended on the future of the production cuts agreed to by the Organization of Petroleum Exporting Countries and 11 other nations for the first half of the year.

    Saudi Arabia is ready to extend the cuts into the second half if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said on Bloomberg Television. Russian Energy Minister Alexander Novak countered it was too early to discuss an extension. An OPEC panel is scheduled to meet this month to review compliance with the current deal.

    ‘Room to Grow’

    “If you make it through this next OPEC compliance meeting and we don’t have further jawboning by the Saudis and Russia, or more compliance, I think that you have room to grow on the short side, which is worrisome,” Brent Belote, founder of Cayler Capital LLC, which manages $5 million in oil-related assets, said by telephone.

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    During the week ended March 14, hedge funds decreased their net-long position, or the difference between bets on a price increase and wagers on a decline, by 23 percent to 288,774, the largest decline on record and the lowest level since December. WTI tumbled 10 percent during the period. Longs fell 8.9 percent to the lowest level since early January, and shorts doubled from the prior week to the highest since November.

    Producers and merchants increased their short positions, or bets on lower prices, to 739,736 futures and options during the report week, the highest level in a month.

    The U.S. benchmark slipped below $50 a barrel on March 9 as oil executives gathered in Houston for the annual CERAWeek by IHS Markit conference.

    Industry players at the meeting aired their concerns that growing U.S. output may thwart OPEC’s efforts to trim stockpiles and raise prices, an idea underpinned by U.S. government data released during the week showing inventories at record high levels. Many shale producers view $50 as a benchmark price for profitability.

    Bets on OPEC

    “The rise to record inventory levels in the U.S. is a challenge to the idea that the market has already fully rebalanced and that the downside risk is negligible," Evans said.

    There’s still hope OPEC will continue its efforts to reduce the global glut. Deutsche Bank AG Thursday predicted OPEC will extend the cuts not only through the end of this year, but also through the end of 2018. Citigroup Inc. said OPEC’s output cuts aimed at easing the glut are “real” and already are cleaning up the market.

    “We’re close to the $49 mark, not too far from $50,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. “It seems like there are a lot of people who still have faith in OPEC delivering the kind of cuts that would allow prices to increase.”

    https://www.bloomberg.com/news/articles/2017-03-19/bullish-bets-on-crude-cut-by-most-ever-as-price-falls-below-50

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    Little new damage found as east Libyan forces push to secure oil ports


    A broken down truck and a tank lie by the side of the road in the sand, and overturned boxes are strewn across the floor of a firefighting station.

    Otherwise, Libya's coastal Oil Crescent appears much as it did before a string of battles saw the eastern-based Libyan National Army (LNA) lose and retake the major export terminals of Ras Lanuf and Es Sider in the space of 11 days.

    The fighting with the Benghazi Defence Brigades (BDB) caused output to dip slightly, and fuelled fears of fresh shutdowns in Libya's most important oil producing region.

    But workers are gradually returning to the oil facilities which officials say show little sign of damage beyond what was wrought in previous rounds of fighting.

    Military checkpoints have sprung up again, and shops, mosques and petrol stations have reopened. The LNA says it is once more fully in control.

    Es Sider and Ras Lanuf are two of Libya's largest terminals. They have a potential combined capacity of some 600,000 barrels per day (bpd), but have been operating at a fraction of normal levels after being repeatedly fought over and blockaded for two years.

    Reuters reporters saw a heavy military presence at Es Sider, the westernmost of the ports, during a visit on Thursday, just two days after the LNA recaptured it.

    "The port has not suffered damage that would hinder exports, just some stealing," said an engineer at Es Sider. "About 30 workers have returned to the port, though we have not started export operations yet."

    At the Harouge oil storage tank farm in Ras Lanuf, about 30 km (18 miles) east of Es Sider, a group of soldiers with five military vehicles stood guard.

    "There were clashes around the tanks, they didn't last long," said Alaa Gaddafi, an LNA commander stationed there. "Some of them escaped and we found some dead. We got control of the tanks after about 10 minutes. There was no new damage to the tanks, the damage is from before."

    The LNA and its leader Khalifa Haftar say they are working to rid Libya of Islamist extremism and militia rule. They have gradually extended their control over most parts of eastern Libya.

    The BDB is partly made up of fighters who battled the LNA in Benghazi. They draw on support from Haftar's opponents in western Libya, and say they are fighting to prevent a return to authoritarian rule and to allow displaced families to go back to Benghazi.

    OPEN LAND

    The attack on the Oil Crescent by the BDB on March 3 took the LNA by surprise, exposing previous claims to have the area well secured.

    Its loss of Es Sider and Ras Lanuf, and the BDB's promise to push northeast towards Benghazi, raised the prospect of an escalation in a simmering conflict between loose armed alliances based in the east and west of the country.

    It also put at risk a partial revival of Libya's oil production, throwing into doubt a fragile arrangement by which the LNA allowed the National Oil Corporation (NOC) in Tripoli to operate the ports, even whilst allowing revenues to go to a central bank that it opposes.

    National output more than doubled after the LNA took control of all four of the Oil Crescent's ports last September, allowing the NOC to reopen three of them. During this month's clashes it dropped by about 100,000 bpd.

    The LNA maintained control of Brega and Zueitina, two ports that lie to northeast of Ras Lanuf, as the BDB advanced. And after massing its forces between Brega and Ras Lanuf, and carrying out daily air strikes against its rivals, it took back both those terminals in a single day.

    "They had no air cover and were in open land, they were on land they did not know, a land which to them was hostile," said Mohamed Manfour, commander of Benghazi's Benina air base, speaking in Brega

    The BDB says it will regroup and that its campaign to reach Benghazi will continue.

    The depth of local support for either side in the Oil Crescent remains unclear. Local backing is often won by offers of financial support and tribal pledges that can quickly shift. Both sides accuse the other of using mercenaries from southern Libya and sub-Saharan states across the border, and of carrying out abuses.

    http://www.reuters.com/article/libya-security-oil-idUSL5N1GU5J1
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    Libya's NOC says expects to regain Es Sider, Ras Lanuf oil ports


    Libya's National Oil Corporation (NOC) has been coordinating with military forces from eastern Libya and has "no reason to believe" it will not regain control of the Es Sider and Ras Lanuf oil ports, NOC's chairman said.

    The loss and recapture of the ports this month by the eastern-based Libyan National Army (LNA) had raised doubts over its willingness to let the Tripoli-based NOC manage the ports.

    Revenue from the sites is controlled by a central bank and U.N.-backed government in the capital which pro-LNA factions oppose.

    Eastern officials accuse rivals in Tripoli and the western city of Misrata of supporting a March 3 attack on the ports by a faction known as the Benghazi Defense Brigades (BDB).

    An oil guard commander appointed by the U.N.-backed government was deployed to secure them.

    After they were retaken, the head of a Benghazi NOC office appointed by Libya's eastern government, Naji al-Maghrabi, said he was pulling out of an NOC unification deal signed in July and an LNA spokesman said there would be no immediate decision on a handover.

    But in written responses provided to Reuters, Mustafa Sanalla, the Tripoli-based NOC chairman, said his staff had already been working with the LNA.

    "We have been coordinating our assessment of the facilities with them," Sanalla said, in his first public comments since the ports were retaken.

    "We have no reason to believe control of the ports will not be handed back to NOC."

    Es Sider and Ras Lanuf have a combined potential capacity of 600,000 barrels per day (bpd).

    Operations there and at two other ports southwest of Benghazi are crucial to the NOC's efforts to revive Libya's output, which has been crippled by years of conflict and political chaos.

    The LNA took over the ports in September, ending a two-year blockade at three of them and quickly inviting the NOC to resume exports.

    Es Sider and Ras Lanuf were badly damaged in previous rounds of fighting and have been operating well below normal levels. The latest clashes, which included ground battles and more than a week of LNA air strikes, had dented the LNA's claim it could defend the ports and led to fears that facilities would suffer further damage.

    But Waha Oil Company resumed pumping to Es Sider on Saturday and Sanalla said the NOC had decided to restart operations at the ports based on technical assessments and a review by military engineers.

    "For the most part, the facilities are not damaged. In one or two locations, some work needs to be done by the military engineers. Our workers are returning to their terminals gradually."

    Reuters journalists observed little apparent additional damage to the ports during a visit on Thursday.

    An engineer at the Waha oil field said on Sunday it was pumping 25,000 bpd to Es Sider as it restarted production. The NOC said 13,000 bpd were being pumped from Defah field, and that Waha's production should reach 80,000 bpd by the end of March.

    Sanalla said the NOC was hoping to raise overall production to 800,000 bpd by the end of April from 611,000 bpd currently.

    Libya along with Nigeria has been exempted from production cuts recently agreed by the Organization of the Petroleum Exporting Countries (OPEC).

    However, any gains in Libya remain fragile as long as the political turmoil that has fractured the country since its 2011 uprising continues.

    Oil accounts for nearly all of Libya's income and pipelines and ports have been repeatedly blockaded by local groups seeking political and financial gain.

    Eastern authorities have attempted to sell oil independently, but have been blocked by international sanctions which remain in place.

    Oil facilities are protected by the Petroleum Facilities Guard (PFG) but PFG units often operate independently or for a particular political faction.

    Sanalla said he was not concerned by Maghrabi's rejection of the NOC unification deal, which he said had been signed to clear up uncertainty in the markets. "I don't think that uncertainty exists anymore," he said.

    "No respectable oil company or ship owner will touch (the eastern NOC) ... To export oil independently would risk the integrity of the state of Libya."

    Sanalla said a neutral PFG should have a role, "but under the authority and real management of NOC".

    "Putting the PFG under the NOC would, we think, go a long way to removing Libya's oil assets as an object of military competition," he said.

    "Unless oil assets are taken off the table as an object of conflict, unless the oil industry is ring-fenced from our political conflict, then the possibility of more

    fighting remains."

    http://www.reuters.com/article/us-libya-security-oil-idUSKBN16Q0CK
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    Chinese Oil Production Dives by 8% in 2017


    Demand is not dropping, but China’s oil production has been decreasing since November 2015

    Chinese oil production so far this year is down 8%, as the world’s fifth largest oil producer continues to be squeezed by lower commodity prices. China has produced 230.5 million barrels of oil in January and February this year, down from the 250 million barrels produced in the first two months of 2016.

    Demand has not dropped, though, as Chinese crude imports grew by 12.5% to 482.3 million barrels.

    Chinese natural gas production has not seen a decline, as production in the first two months of this year is 888.2 Bcf. This is virtually unchanged from the 885.4 Bcf produced in the first two months of 2016. Like crude oil, though, imports have risen by about 7.5% so far this year.

    Chinese oil production has been hit hard by the industry downturn, as expensive fields have been shut in. After growing steadily since 2009, the country’s oil output began to fall in November 2015. Total yearly crude production fell by 6.9% in 2016 to 1.464 billion barrels. This is China’s largest crude output drop since at least 1990. Writing in January, Bloomberg predicted that 2017 could see another production drop of about 7%

    The collapse in Chinese production is a positive for U.S. producers, though, as it reinforces the effect of the current OPEC cuts.

    China’s total production in 2016 dropped by about 313 MBOPD, about one quarter of the OPEC cut commitment.

    According to Xinhua News Agency, the nation expects to produce 1.466 billion barrels of oil in 2020.

    This could be a difficult goal to achieve, especially if Bloomberg’s decline prediction proves correct. Most of Chinese oil production comes from mature fields that are declining. At current prices many of these fields are not economic in primary production, let alone when utilizing the EOR techniques that would be required to increase production.

    http://www.oilandgas360.com/chinese-oil-production-dives-8-2017/
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    Norway's energy minister lauds natural gas sector competitiveness


    Norway's gas supplies will remain competitive in the coming years versus other sources of gas, including US LNG, in its key northwest European markets, recently appointed energy minister Terje Soviknes said in an interview with S&P Global Platts.

    Soviknes, who replaced former minister Tord Lien at the end of December last year, has not given any indication so far that he is likely to stray much from the previous party line, namely that Norway is well placed to continue robust gas supply to northwest Europe.

    "I expect Norwegian gas exports to remain high and stable, not only [this] year, but also for the coming years," Soviknes said.

    Norway's gas sales totaled 115 Bcm in 2016, flat on the previous all-time high recorded the previous year, and according to the Norwegian Petroleum Directorate sales are likely to remain around that 114-115 Bcm/year level until the end of the decade.

    Asked if US LNG exports, which started up in February 2016, could be a threat to Norway's key European markets in the coming years, Soviknes was unfazed.

    "Norwegian gas has a strong competitive position due to its proximity to the northwest European market and efficient, low-cost infrastructure," he said.

    "I am confident there will be a profitable market for Norwegian gas in Europe, in the short- as well as in the long term."

    He also dismissed the prospect of shale gas ever becoming competition to Norwegian gas in the UK and wider European market.

    "What matters for Norwegian gas interests is how supply and import requirements develop in the European market, in which the UK is an integral part. Our resource base is very competitive in this market and I do not expect shale gas in the UK or elsewhere in Europe to have a strong impact on the market in the years ahead," he said.

    GAS DEMAND SIGNALS

    Despite Soviknes' confidence around Norway's position in the European gas market, he did express some concern over the attitude to gas within the EU and certain of the bloc's individual countries.

    "The signals from the EU and EU capitals on the future gas demand and the role of gas in the energy mix are somewhat mixed," he said, without elaborating.

    The European Commission has backed the use of gas in power generation as a cleaner alternative to coal, but some member states are still using significant volumes of coal, such as Germany and Poland.

    "I think that key policymakers in most EU countries are aware the important role gas has to play in the EU energy mix," Soviknes said.

    Calls for a European tax, or price, on carbon emissions -- like the policy unilaterally enforced by the UK -- have also so far fallen on deaf ears.

    Such a move would automatically trigger incremental gas demand for power generation across Europe.

    There has also been some doubt about Norway's ability to sustain its gas exports at current elevated levels into the 2020s due to a lack of investment -- triggered by the falling oil price -- and the maturing resource base of the Norwegian Continental Shelf.

    Soviknes said the majority of exports over the coming years would come from already producing fields, but that the pipeline of projects due online was healthy.

    "New fields coming on stream, such as [Gina] Krog, [Aasta] Hansteen and [Martin] Linge will replace production from mature fields in decline," he said.

    Statoil operates both the Gina Krog and Aasta Hansteen fields, which are due online in the summer of 2017 and fourth quarter of 2018, respectively.

    Martin Linge is a Total-operated field expected to produce first gas in 2018.

    'VALUE OVER VOLUME'

    Another key issue affecting Norway's gas output is the strategy of its mainstay producer Statoil to sometimes keep back production to wait for higher prices.

    The state-controlled company's "value over volume" strategy has seen production reduced at times of low prices at some of its swing fields, such as Troll.

    http://www.platts.com/latest-news/natural-gas/london/interview-norways-energy-minister-lauds-natural-26687828
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    Norway's Hoegh sees Australia as top target market for LNG imports


    Norway's Hoegh LNG Holdings is targeting Australia as the next destination for its liquefied natural gas (LNG) import ships, its chief executive said on Monday, aiming to fill a looming supply gap that has sent prices soaring.

    Hoegh has just started talking to Australia's energy retailers and also sees big gas users as potential customers, with floating regasification and storage units (FSRUs) giving them access to the world market.

    Australia is about to become the world's top exporter of LNG, but faces a gas shortage at home as producers have focused on supplying gas to plants offshore that have locked in 20-year export contracts.

    "(Australia's) at the top of the opportunity list on our side," Hoegh LNG Chief Executive Sveinung Støhle told Reuters in an interview.

    Buyers could take advantage of a global glut of LNG to break the grip of Australia's big gas producers, who have more than doubled contract prices to big gas customers, like power producers and fertilizer, bricks and packaging manufacturers.

    "If they're not happy with the price they're paying in Australia, well then they can buy LNG in the market. It gives you commercial flexibility," Støhle said.

    For a graphic on Australia's gas market, click here

    Hoegh LNG, along with fellow Norwegian company Golar LNG Ltd, is leading the construction of FSRUs, which have become attractive to gas importers from Colombia to Indonesia, as they are quicker and cheaper to build than terminals onshore.

    Hoegh covers the cost of building an FSRU and the customer leases the vessel and pays the operating costs.

    Støhle sees Australia as the best potential destination for FSRUs that Hoegh has coming out of shipyards in April and early next year, in light of warnings that the eastern half of the country could face gas shortages within the next two years.

    If spot LNG prices stay around $6.50 per mmBTU, plus freight of around 50 cents/mmBTU, regasification cost with an FSRU of around 40 cents/mmBTU and crude prices around $50 a barrel, imported LNG could compete with domestic gas, Støhle estimated.

    That is roughly in line with a recent estimate by consultants McKinsey.

    Australia's top power producer and no.2 energy retailer, AGL Energy, is considering building an LNG import terminal, but has said the earliest it may start importing LNG would be in 2021.

    In contrast, Hoegh could have an FSRU in place within six months of signing a contract, as it did in Egypt in 2015, assuming port space, a jetty and infrastructure to hook into gas pipelines were available, Støhle said.

    http://www.reuters.com/article/us-australia-lng-hoegh-lng-idUSKBN16R08L
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    Platts JKM prices for Apr LNG delivery fall 21% on month to $6.079/MMBtu


    The Platts JKM for April LNG delivery averaged $6.079/MMBtu over February 16-March 15, sliding 20.5% from a month earlier on expectations of rising supply and limited demand.

    Train two of the Gorgon project in Western Australia resumed production at the end of February, following its recent shutdown.

    The prospects for new LNG supplies grew as market players focused on the expected startups of Australia's Gorgon Train 3, US Sabine Pass Train 3 and Petronas' floating LNG project, all expected to start up in March and all exerting bearish pressure on the market.

    There was also re-selling of long-term contracted volumes, with Unipec actively re-marketing volumes in February, expected to be at least one cargo a month, with the exact volumes dependent on Chinese domestic demand, from their 7.6 million mt/year LNG contract from eastern Australia's APLNG project.

    In addition, at the end of February, multi-cargo sell-tenders from Papua New Guinea's PNG LNG, as well as Russia's Sakhalin injected significant supply into the market. Sakhalin's May 2017-March 2018 DES sell tender of six cargoes were heard awarded to BP, JERA and another northeast Asian utility at 11.5% of Brent crude price. A further three cargoes for April delivery was awarded at $6.10-6.20/MMBtu, to Mitsui, PetroChina and Gazprom, sources said.

    PNG LNG's six-cargo tender, which closed on February 22, for April-November deliveries were heard awarded to CPC, as well as several non-project offtakers.

    The market also had to absorb more sell tenders, with Argentina's Enarsa awarding a total of 20 cargoes, in a tender which closed March 7. The results of the Enarsa tender awarded were published by the company, Wednesday. Super major Shell was awarded all of the tender slots, save those for June 6 and July 21 delivery into Escobar, which were awarded to Petrobras and Gas Natural Fenosa, respectively. All of the Shell cargoes for July and August were sold on a Henry Hub basis.

    Falling NBP and crude oil prices also lead to bearish near-term sentiment.

    But prices stabilized in the second week of March, as end-users from Japan, India and South Korea with low inventories sought to take advantage of low prices. LNG buyers closed buy tenders in the first half of March, including India's Gail and IOC, South Korea's POSCO, as well as Japan's Kansai Electric and Tohoku Electric. Regarding sell tenders, Angola LNG, Bontang and ADGAS also all closed tenders it the first half of March.

    As far as alternative fuels go, in the US, front-month NYMEX Henry Hub gas futures averaged $2.823/MMBtu, rising 59.5% on the year, but falling 11.9% on the month.

    Platts FOB Singapore 180 CST fuel oil fell 2.1% month on month and rose 94.2% year on year over the period, averaging $8.141/MMBtu.

    http://www.platts.com/latest-news/natural-gas/singapore/platts-jkm-prices-for-apr-lng-delivery-fall-21-26686887

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    Statoil to save another $1 billion in further cost-cutting push


    Norwegian oil and gas giant Statoil will reduce its costs by another $1 billion during 2017.

    The oil company on Friday presented its annual report for 2016 where it said it expects to achieve an additional $1 billion in efficiency improvements in 2017 for a total of $4.2 billion.

    While oil prices in 2016 increased over $30 per barrel towards the end of the year, the company said in the report that its average realized liquids price for the year as a whole was still below $40 per barrel.

    Statoil President and CEO, Eldar Sætre, wrote in a letter to shareholders: “We delivered our cost improvement program above target. The next step will be to go from project mode to a culture of continuous improvements, and we have set a target of achieving $1 billion in additional cost improvements in 2017.”

    According to the report, the $1 billion improvement is on top of already achieved $3.2 billion.

    Sætre further wrote: “The break-even price for our ‘Next generation’ portfolio of projects is now at $27 per barrel of oil equivalents.”

    During 2016, Statoil’s equity production was helped by high production efficiency and amounted to 1,978 million barrels of oil equivalents per day, which is a slight increase compared to 2015.

    The company said that the equity production for 2017 is estimated to be around 4- 5% above the 2016 level.

    Statoil’s serious incident frequency, measured as incidents per million hours worked for both Statoil employees and contractors, increased from 0.6 in 2015 to 0.8 in 2016 due to a fatality in South Korea and a helicopter crash at the end of April that killed 13 people.

    The company’s organic capital expenditures for 2017 are estimated at around $11 billion.

    http://www.offshoreenergytoday.com/statoil-to-save-another-1-billion-in-further-cost-cutting-push/
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    China's Sinopec nears deal to buy Chevron's South African oil assets: sources


    China Petroleum and Chemical Corp (Sinopec) is nearing an agreement to buy a majority stake in Chevron Corp's South African assets, which are estimated at $1 billion, two people familiar with the transaction said.

    The sources said that Sinopec, Asia's largest oil refiner, was the last bidder remaining, and close to completing a deal with the U.S. oil major.

    If the deal is finalised, it will be Sinopec's first refinery asset in Africa, forming a part of the Chinese major's global fuel distribution network.

    Sinopec declined to comment.

    Chevron first announced plans in January 2016 to sell the stake in the business unit, which includes a 110,000-barrels-per-day refinery in Cape Town, South Africa.

    Chevron spokesman Braden Reddall said "the process of soliciting expressions of interest in the 75 percent shareholding is ongoing."

    The remaining 25 percent interest is held by a consortium of Black Economic Empowerment shareholders and an employee trust. A second bidding round closed on Sept. 30, additional sources said.

    http://www.reuters.com/article/us-chevron-m-a-sinopec-idUSKBN16O0NU
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    Nigerian court overturns seizure of oilfield from Shell and Eni


    A Nigerian court on Friday overturned a request by Nigeria's financial crimes agency to seize an oilfield from Royal Dutch Shell and Eni.

    In January, a court had ordered the seizure of the OPL 245 oil block and transfer of operations to the federal government on the request of the Economic and Financial Crimes Commission (EFCC).

    Oil companies Shell and Eni had filed motions to dispute this.

    The EFCC is investigating whether the $1.3 billion purchase of OPL 245 in 2011 involved "acts of conspiracy, bribery, official corruption and money laundering", according to court papers seen in January by Reuters.

    "The chairman of the EFCC failed to meet the precondition for making an application for interim attachment of properties. So the application as such was irregular and the order granted on its basis ought to be discharged," Justice John Tsoho of the Federal High Court said.

    Reuters contacted Eni and Shell by telephone on Friday, following the court ruling. Both companies said they would issue comments in due course.

    Shell had previously said the EFCC conducted "a gross abuse of process and an abuse of power" to get a court order asking for the forfeiture, according to a document obtained by Reuters.

    The Nigerian court case is the latest of several inquiries, following those by Dutch and Italian authorities, into the purchase of OPL 245, which could hold up to 9.23 billion barrels of oil, according to industry figures.

    The oilfield's license was initially awarded in 1998 by former Nigerian oil minister Dan Etete to Malabu Oil and Gas, a company in which he held shares.

    The license was then sold for $1.3 billion in 2011 to Eni and Shell. A British court document has shown that Malabu received $1.09 billion from the sale, while the rest went to the Nigerian government.

    http://www.reuters.com/article/us-nigeria-oil-idUSKBN16O16G
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    Tullow Oil makes $750 mln cash call to reduce debt


    Britain's Tullow Oil Plc plans a rights issue to raise about 607 million pounds ($750 million) to cut its $4.8 billion debt burden and make investments in drilling and exploration in Latin America and Africa.

    Tullow, whose founder and long-serving chief executive Aidan Heavey will hand over to Chief Operating Officer Paul McDade in April, was hit hard by the collapse in oil prices in 2014 just as it was investing heavily in an oil project off Ghana.

    Under the terms of the 25 for 49 rights issue, Tullow said on Friday it will issue 466.9 million shares at 130 pence each, a 45.2 percent discount to Thursday's close.

    Some analysts said they were surprised by the move and Tullow's shares were down 13.7 percent at 204.9 pence at 0833 GMT.

    "The ... rights issue comes as a surprise to us and possibly indicates banks were not as supportive to RBL refinancing as we were expecting," Jefferies analyst Mark Wilson said.

    Tullow, which had tightened its investment budget to $500 million this year, from $900 million in 2016, had net debt of about $4.8 billion as of Dec. 31.

    The company said it would use the proceeds from the rights issue, which is being underwritten by Barclays, JPMorgan and other banks, for investments in new drilling opportunities and further exploration and appraisal programmes in offshore Ghana.

    The company said it also plans to invest in more exploration and appraisal activity in Kenya and fund drilling projects in Africa and South America.

    Tullow also said that CNOOC Uganda Ltd had exercised its pre-emption rights to buy 50 percent of the interests in Uganda which are being transferred to Total.

    Total agreed in January to buy most of Tullow's stake in a Uganda project, jointly owned by Total, Tullow, and China's CNOOC, for $900 million.

    The terms of the CNOOC's agreement will be the same as agreed between Tullow and Total, Tullow said.

    http://www.reuters.com/article/tullow-equity-idUSL5N1GU14Y

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    U.S. drillers add oil rigs for 9th week in a row -Baker Hughes


    March 17 U.S. drillers added oil rigs for a ninth week in a row, extending a recovery that is expected to boost shale production by the most in six-months in April.

    Drillers added 14 oil rigs in the week to March 17, bringing the total count up to 631, the most since September 2015, energy services firm Baker Hughes Inc said on Friday. During the same week a year ago, there were 387 active oil rigs.

    That rig count increase came despite a collapse in crude futures over the past two weeks to a more than three-month low because the rigs activated this week were based on decisions made a couple of month ago when oil prices were higher.

    U.S. crude futures were at about $49 a barrel on Friday, set for a modest weekly rise after falling 9 percent last week on concerns production cuts by the Organization of the Petroleum Exporting Countries (OPEC) was failing to reduce a global glut as U.S. shale producers crank up activity.      

    Since crude prices first topped $50 in May after recovering from 13-year lows in February 2016, drillers have added a total of 315 oil rigs in 38 of the past 42 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.

    Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May 2016 as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.

    U.S. shale oil production in April was projected to rise 109,000 barrels per day (bpd), the biggest monthly rise in six months, to 4.96 million bpd as output in the Permian Basin, America's fastest growing shale oil region, hits another record high, according government data on Monday.                

    U.S. crude inventories edged down from record highs last week, after nine straight weeks of builds, while overall production was projected to rise from 8.9 million bpd in 2016 to 9.2 million bpd in 2017 and a record high of 9.6 million bpd in 2018, according to federal energy data.                    

    Analysts said they expect U.S. energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are expected to keep climbing.
     
    Futures for the balance of 2017 and calendar 2018 were both trading around $50 a barrel. Analysts at Simmons & Co, energy specialists at U.S.
    investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 818 in 2017, 937 in 2018 and 1,048 in 2019. Most wells produce both oil and gas.

    That compares with an average of 729 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data. Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 54 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016.

    That expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.

    http://www.reuters.com/article/usa-rigs-baker-hughes-idUSL2N1GR0OP

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    Cheniere seeks permission to start Sabine Pass LNG Train 4 commissioning


    Cheniere filed a request with the Federal Energy Regulatory Commission (FERC) to begin the commissioning process of its fourth liquefaction train at the Sabine Pass LNG project in Louisiana.

    The company requested the permission to introduce fuel gas to Train 4 to be granted no later than March 24, 2017, in order to start the commissioning activities, according to the FERC filing.

    Cheniere is developing up to six trains at the Sabine Pass terminal with each train expected to have a nominal production capacity of approximately 4.5 million tons per annum of LNG.

    The first two trains have already been completed and commissioned last year and the project has already produced the commissioning cargo from its third liquefaction train in January

    According to the latest weekly report by the U.S. Energy Information Administration, the third train is currently undergoing routine commissioning-related work to enhance the train’s operational performance.

    The facility exported a total of 30 cargoes during the first two months of the year, EIA’s report shows.

    http://www.lngworldnews.com/cheniere-seeks-permission-to-start-sabine-pass-lng-train-4-commissioning/
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    Dakota Access Pipeline races to start moving Bakken crude


    Oil will likely flow through the Dakota Access Pipeline under Lake Oahe in North Dakota early next week.

    Barring any more twists or turns — and there have been plenty in the last seven months of this project — the contentious 470,000 b/d crude oil pipeline will start commercial service very soon thereafter. It will open up a major new route for Bakken and Three Forks production to flow to Illinois and onto the Texas Gulf Coast.

    A March 7 ruling by Judge James Boasberg of the US District Court for the District of Columbia cleared the way for the startup, when he turned down two North Dakota tribes’ request for a preliminary injunction to prevent oil from flowing under Lake Oahe. On Tuesday, he ruled against the tribes again in denying an injunction pending appeal by the US Court of Appeals for the District of Columbia Circuit.

    The lawsuit will go on, but Boasberg’s role in the Dakota Access saga will likely fade to the background.

    Boasberg has presided over the lawsuit with a level head that you’d expect of any judge named to one of the top US courts. He often acted as a mediator during hearings, trying to get the parties to the lawsuit — the North Dakota tribes, the US Army Corps of Engineers and Dakota Access — to reach an agreement without protracted filings about scheduling or moot issues.

    He lost his cool only once — after the US Department of Justice issued a press release freezing pipeline activity near Lake Oahe moments after Boasberg had denied a preliminary injunction and allowed construction to go on.

    Boasberg routinely thanked members of the public who attended the hearings — for being civil and for being a part of the process. There were Standing Rock Sioux in ceremonial regalia, energy industry analysts gathering information for clients, and lots of lawyers and journalists filling the less-than-comfortable benches of Courtroom 19 in the federal courthouse in Washington.

    Native Americans and other opponents of the Dakota Access Pipeline demonstrated outside the White House as part of the Native Nations Rise march on March 10. Photo by Meghan Gordon.

    Protesters will continue to fight Dakota Access and use it to galvanize opposition to future energy projects. The movement solidified a shift among environmentalists from exclusively targeting upstream projects to trying to block the transportation networks that move oil or natural gas from the wellhead to markets.

    At the same time, companies have likely learned their own lessons from the Dakota Access saga — whether they plan to ramp up local engagement before applying for projects to build community support or adopt Energy Transfer Partners’ strategy of keeping nearly silent while they go through the regulatory and court process.

    http://blogs.platts.com/2017/03/16/dakota-access-pipeline-bakken-crude-oil/

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    Alternative Energy

    IEA finds CO2 emissions flat for third straight year even as global economy grew in 2016

    Image title


    Global energy-related carbon dioxide emissions were flat for a third straight year in 2016 even as the global economy grew, according to the International Energy Agency, signaling a continuing decoupling of emissions and economic activity. This was the result of growing renewable power generation, switches from coal to natural gas, improvements in energy efficiency, as well as structural changes in the global economy.

    Global emissions from the energy sector stood at 32.1 gigatonnes last year, the same as the previous two years, while the global economy grew 3.1%, according to estimates from the IEA. Carbon dioxide emissions declined in the United States and China, the world’s two-largest energy users and emitters, and were stable in Europe, offsetting increases in most of the rest of the world.

    The biggest drop came from the United States, where carbon dioxide emissions fell 3%, or 160 million tonnes, while the economy grew by 1.6%. The decline was driven by a surge in shale gas supplies and more attractive renewable power that displaced coal. Emissions in the United States last year were at their lowest level since 1992, a period during which the economy grew by 80%.

    “These three years of flat emissions in a growing global economy signal an emerging trend and that is certainly a cause for optimism, even if it is too soon to say that global emissions have definitely peaked,” said Dr Fatih Birol, the IEA’s executive director. “They are also a sign that market dynamics and technological improvements matter. This is especially true in the United States, where abundant shale gas supplies have become a cheap power source.”



    In 2016, renewables supplied more than half the global electricity demand growth, with hydro accounting for half of that share. The overall increase in the world’s nuclear net capacity last year was the highest since 1993, with new reactors coming online in China, the United States, South Korea, India, Russia and Pakistan. Coal demand fell worldwide but the drop was particularly sharp in the United States, where demand was down 11% in 2016. For the first time, electricity generation from natural gas was higher than from coal last year in the United States.

    With the appropriate policies, and large amounts of shale reserves, natural gas production in the United States could keep growing strongly in the years to come. This could have three main consequences: it could boost domestic manufacturing, supply more competitive gas to Asia through to LNG exports, and provide alternative gas supplies to Europe. US and natural gas prospects will be explored in details in the next World Energy Outlook 2017.

    In China, emissions fell by 1% last year, as coal demand declined while the economy expanded by 6.7%. There were several reasons for this trend: an increasing share of renewables, nuclear and natural gas in the power sector, but also a switch from coal to gas in the industrial and buildings sector that was driven in large part by government policies combatting air pollution.

    Two-thirds of China’s electricity demand growth, which was up 5.4%, was supplied by renewables — mostly hydro and wind – as well as nuclear. Five new nuclear reactors were connected to the grid in China, increasing its nuclear generation by 25%.

    “In China, as well as in India, the growth in natural gas is significant, reflecting the impact of air-quality measures to fight pollution as well as energy diversification,” said Dr Birol. “The share of gas in the global energy mix is close to a quarter today but in China it is 6% and in India just 5%, which shows they have a large potential to grow.”

    In the European Union, emissions were largely stable last year as gas demand rose about 8% and coal demand fell 10%. Renewables also played a significant, but smaller, role. The United Kingdom saw a significant coal-to-gas switching in the power sector, thanks to cheaper gas and a carbon price floor.

    Market forces, technology cost reductions, and concerns about climate change and air pollution were the main forces behind this decoupling of emissions and economic growth. While the pause in emissions growth is positive news to improve air pollution, it is not enough to put the world on a path to keep global temperatures from rising above 2°C. In order to take full advantage of the potential of technology improvements and market forces, consistent, transparent and predictable policies are needed worldwide.

    http://www.iea.org/newsroom/news/2017/march/iea-finds-co2-emissions-flat-for-third-straight-year-even-as-global-economy-grew.html?utm_content=buffer4e497&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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    Precious Metals

    Barrick mulls selling part of Peru mine, bringing partner — report


    Canada’s Barrick Gold, the world's No.1 producer of the precious metal, is said to be mulling either the sale of a stake in its Lagunas Norte mine in Peru or the addition of a partner in the venture.

    People familiar with the matter told Reuters that the Toronto-based miner would prefer to keep at least a 50% ownership of the mine, located in north-central Peru, 140 km east of the coastal city of Trujillo. However, they said it was unclear whether the company wanted to keep control of the open-pit mine as operator, the people added.

    Rumours come a year after the gold miner vowed to spend $640 million to extend the life of Lagunas Norte, worth about $1.4 billion according to industry experts.

    The rumours come a year after Barrick vowed to spend $640 million to extend the life of the mine, worth about $1.4 billion according to industry experts, by about nine years.

    The plan unveiled last year including adding a refractory processing facility at the property, which was expected to potentially unlock other refractory ore sources in the region, the company said at the time.

    Perched on the western flank of the Peruvian Andes at an elevation of 4,000 to 4,260 meters above sea level, Lagunas Norte produced 435,000 ounces of gold in 2016, at a cost of sales of $651 per ounce, and all-in sustaining costs of $529 per ounce.

    Production this year is anticipated to be 380,000-420,000 ounces of gold, the company said last month, at a cost of sales of $710-$780 per ounce, and all-in sustaining costs of $560-$620 per ounce.

    In the past few months, Barrick has been working on strengthening its position in Latin America, a market where it has experienced a series of challenges since the beginning of the decade.

    In September, the gold miner appointed a new executive, George Bee, to lead the development of the Argentine side of the mothballed Pascua Lama gold, silver and copper project straddling the border between Chile and Argentina.

    A few months later, it hired a new director for the region — Pablo Marcet — with decades of mining experience in the geographic area.

    http://www.mining.com/barrick-mulls-selling-part-of-peru-mine-bringing-partner-report/
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    AuRico gets federal enviro nod for multimillion-ounce Kemess project


    Precious metals royalties firm and project developer AuRico Metals has received a positive decision statement from the Canadian Environmental Assessment Agency (CEAA), prompting the British Columbia Environmental Assessment Office (EAO) to grant an environmental-assessment certificate for the company's 100%-owned Kemess underground project.

    "These positive decisions are the culmination of a comprehensive process which began in 2014 . . . The Kemess underground project presents an attractive development opportunity given its strong economics – supported by existing infrastructure, large scale, good jurisdiction and advanced stage,” president and CEO Chris Richter stated.

    The EAO managed the environmental assessment for the Kemess underground project in a substituted process on behalf of British Columbia and CEAA, the latter of which is on behalf of the federal government of Canada. The project will require several other normal-course licences and permits, which are expected to be received early in 2018.

    The Kemess project has about $1-billion of existing infrastructure on care and maintenance on site, which will dramatically reduce the expected capital expenditures to first production to just under $400-million.

    The Kemess underground project and the Kemess East deposits currently hold about 3.34-million ounces of gold in the proven and probable mineral reserve categories, 6.66-million ounces gold in the indicated resource category, and another 2.26-million ounces in the inferred category.

    AuRico believes there is significant exploration upside, especially at Kemess East, where the deposit remains open in several directions.

    A 2016 feasibility study on the project calculated a net present value, at a 5% discount, of C$421-million, with an internal rate of return of 15.4%.

    http://www.miningweekly.com/article/aurico-gets-federal-enviro-nod-for-multimillion-ounce-kemess-project-2017-03-17
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    Mining's biggest loser Lonmin is burning cash to stay alive


    For most of the miningindustry, 2017 is turning out to be another good year. The big exception is Lonmin Plc.

    Investors are losing confidence in the world’s third-largest platinum producer as it burns through cash to stay afloat, just 15 months after raising about $400-million from shareholders. Platinum prices aren’t far from a seven-year low and Lonmin has its own set of operational problems, including higher costs and lower output at its biggest miningshaft.

    The stock is down more than 30% in 2017, the most in the FTSE All-Share Basic Materials Index of 28 commodity producers. The overall index has gained 11% this year.

    “Lonmin can’t survive in its current form unless there’s a very significant recovery in platinum-group metal prices,” said Marc Elliott, a London-based analyst at Investec Plc with a sell rating on the stock. “I wouldn’t be surprised to see them come back to the market for more cash in the next two to three years.”

    Other mining companies are looking to deploy new cash into dividends and acquisitions, buoyed by a recovery in commodity prices and deep cost cuts. Lonmin stands out for its years of problems. The company used up 70% of its net cash last quarter, leaving it with $49-million, although it can draw on $414-million, mainly through credit lines from banks.

    CEO Ben Magara has pushed to get Lonmin back on track and repair its reputation after the shootings at Marikana in 2012, when police killed protesting mineworkers. But it hasn’t been enough. The company has raised about $1.7-billion from shareholders in the past eight years yet its current market value is about $330-million.

    The problem is simple: Lonmin’s costs exceed revenue. Each ounce of platinum-group metal costs R12 296 ($965) to produce, compared with a sale price of R10 372/oz in the three months through December.

    Lonmin said capital spending is usually higher at the end of the year and sales are weighted toward the middle quarters. But the problem isn’t new. Free cash flow has been negative each year since 2011, according to data compiled by Bloomberg.

    “We see cash burn ad infinitum at current PGM prices, and at some point they’ll need to find more financing again,” said Edward Sterck, a London-based analyst at BMO Capital Markets. “Management is doing a good job with challenging assets, but there doesn’t seem to be a Plan B. Plan A is for commodity prices to recover in rand terms and that’s it.”

    With demand growing for electric cars, which unlike conventional vehicles don’t use platinum, there’s no certainty that prices will pick up soon. Platinum declined 0.2% to 955.64 an ounce, while Lonmin rose 5.1% to R15.55 a share at 9:42 a.m. in Johannesburg.

    Operational performance is another problem for Lonmin, which mainly has deep, labor-intensive mines. First-quarter production at K3 shaft, the company’s biggest, dropped 14% due to safety stoppages, union disputes and absenteeism. In February, a worker died in an accident at the shaft.

    COO Ben Moolman resigned in March after less than two years in the role. Previous COO Johan Viljoen held the job for under a year.

    “C-level resignations at Lonmin have in the past presaged bad news, so COO Ben Moolman’s resignation - ostensibly ‘for personal reasons’ - is not an encouraging sign,” Yuen Low, a London-based analyst at Shore Capital Stockbrokers, wrote in a report.

    CEO Magara has temporarily taken over the COO role, having had extensive operations experience at Anglo American Plc’s coal and platinum divisions, spokeswoman Wendy Tlou said in response to questions.

    “We have seen the upward trajectory of our production efforts in the past month from last quarter’s disappointing production results,” she said.

    JOB CUTS

    Magara, a Zimbabwean national, has tried to arrest Lonmin’s decline since taking the CEO job in 2013. He cut 6 000 jobs, or 15%, in the past two years, closed high-cost mining areasand reduced capital expenditure to save cash. In November, Lonmin bought Anglo American Platinum’s stake in Pandora, a mine near its Saffy shaft, in a deal that Magara said would save R2-billion of capital spending over the next five years.

    Magara is also looking to produce more low-cost metal from waste dumps and has the option of shifting mining crews to ore-bearing areas instead of developing corridors for future production.

    Still, some investors are increasing bets Lonmin shares have further to fall. About 7% of the company has been sold short, the highest since the December 2015 rights issue, data compiled by Markit show.

    What the company really needs is a rally in platinum prices, according to Investec’s Elliott.

    “We currently don’t anticipate that will happen any time soon,” he said.

    http://www.miningweekly.com/article/minings-biggest-loser-lonmin-is-burning-cash-to-stay-alive-2017-03-17
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    World's top diamond miner Alrosa quadruples profit amid sector recovery


    Alrosa, the world's top diamond producer by output in carats, injected some fresh good news into the gems market Thursday by posting a fourfold increase in total profit to $2.31 billion (133.5 billion roubles) for 2016.

    The Russian miner said 2016 was a year of active recovery in the diamond market following the decline of 2015.

    The miner, majority-owned by the Russian government and the far eastern province of Yakutia where most of its operations are based, said profit attributable to shareholders totalled $2.25 billion (131.39bn roubles) last year, versus $530K (30.67bn) roubles in 2015, thanks to a global recovery in diamond prices.

    "2016 was a year of active recovery in the diamond market following the decline of 2015,” Alrosa's chief financial officer Igor Kulichik said in the statement. "The company managed to deliver record-high financial performance and generate net cash flow sufficient to repay short-term and medium-term liabilities and pay out dividends to shareholders,"

    Earnings before interest, tax, depreciation and amortization, however, fell 30% in the fourth quarter, becoming the second-worst quarter in the Alrosa’s history due mostly to a weakened demand for gems.

    The diamond miner, which is planning to increase production by 6% to 39.2 million carats this year, appointed last week Sergei Ivanov, the son of a close advisor to Russian president Vladimir Putin, as its new president.

    http://www.mining.com/worlds-top-diamond-miner-alrosa-quadruples-profit-amid-sector-recovery/
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    Washington Cos. reveals stalled $1.1 billion bid for Dominion Diamond


    The Washington Companies said on Sunday it had previously made a proposal to acquire all of the outstanding common stock of mining company Dominion Diamond Corp. (DDC.TO) for $13.50 a share.

    The all-cash $1.1 billion offer was sent to the Dominion board of directors on Feb. 21, according to the statement, but subsequent discussions broke down.

    "We are disappointed that Dominion's board has thus far prevented Washington from moving ahead with its proposal under which shareholders would receive a substantial premium and immediate liquidity," said Lawrence Simkins, president of Missoula, Montana-based Washington, a group of privately held North American mining, industrial and transportation businesses founded by Dennis Washington.

    "We remain fully committed to completing this transaction," Simkins added in the statement.

    Yellowknife, Canada-based Dominion said in a statement late on Sunday that its board had considered Washington's unsolicited offer but that the terms of the proposed talks were unusual and unacceptable.

    They included, according to the statement, the ability to see confidential information that could later be used for a proxy fight to take over the company, and the ability to veto the board's choice of the new chief executive officer.

    "The Dominion Board is more than willing to consider all value-creating opportunities for the Company, but it will not do so to the detriment of its shareholders and other stakeholders," the statement said.

    "The Board of Directors reiterates its openness to engage with WashCorps on customary terms," it added.

    The offer price of $13.50 represents a 36 percent premium to Dominion's closing stock price on March 17 and a 54 percent premium to the price when discussions ended on March 15, according to Washington.

    http://www.reuters.com/article/dominion-diamond-washington-idUSL2N1GW0N3
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    Base Metals

    Union at Chile's Escondida slams new offer from management


    The labor union at the world's largest copper mine, BHP Billiton's Escondida in Chile, called a fresh offer of talks by management to end a 39-day strike "manipulative."

    The union told Reuters on Sunday that it will decide whether to attend a meeting with the company after holding two assemblies for its 2,500 members on Sunday and early on Monday. The company has proposed talks for Monday afternoon.

    Escondida said on Friday that it had agreed to meet with the union and was offering better salaries, bonuses and benefits in response to workers' three main demands.

    "We're sorry to say that all of that is just manipulation and deceit," the union told its members in a statement late on Saturday about the new proposal to end the strike, which has put pressure on global copper prices.

    The union wants Escondida not to trim benefits in its existing contract, not to make shift patterns more taxing, and to offer the same benefits to new workers as existing ones.

    BHP, which owns a 57.5 percent stake in the mine, did not immediately respond to requests for comment.

    http://www.reuters.com/article/chile-copper-idUSL2N1GW0IO
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    Vedanta already turning Anglo’s discarded zinc assets to account


    Diversified mining company Vedanta, which is acquiring 13% of Anglo American through Volcan Investments, has done well with the assets it acquired from Anglo seven years ago.

    On the $1 338-million it paid for Anglo’s zinc assets in 2010, the London-listed, India-rooted company achieved full payback two years later through decisive underground and near-pit mining.

    It is now managing to do what both Anglo and Gold Fields failed to do before it – build a zinc mine at Gamsberg, in South Africa’s Northern Cape, which has been 40 years in the waiting.

    Vedanta’s face in these parts is that of Deshnee Naidoo, formerly of Anglo American, who has managed to shave close to $200-million off the project’s original capital estimate to take it down to $400-million.

    In a video interview with Mining Weekly Online last year, Naidoo again outlined Vedanta’s thrift culture in that the company is planning to use revenue generated during the Gamsberg project’s first phase to help fund its second phase, which will probably include a new 300 MW to 350 MW zinc refinery at a cost of nothing less than $500-million to $600-million. (Also watch the attached Creamer Media video interview).

    The zinc price has been recovering well, buoyant on a fall-off in supply, exemplified by Vedanta’s own closure of the former Anglo Lisheen zinc mine in Ireland.

    A contract to establish and mine the Gamsberg opencast zinc operation has been awarded to Aveng Moolmans by Black Mountain Mining, a Vedanta Zinc International operation.

    The contract award to Aveng Moolmans involves the setting up and commissioning of a concentrator plant and associated infrastructure for the opencast mine, which is located on one of the world’s largest undeveloped zinc deposits, 20 km east of the town of Aggeneys, in South Africa’s Northern Cape.

    Engineering solutions provider ELB’s Engineering Serviceswill oversee the construction of the process, power and waterplants at the project.

    While all this is taking place, Vedanta chairperson Anil Agarwal’s use of Volcan as his vehicle to swoop on £2-billion worth of Anglo’s shares is heightening speculation that Vedanta may be after the rest of Anglo’s South African assets, many of which until recently had for-sale signs on them.

    Agarwal, Naidoo and Vedanta CEO Tom Albanese were prominent at last month’s Investing in African MiningIndaba, in Cape Town, where they usurped Anglo’s usual position of main stage sponsor.

    In their combined main stage presentation, Agarwal and Albanese displayed an appetite for more African investment in general and more South African investment in particular.

    During his visit to South Africa in July last year to coincide with the visit to this country of Indian Prime Minister Narendra Modi, Agarwal waxed lyrical about South Africa’s rich natural resources sector being underexplored.

    During his visit, Vedanta signed two memorandums of understanding with South African companies.

    In September, the company won a prestigious Southern African Institute of Mining and Metallurgy award that recognised the contribution of the company’s cataract surgery project to the advancement of health and wellness.

    http://www.miningweekly.com/article/vedanta-already-turning-anglos-discarded-s-african-zinc-assets-to-account-2017-03-17
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    Rusal forecasts global aluminium deficit to widen to 1.1 mil mt in 2017


    Russian aluminium producer Rusal said Friday it expects global aluminum deficit to widen to 1.1 million mt in 2017 from 0.6 million mt in 2016, as strong demand growth is seen outpacing the increase in supply.

    Rusal put global aluminium demand in 2017 at 62.7 million mt, up 5% from a year ago, and supply at 61.6 million mt, up 4.3%.

    China's aluminium demand is expected grow by 6.7% to 33.5 million mt in 2017, while demand outside of China is forecast to rise by 3.3% to 29.2 million mt.

    But China's supply will stay relatively tight due to the government's new anti-pollution measures. Production in China is expected to rise by 6% to 34.3 million mt in 2017.

    "The country may still have a high risk of supply tightness due to the new environmental measures against pollution including outlined capacity closures and a significant decline in new capacity additions ... similar to ... the steel sector," Rusal said.

    Production outside China will rise 2.4% in 2017 to 27.3 million mt, Rusal said.

    In 2016, global aluminium demand grew by 5.5% to 59.7 million mt. China posted a 7.6% growth to 31.4 million mt, while demand outside of China rose 3.4% to 28.3 million mt.

    China's economic growth remained stable, with gross domestic product increasing 6.7% year on year and industrial output also rising by 6%.

    In North America, Donald Trump's win in the US presidential election resulted in economic optimism, Rusal said.

    New housing starts increased by nearly 5% year on year in 2016 and car output increased by 1.2%.

    Rusal put 2016 global supply at 59 million mt, up 3.6% year on year.

    China's aluminium output increased to 32.3 million mt in 2016, up 5.5% from the previous year, due to capacity ramp-ups in the fourth quarter of 2016, while production outside China was 26.7 million mt, up 2.2%.

    http://www.platts.com/latest-news/metals/tokyo/russias-rusal-forecasts-global-aluminum-deficit-27792946
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    Steel, Iron Ore and Coal

    China's 11 provinces Jan-Feb raw coal outputs surpass 10 mln T


    China's raw coal output stood at 506.78 million tonnes over Jan-Feb in 2017, down 1.7% from the year-ago level, compared to a 6.4% year-on-year drop in 2016, data showed from the National Bureau of Statistics (NBS).

    During the same period, the country's raw coal output reached 8.59 million tonnes each day on average, unchanged from the previous year, the NBS said.

    Raw coal output of China's 11 provinces surpassed 10 million tonnes, accounting for 92% of the total. Total raw coal output of Inner Mongolia, Shanxi, Shaanxi, Guizhou, Xinjiang, Shandong, Anhui, Henan, Hebei, Ningxia and Sichuan reached 466.27 million tonnes.

    Seven provinces witnessed a year-on year increase in raw coal output. Yunnan posted the largest increase of 15.5% to 4.67 million tonnes from the preceding year.

    Chongqing produced 1.59 million tonnes of raw coal, sliding the largest of 55.9% from the year-ago level.Image title



    During the same period, coal imports stood at 42.61 million tonnes, soaring 48.5% year on year.

    http://www.sxcoal.com/news/4553665/info/en

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    Beijing's last large coal-fired power plant suspends operations

    Beijing's last large coal-fired power plant suspends operations

    Beijing's last large coal-fired power plant suspended operations on March 18, meaning the capital has become China's first city with all its power plants fueled by clean energy, China Daily reported.

    The Huaneng Beijing Thermal Power Plant was built up and put into operation in June 1999. It has five coal-fired units with a total installed capacity of 845 MW and heating capacity of 26 million square meters.

    Du Chengzhang, general manager of the plant, said it is an efficient and environmental friendly plant with advanced emission treatment equipment. The plant has provided important support to the stable operation of Beijing's electric power system and the heat-supply system.

    After the suspension of the plant, about 1.76 million tonnes of coal, 91 tonnes of sulfur dioxide and 285 tonnes of nitrogen oxide emissions will be cut annually.

    According to a clean air plan by Beijing from 2013 to 2017, Beijing will build four gas thermal power centers and shut down the four large coal-fueled thermal power plants during the period.

    Another three plants which used to consume over 6.8 million tonnes of coal each year were closed in 2014 and 2015.

    Du said Huaneng will prepare to serve as an emergency heat source for the capital's heating system after operations cease.

    Three of the four gas thermal power have already been built and are in use.

    Beijing has 27 power plants, all fueled by clean energy with a total installed capacity of 11.3 million KW.

    According to the city's plan, Beijing will build no more large-scale power plants.

    http://www.sxcoal.com/news/4553666/info/en
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    Ganqimaodu coal sales surge on good demand


    Ganqimaodu border crossing in northern China's Inner Mongolia autonomous region reported a surge in coal sales and continuous drop of stocks, attributed mainly to robust demand from downstream steel mills and low operating rates at domestic coal mines becasue of the two parliamentary sessions.

    The border crossing sold 398,300 tonnes of coal to other provinces in China over March 6-12, surging 71.76% year on year and up 8.77% from a week earlier.

    Coal stocks at Ganqimaodu stood at 1.3 million tonnes, plummeting 389.83% from the preceding year and down 4.42% week on week.

    In the first two months this year, the border crossing imported 2.75 million tonnes of coal from neighboring Mongolia, up 374% from the year prior, with February imports at 1.3 million tonnes, showed data from Wulate Entry-Exit Inspection and Quarantine Bureau.

    Ganqimaodu borders resource-rich Mongolia, whose Tavan Tolgoi coal mine has coal reserves of 6.4 billion tonnes, with primary coking coal at 1.8 billion tonnes and thermal coal at 4.6 million tonnes. The border crossing has been an important hub of coal trades between the two countries since its opening in 2009.

    http://www.sxcoal.com/news/4553580/info/en

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    India's Adani to finalize investment in Australia coal project by June


    India's Adani Enterprises said it would finalize an investment decision by June for its Carmichael coal project in Australia, which has been delayed due to protests from environmental groups.

    Adani, a business group with interests in power and ports, has battled opposition from environmentalists for more than five years in its quest to develop a mine in the northern state of Queensland that would mainly export coal to India.

    The company's chairman, Gautam Adani, expressed optimism that the project would proceed and said the board would take a final decision on investments in May or June, including structure and planned funding.

    "Definitely," Adani said during an interaction with a group of reporters, when asked if he was confident the project would go ahead. "Our internal planning is 2020 ...(for) first coal to come out," Adani added, noting construction could begin within three months of the board's decision.

    http://www.reuters.com/article/us-adani-ent-australia-idUSKBN16Q06C
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    Supply concerns keep molybdenum prices firm


    The molybdenum market continued to firm Wednesday, with speculation that prices could hit $9/lb by the end of the week, a level not seen since January 2015.

    "Some see higher numbers already and the trend as the friend," one European trader said on talk of higher prices in Asia.

    Others said they were holding back offers while watching the market. A second European trader said he had offered $8.70/lb in Rotterdam Tuesday and had no interest in selling at the same price today. Others said they were offering $8.85/lb by the end of the European day.

    Sources agreed supply was limited. Miners were either not offering in the market or offering limited units.

    Despite the end of strike action at Molymet's Molynor facility and Codelco's Molyb, industrial action at Freeport's Cerra Verde mine continued raising more supply concerns.

    Oxide powder sales in Asia were heard at $8.60/lb and $8.75/lb in Busan and $8.75/lb CI Japan. $8.60/lb was also reported in the US late Tuesday.

    "Talk is that there is not that much material around and it seems to be true. Demand is also supporting prices," the second European trader said.

    A ferromolybdenum tender in Europe attracted fewer than expected offers as traders held back material or were not able to find cargo to offer.

    Ferromolybdenum sales were reported at $21/kg in Rotterdam, $21.25/kg DDP and $21.35/kg DDP European mill. In Asia, a Chinese trader reported a 40 mt sale of China-produced ferromolybdenum at $20.40/kg and $20.60/kg CIF Asia.

    The Platts daily dealer oxide assessment was higher at $8.60-$8.75/lb from $8.40-$8.70/lb. The Platts daily European ferromolybdenum assessment jumped to $20.90-$21.35/kg from $20.40-$20.80/kg.

    http://www.platts.com/latest-news/metals/london/supply-concerns-keep-molybdenum-prices-firm-26686910
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