Mark Latham Commodity Equity Intelligence Service

Tuesday 24th November 2015
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    China busts illegal money transfers of over $125 bln - People's Daily

    China started a crackdown on underground banks in April and has so far busted over 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan ($125.34 billion), official People's Daily reported on Friday.

    Illegal flows of such "grey capital" have not only impacted China's foreign exchange management system, but also seriously disturbed the country's financial and capital markets order, the Communist Party's mouthpiece said in an article published on its website.

    Although the crackdown, launched jointly by China's police, foreign exchange regulator and the People's Bank of China, has made some progress, illegal activities of China's underground banks are spreading and the situation is still grave, the article said.

    In one illegal money transfer case, the biggest discovered in China so far, about 410 billion yuan worth of Chinese money had been transferred overseas using non-resident accounts, exploiting regulatory loopholes and bypassing oversight, according to the article.

    China's central bank and foreign exchange regulator have also been moving to restrict channels by which money can legally leave the country, in order to keep the money supply stable and lower domestic interest rates to spur growth.

    If Chinese companies and individuals continue to sell yuan to buy dollars, it reduces the amount of yuan available for lending and thus puts upward pressure on rates.

    Sources told Reuters on Wednesday that China has moved to restrict trade at offshore yuan clearing banks, stepping up capital controls even as Beijing positions its currency for inclusion in the International Monetary Fund's reserve basket.

    The IMF is set to decide whether to include the yuan at the end of the month. IMF sources told Reuters that the yuan will likely be included in the basket, but at a lower ratio than originally expected thanks to a change in methodology.

    China's central bank and commercial banks bought a net 12.9 billion yuan ($2.02 billion) worth of foreign exchange in October, data showed on Sunday, stemming heavy sales in the previous three months that underlined capital outflows.

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    Indian mulls steps to protect steel and aluminium sectors – Mr Jaitley

    IndiaPTI reported that Finance Minister Arun Jaitley said on Monday that Indian government is considering proactive steps to improve the health of steel and aluminium sectors which are reeling under the impact of decline in global prices.

    He said “Several suggestions have been offered by the bankers in relation to both steel and aluminium. Some of them have been examined by the Department of Revenue.”

    He said “Department of Financial Services would be coordinating further discussions between the banks and Department of Revenue as to what other proactive policy steps are required to be taken in order to improve the health.”

    The steel sector is a major contributor to the NPA or bad loan woes of the PSBs.
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    China’s energy guzzlers Jan-Oct power use down 2.3pct on year

    Power consumption of China’s four energy-intensive industries declined 2.3% on year to 1,387.7 TWh over January-October this year, accounting for 30.3% of the nation’s total power consumption, the China Electricity Council (CEC) said on November 24.

    Of this, the ferrous metallurgy industry consumed 422.4 TWh of electricity over January-October, falling 7.8% year on year, compared to the growth of 1.7% from the previous year; while the non-ferrous metallurgy industry used 355.6 TWh of electricity, up 3.8% year on year, compared a 4.3% growth from the year prior.

    The chemical industries consumed 353.4 TWh of electricity over January-October, up 2.2% year on year, lower than a 5.1% growth a year ago; while power consumption of building materials industry dropped 6.5% year on year to 256.3 TWh, compared to a 6.9% rise in the preceding year.

    In October, the four industries consumed a total 140.8 TWh of electricity, down 3.1% year on year, accounting for 31.3% of China’s total power consumption.

    Of this, the ferrous metallurgy industry consumed 41.9 TWh of electricity in October, dropping 8.7% on year and up 0.48% on month; while the non-ferrous metallurgy industry used 35.8 TWh of electricity, rising 3.1% from a year ago and up 3.17% on month.

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    Researchers just made graphene 100 times more cheaply than ever before

    We all know graphene is great - it’s super strong, it’s only one atom thick, and it's flexible, light and able to conduct heat and electricity better than most other materials out there. In fact, the only reason it hasn’t already revolutionised our energy, medical, andmanufacturing industries is that it’s remained prohibitively expensive.

    But now researchers at the University of Glasgow in Scotland have found a way to produce large sheets of high-quality graphene 100 times more cheaply than previous methods.

    Currently, the most common method of making graphene is known as chemical vapour deposition, which is where gaseous reactants are turned into a film of graphene on a special surface known as the substrate.

    In the past, that substrate was always an expensive material such as platinum, nickel or titanium carbide. These materials are smooth, so they produce high-quality sheets of graphene, but they're also incredibly costly, which means it's not feasible for the graphene they make to be used in most industries.

    Recently scientists have started using copper to reduce the price, but the metal still needs to be processed so it's definitely not cheap. Instead the University of Glasgow team decided to see if they could make graphene with copper foils, which are already being cheaply made in bulk to create common household lithium-ion batteries.

    Without any processing, they found that these copper foils were smooth enough to make high-quality single-atom sheets of graphene.

    Even more impressively, during testing, the graphene sheets displayed optical electrical properties that made them better suited for use in transistors than sheets that had been produced with an expensive substrate.

    “The commercially-available copper we used in our process retails for around $1 per square metre, compared to around $115 for a similar amount of the copper currently used in graphene production,” said lead researcher Ravinda Dahiya. “This more expensive form of copper often required preparation before it can be used, adding further to the cost of the process.”

    “Our process produces high-quality graphene at low cost, taking us one step closer to creating affordable new electronic devices with a wide range of applications, from the smart cities of the future to mobile healthcare,” he added.

    The new technique will make it feasible for scientists to finally start using graphene in new innovations such as high-tech filters and materials, as well as medical devices.

    “Much of my own research is in the field of synthetic skin. Graphene could help provide an ultra-flexible, conductive surface which could provide people with prosthetics capable of providing sensation in a way that is impossible for even the most advanced prosthetics today,” said Dahiya. “It’s a very exciting discovery and we’re keen to continue our research.”

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    Oil and Gas

    Crude oil spiking on Saudi comments

    On Monday morning, West Texas Intermediate crude oil futures surged
    into the green, after being down by about 2%, to as high as $42.75 per
    barrel. Brent crude also rallied nearly 2%, to about $45.73 per

    The official news agency of Saudi Arabia released a statement saying
    the government was prepared to cooperate with other oil producers to
    ensure a stable market.

    "The cabinet stressed the Kingdom's role in the stability of the oil
    market, its constant readiness and continuing pursuit to cooperate
    with all oil producing and exporting countries," the statement said.

    Iran Sees OPEC Keeping Output Cap Unchanged at Next Meeting

    OPEC should make room for increased Iranian crude production within
    its ceiling of 30 million barrels a day, the nation’s oil minister
    said, adding the group will probably leave that limit unchanged when
    it meets next month.

    Iran has asked OPEC to accommodate its return to previous production
    levels when international sanctions are lifted, Bijan Namdar Zanganeh
    told reporters in Tehran. Iran plans to add 1 million barrels a day
    within five to six months of the curbs being removed and that increase
    should be within OPEC’s production ceiling, Amir Hossein Zamaninia,
    deputy minister for commerce & international affairs, said in Tehran
    on Saturday.

    Brent crude tumbled more than 60 percent since the middle of last year
    as OPEC followed Saudi Arabia’s strategy of defending its share of the
    global market against competitors such as U.S. shale producers. The
    Organization of Petroleum Exporting Countries, which accounts for
    about 40 percent of global supply, has been pumping above its target
    level for 17 months. It is scheduled to meet on Dec. 4 to discuss the

    “I don’t expect to receive any new agreement” at the OPEC meeting,
    Zanganeh said. “OPEC is producing more than its approved ceiling and I
    asked them to reduce production and to respect the ceiling, but it
    doesn’t mean we won’t produce more because it is our right to return
    to the market.”

    Iran was OPEC’s second-largest producer before sanctions over its
    nuclear program were tightened in 2012. The nation, which reached an
    agreement with world powers in July over the trade restrictions, is
    currently the group’s fifth-largest supplier, pumping 2.7 million
    barrels a day last month, according to data compiled by Bloomberg.

    “I sent a letter to OPEC to consider our return to the market and to
    manage it,” Zanganeh said. “We don’t need to receive any permission
    from any organization for our return to the previous level of
    production. It is a sovereign right.”

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    Saudi Arabia Edges Out Russia in China Oil Sales as OPEC Digs In

    Saudi Arabia reclaimed its position from Russia as the largest crude supplier to China as OPEC members extended their global fight for market share.

    The world’s biggest oil exporter sold 3.99 million metric tons to China in October, 0.8 percent more than in September, data from the Beijing-based General Administration of Customs showed on Monday. Angola, another member of the Organization of Petroleum Exporting Countries, also surpassed Russia in shipping crude to the Asian nation.

    China has become a battleground for oil producers who are seeking to defend sales amid a worldwide oversupply. Prices have slumped 40 percent since OPEC embarked on a strategy last November to keep pumping and drive out higher-cost competitors such as U.S. shale companies. The 12-member group is scheduled to meet next week and Venezuela has warned that crude could drop to as low as the mid-$20s a barrel unless action is taken to stabilize the market.

    “Saudi Arabia never stopped fighting for market share in China and in Asia as a whole,” Gao Jian, an analyst at SCI International, a Shandong-based energy consultant, said by phone. “One year after OPEC announced its production policy to defend market share, their strategy seems to be working.”

    Saudi Arabia this year twice ceded the top spot to Russia in crude sales to China, in May and September. The kingdom accounted for about 15 percent of China’s imports in the first 10 months of this year, compared with 12 percent for Russia, according to the customs data.
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    Petrobras lost 2.29 mln barrels of oil to strike - filing

    Brazil's state-run oil company Petroleo Brasileiro SA said on Monday it had been unable to produce 2.29 million barrels of oil and 48.4 million cubic meters of natural gas during a strike that began on Nov. 1.

    Petrobras, as the firm is known, said the majority of unions representing oil workers had voted to end the strike, thought to be the most disruptive in 20 years. The largest union FUP proposed ending the strike on Nov. 14 though some hold-out unions continued.
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    About 11.12bcm gas of ONGC shifted to RIL's KG-D6 - D&M

    US-based consultant D&M has said that about 11.12 billion cubic metres of natural gas worth INR 11,055 crore have flowed from idling Bay of Bengal blocks of the state-owned Oil and Natural Gas Corporation (ONGC) to neighbouring KG-D6 fields of Reliance Industries.

    DeGolyer and MacNaughton (D&M), in its report, established that reservoirs in ONGC's Krishna Godavari basin KG-DWN-98/2 (KG-D5) and the Godavari Producing Mining Lease (PML) are connected with Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL.

    D&M said that "As of March 31, 2015, the FFRM (Full Filled Reservoir Model) estimated a gas migration of approximately 11.122 billion cubic metres from the Godavari-PML and KG-DWN-98/2 contract areas to KG-DWN-98/3."

    However, D&M is of the opinion that there exists one big gas resource several metres below sea bed which extends from Godavari PML and KG-D5 to KG-D6. Of the 58.68 bcm of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belongs to RIL and 8.981 bcm could have come from ONGC's side, D&M said in its 553-page report.

    At gas price of USD 4.2 per million British thermal unit, the volume of gas belonging to ONGC which RIL has produced comes to USD 1.7 billion (Rs 11,055 crore).

    ONGC had in 2013 claimed that RIL had deliberately drilled wells close to the common boundary of the blocks and that some gas it pumped out was from its adjoining block.

    RIL, on the other hand, has maintained that it has "scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block" in Krishna Godavari basin.

    D&M estimated that ONGC's Godavari-PML had 14.209 bcm of gross in-place reserves and KG-D5 another 11.856 bcm. RIL's D&D3 fields held 80.697 bcm gross in-place reserves.

    It said that of these, 12.80 bcm of Godavari-PML, 8.01 bcm of KG-D5 and 75.33 bcm of KG-D6 are connected.

    It added that 11.89 bcm of gas from ONGC blocks would have migrated to KG-D6 by January 1, 2017. This volume would rise to 12.713 bcm by May 1, 2019.
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    BG Group Secures Stake In Aphrodite Offshore Cyprus

    BG Group has taken a 35% holding in Block 12, which includes the Aphrodite gas discovery, offshore Cyprus, the company said in a news release.

    This upstream position provides a potential source of gas to Egypt where BG Group holds equity in the two train LNG export facility at Idku as well as LNG offtake rights to lift 3.6 mtpa.

    Operated by Noble Energy, the Aphrodite gas discovery is about 170 km south of Limassol.

    Completion of the transaction is subject to certain regulatory approvals as well as customary closing conditions, the release said.
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    Putin says long-term gas deals should not be scrapped

    Long-term supply contracts, the backbone of Moscow's gas deals with most European clients, should stay in place and not be replaced with an alternative mechanism, Russian President Vladimir Putin said on Monday.

    Speaking during the Gas Exporting Countries Forum (GECF) Summit in Tehran, Putin also said that Russia planned to supply Asia with 128 billion cubic metres of gas per year.

    Russian energy giant Gazprom has begun experimenting, selling some of its gas at spot tenders amid talk that it might increase a spot element in some contracts in future as well.

    Read more at Reuters
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    Iran's Rouhani woos gas partners with capacity pledge

    Iran is dramatically increasing its natural gas export capacity in preparation for the lifting of international sanctions, President Hassan Rouhani said on Monday, as he courted foreign investment in the sector during a summit meeting in Tehran.

    Addressing Russian President Vladimir Putin and leaders of seven other countries including Algeria, Nigeria and Venezuela, Rouhani told the Gas Exporting Countries Forum (GECF) that Iran was seeking international partnerships to develop its vast oil and gas reserves.

    "I invite the leaders of the countries in this group to partner with Iran and invest in developing Iran's gas resources for mutual benefit," he said. "Iran is ready to play a bigger role in the supply of gas."

    The Tehran meeting of the GECF - which also includes Bolivia, Egypt, Equatorial Guinea, Libya and the United Arab Emirates - comes a week before Iran is due to unveil model contracts for future oil and gas development.

    The announcement, intended to lure back global energy companies, will be closely watched ahead of the expected lifting of economic sanctions against Iran. In return, Tehran agreed to long-term curbs on its nuclear programme in a landmark July deal with the so-called P5+1 powers.

    Rouhani said Iran had been working for two years to increase its gas production capacity via pipelines to neighbouring countries or liquefied natural gas (LNG) shipments further afield.

    Iran's gas production more than doubled over a decade to 160.5 billion cubic metres in 2012, before the latest sanctions took full effect, and Rouhani said capacity would surge to more than 1 trillion cubic metres in another two years.

    "The preparatory stages have been completed by the government so that the needed investments will be made," he said. "We believe that the situation will rapidly change with the recent agreements between Iran and the P5+1."

    The 12-member GECF claims to account for a combined 67 percent of the world's proven natural gas reserves.

    Read more at Reuters

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    India oil imports from AsiaPac spike in Oct as refiners tap new routes

    India's crude oil imports from the Asia-Pacific region spiked last month as its refiners looked beyond their traditional suppliers for cheaper purchases amid a global supply glut.

    Crude imports from points east of India, mainly Malaysia and Australia, surged to 187,000 barrels per day (bpd) in October, the highest since April 2014, according to ship tracking data obtained from sources and compiled by Thomson Reuters Oil Research & Forecasts.

    That was more than double the volume imported from Asia-Pacific in September and up some 70 percent from a year ago, the data showed. The surge in shipments were a boost to Malaysia, Southeast Asia's second-biggest oil producer, and Australia, where some refineries have been shut.

    Malaysia in particular has been looking for stable outlets to bolster oil revenues and cushion the impact of falling global crude prices, reducing spot prices to attract buyers and offering grades to refiners further away such as in India.

    "Malaysia has reduced the premium (to the Brent benchmark) it charges, so these grades have become attractive. Also, freight cost from Malaysia is less compared to Nigeria, that makes the Malaysian grade cheaper," said a senior executive at Bharat Petroleum Corp.

    Malaysian oil supplies to India last month were the highest in six months, the data showed.

    Refiners in India normally buy Malaysian oil through term deals but BPCL recently procured barrels through spot tenders. Shell supplied Malaysian Kikeh and Miri grades to BPCL in October under a deal obtained through a spot tender.

    Last month, the Indian refiner for the first time also imported the Russian Sokol grade from Far East Russia, a high-quality crude that usually goes to refiners in nearby South Korea and Japan.

    Other spot values for Asia-Pacific crude loading in September fell to multi-year lows, as refinery margins weakened amid slowing regional demand and a buildup of product stocks, further boosting the shipments from East Asia.

    And at a time of slowing demand growth in China, India looks like the "brightest spot" for Asian barrels, said Ehasan Ul-Haq, senior analyst at London-based consultancy KBC Energy Economics.

    Still, India by far meets the bulk of its oil demand through supplies from Middle East, West Africa and Latin America, with Saudi Arabia regaining its top supplier status in October and Iraq falling back to the second slot.

    Crude futures have already lost around 60 percent of their value since mid-2014 due to a global oil glut that has sparked price competition among producers from West Africa to East Asia in a fight for global market share.

    Overall in October India imported nearly 9 percent more crude than a year ago at 3.94 million bpd, according to the shipping data.

    Read more at Reuters

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    Singapore Oil Borrowers Seek More Slack to Avoid Bond Defaults

    Borrowers in Singapore, so far spared from a wave of defaults in the oil services industry, are starting to ask creditors to cut them some slack.

    Three companies including Dyna-Mac Holdings Ltd., part-owned by Keppel Corp., this month are asking bond holders to alter certain debt limits or profit targets as contract delays wreck firms’ earnings. The issuers are among 28 oil services firms listed in Singapore with more than S$1.8 billion ($1.3 billion) of notes maturing next year.

    “If the oil markets remain depressed beyond 2016, you’re going to see some problems,” Joel Ng, an analyst at KGI Fraser Securities Pte in Singapore, said by phone. “Some of the oil and gas players will probably have to restructure their bonds.”

    The borrowing that helped build Singapore’s biggest export industry is looking overstretched after the price of Brent crude slumped near $40 and the island’s economy grew just 0.1 percent in the third quarter. Delivery deferrals and provisioning by yards are causing "cash flow issues," Maybank Kim Eng Securities wrote in a Nov. 20 report.

    Money is certainly tighter for the 28 listed oil services firms. The median ratio of their operational earnings to interest expense, a measure of a company’s ability to pay its debts, was 5.4 times in their latest filings, a steep drop from 12.5 times at the end of fiscal 2014, according to data compiled by Bloomberg.

    Oil services provider Dyna-Mac’s measure plunged to minus 4.4 times in the latest quarter from 27 times at the end of 2014. The company is currently asking holders of its bonds due in 2017 to, among other things, change a clause that limits its interest coverage ratio to at least three times. Dyna-Mac declined to comment for this story.

    Pacific Radiance Ltd. is also seeking to tweak a rule on its 2018 bonds that requires interest coverage above three times, compared with 4.1 times as of Sept. 30. The company’s debt to equity ratio, a key measure of leverage, jumped to 98.4 percent at the end of June from 75.7 percent at the end of December.

    “It’s a prudent approach because we wouldn’t know how long this soft market condition will last," Loo Choo Leong, group finance director, said by phone. "While we do not expect to breach the covenant, leaving it to hope is not a strategy. We have already cut costs and realigned our ops to be as competitive as possible. We have prepared ourselves for the long march ahead."

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    Ecopetrol 'to be placed in holding company'

    Colombia will reportedly create a holding company of state-owned businesses, including oil company Ecopetrol, in a bid to increase transparency and as a step towards membership in the Organisation for Economic Co-operation & Development, President Juan Manuel Santos said on Monday.

    As the first phase of the plan, cabinet ministers will cease to serve on the boards of Ecopetrol and electricity companies Isagen and ISA, three of 111 businesses which belong to the state, Reuters reported.

    "Eventually all state companies will enter the holding, which will separate from the finance ministry and be autonomous, so state companies can be run with more transparency and the most efficiency possible," Santos said in a speech quoted by the news wire.

    The holding company will be run by an independent board, he said.
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    China's Oil giants consider pipeline, refinery sales

    PetroChina Co and its State-owned parent are planning to sell assets before the end of the year that may include stakes in pipelines and refineries as the country's biggest oil and gas producers seek to shore up their balance sheets, according to sources with knowledge of the situation.

    PetroChina and China National Petroleum Corp may announce the stake sales as early as this week, said the sources, who declined to provide details and asked not to be identified. CNPC is seeking to use proceeds from the sale to meet annual income growth targets set by the country's State asset regulators, according to the people.

    "Many investors would prefer they cash in on some assets rather than running the assets themselves," Laban Yu, head of Asia oil and gas equities at Jefferies Group LLC in Hong Kong, said by phone.

    "Investors have given almost zero valuation to PetroChina's assets such as pipelines. Any asset sales right now are good news for the company and could help its share price."

    The slump in energy prices has pushed energy companies to shed assets and cut staff to survive the downturn. PetroChina's third-quarter profit fell 81 percent to the lowest since Bloomberg started compiling the data in 2007.

    China Petroleum and Chemical Corp, the country's No 2 producer known as Sinopec, posted a 92 percent decline in profit.

    The sale would be the first major divestment by either company since PetroChina sold a 20 billion ($3.1 billion) yuan pipeline stake to institutional investors in 2013. Saudi Arabian Oil Co, the world's largest oil exporter, hired Deutsche Bank AG to advise on the potential acquisition of some marketing, retail and refining assets from CNPC that could be worth several billion dollars, Bloomberg reported in October.

    Income at both companies has dropped "dramatically" this year, adding pressure to meet growth targets, Wang Dongjin, a deputy general manager at CNPC and president of PetroChina, said in a statement posted on CNPC's website this month. CNPC will try to raise profit through an "asset-light" strategy, Wang said, without elaborating.

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    Alternative Energy

    SunEdison shakes up top management at yieldcos

    SunEdison Inc said the chief executives of its two "yieldcos" had stepped down and that its chief financial officer would take charge at the units, suggesting that the U.S. solar company could potentially unify all its units under one company.

    "You could potentially see unification of the three companies, that'd provide SunEdison more assets to sell to the third parties and increase its cash flow," S&P Capital IQ analyst Angelo Zino said, adding that Monday's shakeup is really step one of what one could see down the road.

    SunEdison raised fresh liquidity concerns earlier this month after it posted a bigger-than-expected loss and said it would stop selling projects to its two "yieldcos" - dividend-paying units that hold solar, wind or other power assets for the parent company.

    The yieldcos - TerraForm Power Inc and TerraForm Global Inc - had become an important source of funding for the solar industry bellwether.

    But the yieldcos have taken a beating this year in part because low oil prices have reduced investor interest in all renewable energy stocks.

    Zino said it was "extremely expensive to have three publicly traded entities out there, especially if two of them really don't have as much use as they did several months ago."

    TerraForm Power's shares had fallen 70 percent this year through Friday close, while TerraForm Global stock had lost 65 percent since its IPO in July.

    SunEdison said on Monday Chief Financial Officer Brian Wuebbels will assume additional roles of chief executive at the yieldcos.

    The chief financial officer of the yieldcos had also stepped down and will be succeeded by Rebecca Cranna, the company said.

    Cranna was most recently CFO at Global Asset Management for SunEdison.

    The company also said TerraForm board members Perez Gundin, Mark Florian, Mark Lerdal and Steven Tesoriere had resigned.

    SunEdison said it named Peter Blackmore, Jack Jenkins-Stark and Christopher Compton to its board.

    Major hedge funds, including Third Point Investors and David Einhorn's Greenlight Capital, have slashed their stakes in SunEdison over the past few weeks.

    SunEdison's shares had lost nearly 62 percent of their value since Nov. 10, when the company said that it would stop sales of renewable energy assets to its "yieldcos".

    Read more at Reuters
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    TransCanada, Enbridge Among Winners From Alberta's Carbon Policy

    The race to find winners from Alberta’s low-carbon policies is on with analysts betting renewable energy developers such as Enbridge Inc. and TransCanada Corp. will be among the best placed to make the shift.

    Companies poised to gain will be those able to finance new wind and solar power projects, as the government boosts the province’s share of renewable electricity to 30 percent from 9 percent by 2030. TransAlta, meanwhile, surged 9.5 percent Monday as investors bracing for the worst were buoyed by Alberta’s pledge to compensate coal-power generators for phasing out their plants by 2030.

    “These renewable power contracts are going to go to the bidder that needs the least amount of government support, developers with most financial flexibility and overall lowest cost of capital” such as Enbridge and TransCanada, Patrick Kenny, a Calgary-based analyst at National Bank Financial, said in a phone interview.

    Alberta Premier Rachel Notley on Sunday unveiled sweeping changes to the province’s climate policy with a faster transition from coal to more renewable and gas power; an economy-wide carbon price and a cap on oil-sands emissions. As much as C$15 billion ($11.2 billion) will have to be invested in new electricity generation, according to National Bank. Spending on power distribution and technology to lower greenhouse gases from oil and gas production is also expected.

    Renewable Power

    Enbridge and TransCanada are already among Canada’s largest renewable power operators. Enbridge owns 2,065 megawatts of wind power across the country, enough to power 650,000 homes, while TransCanada operates wind, hydro and nuclear plants as part of its 11,800 megawatts of power generation.

    TransCanada is “ideally situated” to play a role in the switch from coal and has invested successfully in other places that have transitioned to renewable energy including Ontario, Mark Cooper, a spokesman, said in an e-mail.

    The plan will give certainty for the development of “much-needed energy infrastructure investments,” Al Monaco, chief executive officer of Enbridge, said in a statement. Graham White, a spokesman, declined to comment further.

    TransAlta’s renewable division, which the company spun off in an initial public offering in 2013, along with companies such as Berkshire Hathaway Inc.’s AltaLink transmission business, are set to benefit, said Ernst & Young LLP’s Gerard McInnis.

    “There are significant opportunities for investment in the grid and distribution,” said McInnis, a partner who leads the power and utilities practice in Canada. “And there will likely be new entrants to the market.”

    TransAlta Renewables on Monday said it would invest C$540 million in three of its parent’s projects, including renewable energy, while Alberta Investment Management Corp. bought shares in the renewable division, whose shares were little changed.

    The climate plan is a “net negative” for Alberta power generators that have stakes in six coal-fired plants being closed before the end of their lifespan, including TransAlta and Capital Power Corp., said National Bank Financial’s Kenny. Coal-plant owners will find it tough to keep their power supply competitive before the end of the phase-out period, with a carbon tax about 2.5 times higher than previous assumptions, Kenny said.
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    Precious Metals

    Troubles in Dominican mine force Barrick to cut 2015 output forecast

    Barrick Gold, the world's largest bullion miner by total output, said Monday it is cutting its 2015 production forecast after a mechanical issue detected at its jointly owned Dominican Republic-based mine.

    The Canadian miner said it now expects to produce between 6 million and 6.15 million ounces of gold this year, which will result in reduced production until mid-January 2016. Its previous forecast was for between 6.1 million and 6.3 million ounces.

    The revised forecast came as  two of three electric motors at Pueblo Viejo's oxygen plant unexpectedly failed on Nov. 19. Barrick said they have been sent for repairs in the U.S.

    The Toronto-based gold producer owns 60% of the Dominican-based Pueblo Viejo mine. Fellow Canadian producer Goldcorp (TSE:G) (NYSE:GG) hold the remaining 40%.

    Commissioned in 2012, Pueblo Viejo mine achieved full production capacity milestone in 2014, and has significant reserves and resources with potential to expend the life of the mine.
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    Gemfields shares soar on ‘knock out’ auction results

    Shares in Gemfields shot up Monday morning as the precious stones miner reported “knock-out” results from its auction of predominantly lower quality rough emeralds at its recent auction in Jaipur, India.

    The stock traded as high as 44.35 pence or 5.6% higher in early morning as the London-listed miner, the world’s biggest emerald producer, said it had raised $19.2 million from the auction of the gems extracted by its Kagem Mining Ltd subsidiary in Zambia.

    29 companies placed bids in Gemfields' second auction of Kagem output, the first one held outside of Zambia since June 2012.

    A total of 29 companies placed bids in Gemfields' second auction of Kagem output, the first one held outside of Zambia since June 2012.

    The Jaipur event was also used to host a traded emerald auction of predominantly higher quality emeralds from Zambia and Brazil, which were obtained by the firm in the open market from various sources. The traded auction yielded additional gross revenue of $1.1 million with 20,400 carats sold.

    The figures, while important, are still a long way from the sparkling auctions where highly-polished gems usually fetch prices able to turn a company’s fortune around. Earlier this monthbillionaire Joseph Lau in Hong Kong paid $48.5 million for the Blue Moon weighing 12.03 carats. It was the most ever paid at auction for a gemstone.

    The emeralds and rubies miner’s next auction will take place next month in Singapore, and Gemfields anticipates it will be predominantly comprised of mixed lots of ruby and corundum from the Montepuez ruby deposit in Mozambique.
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    Base Metals

    Copper Capacity Growth

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    Billionaire activist Paul Singer has taken a big stake in Alcoa

    Elliott Management, the $27 billion hedge fund let by Paul Singer, has taken a large stake in aluminum maker Alcoa.

    According to CNBC's David Faber, Elliott now holds a 6.5% stake in the company.

    The stock was last trading up 2.9% at $8.96 per share.

    In late September, Alcoa said that it would split itself into two separate publicly traded companies— Upstream Company and Value-Add Company.
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    Steel, Iron Ore and Coal

    China Oct coal transport down 19.7pct on year

    China’s rail coal transport fell 19.7% on year but up 1.95% on month to 157.47 million tonnes in October, registering the 14th consecutive year-on-year decline, showed the latest data from the China Coal Transport and Distribution Association.

    Over January-October, China transported a total 1.66 billion tonnes of coal through railways, down 13.2% from a year ago, data showed.

    Of this, 1.14 billion tonnes or 68.7% of the total were railed to power plants, down 12.8% year on year, with October haulage sliding 18.2% on year but up 0.27% from September to 107.22 million tonnes.

    Coal-dedicated Daqin line transported 29.79 million tonnes of coal in October, a decline of 13.8% from the previous year and down 4.55% from September. Over January-October, Daqin accomplished a coal transport volume of 334.83 million tonnes, dropping 10.5% from the year prior.

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    BC Iron may venture outside iron-ore

    The chairperson of iron-ore miner BC Iron, Anthony Kiernan, has told shareholders that the company was considering stepping outside of the iron-ore space. 

    Speaking at the annual general meeting, Kiernan said that among the assets that BC Iron acquired in the merger with Iron Ore Holdings at the end of last year, were a number of early-stage, non iron-ore exploration projects. “As part of our longer term strategy, we are having a very close look at these from an exploration point of view with a real preparedness to step outside the iron-ore space,” Kiernan said. 

    “The company has a good balance sheet and an extremely competent operating team, so why not be prepared to utilise these.” Despite BC Iron’s possible new venture outside of the iron-ore space, Kiernan said that the company’s focus would remain on its Nullagine joint venture (JV), with major Fortescue Metals, as well as the development of the Buckland and Iron Valley projects, which were also acquired with the Iron Ore Holdings acquisition. 

    “The Nullagine JV operation has been performing well and costs have been reduced materially through a range of proactive initiatives,” Kiernan said, adding that BC Iron had worked to ensure that its operations were conducted efficiently and cost effectively during the low iron-ore price environment. In order to save costs, 

    BC Iron has previously swapped out its mining contractor and road haulage contractor, and have agreed to trial an alternative structure for its rail and port costs with JV partner Fortescue. “Under this structure, the charges we pay to Fortescue vary with the iron-ore price. Under current trading conditions, this has materially lowered our cost base, and hence the company’s breakeven price,” Kiernan said.
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    U.S. Steel to idle Granite City plant; 2,080 to be laid off

    U.S. Steel Corp. will temporarily lay off all 2,080 employees at its Granite City steel plant as the company battles tough market conditions.

    The Pittsburgh-based steel company announced the move Monday afternoon and notified steel workers at the metro-east steel mill. U.S. Steel spokeswoman Courtney Boone said the company has not determined when the temporary closure will occur and for how long employees will be laid off.

    “We need to move orderly through the transitional idling process,” Boone said. “It is based on market conditions and it would not be prudent for us to speculate the length of the idling.”

    Steel workers at the company’s Granite City Works were initially notified of a potential temporary closure earlier last month, as demand for the flat-rolled tubular steel manufactured at the Granite City plant has been declining.

    Boone said market conditions continue to affect operations at Granite City Works, which is forcing U.S. Steel to temporarily consolidate its operations and temporarily close the metro-east mill.

    “I think it’s really important to understand that this is truly related to a number of market conditions affecting the steel industry, where the oil and gas prices continue to stay low and Granite City Works serves those in that market,” Boone said. “In addition to that, there continues to be a glut of imported goods that challenge the overall industry. A number of those goods, we believe, are unfairly traded, and shows an un-level playing field with subsidized steel coming in from other countries. When you add each additional market condition, it makes for a challenging environment.”

    Local union leaders from the United Steelworkers could not immediately be reached for comment following the announcement on Monday afternoon.

    The announcement comes just months after U.S. Steel scuttled a recent plan to temporarily close the Granite City plant and idle workers in May. Instead, the company opted to lay off 80 workers and reduce the plant to one shift.

    The announcement also comes as U.S. Steel employees in Granite City and across the country continue to negotiate for a new contract. The company’s steel workers have been working without a contract since September.

    Read more here:

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