Mark Latham Commodity Equity Intelligence Service

Monday 12th December 2016
Background Stories on www.commodityintelligence.com

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    Macro

    So at what point in the bond market rout does consensus move?

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    Bond rout continues as experts blast Trump's economic plan – as it ...

    https://www.theguardian.com › Business › Stock markets14 Nov 2016 - Global bond markets suffer fresh losses as investors anticipate higher interest rates and inflation under president Trump.

    Trump policy effect energises dollar as government bonds sink

    https://www.ft.com/content/c1ccbaa2-aa18-11e6-809d-c9f98a0cf216 14 Nov 2016 - Monday 22:00 GMT. A conviction that a Donald Trump presidency will deliver higher inflation has dominated market sentiment, energising the ...

    Why the Bond Market's Rout May Get Only Bigger | Investopedia

    www.investopedia.com/news/why-bond-markets-rout-may-get-only-bigger/ 2 Dec 2016 - Global Bond RoutBond prices are now in a bear market, with U.S. 10-year Treasuries seeing their yields jump by the most since 2009 in November. ... Bond prices and yields (interest rates) vary inversely, so as interest rates rise bond prices fall.

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    Headed home: workers abandon Indian building sites after cash crackdown


    Hundreds of thousands of Indian construction workers have returned home since Prime Minister Narendra Modi abolished high-denomination banknotes, leaving some building sites across the country facing costly delays.

    A month after Modi's shock move to take away 86 percent of cash in circulation to crush the shadow economy, the growing labor shortage threatens to slow a recovery in India's construction industry, which accounts for 8 percent of gross domestic product and employs 40 million people.

    Work at SARE Homes' residential projects, spanning six cities, has slowed dramatically as migrant workers, who are out of cash and have no bank accounts to draw from, have little choice but to return to their villages.

    "Construction work at all projects has slowed down in a big way," managing director Vineet Relia told Reuters.

    Property enquiries, meanwhile, have slumped by 80 percent around the Indian capital since the cash crackdown, according to property portal 99acres.

    Getamber Anand, president of Indian builders' association CREDAI, said projects nationwide had been hit, and estimated that roughly half of the migrant workforce, numbering in the low millions, had left for home.

    Road developers have also reported a slowdown as they struggle to find sufficient labor.

    The exodus shows little sign of reversing, risking damage to construction activity and the wider economy into 2017, despite Modi's assurances that hardships from his radical "demonetization" should be over by the end of the year.

    The disruption to building raises doubts about the Reserve Bank of India's view that the impact on the economy would be transitory. The central bank held interest rates on Wednesday despite calls for action.

    NO BANK ACCOUNT

    Modi's gamble is that the majority of workers will be compelled to open a bank account as sub-contractors refuse to pay in cash, bringing them into the formal economy and expanding the country's low tax base.

    That may happen eventually, but for now, millions of workers who depend on daily wages for food and shelter are struggling. Many have never held a bank account, and even if they wanted one, some do not have the necessary documents to do so.

    At a construction site in Gurugram, a satellite city near Delhi, worker numbers have halved to 100. The site manager received a government circular on Nov. 25 saying every worker's wage should be paid into a bank, a message relayed to each contractor.

    Biseshwar Yadav, a 36-year-old migrant laborer from the northeastern state of Bihar, worries about arranging documents to open an account and the cost of making regular trips to the bank.

    Standing in the largely deserted worker housing colony opposite the unfinished 20-storey blocks of flats he had been building, Yadav said that with no salary, he was surviving on $89 borrowed from a local shopkeeper to pay for food.

    Some laborers back in their villages are reluctant to return. Duryodhan Majhi, 38, traveled to his eastern state of Odisha after his employer in Secunderabad ran out of cash to pay his $4.4 daily wage.

    "We keep moving from city to city in search of work. This new order would mean opening a new bank account every time we change cities. How and when will we work then?" he said, adding he would seek farm work.

    CREDAI's Anand predicts activity on construction sites will not return to normal until April, and only once laborers are able to open accounts at banks still struggling to serve long queues of people desperate for cash.

    "Right now the banks say they don't have time to open accounts. It's the biggest challenge," Anand said.

    SLOWING ECONOMY

    Data suggest that demand in India's economy has slowed sharply since Modi's decision on Nov. 8.

    Indian services activity plunged into contraction in November for the first time since June 2015, a survey showed, while factory activity also slowed.

    The real estate industry was already carrying an overhang of unsold inventory, and was hit by an earlier clampdown on "black" money, much of which is invested into property.

    Indian cement and steel makers are feeling the pinch.

    "Developers have cut down purchases," said Mukesh Kasana, a dealer for UltraTech Cement Ltd (ULTC.NS), part of the Aditya Birla conglomerate, estimating his sales had slumped 80 percent.

    India's decade-long construction boom created one in three new jobs as tens of millions of people made the journey from the rural hinterlands to seek employment in towns and cities.

    For Modi, a healthy construction sector is vital if he is to fulfill his promise of boosting job creation for the one million Indians joining the workforce every month.

    There is no reliable data on the number of migrants who have abandoned construction sites since demonetization, because most are undocumented. But stories abound of cash-strapped workers thronging railway and bus stations to make their journey home.

    Jainuddin, a labor contractor near Delhi, said he had lost about 40 of his 50 men since Nov. 8.

    "The ground reality is vastly different from what it appears to those designing these policies."

    http://www.reuters.com/article/us-india-modi-corruption-construction-idUSKBN14015F

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    Driving License Applicants Plummet.

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    Oil and Gas

    Oil prices soar on global producer deal to cut crude output


    Oil prices shot to their highest levels since mid-2015 on Monday after OPEC and other producers reached their first deal since 2001 to jointly reduce output in order to rein in oversupply and prop up markets.

    Brent crude, the international benchmark for oil prices, soared to $57.89 per barrel in overnight trading between Sunday and Monday, the highest level since July 2015.

    U.S. West Texas Intermediate (WTI) crude also hit a July 2015 high of $54.51 a barrel.

    Brent and WTI eased to $56.58 and $53.92 respectively by 0453 GMT, but were both still up over 4 percent from their last settlements.

    With the deal signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-OPEC Russia to participate, focus is switching to compliance of the agreement.

    "We believe that the observation of the OPEC-11 and non-OPEC 11 production cuts is required to sustainably support... oil prices to our 1H17 WTI price forecast of $55 a barrel," Goldman Sachs said.

    "This forecast reflects an effective 1.0 million barrels per day (bpd) cut vs. the 1.6 million bpd announced cut and greater compliance to the announced cuts is therefore an upside risk to our forecasts."

    AB Bernstein said the agreed deal "amounts to an aggregate supply cut of 1.76 million barrels per day (bpd) from 24 countries which currently produce 52.6 million bpd, or 54 percent of world oil supply."

    Bernstein said that "some of the non-OPEC supply cuts will come from natural decline, but most will come from self-imposed cuts."

    Saudi Aramco has told U.S. and European customers it will reduce oil deliveries from January.

    OPEC plans to slash output by 1.2 million bpd from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd in a bid to end overproduction that has dogged markets for two years.

    On Saturday, producers from outside OPEC agreed to reduce output by 558,000 bpd, short of the target of 600,000 bpd but still the largest contribution by non-OPEC ever.

    "Non-OPEC participation should add to bullish sentiment," Morgan Stanley said.

    From outside OPEC, Russia said it would gradually cut 300,000 bpd.

    "Once cuts are implemented at the start of 2017, oil markets will shift from surplus into deficit. Given the cuts in production announced by OPEC, we expect that markets will move into a 0.8 million bpd deficit in 1H17," AB Bernstein said.

    Still, some analysts expect producers, drawn by higher oil prices, to increase output again.

    "While better compliance than we expect would initially lead to higher prices – with full compliance worth an additional $6 per barrel to our price forecast – we expect that a greater producer response, especially in the U.S., would eventually bring prices back to $55," Goldman Sachs said.

    http://www.reuters.com/article/us-global-oil-idUSKBN141017
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    Qatar to merge LNG producers Qatargas and RasGas


    Qatar will merge state-owned liquefied natural gas producers Qatargas and RasGas Co Ltd, the chief executive of Qatar Petroleum (QP) said on Sunday, in the Gulf state's latest reaction to lower energy prices.

    The more-than-two-year slump in oil prices has forced Gulf countries to reduce state spending and consider consolidations as a way to cut costs: among the biggest being Abu Dhabi's merging of Mubadala and International Petroleum Development Co.

    While Qatar is more focused on gas than oil, it too has been forced into reorganisations, with QP already going through a process that reduced staffing and earmarked a number of assets for divestment.

    The tie-up of Qatargas and RasGas, Qatar's number one and two LNG producers respectively, has been talked about for a number of years stretching back before the oil price reduction.

    At a news conference, QP CEO Saad al-Kaabi said that behind the announcement was an element of wanting to cut costs.

    "Of course as an outcome of this cost reduction will be realised, it will make us more competitive in the market," he said, adding that the move would save "hundreds of millions of dollars", without giving a timeframe for the savings.

    "It's one business that will do the same thing. Putting it all (in) one place gives you a much bigger advantage in marketing."

    The transition, which will result in a single company called Qatargas, will take around 12 months to complete and will begin before the end of this year.

    Once the new structure is in place, some areas of the business could see job cuts, although the operational side of the plants will not be affected, Kaabi said.

    A Doha-based energy analyst said the move was in line with QP's recent cost cutting but also had other benefits.

    "Arguably the reasons for having two firms - to deal with western and eastern markets and also to encourage some competition during the rollout phase of LNG facilities - are no longer relevant," he said.

    Qatargas is the largest LNG-producing company in the world, with an annual output capacity of 42 million tonnes a year, according to its website. While QP owns a majority stake, global energy firms including Total, Mitsui & Co and ConocoPhillips also possess small stakeholdings.

    RasGas has a production capacity of about 37 million tonnes a year, according to its website. It is a 70/30 percent joint venture between QP and Exxon Mobil.

    http://www.reuters.com/article/qatar-ma-lng-idUSL5N1E6047
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    China's gas supplies to exceed 360 bln cubic meters


    China's natural gas supplies will exceed 360 billion cubic meters by 2020, predicted a report released by authorities on December 10.

    Stable supplies and relatively well-developed infrastructure have buoyed the fast growth of the gas market, according to the report jointly issued by the National Energy Administration, the Development Research Center of the State Council and the Ministry of Land Resources.

    China is rich in natural gas with 90 trillion cubic meters of conventional resources, and consumers in all its 31 provincial-level regions have access to natural gas currently.

    China's natural gas output rose from 50 billion cubic meters in 2005 to 135 billion cubic meters last year. It accounts for around 7% of China's energy production, with a national target to exceed 10% by 2020.

    The country's demand for the fuel has been boosted by price cuts aimed at switching users from coal to cleaner fuels.

    http://www.sxcoal.com/news/4550160/info/en
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    Boost for Western Australia as Gorgon starts supplying first customers


    The $54-billion Gorgon liquefied natural gas (LNG) project, on Barrow Island off the coast of Western Australia, has started domestic gas supplies to the Western Australian market.

    US energy major Chevron on Friday reported that an initial 150 TJ/d of gas was being supplied to foundation customer Synergy and an industry customer under long-term contracts.

    “This is a significant development for domestic gas in Western Australia and we are committed to being a safe and reliable supplier of domestic gas to our customers,” said Chevron Australia MD Nigel Hearne.

    Domestic gas from the Gorgon project will be transported to the mainland via a 90 km pipeline, connecting into the existing Dampier to Bunbury natural gas pipeline.

    The project is the most significant entry into the Western Australian domestic gas market for almost 30 years. At full capacity and subject to market demand, Gorgon could supply up to 300 TJ/d of gas to the Western Australian market, equivalent to generating enough electricity for 2.5-million households.

    The Australian Petroleum Production and Exploration Association (Appea) has welcomed the new domestic supply, saying Western Australia’s energy security has been further enhanced with the start of the project.

    Appea COO for Western Australia Stedman Ellis said Gorgon was a major reason why Australia was set to become the world’s leading LNG exporter by 2020.

    “Its impact on the Western Australian and Australian economies has already been enormous and is set to grow even bigger through the long-term jobs, local contracts, export income and taxation revenues it will generate over many decades.

    “Gorgon’s entry into the domestic gas market marks another significant milestone in the project’s development and will ensure Western Australians continue to enjoy access to abundant supplies of cleaner-burning natural gas well into the future.”

    Ellis said Western Australia’s domestic gas supply would be further boosted once Chevron began supplying gas from its Wheatstone project near Onslow

    http://www.miningweekly.com/article/boost-for-western-australia-as-gorgon-starts-supplying-first-customers-2016-12-09
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    Xcite Energy put into liquidation as creditors seek cash


    Xcite Energy, a North Sea focused oil company, has been put into liquidation after having been deemed insolvent, as it failed to raise funds for debt payment.

    The company, working to develop the Bentley field in the UK North Sea, failed to pay $152 million in debt when bonds issued in 2014 matured on Ocober 31, 2016.

    On November 1, 2016 the Bond Trustee made demand on Xcite to repay the debt in full. Xcite then confirmed that it could not repay the debt claimed in the demand.

    The creditors then applied to court to place Xcite into liquidation, and the court on December 5 appointed joint liquidators of the company.

    Xcite’s material assets are the licenses its subsidiary XER holds in four blocks in the UK North Sea, the most significant of which is the Bentley field license.

    The assets have been put up for sale prior to the court action, but the process is now monitored by liquidators who will review bids received and determine further course of action.

    In a letter to shareholders, the liquidator has said that based upon current forecasts, the funding available to Xcite will be exhausted during January 2017.

    “If this occurs, XER will cease to operate and the Licences will likely be revoked resulting in little or no value being available to XEL’s stakeholders. In view of this, and in anticipation of the liquidation, the Directors determined that it was appropriate to commence a marketing process for the sale of the shares XEL holds in XER.”

    As for the company shareholders, in order for them to receive a distribution from the disposal of XEL’s assets, that sale must realize in excess of all secured and unsecured creditor claims. At this stage, those claims are estimated to be $152 million, according to FTI Consulting, the liquidator.

    In light of these developments, the Final Investment Decision for Bentley field, which Xcite hoped to file in 2016, will most likely, almost certainly, not happen.

    The Bentley is the crown jewel of Xcite’s portfolio, which the company has been working to develop since  in 2003. It is located on the East Shetland Platform in the UK Northern North Sea.

    Xcite in 2012 completed pre-production phase, producing 147,000 barrels of Bentley crude oil in the process. Xcite has described the oilfield as one of the largest undeveloped resources in the UK North Sea.

    http://www.offshoreenergytoday.com/xcite-energy-put-into-liquidation-as-creditors-seek-cash/?utm_content=buffer26110&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Texas leads biggest rig count jump since April 2014

    Texas leads biggest rig count jump since April 2014

    The oil rebound in West Texas this week led the biggest surge in the drilling rig count since April 2014 — when oil was priced well above $100 a barrel.

    The amount of drilling activity jumped in Texas as 17 active rigs were added to the Lone Star State, mostly in the busy Permian Basin. The total rig count increase of 27 rigs this week easily surpasses the mid-November increase of 20 rigs in one week, according to data collected by Baker Hughes oilfield services firm.

    The hike in drilling activity is the first big change since the Organization of the Oil Exporting Nations agreed at the end of November to scale back oil production. OPEC leaders are meeting Saturday with Russia and other non-OPEC nations to discuss further reductions. The U.S. benchmark for oil was trading above $51 a barrel early Friday afternoon.

    Of the 27 rigs added in the U.S., 21 of them are primarily seeking oil and the remaining six are drilling for natural gas.

    The Permian Basin added 11 rigs, with three more in South Texas’ Eagle Ford Shale and two more in the Texas Panhandle’s Granite Wash. Colorado also saw a big jump with six rigs activated in the DJ-Niobrara Basin.

    The total count is 624 rigs, up from a low of 404 in May, according to Baker Hughes. Of the total, 498 are primarily drilling for oil.

    The Permian now accounts for 246 rigs, almost half of the nation’s oil rigs. The next most active area is Texas’ Eagle Ford shale with 40 rigs, according to the Baker Hughes data.

    Despite this week’s increase, the oil rig count is down 69 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.

    http://fuelfix.com/blog/2016/12/09/texas-leads-biggest-rig-count-jump-since-april-2014/

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    Canadian Oil Sands Resurrected Amid OPEC Cut


    Cenovus said Thursday that the company will proceed with its 50,000 barrel a day phase G expansion at its Christina Lake oil sands site. The announcement comes more than a month after Canadian Natural said it was resuming work on its 40,000 barrel a day Kirby North project.

    The expansions are the first to resume since an oil market crash saw prices plunge from more than $100 a barrel in 2014 to a 12-year-low of about $26 a barrel earlier this year. The Organization of Petroleum Exporting Countries’ agreement last week to cut production for the first time in eight years propelled crude prices above $50 just as the Canadian government approved the expansion of two export pipelines.

    “You are seeing some cautious optimism come back,” said Mark Oberstoetter, lead analyst for upstream research at Wood Mackenzie in Calgary. “2017 looks to be a healthier year in terms of where the price will be. It won’t be all-out growth, but they can start to think of brownfield, debottlenecks, projects that do make sense in the new world.”

    EXPENSIVE PRODUCTION

    The oil sands region of northern Alberta is one of the most expensive regions in the world for crude production because of its isolation and the technical challenge of extracting the tar-like bitumen from the ground. Heavy Canadian crude currently sells at a discount to West Texas Intermediate futures of just over $15 a barrel.

    The downturn forced oil sands companies to become more cost-efficient as they renegotiated contracts with service companies and cut their workforce to survive falling prices.

    During the downturn, Cenovus managed to cut operating costs as much as 40 percent, Brian Ferguson, Cenovus’s president and chief executive officer, said in a conference call Thursday. The company will raise its capital budget next year by 24 percent from 2016 to C$1.3 billion, with 30 percent dedicated to “planned growth projects,” he said. Christina Lake Phase G will be built at C$500 million less than originally budgeted.

    “We expect Christina Lake Phase G to be an industry-leading oil-sands expansion,” Ferguson said. “Our teams have done a tremendous amount of work to reduce cost and improve the efficiency of every dollar that we planned to spend.”

    Total oil production is expected to rise 14 percent from 2016 after recently completed expansions at Christina Lake and Foster Creek, the CEO said. Expansion for the Foster Creek Phase H and Narrows Lake Phase A expansions will be announced in mid 2017.

    http://boereport.com/2016/12/09/canadian-oil-sands-resurrected-amid-opec-cut/

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    Encana cuts debt by largest amount for E&P TSX companies in past year


    Debt reduction has been a hot topic in past year in Canada, as companies adapted to a lower-for-longer price environment. Out of 70 domestic and international producers listed on the TSX, Q3 2016 data available in CanOils reveals that Encana Corp.has cut debt by the largest monetary value over the past year. The company has removed just under Cdn$2.6 billion of debt from its balance sheet between Q3 2015 and Q3 2016 (see note 1), a reduction of around 30%.

    The TSX-listed company that has shaved the most debt off its previous year’s balance sheet proportionately is Touchstone Exploration Inc.. By cutting its debt by Cdn$6.6 million, Touchstone’s debt levels are 93% lower in Q3 2016 than in Q3 2015.

    In terms of domestic producers, Paramount Resources Ltd. (TSX:POU) cut its debt by the largest percentage (84%) over the same timeframe, using funds generated in an asset sale that was the largest E&P deal of the year in Canada.

    Subsequent to Q3 2016 – and therefore not in these figures – RMP Energy Inc.closed a deal with Enerplus Corp. to sell its assets at Ante Creek for Cdn$114.3 million. The sale proceeds allowed RMP to eliminate its bank debt.

    Not all companies reduced debt. Suncor Energy Inc.,the TSX’s largest current producer, saw the largest debt increase in terms of actual value between Q3 2015 and Q3 2016. Suncor’s debt rose by Cdn$2.9 billion after a busy year of acquisitions. Painted Pony Petroleum Ltd. saw debt increase by the largest proportion over the 12 month period, more than ten-fold, to Cdn$537 million. This was mainly due to a new finance lease being accounted for upon the start-up of operations at a gas processing facility and pipeline.

    Overall, despite some companies’ increases in debt, these 70 oil and gas companies of the TSX have around 6% less debt impacting their balance sheets in Q3 2016 compared with Q3 2015 (Cdn$92.4 billion vs. Cdn$98.5 billion).

    For those domestic operators that have reduced debt by significant margins, focus can switch to other pressing problems relating to the downturn, such as Licensee Liability Ratings (LLR).

    https://www.oilvoice.com/Opinion/559/Encana-cuts-debt-by-largest-amount-for-EP-TSX-companies-in-past-year
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    Quebec Paves Way for Oil, Gas Exploration With New Energy Plan


    Quebec’s legislature passed a bill that will pave the way for more oil and gas exploration, providing a boost to drillers such as Junex Inc. while drawing criticism from environmental, aboriginal and citizen groups.

    Bill 106 passed Quebec’s National Assembly in a 62-38 vote early Saturday after an overnight debate ahead of the holiday break. The legislation is meant to implement Quebec’s clean energy plan but also contains provisions allowing for energy exploration, potentially including fracking.

    “Quebec’s government just voted down an amendment to ban fracking in a triumph of science over ‘leave it in the ground’ lunacy,” Calgary-based Questerre Energy Corp. tweeted early Saturday morning.

    Shares of companies that hold exploration rights, including Questerre and Junex, based in Quebec City, surged last week as passage of the legislation looked likely. Questerre holds about 1 million acres and has drilled test wells in the Utica shale formation along the St. Lawrence River, according to its website. Questerre’s shares rose the most in more than eight years on Thursday and inched up again on Friday. Junex’s stock increased 30 percent, the most in almost two years.

    Framework for Drilling

    Bill 106 creates a new agency to promote Quebec’s transition to cleaner energy yet also lays out a framework for oil and gas development in the Canadian province. Environmental, aboriginal and citizen groups argued that the bill’s mandate is contradictory, that debate was rushed and that it should have included a moratorium on fracking as well as greater protection for landowners.

    While Canada’s National Energy Board doesn’t record Quebec as producing any marketable hydrocarbons of its own, the province holds enough gas to meet its own needs for about 100 years. Most is locked up in the Utica shale formation or in deposits beneath Anticosti Island, according to the Canadian Association of Petroleum Producers.

    “This is obviously a way for the government to please the industry,” Patrick Bonin, a spokesman for Greenpeace Canada’s climate and energy campaign, said by phone. “There is no reason why this bill was passed under the false claim from the government that there is urgency.”

    Fracking is safe and the industry position is that it should be monitored like any other technology to make sure that’s the case, so a moratorium is unnecessary, David Lefebvre, director general of the Quebec Oil & Gas Association, said by phone Saturday. “Wells are fracked every day, all around the world,” he said.

    Bill 106 strips power from landowners who will be powerless to stop exploration by companies with drilling claims, Carole Dupuis, a spokeswoman for Regroupement vigilance hydrocarbures Quebec, said by phone from Quebec City.  That, in turn, will hurt property values, especially if exploration leads to fracking.

    “If there was not the fracking issue, the landowner issue would not be a problem. It’s an access issue,” she said. “What’s the value of your land if someone has been drilling one kilometer from you and you don’t know if your drinking water is safe?”

    Fracking Ban

    The citizens group she represents is also concerned that companies with deposits worth developing will be able to expropriate land from owners who are unwilling to sell.

    Expropriation was possible before Bill 106 and a moratorium on fracking would have actually hurt landowners by giving environmentalists the power to decide what they could do with their property,  said Michael Binnion, chief executive officer of Questerre Energy.

    “In our entire time in Quebec we’ve never gone on anyone’s land that didn’t want us there,” he said by phone from Calgary. “This act lets farmers who would like to partner with oil and gas companies have that chance.”

    Bill 106 goes against aboriginal rights to self-determination and to establish the best use of their lands, Mi’gmaq Chief Darcy Gray said in an e-mail Saturday.

    “The bill also opens up our lands to exploration that we feel could have long-lasting, detrimental and irreparable damage,” he wrote “especially with regards to hydraulic fracturing and or other types of well stimulation.”

    “Why this would even be considered, or how it could be construed as a favorable initiative, is beyond me,” he said.

    Stronger Opposition

    The fact that the debate was rushed through the National Assembly has set the stage for stronger opposition from citizens, Greenpeace’s Bonin said.

    “Having the Quebec government sign onto the Paris agreement, claiming they are leaders in climate change, but not wanting to have proper debate on fossil-fuel development in the province is a clear demonstration that it’s not a climate change leader,” he said.

    The Quebec energy bill was approved just hours after Canada reached agreement on a national climate deal to establish a minimum carbon price, with Manitoba and Saskatchewan the lone hold-out provinces.

    Environmentalists have criticized Prime Minister Justin Trudeau for falling short on his green pledges by allowing continued energy sector development, most notably with his approval of the Kinder Morgan Inc. Trans Mountain pipeline last month. Trudeau has said his government aims to balance economic growth with tougher environmental standards.

    https://www.bloomberg.com/news/articles/2016-12-10/quebec-paves-way-for-oil-gas-exploration-with-new-energy-plan

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    New Ways to Clean Up Oil Fields Without Dumping Wastewater


    Earthquakes tied to oilfield wastewater dumping are a major problem in Oklahoma. This year the state has suffered more than 500 earthquakes of magnitude 3.0 or higher; from 2004 to 2008, the five years before the fracking boom, there were nine. So a handful of water management companies are experimenting with ways to reduce the pouring of drilling wastewater back into the ground. Cost is a principal concern, because existing techniques are expensive. The market for handling the water in Oklahoma is about $3 billion, according to consulting firm CAP Resources.
     
    Mobile Evaporator
    Innovator: Anurag Bajpayee
    Title: Chief executive officer of Gradiant, a three-year-old, 50-employee company in Woburn, Mass.
    MIT grad Bajpayee is building an automated evaporator that fits in a large, rectangular gray box on the back of an 18-wheeler. It’s designed to release as much as two-thirds of the wastewater back into the air as clean water vapor, depending on the salt content. What’s left will still be pumped back underground, Bajpayee says, or perhaps reused in some drilling operations. He says he’s in talks with three drilling companies to deploy his first machine in Oklahoma early next year.
     
    Inductive Evaporator
    Innovator: Mike Keller
    Title: President of Produced Water Technologies, a Tulsa startup with six employees
    The Oklahoma entrepreneur, who’s spent 40 years working on waste management technology for refineries and chemical plants, proposes to capture waste heat from pipeline compressors (he won’t say how) to evaporate the clean water from drilling waste, meaning companies won’t have to spend money generating that heat independently. Keller says he’s aiming to cut the amount of wastewater sent back underground by about half.
     
    Desalination
    Innovator: Brian Kalt
    Title: President of Fairmont Brine Processing, a four-year-old, 65-employee company in Fairmont, W.Va.
    Kalt wants to build a plant to extract salt particles from wastewater and release the cleaned-up water into rivers. He says he can process a barrel of wastewater for $1.50, about what disposing of it underground costs. He plans to sell the extracted salt for use on icy roads, as a water softener in large industrial boilers, and to help keep coal piles from freezing in winter. Kalt, a former Marine officer who served in Iraq, already uses the process to clean water from natural gas wells.
     
    Clean Enough for Fracking
    Innovator: Clane LaCrosse
    Title: CEO of Bosque Systems, a nine-year-old, 300-employee company in Fort Worth
    Oklahoma native LaCrosse is the only one in the state already working to clean drilling wastewater. His company treats about 10 million barrels a month, using techniques like filtration to make it clean enough for his eight clients to reuse in their next wells. Fracking is such a water-hungry enterprise that Bosque never has any cleaned wastewater left unused, LaCrosse says. The company often has to add some freshwater to the recycled stuff.

    https://www.bloomberg.com/news/articles/2016-12-09/new-ways-to-clean-up-oil-fields-without-dumping-wastewater

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    Alternative Energy

    China pins hopes on taxation for environmental protection


    China's top legislature is working to upgrade the current pollutant discharge fee system to a coercive and legally binding law, which will tax air and water pollutants, solid waste and industrial noise at different rates, to fight chronic and intractable pollution in the coming years.

    China established the "pollutant discharge fee" system in 1979. In 2015, it collected 17.3 billion yuan ($2.5 billion) from some 280,000 businesses.

    The State Council rendered a draft environment tax law to China's top legislature for the first reading in August, and it vowed earlier this week to introduce environment tax by 2020 in a five-year plan for ecological and environmental protection.

    "The upcoming law is expected to raise polluters' operational costs and thus force them to upgrade technology and shift to cleaner production," said Tan Yunming, professor at the Central University of Finance and Economics.

    Many polluters are overcapacity-hit enterprises and environment tax will help weed out firms that fail to change, said Luo Jianhua, an expert with the All-China Federation of Industry and Commerce.

    Luo dismissed worries that the new tax could encourage enterprises to hike prices and shift the burden to consumers, saying that major emitters like steel and cement factories are unlikely to raise prices in an oversupplied market.

    Pollutant discharge fees are now collected by environmental protection authorities, who have the expertise to gauge pollution, and environment tax will be collected largely by regular taxation authorities.

    "The enforcement of the law will require close cooperation between the two departments," said Chang Jiwen, a resources and environment policy researcher at the Development Research Center of the State Council.

    In addition to the environment tax law, the central government dispatched inspection teams to review local-government environmental protection measures this year.

    The second round of inspections are now underway, and the first round held more than 3,000 governmental officials accountable for lazy environmental protection efforts. Punishments include removal from posts.

    http://www.sxcoal.com/news/4550141/info/en

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    SA-made silicon energy storage system “ready to close grid gap”


    A South Australian company behind a silicon based thermal energy storage system has created and successfully tested a full prototype of its technology, which it says is ready for commercialisation after a decade is the making.

    Adelaide-based Latent Heat Storage – whose progress with its homegrown, patented silicon storage technology we have monitored here and here – said on Friday a prototype of its thermal energy storage system (TESS) had its first successful run on September 30.

    The company, which is in the process of changing its name to 1414°, says it is now ready to apply its TESS to industry and generation sites at scales of 10MWh and 200MWh.

    Suitable sites for these demonstrations, the company says, would be a wind farm, or an existing gas-fired generator. The technology will increase efficiency and revenues of a wind farm through load shifting to times of maximum demand.

    As we wrote here in October last year, the TESS was developed in conjunction with the University of Adelaide, and Adelaide-based engineering consultancy ammjohn.

    It works to store energy by heating and melting containers full of silicon, whose properties of high latent heat capacity and melting temperature make it ideal for the storage of large amounts of energy.

    A key benefit of the TESS device is also considered to be its scalability. The trial confirmed that the technology is capable of storing and supplying hundreds of MW of electricity, at just $70,000 per MWh to provide for a reliable electricity supply with up to 90 per cent renewable sources – making it a good fit with the South Australian energy market.

    And, as well as storing and dispatching electricity, the system’s excess heat can be used to heat water for space heating and other industrial processes.

    So far, the company has invested more than $3 million in getting the technology to this point, with the help of a $400,000 federal government grant awarded last October.

    1414 Degrees said on Friday that sceptics had doubted such a high temperature storage system was feasible, but that the prototype TESS had proven them wrong.

    Kevin Moriarty, a former chairman and managing director of zinc and gold miner Terramin Australia, has recently joined the company to help get commercial operations off the ground. He says 1414° needs $10 million to $20 million to progress its plans, and is involved in “investment discussions” with several large energy companies interested in the technology.

    1414° chairman Dr Kevin Moriarty with pure silicon. Source: Adelaide Advertiser

    “The next phase is to develop the first large, commercial systems over the next two years,” Dr Moriarty said in an interview with the Adeliade Advertiser in October this year.

    “We are facing a pivotal moment in the local and global energy market, with soaring prices, instability, and harmful emissions.

    “Our energy storage technology presents an opportunity to disrupt the energy market and the use of readily available silicon rocks ensures its sustainability and its affordability.

    “We’re using cutting edge technology developed right here in South Australia to provide a viable low cost solution, not just for the power problems we’re experiencing here in SA but which can be implemented worldwide.”

    Moriarty said that while battery chemistries like lithium-ion had a limited life, only lasting a certain number of charging cycles, the TESS was based on a “phase change” – melting and cooling of silicon – and so did not suffer the same limitations.

    He said while the TESS was built with off-the-shelf components, the intellectual property was key to its success.

    “The know-how is crucial. Anyone can go and buy some silicon, it’s cheap, it’s $2000 a tonne,” he said. “A single tonne of that (a 50sq cm block), just to melt that, to hold it at melting temperature, what they call the latent heat, in other words the energy of melting, is the equivalent of taking a tonne of water and raising it 200m in the air.

    “One block like that will store enough energy to keep 28 houses operating for a day.

    “This was recognised in CSIRO some years ago although they worked mostly with molten salt because that operates at around 500 degrees. This melts only at 1414 degrees. It will stay at that temperature while it’s melting and provide energy until fully solidified at a constant potential like hydro. No other heat storage system does that.

    “You can store it, then you can regenerate it.’’  

    http://reneweconomy.com.au/sa-made-silicon-energy-storage-system-ready-close-grid-gap-23607/

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    Agriculture

    Cows and rice paddies boost methane emissions: study


    Global methane emissions from agriculture and other sources have surged in recent years, threatening efforts to slow climate change, an international study has found.

    Researchers led by French Laboratoire des Sciences du Climat et de l'Environnement (LSCE) reported that methane concentrations in the air began to surge around 2007 and grew precipitously in 2014 and 2015.

    In that two-year period methane concentrations shot up by 10 or more parts per billion (ppb) annually, compared with an average annual increase of only 0.5 ppb during the early 2000s, according to the study released by the Global Carbon Project, which groups climate researchers.

    Marielle Saunois, lead author of the study and assistant professor at Université de Versailles Saint Quentin, said that the increase in methane emissions could threaten efforts to limit global warming.

    "We should do more about methane emissions. If we want to stay below a 2 degrees (Celsius) temperature increase, we should not follow this track and need to make a rapid turnaround," she said in a statement.

    Methane is much less prevalent in the atmosphere than carbon dioxide (CO2) -- the main man-made greenhouse gas -- but is more potent because it traps 28 times more heat. The report did not say to what extent methane contributes to global warming.

    CO2 emissions are expected to remain flat for the third year in a row in 2016, thanks to falls in China, the Global Carbon Project said last month.

    Saunois said that while the reasons behind the methane surge are not well understood, the most likely sources are cattle ranching and rice farming. Cows expel large quantities of methane and the flooded soils of rice paddies are homes for microbes that produce the gas.

    She cited data from the United Nations' Food and Agriculture Organization indicating that livestock operations worldwide expanded from producing 1.3 billion head of cattle in 1994 to nearly 1.5 billion in 2014, with a similar increase in rice cultivation in many Asian countries.

    Robert Jackson, a co-author of the paper and Professor in Earth System Science at Stanford University, said that methane can come from many different sources, including natural sources such as marshes and other wetlands, but about 60 percent comes from human activities, notably agriculture.

    A smaller portion of the human contribution, about a third, comes from fossil fuel exploration, where methane can leak from oil and gas wells during drilling.

    "When it comes to methane, there has been a lot of focus on the fossil fuel industry, but we need to look just as hard, if not harder, at agriculture," Jackson said.

    http://www.reuters.com/article/us-environment-methane-idUSKBN14100L
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    Washington state sues Monsanto over PCB damages, cleanup costs


    Washington state filed an environmental lawsuit on Thursday against agricultural company Monsanto Co seeking damages and cleanup costs associated with the company's production of PCBs, the state's attorney general said.

    Monsanto produced the polychlorinated biphenyls, or PCBs, "for decades while hiding what they knew about the toxic chemicals' harm to human health and the environment," Attorney General Bob Ferguson said in a statement.

    St. Louis-based Monsanto, whose products include genetically modified crop seeds and pesticides, said the lawsuit, which was filed in King County Superior Court, lacked merit.

    "This case is highly experimental because it seeks to target a product manufacturer for selling a lawful and useful chemical four to eight decades ago that was applied by the U.S. government, Washington State, local cities, and industries into many products to make them safer," Monsanto Vice President Scott Partridge said in a statement.

    PCBs, once used widely to insulate electrical equipment and in products like paint and caulk, have been linked to cancer, immune system difficulties and other health problems.

    The manufacture of PCBs was banned in the United States in 1979. Monsanto was the only U.S. producer of PCBs between 1935 and 1979, Ferguson said.

    The lawsuit - against Monsanto and two of its splinter companies, Solutia Inc and Pharmacia LLC - seeks compensation for damages to Washington state's natural resources, including the economic impact to the state and its residents, Ferguson said.

    "PCBs have been found in bays, rivers, streams, sediment, soil and air throughout Washington state, with more than 600 suspected or confirmed contamination sites from Puget Sound to the Wenatchee River, Lake Spokane to Commencement Bay," he said.

    The company faces lawsuits by at least eight West Coast cities raising similar claims.

    In September, German chemicals and healthcare group Bayer AG made an offer to buy Monsanto for $66 billion. The deal has to be cleared by regulatory authorities in the United States, Europe and elsewhere.

    http://www.reuters.com/article/us-monsanto-washington-idUSKBN13X2OO

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    Precious Metals

    Asia Gold-China premiums near 3-yr high, Indian demand remains subdued


    Gold premiums in China held near three-year highs this week amid fears of limited supply of the precious metal, while demand in India remained subdued despite lower prices due to a severe cash crunch.

    The import curbs may be part of China's efforts to limit outflows of the yuan after the currency's slide to its weakest in more than eight years, traders said. China allows only 13 banks to import gold, including three foreign lenders, according to the Shanghai Gold Exchange.

    "The news on import restrictions is keeping the premiums high and there has been no real demand," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

    Gold was sold in China at about $28-$30 an ounce above the international spot benchmark this week, traders said.

    Premiums went above $30 in November, the most since January 2014, according to Thomson Reuters data.

    Spot gold is on track for its fifth consecutive week of declines on rising expectations of a rate hike by the U.S. Federal Reserve.

    Gold demand in India remained subdued despite a drop in prices as retail demand was squeezed by cash crunch, while jewellers were delaying purchases expecting a fall in prices next week.

    Dealers in the world's No.2 consumer of the metal were offering a discount of up to $5 an ounce this week over official domestic prices that include a 10 percent import tax, compared with a discount of up to $4 last week.

    Indian gold prices fell to 27,700 rupees per 10 grams on Friday, the lowest level since Feb. 8.

    "Everyone is running business with limited inventory. Jewellers are waiting for correction in prices and want to see how demonetization pans out," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in south Indian city of Chennai.

    Last month, Prime Minister Narendra Modi scrapped 500 and 1,000 rupee banknotes, or 86 percent of the value of cash in circulation, in part of a crackdown on corruption, tax evasion and militant financing.

    Indian jewellers rely on the wedding season for an uptick in demand during winter months after the end of key festivals such as Diwali, but this year wedding demand has fallen sharply due to cash crunch, jewellers said.

    India's overseas purchases of gold could halve to 50 tonnes in December after jumping to the highest level in 11 months in November.

    In Hong Kong and Singapore sellers offered premiums of between $1-$1.50 an ounce. Discounts in Tokyo remained at 50 cents this week.

    http://www.reuters.com/article/asia-gold-demand-idUSL4N1E4348

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    Base Metals

    Crunch time coming for Philippines nickel ore exports


    Crunch time is coming for the flow of nickel ore from the Philippines to China.

    The market is awaiting news of how many more nickel mines might fall foul of a sweeping clamp down on what the Philippine administration terms irresponsible mining.

    Eight nickel mines have already been suspended. Another 14 have been put on notice.

    Between them they account for around half of the country's production, putting at risk China's nickel pig iron (NPI) producers who have become increasingly reliant on Philippine supply for their raw material input.

    But the truth of the matter is that Philippine ore exports are going to slow dramatically over the coming months whatever the outcome of the current mine audit.

    They always do at this time of year because of the rainy season.

    This time around, however, normal seasonality could generate an abnormal supply-chain shock because of low inventory in China.

    That's what nickel bulls will tell you anyway. Bears are unconvinced, arguing that China's NPI sector has proven itself resilient in the past to shifts in raw material flows, so why should this time be any different?

    Uncertain as to which way to call the impact on nickel's complex supply landscape, the market is expressing itself less on outright price than on call options.

    LOPEZ AND THE RAIN

    The results of the latest audit on the mining sector are coming imminently, according to Regina Lopez, former environmental campaigner and now Philippine Environment and Natural Resources Secretary.

    And "there will definitely be suspensions", she told Reuters at the start of this month.

    How many and for how long she wouldn't say. Nor whether any of those mines already suspended might be allowed to restart.

    In the short term it doesn't matter much. The rainy season is a more reliable predictor of the country's nickel ore exports than government policy.

    And exports to China are already showing signs of slowing as they always do around this time of year.

    It's just they are falling from a lower base, since they were already running 12 percent below year-earlier levels in the first 10 months of 2016.

    And they will fall harder this year due to the near depletion of Altawitawi Nickel Corp's Tumbagaan mine, one of the few that could operate during the rainy season, according to analysts at Macquarie Bank.

    STRESS-TESTING THE SUPPLY CHAIN

    The question facing the nickel market is not whether the flow of nickel ore to China's NPI sector is going to slow.

    It's rather how resilient will be the supply chain to the slowdown.

    China's stocks of nickel ore are currently estimated by Mysteel at 13.4 million tonnes MYSTL-INKO-TTPR. It's uncertain just how much that represents in terms of contained nickel.

    But the key takeaway is that they have been falling sharply over the last couple of months and are close to the 12.7-million trough recorded in April at the end of the last Philippine rainy season.

    Macquarie, which is firmly in the bull camp, argues that the normal seasonal drawdown would mean contained nickel in ore inventory falling below 30,000 tonnes by March, "the lowest in recent history and equating to less than one month consumption". (Commodities Comment, Nov. 28, 2016).

    That would imply a major supply and price hit to China's nickel-stainless steel supply chain.

    Unless, of course, China can find alternative sources of nickel feed. Which it might be able to do, according to the bear argument articulated by Citi analysts. (Metals Weekly, Dec. 6, 2016).

    Ironically, the gap could be filled by Indonesia. "Ironically" because it was that country's own 2014 suspension of nickel ore exports to China that created the new dependency on Philippine ore in the first place.

    Indonesia shut off all exports of unprocessed minerals to force its mining sector down the value-add beneficiation road.

    That policy is now starting to bear fruit with Chinese players, led by Tsingshan Group, off-shoring both NPI and stainless steel capacity in Indonesia.

    There is now a large and rapidly growing flow of NPI from Indonesia to China, almost 600,000 tonnes of it in the first 10 months of this year, already three times last year's total.

    Will it be enough to offset the drop in Philippines ore shipments over the coming rainy season? Particularly if seasonality is overlaid with more mine closures?

    There are too many moving parts to this nickel supply conundrum to say with any certainty.

    UNCERTAIN CALL AND CALL OPTIONS

    Which is probably the reason why interest in the London nickel options market has cranked up several gears over recent weeks.

    Faced with a difficult call as to what exactly will happen to the nickel supply chain, bulls have been expressing themselves via call options.

    Activity in London Metal Exchange (LME) nickel options totalled almost 195,000 lots in October and November, up from 110,000 lots in the previous two months.

    Outstanding open interest in call options, which confer the right to buy, totals 14,406 lots across the first quarter of 2017. That dwarfs the 6,545 lots of open interest on put options, which confer the right to sell.

    There are noteworthy clusters of open interest on the $12,000 strike price (3,948 lots), the $12,500 strike (1,043 lots), the $13,000 (2,575 lots) and, on March alone, on the $13,200 strike (1,000 lots).

    As of Thursday's close January was valued at $11,075, February at $11,091.50 and March at $11,108 per tonne.

    The first-quarter 2017 time frame, of course, coincides with the seasonal drop-off in Philippine ore exports and the period of maximum stress in China's long nickel supply chain which ends up feeding its giant stainless steel sector.

    That call option open interest is a heat map of bullish bets that the supply chain is not going to withstand the coming test without a price reaction.

    Whether those expectations are right we're about to find out, but it's the Philippine rain as much as the new Philippine administration that's going to exert the biggest influence on actual exports over the next few months.

    http://www.reuters.com/article/philippines-nickel-ahome-idUSL5N1E43PK
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    Steel, Iron Ore and Coal

    Hubei calls for immediate halt at all coal mines


    Central China's Hubei province ordered all the coal mines in the province to suspend production immediately and conduct safety inspections, said the provincial Administration of Work Safety on December 8.

    Coal mines cannot resume production until get approvals signed by officials of the municipal or prefecture government, while mines with gas outburst issues should be approved by the provincial Coal Mine Safety Administration, said the authority.

    The province launches a province-wide safety inspection on all of its coal mines from December 8 to next year's January 25.

    http://www.sxcoal.com/news/4550146/info/en

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    Shandong Nov coal output climbs 9.7pct mth on mth


    Eastern China's Shandong province produced 10.98 million tonnes of raw coal in November, climbing 9.69% from October but down 23.74% year on year, showed the latest data from the Shandong Administration of Coal Mine Safety.

    Over January-November, raw coal output of the province totaled 117.99 million tonnes, falling 12.8% from the corresponding period last year.

    Of this, 90.49 million tonnes were produced by provincial-owned mines, up 10.2% year on year, while that from mines owned by municipal and lower-level government stood at 27.5 million tonnes, rising 20.4% from a year ago.

    http://www.sxcoal.com/news/4550132/info/en
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    Shaanxi Nov coal output gains 23pct on year


    Shaanxi province, one of China's major coal production bases, produced 49.79 million tonnes of raw coal in November, gaining 22.84% from the year-ago level and up 11.87% from October, showed the latest data from the Shaanxi Administration of Coal Mine Safety.

    Coal output over January-November fell 8.20% from the previous year to 415.48 million tonnes, data showed.

    Of this, coal mines owned by the central and provincial governments produced 77.38 million and 106.82 million tonnes of raw coal, down 17.16% and falling 14.48% from the year prior, respectively; and coal output of the mines owned by municipal and prefecture governments stood at 231.28 million tonnes, down 1.28% on year.

    Total coal sales during the same period reached 411.49 million tonnes or 99.04% of the total coal output of the province, down 3.89% year on year, with sales in November standing at 48.81 million tonnes.

    http://www.sxcoal.com/news/4550122/info/en
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    Jinneng Group signs 16 Mt term coal contracts with utilities


    Jinneng Group in northern China's Shanxi province singed 2017 term supply contracts with four utilities, with total volume at 16 million tonnes, the company announced on its website on December 5.

    The four utilities included China Resources Group and three of China Huaneng Group's subsidiaries -- Huaneng Power International, Huaneng Shandong Power Generation and Huaneng Fuel Company. The company didn't specify the volume to be supplied to each utility.

    Jinneng Group will release more advanced coal capacity during the 13th Five Year Plan period paving the way for deepening corporation with utilities, said Wang Qirui, president of Jinneng.

    This followed signing of 2017 term contracts between two Chinese coal giants -- Shenhua Group and China National Coal Group – and the nation's top five utilities.

    On December 1, twelve key coal producers, including Yankuang Group, Shaanxi Coal & Chemical Industry Group and Longmei Group among others, inked term coal contracts. The contracts earmarked annual supply of 102 million tonnes of thermal coal to utilities and steel producers, at a discounted price to current spot market rates, said China National Coal Association (CNCA).

    http://www.sxcoal.com/news/4550113/info/en
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    Shanxi Coking Coal, CCB sign debt-to-equity swap agreement


    Shanxi Coking Coal Group, a leading coal producer in northern China's Shanxi province, has signed a framework debt-to-equity swap agreement with China Construction Bank, said the company on its website on December 9.

    It is the first debt-to-equity deals in Shanxi province involving a state-run firm after the State Council rolled out relevant guidance in October.

    Shanxi Coking Coal Group will set up two funds totalling 25 billion yuan ($3.62 billion) with China Construction Bank as part of the agreement, according to the company.

    One of the funds will be mainly used for reducing debt-equity ratio and fiscal expenditures of the group, which may contribute to an enhancement of its capital strength.

    The other fund is expected to bolster the integration of its businesses and strengthen comprehensive competition.

    The cooperation will vigorously promote the supply-side structural reform of the group, and speed up its transformation and upgrading.

    http://www.sxcoal.com/news/4550176/info/en
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    China puts temporary ban on North Korean coal imports


    China's Commerce Ministry said it will put a temporary ban on imports of North Korean coal as part of a U.N. Security Council resolution meant to deter Pyongyang from pursuing its nuclear weapons program, Reuters reported on December 11.

    The 15-member Security Council late last month put new sanctions on North Korea aimed at cutting its annual export revenue by a quarter, after it carried out its fifth and largest nuclear test so far in September.

    China would slash its imports by some $700 million compared with 2015 sales under the new sanctions, according to diplomats.

    The ban will be in effect until the end of the year, though coal shipped before Dec. 11 that was yet arrive at Chinese customs would be exempt, said the ministry in a short statement on its website on December 10.

    Over the first ten months of this year, China imported 18.6 million tonnes of coal from North Korea, up almost 13% from a year ago.

    Coal is one of North Korea's only sources of hard currency and its largest single export item.

    North Korea has said any sanctions against its missile or nuclear programmes are a violation of its sovereignty and right to self-defense.

    http://www.sxcoal.com/news/4550157/info/en
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    Brazil grants operating license to Vale’s massive S11D iron ore mine


    Iron ore giant Vale scored Friday a key win after the Brazilian government granted the company a 10-year operating license for its flagship project in the Amazonian state of Para, known as S11D.

    S11D is set to start operations before year-end, with first shipment expected in January 2017.

    According to a document published on the country’ federal environment body Ibama's website (in Portuguese), the massive operation will produce 90 million tonnes a year. That compares to the company’s overall target of 340–350 million tonnes in 2016.

    Vale, which already is the world’s largest iron ore producer, said the license was an important milestone in consolidating the company’s position “as the producer with the lowest C1 cash cost in the industry." The miner was referring to a standardized cost of production that excludes freight and royalties.

    Last year Vale told investors S11D would push the company's cash costs per tonne to below $10 from the current $12.30.

    S11D is Vale's largest-ever investment, valued in some $17 billion. It is expected to start operations before year-end, with first shipments slated for in early 2017.

    http://www.mining.com/brazil-grants-operating-license-to-vales-massive-s11d-iron-ore-mine/
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    China's Nov steel exports edge up on improved global demand


    China exported 8.12 million tonnes of steel products in November, falling 15.5% year on year but edging up 5.5% month on month, showed the latest data from the General Administration of Customs (GAC).

    The demand from abroad has improved, as the Eurozone countries and the U.S. has seen a recovering economy. The PMI for global manufacturing stood at 52.1 in November, up from 52 a month ago.

    Meanwhile, the global steel prices were pushed higher by downsizing steel exports from China in recent months, which in turn tempt the country to export more. The devaluation of RMB also made Chinese steel products more competitive in global market.

    Total exports of steel products dipped 1% year on year to 100.68 million tonnes in the first eleven months, data showed.

    China imported 1.11 million tonnes of steel products in November, climbing 20.65% year on year and up 2.78% from October; imports over January-November stood at 12.02 million tonnes, gaining 3.6% from the year prior.

    China imported 91.98 million tonnes of iron ore in November, 11.99% higher than last year and up 13.84% from October. Over January-November, iron ore imports reached 935.24 million tonnes, rising 9.2% year on year.

    http://www.sxcoal.com/news/4550085/info/en

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    EU launches new investigation into Chinese steel imports


    The European Union has launched a new investigation into whether Chinese manufacturers are selling steel into Europe at unfairly low prices, a case Beijing said it viewed with deep concern.

    The European Commission has determined that a complaint brought by EU steel makers' association Eurofer regarding certain corrosion resistant steel merits an investigation, the EU's official journal said on Friday.

    The EU has imposed duties on a wide range of steel grades after investigations over the past few years to counter what EU steel producers say is a flood of steel sold at a loss due to Chinese overcapacity.

    An official at China's Commerce Ministry said Beijing attached a "high degree of attention and concern" to the case and that Europe's steel problems were due to weak economic growth. Blaming China's excess capacity was baseless.

    Wang Hejun, the head of the trade remedies investigation department at China’s Commerce Ministry, said in a statement on the ministry's website that Europe should rationally analyze the problems facing its steel industry.

    "It should not adopt mistaken trade protectionist measures that limit fair market competition," he said.

    Beijing is also irked because the investigation has been launched just days before the 15th anniversary of China's accession to the World Trade Organization, when it says new trade defense rules should apply.

    Under existing rules, the EU can compare Chinese prices with those of another country - in the current case it has chosen Canadian prices. However, Beijing insists this should no longer be possible from Dec. 11.

    The European Commission proposed last month a new way of treating China, but its proposals still await approval from the EU's 28 members and the European Parliament.

    Some 5,000 jobs have been axed in the British steel industry in the last year, as it struggles to compete with cheap Chinese imports and high energy costs.

    G20 governments recognized in September that steel overcapacity was a serious problem. China, the source of 50 percent of the world's steel and the largest steel consumer, has said the problem is a global one.

    In October, the European Commission set provisional import tariffs of up to 73.7 percent for heavy plate steel and up to 22.6 percent for hot-rolled steel coming from China. Those investigations are set to conclude in April.

    In anti-dumping cases, the Commission typically has up to nine months to determine whether there are grounds for imposing provisional duties on a product and then a further six months to determine whether duties should apply as long as five years.

    http://www.reuters.com/article/us-eu-china-steel-idUSKBN13Y0ZJ
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    India's steel minister says not in favour of protectionist moves


    India's debt-laden steel industry should not take the government's protectionist measures for granted and need to raise their efficiency to compete with foreign companies, the country's steel minister told Reuters in an interview on Friday.

    The government has imposed various duties and quality controls on imports over the past two years to stop the inflow of cheap steel from countries such as China, the world's biggest producer burdened with a massive oversupply.

    "In my view (protectionist measures) should not be there even for a month, but I have to see the overall position of the industry," minister Chaudhary Birender Singh said in his office.

    "I've made it very clear to the industry that on one hand, we are giving this much of protection but on the other hand, I want a roadmap where you can improve upon your efficiency ... (to) narrow down the cost of production and sale price."

    Goutam Chakraborty, analyst at Emkay Global Financial Services in Mumbai, said Indian companies typically produce commodity-grade steel with lower returns and are less efficient than foreign companies producing high-end steel.

    BAD DEBTS

    India's steel sector still accounts for 28 percent of banks' stressed loans, Singh said, but the government measures have helped local companies including JSW Steel, Jindal Steel and Power, Tata Steel and state-run SAIL to raise prices and improve margins.

    Lenders now want the government to help the steel sector with more steps to expedite the recovery of their loans, including by asking state companies such as SAIL to buy some sick private steel assets or manage their operations.

    Singh said loss-making SAIL or fellow state steel maker RINL were not in a position to buy any assets of private companies struggling to repay loans, but they could help with "expertise" or people.

    "It's very strange. When banks advanced loans to these companies, they never consulted me. (But the) responsibility (of sorting the bad loans) now rests with the steel ministry."

    The government expects India's steel-making capacity to rise over a third to around 160 million tonnes by mid-2018, for which SAIL will need to speed up its capacity increase that Singh said had not been satisfactory.

    The company recently signed a technical agreement with South Korean steel maker POSCO, which Singh hopes will help raise output.

    The minister also said Japan and South Korea were keen to invest in India's steel sector and their officials have already met with him.

    http://www.reuters.com/article/india-steel-idUSL4N1E437H
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