Mark Latham Commodity Equity Intelligence Service

Monday 3rd April 2017
Background Stories on www.commodityintelligence.com

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    Macro

    China says pollution inspectors find firms falsifying data


    China's air quality inspectors found problems at more than 3,000 companies in the first three months of this year, of which a large proportion were found to be falsifying data, the environment ministry said on Friday.

    The Ministry of Environmental Protection said it checked more than 8,500 firms in six municipalities and provinces including Beijing and central Henan, and found that many were not implementing air pollution control measures strictly or were still violating environmental regulations.

    Some companies, including a firm owned by Foxconn subsidiary FIH mobile in Hebei province's Langfang city, tried to stop inspectors from making checks, the ministry said. Others were found to be deliberating reporting false data, it said in an online statement.

    A representative for Apple supplier Foxconn said the company was not able to comment immediately in response.

    China says it is winning its "war on pollution" after strengthening legislation, beefing up its monitoring capabilities and cracking down on hundreds of polluting firms, and says average air quality improved noticeably in 2016.

    However, official data published last week showed that air quality was markedly worse in the first two months of the year than the same period of 2016.

    Throughout January, high winter coal consumption combined with unfavorable weather conditions to create heavy smog build-ups throughout northern China, especially in heavily industrialized Hebei province that surrounds Beijing.

    That forced dozens of cities in the region to issue "red alerts" designed to curb industrial activity and thin traffic.

    http://www.reuters.com/article/us-china-pollution-idUSKBN17207B
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    China 2017 energy consumption may reach 4.4 bln T of standard coal equivalent


    China's energy consumption may reach 4.4 billion tonnes of standard coal equivalent in 2017, said the Electric Power Planning &Engineering Institute in the latest report on March 30.

    In 2017, China's primary energy output may reach 3.65 billion tonnes of standard coal equivalent, along with 150 billion cubic meters of natural gas and 1.9 trillion KWh of electricity, the report said.

    China consumed 3.23 billion tonnes of standard coal equivalent in 2016, according to the report.

    Among this, the transportation sector used 500 million tonnes of standard coal equivalent last year, up 3.9% year on year; building sector consumed 520 million tonnes of standard coal equivalent, up 7%.  

    The share of coal dropped 2% in the total energy consumption last year, while that of non-fossil energy and natural gas increased 1.4% and 0.3% year on year respectively.

    http://www.sxcoal.com/news/4554227/info/en
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    Zuma’s night of the long knives


    President Jacob Zuma has fired FinanceMinister Pravin Gordhan in his biggest Cabinet reshuffle yet since assuming office in 2009.

    In a brutal display of power, the president fired five ministers, including former tourism minister Derek Hanekom, who asked for Zuma to be recalled last year.

    He also appointed six new deputy ministers.

    Zuma now faces a revolt in his own party, with senior ANC leaders opposing his dramatic cuts to the executive authority. Former Cosatu leader Zwelinzima Vavi has called for a peaceful march to National Treasury in Pretoria on Friday at 10:00.

    Zuma has replaced Gordhan with Malusi Gigaba, the former home affairs minister, ANC Youth League leader and known Zuma loyalist.

    ANC MP Sfiso Buthelezi replaces Mcebisi Jonas as deputy finance minister.

    Buthelezi was advisor to Zuma during his years as MEC in KwaZulu-Natal, and former chairperson of the embattled Prasa.

    Zuma axed Gordhan and Jonas, despite opposition from his party and alliance partners Cosatu and the SACP.

    This week Zuma recalled Gordhan from an investor roadshow in London, stoking speculation that he was planning to recall the finance minister.

    Gordhan has been a vocal opponent of Zuma’s family friends, the Guptas, and was embroiled in three ongoing court cases with the family's companies.

    The ministers who lost their jobs are Gordhan, Lynne Brown (public enterprises), Dipuo Peters (transport), Tina Joemat-Pettersson (energy) and Ngoako Ramatlhodi (public service and administration).

    Both Gordhan and Brown were embroiled in litigation against the Gupta family.

    http://www.miningweekly.com/article/zumas-night-of-the-long-knives-2017-03-31
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    Former Brazil house speaker Cunha sentenced to 15 years for graft


    A federal court sentenced Brazil's former speaker of the lower house, Eduardo Cunha, to more than 15 years in prison on Thursday for corruption, making him the highest-profile political conviction yet in the "Operation Car Wash" scandal.

    The former politician's defense team said they would appeal the decision. Cunha will remain imprisoned pending appeal.

    Cunha, who drove the successful impeachment of former President Dilma Rousseff, was forced from his position as speaker in July and arrested in October on accusations he received millions in bribes from the purchase of an oil field in Benin by state-controlled oil company Petróleo Brasileiro SA.

    Over 200 people have been charged in the "Operation Car Wash" probe, a far-reaching investigation that centers on bribes and political kickbacks from contracts at Petrobras and other state firms. The Supreme Court is likely to approve soon the investigation of dozens of sitting politicians.

    In February 2015, Cunha, a member of President Michel Temer's Brazilian Democratic Movement Party (PMDB) that for a decade was the main member of left-leaning Workers Party (PT) governments, defied the wishes of his own coalition to run for and win the speakership of the lower house of Congress.

    Just six months later, he officially broke with the Rousseff administration, saying that she was using the Petrobras investigation as a tool of "political persecution" against him.

    As speaker, only Cunha could allow impeachment proceedings to begin against Rousseff, whom critics accused of breaking budgetary laws.

    He did just that in December 2015, just hours after PT deputies cast deciding votes for him to face an investigation by the House's ethics committee for lying about bank accounts he and his wife held in Switzerland.

    By May, Rousseff was impeached and Temer installed as successor. But Cunha could not shake free of corruption allegations that eventually led to his downfall.

    Once he was kicked out of congress, Cunha lost the privilege given to sitting politicians that only the badly overburdened Supreme Court can try them.

    His case was instead sent to crusading anti-corruption judge Sergio Moro, who has been the driving force behind Brazil's fight against graft. Moro has a reputation for plowing through cases efficiently, with over 98 percent of his convictions in Car Wash cases being upheld by higher courts.

    Cunha faces another trial for allegedly receiving $5 million skimmed from Petrobras contracts for two drillships in 2006 and 2007.

    Separately on Thursday, federal prosecutors leading the Car Wash probe for the first time accused a party of the civil crime of "misconduct in political office" for taking part in the Petrobas scheme.

    The authorities said they are seeking 2.3 billion reais ($731 million) from the Progressive Party (PP) for bribes its members received and for fines. Prosecutors are also demanding six sitting PP congressmen and four former deputies lose their offices and rights to run for office in the future.

    http://www.reuters.com/article/us-brazil-corruption-cunha-idUSKBN1712DX
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    Oil and Gas

    Iraq plans to reach 5 mln bpd oil output capacity before year-end


    Iraq plans to increase its oil output capacity to 5 million barrels per day before the end of the year, Oil Minister Jabar al-Luaibi said on Sunday.

    Iraq will proceed in parallel with exploration plans to increase its reserves by 15 billion barrels in 2018, to reach 178 billion barrels, Luaibi told an energy conference in Baghdad.

    Among the plans to increase output capacity from existing fields is a sea water injection plan which is in process of being tendered, he said.

    http://www.reuters.com/article/iraq-energy-idUSB2N17701B
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    Angola heavy-light crude spreads widen as Asian oil demand softens


    After a couple of months of increasing values, Angola's heavy crudes, which had been outperforming lighter barrels, have seen demand falter, allowing the heavy-light spread to widen again.

    "The heavies have to come off now -- the spread has to return to where it was," said a West African crude trader.

    The price spread between the two ends of the complex had reached multi-year lows on strong Chinese demand for heavy grades during the past two trading cycles in March and April.

    This came as Chinese buyers looked to find alternatives to heavy, sour Middle East crudes whose supply has been limited by OPEC's production cut agreement and with strong fuel margins in the region.

    But the heat has dissipated from the market for the heaviest Angolan grades such as Dalia, which has seen spot offers from state-owned company Sonangol drop from an initial offer of Dated Brent plus 10 cents/b to Dated Brent minus 20 cents/b.

    Other medium-light grades such as Girassol and Cabinda, have not seen the same pressures, said traders, with both grades grades clearing cargoes at a faster pace than Dalia.

    Dalia was assessed Wednesday at a discount of 80 cents/b FOB to the 30-60 day Dated Brent strip, S&P Global Platts data showed.

    Girassol, a light grade, was assessed at a discount of 5 cents/b to the 30-60 day Dated Brent strip. The spread is currently at a 70 cents/b discount, but reach its narrowest point during January 26-February 2, when it was at a 20 cent/b spread.

    The Dalia-Cabinda spread was seen to be 55 cents/b discount on Wednesday, a 35 cents/b drop from its narrowest point at 20 cents/b during the period February 28-March 6.

    Similarly, other heavy-light Angolan grade spreads have also tightened. The discount of heavy grade Hungo -- currently assessed at a discount of 60 cents/b to the 30-60 day Dated Strip -- to Girassol is at 60 cents/b, 30 cents wider than where it was during the period of March 2-March 22.

    The one exception to the heavy-light spread story is Nemba, the lightest of Angola's crude oil grades assessed on spot, which has struggled to find buyers in May, according to traders.

    http://www.platts.com/latest-news/oil/london/angola-heavy-light-crude-spreads-widen-as-asian-26699059?utm_source=twitter&utm_medium=social&utm_term=oil&utm_content=news&utm_campaign=news-article&hootpostid=f5fc05735bd0abc96413eff0658d3b67
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    Deepwater emerging as competitor to tight oil plays - Wood Mackenzie


    According to a recent Wood Mackenzie report, a leaner and more cost-competitive deepwater industry is emerging from the downturn, with the most attractive projects now competing with US tight oil plays.

    This year should see a noticeable pick-up in deepwater project sanctions, with three projects – Mad Dog Phase 2, Kaikias, and Leviathan – already fully approved.

    The analyst firm estimates that on average global deepwater project costs have fallen just over 20% since 2014. Assuming a 15% internal rate of return hurdle (NPV15), 5 Bbbl of pre-sanction deepwater reserves now breakeven at $50/boe or lower.

    By comparison, there are 15 Bbbl of tight oil resource in undrilled wells with breakevens of $50/boe or lower at a 15% hurdle rate in Wood Mackenzie’s dataset. However, the playing field between tight oil and deepwater is about to get a lot more level. There is still considerable scope to drive deepwater breakevens lower through leaner development principles and improved well designs, but in tight oil cost inflation is back with a vengeance.

    Wood Mackenzie estimates that a further 20% cut in current deepwater costs would bring 15 Bbbl of pre-FID reserves into contention, on par with tight oil. The deepwater value proposition will strengthen as tight oil cost inflation returns. A 20% rise in tight oil costs would mean that the two resource themes effectively have the same opportunity set measured by volume in the money at $60/boe.

    Angus Rodger, Asia-Pacific upstream research director at Wood Mackenzie, said: “We are at last beginning to see the first signs of recovery in deepwater, driven primarily by cost reduction and portfolio high-grading. Projects in the US Gulf of Mexico in particular have made significant strides, with many reducing NPV15 breakevens from above $70/boe to below $50/boe.

    “This is not just a result of cheaper rig day rates. Of far greater impact are the steps the industry in the Gulf of Mexico and elsewhere have taken to re-evaluate project designs and improve well performance. We are now seeing scaled-down projects emerge with less wells, more subsea tiebacks, and reduced facilities and capacities – and this all translates into lower breakevens.”

    The slowdown has also changed the structure of the deepwater industry. While it is slowly getting leaner, it is also getting smaller. More than 70% of the 45 pre-FID projects targeting sanction over the next few years are operated by just eight companies – Brazil’s Petrobras and the seven majors (ExxonMobil, Chevron, Shell, BP, Total, Eni, and Statoil). This is due to the exit of many independents from the sector because of either cost pressure or a re-allocation of capital to tight oil plays.

    In a capital-constrained world, fewer operators inevitably mean less deepwater projects flowing through to sanction. Only the most cost-competitive projects and regions will attract new investment.

    http://www.offshore-mag.com/articles/2017/03/report-finds-deepwater-emerging-as-competitor-to-tight-oil-plays.html
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    $ 20b investment in South Pars to be put to use soon: Minister


    Minister of Petroleum Bijan Zangeneh said here on Thursday that 20 billion dollars of investment made in oil industry will be put to use in near future.

    He made the remarks on the sidelines of a visit to South Pars projects in the southern province of Bushehr.

    Zangeneh told reporters that in the new Iranian year (which began on March 21), big developments and historic events will take place in the country’s oil industry.

    He said that phases 12, 15, 16, 17, 18, 20, 21 and 19 of South Pars were among priorities of Petroleum Ministry and now all of them have been launched.

    With new phases of South Pars being operational, we successfully passed winter time without any gas shoratge although gas imports decreased compared with the previous year.

    http://www.irna.ir/en/News/82477850/
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    Shell shuts Bonny Light oil export line to remove theft points


    The Nigerian subsidiary of Royal Dutch Shell Plc said it had shut down the Nembe Creek Trunk Line, which exports Bonny Light crude oil, in order to remove theft points.

    The managing director of Shell Petroleum Development Company (SPDC) said the company was working to "remove a significant number of oil theft connections and repair any leaks on pipeline."

    The line is one of two, along with the Trans Niger Pipeline, that carries Bonny Light crude oil to the export terminal. Exports of roughly 232,000 barrels per day (bpd) were planned in April, according to loading programmes, but it was not immediately clear how much of this would be impacted by the pipeline shutdown.

    "SPDC will work with the security forces during shutdown to clear illegal connections on NCTL," SPDC said.

    http://www.reuters.com/article/nigeria-oil-idUSL3N1H84F9
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    Glencore in talks to sell global oil storage stakes - sources

    Glencore in talks to sell global oil storage stakes - sources

    Swiss-based trading and mining giant Glencore is selling a bundle of its global oil storage stakes, sources told Reuters, following similar moves by rivals as a boom period for storage shows signs of nearing to an end.

    Demand for storage exploded following the oil price plunge in 2014 because the abundance of crude for immediate delivery meant traders could make millions by buying oil cheaply and storing it to resell later as prices recover.

    As the Organization of the Petroleum Exporting Countries (OPEC) decided to cut oil output at the end of 2016 to prop up prices and help ease the global glut, the market balance began to change.

    Today, future prices are no longer trading at a steep premium to immediate prices, thus reducing the appeal of storing oil and prompting some of Glencore's rivals to reduce exposure to storage assets, including Vitol and Gunvor.

    If the sale reaches completion, Glencore will likely end up with minority stakes in the assets. The company owns much of its storage terminal interests via joint ventures and is selling half of these stakes, the sources familiar with the sale said.

    A spokesman for Glencore declined to comment.

    "It's an exotic combination of assets with a variety of functions, mainly storage. It's most, if not all, of Glencore's global liquid storage," one source said.

    The portfolio includes assets in Argentina, Belgium and Madagascar, the source said.

    "As a bundle it would appeal to someone looking for an entry point to certain countries," the source added.

    The source said the assets were generating EBITDA or core earnings of around $75 million a year.

    Glencore and other trading houses with large storage assets compete with listed storage firms such as Vopak NV, Magellan Midstream Partners LP and Kinder Morgan Inc.

    Given a limited number of listed storage firms, price to earnings (P/E) ratios in the sector tend to vary significantly between as low as 7 and as high as 15, which in theory could give Glencore's storage assets a value of between $0.5-$1.1 billion.

    Lately, some of Glencore's competitors have been divesting similar assets. Vitol, the world's largest independent oil trader, sold a 50 percent stake in its terminal and infrastructure company VTTI to Buckeye Partners in October last year.

    Swiss trader Gunvor is looking to sell a stake in a Rotterdam storage terminal and Trafigura is considering an IPO for downstream company Puma Energy, in which it holds a major stake.

    http://www.reuters.com/article/us-glencore-assets-sales-idUSKBN1721AK
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    Hyundai Heavy Industries develops new LNG regas system


    South Korean shipbuilding giant Hyundai Heavy Industries said it has developed a new liquefied natural gas (LNG) regasification system.

    The shipbuilder on Friday held a demonstration ceremony for the installation of the regasification system using glycol at a 170,000-cbm floating storage and regasification unit (FSRU) at its Ulsan shipyard.

    “Since the glycol regasification process is free from saltiness unlike a system that uses seawater, it can minimize corrosion in major equipment including heat exchangers, and it can also lower the risk of explosion that a system using propane may be exposed to,” Hyundai Heavy said in its statement.

    The statement notes that an LNG regasification system is a key part of an LNG FSRUs that receives the chilled fuel from offloading LNG carriers and provides natural gas send-out through pipelines to shore.

    Hyundai Heavy has secured an approval in principle (AIP) for its regasification system from Lloyd’s Register last month and has applied for a patent at home and abroad.

    The shipbuilder said it was also in the process of receiving the recognition for the system from other major classification societies as well.

    Hyundai Heavy had delivered the world’s first newbuilding LNG FSRU to Norway’s Hoegh LNG back in 2014. It also claims that it is the only Korean shipbuilder that can both build membrane and moss-type LNG carriers.

    http://www.lngworldnews.com/hyundai-heavy-industries-develops-new-lng-regas-system/
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    SGX, Tullett Prebon launch spot LNG index for Dubai, Kuwait and India

    SGX, Tullett Prebon launch spot LNG index for Dubai, Kuwait and India

    Singapore Exchange and London-based interdealer broker Tullett Prebon have launched a liquefied natural gas (LNG) spot index for Dubai, Kuwait and India.

    The collaboration, that was announced earlier this year, seeks to “enhance price discovery and risk management” in one of the fastest-growing regions for spot LNG trading.

    “The DKI Sling offers a transparent and trusted reference price for LNG Delivered Ex-Ship under flexible terms to key ports in the three countries, complementing an increase in spot trading volumes,” SGX said in a statement on Friday.

    The new offering will seek to provide an independent physical price marker as the industry moves away from oil-linked pricing and towards gas-on-gas pricing.

    SGX’s wholly owned subsidiary, Energy Market Company (EMC), as the index administrator, will publish the DKI Sling every Monday and Thursday. The first print on 30 March was $5.421/mmBtu.

    The DKI Sling is the third in the SGX LNG Index Group or Sling series of indices.

    It follows the Singapore Sling launched in October 2015, which serves as a reference point for the developing South-East Asian market, and the North Asia Sling introduced in September 2016, which delivers a price for the traditional centre of global LNG demand.

    http://www.reuters.com/sectors/basic-materials
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    India to cut Iranian oil purchases in row over gas field


    Indian state refiners will cut oil imports from Iran in 2017/18 by a fifth, as New Delhi takes a more assertive stance over an impasse on a giant gas field that it wants awarded to an Indian consortium, sources familiar with the matter said.

    India, Iran's biggest oil buyer after China, was among a handful of countries that continued to deal with the Persian Gulf nation despite Western sanctions over Tehran's nuclear programme.

    However, previously close ties have been strained since the lifting of some sanctions last year as Iran adopts a bolder approach in trying to get the best deal for its oil and gas.

    Unhappy with Tehran, India's oil ministry has asked state refiners to cut imports of Iranian oil.

    "We are cutting gradually, and we will cut more if there is no progress in the matter of the award of Farzad B gas field to our company," one of the Indian sources said.

    Indian refiners told a National Iranian Oil Co (NIOC) representative about their plans to cut oil imports by a fifth to 190,000 barrels per day (bpd) from 240,000 bpd, officials present at the meeting said.

    Indian Oil Corp and Mangalore Refinery and Petrochemicals Corp will reduce imports by 20,000 bpd each to about 80,000 bpd. Bharat Petroleum Corp and Hindustan Petroleum Corp will together cut imports by about 10,000 bpd to roughly 30,000 bpd, they said.

    In turn, NIOC threatened to cut the discount it offers to Indian buyers on freight from 80 percent to about 60 percent, the officials added.

    No comment was available from the Indian companies or NIOC.

    Cutting imports from Iran amid an OPEC-led supply cut aimed at propping up the market exposes India's refiners to the risk of struggling to find reasonably priced alternatives.

    "We expect that the market is currently undersupplied and that the draws in inventory are coming," U.S. investment bank Jefferies said in a note to clients this week, adding it expected crude prices of around $60 a barrel by the fourth quarter.

    Despite this, Indian oil industrials said they saw no major impact from cutting Iranian imports, mainly due to their specific requirements.

    "Their main requirement is lighter oil, and light oil will remain in oversupply despite OPEC cuts, as OPEC cuts are mainly medium heavy sour," said Ehsan ul Haq of KBC Energy Economics.

    Prices of light crude have fallen recently, thanks largely to soaring output in the United States, which is not involved in the production cuts led by the Organization of the Petroleum Exporting Countries.

    From April last year to February 2017, India imported 542,400 bpd from Iran, compared to 225,522 bpd a year earlier. Average oil volumes supplied by Iran over this period were the highest on record.

    INDIA'S GAS PLAN

    At the heart of the spat is that a group of Indian oil companies headed by Oil and Natural Gas Corp wants to develop Iran's Farzad B gas field.

    Iran has yet to hand out a concession that would allow its development.

    ONGC Videsh has submitted a $3 billion development plan to Iranian authorities to develop the offshore field estimated to hold reserves of 12.5 trillion cubic feet, with a lifetime of 30 years.

    Under sanctions, Iran was banned from the global financial system, preventing the field's development.

    India was one of a few countries still supplying Iran with goods, devising a complex payment mechanism to help Tehran access non-sanctioned items including medicines.

    As new options have opened up for Tehran since the lifting of sanctions, Iran may now be awaiting better bids for Farzad B.

    "They (Tehran) are playing hardball ... We don't see any forward movement on that (Farzad B)... So we have reduced (crude) imports," the Indian official said.

    http://www.reuters.com/article/india-oil-idUSL3N1H53D4
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    Rig count up 15; Louisiana, Texas lead

    Rig count up 15; Louisiana, Texas lead

    The number of oil and gas rigs in U.S. fields rose for the 11th straight week as oil companies, especially in Texas and Louisiana, continue to drill despite a recent dip in oil prices.

    This week’s U.S. count jumped 15, a boom of 420 rigs since its recent low last spring. U.S. oil drillers collectively sent 10 more rigs into the patch this week, the Houston oilfield services company Baker Hughes reported Friday. Gas drillers rose by five.

    Texas added seven rigs, mostly in West Texas’s prolific Permian Basin, and Louisiana added six.

    The total rig count rose to 824, up from a low of 404 in May, and up 374 year over year.

    The number of active oil rigs jumped to 662 this week. Gas rigs rose to 160. The number of offshore rigs is up four, down four year over year.

    Outside of Texas and Louisiana, Alaska added three rigs and New Mexico two. Colorado lost two; North Dakota and Utah lost one.

    Drilling activity has continued to rise despite a recent dip in oil prices.

    http://fuelfix.com/blog/2017/03/31/rig-count-up-15-louisiana-texas-lead/
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    Where have drilling costs dropped the most? Midland Basin, of course

    Image title


    The costs of producing oil in the major U.S. shale fields have dropped by almost half over the past two years, but none as much as West Texas’ Midland Basin, a part of the prodigious Permian.

    Drillers in the Midland, the eastern section of the Permian Basin, used to produce oil for about $71 a barrel, according to a new report by the Norwegian energy research firm Rystad Energy. Last year, that cost dropped by half, to $36 a barrel.

    More than half of that savings — 57 percent — comes from lower drilling prices, as operators have squeezed oil field service companies during the two-year-old oil-price crash, Rystad said. Efficiency improvements have cut another one-quarter of the costs.

    And the last one-fifth come from a practice known as “high-grading,” when oil companies move drilling operations to their best land.

    Essentially, as oil prices crashed in 2014, companies stopped drilling. When they restarted, they picked spots with the most oil, where they knew they’d get their best returns — what they call “core” acreage.

    In 2014, according to Rystad, companies drilled in core acreage about 60 percent of the time.

    Last year? 80 percent.

    Moreover, as companies moved into core acreage, wellhead breakeven prices dropped.

    http://fuelfix.com/blog/2017/03/31/where-have-drilling-costs-dropped-the-most-midland-basin-of-course/

    Attached Files
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    Alternative Energy

    A New Wave of Renewable Energy Revolution in Europe


    The Northumberland coast near Blyth is poised to be linked to Norway by the world’s longest undersea power cable of around 450 km in length. The Norwegian mountain has a tunnel being constructed that would cross national borders and link to a new grid. The major project would connect the massive hydroelectric power supplies of Norway to Britain via passing of power lines drilled through the mountain near Kvilldal.

    The project is still under way and would take years to complete. But on completion, it is reported that the UK would be able to import around 1,400 megawatts of electricity that would be sufficient to power over 750,000 homes. The project would also allow Britain to export surplus wind energy to Norway.

    A new wave of revolution in renewable energy across Europe is evident with this. There is a steady development of an international power grid across national electricity networks by using power interconnectors, to trade surplus energy by allowing prime wind power producers in northern Europe. This includes trading electricity with large solar energy generators in southern Europe.

    It is reported that the UK would be plugged into the network by using interconnectors to Belgium, Ireland, the Netherlands, and France. A highly ambitious project involves the use of a subsea cable of around 1,000 km in length to connect Britain to the profuse supply of geothermal and hydroelectric power of Iceland.

    The international power grid is featured with dependable supplies, smoothening out of intermittent power that is produced from renewable sources like wind and solar energy. It is also poised to give Britain more secure power sources with the shutting down of nuclear and coal plants.

    This, in theory, can also help to decrease the wholesale energy price due to the high availability of low-cost renewable power generated.

    Attached Files
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    Hanergy seeks trading resumption as parent pays down overdue cash


    Hanergy Thin Film Power Group, the solar panel maker being investigated by Hong Kong's securities regulator, said its parent had paid down some overdue debt, part of a push to end an almost two-year share trading suspension.

    Parent Hanergy Holding paid 1.5 billion yuan ($218 million) in overdue trade receivables on March 10, reducing the overdue amount owed to about HK$3.2 billion ($412 million), Hanergy said in a securities filing late on Thursday.

    Founder and former Chairman Li Hejun also signed a "deed of guarantee" committing to pay the remainder of the funds over a period of two years after shares in Hanergy resume trading. Li pledged 1.4 billion Hanergy shares as collateral on the payment agreement.

    Hanergy has been engulfed in controversy since it asked the Hong Kong stock exchange to suspend trading in its shares on May 20, 2015, after the company lost half its $40 billion market value in just 24 minutes. Eight days later, Hong Kong's Securities and Futures Commission (SFC) said it was investigating Hanergy's "affairs" and subsequently directed the bourse to extend the suspension indefinitely.

    The regulator has set two requirements to allow trading to resume: one that Li and four Hanergy directors "not contest liability" and court orders barring them from managing any corporations in the city, and another for Hanergy to release detailed information about its finances.

    Li and the four directors said in January they would not contest the SFC's suit, while Hanergy also reiterated it was working on the disclosure document detailing information on its business, financial performance and prospects to address the SFC's concerns.

    The company said in the filing it posted HK$251.6 million of profits in 2016, reversing a HK$12.2 billion loss in 2015 that was weighed down by a plunge in revenue and HK$9.7 billion in goodwill impairments after it failed to deliver a production line to its parent and controlling shareholder.

    The company had HK$248.7 million in cash and equivalents at the end of 2016. It also had HK$6.8 billion worth of trade receivables, with HK$3.9 billion of those owed by its parent Hanergy Holding and other affiliates and the vast majority more than one year past due, according to the filing.

    Hanergy's auditor, Ernst & Young, issued a so-called "qualified opinion" on the 2016 results, because it was "unable to obtain sufficient appropriate audit evidence about the recoverability of the group's remaining trade receivables and gross amount due from contract customers" worth about HK$6.2 billion, the company said.

    Auditors typically issue a qualified opinion when they believe the financial information is not complete.

    http://www.reuters.com/article/hanergy-tfp-debt-idUSL3N1H82UI
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    Agriculture

    Global grain supply to cross 2.5 billion mt on large carryover: IGC

    Global grain supply to cross 2.5 billion mt on large carryover: IGC

    The world's total grain (wheat and coarse grain) supply in 2016-2017 and 2017-2018 will cross 2.5 billion mt amid record harvest and high carryover stocks, according to a report released by the International Grain Council.

    Despite a 3% drop in 2017-2018 production and strong projected demand resulting in a lower estimated carryover, stocks are expected to reach the second highest level of more than 2.5 billion mt for the second consecutive year, IGC said.

    Wheat production in 2017-2018 is forecast at 735 million mt, down 2.52% from the 2016-2017 estimate.

    Meanwhile, wheat carryover is estimated at 513 million mt in 2016-2017, up 5 million mt from the volume forecast a month ago. In 2017-2018, wheat stocks are estimated at 484 million mt, down 5.65% from the latest estimates for 2016-2017.

    In terms of demand, wheat consumption by the food sector is expected to remain robust, up 1.35% at 502.9 million mt in 2017-2018.

    India is expected to reduce imports from 5.1 million mt in 2016-2017 (April-May) to 2 million mt in 2017-2018 amid expectations of higher local production.

    The world's second-largest wheat producer, India is expected to produce 95.5 million mt of wheat in 2017-2018, up 11% from last season, on higher acreage and expectations of improved weather compared with previous two season.

    Feed sector, on the other hand, is expected to contract 3.16% at 147.3 million mt in 2017-2018, according to the IGC.

    http://www.platts.com/latest-news/agriculture/singapore/global-grain-supply-to-cross-25-billion-mt-on-27803696
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    Turkmenistan opens potash plant, targets Chinese, Indian markets


    Turkmenistan opened a $1 billion Belarussian-built potash plant on Friday, aiming to export 1.2 million tonnes of fertilisers to China and India a year as part of its drive to diversify away from natural gas exports.

    The Central Asian nation has faced foreign currency shortages after its gas exports were hit hard by declining prices and volumes, and the government is banking on the start of potash production and other projects to make the economy more resilient.

    As a potash exporter, Turkmenistan will compete with its former Soviet overlord Russia, home to the world's biggest producer Uralkali, and Belarus, also a major global player.

    Belarussian companies have built the plant and Minsk has said it would help Turkmenistan market the product.

    Belarussian President Alexander Lukashenko attended the opening ceremony in eastern Turkmenistan and said most of the plant's production would be exported to China and India - the world's biggest potash importers.

    "This is Central Asia's biggest potash plant, one can confidently say it will produce 1.5 million tonnes a year," Lukashenko said, adding that Berdymukhamedov had told him about plans to build two more potash plants.

    Russia's Uralkali said this month it expected total global potash demand to rise by 1-2 million tonnes this year to 62 million to 63 million tonnes, driven by China.

    http://www.reuters.com/article/us-turkmenistan-potash-idUSKBN1720RZ
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    DuPont in asset-swap deal with FMC, delays close of Dow merger


    DuPont said on Friday it would swap some assets with FMC Corp to get clearance from the European Commission for its merger with Dow Chemical Co (DOW.N), and pushed back the closing date of its merger again.

    DuPont said it would sell part of its crop protection business to FMC and buy nearly all of FMC's health and nutrition unit in a deal that will fetch DuPont about $1.6 billion because of the difference in the value of the assets.

    DuPont said its $130 billion merger with Dow Chemical Co, which was expected to close in the first half of 2017, is now anticipated to close between Aug. 1 and Sept. 1.

    This is the third time that Dow and DuPont have had to push back the expected completion.

    The deal, which also includes DuPont divesting some of its research and development facilities to FMC, includes a cash portion of $1.2 billion and working capital of $425 million.

    The European Commission had been concerned that the merger of two of the biggest and oldest U.S. chemical producers would leave few incentives to produce new herbicides and pesticides in the future.

    http://www.reuters.com/article/us-du-pont-m-a-dow-fmc-idUSKBN1721AS
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    Precious Metals

    Argentine provincial Gov’t orders Barrick to halt operations at Veladero


    Argentina's San Juan province has ordered Barrick Gold to halt operations at its Veladero mine following the decoupling of a pipeline carrying gold and silver solution on the leach pad Tuesday night.

    In a brief statement Wednesday, Barrick said the incident was quickly addressed and that it posed no threat to the environment.

    Measure is temporary, pending more information on what happened and the possible consequences of the new incident, San Juan’s governor said.

    But San Juan’s governor, Sergio Uñac, told local newspaper La Nación (in Spanish) his decision was based on a conversation with the head of the province's mining police, who personally went to the mine on Wednesday and reported to him this morning.

    The authority noted the measure was just temporary, pending more information on what happened and the possible consequences of the new incident, the third issue affecting Veladero in less than 18 months.

    Operations at the mine were briefly halted in September after falling ice damaged a pipe, causing a spill containing cyanide.

    Earlier in the year, the Toronto-based miner had been ordered to pay a 145.7m pesos fine (about $9.8m at the time) over a cyanide spill at the same mine, which happened almost exactly a year before.

    When Barrick announced the fine in March last year, it said it had undertaken a plan to strengthen controls and safeguards at the mine, including increased water monitoring.

    Veladero, one of the largest gold mines in Argentina, produced 544,000 ounces last year. Proven and probable mineral reserves as of December 31, 2016, were 6.7 million ounces of gold, according to the company's website.

    http://www.mining.com/argentine-provincial-govt-orders-barrick-to-halt-operations-at-veladero/
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    New cost-slashing platinum technology ready to roll – Pallinghurst


    Years of diligent research and development has paid off for Pallinghust group platinum mine Sedibelo, which is now ready to implement an amazing new technology that will send platinum processing costs screaming down the cost curve, use a fifth of the electricity currently needed for smelting and throw caution to the wind when it comes to mining chrome-containing platinum ore.

    The new Kell process route takes cutoff grades far lower, extending mine life and saving the cobalt in the platinumgroup metals (PGM) mix from the destruction it currently suffers.

    By allowing an operation to go from mining to finished refined metal in a week, the process unlocks significant capital.

    Construction of a plant to facilitate the commercial implementation of the patented paradigm-shift technology – which has been 18 years in the making – will begin this year.

    Sedibelo in the North West province dispatched 165 000 oz of four element platinum group metals in the 12 months to December 31.

    Not only is the operating cost far cheaper, but so is the capital cost.

    The plant at Sedibelo, which will have a capacity to process 300 000 oz of platinum group metals (PGMs) a year, is budgeted to come in at less than $100-million.

    “We’ll turn the first sod this year and cut the ribbon in two years’ time,” Pallinghurst CEO Arne Frandsen told MiningWeekly Online in an exclusive interview on Friday.

    The development of Kell has accelerated in the last five years following the backing it received from Pallinghurst, South Africa’s State-owned Industrial Development and investors.

    The enormous volume of data has been gathered from running two pilot plants at Sedibelo for five years.

    “Without any hesitation, I can tell you that the study has firmly established that Kell is viable, technically doable and is exactly what is needed to transform the industry,” Frandsen said.

    Former Mintek researcher Keith Liddell, the developer of the technology, explained that the process carries out on the mine site what normally takes place in smelters and refineries.

    It does so by reconfiguring, in a slightly different way, standard unit operations that already exist in the industry.

    The substantial electricity saving is brought about by avoiding heating worthless gangue, as is done currently, and only expending a fraction of usual heat on the commercially valuable metals.

    Kell processes upper group two (UG2) reef Merensky reef, platreef, Zimbabwe’s Great Dyke reef, North America’s polymetallic ore and even refractory gold.

    The spinoffs on the gold side are that cyanide is not required in the processing and the output is 99.99% refined gold, with the potential to unlock major synergies in locations that host both PGMs and refractory gold.

    A slightly modified Kell is also successful for the reprocessing of the PGMs in recycled autocatalytic converters, which are recovered when the vehicles using them come to the end of their useful lives and are sent to the scrapyard.

    Cobalt, now in a strong potential earnings position because of its growing use in electric vehicles, is recovered with the use of the Kell system.

    “When you add up the numbers, cobalt is worth tens of millions of dollars a year,” Liddell noted.

    Because the presence of chromite is no issue at all, UG2 concentrators can be optimised for greater PGM recovery than when being forced to meet the chrome constraints in the concentrate.

    http://www.miningweekly.com/article/new-cost-slashing-platinum-technology-ready-to-roll-pallinghurst-2017-03-31
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    Base Metals

    Rio Tinto's copper boss sees small market deficit this year


    The copper market is likely to see a small shortage as early as this year because of a lack of new supply and the removal of up to 800,000 tonnes over the past 18 months in response to modest prices, Rio Tinto's copper and diamonds chief will say on Tuesday.

    A Reuters survey in January showed the copper market was expected to be in a surplus of about 80,000 tonnes this year and next.

    But Arnaud Soirat, chief executive of Copper & Diamonds for Rio Tinto, will take a more bullish view, according to excerpts of a speech seen by Reuters that he will deliver to the CRU World Copper Conference in Santiago on Tuesday.

    "We've seen the copper market rebalance in response to lower prices," he says.

    "In the last 18 months the industry has seen around 700,000-800,000 tonnes of price-related cutbacks and we now see the market moving into a small deficit this year," he said, referring to decisions to hold back copper production because it was not economic to produce it.

    After the commodity price crash of 2015, copper's recovery was less spectacular than for some commodities, such as coal and zinc.

    Copper rose 18 percent last year and has extended gains in 2017, boosted by the impact of strike action that has removed supply, as well as a lack of new investment.

    Rio Tinto CEO Jean-Sebastien Jacques has shifted the company's focus toward copper, saying the metal has long-term upside as the world improves electricity grids and electric vehicles gain market share.

    Soirat previously said the copper market would go into deficit by 2020, just when Rio Tinto's extension to the giant Oyu Tolgoi copper mine in Mongolia comes onstream.

    Before that, few new projects are foreseen.

    Soirat refers in Tuesday's speech to "limited new greenfield projects" over the next three to five years.

    "This - combined with grade decline and end of life closures over the next few years - means we see overall mine supply potentially plateauing before the end of the decade," he says, adding there could be "a substantial supply gap" at the start of the next decade.

    http://www.reuters.com/article/chile-copper-riotinto-idUSL2N1HA09J
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    Codelco output slips, but cost cuts boost earnings

    Codelco output slips, but cost cuts boost earnings

    Chile's state copper company Codelco posted a drop in annual copper production on Friday as ore grades declined at its key deposits, but cost cuts helped it swing to a profit for 2016.

    Codelco, one of the world's largest copper miners, said it produced 1.83 million tonnes of copper in 2016, of which 1.71 million tonnes came from its wholly owned mines. The company expects a similar level of output this year, Chief Executive Nelson Pizarro said at a news conference following the results.

    That 1.71 million-tonne figure is down around 1.4 percent from 2015, as the miner digs deeper and scrabbles through poorer quality ore to keep output flowing.

    But costs were lower, with reported production costs per pound of copper at $1.26 in 2016 from $1.39 in 2015.

    That, and a bumper fourth quarter, helped Codelco report a pretax profit for the year of $435 million, a significant rise from the previous year's historic loss of $2.19 billion.

    That was good news for the Chilean government, said Pizarro. Codelco was nationalized in the 1970s and returns all its profits to the state, providing an important source of income to Chile.

    "We have done what was required of us, and have not got in further debt ... despite the fall in ore grades and negative price factors until October," said Pizarro.

    But while positive, the results "did not change the challenging structural scenario" ahead, he said.

    Falling prices for copper in recent years have eaten into Codelco's earnings and forced it to delay some much-needed investment in ambitious projects.

    For 2017, Pizarro said Codelco expected to invest some $2.8 billion, adding the company plans to go ahead with a massive desalination plant in the northern desert mining region of Antofagasta.

    The project has received interest from a variety of major international actors, he said.

    http://www.reuters.com/article/codelco-results-idUSL2N1H80RR
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    Platts assesses Q2 Japan aluminium premiums at $128/mt plus LME, CIF


    Platts Friday assessed the premium for imported primary aluminium in the second quarter of 2017 at $128/mt plus London Metal Exchange cash, CIF main Japanese ports, up 35% from $95/mt plus LME cash, CIF, for Q1.

    The Q2 assessment was on the basis of 12 settlements at $128/mt plus LME cash CIF Japan for seaborne P1020/P1020A ingot loading over April to June, for a volume higher than 500 mt/month.

    The total volume for the 12 settlements was 9,500 mt/month or more. All of the settlements were under annual contracts in which the total volume was set for the year, but premiums are negotiated quarterly.

    Platts specifications are for all quarterly settlements on a CIF main Japanese port basis, negotiated prior to Q2 between two unaffiliated counterparties, for P1020/P1020A 99.7% primary aluminium ingot, with payment in cash against documents, for volumes of 500 mt/month or more.

    Three Q2 settlements were not taken into account for the assessment.

    These three deals were also reported to have closed at $128/mt plus LME cash CIF Japan, but were determined to have fallen outside Platts' specifications, as they were for value-added products.

    Around 20 companies, comprising Japanese trading houses, consumers and overseas suppliers, took part in the negotiations that began in February.

    http://www.platts.com/latest-news/metals/tokyo/platts-assesses-q2-japan-aluminum-premiums-at-27803680
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    Strongbow’s Cornwall-based South Crofty deemed shovel ready after completing water treatment trials


    TSX-V-listed tin project developer Strongbow Exploration has completed watertreatment trials at its South Crofty project, located in Cornwall, UK and is now working on an application to the UK Environment Agency (EA) for a mine waste permit.

    The company said Thursday it has hired global engineeringand project management consultancy WS Atkins to submit an application to the EA for a mine waste permit with waterdischarge consent. The application is expected to be filed within a month, and permits are likely to be issued before the end of summer this year.

    Once Strongbow receives a mine waste permit with waterdischarge consent, the South Crofty project will be fully permitted, with a mining license valid to 2071; planning permission to construct new surface process facilities; and the ability to dewater the mine.

    "This is an important step forward as Strongbow works to bring the South Crofty mine back into operation. The South Crofty team worked closely with the UK EA throughout the process and I am very pleased that we were able to develop a system to treat the mine water which met their very high standards. We have resounding local support in Cornwall and I look forward to updating shareholders and the local community during the summer," president and CEO Richard Williams stated in a press release Thursday.

    The water treatment trials were required by the EA to demonstrate that contaminated mine water could be treated, and dissolved metals and suspended solids collected before discharging mine water from the South Crofty mine workings into the Red River. The results of the trial successfully met all treated water target contaminant levels proposed by the EA.

    A February preliminary economic assessment (PEA) on the South Crofty project has calculated a net present value, at a 5% discount rate, of $130.5-million, and an internal rate of return of 23.4%, at assumed metal process of $10/lb tin, $2.65/lb copper and $0.90/lb zinc.

    South Crofty has estimated pre-production capital cost, including contingency, of $118.7-million, with payback of 3.8 years and sustaining capital costs of $83.8-million over the eight-year life of mine.

    The mineralised material mined in the PEA is 2.58-million tonnes containing 88-million pounds of tin equivalent, at an average grade of 1.55%.

    http://www.miningweekly.com/article/strongbows-cornwall-based-south-crofty-deemed-shovel-ready-after-completing-water-treatment-trials-2017-03-31
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    Steel, Iron Ore and Coal

    Coal exports disrupted in cyclone-hit Australia as floodwaters rise


    Damage to rail lines in cyclone-hit north-east Australia will take up to five weeks to repair, disrupting exports of the steel-making material from the world's largest coking coal region and putting pressure on global prices.

    The extent of the damage, which will hit coal mines operated by BHP Billiton Ltd and Glencore PLC, was revealed in the wake of deadly Cyclone Debbie, which left a disaster zone stretching 1,000 km (600 miles) after striking the region last week.

    Four people have died in the accompanying floods in the eastern states of Queensland and New South Wales, with police still looking for another three people.

    Coal hauler Aurizon Holdings said on Monday it would take up to five weeks to repair parts of its network of rail lines that connect mines to ports in Queensland, with alternative routes being considered for coal transported on the worst-affected Goonyella line.

    More than half of the state's coal - mostly coking coal, used for steel making - is transported via the Goonyella line which is crucial to BHP's local operations run in partnership with Japan's Mitsubishi Corp.

    Queensland accounts for more than 50 percent of global seaborne coking coal supplies, with most going to customers in Japan, China, South Korea and India.

    The supply disruption could lead to a rise in the spot price of hard coking coal, currently around $159 a tonne, and to higher than expected second-quarter contract prices between miners and steelmakers, analysts said.

    AME Group chief economist Mark Pervan said the export of 12 to 15 million tonnes of coal shipments could be affected by the rail outages.

    "We're talking 3 to 4 percent of global coking supply with a question mark over it," Pervan said. "It is certainly a surprise announcement. The market probably wasn't expecting quite such large outages."

    U.S.-based coal producer Peabody Energy Corp said its Queensland mines had restarted but it was too early to assess the impact of the rail outages on volumes and its results, as well as any price effects.

    Representatives from BHP, Glencore, Anglo American PLC and Rio Tinto could not immediately comment on the impact of the rail stoppages.

    HUMAN TOLL

    While the low pressure system is moving out to the Tasman Sea, persistent rain and run-off mean floodwaters continue to rise in some areas.

    "It's just debris everywhere, with piles of rubbish and desks and chairs and computers and all sort of stuff just pulled out of shops and put on the kerb," said emergency services worker Narelle Johnson, speaking to Reuters from the flooded town of Lismore.

    "I think in a lot of ways today is when it's really sort of starting to hit, but the town itself is really pulling together."

    The Insurance Council of Australia said nearly 20,000 claims had already been filed, with an early insured loss figure of A$224 million ($171 million), a number sure to rise.

    In the cyclone-hit tropics, Australia's Defence Force was helping to deliver medical personnel and supplies, while tens of thousands of people remain without electricity.

    At Rockhampton in Queensland, river levels are still rising and are due to peak on Wednesday, with major flooding predicted.

    http://www.reuters.com/article/australia-cyclone-coal-idUSL3N1HB02D
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    CIL to maintain capital expenditure for next year despite production slowdown


    Indian major Coal India Limited (CIL) will make a capital investment at around $ 1.3-billion during 2017/18, Coal Minister Piyush Goyalsaid.

    He said that annual capital expenditure budget was in the final stages and that CIL had taken all measures to ensure that the entire fund earmarked for capital expenditure was used during the year, without any spillover.

    As per official record, CIL’s capital expenditure for the current financial year would be an estimated $1.19-billion. This was apart from $780-million which was set aside for special projects including transportation infrastructure and planned foray into thermal power generation.

    Even the marginal rise in capital expenditure for the coming fiscal was significant since the miner was expected to close the current financial year, ending March, recording a production growth of 2.5% and a sales growth of 2%.

    The production growth for the current year was lower than 8.5% achieved in 2015/16.
    CIL officials out off-the-record attributed the lower production growth to mounting stocks estimated as on date at 100-million tones at both mine pitheads and with thermal power plants which had forced the miner to slow down production at key large mines.

    The Coal Ministry at start of the fiscal had set a production growth target of 11% for CIL based on the 8.5% achieved in the previous year.

    Though figures for 12 months of current year was still to be collated, data released earlier showed that the miner produced 488-million tonnes during April 2016 to February 2017, which was lower than the 535-million tonnes target set for the same period by the Coal Ministry.

    For 2016/17 the target was 598-million tonnes requiring a production growth of 11% but would be clearly be missed as the miner achieving a growth of just 2% during the year.

    http://www.miningweekly.com/article/cil-to-maintain-capital-expenditure-for-next-year-despite-production-slowdown-2017-03-31
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    Any U.S. border tax on steel would prompt complaint to WTO- Italy's Marcegaglia


    The implementation of a proposed border tax under discussion in the United States would be a reason to file a complaint with the World Trade Organisation (WTO), the chief executive of Italian steel firm Marcegaglia said on Friday.

    "A border tax would be a declaration of trade war that should be brought before the WTO, and when you start a war you don't know where you will end up," Emma Marcegaglia told reporters in Rome.

    Marcegaglia said it was still possible that the proposal would not be carried out, and that the issue could be resolved through trans-Atlantic negotiations.

    http://www.reuters.com/article/italy-usa-trade-steel-idUSL5N1H83AB
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