LONDON (BLOOMBERG) - The trading arm of Russia's gas giant Gazprom is under increasing pressure as clients and peers flee in response to the war in Ukraine, posing a risk for energy markets across Europe and Asia.
Gazprom Marketing and Trading, which has a unit in Singapore, is a huge trader of gas, liquefied natural gas (LNG) and power across Europe and Asia. It procures and trades wholesale energy from many sources, not just Russia.
The company is facing liquidity problems as banks delay its transactions and peers refuse to deal with it, according to source familiar with the matter.
Little known to the general public, Gazprom Marketing and Trading has revenues almost on par with the trading arm of Centrica, Britain's top energy supplier. If it goes out of business, it would bring down its British retail arm, a supplier to the National Health Service. The threat is so acute that the British government has made plans to nationalise the business, known as Gazprom Energy.
But Gazprom Marketing and Trading's failure would upend markets beyond its British domicile.
It holds billions of euros worth of hedges for Wingas, a sister company that is one of Germany's largest gas suppliers, said the sources. Losing these transactions would force the company, owned by Gazprom's German arm, to purchase energy for its clients at current high prices.
Gazprom Marketing and Trading also has units in Mexico, Switzerland, France and the United States, according to its website.
Gazprom Marketing and Trading Singapore accesses LNG for marketing across the Asia-Pacific region, improving the flexibility and value of the Russian LNG supplied from the Gazprom majority-controlled Sakhalin-2 project, its website says.
The backlash to Gazprom Marketing and Trading is happening even though the company has not directly been hit by Western sanctions. Britain this week included Gazprombank - which processes some energy deals - in its list of banned entities. While European countries including Austria and Germany have so far opposed penalties on oil and gas, traders fear the trading unit could be next.
Gazprom Marketing and Trading said it sources gas "in the European wholesale markets in exactly the same way as other market participants, and since the first quarter of 2021 we have not received gas under long-term contracts with Russia".
Wingas declined to comment.
European energy markets have been extremely volatile, with gas prices surging as much as 79 per cent in just one day earlier this month. Chaos would worsen if the company - with revenues of £2.6 billion (S$4.7 billion) in 2020 - fails, potentially defaulting on deals and forcing customers to step into the market to buy gas and electricity at prices several times higher than normal.
The LNG market would also feel the pinch. Gazprom Marketing and Trading has a subsidiary dedicated to trading the super-chilled fuel. In 2020, that unit had an international portfolio of supply and purchase deals including accords to take cargoes from the Sakhalin Energy plant in Russia's far east and Yamal LNG in the country's Arctic. It is also the sole marketer of product from a floating liquefaction plant in Cameroon.
The LNG business traded 113 cargoes in 2020. For comparison, German utility giant Uniper handled 225 loads in the same period.
Europe is laying out urgent plans to cut its reliance on Russian oil and gas as quickly as possible, no easy feat for a continent that has spent decades developing a heavy energy dependence on Moscow. Many companies, including giants like Shell and BP, are also "self sanctioning" by choosing not to sign new contracts for Russian supplies.
Here’s a strong argument for adding some gold bullion to your retirement portfolio right now, alongside those stocks and bonds.
And it comes courtesy of Pavel Zavalny, the head of the Russian parliament.
Zavalny spoke last week on the subject of all the economic and financial sanctions being levied against Russia following the invasion of Ukraine. Most of the coverage of his remarks implied that Russia might respond to the sanctions by switching from U.S. dollars to “bitcoin” BTCUSD, +3.37% BTCUSD, +3.37% for international trade.
But a look at the transcript being reported shows something quite different. Zavalny added bitcoin only at the end of a long list of other currency and trading options, almost as an afterthought.
(As you might expect. Not only is bitcoin new, ridiculously volatile, widely open to manipulation, and a massive drain on energy in a world facing an energy crisis, but it also offers no guarantee of privacy. Western authorities can track all transactions on the blockchain, with the result, for example, that they can even get back bitcoin ransoms.)
Much more interesting was Zavalny’s main point, even though it has been mostly overlooked. If other countries want to buy oil, gas, other resources or anything else from Russia, he said, “let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us, this is the national currency.”
In other words, Russia is happy to accept your national currency — yuan, lira, ringgits or whatever — or rubles, or “hard currency,” and for them that no longer means U.S. dollars, it means gold.
“The dollar ceases to be a means of payment for us, it has lost all interest for us,” Zavalny added, calling the greenback no better than “candy wrappers.”
What will this mean? Maybe nothing. Or maybe a lot. Especially if Russia’s lead is followed by countries such as China, India and others — countries that may not welcome Washington’s ability to control the global financial system through its monopoly power over the global reserve currency.
And this adds to the argument for having at least some gold in a long-term investment portfolio. No, not because it is guaranteed to rise, or maybe even likely to. But because it might — and might do so while everything else went nowhere, or went down. Like in a geopolitical or financial crisis where the non-western bloc decides to challenge America’s financial hegemony and ”king dollar.”
China already has the world’s biggest economy, by some measures. More than half the world’s population live in Asia. Why should they continue to pay America for the privilege of trading among themselves?
So far this year gold and commodities are up, while pretty much everything else, including large stocks, small stocks, REITs and government bonds, is in the red.
I am gold agnostic. I am neither a fanatical believer or a denier. I have some in my portfolio. But there is no question it has its uses. Gold is completely private. It is completely independent of the SWIFT or any other banking system. And despite the rise of cryptocurrencies, it remains the most widespread and viable global currency that is not controlled by any individual country.
Ten years ago we pointed out here that Vladimir Putin and the Russian central bank were buying a lot of gold bullion.
Recent events show they should have bought a lot more. When Putin’s army invaded Ukraine last month, Western powers froze the foreign exchange reserves that the Russian government held in their banks’ vaults. That amounted to about $300 billion worth, or nearly half of all of Russia’s reserves, according to finance minister Anton Siluanov.
That has left the country’s government struggling for money and the ruble has collapsed. Putin’s foreign minister called the move “thievery” and admitted it was unexpected.
But had Russia converted all its foreign exchange reserves to gold over the years, and relocated them to vaults underneath the Kremlin, it would have had no such worries. Despite some laughable suggestions that the West might somehow sanction “Russian gold,” there is no way of tracing the identity, nationality, or provenance of bullion. American Eagle coins or South African Krugerrands can be melted down into bars. Gold is gold. And someone will always take it. Carry a Krugerrand to any major city anywhere in the world and you will find people willing and eager to take it off your hands in return for any other currency you want.
Yes, as Warren Buffett has pointed out, gold is a completely unproductive asset, unlike stocks, bonds, farmland or whatever. But so is a suitcase full of yen, dollars, euros, pounds or yuan.
According to data from the World Gold Council, the gold industry’s trade association, the world’s stock of gold is worth about $13 trillion at current prices, which is about 16 times as much as the notional value of all the world’s bitcoin. Heaven knows what would happen to the value — and the price — if it began to rival the U.S. dollar again as a reserve currency. The world’s dollars are valued at somewhere around $37 trillion.
Meanwhile, daily trading volume of gold at current prices is about $160 billion, which dwarfs the bitcoin market, even in today’s boom, by somewhere between a factor of 6 and a factor of 40, depending on whose numbers you believe.
An intriguing case for owning some gold comes courtesy of Doug Ramsey, chief investment officer at Leuthold Group. His firm monitors, as a form of intellectual exercise, what it calls the “All Asset No Authority” portfolio. It’s what they reckon you’d own if you were a portfolio manager who was told effectively to own all the liquid asset classes and make no other conscious decisions. That AANA portfolio, Leuthold argues, would consist of equal weights in 7 different assets: The S&P 500 index of large U.S. stocks, the Russell 2000 index RUT, -0.79% of small U.S. stocks, an index such as MSCI EAFE EFA, -0.78% of large stocks in developed international markets (meaning Europe, Japan and Australasia), 10 Year U.S. Government bonds, real-estate investment Trusts, an index of commodities…and gold.
Anyone could replicate this easily by owning 7 low-cost exchange-traded funds: the SPDR S&P 500 ETF SPY, -0.02% , the Vanguard Russell 2000 ETF VTWO, -0.97% , the SPDR Portfolio Developed World ex-US ETF SPDW, -0.76% , the iShares 7-10 Year Treasury Bond IEF, +0.13% , Schwab U.S. REIT ETF SCHH, +0.76% , the iShares Bloomberg Roll Select Commodity Strategy ETF CMDY, -2.36% , and Aberdeen Standard Physical Gold ETF SGOL, -1.09% .
The argument is that one or two of these assets are always doing well at some point or another. The portfolio, Ramsey argues, minimizes the risk of disaster because there has never been a time when they all failed. (Even in the Great Depression bonds and gold did well.)
(I love the elegant theory behind AANA, though I wonder about its heavy U.S. focus. But what do I know?)
Such investment luminaries as Jeremy Grantham and hedge fund titan Ray Dalio have also made the case for owning some gold in a portfolio.
Another friend, a widely followed investment guru and strategist, told me kept his retirement portfolio for years allocated to just two assets. Two-thirds of the money was in a global stock portfolio, and the other third was in gold, he said. It was a protection against international policy errors and crisis. Gold, he argued, was the one thing that would do well when everything else failed. (Incidentally he later cashed out his portfolio to buy a property.)
In other words, the argument isn’t that we want to own all gold or mostly gold or even a lot of gold, but that we want at least to own some gold, simply for diversification.
(About a decade ago I was at a conference of financial journalists. One of the speakers mocked gold, and said “everybody” was already invested in gold. I interrupted him and asked for a show of hands in the room from anyone who owned any gold at all in their retirement portfolio. In a large room just two of us — the other, a former editor of MarketWatch — raised our hands.)
The case for gold is often undermined by its own die-hard supporters, known as ”gold bugs.” They sometimes ascribe quasi-religious status to the metal or claim it is the only “true” currency. Actually, anything can be a currency, and if we end up in Cormac McCarthy’s “The Road” I’ll bet we find that food, toilet paper, painkillers and drugs all become widely accepted. (Bitcoin? I have my doubts.)
But gold deniers go to the other extreme and argue it cannot be a currency or a sound investment at all. The current crisis shows just how wrong that is.
All wars end with political settlements. As the war in Ukraine drags on, some analysts argue that the country agreeing to political neutrality would serve as the basis for a peace pact with Russia.
Yet the devil of any settlement is in the details, and in this case, those details are devilish indeed. Neutralization along lines tolerable to Ukraine would be — so far — abhorrent to Russian President Vladimir Putin, while a neutrality settlement along lines tolerable to Putin would be a death sentence for independent Ukraine.
Neutralization has long had appeal as a way of resolving disputes over small, strategically located nations. The neutrality of the fledgling state of Belgium was guaranteed by the multilateral Treaty of London in 1839 (but eventually violated by Germany in 1914).
After World War II, Finland accepted curbs on its foreign policy to avoid full-scale incorporation into the Soviet bloc. In the 1950s, Austria was neutralized through a Cold War bargain. Both Austria and Finland subsequently leaned (sometimes quietly) more to the west than to the east, but neither side joined one of the alliance blocs that split Europe in two.
In theory, neutralization might make sense for Ukraine. Putin complained (disingenuously) that eastward encroachment of the North Atlantic Treaty Organization was one of his core grievances against the Kyiv government. In reality, Ukraine had little prospect of being admitted to the alliance, a fact President Volodymyr Zelenskiy has now acknowledged. So perhaps there could be a deal in which Putin ends the war in exchange for the formal neutrality of Ukraine, along with Kyiv’s recognition of Russian sovereignty over Crimea and Donbas.
Ceding land Russia controlled before the current fighting started might be doable: Zelenskiy presumably knows that he won’t get Crimea or Donbas back anytime soon. Diplomats can craft creative language that acknowledges Russian control over these areas without forcing Ukraine to formally recognize Moscow’s sovereignty.
The real problem has to do with conflicting visions of neutrality.
When Putin talks about neutralization, he isn’t talking solely about Ukraine’s alliance status. He envisions a Ukraine so weakened and disarmed that it cannot defend itself. Russian negotiators have proposed limiting the Ukrainian military to 50,000 troops, a fraction of its strength today.
Such concessions would probably lead to the destruction rather than the preservation of an independent Ukraine. A disarmed, perpetually vulnerable country would constantly fear that Putin — who set out to conquer all of Ukraine in this war — would simply try again when the timing was right. Indeed, the circumstances under which Zelenskiy might take such a deal would be so dire for Ukraine that Putin would feel little need to negotiate.
What would it take to make a neutral Ukraine viable? One of two things — either of which Putin would hate.
First, Ukraine could defend its own neutrality if it were armed to the teeth, so that it could do to any invading army what it is doing to Putin’s forces now. This would imply either the building of a far more advanced Ukrainian military-industrial complex, or the provision of lots of advanced weapons — antitank rockets, ammunition, air-defense systems and so on — as well as lots of financing and training by the West.
Alternatively, Ukrainian neutrality could be secured through great-power guarantees. Any promise Putin makes is meaningless, so promises to defend Ukraine if its neutrality is compromised would have to come from Washington, London and other Western powers. If you think that this sounds a lot like NATO membership, you are correct.
Neither option will appeal to Putin, because a Ukraine that can defend its neutrality, or ask Western powers to do so, is one he cannot easily control. Complicating matters further is another problem: Both sides think that time is on their side.
Wars end when combatants converge in their expectations about the future; for example, when country A and country B both realize that their conflict is hopelessly stalemated. Yet even if Russia’s offensives in Ukraine have mostly ground to a halt, there is no such convergence today.
Putin seems to think he can break Ukraine’s will through brutal siege tactics and threats of escalation, perhaps involving chemical or radiological weapons. He is using artillery and air attacks to try to destroy Ukraine’s economy and defense-industrial capabilities, as his forces reposition to press the offensive in the east. He still has powerful non-kinetic weapons, such as cyberattacks, that he can use against the West, and may hope that cascading economic turmoil will weaken his enemies’ enthusiasm for sanctions over time.
Ukraine has a different calculus. Its leaders believe the Russian invaders are overextended and vulnerable. Ukrainian forces are mounting counter-encirclement campaigns against the Russian units besieging Kyiv. Zelenskiy hopes, moreover, that sanctions will wreak increasing havoc on the Russian economy and defense industry. Ukrainian forces can keep fighting so long as they have that vital lifeline of arms and money from the West.
Zelenskiy and Putin both believe that they can get a better deal in the future than they can get today, whether that deal involves neutralization or not. They can’t both be right, of course. But until one is proven wrong, the war will continue — which means that things in Ukraine are likely to get much worse.
Bloomberg
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Chart of the Week
- Mobility levels in California have seen only meager growth in recent weeks despite a seasonal uptick taking place across the country, indicating that a prolonged period of high fuel prices would temper seasonality patterns.
- Gasoline retail prices have averaged $5.70 per gallon over the latest reporting week in California, some $1.50 per barrel above the national average, with current daily prices already at $5.92 per gallon.
- Against this background, weekend mobility data in California has decoupled itself from the nationwide pattern of growth, lingering at levels seen in early 2022.
- Oil demand loss coming from elevated fuel prices in the US might amount to a whopping 300,000 b/d and would be translated primarily into declines in discretionary (primarily weekend) driving.
Market Movers
- The French government is reportedly in talks with the country’s energy major TotalEnergies (NYSE:TTE) to build a floating LNG terminal in the northern port of Le Havre, set to become the fifth LNG plant in the country.
- A wildcat drilled by an international consortium led by ExxonMobil (NYSE:XOM) in Brazil’s offshore waters turned out to be dry, marking the first wildcat in the Sergipe-Alagoas Basin, assumed to be one of the most promising frontiers in Brazil.
- New research from Australia’s GCI claims that BP’s (NYSE:BP) 2030 net-zero plans will not deliver a reduction in the company’s absolute emissions as refined and physically traded products and crude oil are exempted. If these claims are true BP will likely face further backlash from environmentalists.
Tuesday, March 29, 2022
An apparent breakthrough in peace talks between Russia and Ukraine has provided oil markets with some much-needed bearish news. Just after European countries had walked back threats of sanctioning Russian oil, Russia promised to scale down military operations in the north of Ukraine. The promise from Russia has sparked hope that the war in Ukraine may finally begin to deescalate. Meanwhile, China’s zero-COVID strategy has led to more lockdowns, lockdowns that are likely to reduce demand for the Asian giant. WTI is threatening to fall back below $100 on the news, although oil markets still remain tight.
OPEC Warns Against the Politicization of Supply. In a thinly veiled riposte to the IEA, OPEC heavyweights Saudi Arabia and UAE warned against politicizing oil supply issues, arguing that squeezing any member out of the alliance would only increase prices and hit customers even harder.
Chinese Independents Hit by Double Whammy. Already under stress from increasing government interference, China’s COVID lockdowns, including but not limited to the closure of Shanghai, are forcing teapot refiners to sell off their April-delivery cargoes, with selling limited to state-owned refiners due to destination restrictions.
Related: Saudi Arabia Hikes Oil Prices Despite Record Discounts For Russian Crude
Rouble Gas Payment Battle Looms on the Horizon. G7 nations have rejected demands from Russia’s President Vladimir Putin that ‘unfriendly’ countries pay for Russian gas with roubles, setting the stage for a seemingly prolonged battle as Putin has given an end-March deadline to his government on changing the pricing terms.
Chevron Cuts Kazakh Production on Port Issues. US oil major Chevron (NYSE:CVX) reduced production rates at the largest oil field in Kazakhstan, Tengiz, after only one out of three single point moorings of the CPC terminal remains operable, the other two will provisionally take 3-4 weeks to repair.
US to Slap Tariffs on Southeast Asian Solar Imports. US trade officials said they will launch an investigation into solar imports from Malaysia, Thailand, Vietnam, and Cambodia as Chinese producers have shifted production to these countries to avoid paying US duties.
Iran Strike a Warning Sign to Kurdish Gas Plans. According to media reports, Iran attacked Iraq’s Kurdistan region earlier this month in order to warn Kurdish officials that started talks with Israeli and US energy officials to ship Kurdish natural gas to Turkey via a new gas pipeline.
Bolsonaro Replaces Petrobras CEO. Brazilian President Jair Bolsonaro decided to fire Joaquim Silva e Luna, CEO of state-controlled oil company Petrobras (NYSE:PBR), on the back of surging transportation fuel prices in the country, tapping market-oriented academic Adriano Pires for the role.
India Wants Russian Coking Coal. With India becoming by far the largest buyer of spot Russian crude cargoes, Delhi now wants to double down on imports of coking coal from Russia in a departure from pre-2022 developments. Indian steel producers had previously relied overwhelmingly on Australian supplies.
Spain and Portugal Receive Waiver to Cap Prices. The European Commission clearedSpain and Portugal to cap their power prices in a departure from classic non-interventionist EU policy, limiting the wholesale price at €180 per MWh, apparently due to the two countries’ high share of renewables in power generation.
Colombia Greenlights Fracking Pilot. The Colombian government approved the environmental permit for the Kale fracking pilot project in the Middle Magdalena Basin, led by Ecopetrol (NYSE:EC), amidst increasing pressure from environmental groups as they want the country’s high court to ban the practice.
Orsted Sells 50% Stake in World’s Biggest Offshore Wind Farm. Danish renewables company Orsted (CPH:ORSTED) agreed to sell half of the 1.3 GW Hornsea 2 offshore wind project in the United Kingdom to a French consortium comprising insurer AXA and banking giant Credit Agricole (25% each).
Ukraine Peace Promise Pushes Aluminium Back. The apparent progress in Russia-Ukraine peace talks took the steam out of aluminum’s month-long spike, dropping more than 5% on Tuesday alone with LME three-month prices dropping to $3,400 per metric tonne.
Gasoil Storage Has Never Been This Cheap. In a desperate attempt to incentivize oil companies to ramp up Gasoil stocks, storage companies in the ARA region dropped storage fees to a historical low of €1.5-2.0 per cubic meter, yet even with this Europe remains counter seasonally tight and undersupplied.
https://oilprice.com/Energy/Energy-General/Why-Oil-Prices-Are-Finally-Falling.html
LONDON, March 29 (Reuters) – London Metal Exchange (LME) zinc recorded a new all-time high of $4,896 per tonne earlier this month, eclipsing the previous 2006 peak of $4,580 per tonne.
True, the March 8 spike was over in a matter of hours and looked very much like the forced close-out of positions to cover margin calls in the LME nickel contract, which was imploding at the time before being suspended.
But zinc has since re-established itself above the $4,000 level, last trading at $4,100 per tonne, amid escalating supply chain tensions.
Russia’s invasion of Ukraine, which Moscow calls a special military operation, doesn’t have any direct impact on zinc supply as Russian exports are negligible.
But the resulting increase in energy prices is piling more pressure on already struggling European smelters.
European buyers are paying record physical premiums over and above record high LME prices, a tangible sign of scarcity which is now starting to spread to the North American market.
The world is not yet running out of the galvanising metal but a market that even a few months ago was expected to be in comfortable supply surplus is turning out to be anything but.
LME zinc price and stocks, Shanghai stocks
EUROPEAN POWER-DOWN
One European smelter – Nyrstar’s Auby plant in France – has returned to partial production after being shuttered in January due to soaring power costs.
But run-rates across the company’s three European smelters with combined annual capacity of 720,000 tonnes will continue to be flexed “with anticipated total production cuts of up to 50%”, Nyrstar said.
High electricity prices across Europe mean “it is not economically feasible to operate any of our sites at full capacity”, it said.
Still on full care and maintenance is Glencore’s (GLEN.L) 100,000-tonne-per-year Portovesme site in Italy, another power-crisis casualty.
Zinc smelting is an energy-intensive business and these smelters were already in trouble before Russia’s invasion sent European electricity prices spiralling yet higher.
Record-high physical premiums, paid on top of the LME cash price, attest to the regional shortage of metal. The premium for special-high-grade zinc at the Belgian port of Antwerp has risen to $450 per tonne from $170 last October before the winter heating crisis kicked in.
The Italian premium has exploded from $215.00 to $462.50 per tonne over the same time frame, according to Fastmarkets.
LME warehouses in Europe hold just 500 tonnes of zinc – all of it at the Spanish port of Bilbao and just about all of it bar 25 tonnes cancelled in preparation for physical load-out.
Tightness in Europe is rippling over the Atlantic. Fastmarkets has just hiked its assessment of the U.S. Midwest physical premium by 24% to 26-30 cents per lb ($573-$661 per tonne).
LME-registered stocks in the United States total a low 25,925 tonnes and available tonnage is lower still at 19,825 tonnes. This time last year New Orleans alone held almost 100,000 tonnes of zinc.
Fastmarkets Assessments of Antwerp and Italian physical zinc premiums
REBALANCING ACT
About 80% of the LME’s registered zinc inventory is currently located at Asian locations, first and foremost Singapore, which holds 81,950 tonnes.
There is also plenty of metal sitting in Shanghai Futures Exchange warehouses. Registered stocks have seen their usual seasonal Lunar New Year holiday surge, rising from 58,000 tonnes at the start of January to a current 177,826 tonnes.
Quite evidently Asian buyers haven’t yet been affected by the unfolding supply crunch in Europe and there is plenty of potential for a wholesale redistribution of stocks from east to west.
This is what happened last year in the lead market, China exporting its surplus to help plug gaps in the Western supply chain. Lead, however, should also serve as a warning that global rebalancing can be a slow, protracted affair due to continuing log-jams in the shipping sector.
MOVING THE GLOBAL DIAL
While there is undoubted slack in the global zinc market, Europe is still big enough a refined metal producer to move the market dial.
The continent accounts for around 16% of global refined output and the loss of production due to the regional energy crisis has upended the zinc market narrative.
When the International Lead and Zinc Study Group (ILZSG) last met in October, it forecast a global supply surplus of 217,000 tonnes for 2021.
That was already a sharp reduction from its earlier April assessment of a 353,000-tonne production overhang.
The Group’s most recent calculation is that the expected surplus turned into a 194,000-tonne shortfall last year. The difference was almost wholly down to lower-than-forecast refined production growth, which came in at just 0.5% compared with an October forecast of 2.5%.
With Chinese smelters recovering from their own power problems earlier in the year, the fourth-quarter deceleration was largely due to lower run-rates at Europe’s smelters.
The ILZSG’s monthly statistical updates are inevitably a rear-view mirror but Europe’s production losses have continued unabated over the first quarter of 2022.
Moreover, the scale of the shift higher in power pricing, not just spot but along the length of the forward curve, poses a longer-term question mark over the viability of European zinc production.
A redistribution of global stocks westwards can provide some medium-term relief but zinc supply is facing a new structural challenge which is not going away any time soon.
Joe Biden directly appealed to the Russian people with comparisons between the invasion of Ukraine and the horrors of the Second World War as he called for Vladimir Putin to go.
“For God’s sake this man cannot remain in power,” the US president said, during a speech from Poland on Saturday.
He said “if you’re able to listen: you, the Russian people, are not our enemy” as he evoked the atrocities of the siege of Leningrad by the Nazis.
“These are not the actions of a great nation,” Biden said, in front of the Royal Castle, a landmark in Warsaw that was badly damaged during Adolf Hitler’s war.
“Of all people, you the Russian people, as well as all people across Europe still have the memory of being in a similar situation in the 30s and 40s, the situation of World War Two, still fresh in the mind of many grandparents in the region.”
“Whatever your generation experienced, whether it experienced the siege of Leningrad, or heard about it from your parents and grandparents, train stations overflowing with terrified families fleeing their homes, nights sheltering in basements and cellars, mornings sifting through the rubble in your home – these are not memories of the past – not any more, it’s exactly what the Russian army is doing in Ukraine right now.”
Shortly after his speech, a White House official attempted to clarify that Biden was not going so far as to call for a regime change in Russia.
“The President’s point was that Putin cannot be allowed to exercise power over his neighbours or the region. He was not discussing Putin’s power in Russia, or regime change,” the official said.
The Kremlin’s chief spokesman dismissed the remark, saying only Russians could choose who their leader should be.
Asked about Biden’s comment, spokesman Dmitry Peskov told Reuters: “That’s not for Biden to decide. The president of Russia is elected by Russians.”
Multiple rockets struck the western Ukrainian city of Lviv near the Polish border during Biden’s visit, which came as Russia faced the prospect of further setbacks in the war.
The US president said Moscow’s troops have “met their match with brave and stiff Ukrainian resistance” and have strengthened the resolve and unity of both the defending forces and the West.
“Russia wanted less of a NATO presence on his border but now he has a stronger presence, a larger presence,” he said.
Biden said 200,000 Russians had left their country in a single month in a “remarkable brain drain” as Putin “strangled democracy”.
Addressing the thousand-strong audience that included refugees who have fled the war, he told Ukrainians “we stand with you – period” as he defended the nation’s president, Volodymyr Zelensky.
“Putin has the gall to say he’s denazifying Ukraine. It’s a lie, it’s just cynical – he knows that,” Biden said.
“And it’s also obscene. President Zelensky was democratically elected, he’s Jewish, his father’s family was wiped out in the Nazi holocaust and Putin has the audacity – like all autocrats before him – to believe that might will make right.”
But as he made an impassioned defence of democracy, he reminded European nations they must “end its dependence on Russian fossil fuels”.
Sanctions, he said, have been sapping Russia’s strength and have reduced the rouble “to rubble”.
But he warned: “This battle will not be won in days, or months either. We need to steel ourselves for the long fight ahead.”
https://www.mygc.com.au/putin-cannot-remain-in-power-says-biden/
While coal and iron ore prices have soared, South African miners have been forced to stockpile supplies due to problems at Transnet.
Last year, billions of rands in potential coal, iron ore and chrome exports were lost.
SA's biggest coal shipper is weighing buying overseas assets to limit its local coal exposure.
South Africa is missing out on some of the riches on offer from the commodities boom as a rail network beset by problems hobbles its exports.
While coal prices recently soared to a record and iron ore is historically high, miners are being forced to stockpile supplies as state-owned Transnet's rail network buckles under issues from cable theft to breakdowns, compounded by years of corruption. Last year alone, more than $2 billion in potential coal, iron ore and chrome exports were lost, an industry group said.
Transnet's lines are critical for moving bulk commodities - which have rallied further amid the war in Ukraine - from mines to ports. As lost earnings mount for miners, executives are becoming more frustrated by rail failures. It's become such a headache that South Africa's top thermal coal shipper, Thungela Resources, is weighing buying overseas assets to limit its local exposure.
"South Africa is losing money, we are losing money as an industry and we as a company are losing money," Thungela Chief Executive Officer July Ndlovu said. "It doesn't make sense for us to concentrate our risk on exactly the same infrastructure that has cost us as much."
Transnet's 31 000-kilometer network includes a route taking high grade iron ore from Kumba Iron Ore's giant Sishen pit in the Northern Cape to the west coast, and one from Mpumalanga's vast coal fields to the east coast. Companies using it also include Exxaro Resources and Glencore.
The network is being increasingly targeted by thieves taking cables which disrupts operations. It has suffered from locomotive shortages and has even suspected sabotage of infrastructure. Frequent locusts infestations that affect traction on the iron ore line and bad weather also add to the list of problems.
Transnet is among state firms that were hollowed out by mismanagement under former President Jacob Zuma. It said it has turned to general freight locomotives to haul some coal after part of its fleet specifically designed to transport the fuel was grounded by shortages of spare parts. That's partly due to suspension of supplier contracts in the wake of widespread state corruption.
Coal, iron ore and chrome companies missed out on about R35 billion last year from contracted volumes that couldn't reach ports, the Minerals Council South Africa said. Even as coal prices and demand surged in 2021 on the back of an energy crunch, volumes of the fuel transported by Transnet fell to a 13-year low, according to Anglo American spinoff Thungela.
The producer is among those stockpiling coal, Chief Financial Officer Deon Smith said.
Growing stockpiles
Kumba's iron ore stockpiles totaled 6.1 million tons as of December, up about a quarter from the prior year. The company will maintain similar stock levels this year due to the rail challenges, spokeswoman Sinah Phochana said. It transported 39.3 million tons on the rail network last year, but wants to raise output to fully utilize its annual rail capacity that should be 44 million tons.
Kumba parent Anglo is open to exploring ways to help Transnet transport more, CEO Mark Cutifani said.
"If that means we need to put a capital contribution or partner in some way, we are very open to that possibility," he said in an interview in Johannesburg.
Improving efficiency is "at the core" of Transnet's recovery plans, it said in response to Bloomberg questions. It has identified areas for collaboration with customers, and one key area is prioritizing investment toward growth in high margin flows such as bulk commodities, it said.
That will become even more important if the fallout from the Ukraine war pushes demand for South African supplies and prices higher.
Without urgent attention, "the mining industry, the fiscus and the rail and port operator will again forgo any benefit from commodity prices by not exporting minerals to South Africa's full potential," the minerals council said.
Europe’s most pressing energy policy goal was reducing carbon emissions that cause climate change before Russia’s war in Ukraine
BERLIN -- Before Russia's war in Ukraine, Europe’s most pressing energy policy goal was reducing carbon emissions that cause climate change.
Now, officials are fixated on rapidly reducing the continent's reliance on Russian oil and natural gas — and that means friction between security and climate goals, at least in the short term.
To wean itself from Russian energy supplies as quickly as possible, Europe will need to burn more coal and build more pipelines and terminals to import fossil fuels from elsewhere.
This dramatic shift comes amid soaring fuel costs for motorists, homeowners and businesses, and as political leaders reassess the geopolitical risks from being so energy-dependent on Russia.
In 2021, the European Union imported roughly 40% of its gas and 25% of its oil from Russia — an economic relationship that officials had thought would prevent hostilities, but is instead financing them.
While some are calling for an immediate boycott of all Russian oil and gas, the EU plans to reduce Russian gas imports by two-thirds by the end of this year, and to eliminate them altogether before 2030.
This “will not be easy,” said Paolo Gentiloni, the EU's top economic official. But, he added, “it can be done.”
In the near-term, ending energy ties with Russia puts the focus on securing alternative sources of fossil fuels. But longer term, the geopolitical and price pressures stoked by Russia's war in Ukraine may actually accelerate Europe's transition away from oil, gas and coal.
Experts say the war has served as a reminder that renewable energy isn't just good for the climate, but also for national security. That could help speed up the development of wind and solar power, as well as provide a boost to conservation and energy-efficiency initiatives.
The EU has pledged to reduce carbon dioxide emissions by 55% compared with 1990 levels by 2030, and to get to net zero emissions by 2050. Analysts and officials say those goals, enshrined in EU climate legislation, can still be met.
The rapid pursuit of energy independence from Russia will likely require “a slight increase” in carbon emissions, said George Zachmann, an energy expert at the Bruegel think tank in Brussels. But "in the long term, the effect will be that we will see more investment in renewables and energy efficiency in Europe,” Zachmann said.
Plans that wouldn't have been contemplated just a few months ago are now being actively discussed, such as running coal plants in Germany beyond 2030, which had previously been seen as an end date.
Germany’s vice chancellor and energy minister, Robert Habeck, said there should be “no taboos.”
The Czech government has made the same calculation about extending the life of coal power plants.
“We will need it until we find alternative sources," Czech energy security commissioner Václav Bartuška, told the news site Seznam Zprávy. “Until that time, even the greenest government will not phase out coal.”
One of Europe's top priorities is to buy more liquefied natural gas that can come by ship. On Friday, American and European officials announced a plan under which the U.S. and other nations will increase liquefied gas exports to Europe this year, though U.S. officials were unable to say exactly which countries will provide the extra energy this year.
Germany, which lacks import terminals to turn LNG back into gas when it comes off the ship, is pushing ahead with two multibillion-euro projects on its North Sea coast.
The war also has revived Spain's interest in extending a gas pipeline across the Pyrenees to France. The 450 million-euro ($500 million) project had been abandoned in 2019 after France showed little interest and a European feasibility study deemed it unprofitable and unnecessary. If built, it would allow gas imported in Spain and Portugal as LNG to reach other parts of Europe.
In Britain, which is no longer part of the EU, Prime Minister Boris Johnson says it's “time to take back control of our energy supplies."
Britain will phase out the small amount of oil it imports from Russia this year. More significantly, Johnson has signaled plans to approve new oil and gas exploration in the North Sea, to the dismay of environmentalists, who say that is incompatible with Britain’s climate targets.
Some within the governing Conservative Party and the wider political right want the British government to retreat on its commitment to reach net zero by 2050, a pledge made less than six months ago at a global climate summit in Glasgow, Scotland. Conservative Party co-chairman Oliver Dowden said last week that “British people want to see a bit of conservative pragmatism, not net zero dogma.”
Yet the shock waves from the war cut both ways.
Sharply higher gas and electricity prices, and the desire to be less dependent on Russia, are increasing pressure to expand the development of home-grown renewables and to propel conservation.
The International Energy Agency recently released a 10-point plan for Europe to reduce its dependence on Russian gas by a third within a year. Simply lowering building thermostats by an average of one degree Celsius during the home-heating season would save 10 billion cubic meters of natural gas a year, or roughly 6% of what Europe imports from Russia.
At the German rooftop solar panel company Zolar, chief executive Alex Melzer said there has been a surge of inquiries from potential customers since the war began.
“With the Ukraine crisis, we’ve really seen that people are wondering whether Germany is going to stop buying oil and gas from Russia and what’s going to happen to our electricity and energy system,” he told The Associated Press.
Melzer said customers are less interested in saving the planet than in saving money, despite the upfront investment of 20,000 euros ($22,000). But it amounts to the same thing: a reduction in fossil fuel use and thereby emissions.
“Goal achieved, super,” he said.
A leading French political scientist has warned voters not to consider the presidential election a foregone conclusion, because anything can happen before the first round on 10 April.
Dominique Reynié, head of the influential Fondapol thinktank, suggested it was dangerous for voters to not bother turning out just because opinion polls envisage a win for Emmanuel Macron. The combination of Covid and the war in Ukraine had made the election unpredictable, he said, admitting that even experts in analysing voting patterns could not reliably call the result.
“This is not an election like any other and I cannot see in any way that the result is certain. We could say one thing today and tomorrow it could be different,” Reynié, a professor at the prestigious Sciences Po university in Paris, told foreign journalists last week. “We cannot be sure of anything.”
Macron is enjoying a poll boost largely attributed to his role as global go-between for Moscow and Kyiv.
The latest figures on voting intentions in the first round show Macron’s support levelling off at around 27% – a slight drop from last week, but up from before Russia invaded Ukraine. The far right’s Marine Le Pen, who used to support Vladimir Putin but has recently distanced herself, climbed to 21%. Radical left candidate Jean-Luc Mélenchon has risen to third place with 13%, with the mainstream right candidate Valérie Pécresse behind him at 12% and Éric Zemmour on 10%. The Socialist candidate Anne Hidalgo is in eighth place with 2% behind sheep farmer Jean Lassalle with 3%, the Communist party’s Fabien Roussel on 4% and the Greens’ Yannick Jadot on 5%.
This would lead to a Macron-Le Pen second-round runoff – a repeat of the 2017 presidential election – with polls forecasting a 55%-45% win for Macron.
A survey for Les Echos suggested the cost of living and social protections including the welfare state remain voters’ main preoccupations. The war in Ukraine was cited by just over a quarter as a factor that will influence their vote.
“The advantage for Macron is that at this time of war, people rally to the president who is the head of the military and foreign policy … and there’s the idea that it’s not reasonable in this situation to have a new president who has no experience,” Reynié said.
However, he warned that the “flag factor” could backfire if the economic consequences of the war, particularly soaring fuel prices, hit French voters’ wallets too hard.
“Of course, we cannot compare problems like the cost of living against the tragedy in Ukraine but we have to take them into consideration,” Reynié said.
“The French are shocked by Putin’s aggression and are pro-Ukraine, but it’s a difficult and evolving situation. Also, French voters don’t think it’s for them to pay for this [war] effort. In many countries, this would probably be considered a funny idea but in France people often consider that it’s not for them to make an effort but ‘the state’, without understanding that ‘the state’ is the same as ‘the French’.
“I don’t believe people will say ‘oh, too bad for the Ukrainians’ but they could say it’s for the state to pay for this.”
Le Monde has described this presidential race as a “phantom campaign” – over before it had even begun – but Reynié said voters who failed to turn out because they believed there was no point risked a repeat of the 2002 presidential trauma, when a combination of abstention and protest votes saw the far-right Jean-Marie Le Pen knock out the Socialist candidate in the first round.
“On 10 April there could be strong abstention from moderate voters who are anti Marine Le Pen but hostile to Emmanuel Macron and this is the largest group in the electorate. If they don’t turn out for the first round, thinking it’s a foregone conclusion, we just don’t know what the consequences will be. What we do know is that high abstention creates situations that are irreversible and weaken the democratic nature of the vote.”
Reynié said that if Macron does win a second term he will need a convincing score to push through controversial reforms, including a long-promised shake-up of the pensions system.
“We already know how people will react to contested measures: they will say we voted for you because there was the war in Ukraine; we voted for you because you were against Marine Le Pen; we didn’t vote for you to do this reform.”
He added: “I will take a risk and say that if I was to bet I would gamble that Emmanuel Macron will be reelected but I’m taking a risk because of all the things over which I have no control that could have ramifications.
“Based on opinion polls and intentions to vote today, we can say it’s probable but it is just a probability; it would be absurd to say the reelection of Emmanuel Macron is certain.”
The war has the world in production crisis
After the pandemic, the supply chains in the world were battered, and when they began to recover, the war that Russia waged against Ukraine —and the strong economic sanctions imposed by the West— threw all the chips to the ground again. Production is experiencing an unprecedented crisis.
In Colombia, for example, the delivery of new cars was stopped because important switches for electrical systems were manufactured in the Ukraine, and agricultural production became more expensive because most fertilizers and poisons are produced in that region of Europe. The panorama is so delicate that even the music and entertainment industry are experiencing dark days because Ukraine had been dedicated to the manufacture of power tubes for electric guitar amplifiers.
The concern that is growing among economists around the world is not for nothing. The specialized media outlet Bloomberg published that Russia exports 78% of the gas to Europe —already several countries have warned that they cannot stop buying because they would have trouble in the winter—, 69% of the platinum to the United Kingdom, 27% of the palladium to the US, 24% of fertilizers to Brazil and 22% of wheat to Egypt. As if that were not enough, China also buys 44% of the nickel it needs from Russia, in addition to 35% of the oil and 24% of the sunflower oil.
All this is not just about raw material for the manufacture of cars, computers and cell phones, it is about the food security of several countries.
On March 23, The New York Times published: “A crucial portion of the world’s wheat, corn, and barley is trapped in Russia and Ukraine because of the war, while an even larger portion of the world’s fertilizer it is stuck in Russia and Belarus (…) Since the invasion began last month, wheat prices have increased by 21%, barley by 33% and some fertilizers by 40%”.
As we have been publishing, one of the biggest concerns that Colombia has is the overflowing increase in prices of the family basket, because in addition to the pandemic, Colombia went through the protests last year that mistreated the economy.
We are just seeing the tip of the problem, because at this moment the prices of raw materials such as aluminum, nickel, palladium are already rising, this without counting food, fertilizers and gas; when that high price falls on final products, the crisis is going to skyrocket and the final consumer is going to suffer.
David M. Beasley, executive director of the UN World Food Program—an agency that feeds 125 million people a day—told The New York Times: “There hasn’t been a precedent that even comes close to something like this since the Second World War”.
Beasley assured that the costs of the World Food Program increased US$71 million per month, which means that the daily portions delivered end up being reduced, impacting the least favored in an almost leonine way. The hungry will no longer receive food, but rather those who are most at risk of death: the starving.
And like everything that happens in the law of supply and demand, there is always someone who can prevail with money. Countries such as Armenia, Mongolia, Kazakhstan and Eritrea are supplied in a unique way with wheat from Russia and Ukraine, and now they open themselves to the market to find a new seller that meets their needs, but when it comes to offering they must compete with others that have greater purchasing power such as Turkey, Egypt, Bangladesh and Iran.
In that same article it was pointed out that the great recession of the war and the flight of millions of people from their lands will lead to the loss of the harvest and planting seasons, so that the prices of wheat – to give an example – will reach historical levels.
Lenawee County legislators support $4.8 billion infrastructure plan
LANSING — Lenawee County's state legislators said the $4.8 billion in infrastructure spending they supported last week will make improvements in drinking water systems, parks and roads.
The spending is from an influx of federal pandemic aid and other funds.
“The federal government made billions of dollars available to address infrastructure needs across the United States," state Rep. Bronna Kahle, R-Adrian, said in a news release. "We owe it to our communities and our children to take advantage of this opportunity to fix our roads, protect our drinking water, and connect our rural communities with high-speed internet access right here in Michigan. These are life-changing improvements that will last for generations to come — without raising taxes. These are issues that matter to the people of Lenawee County. I was pleased to vote ‘yes’ in support of this $4.7 billion investment into our state’s future using already available federal and state funds.”
The supplemental budget plan, which Gov. Gretchen Whitmer will sign, has more than $2.1 billion for drinking water and wastewater infrastructure — including by replacing lead pipes — dam repairs and safety, and the remediation of "forever chemicals" known as PFAS.
“From faucet to lakefront and everywhere in between, the safety of our valuable water resources is a top priority for me,” Kahle said. “Everyone deserves access to clean, drinkable water no matter what part of the state they live in.”
State Rep. Sarah Lightner, R-Springport, who represents Cambridge Township, and state Sen. Dale Zorn, R-Ida, also voted for the spending.
“Our state’s aging infrastructure needs to be addressed before any more families are hurt by disasters like the dam failures, collapsing sewers and drinking water contamination Michigan communities have experienced in recent years,” Lightner said in a release. “Through this plan, we’re addressing the most critical of those needs without raising taxes and making significant improvements for future generations.”
"“Rather than waste our federal funding on simply expanding the size of government, we’re putting it to good use to make positive, long-term improvements that will help make Michigan a better and safer place to live and work," Zorn said in a release.
The House and Senate approved the main bill 95-7 and 34-3. The deal had been announced late Wednesday by the Democratic governor and Republicans who lead the Legislature's budget committees.
The plan, which legislators called "momentous" and "historic," includes $250 million to add high-speed internet to rural and other areas without access. There is an additional $383 million in emergency assistance for low-income renters, $271 million for housing and related aid, and $200 million to rebuild Midland-area dams whose failure led to major flooding in 2020.
Negotiators allocated $250 million to improve state parks and recreation areas, including $30 million to put a state park near downtown Flint. Another $200 million is for local parks and greenways — split among Detroit, Grand Rapids, a northern Michigan tourism and sports fund, and a statewide parks and recreation grant program.
The plan's centerpiece is water.
It allots about $1.4 billion of $6.5 billion in federal funds over which the state has flexibility to drinking water, sewer and storm water infrastructure. Some $45 million is directed toward Benton Harbor, home to Michigan's latest lead-in-water crisis following an earlier one in Flint; $75 million is to replace lead service lines in Detroit; $72 million is for wastewater projects in Macomb County.
Schools and child care facilities will get $50 million to buy water filters; $66 million is to install backup generators at highway pump stations to prevent flooding if there are power outages.
The plan also disburses federal infrastructure funding that was enacted by Congress and President Joe Biden in November, boosting road and bridge work and authorizing water infrastructure loans.
Sen. Ruth Johnson, a Holly Republican, said she voted no because the legislation no longer has $50 million to help homeowners whose wells are contaminated. She estimated that a quarter of the state's residents rely on private wells for their drinking water.
Legislators also OK'd $88 million in state-funded infrastructure earmarks for specific projects and sent a $50 million state subsidy to the Michigan Potash and Salt Co. It is working to open a mine near Evart. Potash is used in crop fertilizers.
“Michigan farmers need fertilizer to grow our food, but prices have been increasing dramatically as the United States continues to rely on imported potash,” Lightner said. “More than 95% of the potash needed to produce fertilizer here is currently imported from outside the U.S., including almost a third coming from Russia alone. …
"This is crucial for the Michigan agricultural industry, as we have experienced significant supply shortages and skyrocketing costs."
Zorn highlighted his efforts to secure $3 million for a congestion relief project on Secor Road in Monroe County.
No specific Lenawee County projects were mentioned by the legislators.
Lawmakers also deposited $100 million to help shore up the unemployment benefits fund and allotted $29 million to improve customer service and hire employees to combat fraud.
Michigan has $2.8 billion remaining in federal discretionary aid that was enacted a year ago.
BEIJING, March 27 (Reuters) - Profit growth at China's industrial firms accelerated in the first two months of the year in line with other signs of momentum in the economy, although the outlook is clouded by domestic COVID-19 outbreaks and the war in Ukraine.
Profits rose 5.0% in from a year earlier, up from a 4.2% gain in December, the National Bureau of Statistics said on Sunday.
The growth in January-February was driven by surging profits in the energy and raw materials sectors, thanks to higher prices of commodities such as crude oil and coal. January and February data are typically combined to smooth out distortions from the Lunar New Year holiday, which can fall in either month.
Downstream, monthly profit growth among other industrial firms has been weighed down by high raw material costs, languishing in the single-digits since November.
The slightly faster industrial profit growth was in step with improvement in industrial output, retail sales and fixed-asset investment in January-February, suggesting the impact of recent policy measures were starting to be felt.
Still, challenges have emerged this year including China's most serious COVID outbreak since early in the pandemic in 2020, driven by the Omicron variant, threatening to disrupt local economies and further chill consumer spending.
"The gap between upstream and downstream profit margins widened as downstream profit margins fell further," Goldman Sachs analysts wrote in a note. "We expect the COVID outbreak in multiple provinces to weigh on industrial profits in the near term."
Given the coronavirus flare-ups, policies to further ease monetary and fiscal measures can be expected, they said.
Global upheavals such as the war in Ukraine have also created uncertainty over international supply chains and the potential for even higher commodity and energy prices, ultimately weighing on the bottom line of Chinese firms.
Vice Premier Liu He said recently that Beijing will take measures to boost the economy in the first quarter and that monetary policy would be set to support growth.
To ease financial burdens for smaller firms, China has pledged around 1.5 trillion yuan ($240 billion) in value-added tax (VAT) rebates.
The finance ministry said on Thursday China will exempt the 3% VAT levied on some small firms, the country's main source of jobs. read more
The statistics bureau's industrial profits data cover large firms with annual revenues above 20 million yuan from their main operations.
Having already advised Audley Shaw of the need for a new, more inclusive approach to the mining and refining of Jamaica’s remaining bauxite reserves, this newspaper now urges him to put his mind to something else that might lead to the island extracting additional value from the mineral.
Minister Shaw must have it placed beyond doubt that any residual minerals or substances that are left after bauxite is taken through any transformative process, such as refining or calcination, are deemed to be like all minerals that are still in the ground and vested in the State. This should be so unless there are specific agreements to the contrary, for which the Government has been appropriately compensated.
This newspaper previously commended this idea to Mr Shaw’s predecessor, Robert Montague, but we are not aware that he acted on our suggestion. A number of recent developments, however, give the matter urgency.
Depending on who provides the prognosis, Jamaica has between 30 and 100 years of bauxite reserves remaining. Extracting what is left could become increasingly problematic, as future mining operations come closer to communities, many of which already complain of pollution and its other disruptive effects.
However, as we have noted before, there are, at this time, no viable economic alternatives to the bauxite/alumina industry, which provide good-paying jobs, substantial foreign exchange inflows and, usually, significant contributions to the Government’s coffers. That is why we proposed to Mr Shaw a reset of the industry, starting with frank conversations between the Government, the firms, communities and environmental activists on the way forward. These debates must include how to provide greater development and social support to those areas where bauxite is mined and, therefore, suffer the worst of the industry’s negative effects.
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WHO OWNS THE MINERALS
Then there is the separate question of who owns the minerals that may be found in the waste from the refining of bauxite into alumina, which could be of significant economic value. When bauxite is refined into alumina – the stage before that substance is smelted into aluminium – it leaves a red effluent, which is stored in large ponds, sometimes called ‘red mud lakes’. These ponds are obviously in areas near alumina refineries. Sometimes the substance is dried and stacked.
It is common knowledge that there are several other minerals in bauxite. However, what has provoked excitement in recent years is the scientific advancement of technology, although the economic feasibility of none has been verified, to extract rare earth elements (REEs) from red mud – the effluent stored in those ponds in St Catherine, Manchester and St Elizabeth.
A group of 17 minerals, rare earth elements, are widely used in modern technological applications, such as batteries for electric vehicles, parts in mobile phones, satellites, and in ultra-modern war weaponry. While REEs are not really rare, they are not generally found in large, concentrated deposits. The country with the largest known deposits of the stuff is China, which controls around 60 per cent of the world market. The Chinese have also been corralling deposits elsewhere, which worries the Americans. Washington considers REEs strategic minerals, and the Biden administration has been prompting American companies to seek out domestic supplies and expand output.
Indeed, the geostrategic importance of REEs was highlighted a dozen years ago when Beijing briefly halted the export of the minerals to Japan, during diplomatic jousting over Japanese fishermen’s detention of fishing waters that Japan insisted is theirs, which China contests.
Although REEs have not yet been talked about as a fallout from the Russia-Ukraine war, it is unlikely to be far from the minds of strategy analysts. Russia is not a major exporter of REEs, but it is estimated to have about 12 per cent of world reserves. The Russians, however, believe that significantly undercounts their reserves, given the limited exploration and mapping of the reserves. The West’s effort to isolate Russia over its invasion of Ukraine and Moscow’s relationship with Beijing now add another dimension to the geostrategic importance of REEs and Russia’s potential role as a supplier. Ukraine, too, is a supplier of the product, whose mining and export have been disrupted by the war.
IMPORTANT PLAYER
All this could make Jamaica an important player if we, indeed, have plenty of the stuff lying around as waste and there is the technology with which to cost-effectively extract from the effluent. In 2013, Japan’s Nippon Light Metal partnered with the Jamaica Bauxite Institute to advance technology to extract REEs from red mud, but apparently failed to develop a process whose application was economically feasible.
However, early last year, DADA Holding, the then principal outfit that is now rebranded as Atlantic Alumina Company, announced a joint venture with a Canadian green energy firm, Enervoxa, to use Enervoxa’s proprietary technology extract REE from the red mud from the Atlantic’s alumina refinery in Gramercy, Louisiana. At the time, they reported having 35 million tonnes of the waste at the Gramercy refinery. That waste would have come from bauxite shipped from Jamaica over decades.
It is not clear whether that idea is still alive. If it were, the red mud would represent a second economic resource for its owners, whose royalties and levies covered only a single mineral – the bauxite they mined and shipped.
Obviously, Jamaica cannot do anything about effluent from the bauxite that has already left the island, for which companies have already paid. But we can do something about what remains on the ground here by applying the principle used with respect to unmined minerals. Regarding bauxite acquired for refining abroad, the levies and royalties should take into account the likelihood of other minerals, like REEs, being extracted therefrom. This principle should also apply to the tailings from bauxite mining and other processing.
Further, the Jamaican authorities should aggressively encourage domestic research and development of the promising extraction technologies, as well as promote partnerships with Jamaican firms and foreign individuals and outfits that may be on the way to bringing such know-how to market.
https://jamaica-gleaner.com/article/commentary/20220328/editorial-change-mineral-law-cover-red-mud
Chinese firms face critical choices over Russian market
Over the next weeks, the directors of three Chinese automakers -- Geely, Great Wall and Cherry -- must take a decision that could decide the future of their companies.
Following Vladimir Putin’s invasion of Ukraine, the biggest auto exporters to Russia, from Europe, Japan and South Korea, abruptly cancelled their sales, leaving a rare and sudden gap in the market.
Should the three companies take advantage and sharply increase their exports to Russia? But, in doing so, will they incur anger from governments and consumers in Western countries that they consider their most important longer-term market?
In 2021, China exported 123,000 cars to Russia, up from 43,000 in 2020, its third largest export market after Chile and Saudi Arabia. The national target for auto exports is five million by 2025, up from two million in 2021.
All over China, banks and companies face the same dilemma. How to do business with Russia under severe Western sanctions?
An early test will be alumina, after Australia on March 20 banned exports to Russia of alumina and aluminium ores. Australia accounts for 19 per cent of the commodity bought by Rusal, Russia’s giant aluminium producer and the second largest in the world outside China. Should companies in China meet Rusal’s shortage of alumina?
Xu Qin, Communist Party chief of Heilongjiang, the northeast province that borders Russia, has no doubt what to do. In a visit to Heihe on the Russian border on March 20, he said that the Sino-Russian east route natural gas pipeline must be secured and construction of new branching lines accelerated. He said that China must take the opportunity to increase imports of oil and gas from Russia.
China imports 70 per cent of its oil supply and 40 per cent of its gas.
On March 11 – more than two weeks into the invasion – the China Coal Transportation and Distribution Association hosted a video conference between 12 Chinese power plants and 20 Russian coal companies to increase bilateral trade. China is the biggest market in Asia for Russia’s coal exports. In 2021, Russia was China’s second largest supplier of coal.
One Chinese company caught in the middle is DJI Technology, one of the world’s biggest producers of drones and a leader in technology that uses satellite navigation to guide drones to precise locations.
Last week Ukraine’s Vice Prime Minister Mykhailo Fedorov called on DJI to stop selling its goods to Russia: “block your products that are helping Russia to kill the Ukrainians,” he said. In response, the firm said that it was “available to discuss these issues” but did not promise to stop exports to Russia.
In 2021, trade between China and Russia jumped 35.9 per cent over 2020 to a record US$146.9 billion, according to Chinese customs data. Russia was a major source of oil, gas, coal and agriculture commodities and ran a trade surplus with China.
Since the West imposed sanctions in 2014 after Russia annexed Crimea, bilateral trade has expanded by more than 50 per cent, and China has become Russia's biggest export destination.
But not all the news is positive. In a recent survey of 322 Chinese exporters by FOB Shanghai, an industry forum, 39 per cent of respondents said that the war had “severely” undermined their Russian business. One reason is the West’s banning some Russian banks from SWIFT, the global financial messaging system. This makes international settlement of payments for trade more complicated.
One way out of this is payment in renminbi. In the first half of 2021, RMB settlements accounted for 28 per cent of Chinese exports to Russia, compared to just two per cent in 2013. As of June 2021, the Chinese currency accounted for 13.1 per cent of the Russian central bank's foreign currency reserves, compared with just 0.1 per cent in June 2017. In the same period, Moscow's U.S. dollar holdings dropped to 16.4 per cent from 46.3 per cent.
So the directors of Geely Auto must consider many factors. In a press statement last November, the firm said it aimed for sales of 3.65 million units by 2025, including 600,000 exported. “We will focus on developing the Eastern Europe, Middle East, Southeast Asia, and South America markets … Lynk & Co (a Geely brand) will expand its global presence by entering Russia, Malaysia, Australia, and New Zealand among others.”
The directors must consider how long the invasion will go on: would Western sanctions be lifted as part of a peace agreement: with the devaluation of the rouble and a fall in Russian GDP this year, how many consumers will be able to buy its cars: if the war is prolonged and China provides financial, material and military aid to Russia, will its companies be sanctioned too? Would it be better to leave Russia all together and concentrate on other less complicated markets?
There are no easy choices.
-- Contact us at [email protected]
LONDON, UK / ACCESSWIRE / March 28, 2022 / Horizonte Minerals Plc, (AIM:HZM) (TSX:HZM) the nickel development company focused in Brazil, announces its final results for the year ended 31 December 2021 ('FY21' or the 'Period').
Highlights for the Period
Completion of US$633 million funding package for the development of the Araguaia ferronickel project ("Araguaia").
US$25 million royalty agreement signed with Orion Resources Partners to progress development of the Vermelho nickel-cobalt project ("Vermelho") through feasibility study and permitting.
100%, 10-year Araguaia offtake agreement based on LME pricing signed with Glencore.
Strengthened cash balance of £156 million following equity fundraises in February and December 2021.
Appointment of Michael Drake as Head of Projects and Leo Vianna as Araguaia Project Director.
Mobilisation of Araguaia Lead Team in Brazil and successful recruitment of 85 person, predominantly Brazilian, Araguaia project team.
Completion of Operational Readiness plan with key permits secured ahead of commencement of construction.
Award of power line licence to cover the full power requirement of the Araguaia project at nameplate capacity.
Extensive competitive tendering process undertaken across the key Araguaia equipment packages with tier one vendors in preparation for contract awards in H1 2022.
Key environmental and social programmes undertaken in preparation for construction phase of Araguaia including resettlement action plan, social communication programme, safety improvements for school communities located along the PA-449 highway, and the Local Development Agenda programme.
Acquisition of new and unused ferronickel processing equipment from Companhia Brasileira de Alumínio that is expected to provide meaningful synergies in relation to the development of Araguaia, including the potential to fast-track and lower the cost of development of a second RKEF line.
Continued progress at Vermelho with Ramboll awarded Environmental and Social Impact Assessment contract.
Support provided to Conceição do Araguaia's ongoing Covid-19 vaccination effort through the donation 10,000 medical items to the regional hospital.
Post Period End Operational Update
Following completion of the funding package and a positive construction decision for Araguaia, activity in Q1 2022 has been to advance engineering, place orders for long lead equipment and Engineering Procurement and Construction Management ("EPCM") services and to commence early works at the project site.
Engineering progress completed to date includes basic engineering consolidation, geotechnical surveys, support for bidding processes and detailed engineering with a focus on finalising the plant arrangement, earthworks design, overland powerline and access roads.
The furnace supply contract was awarded to Hatch Ltd. in February 2022 (see announcement dated 25 February 2022), which encompasses the supply of a circular electric arc furnace rated at 60 megawatt, a calcine transfer system to feed the furnace with 835,000 tonnes per annum of calcine and additional services on installation and commissioning. The EPCM contract was awarded to Pöyry Tecnologia Ltda ("Pöyry"), the Brazilian subsidiary of global engineering services firm AFRY earlier this week (see announcement dated 22 March 2022). Contracts were also awarded to contractors for access road upgrades, aggregate supply, and construction of temporary facilities such as offices, as well as initial site infrastructure such as telecommunications and fencing. Water wells are also being installed in accordance with construction permits and licenses.
Contractors are being mobilised in accordance with Horizonte's health and safety standards, which have achieved 500,000 man hours without a Lost Time Injury ("LTI)" to date. This was achieved through the deployment of the Company's new health and safety training programme, comprehensive induction programme and the increase in health and safety reporting overseen by the Company's newly appointed Health and Safety Manger, Eduardo Paiva.
New environmental programmes are being implemented in accordance with the construction phase of Araguaia including installation of automatic monitoring systems and implementation of the biodiversity action plan.
Horizonte CEO, Jeremy Martin commented: "The extensive technical and financial work that concluded in the successful completion of the US$633 million project funding package for Araguaia was transformational for Horizonte. It was a culmination of two years of dedication and hard work by the Horizonte team and all our advisors. During this time, we have established the foundations to build a significant low-cost, sustainable nickel business which is now fully funded to take our first tier one nickel project into production.
The preparatory work undertaken alongside the project financing process has enabled us to make good progress during Q1 in the 24-month construction phase of Araguaia. Our focus during this quarter has been on detailed engineering, procurement, and early works ahead of earthworks commencing in Q2. We have already awarded equipment and services contracts valued at approximately US$150 million including the furnace and EPCM contracts. Our owner's team is split across the engineering office in Belo Horizonte and the site office in Conceição do Araguaia, and are managing key contractors working on access road upgrades, essential site facilities and environmental programmes. We were also very pleased to reach an important milestone of 500,000-man hours without a lost time injury during the quarter. Our focus on health and safety continues as activity on site increases.
Whilst the nickel market currently faces unprecedented volatility with pricing, the consensus remains for continued exponential growth in demand, both from the established stainless steel market and the accelerating battery market. With very few new nickel projects in the global pipeline able to reach production in the short-to-mid-term, Horizonte is uniquely placed to supply into this deficit with Araguaia scheduled to start ramp up in early 2024."
Prices for some of the world’s most pivotal products — foods, fuels, plastics and metals — are rising beyond what many buyers can afford. That’s forcing consumers to cut back and, if the trend grows, may tip economies already buffeted by pandemic and war back into recession.
The phenomenon is happening in ways large and small. Soaring natural gas prices in China are forcing ceramic factories that burn the fuel to halve their operations. A Missouri trucking company debates suspending operations because it can’t fully recoup rising diesel costs from customers. European steel mills using electric arc furnaces scale back production as power costs soar, making the metal even more expensive.
Global food prices set a record last month, according to the United Nations, as Russia’s invasion of Ukraine disrupted shipments from the countries that, together, supply a quarter of the world’s grain and much of its cooking oil. More expensive food may be frustrating to the middle class, but it’s devastating to communities trying to claw their way out of poverty. For some, “demand destruction” is just another way to say “hunger.”
In the developed world, the squeeze between higher energy and food costs could force households to cut discretionary spending — evenings out, vacations, the latest iPhone or PlayStation.
China’s decision to put its top steel-making hub under COVID-19 lockdown could limit supply and push up prices for big-ticket items like home appliances and cars. Electric vehicles from Tesla Inc., Volkswagen AG and General Motors Co. might be the future of transportation, but the lithium in their batteries is almost 500% more expensive than a year ago.
“Altogether, it signals what could turn into a recession,” said Kenneth Medlock III, senior director of the Center for Energy Studies at Rice University’s Baker Institute for Public Policy.
The International Monetary Fund is poised to cut its global growth forecast because of the war, and it sees recession risks in an increasing number of countries, Managing Director Kristalina Georgieva said. The world economy is still set to expand this year, though by less than the 4.4% previously anticipated, Georgieva said in an interview with Foreign Policy magazine.
Federal Reserve Chair Jerome Powell has said Russia’s invasion of Ukraine is aggravating inflation pressures by boosting prices on food, energy and other commodities “at a time of already too high inflation.” Curbing high inflation is a top priority, and the central bank is prepared to raise interest rates by half a percentage-point at its next meeting if needed, he said.
A Volkswagen assembly line in Dresden, Germany. Electric vehicles from Tesla Inc., Volkswagen AG and General Motors Co. might be the future of transportation, but the lithium in their batteries is almost 500% more expensive than a year ago. | REUTERS
The danger is more acute in Europe, where energy bills are soaring due to a reliance on Russian supplies. Natural gas prices on the continent are six times higher than a year ago, and electricity costs almost five times more.
Those prices may fuse with the conflict raging on the European Union’s doorstep to make businesses and households averse to all kinds of spending. The U.K. downgraded its economic forecast from 6% to 3.8% as consumers face the worst squeeze on living standards in at least six decades.
“There’s little doubt that inflation’s going to stay higher for longer as a result of the war in Ukraine,” said James Smith, a London-based economist for developed markets at ING. “A renewed spike in gas prices would see demand destruction become more widespread.”
The dynamic is playing out in products as ubiquitous as oil and as specialized as lithium, a key ingredient in advanced batteries for consumer electronics and plug-in cars. Battery makers in China, paying five times more for the metal than a year ago, have to pass some of that cost on to car companies, potentially slowing EV sales.
“The pressure is on the automakers,” said Maria Ma, an analyst at Shanghai Metals Market. “What worries the market now is that the EV sales in the next couple months may stay flat or may not perform very well after the price adjustments.”
Fertilizer-makers, who use natural gas as a raw material, started scaling back operations last year. Italy, Germany and the U.K. are exploring whether to burn more coal next winter to ease the need for gas in power generation. That would free up more of the fuel for industries, such as in glassmaking and production at large steel mills where it can’t easily be replaced.
But that still may not be enough, and there are contingency plans to limit some demand. Brick-makers in the U.K. have been asked by the government to prepare for production slowdowns if the war chokes energy supplies, the industry’s lobby group said.
Higher fuel costs are already having a dramatic effect in Asia. Foshan, a city in southern Guangdong province, started rationing gas deliveries to industrial users, and half of the province’s ceramics production lines stopped running.
American consumers and businesses are more insulated from surging fuel prices since the country doesn’t rely heavily on Russian oil or natural gas, but they’re not immune.
Crude oil prices in the U.S. soared in January and February as the threat of war grew, and retail gas prices followed, setting a nominal record of $4.31 for a gallon of regular. In Los Angeles, the average now tops $6.
Still, demand isn’t budging. It’s about 4% higher than this time last year, the U.S. Energy Information Administration said. That may reflect how Americans cooped up by years of restrictions are hell-bent on traveling.
“That has skewed everything,” said Andrew Gross, a spokesman for Florida-based AAA (formerly the American Automobile Association). “Had there not been a pandemic, these high prices might crush demand.”
Nonetheless, if oil prices stay high for a sustained level, demand destruction looms. JPMorgan Chase & Co. trimmed its second-quarter global demand forecast by 1.1 million barrels a day and reduced the outlook for both of the remaining quarters by about 500,000 barrels. Europe accounts for most of the cuts.
“Whether it’s motorists in filling up their cars, or heating or cooling their houses, this is a level that consumers have started to push back a little bit, and we’ve seen demand destruction in the past,” said Ryan Lance, chief executive officer of ConocoPhillips, on Bloomberg TV. “People start conserving and changing their behavior.”
The ArcelorMittal steelworks in Dunkirk, France. European steel mills using electric arc furnaces are scaling back production as power costs soar, making the metal even more expensive. | AFP-JIJI
Gary Hamilton, owner of an independent trucking company in Frankford, Missouri, is weighing whether to suspend operations until costs drop. Diesel there averages $4.67 a gallon, according to the AAA, and if prices climb above $5.25, that’s enough for him.
Part of the problem is he doesn’t set his own prices; the agribusinesses he hauls for do. If he asks for higher rates as fuel prices rise, they’ll just “call the next guy,” he said.
“Fuel is killing us,” Hamilton said. “It’d be cheaper for us to park our trucks and potentially lay off employees than to just keep going.”
Much like gasoline, demand for groceries in the developed world tends not to change much with price. Shoppers may change what they buy — ditching pricier items for cheaper substitutes — but they still have to buy.
Yet restaurants find rising prices an obstacle as they try to rekindle business after COVID-19. Gus Kassimis, owner of New York City-based Gemini Diner, said customers are ordering fewer steaks and less seafood, so he’s decreased his purchases from suppliers by about 10%. Gemini boosted menu prices once and is poised to do it again.
“People are more cautious on what they spend,” Kassimis said. “I don’t know how much more consumers are willing to take.”
https://www.japantimes.co.jp/news/2022/03/28/business/economy-business/global-economy-rising-prices/
A view of the Natanz uranium enrichment facility 250 km (155 miles) south of the Iranian capital Tehran, in this Maxar Technologies satellite image taken last week and obtained by Reuters on April 12, 2021. Satellite image. PHOTO: REUTERS
U.S. Special Envoy for Iran Robert Malley said on Sunday that he was not confident that a nuclear deal between world powers and Iran was imminent after 11 months of talks in Vienna that have stalled.
"I can't be confident it is imminent.. a few months ago we thought we were pretty close as well," Malley said at the Doha Forum international conference.
"The sooner we get back into the deal, which is in our interest, and presumably Iran's interest, the more faithfully we implement it."
His assessment of negotiations in Vienna to revive a 2015 nuclear accord seemed to contradict Kamal Kharrazi, a senior advisor to Iran's Supreme Leader Ayatollah Ali Khamenei.
"Yes, it's imminent. It depends on the political will of the United States," Kharrazi told the conference.
Then-U.S. President Donald Trump abandoned the pact in 2018, prompting Tehran to start violating its nuclear limits about a year later, and months of on-and-off talks to revive it paused in Vienna earlier this month after Russia presented a new obstacle.
Russia later said it had received written guarantees that it would be able to carry out its work as a party to the deal, suggesting Moscow could allow it to be resuscitated.
The failure of efforts to restore the pact could carry the risk of a regional war, or lead to more harsh Western sanctions on Iran and continued upward pressure on world oil prices that are already high due to the Ukraine conflict, analysts say.
Kharrazi said it was vital for Washington to remove the foreign terrorist organisation (FTO) designation against Iran's elite Islamic Revolutionary Guard Corps (IRGC).
"IRGC is a national army and a national army being listed as a terrorist group certainly is not acceptable," he said.
Tehran has also been pushing for guarantees that any future U.S. president would not withdraw from the deal, which would curb Tehran's nuclear programme in exchange for lifting tough sanctions which have hammered Iran's economy.
The extent to which sanctions would be rolled back is another sensitive subject.
https://tribune.com.pk/story/2349921/us-envoy-not-confident-iran-nuclear-deal-is-imminent
Many countries around the world are highly dependent on Russian wood exports. (Photo by Lyu Pin/China News Service via Getty Images)
A UN vote concluded on 2 March 2022, overwhelmingly condemning the Russian invasion of Ukraine. It also demanded a full withdrawal of Russian troops. Of the 193 nations eligible to vote, 141 approved the motion, while five were against it. A total of 35 countries abstained and 12 were absent.
Naturally, the question is why some nations would oppose or decide not to vote on what to most seems like a very straightforward condemnation of war?
To understand some of the economic ties countries have to Russia, Investment Monitor has analysed how reliant they are on Russian trade.
Russia’s trade position
With 144 million people and a GDP of $1.5trn, it is unsurprising that Russia is a key player in global trade. It is the 14th-largest global economy by goods exports – exporting $337bn worth of goods. Russia runs a trade surplus, with its goods imports totalling $232bn, ranking 21st globally. Russia also has a strong comparative trade advantage in several commodities such as oil, coal, wheat and sunflower seeds due to natural resources and favourable harvesting conditions. This means that there are several countries that will be particularly impacted if trade with Russia should cease or diminish due to imposed sanctions or other reasons. The impact of the Ukraine-Russia war is likely to have a detrimental effect on global trade.
Related
Top Russian goods by trade value
Russia exports sizeable volumes of several commodities. Its top ten export commodities account for two-thirds of its total exports. More than one-third of its total exports are petroleum oils (crude and not crude).
Nevertheless, we need more context to understand who Russia trades with and where Russian export specialism lies to truly understand where Russian trade reliance resides.
Countries that import Russian goods
China’s close political and economic ties to Russia are evidenced by its Russian imports. China imported $57.2bn worth of Russian goods in 2020. This was more than double the value of UK imports (the second-largest importer of Russian goods). Although there are some neighbouring economies in the top ten list below, many others are large, economic powerhouses. Therefore, merely inducing reliance based on total trade value alone may not give a true reflection of Russian dependency.
How important are Russian exports to countries?
When we calculate the Russian imports into each country as a proportion of that country’s total imports, we see a significantly different picture. The table below shows Belarus as being most reliant on Russian exports. Almost half (49.6%) of total Belarusian imports were derived from Russia. We also see a higher presence of neighbouring economies in the top ten. When we compare the two tables (total value and proportion of total imports) the former has seven countries that approved the UN vote to deplore the Russian invasion of Ukraine. Yet, in the second table, only two of the top ten countries voted for the motion.
Russia's export specialisms
Using revealed comparative advantage (RCA) theory, we can assess the commodities that are most likely to be impacted by sanctions placed on Russia. An overview of the RCA calculation is:
Revealed comparative advantage will tell us the commodities Russia exports more than its fair share of in a global context. The table below shows Russia having a RCA (a score greater than one) in 19 (out of 97) commodities. At the two-digit commodity level, Russia’s top export advantages were in nickel, fertilisers and mineral fuels.
However, delving deeper into the four-digit commodity level we can see more specific commodity specialisation. We also see higher RCA scores, indicated by increased export specialism in these commodities. We have identified 27 four-digit commodities where Russia has an RCA score above five – indicating that Russia exports more than five times its fair share of each of these commodities.
Although the dangers of asbestos are well known, it is still mined. Some countries have made using asbestos for building illegal; however, it is still legal to import and export the commodity. Russia has a RCA score of 31.7 on asbestos – a substantial comparative advantage in exporting it. It also accounts for almost two-thirds (62.9%) of global asbestos exports. However, trade values of this commodity ($174.9m) are relatively low compared with others listed.
Russia’s key exports, by trade volume, are oil and gas. Russian coal exports amounted to $12.4bn in 2020, while petroleum oils (crude and not crude) reached $118bn. With many countries, such as Germany, dependent on Russian energy, an instance boycott could destroy the domestic economies of many nations. While countries will certainly try to curtail their reliance on Russian energy, it is likely to be a much stickier commodity compared with others. Even with a move towards more renewable sources of energy, there is still a huge global reliance on Russian non-renewable energy exports.
Countries reliant on Russian exports
Having identified Russia’s key export commodities, the table below shows which countries are most reliant by having the largest trade volumes for Russian exports. China is one of Russia’s top three partners in 12 of the 27 commodities analysed. In fact, China is the primary destination for eight of Russia’s key exports:
ferrous products
sunflower seeds
hydroxide and peroxide of magnesium
coal
petroleum oils (crude)
wood sawn or chipped
oxides of boron; boric acids
fish
Turkey and the US, both of whom voted for the UN condemnation of the invasion of Ukraine, are two of Russia’s next most important trade partners. Russia exports more pig iron and platinum to the US than it does to any other country. Meanwhile, Turkey is the second-largest recipient of Russian exports in pig iron, sunflower seeds and wheat. In total, there were 31 unique countries that featured as one of the top three recipients of commodities in which Russia had a RCA score greater than five. This shows that there is a high degree of diversification in Russian exports and global sanctions could be highly impactful. However, that is assuming all countries agree to place sanctions on Russia.
Which other countries could the world turn to?
It is easy to suggest that all countries stop trading with Russia instantly. However, as identified above, the practicalities of this are much more complicated. Some key questions that must be answered are:
Does the import country disapprove of Russia’s invasion of Ukraine?
Can the import country import the same goods from another country (or countries), and at an affordable cost?
Can it produce more of those goods domestically?
Could it forego the commodity?
Should the answer to the above question be ‘no’, then reliance on Russia will be higher.
The table below shows the top five export countries for commodities where Russia has an RCA score greater than five.
In most cases, demand for these commodities is unlikely to fall, therefore a response is required on the supply side. While there are some commodities (for example, asbestos or ferrous products) where Russia controls a high market share, for most of the other commodities listed there are other countries producing and exporting similar levels to Russia. The challenge of countries swapping from Russian exports to another exporter is both production capacity and logistical. For example, Russia is the leading exporter of wheat and meslin – exporting 18% of the world’s total. Its closest export competitors are the US and Canada. Many US wheat farmers have actually found increased production difficult to achieve and have even experienced difficulties in shifting current crops due to high price inflation. This inflation is caused by Russia and Ukraine being two of the largest wheat producers. As production falls in Ukraine and sanctions are imposed in Russia, prices have soared.
Other commodities where Russia has a strong comparative advantage, such as fertilisers, are also contributing to the price hikes. Many countries are being impacted by falling wheat exports, particularly developing economies. Sri Lanka, which is Russia’s 19th-largest wheat export market, is undergoing an economic crisis due to food and fuel inflation.
Other commodities such as sunflower seeds and oil are highly dependent on Ukraine and Russia. Combined, both countries account for almost 60% of world exports. Production levels will be much lower, causing prices to soar.
Then there are logistical issues. For many of these commodities, Russia is a key player within Europe. With strong demand in Europe for commodities, and other global players further afield, supply chain issues and rising costs are inevitable. For example, Russia exports 15% of the world’s crude oil, a significant proportion of which is destined for Europe. Russia’s top three export partners for crude oil are China, the Netherlands and Germany. The European reliance on Russia can be seen through the Netherlands and Germany. Russia exported $9.42bn worth of crude oil to the Netherlands and $6.3bn to Germany in 2020. Only the United Arab Emirates (UAE) exports more crude oil than Russia globally. The UAE exports 22% of the global share. However, the Netherlands and Germany both have zero imports from the UAE. The US is the third-largest exporter of crude oil. The US exports $4.6bn worth of crude oil to the Netherlands (half of what Russia exports) and $1.7bn worth to Germany (a quarter of what Russia exports).
International companies pulling out of Russia
Country trade reliance can also be linked to those companies most exposed to the Ukraine-Russia conflict. GlobalData’s Multinational Companies Database identified 759 global companies with 2,225 subsidiaries in Russia. A significant proportion (95%) of these parent companies are foreign. The US, UK and France have the highest number of international companies present in Russia as well as the highest number of Russian subsidiaries. With many companies closing or suspending Russian operations, trade volumes are likely to be negatively impacted (as not all companies are exporters).
What happens next?
Russia is (or was) a key player in global trade. It has export specialisms across several commodities. Its invasion of Ukraine has caused trade shockwaves throughout the world. Reduced commodity supply has led, and will continue to lead, to inflationary pressures. The UN vote to condemn Russia’s invasion was widely approved. However, several countries abstained or were against the motion. Trade reliance has certainly played a role in these decisions, along with geopolitical motives.
A country's reliance on Russian exports appears to be present for two primary reasons: (i) neighbouring economies avail of goods with more cost-effective supply chains and quicker routes to market (ii) commodities where Russia has key specialisms – in terms of favourable production environments (for example, access to raw materials).
There will be some commodities where switching from Russian imports to other countries will be possible, but there are several where switching is much more difficult. New trade agreements will be required to ensure supply meets demand. Supply chain efficiencies will also need to be harnessed with the goal of keeping prices from overinflating and guaranteeing a sustainable future. In the shorter term, higher prices will continue and trade volumes will likely decline in 2022.
Depending on the outcome of the war, we could see a new ‘two world’ trade structure. Those that will trade with Russia may have increased dependencies, while those that are unwilling to trade with Russia will see dramatic reductions in Russian imports. With the West looking to disassociate itself from a reliance on Russian, neighbouring economies in eastern Europe and Asia have a more difficult task economically to find replacements. China's next moves will be eagerly monitored. Should it align further with Russia (for example, by supplying weapons/troops), one would expect sanctions to be implemented and the trade landscape to split further.
Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict.
https://www.mining-technology.com/features/which-countries-rely-on-russian-trade/
A disrupted global market may lead to Indonesian coal finding new homes in Europe as the ongoing Russia-Ukraine conflict continues to create turmoil in trade flows and is expected keep global prices of the fossil fuel volatile over the next six-seven months, Indonesian Coal Mining Association Director Pandu Sjahrir told S&P Global Commodity Insights.
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"I think the [Russia-Ukraine] war also adds a lot of uncertainty though I can give you a macro view; there is going to be uncertainty in the next 6-7 months," he said, adding that there would be further disruptions in shipments and global supplies. "With respect to the prices, there is going to be increased volatility."
Stating that sanctions on Russian coal are impacting supply to Europe, Sjahrir said Indonesian miners were looking to supply coal to European buyers, adding some miners have already explored markets like Spain, Poland and Italy.
Despite the surge in thermal coal prices globally, increasing production to meet high demand in a tightly supplied market has proven to be a problem in Indonesia, Sjahrir said.
Indonesia has set a target of 663 million mt coal production in 2022, higher than previous years, on expectations of more demand. While the production levels are comfortable to achieve, there are issues like supply chain disruption and inflationary pressure on costs that might impact prices, he said.
Equipment woes hurt output
Even though European buyers were expected to look for alternatives to Russian coal in Indonesia, it would be difficult for miners to step up production, Sjahrir said.
"There are issues related to supply chain ... it would probably take 18 months for the contractors to get new equipment, especially because of the war. It is even difficult to estimate the prices of equipment in these conditions," he said.
"A lot of these equipment come from other markets such as the US, Japan and China," he said, adding finance options for equipment meant to boost coal output are also limited amid the green finance policy initiatives.
The difficulty in raising production has been observed in the figures since 2019, with COVID-19 related restrictions playing a major role. Further, issues relating to mining equipment, unavailability of ships and barges, and difficulty in availing finance for expanding production have dampened output plans.
The realized coal production in Indonesia was at 616.16 million mt in 2019, 565.69 million mt in 2020 and 608.89 million mt in 2021, according to data by Indonesia's Ministry of Energy and Mineral Resources.
Despite the surge in the price of thermal coal globally after Russia's invasion of Ukraine, Indonesia has seen difficulty in boosting production. The Kalimantan 4,200 kcal/kg GAR price has shot up to $104.95/mt FOB on March 28 from $77.05/mt on Feb. 23, a 36% jump, according to data by S&P Global.
DMO rules need revision
Fresh sources of demand, rising domestic coal consumption and a tight global seaborne thermal coal market call for a revision of Indonesia's domestic market obligation regulations, Sjahrir said.
"The world has changed from the time the DMO was set in 2015-16. I think there must be a revision in the way we look at it," Sjahrir said.
Under DMO, coal producers need to supply 25% of their output to the domestic market -- primarily to state-owned PT Perusahaan Listrik Negara at a capped price -- which according to the miners is way below export prices, leaving little room for healthy margins.
"See the significant divergence in coal prices [between domestic and global]; that will create further issues with respect to supplying to PLN," he said.
Indonesia imposed a blanket ban on thermal coal exports in January after stockpiles at PLN's power plants slipped to critical levels due to non-compliance of DMO by a few miners. The export ban created an upheaval in the seaborne coal markets in Asia, leading to backlogs, supply tightness and consequently higher prices.
To improve compliance, the government now does a bimonthly review of DMO fulfillment instead of a yearly one. A new mechanism of monetary penalties has also been introduced, and in some cases an export ban may be reintroduced for a few miners, according to sources.
For power plant consumption, the price of procurement has been set at $70/mt for 6,322 kcal/kg GAR coal, with 8% moisture, 0.8% sulfur and 15% ash. PLN typically uses coal grades ranging from 4,200 kcal/kg GAR to 5,000 kcal/kg GAR.
The price cap for domestic supply should be a minimum of $90/mt, Sjahrir said.
According to latest projections by PLN, the state-owned power company and the independent power producers will consume 127.1 million mt thermal coal in 2022.
"These are the things to be considered apart from supply and demand numbers. Logistics is going to be an increasingly serious concern," he said.
"Because the spread between the prices of domestic coal supplied to PLN and the existing price of global coal is becoming wider, there will be potentially further disruptions happening."
Late last year, following widespread power shortages, China’s leadership repeatedly emphasised the importance of ensuring energy security – a country’s ability to secure sufficient and affordable energy supplies without interruption.
Since then, China – the world’s current largest emitter of carbon dioxide (CO2) – has seen an intense push to increase the production and supply of coal, its main energy source.
The nation’s daily output from coal mining has set “record highs” multiple times in recent months due to boosts in production capacity. The coal stock at coal-fired power plants has been kept at “historically high levels”.
Administratively, at least five new major coal-fired power projects were approved for construction in the first six weeks of the year and three “billion-dollar” coal mine projects were greenlighted in February.
In terms of policy, China’s top administrative organ announced in mid-February that coal supply “will be increased” and coal power plants “will be supported” to run “at full capacity” to meet electricity demand.
Two sessions: “ Close Two sessions ” is a collective term for two major national political meetings held in China every spring. Known as “liang hui” in Mandarin, they are the plenary sessions of the National People’s Congress (NPC), China’s top legislative body, and the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body. During the annual conferences, the central government reviews and approves national economic and social development plans and receives reports of the implementation of previous plans. Thus, the two sessions are considered the most important annual political gatherings in China. Two sessions: “Two sessions” is a collective term for two major national political meetings held in China every spring. Known as “liang hui” in Mandarin, they are the plenary sessions of the National People’s… “Two sessions” is a collective term for two major national political meetings held in China every spring. Known as “liang hui” in Mandarin, they are the plenary sessions of the National People’s… Read More
Furthermore, during this year’s “two sessions” – a series of important political meetings that take place in Beijing every spring – China’s president Xi Jinping reinforced the direction that coal would be the “mainstay” of the nation’s energy mix. Xi instructed that, based on China’s “national reality”, coal’s role “would be hard to change in the short term”.
The recently published 14th five-year plan (FYP) for the energy sector has also stressed coal’s role in “ensuring the basic energy needs” and highlighted coal power’s importance in supporting the power system.
The all-encompassing push for coal comes more than a year after Xi pledged that the nation would peak its carbon emissions “before 2030” and achieve carbon neutrality “before 2060” at the UN general assembly in September 2020.
‘Dual carbon’ goals: “Dual carbon” goals, or the 2030/2060 goals, refer to China’s Close “Dual carbon” goals, or the 2030/2060 goals, refer to China’s two climate goals announced by president Xi Jinping at the 75th session of the United Nations General Assembly in September 2020. President Xi announced that China would reach its carbon emissions peak before 2030 and become “carbon neutral” before 2060. In July 2021, China’s climate envoy announced that the country’s 2030 target refers to the peaking of carbon dioxide (CO2) while its “carbon neutrality” goal covers “all greenhouse gases” (GHG). ‘Dual carbon’ goals: “Dual carbon” goals, or the 2030/2060 goals, refer to China’s 75th session of the United Nations General Assembly in September 2020. President Xi announced that China would reach its carbon emissions peak… “Dual carbon” goals, or the 2030/2060 goals, refer to China’s 75th session of the United Nations General Assembly in September 2020. President Xi announced that China would reach its carbon emissions peak… Read More
What triggered China’s recent policy on coal? Why does the nation still rely on it? And, most importantly, what does the coal push mean for Beijing’s “dual-carbon goals”?
Carbon Brief has spoken to a wide range of experts to understand these issues.
Most experts agree that the ramp-up of coal is a short-term policy adjustment and does not represent a “walk back” by China on its long-term climate commitments.
However, they have different views on how the move might – or might not – affect the level of CO2 at which China will peak, which, in turn, will directly affect its carbon neutrality agenda, as well as global climate efforts.
Why does China use coal?
China is the world’s largest consumer, producer and importer of coal, with its consumption and production each accounting for around half of the global totals.
Coal is widely used in China for generating electricity, despite the country’s rapid growth of renewable energy in recent years.
According to China’s National Bureau of Statistics, coal accounted for 56% of the country’s total energy consumption in 2021. The ratio signifies a continuous decline from more than 70% in the mid-2000s. Nevertheless, the absolute level of China’s coal use has continued to rise.
China is also home to the world’s largest fleet of coal-fired power plants, making up around 50% of the operating capacity globally. A global coal map produced by Carbon Brief shows the high concentration of coal power plants in China.
However, to understand Chinese policymakers’ approach to coal, one needs to look beyond these figures and understand a bigger picture about China, such as its history, economic growth and politics, experts have told Carbon Brief.
To start with, China has abundant coal reserves. As President Xi has put it, the country is “rich in coal, poor in oil and low in gas (富煤贫油少气)”.
Boasting the world’s fourth largest coal reserves – after the US, Russia and Australia – China produces around 90% of the coal it consumes. (In comparison, it imports around 70% and 50% of the oil and gas it needs, respectively.)
“Resource endowment is a very important reason why China uses so much coal,” Dr Xie Chunping, policy fellow at the Grantham Research Institute on Climate Change and the Environment in London, tells Carbon Brief. She says:
“China’s resource endowment means that coal is low in cost and only by using a low-cost fuel can a country support its economic growth, especially in the initial stages.”
(Dr Xie recently analysed whether China is living up to its climate pledges in her guest post for Carbon Brief.)
Over the past 40 years, China has seen an economic boom, with its annual GDP growth averaging 9.5%. As a cost-competitive source of energy, coal has propelled the transformation, according to Yu Aiqun, China researcher with Global Energy Monitor.
Yu tells Carbon Brief that coal in itself “is cheap”, barring its social and environmental costs. Since China opened its doors to the world in the late 1970s, cheap energy – along with cheap land and cheap labour – has boosted China’s economic competitiveness globally, allowing it to be the “factory of the world”, Yu notes.
Dr Guo Li – research associate of the Lau China Institute at King’s College London – shares similar opinions. She tells Carbon Brief that coal is “extremely important to China” because the country is still in the process of industrialisation. She explains:
“Manufacturing has always been the backbone of the Chinese economy. In addition, in more recent years, China has also seen large-scale, rapid infrastructure construction. Therefore, it must rely on a source of energy that is cheaply available and can be managed easily on the technical front.”
Dr Guo says that it is difficult for China to kick its coal habit because the scale of its economy is “so big” and, for a long time, it depended on this single form of energy. But she also highlights China’s “very astonishing portfolio” in renewable energy. To Dr Guo, this shows that “no matter how important coal is, China is indeed trying to lessen its reliance on it”.
(China’s installed solar and wind energy capacity now accounts for 35-40% of the global total. According to the International Energy Agency, China is expected to reach 1,200 gigawatts of total wind and solar capacity in 2026 – four years earlier than its current target of 2030.)
The above screenshot from China’s state broadcaster shows Chinese president Xi Jinping (far left) inspecting the coal warehouse of a thermal power company in Shanxi province, China, before the Lunar New Year holiday on 27 January 2022. Credit: CCTV/Xinwenlianbo.
Due to its close ties with the economy, coal has been embedded deeply into the country’s social and economic structure, especially its energy system. For example, China’s power grid has been built to solely accommodate coal power, says China-based Dr Kevin Mo, who describes coal as “China’s most dependable energy resource”.
Dr Mo is principal at innovative Green Development Program (iGDP), a consultancy focusing on green and low-carbon development in Beijing. He explains coal’s importance to China’s power grid to Carbon Brief:
“The whole grid’s transmission, distribution and operation logic all centre around coal power. If the grid is to cater to renewable energy, the transmission, for example, would need to be completely different. That is why the transition of the energy system would not be that fast.”
Geopolitics is also “very important” for China’s policymaking on coal and energy security, Dr Mo notes, “because energy security is also a matter of national security”.
Dr Mo says that because China has its own coal but depends highly on imports for oil and gas, policymakers need to ensure that, if the worst comes to the worst, the country’s basic social and economic activities would still be able to run on coal power. Therefore, they need to make sure that the country has sufficient mining and production capacity while also trying to develop renewable energy.
History plays a role in shaping China’s mindset on coal, too, according to Yu of Global Energy Monitor. She says that the Chinese authority has a “deep-rooted fear” of being isolated from the world due to its memories of being sanctioned – something that explains its emphasis of being “self-sufficient”.
Yu says that for a long time after China’s Communist Party took over the country in 1949, the party faced simultaneous supply and technical restrictions from the US and the ex-Soviet Union due to a mix of issues and the experience taught it that it must rely on itself for key supplies. She adds:
“These experiences of being isolated have been ingrained in the authority’s memories. Therefore, China has and is still depending on coal because it would not need to ask other people for it.”
Yu stresses that, for China, energy security is the “cornerstone” of ensuring economic development and political stability. From this perspective, to the Chinese authority, “nothing is more important than maintaining political and social stability”, she says.
(These memories are also why China has “such high enthusiasm” for renewable energy while carrying on using coal, according to Yu. She explains that, apart from the fact that China has abundant renewable resources which could offer the country an opportunity to phase out coal, developing renewable energy means that “China would be able to take a technological vantage point and, eventually, have the right to speak on the world stage”.)
Although some high-profile climate diplomats – such as US climate envoy John Kerry and COP26 president Alok Sharma – have called on China to move away from coal faster, policy advisors to the Chinese government have expressed very different views on the fuel, which can prove controversial to many.
Prof Du Xiangwan – a high-profile academic and deputy director of China’s National Energy Advisory Committee of Experts – has a quote: “Coal is a hero. Coal reduction is progress.” (煤炭是功臣。减煤是进步。)
Speaking recently on CCTV, China’s state broadcaster, Prof Du said that people should recognise the “contribution” coal had made to “environmental protection”. He said that, in history, the prevailing use of coal to provide energy was the reason mankind stopped cutting down forests.
Prof Du explained to the audience coal’s “great merit” in history – especially in “boosting” human productivity – before acknowledging the necessity to cut coal consumption, calling the action “progress”. In explaining China’s energy policy, Prof Du said:
“Right now, we must first use coal well. [We must] use coal cleanly and efficiently while reducing carbon emissions safely. In the meantime, [we must] also develop new energy well and let it grow.”
While juggling between its climate targets and coal policy, China also needs to consider its citizens’ livelihood and wellbeing, as well as the nation’s social and economic situations, according to other Chinese government advisers.
Prof Wang Yi, a senior advisor to the Chinese delegation at COP26, told Carbon Brief last year during an interview at the climate conference in Glasgow:
“Tomorrow China could get rid of all the coal [consumption], but what about heating, right? What about the workers? Besides, our coal power fleet has only been running for an average of a dozen years. If they are all shut down, who will pay for the stranded cost?…We need to have a good pathway for coal exit and that is why we say that we have to promote [such work] in an orderly manner.”
Chinese energy researcher Dr Zhu Tong told state TV that coal is the “staple” of China’s energy system. Therefore, reducing coal consumption would have a “completely different” economic effect on China compared to Europe, whose main energy sources are oil and gas.
‘New energy’: China has not given an official definition of "new energy" so far. But, according to a Close China has not given an official definition of "new energy" so far. But, according to a book published by Tsinghua University, the term refers to the renewable energy developed and utilised using "new technologies". It covers solar, hydro, wind power, biomass energy and hydrogen fuel, among other energy forms. Another book describes "new energy" as alternative energy, which represents “all energy forms outside traditional energy”. China’s National Energy Administration said in 2021 that the country was promoting "new energy" as the main body of electricity supply in its “new style” electric power system to achieve its climate goals. ‘New energy’: China has not given an official definition of "new energy" so far. But, according to a book published by Tsinghua University, the term refers to the renewable energy developed and utilised using… China has not given an official definition of "new energy" so far. But, according to a book published by Tsinghua University, the term refers to the renewable energy developed and utilised using… Read More
Dr Zhu is the director of the energy economic research office at the Institute of Industrial Economics of the Chinese Academy of Social Sciences. According to his online profile, his proposals on energy policy and industry strategies have been “responded to” by the nation’s leaders “many times”.
Dr Zhu told CCTV – in the same programme that featured Prof Du – that China’s current priority is to stabilise its economy, which calls for the stabilisation of the manufacturing industry. He said:
“We must recognise clearly that China’s economic status in the world today is mostly earned by its manufacturing industry. Therefore, the economy would not be stable without the stability of the industry.
“Economic growth means that energy consumption will also grow stably…In the current phase, the urgency of reducing carbon must take into consideration its feasibility on the ground. We must guarantee the reasonable energy demand and growth of traditional industries. We must ensure industrial growth while phasing out fossil fuels.”
How has China boosted coal production recently?
China experienced two waves of electricity shortages last year.
The first occurred in May and hit five provinces in southern China, including Guangdong, which is known for its manufacturing industry. China’s state news agency Xinhua reported at the time that Guangdong’s power grid operator had had to ration the electricity for businesses to tackle “record-breaking” power consumption caused by factors including hot weather and a post-pandemic economic rebound.
But alarm bells did not ring – at least not loudly enough – until a more severe wave of power shortages broke out in August. Electricity rationing spread from southern China to around two-thirds of the nation and from factories to families. (Carbon Brief assessed the causes of the power shortages last October.)
The “energy crisis” – as described by some publications – was met with swift actions from China’s leadership. It took a series of steps to achieve three goals: emphasising the role of coal, boosting its production and stabilising its prices.
The first signal came from Xi in late September when he was inspecting a factory in one of China’s largest coal-producing regions. Xi described coal as the country’s “main [source of] energy”, signalling the fuel’s key position. (Notably, this speech came six days before Xi announced that the country “will not build new coal-fired power projects abroad” at the UN General Assembly.)
In October, two high-level government meetings – both chaired by China’s premier Li Keqiang – were held to give specific orders to tackle the power shortages and to bolster supply security.
Almost immediately, authorities in major coal-producing regions – including Shanxi, Shaanxi and Inner Mongolia – ordered more than 150 “qualified” coal mines to “release advanced production capacity”, which amounted to 220m tonnes a year, Xinhua reported. The state energy regulator, the National Energy Administration, also sent teams to various parts of the country to “supervise” and “guide” local companies to “solidly implement” the measures of boosting coal production and supply, according to China Power News Network, a state-approved media outlet.
Xi made another speech in late October, underscoring the importance of energy self-reliance. He said that the country “must hold the energy food bowl in its own hands”. (Carbon Brief’s China Briefing interpreted this quote of Xi last year.)
A drone picture shows an open-pit coal mine in Ejin Horo Banner, China’s Inner Mongolia autonomous region, on 19 October 2021. Credit: Oriental Image.
Days later, at COP26 in Glasgow, China said that it would “phase down coal consumption” during the 15th five-year plan (FYP) from 2026 to 2030 and “make best efforts to accelerate this work” in the US-China joint declaration released during the climate summit. It also pushed for the wording of “phasing down” – rather than “phasing out” – of coal in the final “Glasgow Climate Pact”.
By the end of last December, it had become clear that coal would remain China’s dominant source of energy for the time being.
At the year-end economic planning meeting – which set key economic goals for the nation for 2022 – the central government underlined the role of fossil fuels, saying that “traditional energy” should “exit gradually” on the basis of “safe and reliable new energy”. (This order echoed Xi’s previous instruction of “establishing before breaking”, which Carbon Brief explained last August.)
The meeting also repeated Xi’s previous line of coal being the country’s “main [source of] energy” and pointed to the concept of “clean and efficient utilisation of coal”.
The government-led production drive saw a quick result.
China’s coal production “hit record highs” in both December and across the whole of 2021, according to Reuters. In early January, Xinhua reported that China’s efforts to ensure the supply of coal power had achieved “phased” success. The state news agency described coal as the “ballast stone” of secure and stable energy supply – a metaphor that had been used by the head of the state energy regulator in December. (Coal has also been called “the foundation” and “the last barrier” of the energy system by Chinese officials and state media.)
Then came a sudden rush of approvals for new coal-fired power projects. During the first six weeks of 2022, five new coal power projects with a combined capacity of 7.3 gigawatts (GW) were approved, according to a recent briefing jointly published by the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM). The news came after such permissions had been “essentially frozen in 2021”, the report noted.
In February, the state economic planner also approved three “billion-dollar” coal mine projects in the country’s coal belt, which “will require a total investment of 24.1bn yuan ($3.8bn) and produce 19m tonnes of coal a year”, according to Bloomberg.
Despite a major national holiday, the Lunar New Year, coal mines around the country endeavoured to increase their production in the beginning of this year. In January and February, the country’s coal production registered a 10.3% year-on-year jump, reaching 690m tonnes, according to China’s National Bureau of Statistics. Reuters reported that the rise followed Beijing’s campaign to “ramp up production for the winter heating season”.
Across last year, China produced 4.1bn tonnes of raw coal, increasing by 5.7% year-on-year, the official annual statistical report said. The report also noted that China’s coal consumption went up by 4.6% in 2021.
Calculations done by Dr Yang Muyi – senior electricity policy analyst of Asia at Ember, an independent climate and energy thinktank – show that China’s coal consumption reached a “record high” of 2.93bn tonnes of standard coal (tce) last year. (Dr Yang has recently explained the causes behind the surge in Carbon Brief’s China Briefing.)
Nevertheless, China’s coal consumption has remained relatively flat over the past decade, as the chart below shows.
The chart displays the consumption in two different units, tce (which is an energy measurement) and tonne (which is a weight measurement). The tce figures are calculated based on the proportion of coal consumption in the total energy consumption, released by the China statistical yearbooks. The tonne figures are released directly by the yearbooks. The Chinese authorities have not released the tonne figure for 2020 or 2021.
The above chart shows how China’s coal consumption has changed in the past decade. The pale blue line (top) represents the trend in coal’s weight, or billions of tonnes. China has yet to release its coal consumption by weight for 2020 and 2021. The dark blue line (bottom) measures coal consumption by billions of tonnes of standard coal (tce), an energy measurement. If measured in tce, China’s coal consumption reached a “record high” in 2021, according to calculations by Dr Yang Muyi of Ember. Dr Yang has analysed the causes behind the growth in Carbon Brief’s China Briefing . Chart by Joe Goodman for Carbon Brief, using Highcharts.
In March, the position of coal – along with the significance of energy security – was cemented at the “two sessions” when government officials and political advisors convened in Beijing to review the country’s performance in 2021 and draw goals for 2022. (See the significance of the “two sessions” in this Carbon Brief Q&A.)
During the meetings, Xi stated that the “reality of coal being the mainstay of the energy mix will not change in the short term”, while the annual government work report listed the “clean and efficient utilisation of coal” as a task for 2022.
Also at the “two sessions”, the state economic planner set the daily coal production target at “more than 12m tonnes” while its deputy director said the “focus” of its work for the year was to “ensure coal supply and stabilise coal prices”. (China Briefing recently analysed this year’s “two sessions”.)
In the latest development, China’s 14FYP plan (2021-2025) for the energy sector – a highly anticipated industry roadmap for the next five years – was published on 22 March, further sealing coal’s role in the country’s future power system.
The document instructs all central government organs and regional governments to “enhance” coal’s role in “ensuring the basic needs” of energy security, “give full play” to coal power’s role of being a “supporting” and “flexible” energy source, and “vigorously promote” the “clean and efficient” use of coal.
Also on 22 March, China’s vice premier Han Zheng – who leads China’s leaders group for “dual-carbon” work – convened a high-level meeting dedicated to coal, reported Xinhua. Han ordered leaders of “relevant” government agencies and companies to “deeply understand” that promoting the “clean and efficient” use of coal is a “vital path” to achieving carbon peaking and carbon neutrality, according to Xinhua.
Neither the 14FYP for energy nor Han explained what “clean and efficient” use of coal means exactly. According to Dr Ryna Cui – assistant research professor and co-director for the China Program at the Center for Global Sustainability at the University of Maryland School of Public Policy in the US – “clean coal” refers to “the more efficient coal use, such as ultra-supercritical coal plants with ultra-low air pollutant emissions”.
Dr Cui says that the average coal consumption per kilowatt hour (kwh) of electricity generation “has been declining” in China “through a combination of replacing the old, dirty, inefficient fleets with new builds and retrofitting”. But she also cautions:
“However, without a target on total consumption, it is unlikely that efficiency improvement itself can deliver large emissions reduction.”
In a related explanation, China announced in February 2019 that it had built “the world’s largest clean coal power supply system” after completing “ultra-low emissions and energy-saving revamps” on the majority of its coal fleet “two years ahead of schedule”.
(Dr Xie Chunping also shares her views on the meaning of “clean and efficient” use of coal lower down.)
Speaking of Beijing’s series of coal-boosting instructions, all of the experts interviewed by Carbon Brief refer to last year’s power shortages as a direct driving factor.
Byford Tsang – London-based senior policy advisor at E3G, a climate change thinktank – tells Carbon Brief that there has been a “shift in the rhetoric” towards coal since the “power crunch”, with the government underlining China’s “endowment” of coal and describing the fuel as the “most prominent” energy source that the country needs to secure and supply.
But, in Tsang’s opinion, this did not represent a “policy shift” because the Chinese government had already underlined the importance of energy security in its 14FYP, which was approved in March 2021. (Read Carbon Brief’s assessment of the 14FYP.) Tsang explains:
“The one thing we picked up back then [in March 2021] was the stress on energy security. Energy security was listed as one of the three security risks of China’s development for the 14FYP period, alongside financial and food security.”
“Within the plan, there was also language regarding the clean and efficient use of coal and raising coal production and production of oil and gas. All of that is not new, but the power crunch has definitely made policymakers more focused on energy security.”
Some experts also highlight the role of the 2021 “global energy crisis” – which caused “all-time high” fuel prices and “supply chain disruptions” – in China’s recent coal policy.
Matt Gray – co-chief executive of TransitionZero, a London-based “climate analytics firm” – tells Carbon Brief that the “ongoing energy crisis and shortages internationally” is “probably a factor” behind Beijing’s “refocus” on energy security.
He adds that the situation is “obviously going to be exacerbated by the recent news of what is happening in Ukraine”. (Carbon Brief has analysed the implications of Russia’s invasion of Ukraine on energy and climate change in this Q&A).
A recent Bloomberg article reflects Gray’s concern. The outlet reported on 14 March that China is planning “a massive increase” in coal mining in a move that “will dramatically reduce” its dependence on coal imports and “deal a blow to its near-term climate actions”. It said that such an increase in mining would cut China’s “already scant” reliance on foreign coal “after global prices hit record levels in the wake of Russia’s invasion of Ukraine”.
A separate Bloomberg report said that the effects of the coal push “could already be evident from space” due to a “powerful cloud” of methane captured by a satellite above China. In a report published on 21 March, the outlet said that a boost in coal mining may have led to the plume of methane – a potent greenhouse gas (GHG) with an estimated warming potential of around 30 times that of CO2 – that has been detected in a location near a coal mine in Inner Mongolia.
Why is China still building new coal power plants?
Apart from the recent coal-production boost, China’s continuous construction and approval of new coal-fired power plants also form part of the picture as to how Beijing views the role of coal.
While more than 40 countries pledged to phase out their use of coal-fired power at last November’s COP26, the construction of new plants is expected to carry on in China.
Currently, China is home to more than half of the new power plants that are expected to be built in the world, according to the Global Coal Plant Tracker. The database shows that, as of January 2022, 158GW of new coal-fired power capacity had been announced, pre-permitted or permitted in China, making up 57% of the global pipeline.
The briefing by CREA and GEM finds that China started construction on 33GW of new coal power plants in 2021, “the most since 2016 and almost three times as much as the rest of the world put together”.
An address by Xi last April set the tone for the country’s stance on coal for this decade. Speaking at the Leaders Summit on Climate via video link, Xi announced:
“China will strictly control coal-fired power generation projects and strictly limit the increase in coal consumption over the 14FYP period (2021-2025) and phase it down in the 15FYP period (2026-2030).”
(Although the Chinese government has not provided an explanation of Xi’s words, many observers and media outlets believe that they mean China plans to peak its coal consumption in 2025. Prof Du Xiangwan interpreted China’s coal policy last month on CCTV, which China Briefing reported on.)
It is worth noting that, although China is still planning, approving and building new coal-fired power plants, the new projects usually use “high-efficiency” units that are aimed at reducing coal consumption and pollution.
A scheme issued last November by the National Development and Reform Commission – the state economic planner – on the “retrofit and upgrade” of coal power has given detailed instructions on the “efficiency” levels that new and existing coal power units need to reach in various aspects. In addition, the document stipulates that new coal power capacity “may” replace the capacity left by the “backward” capacity that has been shut down. (China has been closing down small, older and more polluting units over the past few years.)
An aerial picture shows the Beijiang coal-fired power plant operating on 13 December 2021 in Tianjin, China. Credit: Oriental Image.
Matt Gray of TransitionZero says that even though the new coal power plants that are being built in China do not involve “enormous” investments in themselves, what they mean is that “China does see coal as a primary source of securing energy, still”.
Gray says that such a perspective is “a false narrative” because “what the world learned last year was that coal is not as abundant or as secure as it has previously been considered”. He tells Carbon Brief:
“What we are trying to communicate is that renewable energy is low in cost and a secure electricity source in a way that coal can’t be. The signal we are getting out of China is that policymakers are not entirely convinced of that yet.”
Yu Aiqun tells Carbon Brief what the surge of coal-plant approvals signifies is that “the direction of wind has changed”.
Yu says that the Chinese government has always been “walking a tightrope” in “balancing” two areas of work: pollution and emission control versus economic and energy security.
Because it is “very hard” to find a “balance point” for these needs, even though the Chinese government would try to aim for a “balance” in the long term, it often swings from one side to another in the short term, Yu explains, adding:
“For example, when fast economic growth [causes high pollution and emissions] or when there are major international events, such as President Xi’s climate pledges and COP26, international pressure will force China to lean towards protecting the environment and tackling climate change. However, when there are issues with energy supply or when energy security is endangered, it will shift to favouring the other side.”
Yu points out that those approvals also highlight a “strong impulse” of building coal power plants in China. She notes:
“Usually, it would take a company two to three years to prepare the documents to apply for the construction approval [for a coal-fired power plant]. The string of approvals means that the operators had been well prepared and waiting for the floodgates to open.”
Yu adds that the central government had been relying on strict policies to “suppress” new coal plants, but once the direction of policy changed, the “restless production capacity suddenly rushed out”.
Dr Mo of Beijing-based iGDP also mentions such an “impulse”, even though – as he says – “many organisations in the country have urged against approving new projects”.
Dr Mo explains that the “impulse” comes from local governments because building coal power plants can help boost their regions’ economic performance. Besides, some provinces want to build coal-fired power plants so that they can stop relying on other provinces for electricity due to the province-based setup of China’s power grids, Dr Mo adds.
(Currently, applications for new coal-fired power plants are verified and approved by provincial governments in China, after the central government delegated its power to them in 2014. However, the provincial governments do not have 100% authority on the matter, either. Carbon Brief understands that, although they are the one to issue the permits, they must follow – and sometimes guess – the central government’s policy direction while considering the applications. This Carbon Brief guest post touched upon the topic.)
Some experts perceive new coal-fired power capacity as “necessary” to ensure a stable grid for meeting growing demand in the near term, according to Dr Ryna Cui at the University of Maryland School of Public Policy.
“One argument for that is to use coal plants for providing flexible peaking services to help support an increasing share of renewables in the grid,” Dr Cui tells Carbon Brief. She also says:
“Given the construction period of coal plants [is] between 18 to 36 months or even longer, [China] is likely to see continued coal power capacity growth over the next few years even if most early stages projects are cancelled. Total installed capacity will also depend on how much older plants can be retired.”
The “argument” mentioned by Dr Cui echoes recent instructions coming out of Beijing, which now regards coal power as part of the nation’s renewable-led power system in the future.
A high-level meeting chaired by Xi in January instructed that the country should “vigorously plan and construct” a “new energy supply and accommodation system” (新能源供给消纳体系), which would see “large-scale” solar and wind energy bases as the “foundation”, “clean and efficient” coal power capacity as the “support”, and “stable, safe and reliable” ultra-high-voltage transmission lines as the “carrier”.
Interpreting the directives, Prof Zeng Ming from the Energy Internet Research Centre at the North China Electric Power University in Beijing told Yicai – a Shanghai-based financial publication – that a main method used by China to build such a future system is to pair large wind and solar farms with “clean and efficient” coal power capacity in their surrounding areas. The latter could “balance out” the “instability” of renewable resources, Prof Zeng noted. He added that power would be sent for long distances to load centres by ultra-high-voltage transmission lines in the future system.
The newly published 14FYP for energy centres around the development of a “modern energy system” which chimes with Xi’s command for a “clean, low-carbon, secure and highly efficient” energy system. (China Briefing analysed the 14FYP for energy this month.)
Zhang Jianhua, the head of China’s state energy regulator, told China Power News Network that while China must “accelerate” the development of non-fossil fuels, coal power would be tasked to provide “flexible” services to help the power system take in more new energy.
Chai Qimin – director of the strategy and planning department of the National Centre for Climate Change Strategy and International Cooperation, a government-affiliated thinktank – expects fossil fuels to “work” with non-fossil fuels. He told the 21st Century Business Herald, a Chinese financial publication:
“The development of the entire new type power system in the future needs optimised combinations of fossil fuels and non-fossil fuels, traditional energy and new energy. [They] need to play different roles and work together.”
All these instructions and comments help to provide an official explanation as to why China is still approving and building new coal-fired power plants, as well as retrofitting existing units.
China has sent out “very clear” messages that the “role of coal power has changed”, according to Dr Xie Chunping from the Grantham Research Institute on Climate Change and the Environment. In her view, building new coal-fired power capacity is “important” for ensuring power supply during energy transition when growth in non-fossil energy power generation is not large enough to cover incremental increases in electricity demand.
Dr Xie tells Carbon Brief that the Chinese government has indicated “clearly” that new coal-fired power plants will be treated as “flexible resources or capacity” in the future to help ensure the security and stability of power supply – instead of operating at their full capacity.
Such a message means that building new coal-fired power plants does not necessarily equal an increase of CO2 emissions in the future, as those new plants’ actual operating hours could be controlled at “a very low number” once renewable capacity builds up, Dr Xie explains. She adds:
“Although those newly built coal-fired power plants will not retire in a short period of time, their operating hours can be very low. The reason why they need to exist and their existence is very important is that in the short term they can meet the fast growing electricity demand, while in the long term they can work as peak regulation capacity and support high penetration of renewable integration through providing the necessary flexibility.”
“When renewable energy and energy storage technologies are fully developed, [China] can rely more on wind and solar generation and reduce the utilisation of coal power capacity whenever possible. This energy transition is not only good for the environment and climate, but also crucial for ensuring national energy supply security in the long term, as renewables are much safer than fossil fuels which are often associated with uncertainties and geopolitical conflicts.”
A solar power farm is pictured against rapeseed in Yueqing, China’s Zhejiang province, on 16 March 2022. Credit: Oriental Image.
Moreover, Dr Xie points out that moving away from coal is a challenge faced by many countries, not just China. She says that coal consumption continues to drop “steeply” in developed countries, however, the phase-out of coal in many developing countries is a “daunting challenge”.
Dr Xie says that the proportion of coal in China’s energy mix is “too high”, therefore, a transition cannot happen “overnight” and needs to happen “step by step”.
On the administrative level, China’s state energy regulator has said that, “in principle”, China will not build coal power projects whose sole purpose is to generate electricity in the 14FYP period.
But the authority hinted that some coal power projects would still be approved and built as it said that the country would “arrange a certain scale of supportive power sources to ensure the security of electricity supply, as well as adjustable power sources to facilitate the accommodation of new energy”.
The above messages were not issued as a direct order by the state energy regulator. Instead, they came in a reply from the authority to a political proposal submitted during last year’s “two sessions”. Notably, the response was made in August but, according to various Chinese reports, it was only published in late February. This indicates that it was a message the Chinese government wanted to convey at that particular time.
Dr Xie says the state energy regulator intended to answer a key question through the messages: is China going back on its climate commitments by building new coal power capacity? According to its response, the answer is “no”, because China has assigned a new role for coal power, Dr Xie explains.
E3G’s Byford Tsang says that the response served two purposes. One is to explain some of the elements in the energy 14FYP plan. The other is to clarify how China plans to “strictly control” the buildout of coal power plants.
The explanation by Chinese policy advisers also pointed to the “changing role” of coal power, as Dr Xie has mentioned. Prof Wang Zhongying – another senior adviser to the Chinese government at COP26 – told Carbon Brief in an interview that there is a “widespread misunderstanding” that China’s climate pledges means that it would stop building coal power plants.
Prof Wang emphasised that what China talks about is exiting the consumption of coal, not the installed capacity of coal power generation. Prof Wang elaborated in his interview:
“In some places, it is possible that green electricity from wind and solar, for the moment, due to the grid [availability] or other reasons, such as network load, cannot be delivered. But if it [such places] happens to have coal [supply] and installed [coal-fired power generation] capacity, then it can build [some coal power plants]. It is possible that [such places] will develop a few new coal power plants sporadically. But, at the same time, the old and ancient installed capacity will also be retired.”
Prof Wang added:
“From our point of view, what we need to do now is to further constantly lower the operating hours of installed coal power, while keeping the power system operating smoothly, safely and efficiently. And, here, ‘efficiency’ means to accommodate more [renewable energy].”
Will the coal push affect China’s climate goals?
There is a range of views about what China’s recent push for coal production would mean for its climate goals, especially its efforts towards carbon neutrality.
From a policy perspective, although all the experts interviewed by Carbon Brief believe that China should be able to follow its timeline of peaking CO2 emissions despite the coal boost, some worry that the move could make China’s decarbonisation “slower” and “more costly”.
Byford Tsang says that the increasing “focus on coal” lately “is not great news” to China’s “dual-carbon” goals. He underlines that the Chinese government, however, “has given itself a lot of wiggle room” in interpreting its carbon-peaking target because the official wording only refers to the timeline as “before 2030”.
In Tsang’s opinion, “strictly speaking”, China is “not walking back on its target”, but he warns that “that any additional fossil fuel is going to be stranded asset because it is not going to run the full course of the lifetime if we are to meet the peaking and neutrality goals, or getting China’s emission trajectory in line with the 1.5C target under the Paris Agreement”. He notes:
“[The recent coal push] might not have a big impact on China meeting the 2030 target alone, but it will make China’s transition [towards carbon neutrality] more costly because more new coal power plants will mean more stranded assets and the local economy will rely more on fossil fuels and it is going to make it harder to move away.”
Tsang expects the combination of the “power crunch” and the “increasing geopolitical tensions” between China and “the West” to give Chinese policymakers “a more difficult choice” in balancing the need to transition its energy structure and to “save” energy security “because coal is the fall-back option”.
Dr Ryna Cui believes that any actions that promote coal – rather than phasing it down – “will add challenges” for China’s “post-2030 transition”.
As Dr Cui puts it, China’s near-term commitments on carbon peaking and coal phasedown do not include specific targets on the total CO2 emissions or coal consumption and, thus, “leave room for uncertainties”.
Even though net-zero is “far down the road”, this decade is “certainly critical”, she notes, adding that actions such as peaking earlier at a lower level and accelerating the process to start phasing down coal “can set forth a good path toward carbon neutrality”. She continues:
“The opposite actions will add challenges for the post-2030 transition. Building new coal plants will have economic implications with increased stranded assets, although the emissions impact is less clear with reduced utilisation levels and more efficient use of coal.”
(A new report co-authored by Dr Cui develops an “orderly” plan for China to phase down coal in the 14FYP and 15FYP periods. The report was jointly published by the Centre for Global Sustainability at the University of Maryland School of Public Policy and the California-China Climate Institute.)
Coal is “China’s 800-pound gorilla” and “phaseout is absolutely critical” in order for China to meet its climate targets, according to Matt Gray. In particular, he highlights the financial risks of falling back on the fuel, as he tells Carbon Brief:
“Failure to caveat spending to avoid coal plant investments will have implications on China’s net-zero pledge and economy. Previous analysis from TransitionZero shows that China would need to close, convert or put into reserve capacity 364GW of coal by 2030 in order to meet its net-zero pledge and that continued exposure to coal poses increased economic risk, given the price volatility associated with coal compared to zero-carbon alternatives.
As for Prof Alex Wang – the faculty co-director of the Emmett Institute on Climate Change and the Environment of UCLA School of Law in the US – the instructions coming out of the recent “two sessions” are “worrisome from an environmental perspective”, though “not surprising in a period of economic uncertainty”. He says:
“This year’s NPC meeting has emphasised economic growth. Official comments on climate policy have continually emphasised the need to move cautiously on coal reduction. Perhaps this is just a call for ‘smart’ decarbonisation, but it is hard to see how this does not also mean ‘slower’ decarbonisation.”
However, Chai Qimin – who works for a government-affiliated thinktank in Beijing – sees the issue from a different angle. He told the 21st Century Business Herald that pursuing the “dual-carbon” goals does not mean that China will not develop its coal industry.
Chai stressed that the operating efficiency of China’s coal-fired power units were “generally high” (something Yu Aiqun and Dr Xie Chunping tell Carbon Brief, too) and that coal-fired power capacity “will grow appropriately before 2030”. He said that those newly built units would “continue to play a role in the future” and even become “an entry ticket” for investment in renewable energy, due to China’s current policy.
Regarding the financial prospect for those newly built coal power plants, Chai told the outlet that China’s power pricing system could be reformed to ensure that electricity generated by those plants would be paid “relatively higher” prices as a supportive measure. He added:
“Therefore, in the future, coal power [plants] would not need to operate for more than 4,000 hours to make a profit. It is possible that [they] could make profit by generating power for more than 1,000 or even just several hundred hours.”
Dr Liao Xuanli – senior lecturer on international relations and energy security studies at the University of Dundee in Scotland – says that although there are “quite some uncertainties”, she does not think that China would boost coal use “for too long” with “the advancement of technology”, such as “clean coal”, carbon capture and storage (CCS), carbon capture and utilisation (CCUS) and hydrogen. (According to an explainer published by the Paper – a Shanghai-based news website – “clean coal” refers to the coal that is “processed” and, therefore, “emits significantly less sulphur dioxide (SO2), nitrogen oxides (NOx) and dust” while burning.)
Dr Liao notes that “the temporary policy would not affect China’s climate agenda in the long run”. She explains: “If you could compare China’s case with the EU’s view on natural gas, it might be easier to understand the current situation in China.” (Many policymakers in the EU have viewed gas as a “bridge” from coal to renewables, though Russia’s invasion of Ukraine and high gas prices have posed severe challenges to this position.)
A driver is pictured unloading what is described as “clean coal” for residents in Jinan, China’s Shandong province, on 21 October 2021. Credit: Oriental Image.
From an emissions point of view, the opinions are more varied on whether the recent coal drive would push up China’s carbon peak level, which will have a knock-on effect on the effort needed to neutralise those emissions.
Dr Xie Chunping thinks that the push “will certainly affect” the level of China’s CO2 emissions in “the following few years” because more coal is being used to meet the growing demand.
But she says that the move “may not necessarily” affect the timing and level of China’s emissions peak, “as long as China starts to significantly reduce the utilisation rates of coal-fired plants and use them as backup capacity, once renewables build up”.
Dr Yang Muyi of Ember says that when and at what level China will peak its CO2 emissions “largely” depends on the trajectory of its emission intensity, the CO2 emissions per unit of GDP.
Dr Yang points out that China’s emission intensity has seen a declining trend in recent years, highlighting that between 2005 and 2019, the benchmark had dropped by 48.1% – higher than the country’s initial targets of 40%-45% intensity reduction by 2020.
He refers to previous analysis conducted by Carbon Brief, which suggested that China’s CO2 emissions would peak in 2027 at 12.7bn tonnes if the country could reduce its emissions intensity by 65% of 2005 levels by 2030 – a target set by China’s original nationally determined contribution (NDC). This would require an estimated annual reduction of 3.1-5.2% after 2020, according to the analysis. (China has enhanced its emissions intensity target to a “more than 65%” drop from 2005 levels in its updated NDC published last October.)
Dr Yang says the recent ramp-up of coal production “may contribute to” – but not necessarily lead to – higher CO2 emissions intensity. He notes that as long as the country’s overall CO2 emissions intensity could continue to fall at the rates “considered sufficient” for hitting the 60%-65% targets – in this case, an estimated 3.1-5.2% annual reduction rate – it is “very likely” that it would be able to peak its CO2 emissions “before 2030” at the projected 12.7bn tonnes, assuming that China’s economy grows at expected rates.
Dr He Gang – assistant professor in the Department of Technology and Society at the Stony Brook University in the US – tells Carbon Brief that China has made clear its long-term climate pledges, but “when and at what scale” China peaks its emissions will have a “large” impact on how it and the world would achieve carbon neutrality.
Citing new figures from the International Energy Agency (IEA), Dr He says that China’s energy-related CO2 emissions reached 11.9bn tonnes last year, which “already exceeded” the previously discussed goal of 11bn tonnes in 2030 or a more aggressive goal of 10.5bn tonnes in 2025. (China Briefing has explained the new IEA figures.) Dr He adds:
“If emissions from coal generation could not be reversed, the peak level will be even higher than what had been estimated. The cumulative additional emission will also require a much steep mitigation pathway to achieve carbon neutrality.”
Speaking of China’s construction of new coal power plants, Dr He says that, although the new builds are usually “high-efficiency” plants, if they are not accompanied by the retirement of small inefficient plants and flexibility retrofit of existing plants, they “will make it harder for China to deliver its climate pledges”.
On the same topic, Matt Gray expresses “particular concern” of China’s promotion of “clean and highly efficient utilisation of coal”, especially because the country has not laid out “any specific new targets for coal phaseout”.
On whether “high-efficiency” coal-fired power units could help reduce CO2 emissions, Matt says that the “high-level” answer is “no”. A country “cannot just sub out the existing fleet with high-efficiency plants with the hope of being net-zero in the long term”, Gray notes.
Furthermore, he says that building such plants “on the expectation that they will be supporting a net-zero policy goal over the long term is patently untrue”. He explains:
“As a rule of thumb, an average coal-fired power plant has an emission intensity of about 900 grams of CO2 per kilowatt-hour (gCO2/kWh). To be net-zero aligned, based on the IEA’s net-zero emissions scenario, the carbon intensity will need to be around 140gCO2/kWh by 2030. The most efficient coal plants have a carbon intensity of 650gCO2/kWh.”
However, Gray notes that there is “probably a role” for using “high-efficiency” coal plants for peaking services over the short term as China is building wind and solar farms at a “frantic pace” and this “variable” energy will “need to be supported by dispatchable technologies to balance the system”.
“But in terms of running high-efficiency coal plants without CCS over the long term based on the presumption they are net-zero aligned, that is incorrect,” he concludes.
Dr Xie explains what “clean and efficient utilisation of coal” means from her point of view. She says that the “clean” use of coal is not aimed at cutting CO2 emissions; instead, it refers to coal preparation and the reduction of the emissions of air pollutants – such as SO2, NOx and dust, according to China’s Law on the Prevention and Control of Air Pollution. (Coal preparation, also known as coal washing, is a process aimed at reducing sulphur and ash in coal and restricting the mining of high-sulphur or high-ash coal.)
In terms of the “efficient” use of coal, Dr Xie notes that the move intends to reduce CO2 emissions by “further lowering” the coal consumption of a coal power unit when it generates electricity.
According to China’s scheme on the “retrofit and upgrade” of coal power published last November, the coal consumption in 2020 of those coal-fired power plants whose capacity is six megawatts (MW) or higher stood at 305.5 grams of standard coal equivalent per kilowatt hour (gce/kWh). (The figure has declined by 3% compared to 2015, 8% compared to 2010 and 17% compared to 2005.)
The scheme stipulates that newly built coal-fired power units should “in principle” be “ultra-supercritical units” whose coal consumption is lower than 270gce/kWh. It requires the average coal consumption of all coal-fired power plants nationwide to be lower than 300gce/kWh by 2025.
Dr Xie points out that the scheme also emphasises retrofitting existing units to lower thermal coal use for power generation and to increase their capabilities of providing flexible peaking services to facilitate the accommodation of clean energy. For those units whose coal consumption is higher than 300gce/kWh and cannot be retrofitted or are deemed “backward”, they should be “shut down but not demolished” to be used as backup power sources, Dr Xie cites the scheme as saying.
Despite their different views on the role of coal power and the impact of China’s coal drive on its climate goals, all experts interviewed by Carbon Brief agree on one thing: the recent coal push does not mean that China is rethinking or walking back on its climate commitments (although some experts caution that China’s pledges are not ambitious enough for meeting the 1.5C target under the Paris Agreement).
Another consensus is that even if there are short-term adjustments, the Chinese government will pull all the stops out to hit its announced targets.
As Yu Aiqun puts it, the Chinese government is “a master at planning”, adding that “one has to respect them for that”. She says: “Once a goal is set, no matter what the goal is, [the central government] will dissect it and assign relevant instructions down [to local governments]. These orders will then become political orders for local officials and failing to meet them will lead the officials to get dismissed.” (Carbon Brief’s article on the “nine key climate moments” for China has explained this governing style.)
Dr Ryna Cui says that it is “quite usual that China commits to what is the bottom line and over-accomplish its targets”. She adds that such an approach “just requires more structured and integrated strategies to link near-term actions to long-term goals”.
Dr Cui goes one step further and notes that, “more importantly, low-carbon transition is in line with China’s own vision to achieve a ‘Beautiful China’”. She says that the transition could provide “strong synergies with China’s broad development priorities and [lead] to sustained, high-quality growth that is in harmony with the environment and people’s well-being.”
She concludes that “it is, therefore, in China’s own interests to race to net-zero emissions and bring a better quality of life to its people”.
https://www.carbonbrief.org/analysis-what-does-chinas-coal-push-mean-for-its-climate-goals
NEW DELHI: Russian foreign minister Sergei Lavrov is set to fly to India this week, sources said, finding time to visit to one of the biggest buyers of Russian commodities since the international community began isolating Moscow for its invasion of Ukraine.There is little sign that buying will slow down any time soon, as more deals get signed. One source said the two countries could discuss smoothening trade payments disrupted by Western sanctions on Russian banks. Media have said he could hold talks in Delhi on Friday.It will only be Lavrov's third visit overseas since Russia's February 24 invasion of Ukraine, after a trip to Turkey for talks with his Ukrainian counterpart earlier this month and a scheduled meeting in China on Thursday.
Russia is India's main supplier of defence hardware but overall annual trade is small, averaging about $9 billion in the past few years, mainly fertiliser and some oil. By comparison, India's bilateral trade with China is more than $100 billion a year. But given sharp discounts on Russian crude oil since the attack on Ukraine, India has bought at least 13 million barrels, compared with nearly 16 million barrels imported from the country for the whole of last year. Many European countries have also continued to buy Russian energy despite publicly criticising Moscow. New Delhi has called for an immediate ceasefire in Ukraine but has refused to explicitly condemn Moscow's actions. It has abstained from voting on multiple UN resolutions on the war.India is now considering doubling its imports of Russian coking coal used in making steel, the steel minister said on Sunday.Reuters reported on Tuesday that India recently contracted to buy 45,000 tonnes of Russian sunflower oil for April delivery after supplies from Ukraine stopped. Last year, India bought about 20,000 tonnes from Russia a month."India will import more items from Russia, especially if it is at a discount," one senior Indian government official said.
The government has been looking to establish a rupee-rouble trade system and discussions between Indian and Russian financial officials are ongoing, said the source. All the sources declined to be named as the talks were private. Theg overnment and the Reserve Bank of India (RBI) did not immediately respond to requests for comment.Other mechanisms besides the rupee-rouble trade window, several other options are on the cards, including settling all government and quasi-government payments directly through the central banks of the two countries, said the source."India has made up its mind to continue trading with Russia, one way or the other," said Happymon Jacob, a professor of international studies at New Delhi's Jawaharlal Nehru University."During the Russian foreign minister's visit, the bureaucracy could definitely bring up the issue of how to continue looking for alternative mechanisms to smoothen trade relations between the two sides."Russia's embassy in New Delhi said it could not confirm the visit. India's foreign ministry said it had no information to share. In a sign of sustained ties despite the Ukraine crisis, India is considering allowing Russia to use its funds lying with the RBI to invest in Indian corporate bonds, said another government source.Russia has retained about Rs 2,000 crore ($263 million) of Indian payments for Russian defence equipment with the RBI. But another government official said New Delhi would have to diplomatically tackle pressure from the West to be able to maintain its ties with Russia. US President Joe Biden said this month India was "somewhat shaky" in acting against Russia. A US diplomat said last week after meeting Indian officials in New Delhi that the United States had not asked partners like India to suddenly stop energy purchases from Russia.
Explained
Russia has been condemned for its conflict with Ukraine and increasingly isolated on the international stage but India has remained resolutely silent.
A day after Russia’s invasion of Ukraine on 24 Febraury, the UN Security Council voted on a resolution demanding Moscow immediately stop its attack on Ukraine and withdraw all troops.
Eleven of the council’s 15 members voted in favour.
Russia voted against it and China, United Arab Emirates and India abstained.
Since then India has abstained on further United Nations votes condemning Russia’s actions including those at the UN General Assembly, the UN Human Rights Council and the International Atomic Energy Agency.
We take a look at why and whether this constitutes support.
Is India supporting Russia?
While many Western leaders are imposing tough sanctions on Russia, India is ramping up its import of Russian oil and continuing to import coal.
And on social media in India the hastags #IStandWithPutin and #istandwithrussia are reportedly trending.
But India appears to be walking a diplomatic tightrope over Ukraine.
On the one hand, it stopped short of openly criticising Russia over the invasion by abstaining from UN resolutions.
But in a statement has emphasised the importance of the “UN Charter, international law, and respect for the sovereignty and territorial integrity of states”.
What is the relationship between Russia and India?
Since India’s independence in 1947, the nation has had a long-standing relationship with Russia and has relied on Soviet and then Russian support over the issue of sovereignty of Kashmir.
In 1971, it signed the Treaty of Peace, Friendship and Co-operation with the then Soviet Union.
And in 2000, India’s then Prime Minister Atal Bihari Vajpayee signed a Declaration of Strategic Partnership with Russia’s President Vladimir Putin. Ten years later it became a “Special and Strategic Partnership”.
On a number of UN resolutions relating more recently to Crimea and the Chechen war, India has abstained or voted against.
Why has India not severed ties with Russia?
India relies on Russia for arms. It is the nation’s largest supplier, providing 49 per cent of the country’s defensive weapons.
The Soviet Union and then Russia’s economic contribution and technical assistance have helped India build up its oil, gas and mining industries.
But it still relies on Russia for some of its energy needs.
Its Steel Minister Ramchandra Prasad Singh has said India is “moving in the direction of importing coking coal from Russia”.
India plans to double imports of Russian coking coal, a key ingredient in making steel, the minister said.
It imported 12 million barrels of oil from Russia in 2021 and is understood to be planning to buy more oil from Russia this year, taking advantage of discounted prices.
However, it is also increasing its oil imports from the US and has tried maintain ties with the West as well as Russia.
Anil Triguniyat, a former Indian diplomat who served in Moscow, told the BBC India sees the “holistic picture which involves keeping channels open with everyone”.
Pensana Plc (LON:PRE), building the world’s first independent, sustainable rare earth magnet metal supply chain, has announced its unaudited results for the six months ended 31 December 2021.
Half Year Highlights
Initiation of geotechnical drilling and trenching at both the Saltend and Longonjo sites ahead of main construction activity
Appointment of highly experienced natural resources financier Steven Sharpe as Non-Executive Director of the Company
Total comprehensive loss for the period of $4,235,572 (31 December 2020: $1,717,491)
Post period end
Front-End Engineering Design for both Saltend and Longonjo completed and value engineering ongoing
Approaches received from major European and US electric vehicle and wind turbine OEMS to secure magnet metal supply chain
Memorandum of Understanding executed with key Asian trading house for 50% of Saltend’s production
Financing well advanced, including potential support from the UK government’s UK Export Finance and the Automotive Transformation Fund
Successful institutional equity placing of £10 million with M&G, one of the UK’s largest and long-standing fund managers
Increasing engagement with UK and US generalist institutional investors following M&G’s 5% direct investment and the appointment of Head of Investor Relations and Communications
Comment from Paul Atherley, Chairman: “We have seen six months of considerable progress for the Company as we look to establish an independent and sustainable magnet metal rare earth production facility at Saltend in the UK to meet the burgeoning demand from the electric vehicle and offshore wind sectors. Both the Saltend and Longonjo projects have been brought to FEED status, with financing and offtake discussions being well advanced.”
CEO’s Review
COVID-19
Whilst Covid-19’s grip on the world continued to be felt over this six-month review period to 31 December 2021 (the “Period”) the team, alongside our key technical advisors progressed unabated on the key workstreams of FEED, geotechnical drilling and pilot plant test work on the Saltend and Longonjo projects. Operational readiness programmes saw the work packages for Saltend and Longonjo delineated to high levels of accuracy and the Group’s management team strengthened with key appointments to the Board and our business development team in Japan and Europe. M&G’s £10 million equity investment which completed post period end was a further significant institutional endorsement towards the Company’s strategy of becoming the world’s first major new rare earth mine in over a decade and the critical rare earth processing hub for the UK. The strategic relevance of these projects has been highlighted by ongoing engagement with several EV makers, OEMs, large industrials and potential downstream partners.
Rare earth supply continues to take centre stage
Pensana’s Saltend Chemical processing facility is at the forefront of efforts to break the UK’s dependence on China for supplies of rare earths, critical elements used in the manufacture of permanent magnets, which are used in green technologies such as EVs and wind turbines. China produces more than 98% of the world’s magnets and is preparing to tighten its grip on the market by combining three of its huge state enterprises to form China Rare Earth Group that will control 70% of China’s output. Following recent comments by MP Alexander Stafford, Chair of the APPG on ESG, vice-chair of the APPG on Hydrogen, and vice-chair of the APPG for Critical Minerals that “China’s dominance of rare earth metals has left Britain strategically vulnerable”, politicians in Europe and the US are supporting efforts to diversify supply chains. Recent events in Europe have further highlighted the significance of ensuring diversification away from the world’s traditional reliance on fossil fuels, and we believe Pensana will directly benefit from supportive UK Government policies by building the facility within the Humber Freeport.
Saltend rare earth processing hub (“Saltend”)
Pensana is establishing Saltend in the Humber Freeport zone and alongside the Wood Group, have designed the facility to be easily adapted to cater for a range of rare earth feedstocks. This is an attractive alternative to mining houses who may otherwise be limited to selling their products to China. In addition to our plans to process Longonjo’s feedstock material, discussions have advanced with third parties over the Period for the additional supply of sustainably sourced rare earth carbonates.
Importantly for many miners around the world who are looking to access the European and US supply chains, it is becoming increasingly clear that the planned EU and potential UK carbon border taxation means that it is no longer acceptable for manufacturers to source material extracted or processed unsustainably. Once in production, Pensana will look to expand production capacity when additional feedstock becomes available.
Project delivery
FEED for each of Saltend and Longonjo completed post-Period end. A comprehensive value engineering and optimisation programme is well advanced and is expected to be reported next month and is expected to result in further reduction in capital costs.
Working alongside Wood Group’s Perth, Reading and Johannesburg offices, Paradigm Project Management (PPM), a specialist Africa centric project management and engineering company, and Professional Cost Consultants (PCC), with offices in South Africa and the UK, the estimated capex has been reduced from US$525 million to US$494 million (Saltend: US$195 million and Longonjo: US$299 million).
Worldwide supply chain constraints and inflationary pressures brought about by Covid-19 and the recent Ukraine-Russia conflict, which could have impacted both Saltend and Longonjo projects, have been largely mitigated by this detailed optimisation and value engineering processes.
Specific workstreams involving capital and operation cost savings currently underway include:
Spent acid regeneration to maximise the recycling efficiency of the sulphuric acid plant integrated with off-gas from the calcining of concentrate at Longonjo, which is an important aspect of the process and constitutes a significant reduction of the carbon footprint through reduced reagent consumption
Piloting on a more cost-effective flotation concentrate calcining process offered as a vendor alternative post FEED, which would enable a significantly shorter lead time for fabrication and ease of installation at Longonjo
Optimisation of Saltend’s civil & earthworks for load bearing structures undertaken alongside the completion of detailed geotechnical investigation, which will shorten the construction period and allow for future affordable expansion into downstream activities associated with magnet metal production, magnet recycling and processing of HREO
Piloting of process simplification opportunities discovered in the MRES precipitation circuit in Longonjo
https://www.directorstalkinterviews.com/pensana-six-months-of-considerable-progress/4121059002
The China stock market headed south again on Tuesday, one session after snapping the two-day losing streak in which it had fallen almost 60 points or 1.8 percent. The Shanghai Composite Index now rests just above the 3,200-point plateau and it figures to bounce higher again on Wednesday.
The global forecast for the Asian is broadly positive on hopes for a cease fire between Russia and Ukraine. The European and U.S. markets were up and the Asian bourses figure to follow that lead.
The SCI finished modestly lower on Tuesday following losses from the properties, gains from the oil companies and mixed performances from the financials and energy stocks.
For the day, the index shed 10.56 points or 0.33 percent to finish at 3,203.94 after trading between 3,196.46 and 3,229.18. The Shenzhen Composite Index sank 12.03 points or 0.57 percent to end at 2,084.47.
Among the actives, Industrial and Commercial Bank of China collected 0.64 percent, while Bank of China added 0.63 percent, China Construction Bank advanced 0.97 percent, China Merchants Bank eased 0.09 percent, Bank of Communications improved 0.80 percent, China Life Insurance skidded 1.19 percent, Jiangxi Copper sank 0.76 percent, Aluminum Corp of China (Chalco) retreated 1.47 percent, Yankuang Energy shed 0.64 percent, PetroChina strengthened 1.08 percent, China Petroleum and Chemical (Sinopec) climbed 0.93 percent, Huaneng Power tanked 2.34 percent, China Shenhua Energy rallied 2.94 percent, Gemdale plunged 2.86 percent, Poly Developments slumped 0.83 percent, China Vanke declined 1.63 percent, Beijing Capital Development tumbled 2.01 percent and China Fortune Land plummeted by the 10 percent daily limit.
The lead from Wall Street is solid as the major averages opened firmly higher on Tuesday and stayed that way throughout the session.
The Dow surged 338.30 points or 0.97 percent to finish at 35,294.19, while the NASDAQ soared 264.73 points or 1.84 percent to end at 14,619.64 and the S&P 500 climbed 56.08 points or 1.23 percent to close at 4,631.08.
Reports about encouraging progress in a cease-fire talks between Russia and Ukraine in Turkey helped lift investor sentiment on Wall Street.
In economic news, the Labor Department said the number of job openings in the United States was little changed in February, while the S&P CoreLogic Case-Shiller 20-city home price index rose 19.1 percent in January. And the Conference Board showed an unexpected improvement in U.S. consumer confidence in March.
Crude oil prices dropped on Tuesday amid easing worries about global crude supply after positive reports of the peace talks. West Texas Intermediate crude futures for May ended down by $1.72 or 1.6 percent at $104.24 a barrel.
https://www.rttnews.com/3272650/rebound-anticipated-for-china-stock-market.aspx
A late fade killed the prospect of an eighth straight win for the Australian sharemarket, but investors can still look back on March as a period rich in gains – and drama.
The local bourse jumped to a new three-month high at Thursday’s open as BHP, Rio Tinto and Fortescue Metals rode an iron ore rally to near $US160 a tonne, before news of an impending US oil reserve release sapped energy stocks and weighed the market down.
Word that Australia would be imposing a 35 per cent tariff on Russian imports also seemed to spook investors, while strong building approvals data did little to excite the major banks.
Having spent most of the day ahead, the ASX 200 faded late to end the final session of the month and quarter 14.9 points, or 0.2 per cent, lower at 7499.6.
Camera Icon All major banks fell, including a 1.2 per cent drop for Commonwealth Bank to $105.77, a 1.1 per cent slide for Westpac to $24.24, a 1 per cent fall for ANZ to $27.60 and a 1.9 per cent drop for Macquarie Group to $203.27. NCA NewsWire / Jeremy Piper Credit: News Corp Australia
The broader All Ordinaries fell 10.3 points, or 0.1 per cent, to close at 7789.6, while the Aussie dollar eased to 74.85 US cents at the local close.
Stocks initially rose by as much as 0.6 per cent on Thursday as the ASX 200 looked destined to match its best winning streak since 2017 thanks to another strong session for the materials sector.
Despite the slide, the local benchmark managed to add 6.4 per cent for the month and continue to defy the chaos in Eastern Europe.
City Index analyst Tony Sycamore said March would certainly go down as a memorable one for ASX traders, proclaiming “beware the ides of March”.
“Whether you believe in superstitions or not, March 2022 will go down as a memorable one for the local bourse,” he said,
“After its rally this month, the ASX200 will be one of the few stock markets to end the first quarter of 2022 in positive territory.”
The overnight lead from Europe and the US was weak after Russia sunk hopes of a peaceful resolution with Ukraine.
Camera Icon The local bourse jumped to a new three-month high at Thursday’s open as BHP, Rio Tinto and Fortescue Metals rode an iron ore rally to near $US160 a tonne, before news of an impending US oil reserve release sapped energy stocks and weighed the market down. Evan Collis Credit: Supplied
Local traders were nonetheless enthusiastic for mining stocks early on with BHP adding 2.3 per cent to $51.75, Rio Tinto gaining 1.9 per cent to $119.11, Fortescue Metals up 4.3 per cent to $20.66 and Champion Iron 6 per cent higher at $7.81.
Lithium players also got a boost after US President Joe Biden flagged a production boost for critical minerals, with Vulcan Energy 4.1 per cent higher at $10.15, Mineral Resources up 4.4 per cent to $52.71 and Novonix gaining 9.7 per cent to $6.20.
Coal miners Whitehaven, New Hope, Carnarvon and Yancoal all gained ground, but gold stocks such as Newcrest Mining and Northern Star handed back early gains.
All major banks fell, including a 1.2 per cent drop for Commonwealth Bank to $105.77, a 1.1 per cent slide for Westpac to $24.24, a 1 per cent fall for ANZ to $27.60 and a 1.9 per cent drop for Macquarie Group to $203.27.
NAB was flat at $32.35.
Camera Icon Word that Australia would be imposing a 35 per cent tariff on Russian imports also seemed to spook investors, while strong building approvals data did little to excite the major banks. Vincent Mundy/Bloomberg Credit: Supplied
Growth sectors were deep in the red, with a 4.7 per cent drop for Afterpay owner Block Inc weighing on tech stocks and health giant CSL down 0.7 per cent to $268.15.
Woolworths managed to gain 0.5 per cent to $37.26, Telstra bounced 1.5 per cent to $3.96, and Transurban was 1.8 per cent higher at $13.55, but there was little else to cheer about at the top end of the market.
News that the Biden Administration was preparing to release a million barrels of oil a day from US reserves for several months helped ease oil prices, with Woodside Petroleum subsequently down 1.4 per cent to $32.10 and Santos falling 1.7 per cent to $7.74.
“Given that the Biden administration is taking a very muscular stance toward Moscow, promising further sanctions if Russia continues to wage war in Ukraine, we believe that the SPR (strategic petroleum reserve) release is being used as a tool to blunt the impact of these foreign policy decisions for US consumers,” said RBC Capital Markets’ head of global commodity strategy, Helima Croft.
“It will be important to see whether this release announcement will be an effective shock and awe tactic, given that Russian energy losses are likely to climb as the military campaign intensifies and the humanitarian crisis in Europe grows more dire.”
The world is in the grip of an oil price shock. In just a few months, prices have risen from US$65 a barrel to over $130, causing fuel costs to surge, inflationary pressure to rise and consumer tempers to flare. Even before Russia’s invasion of Ukraine, prices were climbing rapidly because of roaring demand and limited supply growth.
Price shocks aren’t new. Viewed historically, they are an integral part of oil market dynamics, not anomalies. They have occurred since the birth of the industry.
Many factors can trigger oil price shocks. They include large shifts in either demand or supply anywhere in the world, since oil is a global commodity. Shocks can also result from war and revolution; periods of rapid economic growth in major importing nations; and domestic problems in supplier countries, such as political conflict or lack of investment in the oil industry. Overall, the worst spikes have combined two or more of these factors – and that’s the situation today.
50 years of ups and downs
Global oil production began in the mid-1800s and grew rapidly in the first half of the 20th century. For much of that time, oil majors – companies like Chevron, Amoco and Mobil that were created after the Supreme Court ordered the breakup of Standard Oil in 1911 – operated effectively as a cartel, maintaining production at levels that kept oil abundant and cheap to encourage its consumption.
This ended when Iran, Iraq, Kuwait, Saudi Arabia and Venezuela formed the Organization of Petroleum Exporting Countries in 1960, nationalizing their oil reserves and gaining real supply power. Over the following decades, other nations in the Middle East, Asia, Africa and Latin America joined – some temporarily, others permanently.
In 1973, Arab members of OPEC cut their oil production when Western countries supported Israel in the Yom Kippur War with Egypt and Syria. World oil prices shot up fourfold, from an average of $2.90 per barrel to $11.65.
In response, government leaders in wealthy countries introduced policies to stabilize oil supplies. These included finding more oil, investing in energy research and development, and creating strategic oil reserves that governments could use to mitigate future price shocks.
But six years later, oil prices more than doubled again when Iran’s revolution halted that country’s output. Between mid-1979 and mid-1980, oil rose from $13 per barrel to $34. Over the next several years, a combination of economic recession, replacing oil with natural gas for heating and industry, and shifting to smaller vehicles helped to mitigate oil demand and prices.
The next major shock came in 1990 when Iraq invaded Kuwait. The United Nations imposed an embargo on trade with Iraq and Kuwait, which raised oil prices from $15 per barrel in July 1990 to $42 in October. U.S. and coalition troops moved into Kuwait and defeated the Iraqi army in just a few months. During the campaign, Saudi Arabia increased oil production by more than 3 million barrels per day, roughly the amount previously supplied by Iraq, to help dampen the increase and shorten the period of higher prices.
More disruptive price shocks occurred in 2005-2008 and 2010-2014. The first resulted from increased demand generated by economic growth in China and India. At that time, OPEC was unable to expand production due to long-term lack of investment.
The second shock reflected the impacts of Arab Spring pro-democracy protests in the Middle East and North Africa, combined with conflict in Iraq and international sanctions that Western nations placed on Iran to slow its nuclear weapons program. Together, these events pushed oil prices above $100 per barrel for a four-year stretch – the longest such period on record. Relief finally came via a flood of new oil from shale production in the U.S..
A perfect storm in 2022
Today, multiple factors are raising oil prices. There are three key elements:
Oil demand has grown more rapidly than expected in recent months as countries emerged from pandemic lockdowns.
OPEC+, a loose partnership between OPEC and Russia, has not raised production at a commensurate level, and neither have U.S. shale oil companies.
Countries have drawn on stocks of oil and fuel to fill the supply gap, reducing this emergency cushion to low levels.
These developments have made oil traders worry about looming scarcity. In response, they have bid oil prices up. It’s worth noting that while consumers often blame oil companies (and politicians) for high oil prices, these prices are set by commodity traders in venues such as the New York, London and Singapore stock exchanges.
Against this backdrop, Russia attacked Ukraine on Feb. 24, 2022. Traders saw the potential for sanctions on Russian oil and gas exports and bid energy prices even higher.
Unexpected factors also have emerged. Major oil companies including Shell, BP and ExxonMobil are ending their operations in Russia. Spot market buyers have rejected seaborne Russian crude, probably for fear of sanctions.
And on March 8, the U.S. and U.K. governments announced bans on imports of Russian oil. Neither country is a major Russian buyer, but their actions set a precedent that some analysts and traders fear could lead to escalation, with Russia reducing or eliminating exports to U.S. allies.
In my view, this set of conditions is unprecedented. It reflects not just increased complexity in the global market, but also an imperative for energy firms – which already are under pressure from shareholder climate activists – to avoid further reputational damage and leave one of the most oil-rich countries in the world. Some companies, such as BP, are abandoning assets worth tens of billions of dollars.
What could ease this shock?
As I see it, the key players that can help curtail this price shock are OPEC – mainly, Saudi Arabia – and the U.S. For these entities, holding back oil supply is a choice. However, there’s no evidence yet that they are likely to change their positions.
Restoring the Iran nuclear deal and lifting sanctions on Iranian oil would add oil to the market, though not enough to greatly reduce prices. More output from smaller producers, such as Guyana, Norway, Brazil and Venezuela, would also help. But even combined, these countries can’t match what the Saudis or the U.S. could do to increase supply.
All of these uncertainties make history only a partial guide to this oil shock. Currently there is no way to know how long the factors driving it will last, or whether prices will go higher. This isn’t much comfort to consumers facing higher fuel costs around the world.
Natali_Mis/iStock via Getty Images
A guest post by D Coyne
The US Energy Information Administration (EIA) published its Annual Energy Outlook (AEO) 2022 on March 3.
Figure 1
Three scenarios are shown in the chart above for a low oil price scenario, a reference case scenario, and a high oil price scenario. The cumulative crude plus condensate (C+C) output for the scenarios from January 2021 to December 2050 is 112 Gb, 140 Gb, and 200 Gb for the low oil price, reference, and high oil price cases, respectively.
Figure 2
The real Brent oil prices for the AEO 2022 reference case and low and high oil price cases are shown in figure 2 above and the AEO 2021 reference case is included for comparison (little changed from last year). Based on current oil prices, the high oil price case might be more reasonable, but oil prices are volatile and the future oil price is not known.
Figure 3
The chart above shows the AEO 2022 tight oil cases for the reference oil price and the low and high oil price cases (as shown in figure 2). Cumulative tight oil output from 2021 to 2050 is 76 Gb, 98 Gb, and 148 Gb for the three cases.
Actual output for both US C+C and tight oil is likely to be far less than what the EIA predicts in AEO 2022 because the real oil price scenarios do not anticipate falling demand for oil as the World transitions to electric land transport. By 2035 at the latest (and potentially this might occur by 2030), demand for crude plus condensate is likely to be falling faster than the supply of oil in a high oil price scenario. This will lead to falling oil prices.
I have created a simple scenario that uses the high oil price scenario up to 2030, has flat oil prices at the 2030 level until 2035 and then oil prices fall to the low oil price scenario level by 2039 and then gradually fall by $1/b per year from 2040 to 2050. Chart below presents this modified oil price scenario in chart form.
Figure 4
Using the oil price scenario above, we can estimate what tight oil output might look like using the high oil price case, the reference case, and the low oil price case.
Figure 5
For the modified tight oil scenario above, I assume no new wells are completed after 2039 due to the low oil price (under $44/bo in 2021$). Note that the average 2020 Permian basin well barely breaks even at $43/bo at the refinery gate, in 2039, average new well productivity is likely to be lower, costs are likely to be higher, and breakeven oil prices will be considerably higher than in 2020 or 2021. Cumulative output for this tight oil scenario is 87 Gb from 2021 to 2050. Note also that if we assume oil prices start to fall in 2030 rather than 2035, and assume the decline is as rapid as in my modified oil price scenario from 2035 to 2050, but the curve is shifted 5 years to the left, then cumulative tight oil output would decrease by 24 Gb from 2021 to 2050 to about 63 Gb.
An earlier scenario for tight oil that I created in a previous post is compared with the modified tight oil scenario in figure 5 in the figure below.
Figure 6
Cumulative output for the DC tight scenario is 85 Gb from 2021 to 2050. Note that a different oil price scenario with oil prices falling sharply in 2030 rather than 2035 would reduce cumulative output by roughly 20 Gb.
Original Post
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
https://seekingalpha.com/article/4497971-annual-energy-outlook-2022
Russian Foreign Minister, Sergey Lavrov, Chinese Foreign Minister Wang Yi and Minister of External Affairs of India Subrahmanyam Jaishankar pose for a photo during the Meeting of the Council of Foreign Ministers of Shanghai Cooperation Organisation in Moscow, Russia on September 10, 2020. Russian Foreign Press Service Handout | Anadolu Agency | Getty Images
There's been a "significant uptick" in Russian oil deliveries bound for India since March after Russia's invasion of Ukraine began — and New Delhi looks set to buy even more cheap oil from Moscow, industry observers say. China, already the largest single buyer of Russian oil, is also widely expected to buy more oil from Russia at deep discounts, they say. This could mean higher crude prices to come. Major oil importing countries such as India and China have been grappling with higher crude prices, which have soared since last year. While oil prices have been volatile in recent weeks, swinging between gains and losses, they are still around 80% higher compared to a year ago. "We believe that China, and to a lesser extent, India will step up to buy heavily discounted Russian crude," said Matt Smith, lead oil analyst at Kpler. This would mark a stark contrast from the rhetoric across major world powers and companies which are eschewing Russian oil. As a result of Russia's unprovoked and unjustified war on Ukraine, the U.S. has hit the rogue country with sanctions on energy, while the U.K. plans to do so by the end of the year. The European Union is also considering whether to do the same. But sanctions would leave a gap in the market with Russia finding itself with excess crude it's unable to sell, analysts said.
The Government of India's motivations are economic, not political. India will always look for a deal in their oil import strategy. Samir N. Kapadia head of trade, Vogel Group
"Urals crude from Russia is being offered at record discounts, but uptake is limited so far, with Asian oil importers for the most part sticking to traditional suppliers in the Middle East, Latin America and Africa," the International Energy Agency said on March 17. Urals crude is the main oil blend that Russia exports. "As of mid-March, we see the potential for 3 million barrels a day of Russian oil supply to be shut in starting from April, but that could increase if restrictions or public condemnation escalate," the IEA said. A couple of commodity trading firms — such as Glencore and Vitol — were offering discounts of $30 and $25 per barrel respectively two weeks ago for the Urals blend, Ellen Wald, president of Transversal Consulting, told CNBC.
'Significant uptick' of Russian oil bound for India
Cargoes of Russian crude to India were "fairly infrequent," with 12 million barrels delivered across all of 2021, Smith told CNBC. Kpler said he hasn't seen any deliveries to India from Russia since December. However, since the beginning of March, five cargoes of Russian oil, or about 6 million barrels, have been loaded and are bound for India – set to be discharged in early April, he told CNBC in an email. "This is about half the entire volume discharged last year — a significant uptick," Smith said.
The Kremlin invaded Ukraine on Feb. 24, and since then, markets have been roiled by fears of tight oil supply as Russia supplies a significant amount of the world's oil and gas. "Russia oil is still finding a home. Indian refiners have issued several tenders for Urals crude as the discount to Brent continues to rise," ANZ Research said Friday. Russia exports about 5 million barrels of crude oil per day, according to the IEA. It is the world's third-largest oil producer after the U.S. and Saudi Arabia. Russia is also the world's largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia, according to the IEA.
U.S.-India's close historical ties
India could start buying even more cheap oil from Russia at a discount of around 20%, according to analysts and some media reports. Based on current crude prices, that would represent more than $20 off each barrel. India imports crude from Russia only at a nominal share of between 2% to 5% a year, said Samir N. Kapadia, head of trade at government relations consulting firm Vogel Group. Traditionally, New Delhi gets its crude from Iraq, Saudi, Arabia, the United Arab Emirates and Nigeria – but they are all dictating higher prices right now, he said. "Today, the Government of India's motivations are economic, not political. India will always look for a deal in their oil import strategy. It's hard not to take a 20% discount on crude when you import 80-85% of your oil, particularly on the heels of the pandemic and global growth slowdown," Kapadia told CNBC in an email.
Beyond the benefit of discounts, India would also weigh its friendship with Russia in taking crude off it. "India is the third biggest oil importer in the world and right now, they are weighing their options to work with an old friend," said Kapadia. India – as well as China – have so far abstained from a United Nations vote to condemn Russia's invasion of Ukraine. Both countries have had a long history. Russia has supported India on a variety of areas including the provision of military and defense-related equipment — as much as 60% of the Asian country's needs, according to Kapadia. In the late 1950s, India also leaned on Russia for rupee-ruble currency swap arrangements to finance its imports when the former was "broke," said Kapadia.
Russia has also supported India on crucial issues such as the dispute with China and Pakistan surrounding the territory of Kashmir. "White House pressure to curb purchases of crude oil from Russia have fallen on deaf ears in Delhi," said Kapadia. "The real question will be how the US and Europe respond to India should they extend an olive branch to Russia by providing them an outlet for their oil." For its part, India has taken on a tone of defiance. "Countries with oil self-sufficiency or those importing themselves from Russia cannot credibly advocate restrictive trading," a government official said two weeks ago, according to Reuters. "If Western countries were to pivot India's focus to consider how supporting Russia might embolden China's geopolitical influence in the region, things could shift," Kapadia added.
No surprise if China buys more Russian oil
Analysts expect China, the largest oil importer in the world, to also go for discounted oil from Russia. The Asian giant is already the largest single buyer of Russian oil, and bought an average of 1.6 million barrels per day of Russian crude in 2021, according to the IEA. "China is still importing Russian oil, but would likely increase its purchases if it can pay in yuan and at discounts. Basically, Russia is pressured because it is having some difficulty selling its oil," Wald told CNBC in an email.
If they can buy Russian oil at a discount ... then I really don't see what would be stopping China from purchasing a lot of Russian oil. Ellen Wald president, Transversal Consulting
"China really would prefer much cheaper oil … prices are way too high even in the $90 range that's too high for China," she added. "If they can buy Russian oil at a discount, and some of these discounts are pretty significant — $30 off the benchmark, then I really don't see what would be stopping China from purchasing a lot of Russian oil." A number of countries imposed sanctions on Iran's oil, starting with a U.S. and EU ban in 2011, because of its nuclear program, but that didn't stop China from buying oil from Iran via "all sort of clandestine means," she added.
"So I don't think they're really bothered by insurance issues and the like," said Wald, referring to insurers hiking their premiums on shipments in the region after the Russia-Ukraine war started, amid soaring risks of attacks on ships and ports. She said an increase in China's purchases could hit oil prices. "I would not be surprised if we do see more Russian oil shifting to China and then potentially other suppliers like Kuwait, UAE, even some Saudi oil shifting away, but the fact that that China will be able to get a good discount, I think will impact prices globally," she said.
https://www.cnbc.com/2022/03/28/russia-india-india-buys-cheap-russian-oil-china-could-be-next.html
An oil well pump jack operated by Chevron Corp. in San Ardo, California, U.S., on Tuesday, April 27, 2021.
Oil prices dropped on Tuesday, extending losses from the previous day after Russia called peace talks with Ukraine constructive and China's new lockdowns to curb the spread of the coronavirus hit fuel demand.
Brent crude fell $1.72, or 1.5%, to $110.76 a barrel, and U.S. West Texas Intermediate (WTI) crude was down $1.30, or 1.2%, at $104.66. Both benchmarks lost about 7% on Monday.
Ukrainian and Russian negotiators met in Turkey for the first face-to-face talks in nearly three weeks. The top Russian negotiator said the talks were "constructive".
Ukraine proposed adopting neutral status in exchange for security guarantees at the talks, meaning it would not join military alliances or host military bases, Ukrainian negotiators said.
"Oil prices are under pressure again on expectations about peace talks between Ukraine and Russia, which could lead to an easing of sanctions ..." said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Sanctions imposed on Russia over its invasion of Ukraine have disrupted oil supplies, driving prices higher.
Prices also came under pressure after new lockdowns in Shanghai to curb rising coronavirus cases hit fuel demand in China, the world's biggest importer.
Shanghai accounts for about 4% of China's oil consumption, ANZ Research analysts said.
Lockdowns have dampened consumption of transportation fuels in China to a point where some independent refiners are trying to resell crude purchased for delivery over the next two months, traders and analysts said.
"China's zero-COVID policy is bringing some relief to the oil market, albeit involuntarily, which is very tight due to the supply outages from Russia," said Commerzbank analyst Carsten Fritsch.
Oil prices rose almost $2 earlier in the day as Kazakhstan's supplies continued to be disrupted and major producers showed no sign of being in a hurry to boost output significantly.
Kazakhstan is set to lose at least a fifth of its oil production for a month after storm damage to mooring points used to export crude from the Caspian Pipeline Consortium (CPC), the energy ministry said.
The producer group OPEC+ was also expected to stick to its plan for a modest rise in May at this week's meeting, despite a surge in prices due to the Ukraine crisis and calls from the United States and other consumers for more supply.
The energy ministers of Saudi Arabia and the United Arab Emirates, key members of OPEC+, said the producers' group should not engage in politics as pressure mounted on them to take action against Russia over its invasion of Ukraine.
https://www.cnbc.com/2022/03/29/oil-drops-on-ukraine-peace-talk-hopes-china-demand-fears.html
BEIJING, March 27 (Xinhua) -- Prior to U.S. President Joe Biden's visit to Europe, a display of "unity," the European Union rolled out a "Strategic Compass" as a guide to strengthen the bloc's security and defense policy.
The plan of action, ratified on Monday, is widely seen as a move for the EU to cut dependence on Washington for defense, and realize strategic autonomy amid a deteriorating security environment, as a conflict has been flaring up between Ukraine and Russia.
"Today I think everybody is convinced that Europe is in danger," Josep Borrell, the EU's high representative for foreign affairs and security policy, addressed a recent press conference.
In fact, it is Washington that has dragged Europe into this dangerous quagmire.
A staff member hangs a U.S. national flag before U.S. President Joe Biden arrives for the European Council meeting in Brussels, Belgium, March 24, 2022. (Xinhua/Zhang Cheng)
The United States, in utter disregard of Russia's legitimate concerns, drove five waves of NATO expansion eastward all the way to Russia's doorstep, incessantly squeezed Russia's security space and challenged the country's strategic bottom line until a military conflict broke out between Russia and Ukraine.
Following the outbreak of the Russia-Ukraine conflict, Washington has rushed to fan the flames, pushing other Western countries to join it in providing Ukraine with money and weapons, and pound Russia with all-round and indiscriminate sanctions.
Analysts say that for Washington, the fallout of an escalating Russia-Ukraine conflict is well foreseeable, but nearly painless, because it does not bear the brunt.
Europe does. Now the pain has become increasingly acute -- soaring food and energy prices, mounting security concerns and a sudden influx of refugees, among others -- a heavy price to pay.
Fuel prices are displayed at a gas station in Paris, France, March 16, 2022. (Xinhua/Gao Jing)
A weaker Europe also serves U.S. interest. In the wake of America's botched withdrawal from Afghanistan, many Western political pundits predicted that "the American era is ending."
The Russia-Ukraine conflict has offered the United States an opportunity to reinforce its dominant role in the European security order, and possibly revive the so-called "American Era."
And it seems that Washington's fear-mongering has worked. Some Europeans countries, despite having no strong will for Ukraine's NATO accession, have beefed up their national defense since the conflict, convinced that the Ukrainian crisis is a security crisis for Europe as a whole and NATO is what they can count on.
"The Russian invasion has bonded America to Europe more tightly than at any time since the Cold War," the New York Times opined in a recent article.
Perhaps the Europeans need to seriously rethink whether a wantonly expanding NATO is truly conducive to peace and stability in Europe in the long run. The newly approved "Strategic Compass" offers a clue that the EU is well aware of its need of stronger strategic autonomy, not weaker.
Photo taken on March 23, 2022 shows British coins in Basingstoke, Britain. (Photo by Tim Ireland/Xinhua)
After all, Europe is Europe, not America. A failure to peacefully coexist with neighbouring Russia may spell ages of challenges and woes.
Unlike the United States, Europe can not afford an immediate ban of oil and gas imports from its traditional key energy supplier of Russia, as was recently signaled by the French presidential palace.
From long-arm jurisdiction over European enterprises to slapping tariffs in the name of "national security," a self-serving Washington barely hesitates to throw allies under the bus if needed.
Thierry de Montbrial, founder and executive chairman of the French Institute for International Relations, said that the Russia-Ukraine conflict awakens Europe to the importance of "taking its destiny into its own hands."
The time has come for European policymakers to sober up to the high-stake reality. They need to reposition the EU in terms of defense, and truly obtain strategic autonomy so that they can steer the bloc towards a more secure future. ■
https://english.news.cn/20220327/79ddb52c5a96463b8539435c6b34e024/c.html
Alex Mills: Rising petroleum prices cause decline in consumers’ confidence
Demand for petroleum products continued to grow during February, but consumers are pumping the brakes as prices reached historic highs in March.
Crude oil prices for West Texas Intermediate on the futures market was $76.08 at the beginning of 2022 and quickly rose to $91.34 on Feb. 1 and $119.90 on March 1, according to the Energy Information Administration (EIA). Crude oil closed at $111.76 on March 22.
Gasoline prices generally follow oil prices. On Jan. 1, the average retail price of gasoline in the U.S. was $3.381 per gallon and rose to $3.538 on Feb. 1 and to $4.196 on March 1, according to EIA. Gasoline average price on March 21 was $4.239.
U.S. petroleum demand, as measured by total domestic petroleum deliveries, reached the highest level for the month of February since records have been kept which began in 1963 and the highest for any month since August 2005, according to the American Petroleum Institute.
“As a benchmark to before the pandemic, the demand reflected an increase of 6.6% compared to February 2019,” API noted. Domestic petroleum deliveries were 21.6 million barrels per day (b/d) in February.
“Other oils” (including naphtha, gasoil, propane, and propylene) that feed refinery and petrochemical operations, including packaging and medical plastics, remained strong, API said.
Motor gasoline increased in February, offsetting monthly decreases in distillates, jet fuel, and residual fuel oil. Consumer gasoline demand, measured by motor gasoline deliveries, was 8.7 million b/d in February. This reflected an increase of 4% month-on-month (m-o-m) but was 3.8% below its level in February 2019.
API said industrial production and broader economic activity have continued to grow sparking the high level of demand.
However, the University of Michigan’s consumer sentiment index decreased by nearly 30% to readings of 59.7 in early March and 62.8 in February from a January level of 84.9. “The survey attributed the drop in the index to decreased inflation-adjusted incomes, rising fuel prices, and high year-ahead expected inflation rates. Notably, the February and March readings were at their lowest compared with any point with the pandemic since 2020,” API said.
More: Alex Mills: Energy prices reach ‘heightened levels of uncertainty’
More: Alex Mills: Biden’s energy agenda raises many questions
More: Alex Mills: Energy prices soar as Russia invades Ukraine
Even though consumers are beginning to react to higher petroleum prices, the EIA believes energy consumption – oil, natural gas, wind and solar – will increase during the next 30 years.
EIA’s Annual Energy Outlook 2022 states petroleum and natural gas will remain the most-consumed sources of energy in the US through 2050, but renewable energy will be the fastest growing.
U.S. crude oil production will reach record highs, while natural gas production is increasingly driven by natural gas exports, EIA projects.
“The share of generation from renewable energy sources, such as wind and solar, will rapidly increase over the next 30 years as state and federal policies continue to provide significant incentive to invest in renewable resources for electricity generation and transportation fuels. New technologies will continue to drive down the cost of wind and solar generators, further increasing their competitiveness in the electricity market, even as assumed policy effects lessen over time,” EIA said in the report.
Alex Mills is the former president of the Texas Alliance of Energy Producers.
The language in the CIA memo was unequivocal: The 3,500-mile gas pipeline from Siberia to Germany is a direct threat to the future of Western Europe, creating "serious repercussions" from a dangerous reliance on Russian fuel.
The agency wasn't briefing President Joe Biden today. It was advising President Ronald Reagan more than four decades ago.
The memo was prescient. That Soviet-era pipeline, the subject of a bitter fight during the Reagan administration, marked the start of Europe's heavy dependence on Russian natural gas to heat homes and fuel industry. However, those gas purchases now help fund Vladimir Putin's war machine in Ukraine, despite worldwide condemnation of the attacks and global efforts to punish Russia financially.
In 1981, Reagan imposed sanctions to try to block the pipeline, a major Soviet initiative designed to carry huge amounts of fuel to America's critical allies in Europe. But he swiftly faced stiff opposition -- not just from the Kremlin and European nations eager for a cheap source of gas, but also from a powerful lobby close to home: oil and gas companies that stood to profit from access to Russia's gargantuan gas reserves.
In a public-relations and lobbying blitz that played out across newspaper opinion pages, congressional committees and a direct appeal to the White House, industry executives and lobbyists fought the sanctions.
"Reagan has absolutely no reason to forbid this business," Wolfgang Oehme, chairman of an Exxon subsidiary with a stake in the pipeline, said at the time.
Those efforts, nearly a half-century ago, show how some of the world's largest oil and gas companies played a critical role in opening up Russia's reserves by opposing sanctions and advocating for business interests over national security, human rights or environmental concerns.
Today, Europe's reliance on Russia's gas has put European nations in a compromised position: They continue to purchase Russian energy, transferring enormous sums of money to Moscow, which fund a Russian invasion that they denounce.
Reagan's effort to block the pipeline decades ago, which ultimately failed, also laid the foundations for a huge build-out of natural gas, which is now hindering Europe's attempts to tackle climate change. Even as natural gas has helped to replace dirtier coal, the pipelines and other gas infrastructure that followed have effectively committed Europe to a reliance on gas that not only continues today, but remains difficult to unravel even in a moment of global unity against Russian aggression.
"The Soviet Union is a superpower that really emerged on the back of its oil and gas exports," said Agnia Grigas, a senior fellow at the Atlantic Council and an expert on the security and energy issues of Russia and the former Soviet states. "Nothing has changed."
In the face of opposition both at home and abroad, Reagan in 1982 reversed the sanctions, which had stopped U.S. companies from supplying or participating in the project. The pipeline from Siberia to West Germany opened two years later.
The industry lobbying has continued to this day.
In 2014, when the Obama administration imposed sanctions against Russia following its military seizure of the Crimean peninsula from Ukraine, Exxon fought the measures, meeting with White House officials.
As Russia this year massed troops on the Ukrainian border, the American Petroleum Institute, the powerful industry group, lobbied against tougher sanctions, saying that any measures needed to be "as targeted as possible in order to limit potential harm to the competitiveness of U.S. companies."
In the wake of Russia's brutal invasion of Ukraine, Shell, BP and Exxon have said they will end their Russian operations.
Casey Norton, a spokesperson for Exxon, said the company "does not advocate for or against sanctions" but had communicated with the U.S. government "to provide information about the potential impacts on energy markets and investments." He said that Exxon was complying with all sanctions, had discontinued its flagship project in Russia and was withholding new investment there.
Bethany Williams, an American Petroleum Institute spokesperson, said that any interactions by its members with policymakers on sanctions had been limited to "ensuring retaliatory measures are clearly written to reduce any room for uncertainty and ensure maximum compliance."
John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce, said his organization had a long-standing belief that sanctions would very likely fail if they were unilateral. Exxon, the American Petroleum Institute and the Chamber of Commerce all condemned Russia's invasion. Shell and BP had no comment.
The concerns raised during the Reagan administration four decades ago have been borne out. Before Russia's attack on Ukraine last month, Germany relied on Russia for 55% of its gas, for example, complicating Europe's response to Russian aggression in Ukraine.
For Ukraine, the consequences have been devastating. "The companies that have been working with the Russian regime were driven only by pure financial interest," said Oleg Ustenko, a top adviser to Ukrainian President Volodymyr Zelenskyy. "They closed their eyes to the morality of it, and now we are paying the consequences."
PARALLELS IN HISTORY
On a frigid Sunday morning in December 1981, millions of Poles woke up to find their country under a state of martial law. Global condemnation of the Polish authorities, and of their backers in the Kremlin, was swift.
Already wary of the Soviets' plan to build a gas pipeline to Western Europe, the Reagan administration produced a list of economic sanctions that essentially banned U.S. companies from helping to build it.
"The fate of a proud and ancient nation hangs in the balance," Reagan said in his Christmas address.
The measure drew immediate ire from America's European allies, where the $25 billion pipeline promised a stable source of gas at a time nations were still reeling from the oil shocks of the 1970s. But within the United States, it was the oil and gas lobby that fought back.
The sanctions would "aggravate further our international reputation for commercial reliability," the U.S. Chamber of Commerce, which represented major oil and gas companies and pipeline manufacturers among numerous other industries, warned in a letter to the White House. The pipeline would, in fact, give Western Europe "a degree of leverage over the Soviets rather than vice versa," Richard Lesher, the group's president, later told The Washington Post.
Following intense lobbying, the House Foreign Affairs Committee voted to lift the sanctions, despite a letter from Secretary of State George Shultz warning that such legislation would "severely cripple" the administration's ability to deal with the Polish crisis.
That battle four decades ago marked the start of a huge build-out of gas infrastructure in Europe. Today, an extensive network of pipelines stretches from Russia to Europe, supplying about 40% of the continent's gas.
That network has given Moscow leverage over its European neighbors. In 2009, when Russia and Ukraine became embroiled in a diplomatic dispute, Russia shut off its gas supplies, leaving tens of thousands of homes without heat. More than a dozen people froze to death, mainly in Poland, before Russia reopened its pipelines.
An abundant flow of gas from Russia had consequences beyond security, slowing Europe's efforts to tackle climate change by shifting toward renewables, experts say. The European Union has said it now aims to reduce its gas imports by two-thirds, and quickly ramp up its use of wind, solar and other forms of renewable energy.
"Obviously they could have done that before, but there was no incentive to," said Margarita Balmaceda, professor of diplomacy and international relations at Seton Hall University and an associate at the Harvard Ukrainian Research Institute. Access to Russia's gas, she said, had "definitely slowed the move toward renewables."
TIES TO RUSSIA BLOSSOM
The fossil fuel companies' early involvement in the Siberian pipeline was also the start of a courtship of a region with some of the world's largest reserves of oil, natural gas and other commodities. Following the fall of the Soviet Union in 1991, successive U.S. administrations also traded their vigilance for an increasingly warm embrace of Moscow, pushing for closer energy ties. (In 2001, President George W. Bush famously said that he had looked Putin in the eye and got a sense of his soul, comments he later said he regretted.)
Spurred by a thaw in East-West relations, fossil fuel companies pursued joint ventures to develop Russia's oil and gas fields with Russia's state-controlled oil and gas giants. BP took a nearly 20% stake in Rosneft, the Russian oil giant, that accounted for one-third of BP's oil and gas production and more than half its reserves. Shell teamed with Gazprom, the state-owned gas company, to work on projects including Russia's first liquefied natural gas plant, and invested in the Nordstream 2 gas pipeline.
Both BP and Shell say they are now exiting those projects.
Exxon, which invested in a gas project near the Pacific island of Sakhalin in the 1990s, in recent years had pursued a heftier stake in Russian oil and gas production, signing a deal with Rosneft for a possible $500 billion investment. A video produced by Rosneft in 2012 portrayed the wide-ranging nature of their planned partnership: joint headquarters in St. Petersburg and Houston, a slice of Exxon's operations in the Permian Basin in Texas and Gulf of Mexico, and the sharing of fracking and offshore drilling technology.
In 2013, Putin awarded the Exxon chief executive, Rex Tillerson, the Order of Friendship, one of the highest honors Russia gives to foreign citizens.
The fallout from Russia's annexation of the Crimean peninsula the following year forced Exxon to stall the deal, but not without a fight.
Even after the United States adopted sanctions, Exxon tried to push ahead with the Rosneft deal, signing legal documents with the state-owned company's chairman, Igor I. Sechin. Exxon was later fined $2 million for actions the Treasury Department said "demonstrated reckless disregard for U.S. sanctions requirements."
Exxon sued, saying that the U.S. sanctions covered only Sechin's personal affairs, not the company he presided over. A Texas judge ruled in favor of Exxon, although the judge called Exxon's conduct "risky and, perhaps, imprudent."
Exxon also worked to influence Congress' attempts to pass sanctions against Russia around that time, its lobbying disclosures show.
Because of reluctance among some members of Congress to oppose those sanctions, "we had to step in front of that and explain to them how that was hurting U.S. businesses," Keith McCoy, a former Exxon lobbyist said in a 2021 video released as part of a sting operation by the environmental group Greenpeace.
As recently as January 2022, the American Petroleum Institute lobbied to soften sanctions against Russia, saying they should be "as targeted as possible in order to limit potential harm to the competitiveness of U.S. companies."
At his confirmation hearing to become secretary of state under former President Donald Trump, Tillerson, the Exxon chief executive, stated that he had "never lobbied against sanctions personally" and that "to my knowledge, Exxon never directly lobbied against sanctions."
Former Sen. Bob Corker, R-Tenn., who was chairman of the Senate Foreign Relations Committee at the time, interjected, "I think you called me at the time."
Asked about the call last week, Corker said the two men regularly discussed policy on the phone.
https://www.arkansasonline.com/news/2022/mar/27/european-ties-to-russian-gas-a-liability-now/
One of the largest conglomerates Bashundhara Group is setting up the country's largest seed crushing plant to produce edible oil in Narayanganj'sSonargaon with an investment of Tk1,023 crore.
Bashundhara on its own puts 35% of the money, while state-run Agrani Bank in collaboration with Janata Bank, has arranged a syndicate loan to provide the rest 65%.
The plant is expected to produce 14.8 lakh tonnes of crude soybean oil and 0.6 lakh tonnes of crude sunflower oil per annum, which can yield approximately 2.77 lakh tonnes of finished (refined) oil – a 12% of the total consumption in the country.
Currently, Bangladesh needs over 23 lakh tonnes of edible oil annually, of which some 20 lakhtonnes come from imports and 3 lakh tonnes from local manufacturers.
"The country is still heavily dependent on imports for the edible oil. Our new project is good news for the local market as well as the overall economy," said Redwanur Rahman, general manager of Bashundhara Multi-Food Products, the conglomerate's subsidiary which develops the facility.
It would be the largest seed cruising mill in the country, he added. "Currently, we are just refining crude edible oil, importing from different countries. The new seed crushing facility would help people get edible oil at an affordable price," said Redwanur Rahman.
Located at Pirojpur village, the plant is expected to go into operation soon and generate 2,000 jobs.
According to the project document, Bashundhara acquired 14.8 acres of land with Tk118.4 crore. Besides, it spends Tk206.6 crore to prepare the required infrastructure.
Meanwhile, the company opened letters of credits worth Tk408 crore with Agrani Bank and Tk176 crore with Islami Bank to import machinery. Besides, some machines worth Tk24 crore would be purchased from local suppliers.
The site that progressed 90% has so far received machinery worth Tk230 crore, it reads.
Bashundhara Group Vice-Chairman SafiatSobhan holds the lion's share of the plant, 74.89% to be exact, followed by Sadat Sobhan's 9%, Sonia FerdousSobhan 8%, Ibrahim Sobhan 8% and Moynal Hossain Chowdhury 0.11%.
The 665cr syndicate loan
Agrani Bank played the lead arranger and agent bank role of the Tk665.27 crore syndicate loan and provided Tk350 crore on its own, while the other syndicate member Janata Bank lended Tk315.27 crore.
In a recent programme in the capital's Bashundhara Residential area, the two state-run banks signed the loan agreement with Bashundhara Multi-Food Products Limited.
"Bashundhara Group has no default loan. Even, they have no record of loan rescheduling or interest exemption," Shams-Ul Islam, managing director of Agrani Bank.
"We [Agrani and Janata] have been financing different projects of the Bashundhara Group since 1993. They are compliant," he added.
Shams-Ul Islam said syndicate loans were highly beneficial for megaprojects of the country as a single lender alone could not finance big. He is hopeful that the seed crushing plant would largely contribute to fulfilling the demand for edible oil in the country.
Bashundhara Group Chairman Ahmed Akbar Sobhan was present at the event.
"We are committed to work for the people by establishing new manufacturing facilities as the government is providing us [manufacturers] huge policy support," he said.
Sobhan believes that Bangladesh set a unique example in development, among others across the globe.
Meanwhile, Agrani Bank is also arranging another syndicate loan of Tk4,300crore for Bashundhara Group's under-construction gold refinery facility. More than five lenders would join the syndicate.
The edible oil market
Due to heavy dependence on import, Bangladesh edible oil market see ups and down often depending on global prices. Over the last year, the market witnessed an upward trend, and the prices reached a historic high in the last month, with the beginning of the Russia-Ukraine war.
Market data showed soybean, the most consumed edible oil, took over the market in the 1990s. Imported from different countries, it used to be refined in the country.
In 2007, City Group first established a soybean processing plant, followed by Meghna Group and Bashundhara Group. Meanwhile, Globe Pharma diversified its business to the sector in 2018.
All of them currently produce only 3 lakh tonnes of edible oil.
https://www.tbsnews.net/economy/industry/bashundhara-plant-cater-12-edible-oil-demand-391954
James Warrington
Andrew Bailey has warned the hit to living standards from surging energy prices in the wake of Russia’s invasion of Ukraine will be worse than in any year in the 1970s.
Speaking at an event in Brussels, the Bank of England Governor said: “This really is an historic shock to real incomes. The shock from energy prices this year will be larger than every single year in the 1970s.”
Vladimir Putin’s warmongering and resulting sanctions have sparked a huge surge in oil and gas prices, piling further pressure on households at a time when inflation is at a 30-year high.
The Bank of England is tasked with balancing rising prices with the risk of an economic slowdown. Mr Bailey said the central bank had softened its language on interest rate rises to reflect the uncertain outlook, but insisted it was appropriate to tighten policy in the current circumstances.
https://finance.yahoo.com/news/ftse-100-markets-live-news-060741431.html
The world has been transfixed by Ukraine’s fight for survival. As the war drags on, we’d better start considering what will become of Russia, as well.
President Vladimir Putin’s nation has now been subjected to an isolation more sudden and total than that experienced by any major power in recent history. What that leads to may not be pretty.
Since late February, Russia has been hit with punishing economic, trade and financial sanctions. It is careering toward a debt default, as a rapid technological decoupling is also underway. Foreign firms are fleeing the country, while Russian teams are excluded from international competitions in soccer and other sports. Even the International Cat Federation has barred Russian felines from its events.
Russia isn’t some tinpot tyranny like Cuba or North Korea; it is a major power whose population was, until recently, deeply connected to its larger global environment. Now, Russia is suffering a degree of international ostracism that typically happens only when a country is at war with the world.
What will this mean for Moscow if its conflict with Ukraine drags on for months or years to come? We can imagine a few scenarios, all of which would pose nasty challenges for Russia, and some of which could be quite concerning for America and its allies.
The rosiest is a “Moscow Spring,” in which the costs of conflict lead to regime change and a rebirth of the democracy Russia experienced fleetingly in the 1990s. Russian elites push Putin aside and make peace with Ukraine. Having experienced the consequences of aggression and autocracy, the more urban, liberal swaths of Russian society demand a broader political opening and the country’s reintegration into the world. Just as isolation helped convince South Africa to ditch apartheid in the late 1980s, foreign opprobrium forces dramatic change in Moscow’s foreign and domestic policies.
The odds of this scenario materializing are slim. Two decades of Putinism have left Russia with a weak, fragmented opposition. The president has surely tried to coup-proof his regime by co-opting the security and intelligence services and pitting them against one another. And even if Russia did experience a revolution, look out: The history of the 1990s cautions us that instability and even chaos could follow.
A second, more plausible scenario is “Wounded Giant.” Here, Putin uses his control of the security services to hang onto power and repress whatever popular discontent isolation produces. He exploits the black-market opportunities that sanctions inevitably create to compensate loyal cronies. Russia becomes more dependent on China as it seeks economic and technological alternatives to the West.
What changes is not so much Russian policies but Russian power: The cost of slogging ahead is continued attrition of the economy, retarded technological modernization and a long-term weakening of Moscow’s military potential. This scenario isn’t great for the Western and Pacific democracies, but it isn’t terrible, either: Against a more sluggish, stagnating Russia, the U.S. could fare well enough in a protracted rivalry.
There is a third, darker scenario: “Tehran on the Volga.” Here, isolation and radicalization go hand in hand. Educated, upwardly mobile Russians leave the country, ridding the regime of its most outspoken liberal critics. Hard-liners embrace a “resistance economy” premised on self-sufficiency and avoiding the contaminating influence of the West. Aggressive internal purges, relentless propaganda and the fanning of militant nationalism produce a Russian variant of fascism. When Putin eventually falls, he is replaced by an equally repressive, ambitious and xenophobic leader.
Russia thus becomes a superpowered Iran with nuclear weapons — a country that is permanently estranged from the world and compensates for weakness with heightened belligerency. Far from retreating in its confrontation with the West, this Russia might dial up the intensity of that struggle — pursuing wide-ranging programs of sabotage in Europe or more aggressively training its cyberweapons on targets in the U.S. and other democratic countries.
The eventual reality could diverge from any of these scenarios, of course. But the exercise illustrates two important points.
First, Washington needs to start thinking seriously about Russia’s long-term trajectory. In 1989, the administration of President George H.W. Bush quietly created a planning group to consider what might happen amid earthshaking changes in the Soviet Union. Regardless of what happens in this crisis, Russia is big and powerful enough that its trajectory will be vital to the overall health of the international order — which means that the U.S. needs to be ready for whatever direction the country takes.
Second, be careful what you wish for. The U.S. and its allies are rightly using devastating sanctions, along with tenacious Ukrainian resistance, to impose heavy costs on a Russian regime that has flagrantly violated the most basic norms of international behavior. Appeasement and military intervention are the only obvious, and abhorrent, alternatives to this policy. But we have only begun to consider what its long-term consequences might be.
Even in the best-case scenario, the U.S. would confront enormous challenges helping a liberalizing Russia emerge from authoritarian rule. More plausibly, Washington could face a recalcitrant, perhaps even a further radicalized, Russia instead. The war in Ukraine will eventually end, but America’s problems with Russia may only be getting started.
Hal Brands is a Bloomberg Opinion columnist, a professor at Johns Hopkins University’s School of Advanced International Studies, and a scholar at the American Enterprise Institute.
Northvolt might be best known as a cell manufacturer for the automotive industry, but it’s also a producer of whole battery systems for two distinct market segments: Industrial and Grid. Image: Northvolt.
By now, everyone’s heard of Northvolt, the Sweden-headquartered startup founded by former Tesla exec Peter Carlsson, building 150GWh of lithium-ion battery factories in Europe.
But while investments and off-take deals from the automotive industry have rightly been a major focus of attention, its stationary energy storage division Northvolt Systems has a story to tell too.
By Emad Zand, president of Northvolt Systems.
This is an extract of an article which appeared in Vol.30 of PV Tech Power, Solar Media’s quarterly technical journal for the downstream solar industry. Every edition includes ‘Storage & Smart Power,’ a dedicated section contributed by the team at Energy-Storage.news.
At Northvolt Systems we’re working for a clean energy future by contributing to the establishing of a new industrial base for lithium-ion battery solutions in Europe.
Just as we’ve seen with developing a renewable energy industry, fostering a domestic battery energy storage industry not only represents a significant economic opportunity for Europe, but security of supply for a technology that is a linchpin in the transition towards clean energy.
Establishing this new industry isn’t straightforward and there are certainly challenges in developing the necessary components for a world-leading, sustainable supply chain, but we’re further along than people might think.
From our perspective, Europe holds all the right ingredients to become a global leader in battery energy storage solutions and it has every reason to embrace this opportunity.
The evolving European landscape for ESS
It’s fair to begin with acknowledging that while battery energy storage remains a young industry within Europe, it is one full of promise and potential.
The potential stems from the idea that Europe holds all the right competences to support a complete, globally competitive battery storage supply chain. By embracing the opportunities of this new industry and driving them to their full economic potential, Europe could very well become the leading global supplier of battery energy storage to a global market forecasted to attract some US$262 billion in investment out to 2030.
Many in the energy industry recall how 15 years ago Europe was tipped for leading the solar PV industry. But for reasons including lack of engagement from industry, as well as from governments and the EU to create favourable conditions, the opportunity was lost. It is precisely this which we must avoid with the battery industry.
To the promise, we need look no further than case studies of deployed energy storage systems (ESSs) for evidence of what the technology can do to quicken the adoption of clean energy and enable the transition away from fossil fuels. And indeed, there are even pioneering European ESS companies operating within this landscape – albeit with cells and batteries sourced from Asia, the long-standing home of the lithium-ion battery industry.
The relative immaturity of the ESS industry can be understood for two core reasons. First, since the region has historically lacked upstream cell production, it has not been in an ideal position to foster either battery competence or synergies in battery solutions.
Second, while theoretical need for energy storage has been recognised for some time, the realisable market demand has lagged behind. Clear market structures and reliable revenue streams for the operation of ESS are a prerequisite for business-case viable projects, but they also serve to encourage investment in components of industry itself, including components suppliers and developers.
To both points – the location of cell manufacturing and the viability of ESS – we see change that leaves Europe not only well-positioned and motivated to mature its ESS supply chain, but to lead it.
Europe is well underway in scaling up its cell production capacity: long-time champion of the European battery chain, European Commission Vice-President Maroš Šefčovič, has stated that by 2025 Europe will be the second largest producer of batteries in the world and supplying almost 90% of its domestic battery production needs.
In parallel, markets have become more favourable for energy storage deployments. To be sure, some markets are further ahead than others, certainly the UK and Germany can be highlighted in this respect; but broadly we have the right foundations which are strengthened by EU commitments to decarbonisation.
There are of course still challenges for the European supply chain, but above all there is opportunity. It is telling that in acknowledging the need for its own proactivity towards batteries, the US government has recognised the approach of Europe towards fostering a domestic battery supply chain.
The acknowledgement is well-earned. The EU has a proven track-record for nurturing its battery industry – focussing on cell manufacturing, upstream materials preparation and recycling.
Embedded within the EU’s approach is a particular focus on calls for sustainability within the battery industry. This is prudent – positioning the new industry to leverage what can become a differentiating factor for European products. On this front, new legislation currently under development in Brussels, namely the Battery Directive, is key.
Notable highlights include mandating of carbon footprint labelling, new procedures to ensure ethical sourcing of raw materials and ambitions for battery recycling. Stakeholders to the emerging European battery landscape should embrace sustainability from the outset.
BloombergNEF forecasts installations in the order of 1TWh of energy storage by 2030, with much allocated for Europe. Beyond the value of directly enabling these European deployments, the real opportunity is for Europe to become home to leading ESS developers supplying the global market, much as we see with wind power and energy efficiency technology.
With the right approach, in time what we could come to see in the European battery energy storage industry is a textbook example of the environmental, societal and economic gains to be secured in repositioning industrial might in manner aligned with demands of a world facing a climate emergency.
Northvolt’s first grid-connected battery system, Västerås, Sweden. Image: Northvolt
Build to cost, build to scale
For the European ESS industry to scale towards global leadership, it’s critical to design both manufacturing and product technologies to enable competitive pricing.
For this, one insight we’ve had is the importance of modularity. That is to say, designing a base module for integration into packs and systems that can easily be scaled with minimal additional design requirements or components.
The aim to design products for scalability extends to how we deliver new manufacturing capacity. Here too, we can be smart in how we establish factories. A balance must be found between CAPEX and OPEX. There is an unavoidable sizeable upfront cost to deliver assembly lines, but we can be smart in selecting machinery and tools, which when paired with well-designed products, is future-proofed for future battery systems products.
Especially on the mechanical and assembly sides, leveraging large-scale manufacturing techniques and methods – which Europe has considerable experience of from other sectors – is invariable rewarded with lower unit costs.
Reflecting what the European battery systems industry can and should become, we can highlight Northvolt Systems Dwa – the battery systems assembly facility under development in Gdansk, Poland. The facility will feature highly automated assembly lines for high-volume production of modules and module-to-pack integration. A port city with excellent road access to the continent, the facility is well-positioned for both inbound volumes of cells from Northvolt Ett and components and for outbound product flows.
Northvolt will invest US$200 million to build this new battery systems factory and it will become the largest of its kind in Europe. Development is already underway and production is scheduled to begin in 2022 with an initial annual capacity of 5GWh and a potential future capacity of 12GWh.
Batteries are rapidly becoming a cornerstone technology of energy, mobility and societal functioning at large. For Europe to transition effectively to net-zero, it requires battery systems of its own. But the opportunity is much greater. We missed our chance with solar PV, let’s not make the same mistake with batteries.
This is an extract of an article from Volume 30 of PV Tech Power, our quarterly journal. You can buy individual issues digitally or in print, as well as subscribe to get every volume as soon as it comes out. PV Tech Power subscriptions are also included in some packages for our new PV Tech Premium service.
About the Author
Emad Zand is the President of the Systems division at Northvolt. He joined the company in 2017 as part
of the early team.
Prior to joining Northvolt, Emad was active as an angel investor and board professional after leaving his role as CEO of a medical device company, where he completed a successful turnaround and sale. Emad has a Master’s degree in Economics from Stockholm School of Economics and started his career at McKinsey & Co.
https://www.energy-storage.news/building-a-battery-industry-for-europe/
March 28, 2022
TOKYO – Even amid Russia’s invasion of Ukraine, the Japanese government intends for the time being to maintain its interests in energy projects in the Russian Far East island of Sakhalin.
If Japan were to withdraw from the island, the government believes China would be the likely nation to take over the interests, effectively undermining the sanctions imposed on Russia.
It will be difficult to regain oil and gas interests once they have been relinquished, so Tokyo aims to avoid creating a situation where the cost of procuring energy increases and are added onto electricity and gas bills.
During the International Energy Agency’s two-day ministerial meeting in Paris through Thursday, participants discussed ways to reduce dependence on Russian crude oil and natural gas.
“We confirmed that each country will do what they can under different circumstances,” said Economy, Trade and Industry Minister Koichi Hagiuda.
The United States and the United Kingdom, which are less dependent on Russian energy, are making their stance clear on severing ties with Russia. Exxon Mobil of the United States, which held a stake in the Sakhalin 1 energy development project, and Britain’s Shell, which held a stake in the Sakhalin 2 project, announced their withdrawal. Japanese companies continue to participate in both projects.
Germany, on the other hand, which relies on Russia for half of its natural gas imports through pipelines, is among the countries that intend to continue imports for the time being.
While Japan with its very limited natural resources agrees with the policy of reducing dependence on Russia over the medium to long term, it is difficult to immediately make a shift.
From the Sakhalin 2 project Hiroshima Gas Co. imports about 50% of its liquefied natural gas and Toho Gas Co. about 20% of its LNG, so any disruption in the supply would have a significant impact on their businesses.
“Obviously, we need to consider reducing our dependence [on Russia],” said Japan Gas Association Chairman Takehiro Honjo, who is also chairman of Osaka Gas Co. “But I can’t come up with any names [of alternative suppliers] right away.”
Russia has been trying to intimidate “unfriendly” countries such as Japan, the United States and several in Europe by demanding payment in rubles for natural gas purchases. However, if Japan withdraws from the Sakhalin 2 project, the cost of procuring LNG will increase, which could lead to higher electricity and gas bills using it as an energy source.
“Japan would have no choice but to procure energy on the spot market to compensate for the decrease, resulting in an annual cost increase of more than ¥1 trillion on the Japanese side,” estimated Prof. Masahiko Hosokawa of Meisei University, an expert on energy.
Bitter lesson
Japan had been the world’s largest LNG importer, until China took the top spot in 2021. China is shifting away from coal in an effort to decarbonize the country by increasing power generation using natural gas, which has relatively low carbon dioxide emissions.
In an effort to expand China’s supply sources, Chinese companies have invested in the Arctic LNG 2 project in which Japan is also participating. In 2019, China began importing natural gas from Russia via pipeline.
“China’s economy requires an enormous amount of energy to sustain itself,” said Homare Endo, director of the Global Research Institute on Chinese Issues. “China must have a strong desire for Japan’s interests.”
Japan’s reluctance to withdraw from the Sakhalin projects perhaps shows it is learning its lesson from a bitter experience.
In 2010, Inpex Corp., which is partially owned by the Japanese government, withdrew from the development of the Azadegan oil field in southwestern Iran, one of the largest oil reserves in the Middle East. The Japanese side was forced to make a difficult decision because of the fear that it would not be able to receive loans from U.S. financial institutions if it were subject to sanctions imposed on Iran by the U.S. government.
The Japanese side had already invested ¥12.5 billion in the project but returned its 10% stake in the project to the National Iranian Oil Company without charge. The stake was then transferred to state-owned China National Petroleum Corp.
“Sakhalin is an important project for Japan’s energy security,” a Japanese government source said. “If Japan were to give up its interests and then to have China take them, only Japan will suffer damage.”
Paris: Globalisation, which has both fans and detractors alike, is being tested like never before after the one-two punch of Covid and war.
The pandemic had already raised questions about the world’s reliance on an economic model that has broken trade barriers, but made countries heavily reliant on each other as production was delocalised over the decades.
Companies have been struggling to cope with major bottlenecks in the global supply chain.
Russia’s war in Ukraine has raised fears about further disruptions, with everything from energy supplies to auto parts to exports of wheat and raw materials under threat.
Larry Fink, the head of financial giant BlackRock, put it bluntly: “The Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades.
“We had already seen connectivity between nations, companies and even people strained by two years of the pandemic,” Fink wrote in a letter to shareholders.
But United States Treasury Secretary, Janet Yellen, disagreed. “I really have to push back on that,” she told CNBC in an interview. “We’re deeply involved in the global economy. I expect that to remain, it is something that has brought benefits to the US, and many countries around the world.”
Shortages of surgical masks at the outset of the pandemic in 2020 became a symbol of the world’s dependence on Chinese factories for all sorts of goods.
The conflict between Russia and Ukraine has raised concerns about food shortages around the globe as the two agricultural powerhouses are among the major breadbaskets of the world.
It has also put a spotlight on Europe’s – and especially Germany’s – heavy dependence on gas supplies from Russia, now a state under crippling sanctions.
“A number of vulnerabilities” have emerged that show the limits of having supply chains spread out in different locations, the former director general of the World Trade Organization, Pascal Lamy, told AFP.
The global trade tensions have prompted the European Union (EU), for instance, to seek “strategic autonomy” in critical sectors.
The production of semiconductors – microchips that are vital to industries ranging from video games to cars – is now a priority for Europe and the US.
“The pandemic did not bring radical changes in terms of reshoring (bringing back business from overseas),” said Ferdi De Ville, professor at Ghent Institute for International & European Studies.
“But this time it might be different because (the conflict) will have an impact on how businesses think about their investment decisions, their supply chains,” he said.
“They have realised that what was maybe unthinkable before the past month has now become realistic, in terms of far-reaching sanctions,” said de Ville, author of an article on “The end of globalisation as we know it”.
The goal now is to redirect strategic dependence towards allies, what he coined as “friend-shoring” instead of “off-shoring”.
A US-EU agreement to create a task force to wean Europe off its reliance on Russian fossil fuels is the most recent example of friend-shoring. For Lamy, this showed “there is no de-globalisation”. Globalisation, he said, is “an animal that evolves a lot”.
Globalisation had already faced an existential crisis when former US president Donald Trump launched a trade war with China in 2018, triggering a tit-for-tat exchange of punitive tariffs.
His successor, Joe Biden, invoked the need to “buy American” in his sweeping investment plan to “rebuild America”.
“We will buy American to make sure everything from the deck of an aircraft carrier to the steel on highway guardrails are made in America,” he said in his State of the Union speech.
One concept that emerged during the Trump years was “decoupling” – the idea of untangling the US and Chinese economies. The threat has not subsided, especially with China refusing to condemn Russia’s invasion of Ukraine.
The US has warned the world’s second-biggest economy would face “consequences” if it provides material support to Russia in its war in Ukraine.
China already had other contentious issues with the West, such as Taiwan, the self-ruled democracy which Beijing has vowed to seize one day, by force if necessary.
“It is not in China’s interest for now to go into competition with the West,” said Xiaodong Bao, portfolio manager at the Edmond de Rothschild Asset Management firm. — AFP
https://www.thestar.com.my/business/business-news/2022/03/28/pandemic-and-warrattle-globalisation
March 28 (Reuters) - Russia said on Monday it will not supply gas to Europe for free as it works out methods for accepting payments for its gas exports in roubles but G7 nations refused the demand.
At a meeting of European Union leaders on Friday, no common position emerged on Russia's demand last week that "unfriendly" countries must pay in roubles, not euros, for its gas in the wake of the United States and European allies teaming up on a series of sanctions aimed at Russia. read more
Concerns over security of supply were enhanced after the demand, with companies and EU nations scrambling to understand the ramifications.
The Russian central bank, the government and Gazprom (GAZP.MM), which accounts for 40% of European gas imports, should present their proposals for rouble gas payments to President Vladimir Putin by March 31.
"We are not going to supply gas for free, this is clear," Kremlin spokesman Dmitry Peskov told a conference call. "In our situation, this is hardly possible and appropriate to engage in charity (with European customers)."
In a interview aired later on Monday with the American public broadcaster PBS, when asked whether gas would be turned off for non-payers, Peskov replied: "No payment - no gas."
But he added that Russia is yet to take a final decision on how to respond should European countries refuse to pay in the Russian currency.
Meanwhile, energy ministers from the Group of Seven industrialized nations rejected the rouble payment demands, Germany economy and climate protection minister Robert Habeck said after talks with his counterparts. read more
"All G7 ministers have agreed that this is a unilateral and clear breach of existing contracts," he told reporters after a virtual conference with G7 energy ministers.
The ministers "underlined once again that the concluded contracts are valid and the companies should and must respect them ... payment in roubles is unacceptable, and we call on the companies concerned not to comply with Putin's demand," he said.
ENERGY SECURITY
Dutch and British wholesale gas prices rose by up to 20% on Monday on concerns about Russian gas supply.
The EU aims to cut its dependency on Russian gas by two-thirds this year and end Russian fossil fuel imports by 2027. Russian gas exports to the EU were around 155 billion cubic metres (bcm) last year.
On Friday, the United States said it will work to supply 15 bcm of liquefied natural gas (LNG) to the European Union this year. read more
U.S. LNG plants are producing at full capacity and analysts say most of any additional U.S. gas sent to Europe would have to come from exports that would have gone elsewhere.
Russian lawmaker Ivan Abramov said a refusal by the G7 to pay for Russian gas in roubles would lead to an unequivocal halt in supplies, according to the RIA news agency.
Abramov sits on the economic policy committee of the Federation Council, the Russian parliament's upper chamber.
Germany's Habeck called Russia "an unreliable energy supplier."
When asked about what happens if Russia stops gas deliveries, he added: "we are prepared for all scenarios and not only since yesterday."
However, the EU would struggle to replace all Russian gas exports in a short period of time, experts said. read more
Russian gas deliveries to Europe on three main pipeline routes were stable on Monday, with the Yamal-Europe pipeline continuing to flow eastwards from Germany into Poland, operator data showed. read more
Russia's Gazprom (GAZP.MM) said it that it was continuing to supply natural gas to Europe via Ukraine in line with requests from European consumers.
Welcome to EURACTIV’s Green Brief. Below you’ll find the latest roundup of news on energy and environment from across Europe. You can subscribe to the weekly newsletter here.
This week, Total Energies faced the wrath of Yannick Jadot, the Green candidate in the French presidential elections, who criticised the oil giant for maintaining its activities on Russian soil despite the war in Ukraine and calls for French companies to withdraw from the country.
Jadot went so far as to accuse Total Energies of being “complicit in war crimes” in Ukraine before saying that the company “completely discredits France” in its diplomatic attempt to stop the war, making it a state matter.
The day before, however, Total Energies announced in a statement its decision to stop buying Russian oil or petroleum products “by the end of 2022 at the latest” – a decision Jadot deems insufficient.
Total Energies CEO Patrick Pouyanné defended his company’s position on RTL radio on 23 March. “If I decide to stop importing Russian gas, I don’t know how to replace it, I don’t have any available,” he said, adding that “I have 25-year long contracts and I don’t know how to get out of these contracts.”
The company’s operations are therefore being maintained, in strict compliance with the policy of the European Union – which has still not decided on an embargo against Russia. This means that alongside the thousands of victims of Putin’s war in Ukraine, a major French company is continuing business as usual from which the Russian state benefits and finances its war.
That is at least the Manichean view of the situation, but as is often the case in times of war, the reality is more complex.
Hauts-de-France region president Xavier Bertrand put it this way on France Bleu Nord on 23 March: If tomorrow, “all the French firms that are there cease their activities, what happens? They will be expropriated and either Russian or international companies will take their place. This is enough to make one wonder whether they should withdraw from Russia, especially since selling Russian oil and gas in Europe is still legal at present.”
Caroline Mini, senior project manager at the French think tank La Fabrique de l’industrie also highlighted the industrial consequences of an energy import ban. “If we do without Russian gas, there will be gas rationing in France during the winter of 2023 and it is the manufacturers who could be affected first,” she told EURACTIV in an interview.
“Moreover, gas is the raw material for making ammonia and therefore for making fertilisers, which are important for cereals and livestock farmers. The whole sector could be affected,” she added.
Total Energies is not the only French company to be singled out for its activities in Russia. Engie, the energy utility, is also being questioned for its links with Russia. In a statement on 2 March, the company said that “the group has no industrial activity in Russia and is not developing investment projects there”, even though “in 2021, the share of the group’s supplies resulting from long-term contracts with Gazprom was around 20% of its global gas sales and consumption”.
Total Energies and Engie do not have the same strategy, however. While Total sells the oil and gas it mines for the benefit of its private shareholders, Engie only resells gas to its customers. The consequences of a potential withdrawal from Russia are therefore not the same. “Engie is more inclined to withdraw from Russia, smoothly, whereas Total is less favourable to it,” says Thierry Bros, a Professor at Science Po Paris.
Apart from the energy sector, which has been widely covered in the media in recent weeks, other industries are also being scrutinised. With about 160,000 employees and “more than 500 French subsidiaries in various fields (including 35 listed companies)”, France is the leading foreign employer in Russia, the French economy ministry pointed out.
Today, companies like the Société Générale bank, the pharmaceutical laboratory Sanofi, the car manufacturer Renault, the food giant Danone, and the retailer Auchan have been called upon by a number of politicians to withdraw from Russia.
Expressing his irritation over the situation, Ukrainian Foreign Minister Dmytro Kouleba even directly attacked Auchan on Twitter on Sunday (27 March), calling for a boycott of the supermarkets following the company’s announcement that it would carry on its activities in Russia.
On 23 March, Ukrainian President Volodymyr Zelenskyy had already called on French companies to “leave the Russian market. Renault, Auchan, Leroy Merlin and others must stop being sponsors of Russia’s war machine.”
Some, like Renault, are speeding things up, while others, like Total Energies, are limiting themselves to what is strictly necessary to ease the situation.
According to Jadot, it is up to President Emmanuel Macron to order Total’s withdrawal from Russia. But the president has decided otherwise. On 24 March, at a press conference after the NATO summit, Macron said that the French “position is to let companies decide for themselves”.
“It is the choice of the heads of these companies to appreciate, according to their balance, their activities, to choose what is appropriate”, Macron added.
Leaving Russia can undoubtedly be a difficult choice from a business perspective, as it could mean a loss in investments, massive layoffs of Russian employees, the obligation to respect contracts… Business executives can feel trapped.
Morally though, the matter is much clearer. Especially since, as the Ukrainian President reminded us in his speech to the French parliament, “values are more important than profits”.
And values also make the reputation of companies. “Total is a little more reluctant than other companies like BP or Shell to stay in Russia,” according to Bros. “What can happen is that the big shareholders turn away from Total,” he added, suggesting that large funds could change the game and push Total Energies to withdraw.
The big financial players, who are notoriously risk-averse, may indeed have the last word. In the meantime, French corporate groups will have an increasingly hard time justifying their presence in a country whose leaders are responsible for war crimes.
– By Nelly Moussu
Russia is demanding payment in rubles for its natural gas exports to Europe
BERLIN -- Europe's already high gas prices have gyrated since Russian President Vladimir Putin announced plans to have importers pay for Russian natural gas in rubles instead of dollars and euros.
Here's a look at some of the implications of such a move:
WHAT IS PUTIN PROPOSING?
Europe imports large amounts of Russian natural gas to heat homes, generate electricity and fuel industry, and those imports have continued despite the war in Ukraine.
Around 60% of imports are paid in euros, and the rest in dollars. Putin wants to change that by requiring foreign gas importers to purchase rubles and use them to pay state-owned supplier Gazprom.
Putin told the Russian central bank last Wednesday to come up with a workable system.
WHAT EFFECTS COULD THAT PLAN HAVE?
Importers would have to find a bank that would exchange euros and dollars for rubles. That could be cumbersome because some Russian banks have been either blocked or cut off from the SWIFT messaging system that facilitates international payments.
Still, there are some banks that haven't been cut off, and for now, sanctions imposed by the U.S. Treasury barring bank transactions contain exceptions for energy payments. That's a concession to European allies that are much more reliant on Russian oil and gas and fear a total cutoff could throw their economy into recession.
Russia getting paid for gas in their currency would at best help marginally in getting around financial sanctions, propping up the ruble’s value or protecting the Russian economy, said Eswar Prasad, professor of trade policy at Cornell University and a former official at the International Monetary Fund.
“Either Putin is getting terrible economic advice or he is going further off the rails in his hatred for the West,” Prasad said. “It would be cheaper for foreign importers to pay for Russia’s exports in a currency that is collapsing in value, but it is difficult to acquire rubles and make payments in a manner that avoids the sanctions."
He warned that the move “could further roil global energy markets by exacerbating current supply disruptions and adding to uncertainty about future supplies, which could all add up to more price spikes.”
HOW IS PUTIN'S DEMAND BEING RECEIVED IN EUROPE?
European governments and energy companies are rejecting the idea, saying gas import contracts specify the currency and that one side can't change it overnight. They say they intend to keep paying in euros and dollars.
More broadly, the Group of Seven major economies including Japan, the U.S. and Canada as well as Germany, France, Italy and Britain have agreed to reject Moscow’s demand. The European Union's energy commissioner also agreed, a G-7 statement said.
German Vice Chancellor Robert Habeck told reporters Monday that “all G-7 ministers agreed completely" that such a step would be "a one-sided and clear breach of the existing contracts.”
WHAT’S PUTIN’S MOTIVE?
In theory, requiring ruble payments could support demand for the currency and its exchange rate. But not by much, Prasad says. As it stands, euros and dollars are already being used to purchase rubles when Gazprom exchanges its foreign earnings.
The Center for Eastern Studies in Warsaw has suggested that by moving the flow of foreign currency from Gazprom to the largely state-controlled banking system, the Kremlin will gain added control over foreign currency that has become scarcer since Western countries froze much of Russia's reserves abroad.
However, that would leave Gazprom without hard currency to make foreign debt payments or purchase supplies abroad. As it stands, the gas supplier already has to sell 80% of its foreign currency to Russia's central bank.
The ruble dispute has raised concerns it could lead to an interruption in natural gas supply. That could open Russia to charges of not adhering to long-term energy contracts, which it has done so far.
Europe's pipeline system is highly connected, so any attempt to restrict flows to some countries would affect the others, according to analysts at Rystad Energy. Beyond that, energy sales are a key source of revenue for Russia.
Asked by reporters if Russia could cut gas supplies to European customers if they reject the demand to pay in rubles, Kremlin spokesman Dmitry Peskov said in a conference call Monday that “we clearly aren’t going to supply gas for free.”
“In our situation, it’s hardly possible and feasible to engage in charity for Europe,” Peskov said.
HOW REAL IS THAT THREAT?
The ruble proposal led Germany’s utilities association, the BDEW, to call on the government to declare an “early warning” of a severe energy shortage.
That’s the first of three stages of energy emergency in EU and German law, the highest being a shortage so severe that the government must shut off gas to industry to protect households.
The German government does not see the need for such a declaration, a spokeswoman said Monday.
It's possible Putin is bluffing. This month, Russia threatened to use rubles to pay foreign investors who hold government bonds dominated in dollars. It went through with a dollar payment after ratings agencies said paying in rubles would put Russia in default.
When it comes to gas payments, “Putin may demand rubles, but the contracts are clear," said Carl Weinberg, chief economist and managing director at High Frequency Economics in White Plains, New York. "His only option to force change is to refuse to deliver products, and that cannot happen: He can’t keep oil and gas from coming out of the ground without capping wells, and storage capacity will get filled very fast if shipments stop cold. ”
“So let’s call it a bluff,” Weinberg said. “Russia cannot stop shipping product any more than Germany and the EU can stop buying it.”
WHY IS ENERGY AN IMPORTANT FACTOR IN THE WAR?
The European economy remains heavily dependent on Russia for 40% of its gas imports and 25% of its oil.
While the U.S. and the United Kingdom have said they will stop buying Russian oil, European leaders have shied away from a total boycott of Russian oil and gas. Instead, they have focused on reducing their imports over the next several years through conservation, other sources and switching to wind and solar as fast as they can.
Estimates vary of the impact of a total gas shutoff in Europe, but they generally involve a substantial loss of economic output.
https://abcnews.go.com/International/wireStory/explainer-paying-natural-gas-rubles-83735661
Russia: Europe oil embargo delay 'unacceptable' says Ustenko
Brent crude oil dropped by $2.25 to come in at $110.23 a barrel. Meanwhile, US West Texas Intermediate took a 1.6 percent hit to end up at $104.24.
However, both oil benchmarks reportedly fell by seven percent on Monday and an additional seven percent on Tuesday. The news comes as Ukrainian and Russian negotiators met in Turkey for the first face-to-face discussions between the two nations in almost three weeks. A top negotiator from the Kremlin described the talks as "constructive". Moscow is said to have promised to reduce its military operations around Kyiv and other parts of northern Ukraine. JUST IN: Trump begs Putin to release dirt on Biden’s family despite conflict - ‘We should know’
Oil price crash: Ukraine-Russia peace talks lead to price drop as OEUK issue warning
Oil prices have taken their toll at the pump.
Kyiv has reportedly proposed adopting neutral status but still contends it wants international guarantees to protect it from attack. However, an expert has warned the situation in Ukraine might remain fraught for some time. Robert Yawger, executive director of energy futures at Mizuho, said: "Maybe there's reasons to be a bit more optimistic than we were this time yesterday, but I don't think this whole situation with Ukraine is going to go away in the next 15 minutes." Vladimir Putin's invasion of Ukraine has also affected oil prices after it sent prices soaring to 140 a barrel, the highest it has been in 14 years. READ MORE: 'In a tight spot' EU at risk of another crisis over plans to end Russian gas dependence
Russian President Vladimir Putin
The news comes while Offshore Energies UK (OEUK) has issued a warning about the lack of Government commitment to the industry's future.
OEUK claim Britain could face import dependency by 2037 without the confidence to invest within the next year.
The trade body's chief executive Deirdre Michie also said energy had become an issue of national security amid events in Ukraine.
However, a UK Government spokesman said energy security is an "absolute priority".
A BBB hedge in Biden's budget Presented by Chevron
Editor’s Note: Morning Energy is a free version of POLITICO Pro Energy’s morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
With help from Kelsey Tamborrino, Alex Guillén and Josh Siegel.
QUICK FIX
— President Joe Biden’s budget has its eye toward a possible BBB rebirth, while building off of the bipartisan infrastructure package.
— The House Budget Committee kicks off a series of hearings on the budget request today.
— The solar industry isn’t holding back its frustration with the administration’s circumvention investigation into solar parts from Southeast Asia.
HAPPY TUESDAY! I’m your host, Matthew Choi. Congrats to Bill Birsic of Sen. Roger Marshall’s office for knowing Russian Foreign Minister Sergey Lavrov’s first diplomatic posting was in Sri Lanka. For today: Who was the first king of Lesotho? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: Why Commerce’s imports probe could upend the solar industry.
A message from Chevron: The Permian Basin in Texas and New Mexico is one of America’s most prolific oil and natural gas resources. By the end of this year, we plan to increase Chevron’s Permian oil and natural gas production by 10% while continuing to reduce our operations’ carbon and methane emissions intensities.
Driving The Day
BUDGET WITH SOME WIGGLE ROOM: President Joe Biden has big climate and clean energy spending goals for the next fiscal year, with bumped up spending figures in his latest budget request for the departments of Energy and Interior, as well as EPA and programs mitigating the effects of climate change. The request, which came out Monday, builds on a lot of the priorities enumerated in last year’s bipartisan infrastructure package.
But it also saves some space for a revived Build Back Better package, with a reserve fund to account for future negotiations. Many climate-focused Democrats aren’t giving up hope on the $550 billion in climate spending in the stalled BBB, with members making their pitches for individual programs during a Senate Environment and Public Works Committee hearing last week and Senate Energy Chair Joe Manchin reportedly kicking discussion back up on possible paths forward.
Though the administration initially hoped for a BBB that would reduce the deficit, the White House kept the reserve fund deficit neutral to be as flexible as possible with whatever comes out of Congress. Speaking with reporters Monday, Office of Management and Budget Director Shalanda Young wouldn’t get into the details of what that framework might be, saying an “easy way to not get anything done is to negotiate in public.” She also didn’t confirm when asked if the White House had been engaged in any discussions.
As for what is clear, Biden’s budget request includes $48.2 billion in discretionary funding for the Energy Department (a 7 percent increase from the fiscal 2022 omnibus), $18 billion to shore up the country’s defense against climate change and an almost 25 percent increase in Interior spending from the omnibus. EPA would also get a 25 percent boost relative to the omnibus, with $11.9 billion. (Click on the links for breakdowns of each department from the POLITICO Energy team.)
The EPA spending would help support the agency’s freshly released strategic plan for 2022 through 2026, which restores a focus on climate change that had been scrubbed completely from the prior plan issued under the Trump administration. The plan has four main principles: "follow the science," "follow the law," transparency and, for the first time, "advance justice and equity."
The Nuclear Regulatory Commission is also seeking $929.2 million for fiscal year 2023. A majority of the NRC’s budget comes from license fees paid directly to the Treasury, and the nuclear agency said Monday it expects to recover $792.2 million through those fees. That leaves $137 million for its net appropriations request for 2023 — a $6 million increase over the $131 million the agency received as part of the 2022 omnibus after offsetting revenues.
Of course, the budget request is largely aspirational, and the exact spending figures will have to churn through the political meat grinder of Capitol Hill. It’ll also be subject to a fresh assessment this summer with inflation estimates taking into account the Russian invasion of Ukraine, Council of Economic Advisors Chair Cecilia Rouse told reporters Monday.
For an overview of the entire budget proposal, the POLITICO policy staff has you covered. And for how the budget request colors the upcoming midterms, take a read from POLITICO’s Jennifer Scholtes.
Related: "Biden’s budget a ‘peace offering’ that could restart stalled economic agenda," via POLITICO's Laura Barrón-López.
On the Hill
IN COMMITTEE TODAY: The House Budget Committee has the first of a handful of hearings centered on Biden’s budget request today, with OMB Director Young set to testify.
Over in the House Energy and Commerce Committee, the Environment and Climate Change Subcommittee will discuss opportunities for federal assistance updating drinking water infrastructure today. The committee will go into the new funding included under last year’s bipartisan infrastructure package for the drinking water state revolving funds and other mechanisms for boosting drinking water infrastructure, including lead pipe removal and PFAS clean up. The package included an almost 70 percent increase in funding for the state revolving funds over previous levels.
The House Natural Resources Subcommittee on Water, Oceans and Wildlife also has a meeting today, zeroing in on three conservation-centered bills: The Red River National Wildlife Refuge Boundary Modification Act (H.R. 6427 (117)), the Keep America’s Refuges Operational Act (H.R. 6734 (117)) and the Advancing Human Rights-Centered International Conservation Act (H.R. 7025 (117)).
Around the Agencies
HERE COMES THE SUN REACTIONS: The Biden administration said Monday it would kick off a circumvention investigation into solar modules from Cambodia, Malaysia, Thailand and Vietnam. U.S.-based solar manufacturer Auxin Solar called for the probe into whether imports from the countries are being used to avoid duties on imports from China, and the Department assessed that Auxin “properly alleged the elements necessary for a circumvention determination.”
But solar developers warned the probe would deal a devastating blow to the industry by effectively freezing development in the U.S. solar industry and costing thousands of jobs.
Edison Electric Institute President Tom Kuhn in a statement said the initiation of the inquiry will ultimately “impede the nation’s clean energy transition and increase costs for electricity customers.” Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, told Kelsey the group anticipates the decision will wipe out a record year of deployment and will decrease U.S. solar energy jobs by about one-third.
On a call with reporters, American Clean Power Association CEO Heather Zichal, who also served under the Obama administration, said the group had been hopeful given the Biden administration has positioned itself as a champion of clean energy. “As someone who spent many years in the room as these decisions get made and these policies get implemented, I understand how difficult it can be to get them correct and the serious consequences of what happens when the government gets it wrong,” she said. “Well, today we are profoundly disappointed to report that the government has gotten it wrong.”
Craig Cornelius, chair of the board at ACP, said the decision was at odds with the administration’s backing for the clean energy tax credits currently stalled on the Hill, which he called the “most elegant design” of a clean energy economy in over two decades. “That dissonance between the intelligent concept of integrated tax incentives to expand our clean energy economy in the tax credit legislation that's moving through Congress versus this petition from a single company, which this administration didn't ask for, could not be louder,” he told reporters.
Sen. Sheldon Whitehouse (D-R.I.) made a similar point Monday. “I hope my colleagues will see this decision as reason to double down on passing significant climate legislation that accelerates America’s renewable energy market and creates more well-paying domestic jobs,” he told POLITICO’s Josh Siegel.
The move was expectedly cheered by Auxin, whose CEO said in a statement he was "grateful" to Commerce officials for recognizing "the need to investigate this pervasive backdoor dumping and how it continues to injure American solar producers." It was also cheered by some lawmakers, including Rep. Bill Pascrell (D-N.J.), a member of the Ways and Means Committee, who called it “a good start” as the administration “must be relentless in stopping the Chinese government’s bad acts and bad acts by Chinese companies and their accomplices.” Read more on the decision from POLITICO’s Kelsey Tamborrino.
A message from Chevron:
In the courts
SCOTUS EYES STATE WATER AUTHORITY FIGHT: The Supreme Court could decide any day now whether to reinstate the Trump administration rule that limited states' ability to use their authority under Section 401 of the Clean Water Act to block energy projects. A judge last year vacated the rule and sent it back to EPA for reconsideration, and the 9th Circuit last month declined to overturn him. A coalition of states and oil, gas and hydropower industry groups last week took their plea to the Supreme Court, effectively asking it to reinstate the Trump rule even while the Biden administration works on a rewrite.
Both the Biden administration and a coalition of blue states, tribes and environmental groups on Monday filed briefs urging the high court not to get involved. "Applicants have not demonstrated that they will suffer irreparable harm if the 1971 certification rules remain in effect during the relatively brief period while EPA conducts its new rulemaking," the Justice Department wrote, adding that agencies have readjusted to the prior policy and forcing yet another shift so soon "would cause substantial disruption and disserve the public interest."
Coincidentally, EPA on Friday sent its proposed revised rule, Reg. 2040-AG12, to the White House for review, setting up the rule for release later this spring.
Beyond the Beltway
OPEC STAYS OUT OF IT: OPEC has no intention of drastically increasing output to replace Russian oil exports, Reuters reports citing anonymous sources close to the discussions. Though Western countries including the United States have implored the cartel to ramp up its production for months to help cool high crude prices, it has stayed consistent on its gradual output increases of 400,000 barrels per day each month.
Starting in May, that increase will go up to 432,000 barrels per day, Reuters reports, but that figure comes from recalculated reference production levels, not at the behest of Western consumers. OPEC+, which includes Russia, naturally is disinclined to acquiesce to the West's demands if it comes at Russia's expense, and the core members of the cartel have shown they are not keen on antagonizing Moscow. Read more from Reuters.
TICKER WATCH: The cost of crude fell drastically on Monday following announcements that China would be undergoing another round of lockdowns due to the latest Covid variant. Falling from a Friday settlement price of $113.90, U.S. benchmark WTI crude dropped by more than $10 on Monday afternoon before settling at $105.96.
“There was some hope that China this time around would not go through a lockdown, but the message from the country is that that’s out of the question,” Natasha Kaneva, J.P. Morgan’s head of global commodities research, told The Wall Street Journal. “I think the market is definitely afraid of what is coming next.” Read more from the Journal on Monday’s prices.
NO RUBLES FOR YOU: The G-7 will not be paying for Russian gas in rubles, thank you very much. German Economy Minister Robert Habeck rebuffed Russian President Vladimir Putin’s demand for payment in the ailing Russian currency as a “unilateral and clear break fo the existing agreements” and a sign that Putin had his “back against the wall.” Habeck had previously decried the Russian demands as breaking contracts, but Monday’s announcement included the backing of the world’s top 7 liberal economies. Read more from Deutsche Welle.
The Grid
— “For Japan’s Leader, Russian Gas Is Also a Hometown Affair,” via The Wall Street Journal.
— “Misinformation is derailing renewable energy projects across the United States,” via NPR.
— “Biden: ‘Not walking anything back’ on unscripted Putin comments,” via POLITICO.
THAT’S ALL FOR ME!
A message from Chevron: Balancing energy security, costs, and the need to reduce emissions have become an increasingly important part of the energy conversation at home and abroad. In the Permian Basin, we plan to increase oil production by 10% in 2022 while continuing to reduce both carbon and methane emissions intensities. And in the years to come, we expect to grow our Permian production beyond 1 million barrels of oil equivalent per day. Every day, we look for opportunities to make our own environmental footprint smaller as we strive to produce energy that Americans—and customers throughout the world—can count on. Find out more.
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https://www.politico.com/newsletters/morning-energy/2022/03/29/a-bbb-hedge-in-bidens-budget-00021136
Get a quick look at expectations on China’s iron ore and steel markets for the next quarter, as well as the impact of the continuing Russia-Ukraine war in the rebar-scrap market. Our editors in the US are watching gasoline prices, and oil and gas business sentiment, while polyethylene trade is in focus in Asia.
1. Ukraine conflict sparking jump in Chinese steel exports
What’s happening? China has been lifting its exports of finished and semi-finished steel in March as buyers in Europe, the Middle East and in other parts of Asia have been unable to source material from Ukraine and Russia due to the conflict. Some Chinese mills have noted their export volumes reached close to 500,000 mt in the first week of March.
What’s next? A majority of respondents in S&P Global Commodity Insights’ Q2 survey said they expected the conflict to result in higher Chinese steel exports. March orders indicate a big jump in exports over April-May, and the stronger overseas demand could help offset tepid domestic steel demand, and keep prices well supported.
2. … while Turkish export rebar-import scrap spread widens
What’s happening? The Turkish export rebar-import scrap spread has widened to a record high, with Turkish sellers achieving higher export rebar prices to Europe. Turkey received an increased quota, following the redistribution of quotas taken away from Russia and Belarus. European rebar buyers seem to be able to afford to pay the 25% duty if a quota is exhausted, as Turkish rebar is still cheaper than domestic rebar. Turkish mills have also seen strong steel billet export demand following cancellations and delays for CIS-origin material due to the Ukraine invasion.
What’s next? It’s expected that Turkish mills will have to pay more for scrap once they return to buy, with substantial May shipment cargoes required to fulfil their recent finished and semi-finished steel exports. Shortages of basic pig iron from the Black Sea make ferrous scrap the main alternative for mills. The Turkish rebar-scrap spread might narrow slightly, though, if scrap prices catch up with recent increases in rebar prices.
3. California could foreshadow gasoline demand decline in entire US
What’s happening? In Q4 2021, the US West Coast saw a decline in gasoline demand which was more pronounced than the entire country. This coincided with regular unleaded gasoline prices in the area reaching $4/gal. In the latest reporting week, the EIA indicated regular gasoline retail prices in California of $5.70/gal while the US averaged $4.24/gal. Over the last month, as price increases accelerated, California mobility was more tempered relative to the overall US. Weekday mobility is more inflexible than weekend mobility because a larger component is comprised of driving to work.
What’s next? With California gasoline prices being so much higher than the rest of the country, it may be a leading indicator of what could ultimately be seen in the rest of the US with regards to demand impairment. As prices rise to ever more elevated levels, price elasticity is not seen as behaving linearly and demand losses grow disproportionately. Demand losses are estimated be about 35,000 b/d in a low elasticity sensitivity case, to around 300,000 b/d in a high elasticity sensitivity case. This demand loss would be mostly felt in discretionary driving and be reflected in weekend mobility data. If weekend mobility data declines, losses in gasoline demand would begin to mirror that which had already been observed in the West Coast and specifically California.
4. US oil, gas activity index signals growth in major basins
What’s happening? Oil and gas industry executives responding to the Federal Reserve Bank of Dallas’ Energy Survey in March reported a broad expansion in business activity from Q4 2021 to Q1 2022 with increases in production, capital expenditures, employment and overall operating costs. Nearly 52% of respondents reported an increase in oil production in Q1 along with 47% reporting an increase in natural gas production. Less than 7% of survey respondents reported a decrease during the quarter.
What’s next? The overall rise in oil and gas business sentiment in Q1 mirrors activity in the field and could be an indicator of what’s to come in some of the largest shale basins across the Dallas Fed’s Eleventh District – most notably the Permian. In the West Texas-New Mexico play, rig counts, new well drilling and completions are edging back toward pre-pandemic levels in late March, just as production tests new record highs at over 14 Bcf/d. According to a recent forecast published by S&P Global, Permian production could grow by close to 2 Bcf/d by year-end 2022.
5. Asia polyethylene prices reacts to high oil prices
What’s happening? Demand in Asia was weak, and some traders preferred to buy polyethylene on a hand-to-mouth basis in the local market, given market uncertainties. In South Asia, HDPE film prices are at a record high due to limited supply in the international market. Meanwhile, domestic shortage in India on the back of a shutdown of a major PE producing plant due to feedstock issues has been pushing prices higher in the region.
What’s next? Traders expect plant operations in Asia to be reduced due to a lack of Russian naphtha and higher crude costs. Cracker operators are facing high costs and cannot offer lower despite weak demand, traders said. Participants in South Asian region are waiting for fresh offers for May, which they expect to be higher. An upcoming maintenance turnaround in India, a key PE-producing region in South Asia, is also likely to keep the sentiment bullish. Chinese traders were exporting domestic and imported material to Southeast Asia, due to weak domestic demand amid coronavirus-led lockdowns and high inventories. Other sellers were holding high offers, expecting demand to rebound after the lockdowns ease.
Source:Platts
https://www.hellenicshippingnews.com/commodity-tracker-5-charts-to-watch-this-week-45/
Corporate News Heek, March 31, 2022
2G Energy AG grows EBIT to EUR 17.9 million in FY 2021 (previous year: EUR 16.4 million)
- EBIT margin at upper end of guidance at 6.7 % (previous year: 6.7 %)
- Sharp rises in natural gas and electricity prices highlight further importance of CHP systems' efficiency advantages
- Management Board confirms FY 2022 net sales guidance (EUR 280 million to EUR 310 million) with EBIT margin between 6.0 % and 8.0 %
- 2G acquires SenerTec Center Schweinfurt GmbH and minority interest in KWK-tec GmbH
Heek, March 31, 2022 - 2G Energy AG (ISIN DE000A0HL8N9), one of the internationally leading manufacturers of gas driven combined heat and power (CHP) systems, reports higher consolidated net sales of EUR 266.3 million in the 2021 financial year (previous year: EUR 246.7 million). In addition, 2G improved its consolidated earnings before interest and tax (EBIT) to EUR 17.9 million (previous year: EUR 16.4 million), thereby achieving an EBIT margin of 6.7 %, at the upper end of the guidance range (previous year: 6.7 %).
Especially the service business in Germany proved to be a sales driver, with growth of EUR 15.4 million, or 24 %, to EUR 80.9 million. Of this total, around EUR 4.7 million was attributable to HJS Motoren GmbH. Overall, the service share of Group sales rose to 43 % (previous year: 38 %). Adjusted for the first-time consolidation of HJS Motoren GmbH, traditional service sales increased by 18.9 % to EUR 110.9 million (previous year: EUR 93.3 million).
Despite the successes in the service business, foreign sales also grew at an above-average rate and accounted for 39 % of total net sales in the past financial year (previous year: 38 %). The crisis regions of Russia and Ukraine account for only around 1 % of consolidated net sales.
The foreign subsidiary generating the highest level of net sales in the 2021 financial year was 2G Energy Ltd. (UK), which increased its sales to EUR 26.2 million (previous year: EUR 22.2 million).
The following table shows the overall distribution of net sales:
| EUR millions | 2021 | 2020 | ||||||
| CHP systems | Service | Total | As a % | CHP systems | Service | Total | As a % | |
| Net sales | 150.7 | 115.6 | 266.3 | 100.0 | 153.4 | 93.3 | 246.7 | 100.0 |
| Germany | 81.6 | 80.9 | 162.6 | 61.1 | 86.8 | 65.5 | 152.3 | 61.7 |
| Rest of Europe | 37.7 | 20.7 | 58.4 | 21.9 | 34.8 | 20.2 | 55.0 | 12.9 |
| North/Central America | 18.0 | 7.9 | 25.9 | 9.7 | 25.7 | 6.2 | 31.9 | 22.3 |
| Asia/Australia | 7.5 | 1.9 | 9.3 | 3.5 | 4.6 | 1.2 | 5.8 | 2.4 |
| Rest of the world | 5.9 | 4.3 | 10.2 | 3.8 | 1.5 | 0.2 | 1.6 | 0.7 |
Expense ratios shift due to higher service share
As the service business typically incurs more personnel expenses and less cost of materials, the cost of materials ratio decreased to 63.7 % (previous year: 65.8 %), while the personnel expense ratio rose to 18.4 % (previous year: 17.4 %). The resultant margin improvement offsets the rise in other operating expenses of EUR 5.1 million (+ 21 %). This increase reflects additional sales commissions abroad (EUR + 1.0 million), a higher level of value allowances applied to receivables (EUR + 1.0 million, of which EUR 0.5 million in connection with the war in Ukraine), a higher level of legal and consulting expenses, particularly due to the investments in various companies and the capital increase (EUR + 0.5 million), normalized travel activities (EUR + 0.3 million), vehicle costs (EUR + 0.3 million), and the first-time consolidation of HJS Motoren GmbH (EUR + 0.5 million).
Sharp rise in natural gas prices highlights CHP systems' efficiency benefits
Russian natural gas accounts for around 55 % of Germany's natural gas imports and is mainly used in heat generation. In the event of supply restrictions, this portion would have to be at least partially offset short-term by other suppliers in the form of pipeline gas or LNG on the world market. However, a fundamental substitution of natural gas is impossible before the next heating period and is unlikely to be achieved within the next few years. At the same time, the price of electricity will continue to rise, as not only will a lack of Russian natural gas prevail, but also - albeit to a lesser extent - Russian hard coal will have to be replaced. Additional solar and wind power plants will provide relief here at best in the medium to long term.
2G's Management Board consequently expects the efficiency benefits of CHP systems to become much more important given extremely sharp rises in gas prices. Further benefits of CHP systems include their usually short delivery times, low social and regulatory hurdles relating to their installation and operation, as well as the ability to convert 2G CHP systems that have already been supplied and commissioned to hydrogen and biogas operation at any time.
Moreover, the sharp rise in natural gas and electricity prices will have a positive impact on the economic viability of lean gas and biogas projects. 2G is very well positioned in this segment thanks to its decades of experience. Furthermore, 2G is the only CHP manufacturer in the world to carry an entire line of fully hydrogen-capable CHP units in its regular price list.
The Management Board consequently regards this as confirmation of its long-standing strategy of both driving forward the Group's internationalization and expanding its competency edge and technology leadership in all gas applications.
Management Board expects EBIT margin of between 6.0 % and 8.0 % for 2022 on the basis of further sales growth
For the current financial year, the order book is well filled at the beginning of 2022 with EUR 152.7 million of orders (previous year: EUR 111.2 million). As already communicated on January 20, the Management Board anticipates consolidated net sales in a range between EUR 280 and EUR 310 million for the 2022 financial year.
Subject to all reservations and with due commercial caution, the Management Board is aiming for an EBIT margin of between 6 % and 8 %. This guidance range, which has been expanded compared with previous years, reflects both the coronavirus pandemic's continuing effect on the economy and the geopolitical situation, the specific effects of which cannot yet be fully assessed at the present time. For example, the prices of numerous raw materials have risen significantly compared with the previous year, which in view of 2G's business model entails both risks and opportunities. Secondly, the upper edge of this guidance reflects the expectation that further efficiencies can be realized through 2G's four lead projects.
2G acquires SenerTec Center Schweinfurt GmbH and minority interest in KWK-tec GmbH
At the end of the 2021 financial year, 2G Energy AG acquired SenerTec Center Schweinfurt GmbH. In addition to the existing branch operation in Germany's Upper Bavaria region, 2G is thereby strengthening its presence in Southern Germany in order to be able to participate to an even greater extent in the sales potential there.
In February, 2G also acquired a 40 % interest in KWK-tec GmbH (Mendig). KWK-tec GmbH has been a close partner of 2G for many years and, with its 25 employees, specializes in service, complex conversion measures for CHP systems, and CHP control and optimization. The company addresses CHP systems from different manufacturers, thereby enabling access to new customer groups.
2G company portrait
The 2G Energy AG Group is an internationally leading manufacturer of decentralized energy supply systems. With the development, production and technical installation as well as digital grid integration of combined heat and power systems (CHPs), the company offers comprehensive solutions in the growth market for highly efficient CHPs. Aftersales and maintenance services comprise an important additional performance criterion. The product range especially includes CHP modules in the 20 kW and 4,500 kW range for operation utilizing hydrogen, natural gas, biogas, as well as other lean gases. Worldwide, more than 7,000 installed 2G systems in various applications supply electrical and thermal energy to a broad spectrum of customers including companies in the housing industry, agriculture, commercial and industrial companies, public energy utilities, and municipal and local government authorities.
2G benefits from global long-term trends that make efficient and decentralized energy solutions ever more important. These trends include not only rising energy demand but also the need to conserve natural resources. The parallel generation of electrical and thermal energy makes CHP technology more efficient and climate-compatible than conventional energy conversion methods, especially when, for example, hydrogen of regenerative origin is harnessed as fuel. 2G power plants can offset wind and solar power plant production fluctuations as required, thereby forming a backbone technology for future supply concepts, especially in the deployment of hydrogen engines. 2G's customers thereby derive consistent benefits from economically and ecologically highly beneficial innovations that rapidly pay for themselves and create extensive added values.
2G is consistently expanding its technological leadership through continuous research and development work, both in gas engine technology for hydrogen, natural gas and biogas applications, as well as in specific software development. Moreover, in the energy revolution's future electricity market design, the digitalization that 2G consistently implements forms an indispensable system-relevant element in combination with solar, wind, biogas and natural gas producers, and establishes a high barrier to market entry for competitors.
2G employs around 750 staff at its headquarters in Heek, Germany, in North America, as well as at five other European locations. The company is active in more than 50 countries and generated net sales of EUR 266 million in the 2021 financial year. 2G was founded in 1995 and has been listed on the stock market since 2007. The shares of 2G Energy (ISIN DE000A0HL8N9) are listed in the "Scale" segment of the Frankfurt Stock Exchange.
2022 calendar dates
April 6-7 Metzler Micro Cap Days
April 21 Consolidated financial statements for FY 2021
May 19 Q1 key figures and business trends
May 23-25 Spring Conference, Frankfurt
June 3 Ordinary AGM, Ahaus
September 5 Consolidated financial statements for H1 2022
September 5-6 Autumn Conference, Frankfurt
November 21 Q3 key figures and business trends
November 28-30 German Equity Conference, Frankfurt
IR contact
2G Energy AG
Benzstrasse 3, 48619 Heek
Phone: +49 (0) 2568 93 47-2795
Fax: +49 (0) 2568 93 47-15
Email: ir@2-g.de
Internet: www.2-g.de
WARSAW, Poland -- Poland announced steps Wednesday to end all Russian oil imports by year's end, while Germany issued a warning about natural gas levels and called on people to conserve, new signs of how Russia's war in Ukraine has escalated tensions about securing energy supplies to power Europe.
Poland, which has taken in millions of Ukrainian refugees, has taken the lead in the European Union on swiftly cutting off Russian fossil fuels. The 27-nation bloc has declined to sanction energy because it depends on Moscow for the fuel needed for cars, electricity, heating and industry, but it has announced proposals to wean itself off those supplies.
"We are presenting the most radical plan in Europe for departing from Russian oil by the end of this year," Polish Prime Minister Mateusz Morawiecki said at a news conference.
It comes a day after Poland said it was banning Russian coal imports, expected by May. Morawiecki says Poland will take steps to become "independent" of Russian supplies and is calling on other European Union countries to "walk away" as well. He argues that money paid for Russia's oil and gas is fueling its war machine.
While some in Europe are calling for an immediate boycott of all Russian oil and natural gas, the EU plans to reduce Russian gas imports by two-thirds by the end of the year and eliminate them before 2030. In the meantime, rattled energy markets have pushed up already high oil and natural gas prices for Europeans and others worldwide.
The EU is turning to investments in renewable energy as a long-term fix but also is scrambling to shore up alternative sources of fossil fuels, including a new agreement with the U.S. to receive more liquefied natural gas, or LNG, that arrives by ship.
Poland is expanding an LNG terminal to receive deliveries from Qatar, the U.S., Norway and other exporters. A new Baltic pipeline bringing gas from Norway is expected to open by the end of the year. It also has been reducing dependence on Russian oil through contracts with Saudi Arabia, the U.S. and Norway and is considering imports from Kazakhstan.
Germany, the EU's biggest economy and one of the most reliant on Russia's natural gas, has signed deals with several suppliers of LNG, which is shipped to neighboring European countries and then pumped in. Officials say they aim to end the use of Russian oil and coal this year and natural gas by mid-2024.
It has not stopped the fears about the coming months. Germany issued an early warning over gas supplies and called on companies and households to conserve amid concerns that Russia could cut off gas deliveries unless it is paid in rubles.
Western nations have rejected that demand, arguing it would undermine sanctions over the war. France also called Wednesday for "those who can" to conserve energy, including electricity and gas, focusing especially on businesses and public facilities.
"There have been several comments from the Russian side that if this (payments in rubles) doesn't happen, then the supplies will be stopped," Economy Minister Robert Habeck told reporters in Berlin.
Kremlin spokesman Dmitry Peskov said switching payments for Russian gas to rubles is going to be a "drawn-out process." He noted there is always a gap between gas supplies and payments and that the government will release details of the plan soon.
Habeck said those rules were expected today.
He called the early warning precautionary as Russia was still fulfilling its contracts so far. It is the first of three levels and entails establishing a crisis team to step up monitoring of the gas supply, Habeck said.
Germany's gas storages are filled to about 25% capacity.
"The question how long the gas will last basically depends on several factors (such as) consumption and weather," he said. "If there's a lot of heating, then the storage facilities will be emptied."
He added that Germany is prepared for a sudden stop in Russian gas supplies but warned of "considerable impacts" and urged consumers to help prevent a shortage by reducing their use.
"We are in a situation where, I have to say this clearly, every kilowatt hour of energy saved helps," Habeck said.
The second warning level would require companies in the gas industry to take necessary measures to regulate supply. The third means full state intervention to ensure that those who most need gas -- such as hospitals and private households -- receive it, Habeck said.
"We're not there and we don't want to go there," he added.
Italy issued a pre-alert of the risks to its natural gas supply days after the war broke out, given its heavy reliance on Russia. Energy transition minister Roberto Cingolani said the warning aimed to inform users of the "uncertainties linked to the conflict," while confirming supplies remained adequate to cover demand. It has not asked people to conserve.
France's gas storage facilities are "well filled," according to the head of its Regulatory Energy Commission, but still asked for some efforts to save energy.
"If we don't do that, there is a risk next winter for consumption demand to be superior to our ability to meet that demand," Jean-Francois Carenco told the BFM news broadcaster.
France gets about 70% of its electricity from nuclear plants. But during peak demand at winter time, the country needs to import electricity, some of which is produced by gas-powered plants.
https://www.nwaonline.com/news/2022/mar/31/poland-ending-russian-oil-imports-by-23/?business
Europe ‘too dependent’ on Russian gas says von der Leyen
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Since Russian President Vladimir Putin invaded Ukraine, the EU has been looking for alternatives to Russian fossil fuels. For almost a year, the bloc has been reeling from an energy crisis that has only been exacerbated as Putin, who supplies the EU with 40 percent of its gas, squeezed supplies to exert pressure on the bloc.
As the bloc looks for alternatives, many are tipping renewables like wind and nuclear power to ensure energy security. An expert has noted that the UK is in a prime position to replace Russia as a major energy exporter to the EU by developing its wind capabilities. Speaking to Express.co.uk, Zoisa North-Bond, CEO of Octopus Energy Generation, said that while in the short term, the UK Government needed to figure out a way to reduce energy bills, it also needs to plan for the long term. She said: “Actually, into the future, we shouldn't be afraid of building as quickly as we possibly can.
Brexit Britain to replace Russia as 'energy exporter to EU' and become 'world leader'
Countries are looking to divest from Russian gas
“We can absolutely be a major exporter of energy over the next decade or two. “It's been given attention five or six years ago, about a lot of interconnectors we have with Europe, and it would be great to see a focus on that again. “I don't think anyone should be afraid of building lots of renewables, particularly if we can get interconnectors with Europe in place and export them that way.” Experts from the Energy and Climate Intelligence Unit (ECIU) have predicted that the UK could already reap the benefits of its investment in renewables, with paybacks of some £660million forecast during the current gas troubles and up to £26billion possible in a future crisis. READ MORE: Energy crisis: New green scheme promises to save up to £350-a-year
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Ms North-Bond predicted that by 2040, the UK could produce about 40 gigawatts (GW) of energy from offshore wind, and a further 35 GW from onshore wind. She continued: “So you're looking at an additional 75 GW capacity, which would be amazing. “When it comes to offshore wind, we absolutely have the potential to be a leader in that across the world. “For onshore wind, we are an island nation, and there is an abundance of wind that we can capture. DON'T MISS:
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Environment Minister Eamon Ryan speaks to media on board the RV Mallet, one of the Geological Survey Ireland boats used to map Ireland’s seabed Photo: Department of the Environment, Climate and Communications
Arno Verbeek knows just how much patience being in the wind energy sector requires. In the early 2000s, the Dutchman supervised the development of the Arklow Bank, which remains Ireland’s only offshore windfarm. These days, the industry veteran is project director of the Codling Wind Park and has amassed “dozens of metres of folders” worth of paperwork required to get what is slated to be Ireland’s biggest offshore wind farm into the Irish Sea.
The Codling site, 12km to 23km off the coast of Wicklow, was first identified as a suitable location for the project by Fred Olsen in 1999. Back then “there was a flurry of activity” aimed at harnessing the fast winds off Ireland’s coastline, but the “route to market disappeared”, Verbeek says.
The Codling Wind Park project was reinvigorated in early 2020, when France’s EDF bought a 50pc stake in the venture after the 2019 Climate Action Plan set out a plan to generate 70pc of Ireland’s electricity from renewable energy by 2030 – an ambition that was increased in last year’s Climate Action Plan to 80pc – and after the current government pledged to bring forward legislation for a new maritime planning system.
“I was responsible for the construction of Arklow Bank, and here I am, almost 20 years later, still trying to get this industry going in Ireland,” Verbeek says. “But I wouldn’t be here if I didn’t think it was possible.”
By the end of last year, the patience of wind energy companies in Ireland was fast running out, thanks to planning difficulties and red tape. In November, Norwegian company Equinor – formerly known as Statoil – quit its partnership with the ESB to deliver Irish offshore wind projects, including a €2bn floating wind farm at a proposed green energy hub at Moneypoint in Co Clare. One of the main reasons for the company’s decision was reportedly dissatisfaction with the regulatory and planning regime.
Just as the coal-burning power plant at Moneypoint was built in response to the 1970s oil crisis, surging energy costs, the climate emergency and Europe’s plan to wean itself off Russia’s fossil fuels in response to the invasion of Ukraine just over a month ago are all adding a fresh impetus to get Ireland’s pipeline of wind energy projects up and running.
Last Monday, Eamon Ryan, the Environment Minister, announced the start of the long-awaited Maritime Area Consent (MAC) process, which will allow the minister to issue the consents to offshore wind energy developers who meet the relevant criteria, albeit on an interim basis before the new Maritime Area Regulatory Authority (Mara) begins operating in the first quarter of 2023. The award of MACs to qualified developers will enable the first offshore auction to be held under the Offshore Renewable Energy Support Scheme (ORESS) in the fourth quarter, though a date has not yet been set for that auction. Ryan aims to have the first offshore wind turbines in the sea by 2026.
Now that the minister has finally given the industry some clarity, will that be enough to put some wind in the sector’s sails and enable Ireland to meet its target of generating 5GW of offshore wind energy by 2030?
Verbeek says: “It’s only achievable if there is real urgency (devoted to the issue). The resourcing of various agencies and departments, especially EirGrid and An Bord Pleanála, will be important because there is a lot of work coming their way. The offshore wind industry, and the renewable energy industry in general, is a global industry and resources are hard to come by.
“I think 2026 is very optimistic, the main reason being that we are looking at a very lengthy planning process and there are significant risks of judicial reviews, which I want to see changed. I want government and industry to see where we can accelerate the process and one way to do that is the planning system.
“In preparing ourselves for the first critical milestone, which is the ORESS auction, ideally we would have all the policies and procedures in place, just like they have in countries such as the UK, the Netherlands and Belgium, so that we know when the auction will take place and what kind of data will be provided by Government and what data we need to provide. Ireland is very much an emerging market in this regard.
“The horrible events in Ukraine show we don’t want to be reliant on energy from Russia. When you look at how Ireland dealt with the Covid crisis, we need the same leadership, commitment and the same bold decisions to allow these projects get in the water at the earliest opportunity.
“We are also concerned the crisis in Ukraine is not only having a clear knock-on effect on the cost of living but on the raw materials that we need, like copper and steel. Those costs are going up and that will make its way to contractors and to the owners of the projects. The sooner we, as projects, can commit to a contract, the sooner we can lock in the price. If we let the planning system delay further, who knows how much higher prices will be?”
Ireland’s wind resources are being portrayed as not just a solution to domestic energy supply shortages but also as a panacea to Europe’s energy security issues. The European Commission is aiming to replace 24 billion cubic metres of Russian gas with zero-emissions renewable energy sources this year. By tapping into the wind energy from Ireland’s maritime area – which is seven times the size of its landmass – we can “share it with our neighbours” and use it as part of a balanced European grid system, Ryan said last week.
Noel Cunniffe, chief executive of Wind Energy Ireland, which represents 150 members, says: “We have one of the biggest wind resources in Europe and that’s viewed as an opportunity for Europe to transition away from fossil fuels and to remove leverage from Russia – Europe has spent at least €17bn on Russian oil, gas and coal imports since the war started.
“Many other countries in Europe – even over the last few weeks – have been looking to accelerate offshore renewables, like the Netherlands and Germany. Countries like Belgium and the Netherlands have small coastlines so their ability to produce offshore wind could be maxed out before end of this decade and they are looking to their European neighbours to import power in the form of electricity and in the form of green hydrogen. Germany has an enormous demand for hydrogen now as it’s used in the steel industry and they are actively looking to partners around the world for green hydrogen to de-carbonise their steel industry.
“There’s over 20GW of offshore wind energy in various stages of development around Ireland and any one of those projects could deliver for 2030 if we get the planning system and grid connections right.”
But some wind energy companies believe Ryan’s timeline is overly ambitious, not least because they are sceptical that Mara and other bodies such as An Bord Pleanála and EirGrid will have enough staff skilled enough to process the slew of applications coming their way but because there are technical, logistical and supply chain challenges, too.
Dublin Array is one of the first batch of seven offshore wind projects that have been designated as “relevant projects” and can apply for a MAC. It is counted as two projects in the process, due to two separate original applications under the old “not fit-for-purpose” foreshore legislation, but it is progressing as one project, according to Peter Lefroy, the lead on the project for German utility RWE Renewables.
The wind farm, which will comprise between 45 and 61 turbines situated about 10km from the coasts of Dublin and Wicklow, was first proposed in 1999 and is now being developed by RWE and Irish company Saorgus Energy with a plan to generate 900MW of electricity by as soon as 2027. Lefroy says Ireland’s offshore wind industry is still in its infancy as previous governments’ energy policies concentrated instead on onshore wind because it was cheaper and came with “lower-risk technology”.
“We are a long way behind the UK, which is the largest offshore market in the world and the most successful at delivering offshore wind, whereas we stopped at 25MW with Arklow Bank in 2004,” he says. “The UK has a well-established regulatory regime, consent process, route connection regime and domestic supply chain. We have a huge amount to do to get to that stage.
“Offshore wind is going through a global growth spurt and we are by no means the only country in the world with ambitious offshore wind targets – every country with a coastline is looking at it.
“Europe has set a target of 400GW by 2050. What that means is that projects in Ireland are competing against other projects in the UK, Germany, Spain, France and others for vessels, turbines, and port infrastructure.
“We need to see the Irish Government committing to a timescale because if we start to fall behind, the supply chain will lose confidence and go to other countries. If the regulatory regime doesn’t keep moving, if the auction timetable slips and if projects get stuck in a consent process mire and see uncontrollable delays, it puts projects in a position where they can’t get certainty on when they can sign contracts with suppliers.”
Minister of Environment and Climate Change H E Sheikh Faleh bin Nasser bin Ahmed bin Ali Al Thani along with other panellists during a discussion at Doha Forum. PIC: RAJAN VADAKKEMURIYIL
To use renewable energy for sustainability and climate change, first solar power plant with the capacity of 800 megawatts will be opened in Qatar this year.
“This year, we will have the first solar power plant equipped with photo-voltaic technology with the capacity of 800 megawatts,” said Minister of Environment and Climate Change H E Sheikh Faleh bin Nasser bin Ahmed bin Ali Al Thani.
He said that the plant will produce 800 megawatts in phase one which will be expanded to 1.6 gigawatts by 2030.
Sheikh Faleh was sharing the efforts of Qatar to ensure the sustainability and climate change in a panel discussion on ‘Building a New Sustainability Paradigm: Cities Contribution to the Climate Solution’ at Doha Forum 2022 yesterday.
The panellists included Global Leader of Climate & Energy at WWF, Former Minister of Environment of Peru and Former President of COP20 H E Manuel Pulgar-Vidal; Lord Mayor of London The Rt. Hon. Vincent Keaveny; and President and CEO, Wetlands International Jane Madgwick. The event was moderated by Dr. Gonzalo Castro de la Mata Executive Director, Earthna Center for a Sustainable Future.
Sheikh Faleh said that almost 40 percent recycled construction materials were used in projects of FIFA World Cup Qatar 2022 especially stadiums. “We are also thinking to adopt this practice in all small and major projects in the country,” he added.
He said that Qatar has adopted most advanced technologies for reducing greenhouse gas emissions. “Qatar has the largest carbon capture-and-storage plant in the MENA region with the capacity of two million tonnes of carbon footprint which will be expended to nine million tonnes by 2030,” said Sheikh Faleh.
He said that a number of initiatives are being implemented to improve the air quality and reduce the dust storm. “We target to plant one million trees under an ongoing initiative ‘Plant Million Tree’ and committed to plant 10 million trees more by 2030,” said Sheikh Faleh.
He said that every strategy should be in a way to make balance between economic development and environmental protection. “Qatar had launched its National Environment and Climate Change Strategy which identified five key environmental priority areas with ambitious targets developed for each priority.”
He said that the strategy aims at reducing greenhouse gas emissions and maintaining air quality in the cities.
“Qatar already announced to reduce greenhouse gas emissions by 25 percent by 2030. All stockholders in the country are working together to achieve the target even before the given date,” said Sheikh Faleh.
He said that biodiversity action plan in Qatar aimed to ensure a healthy eco-system to control any harmful activities such as overhunting and overfishing.
“We are running our waste management programme with a clear goal of achieving zero-waste within 10 years which will lead to zero landfill,” said Sheikh Faleh.
Manuel Pulgar-Vidal said: “We do need to translate our vision of climate change into a clear message which is a key element to promote the behavioural change.” He said that people should be provided clear information and data in a simple manner making them understand about consequences of climate change.
Jane Madgwick said: “Every sorts of mangrove should be protected because they are top in term of capturing and storing carbon – four times more than tropical rainforest.”
Vincent Keaveny said: “Following our climate action strategy, we (in Landon) are committed to be net-zero in city corporation’s activities by 2027 and net-zero across our value chain by 2040, 10 years ahead of UK government’s target for the country which is 2050.”
https://thepeninsulaqatar.com/article/27/03/2022/first-800mw-solar-power-plant-to-start-this-year
#Steelslag road built with 100 % processed steel slag aggregates in all layers of bituminous roads at Hazira — CSIR CRRI (@CSIRCRRI) 1647941599000
India's first ever 'steel slag road' was laid by @AMNSIndia in collaboration with @CSIR_IND. — ArcelorMittal Nippon Steel India (@AMNSIndia) 1647322630000
The Diamond City of India, Surat , has become the first in India to get a road that is made out of steel waste.Built by Arcelor Mittal Nippon Steel India with CSIR India (Council of Scientific and Industrial Research) & CRRI (Central Road Research Institute) along with the government think tank NITI Aayog , the steel slag road is a stellar example of sustainable development. Often considered as a waste material, steel slag has been a problem area for the steel industry.Laid in the Hazira Industrial Area , the road consists of 100% processed steel slag. The 6-lane 1-kilometre long road is an experimental project that may solve the waste material issue. Slag is a by-product of smelting ores and used metals. The disposal of metallurgical and metal-processing waste in landfills is particularly hazardous for the environment. Processed steel slag aggregate exhibits great potential as a replacement for natural construction material. The thickness of the road has been reduced by 30%.
https://www.ft.com/content/1ac7d696-0fee-40a0-baa0-db27d1dc481f?shareType=nongift
The cost of building a battery-powered truck will “forever be higher” than a combustion engine equivalent, the boss of the world’s largest truckmaker has warned, as the war in Ukraine accelerates an already rapid rise in the price of crucial commodities. “If you take the entirety of engine, transmission, axle, tank system, cooling . . . ” the chief executive officer of Daimler Truck, Martin Daum, told the Financial Times, “we have a maximum of about €25,000 [of material in a combustion engine truck].” “How much battery do you get for €25,000? Even if [battery costs fall to] €60 per kilowatt hour, and I need 400 kilowatt hours, then I need €24,000 alone for the battery cells [in a single truck]”. He added that it would be up to governments to make up the difference, using whichever mechanism they chose. “Without any subsidies . . . the price of an [electric] truck will always, forever be higher than a [combustion engine] truck.” Daum’s comments come after Daimler Truck, which was an early entrant into the electric market and has been manufacturing battery-powered vehicles since 2017, reported that it had more than tripled the sales of zero-emission trucks and buses last year, to a total of 712.
The return of pre-pandemic energy consumption. Threats of cyberattacks on critical infrastructure. And a generation-defining war in Europe with global repercussions.
All have dampened hopes for a swift energy transition—but none have discouraged the world’s movers and shakers in the energy industry from finding solutions. The Atlantic Council’s sixth annual Global Energy Forum, which kicks off Monday in Dubai, is where they’ll discuss the tools, policies, and models essential to responding to these and other major trends in the sector.
Check back here for the latest highlights from the event, which is hosted by the Atlantic Council’s Global Energy Center in partnership with the United Arab Emirates’ Ministry of Energy and Infrastructure and in conjunction with the 2022 World Government Summit.
Watch the first day of the event:
MARCH 28, 2022 | 12:40 PM WASHINGTON, 8:40 PM DUBAI
How helpful could hydrogen be?
Few emerging fuels have generated as much interest—or controversy—as hydrogen in recent years. An expert GEF panel tackled the challenges facing hydrogen economies of scale and explored what a scaling of hydrogen supply and demand would require.
David Livingston, senior advisor to US Special Presidential Envoy for Climate John Kerry, argued that it’s the role of government to “cut the Gordian knot” by both catalyzing the demand signals for low-carbon hydrogen today, and also preparing the regulatory framework to support stable markets for hydrogen in the future. He pointed to the Biden administration’s key initiative, the First Movers Coalition, as an example of government actively working to secure credible demand-side signals for decarbonized hydrogen. Other panelists pointed to the importance of standardization throughout the hydrogen industry, verifiable metrics, and carbon accounting processes.
They also focused on the need to reduce costs for low-carbon hydrogen while also setting the foundations for future hydrogen trading networks. Meg Gentle, executive director of Highly Innovative Fuels USA, pointed to the established global trade of natural gas via pipelines and liquefaction as a model for hydrogen fuels, such as methanol and e-fuels.
For Germany, said Tim Holt, member of the executive board of Siemens Energy AG, hydrogen trade will be crucial for its security of hydrogen supply, arguing that the country “will never be able to produce enough green hydrogen for consumption.” But he added that there are tremendous trading opportunities with potential low-cost green hydrogen producers in Latin America and the Middle East.
Broadly, the panel felt strongly that hydrogen’s moment has finally arrived—but also that numerous pieces of the market puzzle have yet to be solved before the hydrogen economy emerges as a major decarbonizing force.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 12:24 PM WASHINGTON, 8:24 PM DUBAI
This is how the United Arab Emirates does it
In a fireside chat with Atlantic Council President and CEO Fred Kempe, Musabbeh Al Kaabi, CEO of UAE investments at the Mubadala Investment Company, highlighted his country’s unique approach to economic diversification and sustainable development, which was crafted through decades of thoughtful, forward-looking investment.
He noted that his company, which is involved in a range of sectors ranging from energy to healthcare, is a prime example of that approach—particularly given both the challenges and opportunities presented to the Middle East by global decarbonization. Al Kaabi emphasized his optimism for the UAE to be a provider of all types of energy: conventional, new, and emerging. He argued, for example, that the UAE’s exceptionally cheap solar power positions it to be a major green-hydrogen supplier, while the country’s robust oil industry is already pursuing blue hydrogen.
When asked about volatility in the region, Al Kaabi pointed to the recent Abraham Accords as an example of what can be achieved by the UAE’s forward-thinking approaches to economic diversification and societal transformation. He cited a new gas hub with UAE investment support, which will supply both Jordan and Israel with natural gas, as part of a trend he hopes will continue.
But he cautioned that the world must not wed itself to one particular energy solution, and that it will need all available technologies—including hydrogen, carbon capture utilization and storage, renewables, natural gas, and more—to make the current 2050 targets possible.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 11:36 AM WASHINGTON, 7:36 PM DUBAI
Don’t count out Iraqi Kurdistan
That was the message delivered by Masrour Barzani, prime minister of the Kurdistan Regional Government, in a keynote message during a special session moderated by Eithne Treanor, managing director at E. Treanor Media.
He offered an emphatic vision of Kurdistan’s future as a major regional oil and gas supplier—one that is capable of meeting both the needs of its own people and supporting the natural-gas demand of Turkey, and perhaps even Europe. Barzani applauded the efforts of the United States and other countries and private-sector players to invest in the region’s ongoing revitalization of its hydrocarbons industry. He concluded: “A strong, independent Kurdistan is no threat to its neighbors…in fact, it is the opposite.”
An expert panel including several oil and gas industry representatives active in Kurdistan largely agreed. Bill Higgs, chief executive officer of Genel Energy, said his company strongly believes in Kurdistan, while Jon Harris, chief executive officer of Gulf Keystone Petroleum, pointed to his company’s plans to double its current oil production in the region.
Crescent Petroleum CEO Majid Jafar, meanwhile, focused on Kurdistan’s natural-gas potential, saying the “importance of the region is becoming increasingly recognized.”
All expressed strong support for sustainability and the economical usage of natural gas to displace other local fuel sources (especially diesel) by capturing gas to provide electricity to local communities.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 10:34 AM WASHINGTON, 6:34 PM DUBAI
Meet the Green Builders of Tomorrow
Winners of the United Kingdom’s Green Builders of Tomorrow competition—aimed at supporting companies at the intersection of sustainability and entrepreneurship—showcased their innovative approaches to achieving net-zero in a GEF session Monday afternoon. Each chief executive officer presented their company’s unique approach to disrupting a carbon-intensive industry, providing a new option for emissions mitigation, or supporting renewable, clean energy economies.
Taken together, each unique proposal demonstrated the growing and robust market interest in emerging technologies and business opportunities in the clean economy.
Julie Chen, of The Cheeky Panda, explained how her company’s tissue and hygiene products are disrupting deforestation through the use of sustainable bamboo paper products.
Ian Mackenzie, of Trojan Energy, showcased his company’s electric car charging point—which is embedded into the pavement to make EV ownership easier for both drivers and cities.
Ernst Van Orsouw, of Roslin Technologies, discussed his company’s approach to stem cells in the production of cultivated meat, which has the potential to bring nutritious non-farm-based meats to new customers all over the world without the considerable emissions associated with traditional farming.
Jo Parker-Swift, of Solivus, described how her company is using thin-film solar panels on conventional buildings, such as stadiums and shopping malls, which cannot take the weight of solar panels made from conventional materials.
And finally, Ben Turner, of Origen Power Limited, described the potential for his company to disrupt the emissions-intensive lime industry by producing a carbon-neutral lime product.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 9:37 AM WASHINGTON, 5:37 PM DUBAI
Why natural gas is staying—not going
Natural gas—and particularly its role in the transition—stole the show in a GEF panel about oil and gas in a net-zero world. The panelists, who represented a range of private and national oil companies, suggested that much of the narrative around it has lacked nuance, or proven problematic.
Sharif Al Olama, undersecretary for energy and petroleum affairs at the United Arab Emirates’ Ministry of Energy and Infrastructure, said natural gas is critical in his country’s energy strategy alongside renewables, and that it plans to supply both its domestic population and growing global demand for natural gas.
Dan Brouillette, president of Sempra Infrastructure and a former US secretary of energy, added that transitions usually involve using more—not less—energy, and that dense types of energy (such as fossil fuels) will be used for many years to come as a complement to renewables. He also suggested that an “all of the above” energy policy is a fundamental US one that is unlikely to change soon.
Hunter Hunt, chief executive officer and president of Hunt Consolidated Energy, LLC agreed—adding that some proposals for decarbonization through 2050 are simply not sensible.
Just Transition was also a focus. Mele Kyari, group managing director of the Nigerian National Petroleum Corporation, emphasized that the specific energy-access and poverty issues in Sub-Saharan Africa must be carefully considered in transition strategies—and that investments in natural gas and liquid natural gas are crucial to the continent’s future growth and economic success and its ability to support fuel supply to Europe.
Helima Croft, managing director and head of global commodity strategy at RBC Capital Markets, similarly noted that the world cannot expect the energy transition to be cost-effective or “geopolitically benign,” and that lessons learned from the current crisis must be applied in order to ensure as minimally volatile a transition as possible.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 8:58 AM WASHINGTON, 4:58 PM DUBAI
Will energy security derail the transition? (Part two)
The new US-EU Task Force for Energy Security is well-positioned to play a key role in US national and international-security policy. That’s what Amos J. Hochstein, US presidential coordinator for Build Back Better World, told moderator Helima Croft, managing director and head of global commodity strategy at RBC Capital Markets, during a one-on-one chat about the challenges of the energy transition Monday.
He emphasized that the United States must supply Europe with additional gas supplies immediately and in the future, as well as speed up the transition to reduce dependency on natural-gas supplies in the long term. That’s why Washington is working to ensure that all available liquid natural gas (LNG) terminals in and around Europe are importing at maximum capacity, that piped capacity is full, and that available gas storage is being optimized, he said.
Hochstein also noted that the war in Ukraine has fundamentally transformed the European view on the need to diversify away from Russian oil and gas supplies.
On domestic oil and gas production, Hochstein said “we need to make sure that our system and our economy is well-supplied to sustain growth and avoid inflationary action.” He added that US oil production could rise by 1 million barrels per day this year and suggested that investor and fiscal pressures are the key issue holding back rapid US production growth in the short term. He noted, for example, that the Biden administration has allowed significant oil and gas permitting, particularly in LNG infrastructure. Hochstein also indicated growing European support for more long-term contracts, which will ease financing for US LNG export projects.
In the long-term, he added, the energy-security challenge is as much about finding new fuels and supply chains—such as those around critical minerals—as it is about cutting back on conventional fuels, and that the Biden administration is keenly aware of these issues.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 8:24 AM WASHINGTON, 4:24 PM DUBAI
In Europe, ‘the writing has been on the wall’
In a discussion about Europe’s energy security, Maxim Timchenko, chief executive officer of Ukrainian private energy giant DTEK, was among those who made impassioned pleas for leaders to finally confront the reality of Russia’s weaponization of energy supplies in Europe, and to cut their purchases of Russian hydrocarbons. He painted a grave picture of millions of Ukrainians struggling with no electricity or natural gas for weeks amid the Kremlin’s invasion of that country, and also argued that all money which goes to Russia from its oil and gas sales is converted directly into bullets to murder civilians.
Multiple panelists concurred. Alexander Nikolov, Bulgaria’s energy minister, noted that “the writing has been on the wall” not for months, but for years. He added that a laser focus on “green” energy solutions in Europe—at the expense of natural gas and nuclear power—facilitated this crisis.
Wolfgang Ischinger, president of the Foundation Council of the Munich Security Conference Foundation, said the prevailing view in Germany continues to be that sanctioning Russian oil and gas now takes a crucial tool off the table if Russia chooses to escalate further—a view he believes is short-sighted.
Atlantic Council President and CEO Fred Kempe agreed with what he described as Ischinger’s “minority view,” adding that the conflict is increasingly about who is going to shape global order. He concluded that “sanctions have to be toughened” and that strong energy-sector sanctions will need to be ultimately rolled out in Europe. He suggested that the global narrative around this war is changing, and that citizens are becoming increasingly determined to prevent Russian President Vladimir Putin from winning the war.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 8:06 AM WASHINGTON, 4:06 PM DUBAI
Leading oil and gas into a net-zero world
The urgency of climate action has clouded the future of oil and gas in the energy transition. Pressure on oil and gas producers to adapt their operations to fit into a net-zero world has grown, from both policymakers and the investment community. But a supply crisis and price spikes have illustrated the danger of moving away from these fuels without a sufficient corresponding uptake of cleaner alternatives. Most models of the energy transition also suggest that continued petrochemical demand and use in transportation will ensure a considerable level of oil and gas demand, even in a net-zero scenario.
Oil and gas will thus continue to play a key role in the energy transition. It will be incumbent on the industry, policymakers, and investors to walk a precarious tightrope, keeping markets stable through sufficient continued oil and gas production while pursuing ambitious decarbonization targets. Technologies like clean hydrogen and carbon capture, utilization, and storage, with the potential to lessen oil and gas’s traditionally emissions-intensive footprint, could help. So could carbon offsetting. But clarity is needed, and without it, supply-demand mismatches could rage on without any meaningful emissions reductions to speak of. For the transition to be both smooth and comprehensive, oil and gas will require both rigorous accountability and support for the practices and technologies that can help make them compatible with a net-zero world.
MARCH 28, 2022 | 7:06 AM WASHINGTON, 3:06 PM DUBAI
Will energy security derail the transition? (Part one)
A move to clean energy is crucial, but securing today’s supply and investing wisely are also key. That was the conclusion of a GEF panel featuring Tim Holt, member of the executive board at Siemens Energy AG, Anna Shpitsberg, deputy assistant secretary for energy transformation at the US State Department, Majid Jafar, CEO of Crescent Petroleum, and Claudio Descalzi, CEO of Eni.
Holt highlighted how the current moment in energy geopolitics has “accelerate[d] the transition,” and that the world faces a crucial test of reducing natural gas in Europe while pushing harder to achieve the energy transition as quickly as possible. He added that while the world has “a lot of the ingredients, it’s just the implementation” when it comes to following through on the transition. Shpitsberg largely concurred, adding that the United States is pouring billions of dollars into energy diversification through hydrogen and also carbon capture, utilization, and storage. She also argued that compromising on one goal to the detriment of another shouldn’t be an option.
Meanwhile, Jafar and Descalzi agreed—but also argued for a more nuanced perspective, given the level of energy poverty throughout the world (for example, billions still lack access to clean cooking). They viewed the push to divest from oil and gas as deeply problematic and counterproductive; oil, for example, is still used in a wide range of products while natural gas has massive decarbonization potential in various parts of the world still reliant on coal. That’s why underinvestment in conventional energy—especially hydrocarbons—could actually undermine energy security, they said.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 4:15 AM WASHINGTON, 12:15 PM DUBAI
Urgency and reality collide as GEF kicks off
Atlantic Council President and CEO Frederick Kempe, UAE Special Envoy for Climate Change and Minister of Industry and Advanced Technology Sultan Al Jaber (also managing director of Abu Dhabi National Oil Company), and UAE Minister of Energy and Infrastructure Suhail Al Mazrouei opened this year’s Global Energy Forum by acknowledging the urgency of the moment in global energy security—but also the need to balance a long-term transition with immediate, near-term energy security needs.
Kempe noted the challenges of 2022—the ongoing pandemic, inflation and, most recently, the Russian invasion of Ukraine—and said energy is central to the global drama. The current crisis in European energy security is clear evidence of this reality, he added, proving that the energy transition “is not a light switch” but will take years to navigate. Rising energy prices are putting the transition at risk by threatening the global cohesion that is necessary to realize a net-zero emissions world. Kempe added that the choice between climate action and energy security is a false one.
Al Jaber (who noted the achievements of Dubai Expo 2020) argued that long-term underinvestment in oil and gas has left markets exposed to these challenges—with those markets tightening amid rising global demand year-on-year. While the world must embrace the transition, he said, policies must be tailored to “real world scenarios,” and that “if we fail to plan, our plan will definitely fail.” Al Jaber also said many in Europe and the United States are beginning to accept that the transition will take time, which has resulted in a belated pivot to reconsider near-term energy security, and added that the United Arab Emirates is taking leadership on both near-term energy security and the long-term energy transition with long-term sustainable economic growth at the forefront of its strategy. He argued for a clear, global roadmap with strong foundations—but without defunding the current energy system before a new one can replace it.
Al Mazrouei argued that the current global crisis was predicted years ago, particularly the need for more investment in hydrocarbons and supply diversity, and emphasized that the geopolitical situation is negatively affecting all aspects of energy and human security. He added that diversifying the global natural gas supply is especially important, and that failure to invest and develop resources in this area will lead to even tighter markets. He noted that the United Arab Emirates will continue to work with the Organization of the Petroleum Exporting Countries (OPEC) to ensure stable global markets, and will also aim to produce the lowest carbon barrels in the world. Al Mazrouei also discussed his commitment to bringing affordable hydrogen to market—first blue, then green—and highlighted three pillars of a realistic energy strategy: secure, affordable, and sustainable supply.
Speaking with Kempe at the end of the opening session, Al Mazrouei reiterated the importance of OPEC in stabilizing global energy markets and argued that politics around sanctioned countries (such as Russia) must not interfere with the organization’s broader mission. On raising oil and gas production immediately, he noted significant production declines in recent years and that at least 5-8 million barrels need to be replaced each year through investment. He added that pressure on the international oil companies from their shareholders to leave hydrocarbons has, in turn, pressured national oil companies, and he highlighted the need for a viable long-term perspective on energy now. In particular, financial and analytical institutions, such as the International Energy Agency, must adopt realistic perspectives on long-term investment in oil and gas and recognize the needs of global consumers who need affordable energy and commodities.
—Andrea Clabough is a nonresident fellow at the Global Energy Center.
MARCH 28, 2022 | 3:11 AM WASHINGTON, 11:11 PM DUBAI
Pakistan: The next great infrastructure connector
Pakistan sits at the crossroads of the abundant resources of Central Asia and the Middle East, and the lucrative markets of China and India. It, therefore, has the potential to play a significant connecting role.
But Pakistan’s network, though rapidly advancing, is not yet ready to take on these responsibilities. However, there are considerable opportunities; from energy transportation and roadbuilding to digital connectivity and rail access, if Pakistan pursues significant infrastructure improvements, it has a chance to assume the mantle of the region’s great connector.
MARCH 27, 2022 | 2:00 PM WASHINGTON, 10:00 PM DUBAI
The United States, Canada, and the minerals challenge
An energy mix enabled by clean technologies will be far more mineral-intensive than its hydrocarbon-based predecessor. Demand for minerals like lithium, nickel, and cobalt is projected to skyrocket over the coming years, with supply chains largely unprepared to scale up accordingly. And procurement of these minerals has been plagued by concerns over environmental impact, human rights violations, and state monopoly over specific parts of the value chain, posing both moral and strategic issues.
The onus now falls on policymakers in the United States and Canada to develop resilient, sustainable, and transparent mineral supply chains. As two of the world’s most advanced economies, the US and Canada have the opportunity to take the lead in preempting the emergence of some of the hazards that characterize the oil and gas-based system. It will not be easy; value chains are full of chokepoints, and mining operations have not always followed best practices. But to both enable a smooth energy transition and ensure that procurement does not negate minerals’ carbon-reducing benefits, the US and Canada must act now.
MARCH 17, 2022 | 1:13 PM WASHINGTON, 9:13 PM DUBAI
Unearthing potential: The value of geothermal energy to US decarbonization
Achieving US climate goals requires the development and widespread deployment of all available clean energy solutions. Geothermal energy, while currently only a marginal component of the US energy economy, can contribute significantly to the climate action effort. It has the potential to support deep decarbonization through clean baseload generation, efficient heating and cooling, lithium co-production, and a host of other applications.
However, current policy towards geothermal energy has, thus far, prevented the emergence of a vibrant market that would stimulate sector growth. To realize the potential of geothermal energy, public- and private-sector leaders must support policies that encourage geothermal industries and address regulatory, technical, and economic barriers. This report and accompanying two-pager make several recommendations with the potential to optimize US geothermal policy to set the sector up for a central role in the fight against climate change.
JANUARY 19, 2022 | 12:23 AM WASHINGTON, 8:23 PM DUBAI
The 2022 Global Energy Agenda
The year 2021 began with high hopes for climate action, as many members of the international community—including, once again, the US—rededicated themselves to the effort and looked to deploy resources accordingly. But as global economic demand roared back from its pandemic-dampened level in 2020, energy supply failed to keep up, inflating hydrocarbon prices, driving countries back to dirty coal generation, and underscoring the challenges of the “transition” part of the energy transition. It became clear that countries will need to thread the needle between pushing for ambitious emissions reductions and keeping prices down and the lights on in the interim, all against an ever more precarious geopolitical backdrop.
Our experts offer ways forward for the energy transition in the face of hazards like Russian aggression, supply-demand mismatch, and a transition that threatens to leave the global poor behind.
JANUARY 18, 2022 | 11:15 AM WASHINGTON, 7:15 PM DUBAI
In the wake of the pandemic, new thinking on the way to net zero
In January, the Global Energy Forum made its way to Abu Dhabi Sustainability Week to address the outcomes of COP26 and discuss opportunities to move forward on climate goals.
JANUARY 19, 2021 | 9:27 AM WASHINGTON, 5:32 PM DUBAI
Catch up on last year’s Global Energy Forum
Last year our Global Energy Center gathered leaders, officials, and experts to focus on the post-pandemic energy system, net-zero carbon goals, the Middle East’s role in the energy transition, and the Biden administration’s energy priorities.
It’s all about renewables
The renewable energy sector has been particularly buoyant over the past 18 months, and JLEN Environmental Assets (JLEN) is well-positioned to benefit. Initiatives such as the United Nations Climate Change Conference (COP26), new regulations on climate related financial disclosure – TCFD – and the Russo-Ukrainian crisis, combined with rising inflation and power prices, have only heightened the attractions of renewable energy.
The managers have identified an exciting pipeline of potential new investments made up of a number of opportunities from electric vehicle charging infrastructure to biomass, an area which JLEN dipped its toe into last year with its acquisition of the Cramlington facility. A recent fundraise means JLEN’s managers can get to work on this pipeline now, while the trust is also on track to achieve its dividend target for 2021/22 of 6.80p.
Progressive dividend from investment in environmental infrastructure assets
JLEN aims to provide its shareholders with a sustainable, progressive dividend, paid quarterly, and to preserve the capital value of its portfolio. It invests in a diversified portfolio of environmental infrastructure projects generating predictable, wholly or partially index-linked cash flows. Investment in renewable energy projects is supported by a global commitment to support low-carbon electricity targets.
At a glance
Share price and discount
Over the year to 28 March 2022, JLEN’s shares traded at a premium to NAV within a range of 0.5% to 22.3%. The average premium over the year was 9.7%.
Continued growth of ESG investing, and a view that the government will likely look to renewables to play a key role in a post-COVID economic recovery, have helped shape market sentiment.
Performance over five years
Over the five years to 28 February 2022, JLEN delivered total NAV and share price returns of 38.0% and 36.2% respectively, equivalent to annualised total returns of 6.6% and 6.4%.
The statement accompanying the announcement of JLEN’s end December NAV said the 2.3p over the final quarter of 2021 reflected a further upward revision of power price assumptions, including actual fixed price arrangements.
Fund profile
JLEN invests in infrastructure projects that use natural or waste resources or support more environmentally-friendly approaches to economic activity, support the transition to a low carbon economy or which mitigate the effects of climate change. This could involve the generation of renewable energy (including solar, wind, hydropower and biomass technologies), the supply and treatment of water, the treatment and processing of waste, and projects that promote energy efficiency. JLEN aims to build a portfolio that is diversified both geographically and by type of environmental asset. This emphasis on diversification helps differentiate JLEN from the majority of its peers, which tend to specialise in solar or wind.
Reflecting its objective of delivering sustainable, progressive dividends and preserving its capital, JLEN does not invest in new or experimental technology.
A substantial proportion of its revenues is derived from long-term government subsidies.
Appointment of Foresight as AIFM
In January 2022, JLEN appointed Foresight Group LLP (Foresight) as its external alternative investment fund manager (AIFM) with discretionary investment management authority for the company. This arrangement replaces the investment advisory agreement between the company and Foresight, which has now been terminated.
Until now, the company had been a self-managed alternative investment fund which took its own investment management decisions based on advice from Foresight. As discretionary investment manager, Foresight will take investment management decisions on behalf of JLEN, subject to the terms of the investment management agreement. The fees payable to Foresight under the new agreement remain unchanged.
As AIFM, Foresight remains subject to the investment policy and the supervision of JLEN’s board. The board also retains overall responsibility for JLEN’s activities, including reviewing its investment activity, performance, business conduct and policy. In addition, certain investment decisions are reserved to the board, including in respect of very large investments, those which would involve taking the company near to the limits of its available borrowing facilities, those involving the company investing in new geographies or technologies and those which may cause reputational risk to the company.
Foresight is one of the best-resourced investors in renewable infrastructure assets, with £8.4bn of assets under management as at 31 December 2021. This includes Foresight Solar Fund, which sits in JLEN’s listed peer group. Foresight has a highly-experienced and well-resourced global infrastructure team. The co-lead managers to JLEN are Chris Tanner and Chris Holmes (see page 26).
In connection with Foresight Group’s appointment as AIFM, JLEN appointed NatWest Trustee and Depositary Services Limited as its depositary.
New impetus towards adoption of renewable energy
The environmental infrastructure markets in which JLEN operates have experienced a continuous period of growth, supported by worldwide commitments to decarbonise, increasing focus on the protection of the natural environment and the treatment and processing of waste, and decreasing capital costs. These trends are expected to create an attractive environment for further investment into these markets, in the UK and Europe.
Global investment in the energy infrastructure market has been significant, with Bloomberg calculating investment into renewable energy in 2020 totalling $303.5bn (up 2% on the prior year). Zero emission or low carbon energy generation continues to be central to European carbon targets and of the global decarbonisation agenda, an objective that has only gotten stronger with the current Russo-Ukrainian crisis.
Renewable energy continues to be supported by the UK government, which has published the budget for its fourth Contracts for Difference (CfD) auction, to allocate around £265m of subsidies to renewables development. This will also allow for onshore wind and solar to access some of the CfD funding (previously they could not). The UK has also confirmed its commitment to close coal‑fired plants by 1 October 2024 (brought forward from 2025).
Meanwhile, the UK’s national target under the Renewable Energy Directive was, by 2020, for 15% of gross final energy consumption to come from renewable sources – the final outturn was 13.6%. An analysis of this shows that the electricity generation component of this met its target – 38.7% of electricity came from renewable sources. However, the figures for transport and heat were just 10.3% and 6.6%, respectively. This implies that both the transport and heat sectors need to make further progress in order to hit the 2030 gross final energy consumption target of 32%.
Low carbon investment opportunities could encompass combined heat and power systems, battery storage and flexible generation, low carbon agriculture, co-location of battery storage with existing assets, electric vehicle and low carbon transport infrastructure such as biofuels.
Open to new opportunities
JLEN’s board continues to view the wider market environment as favourable for its investment policy. It says that the resilience shown during the COVID-19 pandemic has reinforced the value of established environmental infrastructure assets and now that economies have fully embarked on their fiscal and regulatory stimulus programmes, the outlook continues to appear promising.
Prompted by COP26, market discussions have been dominated by how pledges to cut emissions can be translated into physical infrastructure while the focus has fallen on the finance sector to facilitate a greener economy. The sector is being asked to direct its capital to help solve environmental issues and it is also being asked to “future-proof” those investments to plan for climate change scenarios. The latest study by Climate Action Tracker (CAT), suggests that global greenhouse gas emissions in 2030 will be double the level needed to meet the Paris agreement target of limiting heating to 1.5C. This stresses the need for firm, irrevocable legislation and sets the tone for the renewable infrastructure market.
The Climate Change Committee 2021 Progress Report to Parliament (CCC) notes that lockdown measures led to a decrease in UK emissions in 2020 of 13% from the previous year, although driving reductions in emissions requires sustained government leadership, underpinned by a strong net zero strategy.
Areas the CCC highlights that require particular attention include:
a heat and building strategy;
transport, hydrogen, biomass and food; and
plans to decarbonise energy from waste.
These are all areas that JLEN has either invested into or has the potential for future investment. While power price forecasts have rebounded strongly over the short term, it remains to be seen how this will feed into market competition for core renewables. It is anticipated that acquisitions of operational wind and solar projects will continue to remain challenging from a yield and return perspective. Bioenergy assets remain attractive, as shown by the recent acquisitions of energy from waste project, ETA Manfredonia, and biomass project, Cramlington.
Beyond these sectors, JLEN’s broad investment mandate provides investors with access to a wider range of environmental infrastructure opportunities that conform to the company’s investment targets.
The team has been assessing opportunities in sectors such as controlled environment agriculture and aquaculture, which are good examples of new and potentially attractive sectors for JLEN. We talk more about these in the pipeline section of this note. These investments can be particularly effective when co-located with renewable energy generators such as anaerobic digestion (AD) plants, where renewable heat, power and CO 2 are readily available.
Impact of Ukraine crisis on power prices
As we highlighted in our previous update note, having fallen sharply in the early period of the pandemic in 2020, power and gas prices rebounded last year and have since soared to record levels on a global basis. This has been further accelerated by Russia’s invasion of Ukraine. Russian oil and gas is being increasingly shunned as the United States, the European Union, and other countries, including China, introduce sanctions and try to undermine the regime’s ability to fund its war.
Sanctions are penalties imposed by one country on another, to stop it acting aggressively or breaking international law. They are among the toughest actions nations can take, short of going to war.
The US is banning all Russian oil and gas imports and the UK will phase out Russian oil by the end of 2022, while the EU, which gets a quarter of its oil and 40% of its gas from Russia, says it will switch to alternative supplies and make Europe independent from Russian energy ‘well before 2030’. Germany has put on hold permission for the Nord Stream 2 gas pipeline from Russia to open.
Some countries, such as Germany have realised the need to wean themselves off fossil fuels more aggressively, but may have to, in the short-term, look to quick-fix solutions like burning more coal.
Figure 1 shows how power prices have changed over the past five years, while Figure 2 shows a similar pattern for UK natural gas prices.
JLEN’s co-lead manager Chris Tanner says the key thing the crisis highlights is the problem with energy dependency. He says more investment is needed to help with transition into renewable energy sources and that the major energy firms need to work harder and faster to transition to renewable provisions so as not to rely on countries such as Russia.
JLEN had been able to lock in prices across its core wind, solar and AD projects last year and continues to see strength in the market, which it has been fixing into for future periods.
Inflation concerns
Since the beginning of the year, central bankers in major developed markets have, in the face of rapidly rising inflation, been reversing their positions on the outlook for raising interest rates. Following a significant increase in energy costs and household expenses more generally, The Bank of England has now raised its key rate to 0.75% with 0.25% jumps in February and March. The February move was shortly followed by an announcement from the European Central Bank (ECB) of a sharp turnaround in its policy that would see its deposit rate raised to -0.25%, from -0.5% (a record low) by the end of 2022 (the ECB having previously said there would not be a rate rise until at least 2023). The US Federal Reserve (Fed) has also just weighed in, increasing the funds rate by a quarter point to a range of between 0.25% and 0.5% – the first such increase since 2018. The Fed has also indicated that it has earmarked a further six increases by the end of the year which, if it comes to pass, will be the fastest pace of tightening for more than 15 years.
JLEN’s most direct risk is of rising running costs. However, a large part of its revenue (71% at end December 2021) is linked to inflation. This will more than exceed any negative cash flow impacts from inflation linked costs. If higher than trend inflation is expected, then the earnings from the company will increase, everything else being equal.
If higher inflation assumptions become embedded for the longer term, such that it becomes appropriate for JLEN to revisit its long-term inflation assumption of 3% until 2030, then this will also benefit the NAV, as future cash flows from the portfolio will be assumed to be higher. However, higher long-term inflation expectations may also have impacts on other risks. If central banks believe that they need to combat high inflation, we might expect to see interest rates rise. The large majority of JLEN’s debt is project finance at the project level, fully hedged against interest rate rises and so this risk is mitigated. However, JLEN’s revolving credit facility (RCF) is not hedged and so an increase in interest rates indirectly brought about by inflation concerns would have a small negative impact on RCF interest costs depending on the level of borrowing.
Higher inflation expectations may also change investors’ views on what constitutes a reasonable return from assets, including environmental infrastructure assets. This would typically manifest in an increase in the discount rates used to value such assets, causing the value of such assets to decrease, everything else being equal. The market for infrastructure assets remains very competitive, and the return differential to gilts (generally used as a proxy for a ‘risk free’ return on capital) remains high, so JLEN does not expect any material negative movement in discount rates for the foreseeable future.
Investment process
Foresight selects projects for the portfolio based on its assessment of each project’s risk and reward profile that fit within its defined investment policy. The group operates within a limited set of investment restrictions. New assets predominantly come from investments in the secondary market acquired from third parties.
The AIFM aims to maintain the balanced and diverse nature of the portfolio. Its approach is a cautious one. Although JLEN can invest across all OECD countries, to date investments have predominantly focused on the UK, with a small but growing exposure to European renewables. Through its investment in FEIP, it has also invested in single assets in Spain, Finland and Sweden. The managers say that they prefer to concentrate on countries and regulatory/subsidy regimes that they know well or where they have relationships with established partners.
Investment restrictions
No more than 25% of the portfolio is to be invested in assets under construction or that are not yet operational. The board does expect to see an increase in the allocation to construction-ready assets, within the 25% limit, following the commitment to Foresight Energy Infrastructure Partners (FEIP).
At least 50% invested in the UK and the balance invested in other OECD countries.
countries. No new investment to exceed 30% of NAV (or 25% of NAV based on the acquisition price, taking the value of existing assets into consideration).
Purchases from third parties in the secondary market
The managers have built up good working relationships with project developers. Some opportunities are brought to the managers for appraisal by specialist consultancy firms operating in the area. Deals may also be introduced by the wider Foresight team.
Prices are negotiated at arms-length and reflect the managers’ assessment of the potential risks and rewards from each project. This includes a review of the project’s capital structure.
ESG assessment
Environmental criteria are embedded in the structure of JLEN’s investment and portfolio management activities.
With Foresight, JLEN considers the following key environmental criteria during due diligence of a potential acquisition and thereafter the ongoing monitoring of its assets:
Resource management
Life on land/below wate
Climate change and resilience
In order to inform its environmental objective, JLEN intends to consider the following environmental KPIs and associated measurements.
Renewable energy generated (MWh renewable electricity, MWh renewable heat)
GHG emissions avoided (tCO2e avoided for each investment)
Waste treatment (waste recycled, waste diverted from landfill, in tonnes)
Water treatment (wastewater treated in litres)
Environmental incidents (reportable environmental incidents)
Purchased energy originating from renewable sources (% of total purchased energy in the portfolio originating from renewable sources)
Management of biodiversity (% of assets with biodiversity plans, number of assets engaged with on biodiversity issues)
Assessment of major contractors against ESG criteria (% of major new and existing suppliers assessed against environmental criteria)
Ongoing management
The day-to-day facilities management, operations and maintenance of the projects is contracted to third parties and part of the managers’ role is overseeing these arrangements, including approving payments.
The managers seek to identify opportunities for efficiency enhancements and capacity increases.
The managers also aim to optimise the company’s financial structure.
Disposals
JLEN will usually hold its assets for the long term, and only one disposal has been made to date. The company will sell assets when the managers feel the sale price justifies it or when there are other valid reasons for doing so.
Hedging
When they invest in assets in currencies other than sterling, the managers may choose to hedge the currency exposure back to sterling. The managers may also hedge interest rate risk, inflation risk, power, and commodity prices. All hedging is at the board’s discretion. The proportion of the portfolio assets with cash flows denominated in euros accounted for 5% of the portfolio value at
30 September 2021. The directors consider the sensitivity to changes in the euro/sterling exchange rate to be insignificant due to this low amount.
Regulation and directives
Taskforce on Climate-related Financial Disclosures
In December 2020, the FCA published a policy statement confirming a new rule for companies with a UK premium listing requiring them to make disclosures consistent with the recommendations of the Taskforce on Climate‑related Financial Disclosures (TCFD) in their annual reports or to explain why they have not done so.
From 6 April 2022, TCFD reporting will be mandated for more than 1,300 of the largest UK-registered companies and financial institutions pending parliamentary approval. These include many of the UK’s largest traded companies, banks and insurers, as well as private companies with more than 500 employees and £500m in turnover.
The rule also comes into force for those with accounting periods starting after 1 January 2021. While JLEN is a closed-ended investment company and therefore not in the scope of this regulation, it intends to provide full climate-related disclosures in its annual report, due to be published in June 2022.
Increasing environmental disclosures
In October 2021, the UK government published a new policy document to serve as a roadmap to green the UK’s finance activities. The document includes new policy measures and clarity on several areas of green finance and sets the tone for the role that the finance sector will play in addressing issues of climate risk and transparency to maintain momentum in the shift to a net-zero future.
Key takeaways relevant to JLEN involve:
Development of the UK’s Sustainability Disclosure Requirements (SDR) to build on the UK’s TCFD implementation. The SDR will integrate new and existing sustainability and climate risk reporting requirements into one comprehensive framework and aims to clarify the extent to which economic activities are sustainable. The timeframe for the SDR is relatively open-ended but the government intends to legislate the framework and regulators will set out sector-specific requirements with these coming into force starting in 2022; and
Clarity around the UK’s green taxonomy, that will be based on the EU taxonomy, and is expected to be legislated by the end of 2022. The taxonomy will focus on the outcomes of economic activities through the lens of a contribution to environmental objectives.
EU taxonomy for sustainable activities
The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It could play an important role in helping the EU scale up sustainable investment and implementing the European green deal. The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In this way, it should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed.
In order to meet the EU’s climate and energy targets for 2030 and reach the objectives of the European green deal, it is vital to direct investments towards sustainable projects and activities. The COVID-19 pandemic has reinforced the need to redirect money towards sustainable projects in order to make economies, businesses and societies – in particular health systems, more resilient against climate and environmental shocks.
To achieve this, a common language and a clear definition of what is ‘sustainable’ is needed. This is why the action plan on financing sustainable growth called for the creation of a common classification system for sustainable economic activities, or an ‘EU taxonomy’. Controversially, the EU included gas and nuclear as environmentally sustainable. It is possible that they will be removed from the definition as EU member states and the EU parliament review the proposal.
Sustainability
Climate change and issues of sustainability are pressing long-term challenges. The UK government’s commitment to net-zero emissions by 2050 will require considerable investment in renewable energy and energy storage, as it seeks to cut CO 2 output associated with power generation.
JLEN’s investments sit at the heart of the solution to these problems. This has been recognised by the London Stock Exchange (LSE), which awarded JLEN its Green Economy Mark (recognising companies that derive more than half of their revenues from products and services that contribute to the green economy).
In its most recent report, JLEN said the resilience shown during the COVID-19 pandemic has reinforced the value of established environmental infrastructure assets and now that economies have fully embarked on their fiscal and regulatory stimulus programmes, the outlook continues to appear promising.
In our view, JLEN’s clear appeal to ESG investors is amongst the key factors behind the degree to which its shares trade at a premium to NAV (see the premium/(discount) section).
JLEN’s AIFM, Foresight, is a signatory of the United Nations’ Principles for Responsible Investment (UNPRI) and ESG analysis is built into JLEN’s investment process. It is also incorporated into the ongoing monitoring programme for JLEN’s portfolio.
Environmental performance 2020/2021
JLEN publishes ESG reports regularly, with the most recent findings available in its half-year report published in November 2021 for the six months ended 30 September 2021.
Over the six months to the end of September 2021, JLEN’s portfolio generated more than 560,000MWh of clean energy and among other achievements.
Highlights from the six-month period to 30 September 2021 include:
564,000 MWh energy generated;
>330,000 tonnes of waste diverted from landfill;
>78,000 tonnes of waste recycled; and
>16.5bn litres of wastewater treated.
Meanwhile, the company made three new investments, which are forecast to avoid around 41,500 tCO2e emissions per year. This is equivalent to 17,975 cars off the road per year.
United Nations SDGs
The United Nations Sustainable Development Goals (SDGs) are a set of 17 goals for sustainable development. To be achieved by 2030, they recognise that ending poverty must go hand-in-hand with strategies that build economic growth and address a range of social needs including education, health, social protection and job opportunities, while tackling climate change and environmental protection. JLEN has mapped its portfolio against the SDGs and the results of this analysis are set out in Figure 4 below.
Asset allocation
Figure 5 displays JLEN’s portfolio by project type, as at 31 December 2021 (this being the most recently available data). In aggregate, at that date there were 39 projects spread across the wind, AD, solar, waste & wastewater, hydro, and low carbon & energy efficiency technologies.
Between 31 March 2021 (the end of JLEN’s last financial year) and 31 December 2021, the company bought a 100% stake in Cramlington Renewable Energy Developments Limited, a biomass combined heat and power plant located in Cramlington, UK. For more information on this purchase, which was made in June 2021, readers can look at our last update note: On the front foot.
Since the publication of this data, there have been two disposals in the wind segment of the portfolio, which we explain in more detail on page 16. As a result, JLEN now has 37 assets, though this is not presented in the table below.
The shape of JLEN’s portfolio as at 31 December 2021, by sector and geography, is shown in Figures 6 and 7. Note, this does not include the recent French disposals.
As at 31 December 2021, the weighted average remaining asset life of the portfolio was 17.4 years, with 89% of the portfolio having an asset life above 10 years. We also note that 71% of portfolio distributions were inflation-linked.
https://quoteddata.com/research/jlen-environmental-assets-renewables-qd/
EV Battery Production Faces Supply Chain, Geopolitical Challenges
China's dominant position in the lithium-ion supply chain is expected to continue, at least for now. The majority of today's battery manufacturing is done in China and South Korea. And those manufacturers-plus other Asian-based suppliers-continue to face supply chain constraints such as inflated air freight costs, ongoing shortage of cargo ships, clogged seaports, shutdowns due to the pandemic, and so on.
So, with these supply shortages, there has been a renewed push to onshore supply to North America. For example, President Biden's infrastructure bill allocates $6 billion in funds to the Department of Energy (DOE) for domestic supply chain manufacturing. The idea: You reduce your supply chain risk by bringing production closer to the point of consumption. Hence the move by several OEMs to build their EVs closer to home.
However-yes, another however-a geopolitical challenge faces this onshoring plan because those Chinese, South Korean, and other Asian suppliers mentioned earlier control the majority of the natural resources and raw materials like nickel and cobalt that are needed for EV batteries. By some estimates, the mines of the Democratic Republic of the Congo in Africa hold around 70% of the world's reserves of cobalt, crucial for lithium-ion batteries, and most of those mines are Chinese-owned or controlled.
Therefore, to reduce the reliance on energy dense lithium-ion batteries that require these raw materials, the race is on to develop different kinds of batteries, with different chemical makeups.
An Innovation Race Toward Next-Generation EV Batteries
This innovation race is really a chemistry race. It's a sprint to develop battery technology that's less dependent on those raw materials mentioned, but also to develop technology that leads to cheaper, more efficient, and more durable EV batteries.
Most lithium-ion batteries used in EVs rely on nickel, manganese, and cobalt. Some industry sources predict that a shift will occur this year and next from nickel-manganese-cobalt compositions to lithium phosphate compositions or LFP batteries. LFPs reportedly cannot store as much energy per pound, but they are less expensive and last longer. Along these lines, there is also research and development occurring to create so-called solid-state batteries, which wouldn't just change the chemistry and/or ingredients of EV batteries, but also the overall way they are constructed. A launch of solid-state battery types is likely several years away.
Protolabs and EV Battery Development
Given that the automotive industry is a segment our company serves, we've seen the development of both EVs and EV batteries closeup.
On the vehicle side, we've partnered with product designers and engineers from OEMs and other automotive-related companies to manufacture plastic injection-molded fixtures, housings, and other parts. On the EV-battery development side, we've helped companies prototype and test a range of items such as enclosures, housings, and other plastic components. Plastic components are often used in the automotive industry because the material helps with light-weighting.
Notably, the pace of this innovation is fast. Rapid prototyping is needed to bring next-generation battery technology to market. With our industry leading lead time, we are especially adept at quickly developing components used to iterate and test those designs.
Beyond just the batteries, it's clear that the overall pivot to EVs is upon us, even though supply chain, raw material, design, and technology challenges lie ahead. Ultimately, the switch to EVs will create an emissions-free future and a dramatically changed automotive landscape.
By Nick Carey
LONDON (Reuters) - Electric vehicle (EV) battery startup Britishvolt and VKTR, part of Bakrie & Brothers' auto unit, said on Tuesday they would develop sustainable nickel refining capacity in Indonesia and look into building a battery plant there.
The two companies will form a joint venture called Indovolt BV VKTR, to provide nickel sulphate, a crucial ingredient for high-performance EV batteries, which will eventually be produced using renewable energy in line with Britishvolt's environmental, social, and governance (ESG) goals.
"I am proud to be helping establish a secure supply of nickel to the UK at a time when raw materials are in the spotlight," Britishvolt chief executive Orral Nadjari said in a statement.
Indovolt will also look at other countries for potential battery plants. VKTR has been looking for a partner to build a 15 Gigawatt hour (GWh) battery plant in Indonesia.
The deal comes at a time of surging raw materials prices, exacerbated by the invasion of Ukraine by Russia and the international sanctions that have followed it.
Indonesia is a top nickel producer and has harboured ambitions of processing its nickel laterite ore and becoming a global hub for producing and exporting EVs.
Last week, Volkswagen, Huayou Cobalt and Tsingshan Group signed a deal focused on nickel and cobalt raw material production in Indonesia - home to more than 10% of global laterite nickel ore reserves.
State-owned Indonesia Battery Corporation (IBC) and South Korea's LG are also building a battery plant in Indonesia worth $1.2 billion with 10 GWh of capacity.
Last month, Britishvolt launched a Series C funding round with a starting investment of 40 million pounds ($52.4 million) from shareholder Glencore.
It has also secured UK government backing for a 45 GWh battery plant project in northern England, unlocking 1.7 billion pounds ($2.3 billion) in private funding.
Britishvolt has signed up British carmakers Aston Martin and Lotus as customers.
($1 = 0.7641 pounds)
(Reporting By Nick Carey. Editing by Jane Merriman)
The past six months have seen a flurry of major miners making headlines for their efforts in decarbonising rail networks that support their sites. Australian Mining examines the viability of this green rail movement.
A 2019 report from the Australian Government and the Australasian Railway Association estimated the country’s rail network was almost 33,000km long.
Playing a significant part in the country’s mining supply chain and rail network were Western Australia’s Pilbara iron ore network (measuring 2642km), central Queensland’s coal networks (1979km) and New South Wales’ Hunter Valley coal operations (785km).
With only 10 per cent of the country’s rail network electrified in 2019, the remaining 30,000km was reliant on diesel-powered locomotives to keep Australia moving.
Along these tracks, rail operators like Aurizon and the Australian Rail Track Corporation facilitate the transport of millions of tonnes of mined material like coal and ore from pit to port.
But as mining companies and rail operators turn their focus to the elimination of Scope 1, 2 and 3 carbon emissions, hundreds of diesel-powered locomotives have come under the spotlight.
In September 2021, Roy Hill purchased the world’s first fully battery-powered, heavy-haul locomotive from Pittsburgh-based Wabtec. The FLXdrive locomotive will arrive on Australian shores in 2023, when Roy Hill will use it to haul iron ore through the heat of the Pilbara region.
In December 2021, Fortescue Metals Group welcomed two new locomotives to its research and development facility outside Perth, allowing the miner to test a new fuel system to decarbonise its rail freight.
The testing is being handled by Fortescue Future Industries (FFI), a Fortescue subsidiary, as the new trains join a two-stroke version procured earlier in 2021.
In the same month, Australia’s largest rail freight company, Aurizon, announced a strategic partnership with Anglo American to investigate hydrogen-powered bulk freight trains.
The partnership will consider the use of Anglo American’s hydrogen fuel-cell technology, already in advanced trials on its ultra-class 290-tonne haul truck fleet at the Mogalakwena platinum group metals mine in South Africa.
And now, in 2022, fellow heavy hitters BHP and Rio Tinto have each announced orders of four battery-electric locomotives to reach their lofty carbon emission reduction targets.
Therein lie the questions: How important are these efforts in zero-emission rail freight? Will they be enough to wipe rail freight emissions from the radars of Australia’s major miners? And, if not, what more needs to be done?
Of the eight battery-electric locomotives purchased between BHP and Rio Tinto, six were ordered from Wabtec following Roy Hill’s purchase in September.
According to Wabtec senior regional vice president for southeast Asia, Australia and New Zealand Wendy McMillan, the answer to the first question – how important are these efforts in zero-emission rail freight? – is “very”.
“The mining industry is taking an aggressive approach to decarbonising its operations and setting ambitious goals to reduce emissions,” she told Australian Mining.
“The major mining companies are being proactive in addressing the emissions of their rail operations. Industry leaders such as BHP, Rio Tinto and Roy Hill are setting an example for mining companies worldwide by ordering the FLXdrive battery locomotive.”
BHP is targeting a 30 per cent cut to its operational GHG emissions (including rail) by 2030.
Conveniently, a full transition to battery-electric locomotives would reduce BHP’s WA iron ore (WAIO) diesel-related carbon emissions by the same percentage.
WAIO’s rail fleet includes more than 180 locomotives, and for each diesel-powered locomotive converted to an alternative energy source, up to 3000 tonnes of carbon dioxide is eliminated per year, according to McMillan.
Considering this and BHP’s 16.2 million tonnes of GHG emissions during the 2021 financial year, the four FLXdrives mark a key step in the company’s progress.
Anglo American is also taking steps towards its goal of carbon-neutral mining operations by 2040, with Scope 3 emissions (including rail) to be halved by that time.
Chief executive officer of Anglo American’s business in Australia Tyler Mitchelson said the hydrogen haul truck trials were a pivotal part of the company’s wider ambitions to decarbonise.
“An advanced trial of our fully functioning two-megawatt prototype truck is already underway at our Mogalakwena platinum mine in South Africa,” he said.
“Through this work, our ultimate aim is to reduce the use of the majority of diesel at our mining operations throughout the world to help reduce emissions, and we believe this same technology could have similar applications for other heavy-haulage providers, such as heavy haul rail freight.”
As Aurizon operates the rail network Anglo American uses to transport its mined material from pit to port, the two companies have found many synergies in their partnership and are working to achieve shared emissions reduction goals.
Aurizon head of asset management James Petty said it was important for companies to work together, especially in eliminating Scope 2 and 3 emissions.
“Aurizon sees great opportunities in developing ‘green commodity supply chains’ to support Australian commodities in remaining a premium product in global markets,” Petty said.
“By forming partnerships and collaborations with our customers, suppliers and innovators, Aurizon believes we can expedite decarbonisation of our rail services.”
Aurizon has also partnered with the University of Queensland (UQ) to strengthen its credentials in zero-emission rail freight technology, investigating new-generation batteries and green hydrogen fuel-cell technology.
The research will assess the energy requirements of Australia’s 33,000km rail network to understand how new technologies could replace current power systems.
Petty said the research would map out a future in green rail solutions by understanding what more needs to be done in the space.
“Ultimately the research will help us design new and future solutions to decarbonise rail freight and contribute to climate change efforts,” he said.
“We intend to publish findings to share our conclusions on the best technologies for the heavy-haul industry to adopt or pivot towards.
“We’ll also highlight where there may be knowledge, manufacturing, or performance gaps in the emerging technologies to allow future research to target and resolve.”
Petty agreed on the importance of companies working together to solve these challenges and said the company is exploring every avenue to achieve that goal.
“The decarbonisation of supply chains is a priority for companies that are committed to the collective global efforts to combat climate change,” he said.
“There are many initiatives underway across the international rail industry to reduce carbon emissions in rail operations, and Aurizon plans to tap into this wave of technology and innovation to play its part in reducing carbon emissions.”
Of course, these many hours of research and collaboration wouldn’t be necessary if there weren’t significant challenges involved with the decarbonisation of the world’s heavy-haul rail freight.
Aurizon’s 2021 Sustainability Report outlined its current standing in GHG emissions, and its devotion to net-zero Scope 1 and 2 emissions by 2050 – as well as a 10 per cent decrease from 2020 to 2030.
The report found the company released 847,312 tonnes of Scope 1 and 2 carbon emissions in the 2021 financial year. This was comprised of about 60 per cent Scope 1 emissions and about 40 per cent Scope 2 emissions.
Most of the former came from diesel locomotives and most of the latter from powering electric locomotives.
“Freight trains require a very large source of energy to be housed within the profile of the train and the railway corridor,” Petty said. “Very large power demands are required, especially when pulling heavy loads for long distances or up long gradients.
“Trains also need the infrastructure to charge and re-charge a battery, or in the case of hydrogen, to supply it at the train origin, destination and potentially along the rail corridor.
“All these issues need to be worked through as we better understand the technology and how it can be adapted to heavy-haul rail environments. Plus, there may be a need for different solutions for different rail routes and customer needs.”
These different solutions could come in the form of hydrogen, battery power, or even ammonia, as FFI has been investigating at Fortescue.
Fortescue chief executive officer Elizabeth Gaines said FFI was considering all angles to decarbonise all corners of the iron ore producer cum “green resources company”.
“FFI’s Green Team are successfully trialling technology on hydrogen, ammonia and battery power for trains, ship engines, haul trucks and drill rigs for technology demonstration,” Gaines said.
“The Green Team have recently commenced ramping up the decarbonisation of our locomotive fleet, with the arrival of two additional locomotives at FFI’s research and development facility in Hazelmere, Perth, bringing the total to three.”
This will allow FFI’s Green Team to expand their development in green rail freight, an integral part of Fortescue’s attempts to decarbonise its 54-strong locomotive fleet.
While the obstacles to greener rail networks remain, McMillan said Wabtec was bullish about the prospects of the technology.
“Previously, there were several challenges to implementing zero-emission technologies. However, advances in battery capacity, reduced costs and improved computing capabilities make it the right time to apply battery technology to rail,” McMillan said.
“Additionally, Wabtec continues to advance and improve the capabilities of these technologies, including advances in hydrogen solutions.”
To advance these technologies, Wabtec and General Motors announced last year they were collaborating to accelerate the development and commercialisation of battery and hydrogen solutions for Wabtec locomotives.
Specifically, the technologies were GM’s Ultium battery technology and HYDROTEC hydrogen fuel cell systems.
This partnership itself represents the fact there isn’t a single perfect answer to a decarbonised rail network, but instead a plethora of options waiting to be developed for the right applications.
Petty echoed this sentiment as the company explores all avenues in the hunt for greener rail freight.
“Aurizon continues to assess a range of alternate low-carbon energy sources for its rail operations, including battery and hydrogen,” he said.
“Aurizon is not fixed on one energy solution, but rather we will examine in parallel the emerging technologies and how effectively they can operate in different situations across our national footprint.
“Battery, hydrogen or hybrid solutions may be used – we certainly believe they can have a strong future in the heavy-haul rail industry, including those services for our mining customers.”
The resounding message from these leaders in mining and rail operation is that goals have been set, and with each new battery-electric locomotive, research partnership and trial project, the industry comes another step closer to achieving those goals.
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Tongyezhen is a town with coal in its bones. In this part of China’s Henan province, people have been mining coal and smelting metals for millennia. Today, Tongyezhen hosts a sprawling industrial park where huge ovens bake coal and limestone into coke and lime, both key ingredients for producing steel. Unsurprisingly, it is one of the smoggiest places in China.
It might seem an unlikely venue for a clean-technology milestone. But later this year, a chemical plant here is set to become the world’s largest facility for recycling carbon dioxide into fuel. It will combine CO 2 from a lime kiln with excess hydrogen and CO 2 from a coking furnace to produce methanol, an industrial chemical used for fuel and to make plastics. Carbon Recycling International (CRI), the Reykjavik-based firm behind the operation, says that the Tongyezhen plant will recycle about 160,000 tonnes of CO 2 per year — equivalent to the emissions from tens of thousands of cars — that would otherwise go into the atmosphere.
It’s an alluring idea: industrial CO 2 emissions are warming the climate, and many countries are working on capturing the gas and storing it underground. But why not recycle it into products that are both virtuous and profitable? As long as the recycling process avoids creating more carbon emissions — by using renewable energy, or excess resources that would otherwise be wasted — it can reduce the CO 2 that industry pumps into the atmosphere and lower the demand for fossil fuels used in manufacturing. That’s a double climate win, proponents say.
This kind of recycling (sometimes called upcycling) is an increasingly crowded field, as companies big and small race to market a bewildering array of products made from CO 2 . Some are boutique items for the climate-conscious shopper — vodka or diamonds, for example — but most are staples of the global economy: fuels, polymers, other chemicals and building materials. More than 80 firms are working on new approaches to using CO 2 , noted a 2021 report by Lux Research, a market-research company in Boston, Massachusetts. The market for these products is tiny today, amounting to less than US$1 billion — but Lux predicts that it will grow to $70 billion by 2030, and could reach $550 billion by 2040.
This activity is being driven by a fall in the cost of renewable energy, along with rising carbon taxes and other climate incentives that are persuading firms to avoid CO 2 emissions. At the same time, chemists have improved the efficiency of the underlying technologies.
But there are tough questions about whether CO 2 recycling genuinely benefits the climate. Many of the products made this way only briefly delay carbon’s journey into the atmosphere — fuels are burnt, products made from chemicals degrade and the CO 2 consumed during their creation is released again. That will happen at Tongyezhen: much of the methanol produced is destined to be burnt as fuel in China’s growing fleet of methanol-powered vehicles.
Meanwhile, some estimates suggest that the global market for recycled CO 2 products is unlikely to lock up more than a few per cent of the CO 2 that humans release into the atmosphere by burning fossil fuels, which totalled 36 billion tonnes last year. CRI’s plant, for one, will convert the equivalent of a little over 2 minutes’ worth of annual global CO 2 emissions. “We can avoid a lot of that, for a lot less money, than we can by turning CO 2 into stuff,” says Niall Mac Dowell, an energy-systems engineer at Imperial College London.
“The assumption that we can fix this climate-change problem in an economically attractive and easy way — at best it’s naive, and at worst it’s actively disingenuous,” he says. It’s an argument that’s heating up as CO 2 recycling goes mainstream.
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Using CO 2 as a chemical ingredient isn’t a new idea. Roughly 200 million tonnes of CO 2 are used in a handful of processes each year, most of it reacted with ammonia to make urea for fertilizers. (Producing ammonia emits extra CO 2 , and urea’s carbon is quickly released after it is spread on a field, so there are no climate benefits.) The petroleum industry also injects CO 2 underground to help recover oil, but using that oil can generate more gas than is stored.
What’s changing now is the sheer number of firms that are moving new CO 2 -recycling methods towards the market and touting their climate benefits. Approaches range from co-opting biological processes to using electrochemical cells or catalysts (see ‘Reusing carbon dioxide’).
Adapted from ref. 10
Many of the bigger players use catalysts that help to combine CO 2 with hydrogen to make fuels and commodity chemicals. Their main costs revolve around the energy needed to make hydrogen, capture streams of CO 2 and break this molecule’s strong carbon–oxygen bonds to forge new molecules. That is why so many early plants are located where there are plentiful streams of high-purity waste CO 2 , widely available spare hydrogen and heat (which powers the methanol production at Tongyezhen), or low-cost renewable electricity.
CRI, for instance, opened its first CO 2 -to-methanol plant in 2012, next door to a geothermal power station in Iceland. There, boreholes tap into hot water and steam that come with unwanted CO 2 . CRI’s plant relies on Iceland’s relatively low-carbon electricity grid to create ‘green’ hydrogen from water by electrolysis. Then the gases are combined, heated, pressurized and passed over a catalyst that eases the breaking of CO 2 bonds. Each year, the Iceland plant recycles 5,500 tonnes of CO 2 .
CRI’s first CO 2 -to-methanol plant was built near a geothermal power station in Iceland.Credit: ARCTIC IMAGES/Alamy
“This is more expensive than producing conventional methanol, there is no doubt about it,” says Emeric Sarron, chief technology officer at CRI, who declines to say how much more expensive. “But companies that need to source renewable fuels are willing to pay a premium for it.” And the firm has customers: as well as the facility in Tongyezhen, CRI is working on other full-size plants in China’s Jiangsu province and in northern Norway. Other consortia projects involving companies in Belgium, Sweden and Denmark will all recycle CO 2 to methanol for use as a chemical feedstock and shipping fuel, and aim to start operations between 2023 and 2025.
Electrochemical fuels
Rather than building such large, centralized projects, some start-ups think it will be cheaper and more efficient to convert CO 2 inside smaller, modular electrochemical cells. California-based start-up firm Twelve, for instance, aims by the end of this year to have an electrolyser system the size of a shipping container that uses electricity to process more than one tonne of CO 2 each day into syngas. This mixture of carbon monoxide and hydrogen is widely used to make other chemicals, including fuels. Twelve plans to offer CO 2 conversion as a service to firms wanting to reduce their emissions; it could charge per tonne converted, and sell its end products to cover costs. In July 2021, it raised $57 million in venture-capital funding. “We definitely see ourselves being a player in greenhouse-gas emission reduction,” says Etosha Cave, the company’s co-founder and chief scientific officer.
Syngas is conventionally made by an energy-intensive process that crushes methane and water together at high temperatures and pressures. Twelve, by contrast, uses a modified commercial electrolyser, which normally splits water into hydrogen and oxygen. Adding a metal catalyst to one of the device’s electrodes (the cathode) enables it to simultaneously convert CO 2 into CO, so that the system produces syngas at room temperature. Twelve aims to use renewable electricity sources to run these CO 2 -recycling units.
Academic chemists have pressed the case for electrochemical recycling by making significant improvements to cathode catalysts. A key metric known as Faradaic efficiency — the proportion of electrons that go into producing CO rather than unwanted by-products — is now more than 90% in some cases1. Chemists are also making headway on another front — improving the ability of catalysts to support a high electric-current density. This allows a given area of electrode to convert more CO 2 molecules. Nevertheless, many catalysts struggle to work for more than a few hundred hours before they start to degrade, says Jan Vaes, programme manager for sustainable chemistry at the Flemish Institute for Technological Research (VITO) near Antwerp, Belgium.
Electrochemists aren’t only targeting syngas. Avantium, a renewables chemical company in Amsterdam, is using improved catalysts2 to make formic acid, which can be converted into more-valuable chemicals. It is currently testing an electrochemical reactor at a fossil-fuel power plant in Germany.
And some chemists are hoping to make more complex carbon molecules that could command higher prices. Larger molecules can be more troublesome to make this way — with more chemical bonds, there are more opportunities for electrons to be diverted into side products, reducing efficiency — but progress is being made. This year, for instance, electrical engineer and materials scientist Edward Sargent at the University of Toronto in Canada and his team unveiled an electrochemical system that converts CO 2 and water into ethylene oxide, which is widely used to make polymers. The team’s catalyst achieved a record Faradaic efficiency of 35% for the conversion3.
Life-cycle arguments
Whether products recycled from industrial CO 2 emissions actually protect the climate is unclear — because the CO 2 they capture will still be released into the atmosphere if the molecules are burnt or broken down. Drawing CO 2 directly from the atmosphere could have clearer climate benefits, but capturing the gas from air is extremely expensive, as are products made that way.
Proponents argue that recycling industrial CO 2 into chemicals can reduce emissions in another way — by avoiding some fossil-fuel-based production. “Our process helps keep fossil fuels in the ground by tapping into existing streams of CO 2 ,” a spokesperson for Twelve told Nature.
The stringent way to examine this is through a life-cycle analysis (LCA) — a detailed accounting of the carbon involved in making and using a product, from the origins of its CO 2 to its final fate. Many CO 2 -recycling firms say they have done these audits, but don’t publish them because they contain proprietary information.
One firm that has released LCAs is LanzaTech, headquartered in Skokie, Illinois. The company uses bioreactors filled with Clostridium autoethanogenum bacteria to ferment industrial CO 2 , CO and hydrogen waste emissions into ethanol. Its chief executive, Jennifer Holmgren, notes that this kind of bioconversion can handle messy waste-gas streams, such as those from municipal waste gasifiers, better than chemical processes do. The firm’s reactor at a Shougang Group steel plant near Tianjin in China has been producing ethanol since 2018. A second plant began operating at a Chinese alloy plant last year, and commercial plants in Belgium and India are expected to come online by the end of this year.
On 8 March, LanzaTech announced that it would become publicly listed, a move that values the company at $1.8 billion. This year, it reported that with genetic modifications, its bacteria could make larger molecules such as acetone and isopropanol, too4. Conventional production of acetone and isopropanol generates copious CO 2 emissions. By contrast, LanzaTech’s LCA suggests that its route is carbon-negative — consuming much more carbon than it emits4. But this analysis did not include what would happen to the CO 2 when the products were used.
Holmgren thinks that CO 2 -based products will save on emissions anyway, by displacing their conventionally made equivalents. But she concedes that it is hard to be certain this is true — CO 2 -based products might simply add to the growing global consumption of fuels and other chemicals, rather than displace incumbent production. It’s also tricky to pin down direct evidence for displacement in such a nascent market, adds Sarron.
“The problem is that people use displacement with the idea that the market will do it, somewhere around the globe,” says Andrea Ramírez Ramírez, who studies low-carbon systems and technologies at Delft University of Technology in the Netherlands. “But how do you monitor displacement? That’s very, very difficult.”
A greater availability of supposedly guilt-free CO 2 -derived products might also lead to increased consumption of those resources, she adds. Anyone who is trying to limit their international flights, for instance, might fly more often if their airline boasts of its climate-friendly fuel. This ‘rebound effect’ has been observed for some energy-efficiency measures, Ramírez Ramírez says, although it hasn’t been studied for CO 2 -based goods.
In her view, negative emissions, such as those claimed by LanzaTech, “should mean real CO 2 removal from the atmosphere, that you can actually measure physically”.
Locking carbon down
To maximize climate benefits, it makes more sense to lock recycled CO 2 into products that last for decades. That’s where polymers come in. “You’re making products like insulation foam, mattresses, soft furnishings, that have quite a long lifetime,” says Charlotte Williams, a chemist at the University of Oxford, UK.
Williams develops catalysts that can incorporate CO 2 into polyols, which are used to make polyurethane foams. Polyols are usually made from expensive chemicals called epoxides, but her catalysts help CO 2 to take the place of some of these in the polymer chain. This traps CO 2 and reduces the consumption of epoxides — which themselves have a big carbon footprint.
Williams has founded a spin-off company, Econic Technologies. In September 2021, it signed a deal to build a pilot plant in India, and then retrofit an existing plant to incorporate waste CO 2 into polyols. Other companies are seasoning polymers with CO 2 in similar ways.
Despite this progress, projections suggest that using CO 2 as a polymer ingredient would lock up only around 10 million to 50 million tonnes of CO 2 per year by 20506. So, is it really worth it? “I think it’s the wrong way of looking at the problem,” Williams says. “We have to make massive cuts in CO 2 emissions across the board, but we also have to invest in some technologies that can directly use it.”
The biggest opportunity to incorporate CO 2 into products lies in concrete and other building materials, says Runeel Daliah, a senior analyst at Lux Research, who is based in Amsterdam. The technology is proven and scalable, and could feed an enormous global demand for concrete, giving it the potential to dominate the CO 2 -conversion market. “Concrete is really the only one where you have permanent sequestration of CO 2 in the product,” Daliah says.
One of the leaders in this sector is Canadian company CarbonCure in Halifax. Founded in 2012, it pumps waste CO 2 into fresh concrete to form nanoparticles of calcium carbonate. This improves the compressive strength of the concrete, so that less cement is needed7. Because cement-making accounts for most of concrete’s carbon emissions, the company says this could reduce the carbon footprint of every tonne of concrete by around 5% (or 6 kilograms of CO 2 ).
CarbonCure concrete is poured during a construction project. Pumping CO 2 into concrete locks up the gas for many years, or even centuries.Credit: CarbonCure Technologies
The company has installed more than 550 of its CO 2 injection units at concrete plants around the world, most of them in North America, which has avoided and mineralized 150,000 tonnes of CO 2 emissions so far. But with some 100,000 plants worldwide churning out roughly 33 billion tonnes of concrete per year, “we’re really just scratching the surface”, says Jennifer Wagner, CarbonCure’s president.
Ramírez Ramírez says that converting CO 2 into minerals offers a much clearer climate benefit than converting it into fuels. “In the life-cycle analysis, you can see the benefits are much larger, and I think much more robust.”
(WorldKings.org) As of 2019 Vestas has installed over 66,000 wind turbines for a capacity of 100 GW in over 80 countries on five continents.
The renewable-energy industry is the part of the energy industry focusing on new and appropriate renewable energy technologies. Investors worldwide have paid greater attention to this emerging industry in recent years. In many cases, this has translated into rapid renewable energy commercialization and considerable industry expansion. The wind power and solar photovoltaics (PV) industries provide good examples of this.
Vestas Wind Systems A/S is a Danish manufacturer, seller, installer, and servicer of wind turbines that was founded in 1945. The company operates manufacturing plants in Denmark, Germany, the Netherlands, Taiwan, India, Italy, Romania, the United Kingdom, Spain, Sweden, Norway, Australia, China, Brazil, Poland and the United States, and employs more than 25,000 people globally.
After the second world war Vestas was founded in 1945 by Peder Hansen as "Vestjysk Stålteknik A/S" (West-Jutlandish steel technology). The company initially manufactured household appliances, moving its focus to agricultural equipment in 1950, intercoolers in 1956, and hydraulic cranes in 1968. It entered the wind turbine industry in 1979 and produced wind turbines exclusively from 1989.
In 2003, the company merged with the Danish wind turbine manufacturer NEG Micon to create the largest wind turbine manufacturer in the world, under the banner of Vestas Wind Systems. In 2016, Vestas was voted number 7 on the Clean200 list.
As of 2019 Vestas has installed over 66,000 wind turbines for a capacity of 100 GW in over 80 countries on five continents. As of 9 January 2019 the company has built production facilities in more than 12 countries, among them China, Spain and the United States.
According to Wikipedia
Russia's invasion of Ukraine has entered its second month, with casualties mounting on both sides.
Ukraine's forces continue to resist, while its President Volodymyr Zelenskyy regularly calls on the world to do more to help. Governments around the globe have imposed heavy sanctions against Moscow but have stopped short of direct intervention for fear of sparking a wider conflict.
Meanwhile, rising geopolitical risk and volatile energy and financial markets are rocking Asia.
For all our coverage, visit our Ukraine war page.
Read our in-depth coverage:
-- China's Sinopec to keep buying Russian oil and gas, exec says
-- Apple to cut iPhone, AirPods output amid Ukraine war uncertainty
-- Japan's 3 Ukraine takeaways: Be ready, show grit, don't wait for U.S.
-- Is Putin cracking? Voice analysis belies steely exterior
Entries include material from wire services and other sources.
Note: Nikkei Asia on March 5 decided to temporarily suspend its reporting from Russia until further information becomes available regarding the scope of the revised criminal code.
Here are the latest developments:
Thursday, March 31 (Tokyo time)
2:00 a.m. With Russia now more than a month into its invasion of Ukraine and showing little sign of backing down, how has Russian President Vladimir Putin's mindset changed over the course of the conflict? The answer may lie in his voice.
An analysis of the audio suggests his stress levels were elevated starting in the days before the invasion and climbed sharply in early March, when Moscow responded to the tightening sanctions net around the country. Read more.
1:45 a.m. Ukrainian President Volodymyr Zelenskyy tweets that he discussed specific defensive support with U.S. President Joe Biden in an hourlong call Wednesday. The two leaders also discussed a new package of enhanced sanctions against Russia, Zelenskyy says, as well as financial and humanitarian aid support for Ukraine.
1:39 a.m. The president of the Georgian breakaway region of South Ossetia says the territory will take steps soon to become part of Russia. Moscow recognized the territory and the coastal region of Abkhazia as independent after fighting a war with Georgia in 2008, extending financial support to the area as well as offering Russian citizenship and stationing troops there.
1:32 a.m. The offices of Russian gas major Gazprom are raided by European Union antitrust officials, sources tell Reuters, as the watchdog intensifies an investigation into the company's gas supplies to Europe.
The investigation began in January when EU antitrust chief Margrethe Vestager asked gas companies including Gazprom about tight supplies after accusations it was withholding extra production that could be released to lower rising prices.
The raid comes amid the backdrop of tightening sanctions against Russian gas and other energy exports over the invasion.
12:50 a.m. Russia is suffering from brain drain as a result of Western sanctions, the head of the Russian Academy of Sciences says.
"It's hard to estimate the scope of the losses, but I think they are high," Alexander Sergeyev, the physicist who serves as the academy's president, is quoted by Interfax as saying. "It's necessary to offer benefits and increase the financing of science so that, apart from prestige, there should also be a proper material basis for it."
Wednesday, March 30
11:00 p.m. Volkswagen-owned German truckmaker MAN will put up to 11,000 workers in Germany on shortened hours as it struggles to secure a key component made in Ukraine.
"The war in Ukraine is leading to massive supply gaps for truck wiring harnesses at MAN Truck & Bus," the company says in a statement. "As a result, since March 14 there has been a standstill in the truck plants in Munich and Krakow as well as significant production downtimes at the Nuremberg, Salzgitter and Wittlich plants."
Earlier this month, wire harness maker Sumitomo Electric Industries of Japan said it will add production lines at its Romanian and Moroccan plants, having suspended operations at its factory in western Ukraine at the end of last month.
9:00 p.m. Indian Prime Minister Narendra Modi tells a regional summit that recent developments in Europe have raised a question mark over the stability of the international order, but he stops short of referring directly to Russia's invasion of Ukraine.
Modi says it its important to make the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation's activities more active.
"It has also become essential to give greater priority to our regional security," he says says in a virtual address at the meeting, hosted by current chair Sri Lanka. Read more.
8:00 p.m. Russian Foreign Minister Sergey Lavrov will pay a two-day visit to New Delhi starting Thursday, the Indian government says in a one-line statement on Wednesday. It is the highest-level Russian visit to India since Moscow launched an invasion of Ukraine on Feb. 24. The Ukraine crisis is expected to figure prominently in Lavrov's meetings in New Delhi, even though the Indian statement did not reveal the agenda.
7:00 p.m. The Kremlin says it welcomes the fact that Kyiv has set out its demands for an end to the conflict in Ukraine in written form, but says there is no breakthrough yet. Kremlin spokesman Dmitry Peskov tells reporters that Russia has not noticed anything promising or that looked like a breakthrough, and says there is a long period of work ahead.
6:46 p.m. Russia's Federal Security Service says on Wednesday it has detained 60 supporters of what it describes as a Ukrainian "neo-Nazi" group and has seized weapons in 23 regions across Russia, news agencies report. The FSB has previously identified the alleged group as the MKU. State television in December said the abbreviation stood for "Maniacs. Cult of Murder." The FSB says the group had been set up by a Ukrainian under the patronage of Ukraine's intelligence services.
6:34 p.m. The United Nations has named three human rights experts to conduct an investigation into possible war crimes and other violations committed in Ukraine. The independent panel, to be led by Erik Mose of Norway, has a mandate to "investigate all alleged violations and abuses of human rights and violations of international humanitarian law and related crimes in the context of the aggression against Ukraine by the Russian Federation," according to a statement.
6:06 p.m. Russia denies a claim by Ukraine that it had struck the town of Uman, visited by tens of thousands of Hasidic Jews each year, showing pictures of what it says are Ukrainian forces loading arms near a synagogue there. Ukrainian President Volodymyr Zelenskiy told Israeli lawmakers on March 20 that Russia had struck Uman on the first day of the invasion in February, according to a transcript of the speech supplied by The Times of Israel.
5:49 p.m. Russian Sports Minister Oleg Matytsin says Russia will invite "friendly countries" to take part in its national university games, at a time when its own athletes remain banned from competitions. He does not specify which countries will be invited to the event, which had been under planning since before Russia's invasion.
5:42 p.m. There are now 4,019,287 Ukrainians who have fled abroad, according to the United Nations High Commissioner for Refugees.
5:30 p.m. Ukraine officials report shelling around the capital Kyiv and the northern region of Chernihiv, despite a promise by Moscow to reduce military operations there. Russian forces were also shelling nearly all cities along the front separating Ukraine-controlled territory from areas held by Russian-backed separatists in the eastern Donetsk region, the regional governor says. Heavy fighting was also reported in Mariupol. Oleksiy Arestovych, an adviser to President Volodymyr Zelenskyy, says Russia has been transferring forces from northern Ukraine to the east to try to encircle Ukrainian troops.
4:10 p.m. Russian forces hit industrial facilities in three overnight strikes in the Khmelnytskyi region of western Ukraine, regional governor Serhiy Hamaliy says. He gave no details of the targets but said fires had been "localized" and checks were being made to determine whether there were any casualties.
4:07 p.m. The governor of Ukraine's northern Chernihiv region says he saw no letup in Russian attacks despite a promise by Moscow to scale down military operations there. "Do we believe in [the promise]? Of course not," Gov. Viacheslav Chaus said via the Telegram messaging app. "The 'decreased activity' in the Chernihiv region was demonstrated by the enemy carrying out strikes on [the city of] Nizhyn, including air strikes, and all night long they hit [the city of] Chernihiv."
3:50 p.m. Russia and China agree to widen cooperation at a meeting of foreign ministers in China, according to the Interfax news agency, citing Russia's foreign ministry amid what Moscow described as "difficult international conditions." Interfax says cooperation included building up foreign policy coordination and speaking with one voice on global affairs. Chinese Foreign Minister Wang Yi met with his Russian counterpart Sergei Lavrov in the eastern Chinese province of Anhui.
3:45 p.m. Ukraine's armed forces say there is a danger of ammunition exploding at the defunct Chernobyl nuclear power station and that Russian forces occupying the plant must pull out of the area, according to Deputy Prime Minister Iryna Vereshchuk. She also says Ukraine had asked Russia on Tuesday to allow 97 humanitarian corridors to be established in the worst-hit towns, cities and villages. "We demand that the U.N. Security Council immediately take measures to demilitarize the Chernobyl exclusion zone and introduce a special U.N. mission there to eliminate the risk of the repeat of a nuclear catastrophe," she said.
3:26 p.m. Shelling could be heard outside Kyiv overnight but the Ukrainian capital itself was not shelled by Russian forces, Deputy Mayor Mykola Povoroznyk says. "The night passed relatively calmly, to the sounds of sirens and the sound of gunfire from battles around the city, but there was no shelling of the city itself."
3:15 p.m. Britain will take a very skeptical view towards any promises coming from Russia about Ukraine and will respond to Moscow based on its actions, not its words, Deputy Prime Minister Dominic Raab says. "I would be very careful in taking at face value what is coming out of Putin's war machine," he told Times Radio, adding that room for diplomacy must still be made.
Tuesday, March 29
10:40 p.m. The Ukraine invasion has triggered the dismissals of some brilliant Russian musical figures from the classical scene in the West. In some cases, the firings have been sudden. Russian maestro Valery Gergiev was sacked as chief conductor of the Munich Philharmonic Orchestra on March 1.
After Russia had invaded Ukraine, Munich Mayor Dieter Reiter immediately presented the Russian conductor an ultimatum. Either "clearly and unequivocally distance himself" from Russia's "special military operation" or leave.
"I had hoped that he would reconsider his very positive assessment of Russian President Vladimir Putin," the mayor said in his March 1 announcement. "He has not done so." Read more.
9:57 p.m. The Russia-Ukraine negotiations in Istanbul have concluded, host Turkey says Tuesday, adding that the peace talks will not continue for a second day.
9:40 p.m. Ukraine proposes adopting neutral status, in the first sign of progress toward negotiating peace in its talks with Russia.
Under the proposals, Kyiv would agree not to join alliances or host bases of foreign troops, but would have security guaranteed in terms similar to "Article 5," the collective defense clause of the trans-Atlantic NATO military alliance, negotiators from Kyiv say.
They named Israel and NATO members Canada, Poland and Turkey as countries that may give such guarantees. Russia, the U.S., Britain, Germany and Italy also could be involved.
9:21 p.m. Russia will curtail military activity around the Ukrainian cities of Kyiv and Chernihiv, its deputy defense minister says, after talks between Russian and Ukrainian negotiating teams in Istanbul. The official, Alexander Fomin, says the decision was taken in the interest of creating mutual trust and the conditions for further talks.
6:00 p.m. Ukraine's president has spoken with South Korea's incoming leader.
6:30 p.m. Russian and Ukrainian negotiators have begun the first direct peace talks in more than two weeks on Tuesday in Istanbul, with the surprise attendance of Russian billionaire Roman Abramovich who is sanctioned by the West over Moscow's invasion of Ukraine. The two teams sat facing each other at a long table in the presidential office, with the Russian oligarch sitting in the front row of observers, a Turkish presidential video feed showed. Two of Abramovich's superyachts are docked at Turkish resorts.
5:00 p.m. Russia's Foreign Ministry called in the ambassadors of the three Baltic nations on Tuesday to announce the expulsion of some of their diplomats in a tit-for-tat move, the TASS and RIA news agencies cited a source as saying. Latvia, Estonia and Lithuania expelled a total of 10 Russian diplomats in a coordinated move earlier this month.
4:10 p.m. Progress in talks between Russian and Ukrainian negotiators starting in Istanbul on Tuesday would pave the way for a meeting of the countries' two leaders, Turkish President Recep Tayyip Erdogan told the delegations ahead of the talks. In a televised speech to the negotiators in Istanbul, Erdogan said the time has come for talks to yield concrete results and called for an immediate cease-fire, saying that "stopping this tragedy" was up to both sides.
3:00 p.m. German consumer sentiment looks set to slump heading into April as the war in Ukraine pushed households' economic and income expectations to their lowest since the 2009 financial crisis, a survey shows. The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, tumbled to -15.5 points heading into April, down from a revised -8.5 points a month earlier, the lowest reading since February 2021.
Japan will ban the export of luxury goods to Russia, including luxury cars, from April 5 in its latest response to the Russian invasion of Ukraine. © Reuters
10:30 a.m. Japanese Chief Cabinet Secretary Hirokazu Matsuno says Japanese companies will be requested to refuse if Russia asks for payments in rubles, especially in the energy sector. Russia demanded last week that "unfriendly" countries must pay in rubles, not euros, for its gas in the wake of the United States and European allies teaming up on a series of sanctions aimed at Russia.
10:00 a.m. Japan will ban the export of luxury goods to Russia in its latest response to Russia's invasion of Ukraine, effective April 5, the Ministry of Economy, Trade and Industry says in a statement. Prohibited items include luxury cars, motorcycles, liquors, cosmetics, fashion items and art pieces.
6:45 a.m. U.S. President Joe Biden offers an explanation for his eyebrow-raising exclamation Sunday that Russian President Vladimir Putin "cannot remain in power."
"I wasn't then nor am I now articulating a policy change," Biden tells reporters at the White House. "I was expressing moral outrage that I felt, and I make no apologies."
5:15 a.m. Russian oligarch Roman Abramovich, the owner of the Chelsea Football Club, suffered symptoms of poisoning in Kyiv in early March after peace talks with Russia, the Financial Times reports, citing three people familiar with the matter.
Two Ukrainians involved in the talks also suffered symptoms. Abramovich's eyesight "completely disappeared" for several hours, the Financial Times reports.
"We did not identify the substance," the newspaper quotes a person close to Zelenskyy as saying. "No idea who was behind [the attack] -- but it looks like Roman was the main target."
The suspected poisoning was first reported by The Wall Street Journal.
A local resident cries before leaving the besieged southern port of Mariupol, Ukraine, on March 27: The city's mayor says all citizens must be evacuated to avoid a humanitarian catastrophe. © Reuters
4:30 a.m. Ukrainian Foreign Minister Dmytro Kuleba says the country's most ambitious goal at talks with Russia in Turkey this week is to agree on a cease-fire. "The minimum program will be humanitarian questions, and the maximum program is reaching an agreement on a cease-fire," he said on national television when asked about the scope of the latest round of peace negotiations, expected to kick off Tuesday. "We are not trading people, land or sovereignty."
3:08 a.m. U.S. lawmakers are probing Credit Suisse Group's compliance with sanctions related to Russia's invasion of Ukraine, asking the Swiss bank to provide documents tied to the financing of yachts and jets owned by potentially sanctioned individuals, according to a letter sent by a House of Representatives committee to the bank's chief executive, Thomas Gottstein.
The probe comes after the Financial Times reported this month that Credit Suisse asked hedge funds and other investors to destroy documents relating to its richest clients' yachts and private jets in an attempt to stop information leaking about loans to oligarchs who were later sanctioned.
2:00 a.m. The exodus of many of the world's top brands from Russia in protest of the country's invasion of Ukraine has created a cottage industry in patent applications for strikingly similar logos. They include one that looks like McDonald's golden arches turned on their side and a blue-and-yellow IKEA look-alike. Read more.
12:30 a.m. Group of Seven economies will reject Russia's demand to pay for natural gas in rubles, their energy ministers have agreed in an online meeting, according to Japan's Ministry of Economy, Trade and Industry.
Russian President Vladimir Putin has said that only "unfriendly" countries would have to pay for Russian energy in rubles. This list includes the U.S. and Japan.
These transactions have mostly been paid for in dollars and euros. Natural gas from the Japanese-backed Sakhalin-2 project has been paid for mainly in dollars.
Monday, March 28
11:45 p.m. International brewers Heineken and Carlsberg say they plan to exit Russia, joining other big consumer brands.
Carlsberg has more exposure to Russia than any of its peers, the Financial Times reports. The country makes 9% of its revenue in the country and employs 8,400 people there.
10:01 p.m. Russia's Novaya Gazeta newspaper, whose editor Dmitry Muratov was a co-winner of last year's Nobel Peace Prize, is suspending online and print activities until the end of Russia's "special operation" in Ukraine. The investigative paper, which already removed material from its website on Russia's military action in Ukraine to comply with a new media law, says it received another warning from the state communications regulator about its reporting, prompting it to pause operations.
6:22 p.m. Chinese state energy company Sinopec will continue to buy crude oil and gas from Russia, a top executive says, even as Western democracies step up sanctions in response to the country's invasion of Ukraine. The company, known formally as China Petroleum and Chemical, is involved in two major projects in Russia: an oil and gas production joint venture called Taihu in the Volga-Ural petroleum basin, and the development of the Amur gas chemical complex and processing plant with Sibur in the Russian Far East, adjoining China.
6:19 p.m. The Kremlin says that peace talks between Russia and Ukraine may get underway in Turkey on Tuesday and said it was important that the talks would be held face-to-face despite scant progress in negotiations so far. Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan agreed in a telephone call on Sunday for Istanbul to host the talks, which Ankara hopes will lead to a cease-fire in Ukraine.
5:36 p.m. Cambodian Prime Minister Hun Sen has condemned Russia's invasion of Ukraine and echoed calls for an immediate cease-fire made by the Association of Southeast Asian Nations (ASEAN), which Cambodia currently chairs. In his remarks, Hun Sen invoked Cambodia's own history of occupation by Vietnam and cast doubt on Russia's ability to capture the Ukrainian capital Kyiv.
4:59 p.m. Ukrainian and Russian negotiators will begin peace talks in Istanbul later Monday, a senior Turkish official said, without elaborating. Turkish President Recep Tayyip Erdogan and his Russian counterpart, Vladimir Putin, agreed in a telephone call on Sunday for Istanbul to host the talks, which Ankara hopes will lead to a cease-fire.
4:54 p.m. Russian forces are regrouping but are unable to advance anywhere in Ukraine, Ukrainian Deputy Defense Minister Hanna Malyar says. Russian forces were trying to reinforce positions they already hold and were trying to break through the defenses of Kyiv but had no hope of capturing the capital, she says.
4:48 p.m. Ukraine has no plans to open any humanitarian corridors to evacuate civilians from besieged cities on Monday because of intelligence reports warning of possible Russian "provocations" along the routes, Deputy Prime Minister Iryna Vereshchuk says.
4:35 p.m. The mayor of Mariupol says all civilians must be evacuated from the encircled Ukrainian city to allow them to escape a humanitarian catastrophe. Mayor Vadym Boichenko says 160,000 civilians were still trapped in the southern port city on the Sea of Azov without heat and power after weeks of Russian bombardment.
He says 26 buses were waiting to evacuate civilians from Mariupol, which normally has a population of about 400,000 people, but Russian forces had not agreed to give them safe passage. He did not say where they were waiting.
4:04 p.m. Chinese drone maker DJI has dismissed as "utterly false" accusations that the Russian military is using its drones in Ukraine after a German retailer cited such information as the reason for taking its products off the shelves. The rejection followed Friday's Twitter revelation of the removal by German electronics and home appliances giant MediaMarkt in response to "information from various sources," although it gave no details on the information it had received.
2:08 p.m. Japan will revise its foreign exchange law to prevent Russia from evading financial sanctions via cryptocurrency assets. A proposed revision to the Foreign Exchange and Foreign Trade Act will be submitted to the Diet to deter Russia from dodging sanctions, Chief Cabinet Secretary Hirokazu Matsuno said at a news conference. Prime Minister Fumio Kishida also called on Monday for the law to be amended, stressing the need for coordinated actions with Western allies after attending last week's Group of Seven summit in Belgium.
11:23 a.m. Hollywood shared some of its big night with Ukrainians on Sunday, using text on a screen to ask the world for financial contributions. But rather than turning the Academy Awards into a platform about Ukraine, the show's directors opted for a silent message that did not mention Russia, which invaded Ukraine 31 days ago. "We'd like to have a moment of silence to show our support for the people of Ukraine currently facing invasion, conflict and prejudice within their own borders," read the message posted on screen just before a commercial break.
11:11 a.m. Russian forces have left the Ukrainian town of Slavutych, home to workers at the defunct nuclear plant of Chernobyl, after completing their surveying task, the mayor says. On Saturday, the Kyiv regional governor said Russian forces had taken control of the town just outside the safety exclusion zone around Chernobyl, site of the world's worst nuclear disaster in 1986, where Ukrainian staff still manage the plant.
6:51 a.m. German Chancellor Olaf Scholz says that neither NATO nor U.S. President Joe Biden aims to bring about regime change in Russia. Biden said of Russian President Vladimir Putin during a speech on Saturday that "this man cannot remain in power." The White House and other U.S. officials rushed to clarify that Biden was not actually calling for Putin to be toppled. Asked during a Sunday appearance on ARD television whether Putin's removal is in fact the real aim, Scholz replied: "This is not the aim of NATO, and also not that of the American president," adding, "We both agree completely that regime change is not an object and aim of policy that we pursue together."
Turkish President Recep Tayyip Erdogan speaks at a news conference after a NATO summit in Brussels on March 24. © Reuters
3:09 a.m. Turkish President Recep Tayyip Erdogan tells Russian counterpart Vladimir Putin that a cease-fire and better humanitarian conditions are needed. "Stressing the need for the immediate establishment of ceasefire and peace between Russia and Ukraine as well as the amelioration of the humanitarian situation in the region, President Erdogan stated that Turkiye would continue to lend every kind of support regarding the process," Erdogan's office says in a Twitter thread about the phone call, using Turkey's new English rendition of its own name.
Erdogan and Putin agree that the next round of negotiations between Ukraine and Russia will be held in Istanbul.
3:08 a.m. Ukraine is prepared to discuss adopting a neutral status as part of a peace deal with Russia, but it would have to be guaranteed by third parties and put to a referendum, Zelenskyy says in an interview.
Speaking to a group of Russian journalists via video call, Zelenskyy says the invasion caused the destruction of Russian-speaking cities in Ukraine and says the damage exceeded that from the Russian wars in Chechnya.
1:51 a.m. Russia's communications watchdog tells Russian media not to report on an interview done with Zelenskyy and says it has started a probe into the outlets that had interviewed him.
In a short statement distributed by the watchdog on social media and posted on its website, it says a host of Russian outlets had done an interview with Zelenskyy.
"Roskomnadzor warns the Russian media about the necessity of refraining from publishing this interview," it says. It does not give a reason for its warning.
Sunday, March 27
9:30 p.m. The U.S. has no strategy of regime change for Russia, Secretary of State Antony Blinken tells reporters in Jerusalem. "I think the president, the White House, made the point last night that, quite simply, President [Vladimir] Putin cannot be empowered to wage war or engage in aggression against Ukraine or anyone else," Blinken says.
Israeli Prime Minister Naftali Bennett, right, shakes hands with U.S. Secretary of State Antony Blinken after their meeting in Jerusalem on March 27. © Reuters
"As you know, and as you've heard us say repeatedly, we do not have a strategy of regime change in Russia -- or anywhere else, for that matter," he adds. "In this case, as in any case, it's up to the people of the country in question. It's up to the Russian people."
3:37 p.m. Ukraine and Russia have agreed on two "humanitarian corridors" to evacuate civilians from front-line areas on Sunday local time, including allowing people to leave by private car from the southern city of Mariupol, Ukrainian Deputy Prime Minister Iryna Vereshchuk says.
3:52 a.m. U.S. President Joe Biden says in Poland that Russian President Vladimir Putin "cannot remain in power" in a comment soon walked back by a White House official. "The president's point was that Putin cannot be allowed to exercise power over his neighbors or the region," the official says. "He was not discussing Putin's power in Russia, or regime change."
Biden's comments, including an earlier one in which he called Putin a "butcher," mark a sharp verbal escalation in the American approach to Russia over its invasion of Ukraine.
Saturday, March 26
8:56 p.m. Ukraine received additional security pledges from the United States on developing defense cooperation, its Foreign Minister Dmytro Kuleba says. "We did receive additional promises from the United States on how our defense cooperation will evolve," Kuleba tells reporters.
7:06 p.m. More than 100,000 people still need to be evacuated from the besieged Ukrainian city of Mariupol, Ukraine's Deputy Prime Minister Iryna Vereshchuk says on national television.
6:53 p.m. Ukraine's Defense Minister Oleksii Reznikov says that he and Foreign Minister Dmytro Kuleba had held a joint meeting with their U.S. counterparts for the first time. "We discuss current issues & cooperation in political and defense directions between Ukraine and the United States," Reznikov says on Twitter, posting a photograph of the meeting in Warsaw with U.S. Secretary of State Antony Blinken and U.S. Defense Secretary Lloyd Austin.
5:54 p.m. Russian Defence Minister Sergei Shoigu was seen chairing an army meeting and discussing weapons supplies in a video posted by his ministry, the first time he had publicly been shown speaking for more than two weeks. In the video, uploaded on social media, Shoigu said he had discussed issues related to the military budget and defence orders with the finance ministry.
5:25 p.m. Russian forces have taken control of the town of Slavutych, where workers at the defunct Chernobyl nuclear plant live, the governor of Kyiv region Oleksandr Pavlyuk says. In an online statement, Pavlyuk says Russian troops had occupied the hospital in Slavutych and kidnapped the mayor.
3:46 p.m. The war in Ukraine has killed 136 children in the 31 days since the start of the Russian invasion, Ukraine's office of the prosecutor-general said on Saturday in a message on the Telegram app. Of the total, 64 children have been killed in the Kyiv region, the office said. A further 50 children have died in the Donetsk region, it said. Additionally, 199 children have been wounded.
10:39 a.m. About 300 people were killed in the Russian airstrike last week on a Mariupol theater that was being used as a shelter, Ukrainian authorities say, in what would make it the war's deadliest known attack on civilians yet. The bloodshed at the theater fueled allegations Moscow is committing war crimes by killing civilians, whether deliberately or by indiscriminate fire.
Service members of pro-Russian troops are seen atop of an armored vehicle with the symbols "Z" painted on its sides in Dokuchaievsk in the Donetsk region, Ukraine. © Reuters
3:30 a.m. A senior Russian military official says that the first phase of its "special operation" -- Moscow's name for the invasion of Ukraine -- has been mostly completed and that the focus is now on the eastern Donbas region.
"The military capacities of Ukraine's armed forces have been significantly decreased, which allows efforts to be focused on achieving our main aim: liberating Donbas," Sergei Rudskoy says, referring to a region where Russian-backed separatists have declared themselves "republics." Ukraine does not recognize their independence.
Russia's hints at a potential scaling back of its territorial ambitions in Ukraine come amid reports of military setbacks. Russian forces no longer have full control of Kherson, the first major Ukrainian city they captured, The New York Times reports, citing a senior Pentagon official.
U.S. President Joe Biden is welcomed by Polish Defence Minister Mariusz Blaszczak as he arrives at Rzeszow-Jasionka Airport in Poland. © Reuters
2:55 a.m. Zelenskyy gives an update on his latest talks with Turkish President Recep Tayyip Erdogan.
1:30 a.m. The U.S. aims to supply 15 billion cu. meters of liquefied natural gas to the European Union this year to help ease its dependence on Russian energy. Read more
Friday, March 25
11:55 p.m. Ukraine is likely to be on the agenda for a meeting of Quad leaders being planned for April. Japanese Prime Minister Fumio Kishida, the summit host, has reached out to U.S. President Joe Biden on a possible visit to Japan for the talks involving Australia and India.
11:00 p.m. Moscow reacts to talk of excluding Russia from the Group of 20.
Russian presidential press secretary Dmitry Peskov says the G-20 format is "important," but "in the current conditions, as most of the participants in this format are in a state of economic war with us at their own initiative, nothing deadly harmful will happen" if Russia is left out.
Peskov's comments were reported by Interfax.
10:19 p.m. U.S. President Joe Biden lands in Rzeszow, Poland, to assess humanitarian efforts to help some of the millions of Ukrainian refugees fleeing their country and talk to American troops shoring up NATO's defenses.
A man looks on from a cultural center destroyed in shelling earlier this month in the village of Byshiv outside Kyiv on March 24. © Reuters
5:04 p.m. Russia's armed forces destroyed a major fuel depot outside Kyiv in a missile strike, the country's defense ministry says. Spokesman Igor Konashenkov said the strike happened on Thursday evening, using Kalibr cruise missiles fired from sea. Konashenkov said the depot was used to supply Ukraine's armed forces in the center of the country.
4:40 p.m. Rescuers were searching for survivors among debris on Friday after two missiles hit a Ukrainian military unit on the outskirts of the city of Dnipro, causing "serious destruction," regional governor Valentyn Reznychenko said on social media.
Russian ex-President Dmitry Medvedev was quoted as saying on Friday that it is "foolish" to believe Western sanctions could have any effect on the Moscow government. © Reuters
1:40 p.m. It is "foolish" to believe that Western sanctions against Russian businesses could have any effect on the Moscow government, Russian ex-President and Deputy Head of the country's Security Council Dmitry Medvedev was quoted as saying on Friday. The sanctions will only consolidate Russian society and not cause popular discontent with the authorities, Medvedev told Russia's RIA news agency in an interview.
"Let us ask ourselves: can any of these major businessmen have even the tiniest quantum of influence of the position of the country's leadership?" Medvedev said. "I openly tell you: no, no way."
1:25 p.m. Four Russian officials, including hackers with a government intelligence agency, have been charged with the malicious hacking of critical infrastructure around the globe including the U.S. energy and aviation sectors between 2012 and 2018, the U.S. Justice Department and British Foreign Office say. Among the thousands of computers targeted in some 135 countries were machines at a Kansas nuclear power plant -- whose business network was compromised -- and at a Saudi petrochemical plant in 2017 where the hackers overrode safety controls, officials say.
President Volodymyr Zelenskyy says Ukrainians "need to achieve peace" and halt the Russian bombardment that has forced millions to flee to countries like Poland. (Ukrainian Presidential Press Service/Handout via Reuters)
10:30 a.m. President Volodymyr Zelenskyy says that Ukrainians "need to achieve peace" and halt the Russian bombardment that has forced millions to flee to countries like Poland, where U.S. President Joe Biden is due to visit and witness the crisis first hand. Appearing exhausted in a brief video address early on Friday, Zelenskyy said he had made appeals to Western leaders "all for one reason -- so that Russia understands that we need to achieve peace. Russia also needs to achieve peace."
6:10 a.m. The U.N. General Assembly overwhelmingly approves a resolution blaming Russia for the humanitarian crisis in Ukraine and urging an immediate cease-fire and protection for millions of civilians and the homes, schools and hospitals critical to their survival. There was loud applause in the assembly chamber as the result of the vote was announced: 140-5 with only Belarus, Syria, North Korea and Eritrea joining Russia in opposing the measure. There were 38 abstentions, including Russian ally China, India, South Africa, Iran and Cuba.
4:40 a.m. "The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades," BlackRock CEO Larry Fink writes in his annual letter to shareholders of the world's largest asset manager.
Fink predicts "companies and governments will also be looking more broadly at their dependencies on other nations. This may lead companies to onshore or nearshore more of their operations, resulting in a faster pull back from some countries." Read more.
Russian President Vladimir Putin. U.S. President Joe Biden said he thinks Russia should be excluded from the G-20. © Reuters
3:30 a.m. U.S. President Joe Biden says he thinks Russia should be removed from the Group of 20, or if that fails, Ukraine should be allowed to participate in meetings. Biden acknowledges that such a decision "depends on the G-20." This year's G-20 president, Indonesia, has indicated it plans to let Russia stay in the grouping.
2:49 a.m. China understands its economic future is more closely tied to the West than to Russia, U.S. President Joe Biden says on the sidelines of emergency meetings in Europe, after warning Beijing it could face consequences for aiding Moscow's war in Ukraine.
"I made no threats, but I made it clear to him -- made sure he understood the consequences of helping Russia," Biden said of a recent conversation with Chinese President Xi Jinping.
A service member of pro-Russian troops walks past a truck painted with the letter "Z" in the separatist-controlled Donetsk region on March 1. © Reuters
1:12 a.m. Leaders of the Group of Seven industrialized nations warn Russia not to use biological, chemical or nuclear weapons in its war with Ukraine, in their statement after summit talks in Brussels. All countries are ready to welcome refugees from Ukraine, they say.
12:40 a.m. The 193-member U.N. General Assembly overwhelmingly demands aid access and civilian protection in Ukraine and criticizes Russia for creating a "dire" humanitarian situation with its invasion a month ago.
The resolution, drafted by Ukraine and allies, received 140 votes in favor and 5 votes against -- Russia, Syria, North Korean, Eritrea and Belarus -- while 38 countries abstained, including China and India.
12:30 a.m. Ukraine says it has destroyed a large Russian landing support ship, the Orsk, at the Russian-occupied port of Berdiansk on the Sea of Azov.
Video footage shows a column of smoke rising from a blaze at a dock, and the flash of an explosion.
Two vessels, one of which appeared to have been damaged, were seen in the footage sailing out of the dock as a third ship burned.
Thursday, March 24
10:30 p.m. U.S. President Joe Biden is set to announce $1 billion in humanitarian aid to Ukraine, and a plan to accept up to 100,000 Ukraine refugees, a senior administration official says.
The U.S. is also launching the "European Democratic Resilience Initiative" with $320 million to support media freedom, social resistance and human rights in Ukraine and nearby countries, according to the official.
Ukrainian refugees wait to board a train back to the Ukraine outside of Przemysl Glowny train station in Poland. © Reuters
7:49 p.m. Ukrainian authorities in besieged Mariupol say about 15,000 civilians have been illegally deported to Russia since Russian forces seized parts of the southern port city. Ukrainian officials say civilians trapped in Mariupol, which is normally home to about 400,000 people, face a desperate plight without access to food, water, power or heat.
6:30 p.m. Britain has frozen the assets of Russia's Gazprombank and Alfa-Bank, and the state-run shipping firm Sovcomflot, in its latest round of sanctions. They were among 59 individuals and entities added to the sanctions list which has been used to target Moscow since Russia invaded Ukraine. Gazprombank is one of main channels for payments for Russian oil and gas. Alfa-Bank is one of Russia's top private lenders.
5:40 p.m. Zelenskyy urges Western nations gathering in Brussels on Thursday to take "serious steps" to help Kyiv fight Russia's invasion, as an unprecedented one-day trio of summits -- NATO, G-7 and EU -- got underway. The hectic day of meetings, aimed at maintaining Western unity, kicks off at NATO headquarters in Brussels, where the trans-Atlantic defense alliance's leaders will agree to ramp up military forces on Europe's eastern flank.
"At these three summits we will see who is our friend, who is our partner and who sold us out and betrayed us," Zelenskyy said in a video address released early on Thursday.
A charred Russian tank is seen on the front line in the Kyiv region on March 20. (Ukrainian Ground Forces/Handout via Reuters)
3:30 p.m. NATO estimates that 7,000 to 15,000 Russian soldiers have been killed in four weeks of war in Ukraine, where fierce resistance from the country's defenders has denied Moscow the lightning victory it sought, AP reports. By way of comparison, Russia lost about 15,000 troops over 10 years in Afghanistan. A senior NATO military official said the alliance's estimate was based on information from Ukrainian authorities, what Russia has released -- intentionally or not -- and intelligence gathered from open sources. The official spoke on condition of anonymity under ground rules set by NATO.
3:15 p.m. Turkish telecoms company Turkcell, one of three main operators in Ukraine, said around 10% of its infrastructure in the country has been disabled by Russia's invasion, but added there was no damage to its central network. While Russia has failed to capture a single major Ukrainian city a month after it launched its invasion, the fighting has left cities in ruins and destroyed critical infrastructure.
12:30 p.m. The U.S. State Department says Russia has begun the process of expelling several more diplomats from the U.S. Embassy in Moscow. The department said that on Wednesday it received a list of diplomats who have been declared "persona non grata" by the Russian foreign ministry. It didn't say how many diplomats were affected by the order, which generally results in the expulsion of those targeted within 72 hours. The foreign ministry summoned U.S. Ambassador John Sullivan on Monday to protest President Joe Biden's description of Russian President Vladimir Putin as a "war criminal" over the invasion of Ukraine.
Russia's communications regulator accuses Google News of allowing access to what it calls fake material about the country's military operation in Ukraine, the Interfax news agency says. © Reuters
11:00 a.m. Russia's communications regulator has blocked Google's news aggregator service, accusing it of allowing access to what it calls fake material about the country's military operation in Ukraine, the Interfax news agency says. "We've confirmed that some people are having difficulty accessing the Google News app and website in Russia and that this is not due to any technical issues on our end," Google said in statement. "We've worked hard to keep information services like News accessible to people in Russia for as long as possible."
10:35 a.m. Japan has no clue yet about how Russia would carry out its claim to seek payment in rubles for energy sold to "unfriendly" countries, the finance minister says. "Currently we're looking into the situation with relevant ministries, as we don't quite understand what is [Russia's] intention and how they would do this," Finance Minister Shunichi Suzuki said in a parliament session.
A girl at Ohmatdyt Children's Hospital in Kyiv waits in the basement to be evacuated to Poland on March 2. The World Health Organization says Russian attacks on health care in Ukraine between Feb. 24 and March 21 resulted in 15 deaths and 37 injuries. (Agencja Wyborcza.pl via Reuters)
8:30 a.m. The World Health Organization says it has verified 64 instances of attacks on health care in Ukraine between Feb. 24 and March 21, resulting in 15 deaths and 37 injuries. Close to 7 million Ukrainians have been internally displaced in the one month of war, with 1 in 3 of them suffering from a chronic health condition, according to the global health agency.
3:50 a.m. "Based on information currently available, the U.S. government assesses that members of Russia's forces have committed war crimes in Ukraine," Secretary of State Antony Blinken says in a statement.
While acknowledging that "a court of law with jurisdiction over the crime is ultimately responsible for determining criminal guilt in specific cases" of alleged war crimes, Blinken says the U.S. government "will share information we gather with allies, partners, and international institutions and organizations, as appropriate." Read more.
2:35 a.m. One of the Kremlin's faces to the world, Russian President Vladimir Putin's special climate envoy Anatoly Chubais, has resigned.
Chubais quit of his own accord, Putin spokesman Dmitry Peskov tells the Financial Times, without saying whether the move came in response to Russia's invasion of Ukraine.
Bloomberg first reported the resignation. Chubais, an architect of Russia's post-Soviet economic overhaul and an oligarch in his own right, served as first deputy prime minister under President Boris Yeltsin in the 1990s.
Russia's Anatoly Chubais attends a session of the St. Petersburg International Economic Forum in June 2021. He had serves as President Vladimir Putin's special representative for relations with international organizations to achieve sustainable development goals © Reuters
2:00 a.m. Russian President Vladimir Putin and Israeli Prime Minister Naftali Bennett have spoken again, this time by phone.
"Bennett shared his assessment of the situation around Ukraine, considering his recent contacts with leaders of several foreign countries, and expressed some ideas in relation to the negotiating process between Russian and Ukrainian representatives," Interfax reports, citing the Russian presidential press service.
12:50 a.m. Russia's invasion of Ukraine shows that "full-fledged war is an instrument of their policy, and therefore we have to be prepared to confront such a reality," Deividas Matulionis, Lithuania's ambassador to NATO, tells Nikkei ahead of the alliance's summit in Brussels on Thursday.
The meeting is expected to cover not only the Ukraine conflict, but also bolstering the defenses of former Soviet states in Eastern Europe and the Baltic region that many fear may be in Russia's sights as well. These include Lithuania, which borders the Russian exclave of Kaliningrad as well as Belarus, where Moscow holds growing sway. Read more.
For earlier updates, click here.
The European Commission has said that it will do "whatever it takes" to rebuild Europe's solar manufacturing industry.
The EU's energy commissioner announced the news on Thursday, as part of the bloc's plans to cut reliance on Russian gas as fast as they can.
"We need to bring manufacturing back to Europe, and the Commission is willing to do whatever it takes to make it happen," Kadri Simson told the Solar Power Summit conference in Brussels.
We need to bring manufacturing back to Europe, and the Commission is willing to do whatever it takes to make it happen. EU's energy commissioner
"Part of this is looking at possible financing options," he added.
Where are most solar panels made?
China is the world leader in production of solar energy, having installed more than 30.1 GW of photovoltaic (PV) capacity since 2019. As the nation with the largest population and carbon footprint, this commitment to renewable energy is encouraging.
The United States, India, Japan, and Vietnam rank next on the list of top solar producers.
There are only a small amount of panels made in Europe. The countries currently producing solar cells are Italy, France and Slovenia.
Solar manufacturing in Europe needs to grow if it wants to wean itself off Russian gas. Canva
How much solar power does the EU currently use?
Europe's solar growth is accelerating year on year, as the bloc commits to relying on more renewable sources for its energy needs.
Solar panels generated a record 10 per cent of EU electricity in June-July 2021, up from the same period in 2018.
Seven EU countries generated over a tenth of their electricity from solar panels in June-July 2021, with the Netherlands (17 per cent), Germany (17 per cent), Spain (16 per cent), Greece (13 per cent) and Italy (13 per cent) leading the way, according to energy thinktank Ember.
Hungary has also quadrupled its solar share since June-July 2018, while the Netherlands and Spain have doubled. Estonia and Poland have gone from near-zero solar in 2018 to 10 per cent and 5 per cent respectively in June-July 2021. And for the first time, solar overtook coal power in Hungary in summer 2021, a milestone that had already been reached the previous year in Greece and Portugal.
"Europe has had a record-breaking summer for solar power, but it is yet to harness its full potential. Weather extremes have given governments an urgent wake-up call and now they must turn climate targets into climate action by stepping up solar deployment," says Charles Moore, Europe lead at Ember.
Claim: A twitter user recently claimed that a mining company stumbled across a large uranium deposit in Enugu and consequently, the federal government seized the licence of the operator.
Verdict: The verdict is false. Investigation shows that aside from the tweet, there was no other confirmation of the incident as calls were placed to the Enugu State government and the Ministry of Mines and Steels Development said they were not aware of such discovery in the state.
Twitter user with the username @Uchez2 claimed that a mining company accidentally found a huge cache of uranium deposits in Enugu State and upon getting the information, the federal government stopped the company from further usage of its license.
The tweet which has generated over 4, 000 retweets and liked more than 10,000 times has generated mixed reactions on the intention of the government as well as veracity of the information.
A tweep, Dr Olusesan, said the post was a “a radioactive lie!” as there is no uranium in Enugu. “Not even 0.01%U. Unprovoked, y’all spin gigantic lies. Every inch of space on earth with Uranium, including 6 places in Nigeria, are rigorously mapped by the International Atomic Energy Agency and are under strict satellite surveillance.”
Believing on the post, another user, KechAmanii, declared that Nigeria should be “Restructured now. Let each region harness her resources and contribute to the centre. A lot of our resources are illegally used by a few while the larger populace suffers. That uranium will be mined by a few unscrupulous elements like the gold in Zamfara.”
However, another user, Nafisah write: “So many wrong information in this tweet. First, Uranium is not something you randomly discover. Second, when FG gives you license you are allowed to mine only the minerals mentioned in the license. Third, do you know what uranium is?”
Brief on Uranium
According to the United States Department of Energy, Uranium, a chemical compound, is a silver metal whose formation happens in “low concentrations in soil, rock and water.”
In its raw form, it is known as uranium ore and naturally sourced through excavations and digging of open holes in rocks that contain the element. Its occurrence on earth deposits is more than silver and gold with a report on Wikipedia stating it is found “40 times more common than silver and 500 times more common than gold.”
However, the chances of getting it lies on the availability of technology to detect its formation on rock deposits. While containing three isotopes—uranium-238, uranium-235 and uranium-234, the uranium-235 is enriched to produce electricity and other human products.
According to a report by energy education, “Once the uranium is assembled, it can be used in a reactor to produce heat. Once the heat generated is nearly identical to an ordinary coal-fired power plant, the heat is transferred to circulating water which boils to steam either directly (i.e the RBMK reactor) or indirectly (i.e pressurized water reactor). This pressurized steam can then be used to spin a large turbine and generator, supplying electricity for the world’s needs.
Similarly, it stated that it can be used as radioisotopes, which are used in medicine for diagnosis and research, saying about 1 in 2 people in the western world are likely to experience the benefits of nuclear medicine in their lifetime.
It added that the radioisotope is also used to preserve food, kill parasites, and control the ripening of fruits and vegetables. And its devastating use can be to produce weapons when the enrichment of the uranium—235 is above 5 per cent to a 90 per cent enrichment.
Availability of uranium in Nigeria
With more than half of uranium produced in the world from 10 mines, with Niger Republic and Namibia making the list, it has been researched that Nigeria has the potential to use the element to solve its perennial power crises.
A list of mineral resources compiled by Nigeriainfopedia said uranium exists in six states of Akwa Ibom, Bayelsa, Cross River, Adamawa, Taraba, Plateau, Bauchi, and Kano states with the Nigeria Atomic Energy Commission in charge to regulate and mine radioactive minerals.
The development programme began in 1976 but the sector started collapsing by 1989 when Total pulled out of its 40 per cent part-ownership of the Nigerian Uranium Mining Company. Subsequently, when Former President Olusegun Obasanjo came to power in 1999, he made moves to restore it but “he left office before an actual take-off. The roadmap he designed had anticipated that Nigeria would generate 1,000 megawatts of electricity from Uranium by 2017.”
Similarly, the present administration in 2016 made attempts to revive the hopes of electricity generation with the government signing a memorandum of understanding (MoU) with Russia for establishment of a multifunctional scientific research nuclear centre in the country.
However, the move was met with hue and cry due to concern of how safe the project would be considering its novelty in the country with the Nigerian Institution of Electrical and Electronics Engineers (NIEEE) noting that the country can’t afford to implement the technology, but the government should look into other alternatives like coal and solar energy.
This was after a declaration by the International Atomic Energy Agency, IAEA, agreed that using the process to generate electricity would not pose any security threat.
A Senior Nuclear Security Officer at IAEA, Mr Robert Larsen, made the submission at a National Training Course on Nuclear Security for the Uranium Extraction Industry organized by the federal government.
At the ceremony, a former Minister of Solid Minerals Development and governor of Ekiti State, Dr. Kayode Fayemi, said “the issue of uranium for power generation was actually canvassed as a vital component in the energy mix equation. So, this training is coming at the right time where capacity to explore, exploit and utilise uranium for power generation and other uses cannot be overemphasised. And apart from the exploration, exploitation and utilisation, the security and health aspect of uranium needs to be taken care of, and that is why we have security delegates here.”
The then Director-General and CEO of the Nigerian Nuclear Regulatory Agency, Prof. Lawrence Dim, explained that the training was to expose participants to the technicalities in Uranium use for power generation since Nigeria does not have the relevant technology to do so at the moment.
On the safety of the use of the method, he said “Uranium exploration in Nigeria is quite safe. We have not had any cause to find out that there is any high level of radiation or exposure relating to that. The issue is that the uranium we get in our soil is the natural uranium; although it has radioactive material, the concentration is low. So, we don’t have any situation where the level of radiation coming out from it is detected to be harmful.”
Mineral resources in Enugu State
Nigeria is blessed with several natural minerals with each of the 36 states and the FCT having at least one. Enugu State is known to have abundance of coal, reason it’s termed “Coal City State”. The state has other resources like limestone, lead and zinc.
Verification
A search keyword of uranium and Enugu was done using Tweet Deck and Google search to verify if the report of the incident was reported by credible media organizations. The search did not yield any result as most of the results generated were regurgitations of the earlier post on twitter with an appearance on a social network forum, Nairaland.
Also, when the S.A Media to the state governor, Louis Amoke, was contacted, he said he was not aware of the incident but advised this reporter to contact the ministry of Mines and Steel Development.
At the ministry, this reporter was told that nothing of such happened as the state was not known to have uranium deposits. Asked if the federal government could revoke the license of a mining company if it mined another mineral it was not licensed to, an affirmative answer was given because it means violation of trust.
Conclusion
There is no available record to suggest that uranium exists in Enugu State. In the same vein, the two bodies that should have been involved in the issue denied knowledge of any such thing.
https://dailytrust.com/no-uranium-was-accidentally-found-in-enugu
TORONTO, March 29, 2022 /CNW/ - Global Atomic Corporation ("Global Atomic" or the "Company"), (TSX: GLO) (OTCQX: GLATF) (FRANKFURT: G12) announced today its operating and financial results for the year ended December 31, 2021.
Global Atomic Corporation (CNW Group/Global Atomic Corporation)
HIGHLIGHTS
Dasa Uranium Project
The Company issued its Dasa Project, Phase 1, Feasibility Study ("Feasibility Study"), based on multiple trade-off studies and pilot plant campaigns.
The Feasibility Study reported a maiden reserve for the Dasa Project of 4.1 million tonnes grading 5,267 ppm for a total of 47.2 million pounds U 3 O 8.
The Feasibility Study resulted in an initial, Phase 1, 12-year mine schedule at a production throughput of 1,000 tonnes per day to produce 45.4 million pounds U 3 O 8 .
The Study estimates cash costs, including royalties and all Niger off-site costs, of US$18.91/lb U 3 O 8 and an all-in sustaining cost of US$21.93/lb U 3 O 8 .
Initial capital expenditures are estimated to be US$208 million.
Based on a U 3 O 8 price of US$35/lb, the after-tax NPV discounted at 8%, is US$157 million for an after-tax IRR of 22.7%. The Feasibility Study sensitivity analysis shows that at a U 3 O 8 price of US$50/lb the after-tax IRR rises to 44.6% and at US$60 the after-tax IRR would be 57.2% for Phase 1 only.
In Q4 2021, the Company began an infill drill program to upgrade Inferred Resources on strike of the Phase 1 Flank Zone to Indicated Resources in order to begin incorporation of additional Phase 2 resources into an updated mine plan.
With the mining permit, final Feasibility Study results and Board approval, the Company determined that effective December 30, 2021, the technical feasibility and commercial viability of the Dasa Project were sufficient to support its development decision.
The development decision resulted in a transfer of $45.2 million previously capitalized expenditures from "exploration and evaluation assets" to "mineral property assets" on the Company's balance sheet.
The Company engaged HCF International Advisers Limited as its financial advisors for project financing and, by the end of 2021, a short list of interested project lenders had been identified.
The Company engaged Fuel Link Limited as its uranium marketing agent and yellowcake offtake discussions have been initiated with utilities.
The Company began a drill program in Q4 2021 at the Isakanan deposit on the Adrar Emoles 4 permit to recover core for in-situ leach testing.
https://finance.yahoo.com/news/global-atomic-announces-2021-results-210500155.html
Country
The issue arises as Parks and Wildlife already is dealing with attacks of livestock by wolves that have established themselves in northern Colorado, and is trying to prepare for handling livestock predation issues on a larger scale once it starts introducing wolves into the state as required by a 2020 measure approved by voters.
“The timing of (the Utah attack) is tough because of all the wolf conversations, and so I could understand all the livestock owners going ‘here comes another carnivore,’ ” said Steve Torbit, who is retired from the U.S. Fish and Wildlife Service after serving as assistant regional director for science.
But Torbit, whose career included doing some wolverine research, said the chances of any individual livestock owner suffering losses from a wolverine attack is small. He said in Montana, which unlike Colorado never lost its historic wolverine populations, “you don’t hear livestock people complaining about losses to wolverine.”
He speculates that the Utah wolverine was lost, looking for appropriate habitat, and hungry when it came upon the sheep and killed some of them.
“He was an explorer and colonizer and was probably a young one,” said Torbit. “You can’t let that one be a guide for how a stable population would operate.”
The Utah Division of Wildlife Resources said in a news release that federal Wildlife Services personnel in a plane spotted the wolverine feeding on a dead sheep outside Randolph in far-northern Utah the morning of March 10, and the sheep was one of 18 it had killed or wounded that morning. Crews live-trapped the wolverine, a healthy male weighing 28 pounds and about 3 or 4 years old. Then biologists fitted it with a GPS collar and relocated it to the Uinta Mountains in northeastern Utah.
CHICAGO, March 26 (Xinhua) -- CBOT agricultural futures ended higher last week on Russia-Ukraine conflict premium and supported by market demand.
Chicago-based research company AgResource looks for extreme trade volatility to continue based on the uncertainty and fast political changes that surround the Russia-Ukraine conflict. A bullish landscape for commodities will persist, but there can be sharp downward corrections that last for weeks.
Russia is shifting its focus to the Donbass region in Eastern Ukraine. This could allow farmers in Western and Central Ukraine to be more active with spring seeding. But questions abound on Ukraine's export ability beyond its rail line to the east.
Corn futures ended higher this week as additional Russia-Ukraine conflict premium was added. U.S. Department of Agriculture (USDA) stocks and seeding data to be released on March 31 will be critical to spring price direction, while the monthly chart reflects that corn has reached its initial long-term price target of 7.80-8.40 U.S. dollars. USDA report could push the market to a new rally high.
South American corn export premiums are in decline with Brazilian weather aiding the potential of its winter corn crop. The crop is well watered with record yield potential if April and May rains are normal. Back-to-back Brazilian droughts are rare.
It is USDA report and the Brazilian winter corn crop size that loom as April fundamental drivers.
U.S. and European wheat markets ended higher last week. Though spot CBOT futures remain bound to a range of 10.50-11.50 dollars, AgResource suggests that this range does reflect fair values as the market has now digested the loss of the old crop Ukrainian and Russian wheat exports into June. India, Europe and Australia will fill gaps left by the absence of Black Sea surpluses between now and June, and what is most important is whether Black Sea shipments are able to resume from mid-summer onward.
Central U.S. weather contributes to already extreme volatility. Nearby improvement in soil moisture is forecast in Western Europe and across the principal hard red winter (HRW) wheat Belt. However, odds favor the return of abnormal heat and dryness across the U.S. Plains in April as La Nina lingers into late spring.
Both the bulls and bears will struggle for leverage until clarity over the ending of the Russia-Ukraine conflict emerges. The weekly chart shows that additional consolidation is expected.
Soybean futures moved higher last week, supported by the ongoing buying from China and the strengthening of world cash oilseed markets. Rallies in the week ahead will find profit-taking ahead of the month/quarter and key USDA reports.
U.S. soybean exports are in a seasonal decline while the Brazilian exports gather speed as its harvest nears an end. However, an early peak in Brazil's exports is expected, with the pace to fall sharply in the early summer months. This idea is confirmed by historic Brazilian export quotes that indicate that the Brazilian market is nearly sold out. U.S. soybean exports will become active again from June through yearend.
Traders are anxiously waiting for the USDA Prospective Plantings and March Grain Stocks reports. AgResource estimates March 1 soybean stocks at 1,950 million bushels, and new crop planted acres at 89 million acres.
AgResource holds a bullish outlook on breaks, doubting that a market high has been scored as China adds to its forward purchase pace of U.S. soybeans through November. However, a technical break of 0.50-1.00 dollars would not be unusual. Enditem
http://www.china.org.cn/world/Off_the_Wire/2022-03/27/content_78132847.htm
India has achieved 9.45 percent of ethanol blending with petrol and is likely to achieve 10 percent blending by end of this year. It has targetted 20 percent blending by 2025.
Ethanol is a renewable source of energy used for its benefits such as increase in engine efficiency, better fuel quality, reduced emissions among other environmental benefits.
However, experts say that the 20 percent blending target, with a focus on feedstock as the source, could be harmful as it would lead to changes in land use patterns and demand for more water.
The Indian government recently claimed that it has achieved 9.45 percent ethanol blending with petrol, a practice which contributes to lower emissions and other environmental benefits. At this pace, the country is likely to reach a target of 10 percent ethanol blending by November 2022, the end of the ethanol supply year (ESY). The government is also confident of achieving its 2025 target of 20 percent blending of ethanol in petrol, that’s stated in the National Biofuel Policy 2018.
India’s biofuel policy aims to reduce the country’s crude oil import bill, cut down emissions and move towards cleaner fuel. On March 25, the government told the parliament that 11 states/union territories have achieved the target of 10 percent blending. According to the data, the states which already exceeded the 10 percent blending targets include Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Maharashtra, Punjab, Telangana, Uttar Pradesh and Daman & Diu & Nagar Haveli.
Ethanol is considered a renewable source of energy. It is derived either from feedstocks such as sugarcane juice or molasses, considered first-generation sources, or through the non-starch-based fibrous part of plant materials (lignocellulosic parts) which include paddy straws, bagasse, forest residues, and others.
The Ethanol Blending Programme (EBP) in India started in 2003 with the target of five percent blending of ethanol in petrol in selected districts which was later expanded to more states in 2006.
Ethanol is used for blending with petrol due to its characteristics which lead to benefits such as an increase in engine efficiency, better fuel quality due to its higher octane number and other environmental benefits, note studies. Due to its complete combustion quality, ethanol leads to lesser emissions of carbon monoxide, and other particulate matter (PM).
While the government is confident of achieving 20 percent blending, there are some challenges along the way, note experts. For instance, the dependency on feedstock for ethanol production would result in an additional burden on the farms and feedstock, note experts and object to using first-generation sources for the production of ethanol for blending purposes.
Ramya Natarajan, a research scientist at the Center for Study of Science, Technology and Policy (CSTEP), a Bengaluru-based think tank, told Mongabay-India that the transition from 10 percent ethanol blending to 20 percent would lead to other investments and additional burdens on several sectors, ranging from its effect on farms to automobile users. “Most of the ethanol in India is produced from sugarcane, which is a water-intensive crop. Based on CSTEP’s analysis, India should be able to achieve up to 10 percent ethanol blending with the existing level of sugarcane cultivation – using molasses and surplus sugar. However, the 20 percent blending target would lead to increased sugarcane cultivation, which in turn will use more arable land and groundwater and affect food security. Further, existing vehicles are compatible with 5 percent-10 percent ethanol-blended petrol, so an increase in blending beyond that would mean replacing the existing stock or investing in retrofitting and calibrations,” she said.
Natarajan said that the most sustainable form of development in the blending programme would be to keep the blending levels up to 10 percent and not pursue the 20 percent target because otherwise the burden would be on the farmlands, groundwater, and automobile users, and the costs may outweigh the benefits.
Her arguments are also validated by government reports. For instance, a report by NITI Aayog, the federal government’s think tank, claimed that in 2019-20, out of the total ethanol produced in the country, 91 percent came from sugarcane alone. Another report by NITI Aayog, on sugar and sugar industry, claims that sugarcane and paddy (the feedstock source of ethanol) use 70 percent of India’s irrigation water leading to a lack of water availability for other crops.
Promit Mookherjee, a researcher at Observer Research Foundation (ORF), argues against the focus on the first-generation sources for deriving ethanol. In his latest publication on biofuel, he claimed that the shift of the government from second-generation sources, mostly agricultural waste and by-products, to the first generation, is not sustainable in the long term and is going away from the real objective of using biofuels.
“We need to first understand what is the real objective of opting for a biofuel. It is to reduce emissions from the complete life cycle of the fuel. To achieve this, we should not first target food grain-based feedstock as it will lead to unsustainable land-use changes but rather focus our energy, incentive and research on second-generation fuels,” Mookherjee told Mongabay-India. “Globally, the cost of ethanol production is also comparatively higher in India due to the dependence on heavily-subsidised food grains. If we want to reduce the cost of production and look for a sustainable development model, we need to focus on producing ethanol from waste. Although these technologies are still nascent, public investment in research and development and pilot projects could go a long way to making them commercially viable,” he said.
His concerns are based on the shift in the government policy from the 2018 National Biofuel Policy, where the focus was on second-generation sources, to the 2021 NITI Aayog Roadmap for Ethanol Blending where the focus was back on the first-generation crops for biofuels. In the 2021 roadmap, the ethanol blending targets were also fast-tracked from 2030 to 2025. The new programme aims for 20 percent ethanol blending by 2025 and five percent biodiesel blending by 2025. While ethanol production is mainly derived from sugar crops and agricultural wastes, biodiesel is driven from oil-based seeds and plants.
A farmer spreads fertiliser on his rice plants in the Indian state of Punjab
In the United States alone, fertilizer bills are expected to jump 12% this year, after rising 17% in 2021.
In short supply around the world: Spreading fertiliser in a soybean field, near Brasilia, Brazil. Photos: Reuters
Sky-high fertiliser prices have farmers worldwide scaling back its use and reducing the amount of land they’re planting.
This is a fallout from Russia’s invasion of Ukraine, and some agricultural industry insiders are warning of food shortages.
Western sanctions on Russia — a major exporter of potash, ammonia, urea and other soil nutrients — have disrupted shipments of those key inputs around the globe. Growers are scrambling to adjust.
The pivot can be seen in agricultural powerhouse Brazil, where farmers are applying less fertiliser to their corn, and federal legislators are pushing to open protected indigenous lands for the mining of potash.
In Zimbabwe and Kenya, small farmers are reverting to using manure to nourish their crops. In Canada, one canola farmer has already stockpiled fertiliser for the 2023 season in anticipation of even higher prices ahead.
Farmers elsewhere are making similar moves.
In the United States, fertiliser bills are expected to jump 12pc this year, after rising 17pc in 2021.
Some growers are contemplating switching to crops that require fewer nutrients. Others plan to cultivate less acreage. Others say they’ll simply use less fertiliser, which will hurt yields.
Production is most at risk in developing nations, whose farmers have fewer financial resources to weather the storm.
“My concern is of a food crisis on a global basis,” says Tony Will, chief executive of Illinois-based CF Industries Holdings, a leading producer of nitrogen fertiliser.
Last week, Peru declared a state of emergency over fears of food insecurity.
Global fertiliser prices were already high prior to Russia’s February 24 invasion of Ukraine, as record natural gas and coal prices forced some fertiliser makers to cut output in that energy-hungry sector.
Western nations responded with tough economic sanctions on Russia, while the USA and the EU imposed new sanctions on Belarusian President Alexander Lukashenko, who has provided support for Russia’s offensive.
Combined, Russia and Belarus last year accounted for more than 40pc of global exports of potash last year, one of three critical nutrients used to boost crop yields, Dutch lender Rabobank said this month.
Additionally, Russia accounted for about 22pc of global exports of ammonia, 14pc of the world’s urea exports and about 14pc of mono-ammonium phosphate (MAP).
Sanctions have disrupted sales of fertiliser and crops from Russia. Many Western banks and traders are steering clear of Russian supplies for fear of running afoul of the rapidly changing rules, while shipping firms are avoiding the Black Sea region due to safety concerns.
It all amounts to a double whammy for the global food supply.
Russia and Ukraine are major grain producers. Together they account for about 30pc of global wheat exports and 20pc of corn exports.
Grain shipments through the Black Sea have already been disrupted. Stalled deliveries from those two countries have spurred galloping global food inflation.
The World Bank said last week that a number of developing countries face near-term wheat supply shortages due to their high dependence on Ukrainian exports.
But the fertiliser crisis is in some respects more worrying because it could inhibit food production in the rest of the world, says Maximo Torero, chief economist for the UN Food and Agriculture Organization.
“If we don’t resolve the problem of fertiliser, and trade of fertilisers doesn’t continue, then we’ll have a very serious problem of supply next year,” he says.
Brazil, the world’s biggest soybean exporter, relies heavily on imported fertilisers such as potash, which accounted for 38pc of the crop nutrients it used last year. Russia and Belarus were the source of half of those shipments.
Prior to the invasion of Ukraine, Brazilian farmers were already reducing corn plantings due to rising fertiliser prices.
Soybean cultivation will likely be impacted as well, with growers expanding more slowly than in previous years.
In the state of Mato Grosso, farmer Cayron Giacomelli says he has already reduced fertiliser use on his corn crop. He says he’ll do the same when he plants soybeans later this year, a move he reckons will shrink his harvest by 8pc.
Lawmakers from Brazilian farm states, meanwhile, are pushing for legislation that would open indigenous lands in the Amazon to potash mining. That measure is opposed by members of the Mura tribe, who say mining would despoil the natural habitat on which they depend.
The bill is making its way through congress.
In Zimbabwe, scarce and pricy imports have forced corn growers to make their own fertiliser. “We mix cow dung or chicken waste with zinc,” says farmer Boniface Mutize.
It’s the same in Kenya. Farmer Mary Kamau says she too has slashed purchases of commercial fertiliser and is using manure to nourish the coffee and avocados she grows on 12ac. She worries about the consequences for her family.
“If I don’t get a good harvest, I don’t get good prices. And that will affect me for the next two years — it’s not just this season,” she says.
In the USA, fifth-generation New Mexico farmer Mike Berry has similar worries. He recently paid $680 a ton for liquid nitrogen to fertilize his corn crop, an “exorbitant” price he said was 232pc above last year’s price.
Berry says he plans to cut his spring plantings of corn for livestock feed to about 300ac from his usual 400-600ac. He says he will also reduce applications of liquid nitrogen by about 30pc, which could drop his yields by 25pc.
“We’re going to produce less,” he says.
That might seem short-sighted considering commodity prices have jumped sharply in recent weeks. But the cost of growing crops is outpacing potential revenue for many farmers.
“Planting decisions are increasingly being made not on market fundamentals but rather on the cost of production driven by the price and supply of fertiliser,” dozens of US lawmakers wrote in a March 17 letter to the US International Trade Commission.
They were seeking relief from duties on fertiliser imports from Morocco and Trinidad & Tobago.
US farmer Don Batie describes the stressful process of securing enough fertiliser for this year’s planting.
“It’s nuts,” says Batie, who grows corn and soybeans on 1,500ac in Lexington, Nebraska. “By the time they get a price and they quote it to you, the price changes.”
Asia is struggling, too. India, which imports fertiliser for its sprawling agriculture sector, is increasingly turning to Canada and Israel to replace its Russian supplies.
Thailand, meanwhile, is facing pressure on its signature rice crop. Russia and Belarus accounted for about 12pc of its fertiliser imports last year. But domestic price controls on fertiliser are squeezing Thai importers as global market prices explode.
“If you’re a merchant, and you’re absolutely going to lose money, will you still import more stuff?” asks Plengsakdi Prakaspesat, president of the Thai Fertiliser and Agricultural Supplies Association..
China last year imposed fertiliser export curbs to protect its own farmers as global prices soared due to strong demand and high energy prices. Beijing was expected to ease those restrictions this year, potentially boosting world supply, says Gavin Ju, principal fertiliser analyst in the Shanghai office of commodities consultancy CRU. But he said that’s less likely now with the global market in chaos.
Concerns over rising inflation and a protracted Ukraine war have some farmers planning well ahead.
In Manitoba, Canada, corn and canola farmer Bert Peeter recently agreed to spend more than Can$500,000 (€360,000) buying 80pc of the fertiliser he’ll need — for 2023. Although prices are soaring, he figured things could still get worse.
This “might not be over after one year,” Peeter said.
New Delhi: In order to keep pace with the changing regulatory requirements for export of organic products to European Union, the Agricultural and Processed Food Products Export Development Authority (APEDA) organized a webinar jointly with the Indian Embassy in Brussels and Denmark yesterday.
The webinar focussed on the revised Regulations being implemented since 1st January 2022 for imports in EU and the market opportunities for Indian organic products.
The European Union is the second major destination for Indian organic food products. Under the National Programme for Organic Production (NPOP), exports to EU stood at $356 million in 2020-21, accounting for around 34% of the $1040 million worth worldwide organic food products exported from India.
Organic food products from India are exported to USA, European Union, Canada, Great Britain, Korea Republic, Israel, Switzerland, Ecuador, Vietnam, Australia, etc. In terms of export value realization, Processed foods including soya meal (57%) lead among the products followed by Oilseeds (9%), Cereals and millets (7%), Plantation crop products such as Tea and Coffee (6%), Spices and condiments (5%), Medicinal plants(5%), Dry fruits (3%), Sugar(3%), and others.
While complementing the stakeholders on the milestone achieved by India by crossing remarkable export of more than $ 1billion organic products under NPOP, Dr. M. Angamuthu, Chairman, APEDA, emphasized that the applicable standards need to be adhered to in order to maintain the market acceptance by the end consumers and the national regulators. He also stated that APEDA provides possible means for market penetration of new products and brand building through participation in organic food fairs in EU.
In order to address the challenges faced by the Indian exporters in exporting to EU and enhance the share of Indian organic product shipments to EU, a panel discussion was also held with members of OrganicDenmark, Confederation of Indian Organic Industry, International Federation of Organic Agriculture Movements (IFOAM) and Organic Processing and Trade Association (Europe) (OPTA). Technical sessions were led by Michel Reynaud of IFOAM and Aurora Abad of OPTA wherein the aspects on new regulatory requirements and emerging market opportunities were detailed.
In his address, Shri Santosh Jha, Ambassador of India to Belgium, Luxembourg and EU, highlighted the necessity for the market acceptance for organic products, expectation by the importing countries and emerging opportunities for Indian organic products.
Ms. Pooja Kapur, Ambassador of India to Denmark, spoke about the current organic market trend focussing on Europe, significance of regulatory system and brand building for India.
Though the webinar was aimed for Indian exporters, it witnessed the participation of trade associations in EU, Indian missions of various EU Member States, Certification Bodies, Assessors and officials from various departments.
APEDA is the implementing body for the National Programme for Organic Production (NPOP). The programme involves the accreditation of Certification Bodies, standards for organic production, promotion of organic farming and marketing, etc. The NPOP standards for production and accreditation system have been recognized by European Commission and Switzerland for unprocessed plant products as equivalent to their country standards. With these recognitions, Indian organic products duly certified by the accredited Certification bodies of India are accepted by the importing countries. APEDA is also in the process of negotiation with South Korea, Canada, Japan, Australia etc.
In 2020-21, India produced around 3496800 Metric Tonne of certified organic products which includes all varieties of food products namely Oil Seeds, Fibre, Sugarcane, Cereals & Millets, Pulses, Aromatic & Medicinal Plants, Tea, Coffee, Fruits, Spices, Dry Fruits, Vegetables, Processed foods etc. The organic production is not limited to the edible sector but also raw cotton, functional food products etc. Among different states, Madhya Pradesh is the largest producer followed by Maharashtra, Karnataka, Rajasthan and Uttar Pradesh. In terms of commodities, Oil seeds are the single largest category followed by Fibre crops, Sugar crops, Cereals and Millets, Spices & Condiments, Pulses, Medicinal plant products, Fruits & Vegetables, Tea, Coffee, Dry Fruits etc.
In 2000, the Ministry of Commerce and Industry launched NPOP as the first such institutional mechanism for organic products in India. In 2001, the NPOP was brought under the ambit of Foreign Trade Development and Regulation (FTDR) Act wherein it was mandated that no organic products can be exported unless they are certified under National Programme for Organic Production.
(TheNewswire)
Vancouver, British Columbia – TheNewswire - March 26th, 2022 – York Harbour Metals Inc. (the "Company") (TSXV:YORK) (OTC:YORKF) (Frankfurt: 5DE0) is pleased to report high-grade copper and cobalt values in diamond drill hole YH21-24, grading 5.25% copper, 436.5 g/t cobalt, 8.97 g/t silver, and 0.801% zinc over a drilling length of 29.0 metres at the Company’s York Harbour Copper-Zinc Project (the “Project”) in Newfoundland. Drill hole YH21-22 intersected strong zinc and copper values over a 5.26-metre interval, grading 2.84% copper, 31.96% zinc and 42.09 g/t silver.
The Phase 2 Drilling Program included 29 diamond drill holes, totalling 4,562 metres, that targeted volcanogenic massive sulphide (“VMS”) mineralization along a 400-metre strike length within the Main Area near the historic underground mine workings.
Click Image To View Full Size
Figure 1: Example of High-Grade VMS Mineralization. This Sample Assayed 11.9% Copper and 627 g/t Cobalt at the End of the 29 Metres Drilling Length Interval in Drill Hole YH21-24.
Bruce Durham, Chairman, commented, “High dollar value, high grade copper mineralization like the intersection in drill hole YH21-24 is very rare and they are important indicators of strong mineralizing fluid systems at work. We know there are numerous indications of copper and zinc mineralization in the local area and most remain only partially defined. By proceeding to drill these mineralized areas in detail we will begin to establish a solid understanding of the size, mineralogy, structural controls, and grade distribution within these various areas of known VMS style mineralization.”
Click Image To View Full Size
Figure 2: Example of High-Grade Sphalerite (Zinc Sulphide) Intersection in Drill Hole YH21-22 that intersected 5.26 m of 2.84% Copper, 31.96% Zinc, and 42.09 g/t Silver. The dark mineral is Sphalerite.
York Harbour Metals’ - Special Investor Presentation
“Today, we released another batch of drill results from our Phase 2 drill program at the York Harbour Copper-Zinc Project. These results are our best intersections of grade and length to date. We welcome you to join us on March 30th for a live presentation about the York Harbour Project. There will be a discussion about this week’s drill results, what they mean for the Company’s understanding of the project, and what we see for our Company’s near-term future,” commented Andrew Lee, CEO.
Wednesday, March 30th, 2022 at 10:00 am Pacific Daylight Time (1:00 pm EDT)
Join Zoom Meeting: https://us06web.zoom.us/j/89934094821
TORONTO, March 24, 2022 (GLOBE NEWSWIRE) -- Victoria Gold Corp. (TSX-VGCX) (“Victoria” or the “Company”) is pleased to announce its fourth quarter and year ended December 31, 2021 summary financial and operating results. The Company will host a video conference call and webcast Monday, March 28th at 8:00am PST (11:00am EST) to discuss the fourth quarter and year ended December 31, 2021 consolidated results (details are provided at the end of this news release). The Company uses certain non-IFRS performance measures throughout this news release. Please refer to the “Non-IFRS Performance Measures” section of this new release for more information.
All amounts are in Canadian dollars unless otherwise indicated. This release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the years ended December 31, 2021 and 2020, available on the Company’s website or on SEDAR.
| 2021 Highlights | |
| Gold produced | 164,222 oz |
| Average gold price realized | US$ 1,790 |
| Revenue | US$ 284,366,680 |
| Gross Profit | US$ 120,441,442 |
| Net Income | US$ 88,047,991 |
| Earnings (loss) per share – Basic | US$ 1.41 |
| EBITDA | US$ 175,497,811 |
“2021 saw record annual gold production of 164,222 ounces, an increase of over 40% from 2020. Our increased production led to other record highs for Victoria including revenues of $356 million and net income of $108 million,” noted Mr. John McConnell, President and CEO. “2021 Capital expenditures and all-in-sustaining-costs were higher as the Company not only dealt with the impacts of COVID-19 and inflation, but continued advancing growth initiatives. These growth initiatives, which include Project 250 and exploration at Eagle and Raven, will continue through 2022 and are expected to lead to material increases in production and reduction in unit costs for 2023 and beyond.”
Operational Summary – Fourth Quarter and Year Ended 2021
Financial Summary – Fourth Quarter and Year Ended 2021
Fourth Quarter and Year to Date 2021 Operating Results
| Three months ended | Years ended | ||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||
| Operating data | |||||
| Ore mined | t | 2,515,702 | 2,247,243 | 9,488,128 | 7,529,181 |
| Waste mined | t | 3,200,397 | 3,084,892 | 15,028,269 | 12,370,280 |
| Total mined | t | 5,716,099 | 5,332,135 | 24,516,397 | 19,899,461 |
| Strip ratio | w:o | 1.27 | 1.37 | 1.58 | 1.64 |
| Mining rate | tpd | 62,132 | 57,997 | 67,168 | 54,369 |
| Ore stacked on pad | t | 2,539,309 | 2,316,522 | 9,157,313 | 7,271,334 |
| Ore stacked grade | g/t Au | 0.83 | 0.81 | 0.85 | 0.84 |
| Throughput (stacked) | tpd | 27,601 | 25,174 | 25,089 | 19,866 |
| Gold produced | oz | 49,496 | 42,436 | 164,222 | 116,644 |
| Gold sold | oz | 49,219 | 40,023 | 158,736 | 102,551 |
The Company issued original 2021 Guidance for the Eagle Gold Mine on March 1, 2021. Revised 2021 Guidance was issued on December 16, 2021. The following table shows the Company’s performance compared to the revised Guidance:
Results vs. Revised 2021 Guidance
| 2021 Guidance | 2021 Results | Achievement | ||
| Gold production | ounces | 162,000 - 180,000 | 164,222 oz | Met revised production target |
| AISC | US$/oz sold | $1,175 - $1,234 | $1,193/oz | Met revised AISC target |
Gold production and sales
During the three months ended December 31, 2021, the Eagle Gold Mine produced 49,496 ounces of gold, compared to 42,436 ounces of gold production in Q4 2020. The 17% increase in gold production is attributed to the increase in ore mined and stacked during the current and preceding quarters along with higher ore grades.
During the three months ended December 31, 2021, the Company sold 49,219 ounces of gold, compared with 40,023 gold ounces sold in Q4 2020. The 23% increase in gold sold is attributed to the increase in gold produced.
During the year ended December 31, 2021, the Eagle Gold Mine produced 164,222 ounces of gold, compared to 116,644 ounces of gold production in 2020. The 41% increase in gold production is attributed to the increase in ore mined and stacked along with higher ore grades.
During the year ended December 31, 2021, the Company sold 158,736 ounces of gold, compared with 102,551 gold ounces sold in 2020. The 55% increase in gold sold is attributed to the increase in gold produced.
Mining
During the three months ended December 31, 2021, a total of 2.5 million tonnes of ore were mined, at a strip ratio of 1.3:1 with a total of 5.7 million tonnes of material mined. In comparison, a total of 2.2 million tonnes of ore were mined, at a strip ratio of 1.4:1 with a total of 5.3 million tonnes of material mined for the prior comparable period in 2020.
Total tonnes mined were 7% higher during the three months ended December 31, 2021 as a result of higher stacking rates allowing for higher mining rates.
During the year ended December 31, 2021, a total of 9.5 million tonnes of ore were mined, at a strip ratio of 1.6:1 with a total of 24.5 million tonnes of material mined. In comparison, a total of 7.5 million tonnes of ore were mined, at a strip ratio of 1.6:1 with a total of 19.9 million tonnes of material mined for the prior comparable year in 2020.
Total tonnes mined were 23% higher during the year ended December 31, 2021 as a result of higher stacking rates allowing for higher mining rates.
Processing
During the three months ended December 31, 2021, a total of 2.5 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 27.6 k tonnes per day. A total of 2.3 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 25.2 k tonnes per day for the prior comparable period in 2020.
Ore stacked on the pad increased by 10% during the three months ended December 31, 2021 as increased efficiencies started to materialize from ongoing improvement efforts.
Ore for the quarter had an average head grade of 0.83 g/t Au, compared to 0.81 g/t Au in the prior comparable period in 2020 due to mine sequencing.
During the year ended December 31, 2021, a total of 9.2 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 25.1 k tonnes per day. A total of 7.3 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 19.9 k tonnes per day for the prior comparable year in 2020.
Ore stacked on the pad increased by 26% during the year ended December 31, 2021 due to improved material handling.
Ore for the year had an average head grade of 0.85 g/t Au, compared to 0.84 g/t Au in the prior comparable year in 2020 due to mine sequencing.
As at December 31, 2021, the Company estimates there are 104,015 recoverable ounces within mineral inventory.
Capital
The Company incurred a total of $24.8 million in capital expenditures during the three months ended December 31, 2021, including: (1) sustaining capital of $15.0 million (including scheduled capital component rebuilds on mobile mining fleet of $2.9 million, expansion to the heap leach pad of $2.8 million and continued construction of the truck shop and water treatment facility of $8.0 million); (2) capitalized stripping activities of $4.3 million; (3) $4.1 million spend on growth capital expenditures (growth exploration and mine expansion) and; (4) $1.4 million adjustment to the Company’s asset retirement obligation during the quarter.
The Company incurred a total of $107.6 million in capital expenditures during the year ended December 31, 2021, including: (1) sustaining capital of $59.9 million (including upgrades to the material handling system including chute liners of $12.8 million, scheduled capital component rebuilds on mobile mining fleet of $14.6 million, expansion to the heap leach pad of $5.9 million, $7.0 million for light vehicle and machinery purchases and construction of the truck shop and water treatment facility of $18.0 million); (2) capitalized stripping activities of $31.0 million; (3) $5.7 million spend on growth capital expenditures (growth exploration and mine expansion), and; (4) $11.0 million adjustment to the Company’s asset retirement obligation during the year ended December 31, 2021.
Fourth Quarter and Full Year 2021 Financial Results
| Three months ended | Years ended | ||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||
| Financial data | |||||
| Revenue | $ | 110,647,040 | 98,221,599 | 356,453,633 | 178,747,827 |
| Gross profit | $ | 49,786,942 | 43,159,771 | 150,973,347 | 76,315,208 |
| Net income (loss) | $ | 45,660,450 | 54,851,137 | 110,368,157 | 14,891,909 |
| Earnings (loss) per share – Basic | $ | 0.73 | 0.89 | 1.77 | 0.25 |
| Earnings (loss) per share - Diluted | $ | 0.70 | 0.83 | 1.68 | 0.23 |
| As at December 31, 2021 | As at December 31, 2020 | ||
| Financial position | |||
| Cash and cash equivalents | $ | 31,250,867 | 56,136,314 |
| Working capital | $ | 62,807,859 | 25,370,418 |
| Property, plant and equipment | $ | 626,400,098 | 579,617,049 |
| Total assets | $ | 891,386,863 | 776,760,617 |
| Long-term debt | $ | 151,250,785 | 209,660,142 |
Revenue
For the fourth quarter, the Company recognized revenue of $110.6 million compared to $98.2 million for the previous year’s comparable period. The increase in revenue is attributed to a higher number of gold ounces sold, partially offset by a lower average realized price. Revenue is net of treatment and refining charges, which were $0.5 million for the quarter. The Company sold 49,219 ounces of gold at an average realized price1 of $2,251 (US$1,786), compared to 40,023 ounces at an average realized price1 of $2,453 (US$1,883), in the fourth quarter of 2020.
For the year ended December 31, 2021, the Company recognized revenue of $356.5 million compared to $178.7 million for the previous year’s comparable year, which only includes six months of revenue as the Company declared commercial production on July 1, 2020. Revenue is net of treatment and refining charges, which were $1.0 million for the year. The Company sold 158,736 ounces of gold at an average realized price1 of $2,243 (US$1,790), compared to 102,551 ounces at an average1 realized price of $2,480 (US$1,882), in 2020.
St George Mining has identified five new nickel copper targets at its Mt Alexander project. The company said the conceptual targets for nickel-copper-platinum group elements, or PGEs, are large and compelling, with minimal previous drilling.
Infill and extensional diamond drilling is also aiming at known, high-grade mineralisation in a bid to expand the Investigators and Stricklands deposits.
Seismic surveys will be expanded after recent drilling at three of the new zones confirmed they can successfully locate potentially mineralised structures.
No sulphide mineralisation was found and drilling of the final two areas has been suspended until additional seismic survey lines are completed and analysed.
St George identified the new conceptual targets after completing a detailed review of the Mt Alexander project. The company said the nickel-copper-PGE targets have favourable structural and geological settings warranting prioritised follow-up exploration, that is scheduled to begin in the June quarter.
The Ida Fault target is described as a structurally-complex area where the Cathedrals Belt is truncated by the craton-scale Ida Fault. The company interprets the Ida Fault as being a possible pathway for shallow westerly plunging high-grade mineralisation.
St George has identified regions within the Radar and Fish Hook as possible eastern extensions to the Cathedrals Belt. At Radar a previous drill intersection returned 4.0m at 3.0 per cent nickel, 1.1 per cent copper and 2.2 grams per tonne PGEs from 48m downhole.
Another area of potential identified by the company is the contact zone between the Mt Alexander greenstone belt and granite on its northern side.
St George believes an untested gravity and magnetic anomaly, in an east-west structure 1km north of the Stricklands deposit, has similarities to Stricklands and is a “walk-up” drill target.
Two strong downhole EM conductors of 22,800 and 9825 Siemens have been identified north-west of the main Stricklands Deposit.
Their location is near the western end of known mineralisation and St George believes they represent massive nickel-copper sulphides. The stronger conductor is located at a depth of 600m.
We are energised by these new exploration initiatives which could help to add to the four shallow high-grade nickel-copper discoveries we have already made across the Cathedrals Belt.
St George identifies the high-grade nickel-copper-PGE mineralisation at Mt Alexander as being structurally controlled, therefore driving the company to test the newly-identified potential targets. Only time will tell if the new targets deliver the “step change” in the scale of the Mt Alexander project that St George believes they can.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
VANCOUVER, British Columbia, March 29, 2022 (GLOBE NEWSWIRE) -- P2 Gold Inc. (“P2” or the “Company”) (TSX-V:PGLD) reports results from the first four reverse circulation (“RC”) drill holes (GBR-032 to 035) of the initial 2022 Drill Program at its Gabbs Project located on the Walker-Lane Trend in Nevada.
“Following upon the success of our 2021 drill program at Gabbs, we completed a 22-hole, 4,000-meter RC drill program at Gabbs in January and February of this year. This drilling focused on extensions to the Car Body and Sullivan Zones and infill and extensions to the Lucky Strike Zone,” commented Joe Ovsenek, President and CEO of P2. “As we set our sights on delivering a preliminary economic assessment on Gabbs in the fourth quarter of this year, we will turn our attention to expanding the oxide mineralization in future drill programs, which will be the first to be accessed in a mine plan.”
The initial 2022 Drill Program commenced at the Car Body Zone and then moved to the Sullivan and Lucky Strike zones before returning to the Car Body Zone to finish the program. Select drill results (see Table 1 below for drill results) from holes GBR-032 to GBR-035 drilled at the Car Body Zone include:
Drill holes GBR-032 to 035 were designed to test for structural controls on the mineralization at the Car Body Zone, which is the smallest tonnage, but highest-grading gold zone on the property. The gold at Car Body is interpreted to be low-sulphidation epithermal mineralization and is open in all directions.
These initial four holes have confirmed the results from the historical drilling at Car Body and have locally expanded the mineral intersections. The ore controls appear to be related to a set of steeply dipping, east-west quartz stock work typical of the Walker Lane Trend. Two north – south oriented holes were completed at the end of the program to test for this stockwork. Higher density drilling is expected to intersect more mineralization with the net effect of expanding the bulk tonnage resources.
Plan maps and sections for drill holes GBR-032 to 035 of the initial 2022 Gabbs drill program are available here.
Gabbs Metallurgy and Geophysics Programs
The Phase Two metallurgical program is nearing completion. The results of the program will be used as the basis for a preliminary economic assessment targeted for completion in late 2022.
In the field, a 48.3-line kilometer Natural Source Magneto Telluric (“NSMT”) survey has been completed over the project covering all four known zones of mineralization and the prospective locations of the potential gold-copper porphyry source at depth. An interpretation of the NSMT survey indicates an anomaly, that may be the potential source of the Gabbs porphyry mineralization, midway between the Sullivan and Lucky Strike zones at a depth of approximately 400 meters. A plan map and section of the anomaly are available here.
Table 1: Selected Gabbs Drill Results, March 2022 (GBR-032 to GBR-035)(1, 2)
Hole | Collar Coords | Dip/ Azimuth | From (m) | To (m) | Interval (m) | Gold (g/t) | Copper (%) | AuEQ (g/t) | CuEQ (%) |
| Car Body Zone | |||||||||
| GBR-032 | N4291331/ E415612 | -50/90 | nsv | - | - | - | |||
| GBR-033 | N4291334/ E415612 | -45/250 | 12.19 | 35.05 | 22.86 | 2.96 | - | - | - |
| Incl | 19.81 | 32.00 | 12.19 | 5.00 | - | - | - | ||
| GBR-034 | N4291385/ E415976 | -45/90 | 19.81 | 30.48 | 10.67 | 0.43 | - | - | - |
| Incl | 39.62 | 44.20 | 4.58 | 0.33 | - | - | - | ||
| GBR-035 | N4291402/ E416083 | -45/270 | 0.00 | 39.62 | 39.62 | 1.13 | - | - | - |
| incl | 19.81 | 33.53 | 13.72 | 2.73 | - | - | - | ||
| 96.01 | 124.97 | 28.96 | 0.51 | - | - | - | |||
(1) True thickness to be determined.
(2) All samples were submitted for preparation by ALS Global at its facilities in Elko, Nevada, with the analysis completed at ALS Global facilities in Reno, Nevada, and North Vancouver, British Columbia. All samples were analyzed using multi-digestion with ICP finish and fire assay with AA finish for gold. Samples with over 10 ppm gold were fire assayed with a gravimetric finish. One in 20 samples was blank, one in 20 was a standard sample, and one in 20 samples had a sample cut from assay rejects assayed as a field duplicate.
Quality Assurance
Ken McNaughton, M.A.Sc., P.Eng., Chief Exploration Officer, P2 Gold, is the Qualified Person, as defined by National Instrument 43-101, responsible for the Gabbs Project. Mr. McNaughton has reviewed, verified and approved the scientific and technical information in this news release.
About P2 Gold Inc.
P2 Gold is a mineral exploration and development company focused on advancing precious metals and copper discoveries and acquisitions in the western United States and British Columbia.
For further information, please contact:
| Joseph Ovsenek President & CEO (778) 731-1055 P2 Gold Inc. Suite 1100, 355 Burrard Street Vancouver, BC V6C 2G8 info@p2gold.com (SEDAR filings: P2 Gold Inc.) |
VANCOUVER, British Columbia--(BUSINESS WIRE)--Northisle Copper and Gold Inc. (TSX-V: NCX) (“Northisle” or the “Company”) is pleased to announce that it has finalized its 2022 work plans for the highly prospective new gold-rich zone at Northwest Expo. The 2022 plan is to define a resource around the gold-rich mineralized porphyry zone measuring 480 by 360 metres with an average true width of 86 metres and a true width-weighted average grade of 0.98 g/t Au or 1.23g/t Au Eq. Initial metallurgical testing will commence immediately and will be incorporated in updated trade off studies that will consider the impact of Northwest Expo on the currently defined North Island Project, where a PEA completed during 2021 indicated a preliminary after-tax NPV (8%) of C$1.1 billion based on a US$3.25/lb copper price and a US$1,650/oz gold price.
Sam Lee, President & CEO of Northisle stated “The gold-rich zone at Northwest Expo is very exciting as it opens up the possibilities for improving the economics on an already large and robust project. The fact that it is only 3.5 km away from the Red Dog deposit and that the gold-rich mineralization is open at depth and along strike makes Northwest Expo our top exploration priority for 2022. The goal for this year is to be able to include the gold-rich zone at Northwest Expo in the project’s mineral inventory at an exploration cost below $5 per ounce gold equivalent. In parallel, we will advance metallurgical and trade-off studies to assess the potential advantages that this higher grade gold zone may bring to our project.”
Northwest Expo Catalysts
Key activities at Northwest Expo for 2022 are detailed in Table 1:
| Table 1: Key Catalysts at Northwest Expo | ||||||
| Timing | Category | Details | ||||
| Q2 2022 | Surface Exploration | Wireless IP north of Zones 1 - 3 | ||||
| Q3 2022 | Preliminary Met. Results | Results from preliminary gold deportment studies and met testing at Northwest Expo | ||||
| Q3 2022 | Preliminary Site Investigation | Preliminary environmental investigations and identification of key factors for Northwest Expo target area | ||||
| H2 2022 | Drilling of Zone 1 | Methodical drilling of Zone 1 in order to generate initial resource estimate | ||||
| Q4 2022 | Resource Estimate | Initial resource estimate for NW Expo gold-rich zone | ||||
| Q4 2022 / Q1 2023 | Trade-off Studies | Preliminary trade-off studies to evaluate impact of NW Expo gold-rich zone on North Island Project | ||||
Surface Exploration
The surface exploration program at Northwest Expo will include mapping and surface sampling, as well as a wireless surface geophysical survey. Surface sampling will be conducted by Northisle with the objective of outlining and sampling surface exposures of the gold-rich zone, and obtaining a better understanding of structure in the area. The geophysical program will focus on the areas to the north of IP surveys completed in 2012. The program consists of a total of 11 line- kilometres of IP and magnetometer surveys, testing to a depth of up to 800 metres, and is anticipated to provide further understanding of structure and locus of mineralization to ensure efficient use of drilling of this large target area. Figure 1 shows the location of the proposed surveys relative to recent drilling. This program is anticipated to commence in Q2 2022.
Drilling of Gold Rich Zone 1
Northisle anticipates drilling the gold-rich Zone 1 at Northwest Expo during the second half of 2022, following the IP/Mag survey, with the objective of augmenting the currently drilled significant gold intercepts (Table 2) with a target of defining an initial mineral inventory of 40-50 million tonnes. The program will include drilling of up to 11 diamond drill holes totalling 3,300 metres along approximately 100 metre spaced north-south sections extending from the eastern boundary of Zone 1 to the western extent of the geophysical lines shown in Figure 1. New drilling assays will be combined with previous drilling assays, as summarized in Table 2, in order to define a resource by the end of 2022.
| Table 2: Zone 1 Significant Intercepts | ||||||||||||||||||
| Hole ID | From (m) | To (m) | Interval (m) | True Width (m) | Au Grade (g/t) | Cu Grade (%) | Mo Grade (%) | Re Grade (g/t) | Au Eq. Grade (g/t) | |||||||||
| NW21-03 | 280.25 | 365.05 | 84.8 | 84.0 | 0.92 | 0.19 | 0.005 | 0.17 | 1.20 | |||||||||
| Including | 280.3 | 305.0 | 24.8 | 24.8 | 1.30 | 0.10 | 0.007 | 0.30 | 1.46 | |||||||||
| EC-218 | 323.8 | 438 | 114.2 | 114.0 | 0.53 | 0.11 | 0.004 | * | 0.70 | |||||||||
| EC-228 | 151.85 | 221.9 | 70.1 | 70.0 | 1.15 | 0.22 | 0.018 | * | 1.52 | |||||||||
| EC-233 | 329.2 | 423.7 | 94.5 | 94.0 | 0.86 | 0.13 | 0.002 | * | 1.04 | |||||||||
| EC-234 | 286.5 | 384.0 | 97.5 | 97.5 | 0.94 | 0.16 | 0.003 | * | 1.18 | |||||||||
| EC-245 | 148.0 | 264.9 | 116.9 | 110.0 | 1.18 | 0.15 | 0.001 | * | 1.80 | |||||||||
| Including | 234.7 | 264.9 | 30.2 | 28.4 | 2.03 | 0.25 | 0.001 | * | 2.37 | |||||||||
| EC08-254 | 270.00 | 386.00 | 116.0 | 95.0 | 1.00 | 0.17 | 0.005 | 0.37 | 1.26 | |||||||||
| Including | 322.0 | 352.0 | 30.0 | 24.6 | 1.50 | 0.21 | 0.008 | 0.24 | 1.82 | |||||||||
| * Not analyzed in historical drilling. |
| Bolded holes are from 2021 drilling |
| Copper and gold equivalent calculations based on the following metal prices which were used in the Company’s 2021 PEA on the North Island Project: |
| Cu = US$3.25/lb, Au = US$1,650/oz, Mo = US$10/lb, Re = $1,256/kg. Calculations assume 100% recovery; totals may not add due to rounding |
| Note on equivalent calculation: |
| Copper equivalent is determined by calculating total contained metal value/ tonne, dividing by the copper price, and then dividing the resultant number of pounds of copper by 2204.6. Gold equivalent is determined by calculating total contained metal value/tonne, dividing by the gold price, and then multiplying the resultant number of troy ounces of gold by 31.103See news release on January 25, 2022 for additional details of the drill holes noted above. |
Rick Mills, Editor/ Publisher, Ahead of the Herd: Today I’m here with Timothy Beale. Timothy’s a Pampa Metals Corp. (CSE:PM, FSE:FIRA), Director, he’s a geologist, he’s got over 20 years living in Argentina, Chile and Peru.
As for Pampa Metals I don’t think I’ve seen a better risk-reward profile in the copper sector and it’s certainly one of the top few in the resource industry. I’ll explain that.
With only 43 million shares outstanding you look at the risk-reward, the risk is, will you lose your money? Will they make a discovery? The reward is, if they do make a major discovery, they have 16 projects each with multiple targets, with such a low outstanding amount of shares, your reward is maximized.
What this company has done in its first year is truly amazing, I mean they’ve got eight 100%-owned copper-gold projects in northern Chile, Austral Gold has joint-ventured two of them, and they’re drilling on one. Pampa has drill-tested two separate projects (four targets) and three are slated for possible follow-up. They’ve signed a deal with VerAI Discoveries to use their artificial intelligence technology and apply it to mineral exploration, and they’ve received access to its eight additional projects.
I think this is truly unique for a risk-reward profile. It gives you, the investor, one of the most bangs for the buck for discovery upside, in the business. Truly outstanding, Tim, could you break it down for us, the different projects and management?
Timothy Beale, Director, Pampa Metals: Pampa has a tight share structure and we’ve done a lot of work in the 13-14 months since inception. The company started with eight wholly owned projects located in the principal copper-producing belts of northern Chile. We’ve focused on projects that have quite extensive areas of post-mineral cover, meaning many of the targets that we’re exploring are actually blind targets.
There is a certain amount of geological evidence in surrounding outcrops, which is important to us and we focus a lot on that, but we also have to apply geophysical technologies to our exploration to see through that post-mineral cover and look at the targets we’re exploring for.
We’ve done extensive geophysical and geological surveys on five of our projects and as you mentioned we drill-tested four targets on two of those projects. Three of those drill targets merit follow-up and in fact we are currently working to put together a drill program on one of those targets.
So we’re working hard, we’re working fast and we’re putting as much money into the ground as we possibly can, and we’re getting good results in the process.
RM: And Austral Gold?
TB: We have two of our projects optioned to Austral Gold, which is actually a producing gold-silver miner in Chile. The two projects that they have optioned from us have the characteristics of the highest portions of the copper systems that we’re generally looking for, and those geological high-level portions of these systems often have the potential for gold and silver.
So that’s why Austral Gold is interested and in order to try and progress as many projects as we can at the same time, we considered it prudent to do the deal with Austral Gold so they could be focusing their money advancing those two projects while we’re advancing the other projects in our portfolio.
About the deal with VerAI, which we just signed in the last month or two, VerAI is an innovative company focused on artificial intelligence technologies, and they are applying artificial intelligence algorithms to certain exploration data sets, principally detailed geophysical data in their case, and coming up with targets of potential interest. We signed a deal with them whereby we have an option to earn into eight projects that they have staked in northern Chile based on their artificial intelligence algorithms, so we’re just starting work on looking at those projects, as we speak.
RM: It’s interesting that the projects are in northern Chile, they look an awful lot like what you guys are already working on.
TB: Yes, another reason for doing the deal with VerAI is their projects are geographically located within the same districts and regions that we’re looking at in northern Chile, so in a general sense very similar geology, something we understand and in areas that we believe are highly prospective.
RM: What do VerAI’s artificial intelligence algorithms show you?
TB: What we see is the results of the application of their algorithms to certain geophysical data sets. They generate targets based on this work that are, if you like, lookalike targets to known mineral deposits in northern Chile. They use local deposits as a modeling set and they look at those known deposits, look at the geophysical data and then apply their algorithms to look for similar areas elsewhere in the data sets they have. And that’s how they generate their targets.
We had an overview of their targets before we signed the deal, we liked the general areas they were located in and the general ideas, so we decided that we would go ahead and explore with them, partner with them.
RM: Can you expand on each of Austral’s joint venture projects, Morros Blancos and Cerro Blanco, just a little bit more on what they’re doing, if they’ve drilled them and what they’re planning on doing this year?
TB: Sure, so with our property portfolio of eight projects, and indeed now double the number of projects with the VerAI option that we have, we simply believe that the more projects, the more targets you have the more chances you have of success.
Prioritization is a key factor so that we’re only spending our money on the very best targets, but nevertheless we’ve got multiple targets which give investors multiple chances of success.
In the case of Austral Gold we essentially have in simple geological terms uneroded porphyry copper systems that in their highest parts have potential for gold and silver. These deposits are called high-sulfidation-type deposits, and they’re typical around the world and particularly in the Andes, where some very important high-sulfidation deposits have been discovered over the last 20-30 years, including Yanacocha in Peru, Alturas in Chile and several others. So these are important deposit types for precious metals.
Austral Gold has completed very detailed geological mapping of our Morros Blancos project and also conducted certain geophysical surveys and some surface geochemical sampling surveys. They have delineated three potential target areas at Morros Blancos and they have started the most detailed work at the northern target which is called Rosario del Alto. They’ve mapped out a series of geological features which are very characteristic of these high-sulfidation-type precious metal systems and they are currently drilling. They started diamond drilling on the Rosario del Alto target at Morros Blancos at the end of January, and have plans to drill around five holes totaling about 2,000m.
Our understanding is currently they’re finishing off hole 2 but we don’t have access to any results at this point. At Cerro Blanco they’ve also conducted detailed surface exploration It’s a very small hill surrounded by these very extensive post-mineral covered areas I mentioned previously, which incidentally are called pampas, hence our name Pampa Metals. They have done surface work on the relatively small outcrops and they have told us that they hope to be drill-testing at Cerro Blanco a bit later this year.
RM: One of the projects that Pampa is working is Cerro Buenos Aires and you’ve done some reverse circulation (RC) drilling in 2021 around the porphyry and the tourmaline breccia, can you explain to us what you found there and what your plans are for that one this year?
TB: You’re absolutely right, Cerro Buenos Aires is another quite large project area, and we have a number of ideas for targets on the property. We focused in initially on a target to the north called Cerro Chiquitin, which is also a relatively small hill poking out of the surrounding post-mineral gravel-filled pampa area, and this hill displays very interesting characteristics as it looks like it’s on the edges of some kind of porphyry system, with tourmaline breccias, a porphyry intrusion with some quartz veinlets in it, which are very characteristic of porphyry systems, and some other characteristics which we found to be very positive for a porphyry system in the near vicinity.
We carried out some very wide-spaced RC drilling, and completed seven holes over an area of about 4.5 km north-south by about 2 km east-west, so you can imagine that the holes were pretty wide-spaced, and we were testing a variety of geophysical anomalies essentially, and some geochemical anomalies, through the cover. We determined that part of the area we tested was not of interest but we are vectoring into what we believe is the core of the system just to the south of the outcrops that I mentioned at Cerro Chiquitin.
We’ve already done a detailed IP survey over that area of interest in January and February of this year and we will be shortly announcing some results from that. We hope to be following up with further diamond drill testing of this much smaller area in the next two or three months.
RM: You’ve paid some serious attention to another project, Block 4.
TB: Yes, Block 4 is for us pretty exciting, it’s rapidly becoming a priority. We did a ground magnetic survey last year similar to what we had done on several of our other properties, and we followed up with detailed geological mapping of the available outcrops but there’s quite a lot of cover at Block 4 as well. Nevertheless, we noticed in the magnetic data a very discrete, isolated magnetic high literally in the geographic center of our property.
Our very keen-eyed senior geologist in Chile, who’s leading the technical work on the ground, found a porphyry intrusion that is very poorly exposed being mostly covered with post-mineral deposits, but small outcrops of this porphyry intrusion are visible and we see very intense quartz veinlet stock working. These quartz veinlets that we see in these porphyries and sometimes in the surrounding host rocks, are very critical and characteristic of these copper porphyry systems that we’re looking for, and this was very exciting to us.
The coincidence of this, with the magnetic high, tells us things about the potential porphyry system we might be looking at here. And it’s interesting to note there’s a bit of historic exploration on the Block 4 property, and the historic exploration has been very limited wide-spaced trenching, with a few old drill holes that we believe date back to the 1980s or ‘90s. We don’t have any results from this work but these old trenches and drill holes were focused on quite a number of little copper oxide occurrences, so we know we have copper mineralization in the general vicinity but the actual porphyry and quartz veinlet stock work zone coincident with magnetic anomaly that we’ve found, has never been drill-tested or trenched or explored historically.
We completed a trenching program at the end of last year and the positive assay results from that trenching program on this quartz veinlet stock work porphyry were announced recently. We believe quite strongly that this Block 4 target is now a target for drill testing. We’re looking at all the permit-related issues for that.
RM: Did you want to talk about the Redondo-Veronica and the Block 3?
TB: Sure. Redondo-Veronica has a little more outcrop than most of our projects but it still has some thin post-mineral cover in certain key areas. We did quite a lot of geophysics over the property, we did certain IP technologies, we did magnetic surveys flown using a drone, actually we were one of the first companies I believe to employ a drown-flown magnetic sensor in Chile, which allows for pretty rapid coverage of the ground but still allows for very detailed surveys, and also completed very detailed geological mapping.
We delineated five areas within the property for potential porphyry copper-style mineralization, a couple of those we felt were somewhat lower rank.
We always have a limit to the funds that we have available, but we did decide to drill-test the other three of those targets. Again we did some wide-spaced RC drilling, one target received one drill hole, one target received two drill holes, and the other target received four drill holes and the closest spacing between the drill holes was about 1 km – 1.5 km. Nevertheless two of those targets returned pretty interesting results, we got some pretty interesting geochemical anomalies, and with the geophysics we’ve had, now we can see a little more in three dimensions from the drill hole results, together with the surface geological mapping and the deeper geophysical anomalies that we have, we believe two of these targets are really worth following up with deeper drilling.
At one of them in particular, Redondo Southwest, our drill holes literally arrived at the peak or the very top of quite an interesting geophysical feature. We believe we just have to drill 200-300m deeper to really investigate what’s going on there. And that too is in our plans. It’s just a question of priorities.
At the moment our Block 4 property and our Cerro Chiquitin target at Cerro Buenos Aires are our principal priorities, but we hope to get back to Redondo-Veronica maybe later this year and follow up on those two targets that we think look pretty interesting.
In the case of Block 3, we’ve done some surface work, again we’ve done a drone-flown magnetic survey, we’ve done detailed geological mapping but again we’ve got lots of post-mineral cover, so we only have little bits of outcrop dotted around, nevertheless it’s hugely important to map these outcrops and understand what they’re telling us about the geology of the general area.
We believe we’ve got a number of magnetic anomalies of potential interest, that might represent potential porphyry targets, a bit like the magnetic anomaly at Block 4 turned out to be. So we’ve got several magnetic features on the Block 3 property that we believe are interesting for potential follow-up, but given the extent of the post-mineral cover at Block 3, we almost certainly have to do an intermediate stage of electrical geophysics, probably induced polarization commonly known as IP, over some of these magnetic features prior to any drill testing.
Again it’s all about prioritization, where do we put Pampa’s funds in terms of getting the biggest bang for our buck in the shortest time frame? All of these projects display tremendous interest for discovery, but we have to prioritize the very best targets so we can use our money wisely.
The most expensive phase of exploration obviously is the drill testing, that’s what our shareholders want to see, they want to see us drilling because you don’t make a discovery until you stick a drill hole into something. That’s obviously a big priority for us and we’re trying to put the drill holes in the best possible places at this time.
I come back a little bit to our portfolio approach. I hope I’ve been able to describe a little bit the multitude of projects and targets that we have in our portfolio, and if we’re given the chance by shareholders to explore as many of these as we possibly can, I’m convinced we’re going to have success down the road.
RM: I agree, I love the approach to multiple projects and working on a couple at a time. The more you work on, the more you’re out in the field, the more you see, the better your chances of discovery.
That brings me around to VerAI, with their AI technology and high-resolution geophysics data generating a series of exploration targets. Now they’ve got eight property blocks, 18,700 hectares, you’ve got 62,000 ha, all in very prospective ground in northern Chile, we’re “elephant hunting”, you’ve made an exclusive option over the next 12 months to define one or more designated projects from the eight property blocks owned by VerAI.
You have to spend some money but you’re getting access to some amazing technology and the potential of earning 51% up to 75% on a prospective property, so you’ve really expanded your discovery potential and your property portfolio.
TB: You’ve absolutely right, Rick. Northern Chile is a region that is very heavily staked, there’s very little ground available for new staking. Much of the ground is controlled by major mining companies, the BHPs, the Rio Tintos, the Anglo Americans, also the state-controlled miner in Chile, Codelco. For a junior company to have access to this amount of ground in such a prospective part of the world is not very common at all, almost unique I would say.
It’s all about optionality. This is not just random ground, this is ground that has clear targets of potential interest that we need to follow up. We’re giving shareholders lots of opportunity, lots of options/ optionality, to make a discovery. We have, with VerAI as you rightly point out, the option to earn up to 75% of any designated target that we choose, so we’ve got a low-cost introduction to their eight properties, we have to spend $500,000 over the next 12 months globally, to review the eight project areas.
We may decide we don’t want to follow up any of them, or we can decide to follow up all eight of them. Or anything in between. Each project we decide to follow up becomes a designated project, we can earn an initial 51% by spending $1 million over the following two years on each designated project and then we can subsequently earn 75% by completing a preliminary economic assessment (PEA) on each designated project. These are very reasonable earn-in terms in our view, and just gives Pampa Metals’ shareholders additional optionality on very prospective parts of the world.
RM: As I said at the start of the interview, the risk-reward profile here is excellent, the low, tight share structure and the multitude of projects in a world-class exploration district. It’s quite a nice play. Do you have anything else you’d like say Tim, in closing?
TB: I think just to say, Rick, that we’re working very hard, we have a pretty small team, a very dedicated team in Chile, we’ve been able to operate all through the pandemic last year, we have a very experienced geologist who I know from my days with Anglo American, a gentleman called Mario Orrego, he’s leading our technical charge in the field, he’s a very experienced porphyry copper geologist and indeed has experience in a number of other mineral deposit types, he’s leading a team doing an excellent job for us down in Chile.
I was in Chile in February, I spent two weeks visiting all of our projects so I’ve got a very clear idea of the quality of the work that’s been done and we’re very happy with our team’s progress. We’re working hard to keep going, keep drill-testing and keep generating new targets and Rick we’re hopeful for success in the short term.
RM: I really wanted to emphasize the potential for discovery with the low share count, it really does reward investors, you make a discovery, you’ve got 43 million shares out, or you make a discovery and you’ve got a quarter billion (shares outstanding). The one I wouldn’t buy, the one I would, I mean what’s the point in buying the company with a quarter billion shares o/s, you could find one of the biggest things in the world and you’re not going to make a lot of money off it.
TB: I think our share structure’s very important, we’re hopeful we can keep it as tight moving forward, obviously new funds will be required at some point to enable us to continue exploring, but we’re working hard to make the share structure attractive to investors and make that discovery.
RM: The transition from exploration to discovery is the biggest wealth-generating stage in the minerals business. What that means to an investor is you need to have the best, and most shots at discovery you can have in one company. Pampa Metals Corp. (CSE:PM, FSE:FIRA), in my opinion, offers that.
TB: That’s it, prioritization of targets, joint ventures, boots on the ground, never stop looking for that discovery, that’s exactly what it’s all about.
RM: As always, entertaining and enlightening. I enjoyed our talk Tim and I hope we get to do it again soon.
Pampa Metals Corp.
CSE:PM, FSE:FIRA
Cdn$0.34, 2022.02.09
Shares Outstanding 43.4m
Market cap Cdn$14.7m
SHANGHAI, Mar 28 (SMM) - SHFE nickel dropped more than 10% last Friday night, which might indicated the correction of nickel prices. And the violently fluctuating nickel prices amid money game have brought great trouble to the spot market. The trading volume of LME nickel declined significantly after experiencing violent fluctuations last week. After a short correction trend on Monday and Tuesday, LME nickel touched limit up for two consecutive days due to the influence of money games and the amplification under low trading volume. The expectation of downstream procurement is also sluggish amid great uncertainties certering the futures market. At present, nickel sulphate manufacturers and NI-MH battery factories maintained production curtailment. In addition, due to the impact of the pandemic, spot transportation and delivery have been delayed. The supply of nickel sulphate was relatively tight as a result of the short supply of raw materials. Whether the output of high-grade nickel matte could increase substantially is the key point that affects the supply to new energy sector and alleviates the supply tightness of nickel briquette. However, the current production of nickel matte has not yet met expectations. The prices of SHFE nickel continued to rise under the impact of LME nickel. At present, the prices of nickel have largely deviated from the fundamentals due to the money game. On the whole, the market shall closely watch LME nickel for a clue that guides SHFE nickel.
Pure nickel: The trading volume of LME nickel declined significantly after experiencing violent fluctuations last week. After a short correction trend on Monday and Tuesday, LME nickel touched limit up for two consecutive days due to the influence of money games and the amplification under low trading volume. SHFE 2204 nickel has been rising since last Tuesday tailing LME nickel, and touched the weekly high at 281,250 yuan/mt. In terms of spot, the sharp fluctuations in nickel prices have also brought great trouble to spot traders. The overall transaction was weak last week, and the main transactions were concentrated on the occasion of market correction on Monday and Tuesday. After Wednesday, due to the high futures prices and great uncertainty, expectation of downstream purchase was weak. The upstream quotations and shipments were also more cautious. In addition, the traders have stopped making quotations on Thursday as they could not close their positions for hedging when the futures hit limit up again. In addition, due to the impact of the pandemic, the transportation and delivery of spot goods have been delayed. In terms of nickel briquette, due to the large price difference between SHFE and LME prices for a long time, the tight supply of briquette in the market remains unchanged. At present, the cost efficiency of self-dissolution of nickel briquette in nickel sulphate factories is still poor, and some manufacturers chose to reduce or stop the production, and some even sold their nickel briquette stocks. However, due to cost efficiency problems, terminals generally stopped picking up goods. To sum up, the current pure nickel market presents a pattern of weak supply and demand.
NPI: The SMM average price of 8-12% high-grade NPI stood at 1,635 yuan/mtu (ex-works, including tax) on Friday March 25, up 10 yuan/mtu from a week earlier, and the average price of Indonesia NPI stood at 1,647.5 yuan/mtu (including tax, delivery to ports), 10 yuan/mtu higher than a week earlier. The traded price with mainstream steel mills was 1,630 yuan/mtu (arrival at the factory, including tax). At the time when nickel prices fluctuated wildly, the market reservoir would cast a certain influence on the NPI prices. In the later period, nickel futures surged again, and the market quotation returned to a high level. On the demand side, although the spot prices of stainless steel moved up following the futures prices, the downstream transaction was less than expected. Besides, due to the influence of the COVID-19, the profit margin of steel mills could hardly realise, so they were cautious about high-priced raw materials. Moreover, nickel prices fluctuated abnormally, so the steel mills held a wait-and-see attitude to avoid the cost risk. On the supply side, quotes of NPI plants and traders were still high, which was supported by the gap between supply and demand and the low inventory in steel mills. What’s more, the spread between pure nickel and NPI was large, and upstream held firm to the prices. In addition, the cost of NPI plants was supported by high nickel ore prices and the higher electricity bill. And due to the COVID-19, the transportation cost of NPI increased. Therefore, NIP prices are unlikely to fall. It is expected that the prices of NPI will remain at 1,610-1,680 yuan/mtu (ex-factory, including tax).
Nickel Sulphate: As of Friday March 25, battery-grade and electroplating-grade nickel sulphate recorded 47,000-49,000 yuan/mt and 50,000-53,000 yuan/mt respectively. Nickel futures staged a dramatic scene again last week, and prices continued to rise and fall drastically. The abnormal fluctuations of nickel prices under the money game have not yet subsided. The wildly fluctuating nickel prices have brought great trouble to the spot market of nickel sulphate. At present, under the current nickel market landscape, the spot market trading in all nickel-related sectors are basically stagnant, according to SMM research. Unreasonable fluctuations in nickel prices mainly affect the two following aspects: 1. Raw materials prices like MHP/MSP/nickel briquette, that are settled based on futures prices, especially LME nickel, have seen forced up. And the downstream refuses to purchase under small orders when import losses are obvious, and the long-term orders are also mostly under negotiation. 2 The market sentiment has been on edge for lack of clear guidance. The upstream and downstream are cautious in making quotations and shipments, and are mainly in a wait-and-see state. However, as the end of the month is approaching, some precursor companies still have procurement demand. With such fluctuations in nickel prices, the procurement cycle is forced to be delayed, and companies may face challenges in production and order delivery. Entities are currently in a dilemma and have to survive. It is expected that the prices of nickel may correct this week. But according to current expectations, the process will take longer time. Traded prices of battery-grade nickel sulphate are expected to stand at 47,000-52,000 yuan/mt amid the game between supply and demand sides. And the prices of electroplating-grade nickel sulphate will move between 50,000-54,000 yuan/mt.
Stainless Steel: Due to the influence of the pandemic, the trading of stainless steel spots was slack, and the arrivals at steel mills and market shipments were both restricted. In the case of unstable prices and operating rates affected by the pandemic, some downstream processing companies only purchased on rigid demand. According to some traders, the trading volume was more than halved based on the average level. The shipment of stainless steel will be exposed to further restrictions because a driver in Wuxi Oriental Steel Mall got a positive result in nucleic acid test last Friday night. Last week, driven by the rising SS contract, the spot prices were high. However, the actual shipment born huge pressure and the spot prices could not catch up with the trend. It is expected that the stainless steel spot prices will be stable with possibilities of falling. The market should keep an eye on the driving force of the demand on the resumption of downstream production when the COVID-19 outbreak eases.
Junior explorer Coda Minerals is finding further potential at its flagship Elizabeth Creek copper project in South Australia’s world-class Gawler Craton. The latest drill hole intersected a distinct copper-rich zone indicating a potential southeast expansion of the interpreted iron oxide-copper-gold, or ‘IOCG’ mineralisation.
Coda says a geologically distinct, copper-rich ‘bornite’ dominated zone was intercepted and an independent re-evaluation of the emerging IOCG mineralisation demonstrates the potential for multiple copper-rich bornite zones.
…Drilling continues to emphasise the enormous metal endowment of the broader Emmie System, which comprises both the shallower Emmie Bluff copper-cobalt deposit and the adjacent Emmie IOCG (copper-gold) at depth.
…Simply put, we thought we were chasing a single area of mineralisation but we now believe that there may be multiple zones of bornite.
Owing to their large-scale and strong endowment of minerals, IOCG deposits are among the world’s richest mineral deposits and have the potential to support highly-profitable operations. The Gawler Craton is a prolific IOCG host, housing BHP’s world-renowned deposit Olympic Dam and other deposits such as Prominent Hill and Carrapateena.
Interestingly the region also hosts Coda’s three sedimentary copper-cobalt deposits that when combined contain 1.1 million tonnes of copper equivalent. Notably, the Emmie Bluff deposit constitutes the bulk of its metal inventory, holding a whopping 43.3 million tonnes of ore grading 1.3 per cent copper and 470 parts per million cobalt, containing 562,000 tonnes of copper and a further 20,000 tonnes of cobalt.
Importantly, Emmie Bluff is located stratigraphically above and about 400 metres to the northeast of Coda’s emerging IOCG discovery, newly-coined ‘Emmie IOCG.’
Coda believes Emmie Bluff and its accompanying Emmie IOCG deposit represent a significant accumulation of copper, cobalt, gold and silver mineralisation within a large and complex mineralising system.
The company has integrated Emmie IOCG into the wider ‘Emmie System’ in the ongoing Elizabeth Creek scoping study. The company believes the IOCG deposit’s close proximity to the existing Emmie Bluff resource could present an opportunity to share infrastructure and mutually reduce capital expenditure requirements.
With mining and metallurgy studies having materially advanced, Coda reports the study is on track for completion in the first half of the year.
According to the company, its geological model has evolved and improved the understanding of the mineralisation and highlighted further high-priority drill targets.
Coda is currently drill testing potential eastern extensions of the Emmie Bluff deposit in addition to another IOCG prospect 15km to the south of Emmie IOCG.
The company boasts some heavy saddle bags as its cash balance remains above $11.3 million.
The Elizabeth Creek project is jointly held by Coda and its partner ASX-listed Torrens Mining Limited. Coda holds the lion’s share of the project with a 70 per cent stake with Torrens making up the balance. Interestingly, the pair are eying a merger to ultimately consolidate ownership of the project.
Aiming to quantify a potential IOCG deposit is no small affair and whilst it is only early day Coda appears to have picked the right postcode to be hunting elephants.
Highlights
Offering to raise up to £40.5 million (approximately C$66.8 million) comprising £25 million (approximately C$41.2 million) strategic investment by Vision Blue Resources (“VBR”), a vehicle founded by Sir Mick Davis to invest in green energy-related metal and mineral resource companies £15.5 million (approximately C$25.6 million) from a private placing to existing and new UK institutional investors as well as a subscription by existing Canadian investors and eligible accredited private investors
Net proceeds will advance the South Crofty tin project - a fully permitted, former producing high-grade underground tin mine, located in Cornwall, UK Work will include dewatering of the mine, resource drilling, completion of a feasibility study, evaluation of further downstream beneficiation opportunities, and on-site early works in advance of a potential construction decision
Demand for tin is expected to increasingly outstrip supply in coming years driven by growing demand from the electronics sector, EVs, and renewable power, especially solar cells Since March 2021, LME cash tin prices have risen from approximately US$25,000 per tonne to in excess of US$40,000 per tonne
Cornish Metals Inc. (TSX-V/AIM: CUSN) (“Cornish Metals” or the “Company”), a mineral exploration and development company focused on tin / copper projects in Cornwall, United Kingdom, is pleased to announce that, subject amongst other things to receipt of the requisite shareholder approvals and the approval of the TSX Venture Exchange (“TSX-V”), the Company plans to raise gross proceeds of up to £40,500,000 (C$66,800,700) through a unit offering (the “Offering”) comprising one common share priced at 18p (C$0.30 for Canadian investors) per common share and a warrant to purchase one common share priced at 27p (C$0.45 for Canadian investors) for a period of 36 months (details provided below).
Richard Williams, CEO of Cornish Metals, stated; “This announcement marks a transformational moment for the Company, its shareholders and all stakeholders in relation to the redevelopment of South Crofty, the Company's principal asset. It is testament to the quality of both the project and the Company that an investor of the calibre of Vision Blue Resources is proposing such a significant investment, and we are delighted to welcome them as a major strategic shareholder.
“Tin is essential to anything electronic, including electric vehicle (EV) components, computing, 5G, robotics, renewable power generation, and the electrification of the economy, making South Crofty a strategic asset with the ability to provide a secure, traceable, sustainable supply of this important metal.
“We are excited to embark on this new chapter of Cornwall’s mining history which will see South Crofty make a significant contribution to the local and UK economy, with the potential to create up to 1,000 direct and indirect jobs, as well being at the forefront of the drive towards net zero.”
Sir Mick Davis, CEO of VBR, stated: “VBR was founded to accelerate the responsible supply of commodities necessary to facilitate the transition to clean, green energy. The investment in South Crofty has the potential to deliver significant tin production to meet an expected supply shortfall and enable the deployment of new, green technologies. At the same time, restarting production at an historic underground mine, within the existing footprint, and with the benefit of modern production techniques, provides an opportunity to minimise environmental and other impacts whilst creating significant benefits for local communities.”
About Vision Blue Resources
VBR aims to create lasting value for all stakeholders by accelerating the supply of the commodities necessary to facilitate the green energy transition. The growth in demand for these metals is unprecedented, driven by regulation and social change, and is taking place against a backdrop of limited supply due to years of underinvestment in the sector. VBR aims to unlock value in its investments by providing transformational investment capital and its financial, technical, ESG, construction and operating experience in the mining and metals sector, ensuring its investments are advanced into production and beyond.
Compelling Opportunity
Demand for tin is expected to grow rapidly as it is essential for the high-tech, low carbon economy and, according to research by the Massachusetts Institute of Technology, it is the metal most likely to be positively impacted by new technologies. Tin is primarily used in the production of lead-free solder used in almost all circuit boards and semiconductors, as well as renewable energy systems where tin is used in the production of photo voltaic cells, and there is growing demand from the automotive sector where it is utilised in EV components and has been shown to enhance the performance of EV batteries themselves.
At the same time there is no primary mine production of tin in Europe or North America and the metal has been designated as a mineral critical to economic and national security by the USA.
South Crofty has one of the highest grade tin Mineral Resources in the world not currently in production and has the potential to be amongst the lowest cost producers globally. Having previously operated until 1998, there is significant mine infrastructure still in place, most notably several mine shafts that can be used for future production and ventilation purposes, and the operation is located within an industrial area with access to the national electricity grid as well as existing transport infrastructure.
Details of the Offering
In connection with the Offering:
(i) VBR and the Company have entered into a conditional agreement dated March 28, 2022 (the “Investment Agreement”) pursuant to which VBR has agreed to purchase, on a private placement basis (the “VBR Subscription”), an aggregate of 138,888,889 units of the Company (each, a “Unit”); (ii) the Company is undertaking a concurrent placing in the UK, on a private placement basis, of up to 76,872,728 Units (such Units being the "UK Placing Units") with certain existing and new institutional investors (the “UK Placing”); and (iii) the Company is also undertaking concurrent subscriptions, on a private placement basis, of up to 9,238,383 Units (such Units being the "Subscription Units") with certain existing Canadian and UK investors and eligible private investors (the “Concurrent Private Placements” and, collectively with the VBR Subscription and the UK Placing, the “Offering”).
The subscription price for all Units issuable under the Offering is £0.18 (C$0.30 for Canadian investors) each (the "Offering Price"). Each Unit comprises one common share of the Company (each, a “Common Share”) and one common share purchase warrant of the Company (each, a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one additional Common Share (each, a “Warrant Share”) at an exercise price of £0.27 (C$0.45 for Canadian investors) per Warrant Share for a period of 36 months from the closing date of the Offering.
Use of Proceeds
The planned use of the proceeds of the Offering is to complete a dewatering programme and feasibility study at South Crofty, evaluation of downstream beneficiation opportunities, and potential on-site early works in advance of a potential construction decision. Assuming the issuance of all 225,000,000 Units pursuant to the Offering, the proceeds raised under the Offering are budgeted to be spent in the following manner to finance a 30 month programme (from closing of the Offering) covering mine dewatering and resource drilling through to the completion of a feasibility study in respect of the South Crofty mine.
Mine dewatering £16.1m Underground access / resource drilling £8.5m Surface drilling to expedite feasibility study £4.5m Feasibility study £1.2m South Crofty holding costs £1.7m Corporate and general working capital £8.5m Total £40.5m
PETALING JAYA: Riding on the current record-high tin prices, Malaysia Smelting Corp Bhd (MSC) plans to acquire more mining leases around the existing tin mines under its subsidiary, Rahman Hydraulic Tin Sdn Bhd (RHT).
According to executive director and group CEO Datuk Patrick Yong, the global integrated tin producer this year will focus on expanding its mining operation, which is its main profit contributor at the moment.
He told StarBiz that additional capex has been approved for a new processing plant that can provide additional capacity for new mineral extractions and secondary tin processing from MSC’s tailings stockpile.
“This is also expected to bring our mining output from 10 tonnes a day to 14 tonnes a day within the next few years.
“Modernisation using integrated head material processing equipment will enhance production volume as in situ partial ore processing can be enabled, thus reducing the cost of internal transportation of barren material from the mining pit to the processing plants,” added Yong.
Yong noted that the high tin price contributed directly and significantly to the profits of MSC’s mining segment.
“Even the tailings that were left unprocessed in the past, are now valuable feed for secondary extraction.
“Past data have linked the profitability of MSC directly to the tin price, showing a better than linear co-relation, hence we are highly optimistic that the growing demand for tin will only push the performance of MSC higher,” he added.
Yong said the group’s new smelting plant in Pulau Indah near Klang, Selangor has added significant capacity to the smelting capacity and is already being used to smelt ore from tolling customers.
MSC’s old smelting plant in Butterworth, Penang is also used to recover 6,000 tonnes of tin metal trapped in the intermediates accumulated over the years.
“This is a welcome bonus to MSC as the trapped tin has been fully costed in our books,” explained Yong.
Upon full commissioning of the Pulau Indah plant, he said the group will be able to completely retire the old inefficient Butterworth plant.
Yong also described that MSC as most fortunate to perform above expectations in 2021 following the record-high tin prices.
“This has boosted the group’s mining activity income significantly.
“Tin price, which has doubled also boosted profits when we recovered a portion of the trapped tin in the intermediates that accumulated over the past years,” he said.
Yong also does not expect the price of tin to retreat as much in 2022.
He expects that “demand from the electronic sector and electric mobility tipping the supply-demand balance positively for us.
“As MSC continues to retrieve the tin in our huge stockpile of tin bearing intermediates, the good financial performance is expected to flow through over the next couple of years.”
The main challenge faced by the MSC group last year was mostly due to the shutdown by the authorities during the full movement control order.
“Our smelting plant in particular was closed for a few months.
“Then our mines in RHT also faced a period of closure resulting in zero ore production for a couple of months. Externally, disruption in shipping logistics and closure of mines overseas have also impacted supply of ore to our smelter,” he said.
However, these challenges are now over, Yong said, adding that the return to normalcy has enabled mining in RHT to recover and importation of ore for smelting is almost back to pre-Covid days.
He said MSC has well utilised the recovery period to catch up on the backlog in toll-smelting and also to complete commissioning the new smelter in Pulau Indah.
On whether the rally in tin price is sustainable, Yong said “In my opinion, the long term demand for tin has no other direction to grow but northwards.”
The Covid-19 pandemic and the Ukraine-Russian conflict will also come to pass and will only delay, but not stop the march of the zero emission vehicles, where tin will play its role in this energy conversion metamorphosis.
Hence, the price of tin will find a point of equilibrium within the supply and demand balance in due course and will be very unlikely to find any significant decline, he added.
https://www.thestar.com.my/business/business-news/2022/03/28/msc-eyes-more-mining-leases
Ontario aims to propel its leadership in automotive electrification by continuing to attract key industrial investments that will establish a complete electric vehicle and battery supply chain in the region, according to a government official.
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"Quite frankly, we are all in with our chips on electric vehicle production in Ontario," Vic Fedeli, Ontario's minister of economic development, job creation and trade, said in an interview with S&P Global Commodity Insights.
Fedeli said Ontario's government has already worked to bring C$13 billion ($10.36 billion) of investment to the province over the last 18 months that has spurred an industrial transition in support of a growing EV industry.
The investments include a recent commitment announced March 23 by Stellantis and LG Energy Solutions to jointly build Canada's first large-scale EV battery gigafactory in Windsor, Ontario, with production expected to begin in 2024.
"That's historic," Fedeli said. "It is the single largest auto investment in the history of our country."
With recent and forthcoming investments, Ontario has now secured development propositions that span the electric vehicle value chain from "end to end."
"We've got the OEMs covered, we've got the investment in the [Stellantis-LGES] battery manufacturing plant, an investment in green steel [ArcelorMittal Dofasco], and we put millions into a program called the Ontario Automotive Modernization Program."
The O-AMP is a partnership supporting automotive parts makers that are transitioning their operations to supply electric vehicles. The Ontario Vehicle Innovation Network has also been funded by the province's leadership to promote connected and autonomous vehicle manufacturing, Fedeli added.
Fedeli said more related investments in Ontario are expected in the near term.
"We will continue pushing hard to land a second battery factory," he said. "Outside of a second battery plant, we still have a string of EV manufacturing announcements to make in the coming days and weeks."
Battery metals in 'ring of fire'
Fedeli said Ontario has launched a critical minerals strategy to advance the province's mineral mining, refining and cathode production capacity that can domestically supply its burgeoning EV and battery industries.
"Canada is the only country in the Western Hemisphere with all the raw materials," Fedeli said. "And, we know Ontario has everything we need here."
Northern Ontario's "ring of fire" region represents a major focus area for critical mineral sourcing, with the potential to produce cobalt, nickel, copper, platinum and palladium. Fedeli said much of the province's critical minerals strategy has targeted this area.
"We will work to expedite the approvals for mines throughout Northern Ontario and to extract minerals and to process them," Fedeli said. "We also want value-added [capacity], so we are going to push hard in Northern Ontario for precursor and cathode production, but nonetheless it all starts with the minerals."
Fedeli said Ontario is already North America's leading producer of nickel, and the province houses the continent's only cobalt refinery (now owned by Electra Battery Materials, with operations set to restart later this year).
Turnaround for Ontario's auto industry
Fedeli said Ontario's push to build its EV industry under Premier Doug Ford through the "Driving Prosperity" initiative and other policy programs represents a "huge turnaround" for the province's automotive sector.
"Where we were four years ago, the auto sector was on severe decline," he said. "Under the former [provincial] government, we lost 300,000 jobs in Ontario, and so when [our administration] took office, Premier Doug Ford said that we have to reduce the cost of doing business."
Under the current administration, Ontario has reduced workplace insurance premiums without altering benefits, offered a capital cost allowance, enacted "red tape" reduction bills, and lowered the cost of industrial and commercial energy and property tax rates, according to Fedeli.
Ontario's policies have since enticed new automaker EV manufacturing investments in the region from Honda, Ford and General Motors, he added.
"Our job is to ensure that the EVs that are purchased are made right here in Ontario," Fedeli said. "For the automotive OEMs, the batteries, the vehicle parts, the critical minerals and the green steel technology, we're investing taxpayer dollars in every one of those areas."
"We have to invest in the complete supply chain because that's where the jobs are, and that's where 'Driving Prosperity' has done just that."
By Naveen Thukral
SINGAPORE, March 29 (Reuters) - London copper slid on Tuesday, giving up the previous session's gains as spreading COVID-19 infections in top metals consumer China raised worries over demand.
Shanghai nickel dropped almost 4%.
"We have probably seen the storm and now there are reasonable concerns over Chinese demand," said Guy Wolf, global head of market analytics at Marex.
"We are looking at an impact on Chinese industrial production. There are concerns over demand outlook for the near term."
COPPER: Three-month copper on the London Metal Exchange CMCU3 lost 0.1% to $10,334 a tonne by 0730 GMT and the most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 0.7% to 73,570 yuan ($11,551.81) a tonne.
CHINA: Concerns over demand in top industrial metals consumer China kept a lid on copper prices.
LOCKDOWN: China's financial hub of Shanghai launched a planned two-stage lockdown to contain a coronavirus surge, adding to worries about growth prospects for the world's second-biggest economy.
CODELCO: Chile's Codelco, the world's largest copper producer, is preparing to offer the market some "non-core" exploration assets, signalling a rare privatisation for the state-owned mining firm, a senior executive said on Monday.
Stockholm, March 28, 2022 – Leading Edge Materials Corp. (“Leading Edge Materials” or the “Company”) (TSXV: LEM) (Nasdaq First North: LEMSE) (OTCQB: LEMIF) (FRA: 7FL) provides a letter from the Chief Executive Officer.
CEO’S REPORT TO THE SHAREHOLDERS
Pandemic, war and climate change - the world as we know it is changing dramatically. Our vision, materials for change, is right in the middle of these societal challenges. A change in the energy system towards renewables and energy storage, electrified mobility solutions and resilient and sustainable supply-chains will need new materials and new sources for those materials. This is where the projects we have and the work we do on them becomes critically important.
Graphite is a key material to enable the energy transition, where most lithium-ion battery chemistries use graphite for the anode. As demand for lithium-ion batteries grows exponentially, demand for graphite is expected to grow by a factor of three by 2030i. Currently production of graphite for batteries is dominated by China.
Our Woxna graphite mine is one of few already built and permitted graphite mines in the western world. The Company’s strategy is to establish a vertically integrated mine to anode material production unit which could offer a secure and sustainable supply of anode materials for European battery producers at the same time demand is expected to grow significantly.
Rare earth elements are needed to produce the high strength permanent magnets that are critical for the motors for electric vehicles and generators for wind turbines. As these technologies are set to grow significantly the market for magnet rare earth oxides is forecasted to increase five times by 2030ii. China is again the dominant supplier of rare earth oxides and permanent magnets.
Our Norra Karr rare earth project is one of the world’s most significant deposits for heavy rare earth elements such as dysprosium and terbium, and the only deposit of its kind in the European Union. In addition, the project has the potential to supply by-products such as the industrial mineral nepheline syenite, zirconium and niobium. Bringing the project into production could be a key enabler for a European mine-to-magnet value-chain.
As we entered last year, we were working on 4 main objectives; demonstrate the economic potential of our Woxna graphite mine to anode material project, redesign the Norra Karr rare earth project to improve the conditions for a granted mining lease, focus our resources on the two main Swedish projects, and get the exploration license in Romania granted.
We successfully completed the preliminary economic assessment for the Woxna graphite anode project iii (the “Woxna PEA”) with exceptional economic figures for the project with a post-tax NPV(8%) at US$248m and a post-tax internal rate of return of 37.4%. Using the inputs and outputs from the Woxna PEA we commissioned UK-based consultancy firm Minviro Ltd. to perform an ISO-compliant life-cycle assessment on the project, which demonstrated a potential 85-90% reduction in CO2 footprint of anode material to be produced from Woxna compared with current Chinese supply alternatives iv . Lastly, we signed a non-binding heads of agreement with the Australian company Sicona Battery Technologies Pty Ltd for the establishment of a Sweden based 50/50 joint venture targeting the production of advanced natural graphite and silicon-graphite-carbon composite anode materials v ;
(the “Woxna PEA”) with exceptional economic figures for the project with a post-tax NPV(8%) at US$248m and a post-tax internal rate of return of 37.4%. Using the inputs and outputs from the Woxna PEA we commissioned UK-based consultancy firm Minviro Ltd. to perform an ISO-compliant life-cycle assessment on the project, which demonstrated a potential 85-90% reduction in CO2 footprint of anode material to be produced from Woxna compared with current Chinese supply alternatives . Lastly, we signed a non-binding heads of agreement with the Australian company Sicona Battery Technologies Pty Ltd for the establishment of a Sweden based 50/50 joint venture targeting the production of advanced natural graphite and silicon-graphite-carbon composite anode materials ; The redesign of the Norra Karr project resulted in the release of a preliminary economic assessment report vi (the “Norra Karr PEA”) delivering strong financial results with a post-tax NPV(10%) of US$762m and post-tax IRR of 26.3%. More importantly, the redesign presented a revised flowsheet where operations at the deposit site only includes mining and physical beneficiation whereas chemical leaching and recovery of the rare earth oxides is moved to a more suitable off-site location. The benefits of this new flowsheet are a significant improvement in resource utilization, the removed need for wet chemical tailings dams and an 80% reduction in land area usage at site. All changes are expected to improve the conditions for a granted mining lease for the project;
(the “Norra Karr PEA”) delivering strong financial results with a post-tax NPV(10%) of US$762m and post-tax IRR of 26.3%. More importantly, the redesign presented a revised flowsheet where operations at the deposit site only includes mining and physical beneficiation whereas chemical leaching and recovery of the rare earth oxides is moved to a more suitable off-site location. The benefits of this new flowsheet are a significant improvement in resource utilization, the removed need for wet chemical tailings dams and an 80% reduction in land area usage at site. All changes are expected to improve the conditions for a granted mining lease for the project; We completed the sale of our Swedish lithium exploration project vii ;
The granting of the exploration license for our nickel-cobalt project in Romania unfortunately continued to be evaluated with no news.
The fundamental drivers underpinning our vision and strategies continue to be supportive. Increasing demand coupled with ongoing supply side issues such as a global power crunch and shipping disruptions have led to significant price increases over the last 12 months. Graphite prices in Europe, including spherical purified graphite (being the anode material feedstock), are recently reportedviii to be up almost 40-50% compared to the same period last yearix. Key magnet rare earth oxide prices are up between 27 and 150% year on yearx.
Governments in the western world launching initiatives to support the development of domestic sources of critical raw materials to reduce reliance on China, the European Union being no exception. The European Raw Materials Alliance released its action plan on rare earth elementsxi including a proposed bridge fund of up to €200m per year to fund projects, the European Parliament adopted a European strategy for critical raw materialsxii and more recently the EU leaders addressed strategic dependencies on critical raw materials in the Versailles Declarationxiii as a response to the Russian invasion of Ukraine.
Considering the improved graphite market conditions, we are evaluating the potential restart of production of flake graphite concentrate at Woxna and we will update on this in the near future. This is in parallel, but ultimately connected to our anode material development project where we are producing bulk samples of material together with our preferred suppliers. This material will be further refined by Sicona and subsequently tested internally and provided to potential customers for evaluation. Subject to a successful outcome of this test program we will then negotiate the formal joint venture and decide on the establishment of a commercial demonstration plant.
For Norra Karr we are continuing our work with our consultants to update our mining lease application based on the new plans for the project. A recent decision by the Swedish government to grant a mining lease on a separate project in Swedenxiv might positively influence the scope of assessment required for a mining lease compared with the subsequent environmental permit application process.
We continue to work with our Romanian joint venture partner in preparation of a hopefully positive outcome on our exploration license application. Should this materialize we have a prepared exploration program that we look forward to putting into motion to test the potential for high-grade nickel and cobalt mineralizations. Both nickel and cobalt prices have risen sharply over recent months making the opportunity for this project even more attractive lately.
None of this work would have been possible without the support of our shareholders, which we thank you for. In the recently closed first fiscal quarter of 2022 we saw continuing support from long-term shareholders through the exercise of options and warrants for proceeds of C$1,665,500, with many warrants and options still outstanding with exercise prices deep in the money. During fiscal 2021 our share price increased by 120%, and as of this letter’s date it is up 479% from May 4, 2020, when the new Board of Directors joined the Company, and I was given the opportunity to lead the Company as the CEO. Looking forward, we are committed to do our utmost to uphold this track-record of delivering shareholder returns.
Three potentially significant discoveries over the past week have returned copper to the radar screens of investors, with the bonus being that demand for the metal appears to be outstripping supply, which can only mean a higher future price.
Recharge Metals (ASX: REC), Tempest Minerals (ASX: TEM) and Culpeo Minerals (ASX: CPO) have all enjoyed spectacular share price boosts from their discoveries in WA and Chile, with their share price moves over the last five trading days the best way of telling the story.
Recharge is up $0.22 (175%) at $0.35 thanks to its promising results from drilling at the Brandy Hill South project in WA’s Murchison district.
Tempest is up $0.054 (131%) at $0.095 thanks to promising drill results from its Orion target in the Meleya project close to the Golden Grove polymetallic mine near Yalgoo in central WA.
Culpeo is up $0.21 (190%) at $0.32 thanks to a 200m intersection of copper sulphides in its first hole at the Lana Corina project in Chile.
Most copper-exposed stocks have shared in what’s shaping as a copper rush sparked by the metal’s multiple uses in the old economy where it has deep markets in transport, construction and electronics and the new economy where it is a key player in energy transition.
Other copper stocks to watch
Among the stocks worth watching for their appealing copper exploration assets are: QMines (ASX: QML), AuKing Mining (ASX: AKN), Peel Mining (ASX: PEX), Alderan (ASX: AL8), Odin Metals (ASX: ODM), Staveley Minerals (ASX: SVY), OZZ Resources (ASX: OZZ), Kingston Resources (ASX: KSN), Zenith Minerals (ASX: ZNC), and New Century Resources (ASX: NCZ).
A few other small caps with some potential copper exposure to keep an eye on, include: Dundas Minerals (ASX: DUN), Nimy Resources (ASX: NIM), and Western Mines Group (ASX: WMG).
While it is discovery news driving the small end of the copper sector, it is events at the top end which will ensure that what’s happening is not a flash in the pan.
Copper market
Multiple factors on both sides of the copper business are at work in the price, including:
An ongoing production deficit, which industry research body Lisbon-based International Copper Study Group (ICSG) said totalled 475,000 tonnes last year – a modest improvement on the supply shortfall of 484,000t in 2020.
On the other side of the business, there is a strong recovery in Chinese copper demand.
Investment bank Citi estimated this drove a 4.4% rise in the first two months of the year – the highest year-on-year growth increase since last June.
Another factor driving the price is a possible significant increase in the cost of copper production in Chile, the world’s largest producer of the metal.
There is also concern that Chile might introduce new laws, which make the country less attractive as a mining investment destination – a point made by BHP (ASX: BHP) at the world’s top copper conference held this week in the country’s capital, Santiago.
BHP is considering a US$10 billion investment to expand its Chilean copper business but only with “legal certainty”, the head of the company’s copper division, Ragnar Udd, told the CRU-CESCO copper conference.
Chile’s new Mines Minister, Marcelo Hernando, promised at the conference that the country will not lose its competitiveness, even as plans to possibly nationalise copper and lithium remain on the agenda of a recently elected left-leaning government.
Growing concerns about future water supplies have added to the pressure cooker, with Anglo American, one of the miners, looking at investing up to US$1 billion in a seawater desalination plant.
Meanwhile, uncertainty remains about the future supply of Russian copper as Ukraine war sanctions start to bite.
Among the Russian projects which could face delays are the US$7 billion Udokan mine in the far east of Siberia and the US$8.5 billion Baimskaya project in the even more remote Chukotka region, which is 3,000km from the nearest railway.
Long-term market changes
Some analysts see the potential for a copper price correction, especially as the current high price might be leading to some demand destruction and substitution.
However, that might not be the case, because copper is an essential metal and substitutes in some applications, such as aluminium, are also close to all-time price peaks.
Wood Mackenzie, a leading research house, is concerned that the overall increase in metal prices could lead to long-term changes in the market.
Robin Griffin, vice president of Wood Mackenzie said mining company profit margins are “way above historic norms” and such a drastic divergence of price and production costs cannot last indefinitely, even if there is an indefinite “stranding” of Russian supply.
But Griffin’s concern about high prices destroying demand are not being reflected in the underlying supply-and-demand fundamentals as shown in the latest ICSG reports and sliding stockpiles on terminal markets such as the London and Shanghai metal exchanges.
The London Metal Exchange copper stockpile has dropped from 250,000t to 80,000t over the last seven months, prompting investment bank Goldman Sachs to warn that the loss of Russian copper from the market could be a significant development.
Goldman Sachs believes investors are “mispricing Russian supply risk” with a million tonnes of Russian copper potential missing in action.
The bank expects copper to rise from its current already elevated US$4.65 a pound to a new all-time high of US$5.50/lb over the next 12-months.
It’s forecasts like this, which appear to justify a number of recent, and very high-priced copper deals, including the $1.5 billion acquisition of the CSA copper mine in NSW by the special purpose business, Metals Acquisition Corp.
The company is backed by former Northern Star Resources (ASX: NST) boss Bill Beament, and former Fortescue Metals Group (ASX: FMG) chief executive officer Nev Power.
Electric vehicles accelerating copper demand
Citi’s latest copper analysis via its China Copper End-Use Tracker found that demand was especially strong in the automotive (electric vehicles), industrial and transport sectors.
The importance of EVs in the copper market has been well reported over the past few years because they use much more copper than internal combustion vehicles, with Citi’s copper tracker fleshing out the theory by calculating that copper demand in the automotive sector rose by 20% in the first two months of the year.
But Citi also warned that China’s copper appetite could decline over the next few months as the latest Covid-19 outbreak forces the lockdown of major population centres, including Shanghai.
Critical mineral
Copper is such an important metal in so many industries that it is fast becoming a commodity of national concern, as seen in Chile’s talk of nationalising (or should that be renationalising) the country’s copper industry.
Just how important copper might become was the subject of a thoughtful column in London’s Financial Times newspaper earlier this year from one of its senior writers John Dizard.
In order to ensure an orderly energy transition away from fossil fuels to renewables Dizard suggested a revised “Circular 5” which most people have never heard of.
The US Government issued a Circular 5 in 1949 to create a guaranteed market for uranium, which was critical for weapons and power generation.
The government plan involved provision of an assured price and a 10-year purchase contract, plus bonus payments for significant uranium discoveries.
It worked for uranium and it’s a plan that might appeal to governments if the copper price rises too far – or if supply is crimped in some way.
This is especially the case as most governments back the transition to renewable energy and are slowly discovering that it can’t happen without a lot more copper.
https://smallcaps.com.au/hot-copper-whats-driving-latest-charge/
Australia’s newest nickel-copper sulphide deposit contains 4.6 million tonnes at 1.11% nickel, 0.47% copper and 0.05% cobalt (1.41% nickel-equivalent) for 75,000 tonnes of contained metal, with further growth anticipated.
Azure Minerals Ltd (ASX:AZS) has delivered a maiden mineral resource estimate (MRE) for the Andover deposit, the first prospect drilled as part of the Andover Project in the West Pilbara region of Western Australia, in which Azure has a majority share.
Andover deposit is estimated to contain 4.6 million tonnes at 1.11% nickel, 0.47% copper and 0.05% cobalt for 51,700 tonnes of contained nickel, 21,700 tonnes of contained copper and 2,290 tonnes of contained cobalt at a cut-off grade of 0.5% nickel (JORC 2012).
This includes a high-grade resource component of 2.0 million tonnes at 1.41% nickel, 0.49% copper and 0.06% cobalt at a cut-off grade of 0.9% nickel.
Methodology
The MRE was completed by CSA Global Pty Ltd based on 104 holes drilled between 2018 and 2021, consisting of 102 diamond and two reverse circulation (RC) holes for 44,267 metres.
All holes were assayed where they intersected mineralisation lodes and for any internal waste and external lengths for several metres outside the lodes. Drill holes were nominally spaced 50 metres by 50 metres, typically oriented within 020° of orthogonal to the interpreted dip and strike of mineralisation.
The company sees this, the country’s newest nickel-copper sulphide deposit, as a robust resource with more than 80% of the mineral resource estimate tonnes classified in the indicated category.
“I’m very pleased to present this maiden mineral resource for the Andover deposit, thereby achieving a key milestone in advancing the overall Andover Project,” Azure’s managing director Tony Rovira said.
“This highlights the extraordinary potential that we have always recognised within the project and is just the beginning of a very exciting journey."
Geological map of the Andover deposit and surrounds.
Likely additional resources to come
“The exploration team has excelled to have delivered the first resource only 18 months after starting exploration, while also discovering and now drilling significant nickel and copper sulphide mineralisation at several other prospects within the project area," Rovira said
“For example, it’s likely that additional mineral resources will be defined at the nearby Ridgeway (6.3 metres at 3.59% nickel, 4.9 metres at 3.5% nickel, and 4.5 metres at 3.95% nickel as announced on March 15, 2022), Seaview (7.0 metres at 1.35% nickel) and Skyline (results to be announced) prospects.
“With these, plus other excellent targets like Atrium and Woodbrook that have yet to be drilled, I’m confident this is only the start of mineral resource definition at the Andover Project.”
The project is 35 kilometres southeast of Karratha and immediately south of the town of Roebourne.
Excellent infrastructure, including airports, port access, railway, grid power, sealed highway and support services are readily available in the local district.
SHANGHAI, Mar 30 (SMM) - Overnight SHFE nickel dropped with capitals withdrawing from the market. SHFE nickel has basically returned to the fundamentals, and lacks upside momentum in the short term.
On the supply side, the downstream was cautious amid steep ups and downs of spot pure nickel. The sustaining import losses have led to the scarcity of nickel briquette. Sumitomo and NIKKELVERK nickel supply remained tight. In terms of nickel pig iron, the prices fell slightly due to falling SHFE nickel yesterday. But as the current smelting cost is high, the upstream is willing to hold firm to the prices. At present, the acceptable prices of upstream and downstream are quite different, and the transactions in the spot market has been muted.
On the demand side, due to the impact of the pandemic, the steel trading market in Wuxi has been closed for closed-off management. The centralised procurement of stainless steel plants has not yet come, and the overall transaction was poor. In terms of nickel sulphate, the cost efficiency of self-dissolved nickel briquette has not yet recovered, and the production of nickel sulphate showed signs of reducing. At present, some precursor plants still have procurement needs at the end of the month. However, in the context of the sharp fluctuations in nickel prices and the severe pandemic, the procurement cycle is forced to be postponed. To sum up, the current pandemic and the recent sharp fluctuations in SHFE nickel have had a greater impact on the supply and demand in the spot market.
Pure nickel : As the recent futures prices have deviated from the spot supply and demand pattern, SSMM now suspended offering premium/discount quotations of 1# Jinchuan nickel, 1# imported nickel and nickel briquette. SMM prices of 1# refined nickel, 1# Jinchuan nickel, 1# imported nickel are available as usual. This notice complies with IOSCO standards. Yesterday, Jinchuan and NORNICKEL nickel were offered at 219,800-222,000 yuan/mt, and the average price was 6,350 yuan/mt lower than the previous day. At present, the money game in the futures market has not subsided, and the prices fluctuate greatly. The prices of nickel briquette stood at 216,800-219,000 yuan/mt yesterday, and the average price was 6850 yuan/mt lower than a day ago. At present, the cost efficiency of nickel briquette has not yet recovered, and the expectation of downstream procurement is not optimistic. There were few quotations from traders amid violently fluctuating SHFE nickel prices.
NPI: As of march 29, SMM average price of NPI was 1630 yuan/mtu (ex-factory, tax included), down 5 yuan/mtu from a day ago. The intraday SHFE nickel and ss2205 contracts both fell as the downstream turned away from high prices. But he upstream held firm to the prices. Hence the market transactions were thin amid wide difference of acceptable prices between the upstream and the downstream. The current prices of auxiliary materials and raw materials have raise the costs of NPI plants, offering suppor to NPI prices amid great price difference with pure nickel. The centralised procurement of downstream stainless steel plants has not yet come, and the high raw material prices have greatly squeezed the profits of stainless steel mills, which delayed the mills’ procurement demand. NPI prices are expected to remain volatile at a high level in the short term.
Stainless steel: The SS contract prices dropped. And the SS2205 contract fell back to around 20,000 yuan/mt. However, due to the impact of the pandemic, the spot market has had poor transactions. And Wuxi Dongfang Steel City was also closed yesterday, and relating staff have been quarantined. The spot market prices have been falling, but it failed to stimulate the market, and the transactions were still subdued. Spot prices in Wuxi were relatively stable yesteraday. The prices of 304 cold-rolled coils moved between 20300-20600 yuan/mt, and the prices of 304 hot-rolled coils were between 19700-20000 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2205 contract stood at 20115 yuan/mt, and the spot premiums in Wuxi were 355 - 655 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).
MONTREAL - Osisko Metals Incorporated (the 'Company' or ' Osisko Metals' ) (TSX-V: OM; OTCQX: OMZNF; FRANKFURT : 0B51) is pleased to announce that it signed, on March 25 2022 , a binding term sheet with Glencore Canada Corporation ('Glencore' and collectively the 'Parties'), providing Osisko Metals with an option (the 'Option') to acquire a 100% interest in the past-producing Gaspe Copper Mine ('Gaspe Copper') located near Murdochville, Quebec for an up-front payment of US$25 million , to be paid by Osisko Metals by way of a convertible note issued to Glencore upon the successful closing of the transaction, and a cash payment of US$20 million , payable upon start of commercial production. The Company must also incur drilling costs of C$5 million before June 30, 2022 , to test oxidation levels within the mineralization that surrounds the historical Mount Copper open pit deposit.
Gaspe Copper Option Overview
Assuming exercise of the Option, the acquisition by Osisko Metals of Gaspe Copper could provide the following benefits to the Company: Transformational acquisition for the Company, providing shareholder exposure to a significant copper development asset that is located in a safe jurisdiction with an excellent track record of mine permitting, especially for metals critical to global decarbonization objectives; Substantial exploration and resource development potential at Gaspe Copper, which includes the past-producing Mount Copper open pit mine, the higher-grade Needle Mountain and E-Zone underground mines, as well as the undeveloped Porphyry Mountain bulk tonnage deposit; Drill program to start in April 2022 for the purpose of validating an internal resource model and the oxidation levels of mineralization at the Mount Copper deposit, which is a critical phase of due diligence on the project that will lead to a decision on whether to exercise the Option before June 30 2022 , and Supportive infrastructure necessary for mine development is already in place, including green hydroelectric power with an electrical substation on the former mine site.
Osisko Metals will host a conference call at 10:00AM ET . Participants are requested to log in 15 minutes prior to the call using the following numbers:
Participant Toll-Free Dial-In Number:1 (888) 880-5501
Participant Toll Dial-In Number:1 (438) 800-1833
A digital recording of the conference call will be available for replay two hours after the call's completion until March 31st 2022 . To access the recording, please use the dial-in number listed below and the following conference ID 3093894.
Toll Free Dial in Number: 1- 800- 770- 2030
Toll Dial in Number: 1- 647- 362- 9199
Robert Wares , Chairman & CEO, commented: 'Gaspe Copper was a significant copper producer in Eastern Canada for over forty years, and we believe in the potential to unlock value from this asset through drilling and re-evaluation of remaining resources. If our internal model is validated, we expect to close the transaction and release a maiden Inferred Mineral Resource estimate on the Mount Copper deposit this year.'
'The successful closing of this transaction will give Osisko Metals shareholders significant copper exposure and make Glencore a major shareholder of the Company. We welcome the new partnership with Glencore and look forward to other collaborative opportunities that the partnership may bring. In addition to the ongoing development of our Pine Point zinc-lead project, we are convinced that this combination of projects will cement Osisko Metals' position as one of the premier base metal development companies in Canada . Our combined expertise will allow us to rapidly advance both projects and create shareholder value in safe jurisdictions with a celebrated mining history.'
Transaction Overview
Glencore has granted Osisko Metals an exclusive Option to acquire 100% of its interest in the past-producing Gaspe Copper mine, subject to the following terms: The Company incurring drilling costs of C$5 million to test oxidation levels within the mineralization that surrounds the historical Mount Copper open pit deposit; Completion by the Parties of all necessary due diligence inquiries of the other Party, and negotiating any outstanding matters by the Parties, and Provide a letter indicating its intent to exercise the option by June 30, 2022 .
The Parties will work toward finalizing and signing a Definitive Agreement and all related documents no later than May 16, 2022 , which will only become effective upon exercise of the Option.
Once Osisko Metals has exercised the Option, if at all, and the Definitive Agreement and all related documents are signed by the Parties, then the Parties will have three months (on or before September 30, 2022 ) to close the transaction, including the payment by Osisko Metals to Glencore of the US$25 million purchase price. The payment will be paid by way of issuance of a convertible note to Glencore.
The note will be convertible by Glencore into units of Osisko Metals at a price of $0.40 per unit. Each unit will consist of one share and a half-warrant. Each whole warrant will entitle Glencore to acquire one common share of Osisko Metals at a price of $0.46 per share for a period of 3 years.
Glencore will retain a 1% NSR on the Mount Copper sulphide deposit and a 3% NSR on all other mineral products extracted from the property.
Osisko Metals will incur a total of C$55 million in exploration and development expenditures, including permitting expenditures, over a period of four years of the date of the Definitive Agreement, with a minimum of C$20 million to be incurred within the first two years of the date of the Definitive Agreement.
Glencore will retain a commercially reasonable offtake for 100% of concentrates produced during the renewed life of mine at Gaspe Copper.
Osisko Metals will pay to Glencore an additional cash consideration of US$20M upon commencement of commercial production at Gaspe Copper.
The Option and acquisition by Osisko Metals of a 100% interest in Gaspe Copper remain subject to, among other things, the approval of (i) the TSX Venture Exchange , and (ii) the shareholders of Osisko Metals to authorize Glencore to become, upon and only upon conversion of the note, a 'control person' of the Company.
History of Gaspe Copper Mines
From the initial discoveries in 1921, Gaspe Copper (formerly subsidiary of Noranda Inc. ) mined the porphyry copper/skarn complex and produced copper concentrate continuously from 1955 until the closure of the mine in 1999. Production started with the Needle Mountain open pit then expanded to operating the Mount Copper open pit that was supplemented with feed from the extensive high-grade underground skarn mineralization ( B and C Zone deposits) as well as the massive sulfide skarn and manto deposits of the underground E Zone .
During its mine life, a total of 150 million tonnes grading an average of 0.87% Cu with minor gold and silver credits was extracted (Hussey&Bernard, SME Journal , August 1998 ), making it one of the largest copper operations in Eastern Canada .
Location and Infrastructure
Gaspe Copper is located next to the community of Murdochville , in the Gaspe Peninsula of Eastern Quebec , approximately 825km east of Montreal . All necessary support infrastructure for the potential re-opening of Gaspe Copper is already in place. The former mine site benefits from paved road access with local highway 198 linking Murdochville with the coastal community of Gaspe. Green hydroelectric power with an electrical substation is located on-site.
About Osisko Metals
Osisko Metals Incorporated is a Canadian exploration and development company creating value in the base metal space. The Company controls one of Canada's premier past-producing zinc mining camps, the Pine Point Project , located in the Northwest Territories for which the 2020 PEA has indicated an after-tax NPV of $500M and an IRR of 29.6%. The Pine Point Project PEA is based on current Mineral Resource Estimates that are amenable to open pit and shallow underground mining and consist of 12.9Mt grading 6.29% ZnEq of Indicated Mineral Resources and 37.6Mt grading 6.80% ZnEq of Inferred Mineral Resources. Please refer to the technical report entitled 'Preliminary Economic Assessment, Pine Point Project , Hay River, Northwest Territories , Canada' dated July 30 2020 , which has been filed on SEDAR. The Pine Point Project is located on the south shore of Great Slave Lake in the Northwest Territories , near infrastructure, paved highway access, and has an electrical substation as well as 100 kilometres of viable haulage roads already in place.
The current Mineral Resources mentioned in this press release conform to NI43-101 standards and were prepared by independent qualified persons, as defined by NI43-101 guidelines. The abovementioned Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. The quantity and grade of the reported Inferred Mineral Resources are conceptual in nature and are estimated based on limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological grade and/or quality of continuity. Zinc equivalency percentages are calculated using metal prices, forecasted metal recoveries, concentrate grades, transport costs, smelter payable metals and charges (see respective technical reports for details).
Contact:
Robert Wares
CEO
Osisko Metals
Tel: 514-940-0670 ext. 111
Email: info@osiskometals.com
WEB: www.osiskometals.com
Cautionary Statement Regarding Forward-Looking Information
This news release contains 'forward?looking information' within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates, projections and interpretations as at the date of this news release. The information in this news release about the Option; the timing and ability of the Company to exercise the option (if at all); the timing and ability of the Company and Glencore to execute the Definitive Agreement (if at all); the results of any exploration work completed by Osisko Metals on Gaspe Copper ; the significance (if any) of Gaspe Copper being a past producer and the results of such past production; the ability of Osisko Metals (if at all) to complete the required expenditures during the periods to be specified in the Definitive Agreement; the timing and ability of the Company to obtain regulatory approvals, including the approval of the TSX Venture Exchange , in respect of the Option and the acquisition of Gaspe Copper ; and any other information herein that is not a historical fact may be 'forward-looking information'.
Any statement that involves discussions with respect to predictions, expectations, interpretations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as 'expects', or 'does not expect', 'is expected', 'interpreted', 'management's view', 'anticipates' or 'does not anticipate', 'plans', 'budget', 'scheduled', 'forecasts', 'estimates', 'believes' or 'intends' or variations of such words and phrases or stating that certain actions, events or results 'may' or 'could', 'would', 'might' or 'will' be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information.
(MENAFN- The Conversation)
The Indonesian government has claimed that its raw nickel export ban, which started in January 2021, has shown positive impacts after seeing increases in mining investments and exports of nickel-derived products.
This statement seems to be premature, considering that the government has failed to disclose the data that can support this argument.
The Indonesian government has long desired to add high value to domestic mining products, especially nickel, through downstreaming.
Nickel is a major component in electric batteries, which have become increasingly important due to the rising production of various gadgets and electric cars that require energy storage.
As the country with the world's largest nickel ore production and reserves , Indonesia has a vital role in the global nickel trade. Indonesia produces 1 million metric tons per annum or 37% of the worldwide nickel production of around 2.7 million metric tons.
Indonesia has placed a ban on raw nickel exports in hopes of adding value to domestic nickel products.
Economists generally discourage market interventions like export bans as they hurt economic efficiency. A nickel export ban might disturb global nickel supplies and trigger trade conflicts. This is evident in the European Union's filing of a dispute at the World Trade Organization (WTO) on Indonesia's export ban policy.
With the above in mind, it begs the question as to whether Indonesia's export ban actually creates a positive impact on the downstreaming of nickel products.
Export ban: increased investments and export of derivative products
The implementation of the export ban has not always been smooth. In 2014, the government tried banning mineral exports . The government revoked this restriction in 2017 due to dropping nickel productions, sluggish smelter developments and trade balance deficits.
In 2020, as some smelters became operational, the government again banned mineral exports, particularly for low-grade nickels .
The government argued that banning nickel ore exports has successfully increased basic metal industry investments , especially in nickel smelter developments . This statement has been backed up by data from the Indonesian Ministry of Investment presented below.
The data show that investments in the mining industry dropped in 2014 when the government introduced a ban on nickel ore exports, taking away one of the main incentives for investment. However, in 2021, data show that investments in the industry increased from the previous year, indicating that an export ban does not hurt investment as supplies are absorbed by the domestic market.
The government also claimed that 2021 saw the exports of value-added nickel products , such as stainless steel.
As investments in the basic metal industry increased, the production of value-added nickel products also rose. Figure 2 shows nickel-based productions ups and down were influenced by the ban in 2014, relaxation in 2017 and reimplementation of the ban in 2020.
The two indicators — increased investments and exports by the downstream mining industry — have encouraged the government to expand the mineral export ban on other products , including tin and copper.
However, a question remains as to whether investment and export figures make a precise indicator to evaluate the success of the export ban strategy.
Measuring the dynamics of added value
It is correct to say that the value of exports of value-added nickel products is higher than the lost value of nickel ore exports .
However, if the government intends to add value at the domestic level, measuring success using exports is not accurate.
Measuring the shift in the value chain, especially with interventionist policies like an export ban, need detailed assessments.
The first issue is the potential loss of government revenue.
Banning nickel exports means revenue losses from corporate taxes and export duties. This also means that state revenues from the downstream nickel industry must cover the losses. On the other hand, however, enticing smelter investors to Indonesia requires not only a nickel export ban but also tax incentives .
The government offers smelter companies a tax holiday—from corporate income tax deductions to exemptions, and their products are exempt from export duties.
The second issue is about transferring added value from mining companies to the smelters. The export ban has forced mining companies to sell their nickel ores to domestic smelting companies. Mining companies must accept a far lower price amid the currently high global nickel price .
The nickel export ban, in sum, has caused value losses in the mining sector. This loss has been exacerbated by problems surrounding domestic nickel selling pricing and grading systems .
The third issue is employment. The government argued that adding value to mining products would open new industries and new job opportunities in Indonesia.
Nevertheless, despite the possible increase in employment rate, especially in the smelting sector, the government must also measure the possible downsizing in the mining sector due to the nickel export ban.
Unfortunately, Indonesia does not have reliable employment data in the mining sector . Available data show that the proportion of basic metal industry workers in the Indonesian workforce has not demonstrated any perceptible increase.
The three issues mentioned above illustrate that measuring added value based on export bans and tax incentives is more complex than the government has argued.
The government should also assess the alignment between the visions of this export ban and those who enjoy the benefit of the value addition. For example, Chinese-based companies chose to invest in Indonesia for the tax holidays offered and the access to cheap nickel but would export their production output back to China.
Figure 3 below illustrates the above case for ferronickel, a semi-finished commodity derived from smelting oxidised nickel ore.
The government needs a careful consideration
Tax holidays and guaranteed access to cheap nickel may distort the measurement of the economics of smelters. It is questionable whether smelters remain economically feasible if the government revokes all tax incentives and impose export duties on value-added nickel products to add to the state revenues.
This is without including the other problems, such as permit maladministration , increased energy demands , and environmental issues like water contamination, which have become an increasingly crucial aspect for global investors.
Not to mention, smelter operation requires 4.8 gigawatts of electricity annually. This runs counter to Indonesia's spirit to cut carbon emissions in the following years.
More, Indonesia's export ban has triggered a dispute filing by the European Union at the WTO . This suit is certainly not the best situation for Indonesia to start the term of its G20 presidency .
Suppose more countries join the European Union in this dispute. In that case, Indonesia is exposed to the risk of trade retaliation that will give the government a hard time when channelling its value-added nickel products to the global market . Indonesia's appeal as a battery production center will no longer be enticing without the global market.
The ban has also caused Indonesia to miss out on gaining from the increased nickel price , which rose by five folds from February to early March because of the war between Russia and Ukraine, two major global nickel suppliers.
All in all, I view that the data the government used to support its claim of the success of the nickel export ban are weak. Potential tax losses, trade retaliations, and decreased mining revenues for only allowed selling to domestic companies under a lower pricing arrangement are significant issues in measuring the added value of export ban-based nickel downstreaming.
The government should measure the success based on more data, not only export data. The government must also integrate the calculations with its downstreaming roadmap to allow the creation of a long-term goal. On top of that, the government must disclose the data for the public to access.
If the current methodology is maintained, it may be best for us to remain sceptical of the benefits of export ban-based nickel downstreaming.
This article was originally published in Indonesian
LONDON, March 29 (Reuters) - London Metal Exchange (LME) zinc recorded a new all-time high of $4,896 per tonne earlier this month, eclipsing the previous 2006 peak of $4,580 per tonne.
True, the March 8 spike was over in a matter of hours and looked very much like the forced close-out of positions to cover margin calls in the LME nickel contract, which was imploding at the time before being suspended.
But zinc has since re-established itself above the $4,000 level, last trading at $4,100 per tonne, amid escalating supply chain tensions.
Russia's invasion of Ukraine, which Moscow calls a special military operation, doesn't have any direct impact on zinc supply as Russian exports are negligible.
But the resulting increase in energy prices is piling more pressure on already struggling European smelters.
European buyers are paying record physical premiums over and above record high LME prices, a tangible sign of scarcity which is now starting to spread to the North American market.
The world is not yet running out of the galvanising metal but a market that even a few months ago was expected to be in comfortable supply surplus is turning out to be anything but.
LME zinc price and stocks, Shanghai stocks
EUROPEAN POWER-DOWN
One European smelter - Nyrstar's Auby plant in France - has returned to partial production after being shuttered in January due to soaring power costs.
But run-rates across the company's three European smelters with combined annual capacity of 720,000 tonnes will continue to be flexed "with anticipated total production cuts of up to 50%", Nyrstar said.
High electricity prices across Europe mean "it is not economically feasible to operate any of our sites at full capacity", it said.
Still on full care and maintenance is Glencore's (GLEN.L) 100,000-tonne-per-year Portovesme site in Italy, another power-crisis casualty.
Zinc smelting is an energy-intensive business and these smelters were already in trouble before Russia's invasion sent European electricity prices spiralling yet higher.
Record-high physical premiums, paid on top of the LME cash price, attest to the regional shortage of metal. The premium for special-high-grade zinc at the Belgian port of Antwerp has risen to $450 per tonne from $170 last October before the winter heating crisis kicked in.
The Italian premium has exploded from $215.00 to $462.50 per tonne over the same time frame, according to Fastmarkets.
LME warehouses in Europe hold just 500 tonnes of zinc - all of it at the Spanish port of Bilbao and just about all of it bar 25 tonnes cancelled in preparation for physical load-out.
Tightness in Europe is rippling over the Atlantic. Fastmarkets has just hiked its assessment of the U.S. Midwest physical premium by 24% to 26-30 cents per lb ($573-$661 per tonne).
LME-registered stocks in the United States total a low 25,925 tonnes and available tonnage is lower still at 19,825 tonnes. This time last year New Orleans alone held almost 100,000 tonnes of zinc.
Fastmarkets Assessments of Antwerp and Italian physical zinc premiums
REBALANCING ACT
About 80% of the LME's registered zinc inventory is currently located at Asian locations, first and foremost Singapore, which holds 81,950 tonnes.
There is also plenty of metal sitting in Shanghai Futures Exchange warehouses. Registered stocks have seen their usual seasonal Lunar New Year holiday surge, rising from 58,000 tonnes at the start of January to a current 177,826 tonnes.
Quite evidently Asian buyers haven't yet been affected by the unfolding supply crunch in Europe and there is plenty of potential for a wholesale redistribution of stocks from east to west.
This is what happened last year in the lead market, China exporting its surplus to help plug gaps in the Western supply chain. Lead, however, should also serve as a warning that global rebalancing can be a slow, protracted affair due to continuing log-jams in the shipping sector.
MOVING THE GLOBAL DIAL
While there is undoubted slack in the global zinc market, Europe is still big enough a refined metal producer to move the market dial.
The continent accounts for around 16% of global refined output and the loss of production due to the regional energy crisis has upended the zinc market narrative.
When the International Lead and Zinc Study Group (ILZSG) last met in October, it forecast a global supply surplus of 217,000 tonnes for 2021.
That was already a sharp reduction from its earlier April assessment of a 353,000-tonne production overhang.
The Group's most recent calculation is that the expected surplus turned into a 194,000-tonne shortfall last year. The difference was almost wholly down to lower-than-forecast refined production growth, which came in at just 0.5% compared with an October forecast of 2.5%.
With Chinese smelters recovering from their own power problems earlier in the year, the fourth-quarter deceleration was largely due to lower run-rates at Europe's smelters.
The ILZSG's monthly statistical updates are inevitably a rear-view mirror but Europe's production losses have continued unabated over the first quarter of 2022.
Moreover, the scale of the shift higher in power pricing, not just spot but along the length of the forward curve, poses a longer-term question mark over the viability of European zinc production.
A redistribution of global stocks westwards can provide some medium-term relief but zinc supply is facing a new structural challenge which is not going away any time soon.
The opinions expressed here are those of the author, a columnist for Reuters.
The dispute started in August last year when the DRC government formed a commission to reassess reserves and resources to “fairly lay claims to their rights”
China Molybdenum said “significant progress” had been made on a dispute over the Tenke Fungurume copper and cobalt mine in the Democratic Republic of Congo (DRC).
The dispute between China Moly and the Central African nation’s state mining company Gecamines started in August last year when the government formed a commission to reassess reserves and resources at the mine to “fairly lay claims to their rights”.
China Moly holds an 80% stake in the mine, while Gecamines holds the remainder.
A spokesman for the Congo government, Patrick Muyaya Katembwe, said the judicial procedure “remains suspended with a view to restoring a climate of exchange and harmony between the parties”, adding that the government had proposed a roadmap.
“This marks an important step forward … regarding the additional royalty payment for increase of reserves at [the mine],” China Moly said in a statement late on Wednesday.
The Chinese firm and Gecamines would jointly hire an internationally recognised third party to conduct the assessment as required by the Congo government, and to promote a “fundamental settlement” of the dispute.
“The communique … further strengthens our confidence to invest in the DRC,” China Moly cited its chief executive Sun Ruiwen as saying in the statement.
Sun also vowed to push forward construction of the Tenke Fungurume and Kisanfu copper and cobalt mines in 2022, China Moly said.
The Tenke Fungurume project produced 209,120 tonnes of copper and 18,501 tonnes of cobalt in 2021. It is hoping for an annual output of 227,000-267,000 tonnes of copper and 17,500-20,500 tonnes of cobalt in 2022.
Reuters, with additional editing by George Russell
READ MORE:
https://www.asiafinancial.com/china-molybdenum-hails-progress-in-african-mine-dispute
Like so many parts of the global economy, copper prices were deeply affected by the onset of the coronavirus pandemic. Temporary closures to copper mines and stockpiling in various markets, particular China, saw prices soar as supply was outstripped by demand. Now in 2022, copper prices are spiking once again, facing something of a perfect storm on an international scale. In Chile, the world’s largest copper producer, accounting for roughly 28% of global production, poor ore quality and an ongoing drought have reduced output significantly since the start of the year. Meanwhile, in Peru, the second largest copper producing nation (around 12% of the global supply)…
Like so many parts of the global economy, copper prices were deeply affected by the onset of the coronavirus pandemic. Temporary closures to copper mines and stockpiling in various markets, particular China, saw prices soar as supply was outstripped by demand.
Now in 2022, copper prices are spiking once again, facing something of a perfect storm on an international scale. In Chile, the world’s largest copper producer, accounting for roughly 28% of global production, poor ore quality and an ongoing drought have reduced output significantly since the start of the year.
Meanwhile, in Peru, the second largest copper producing nation (around 12% of the global supply), ongoing protests at some of the country’s largest mines have also brought production to temporary halt
The ongoing Russian invasion of Ukraine is also having a significant impact on global metal prices, with international trade sanctions greatly disrupting supply chains.
Russia produces around 5% of the world’s yearly copper output, as well as being a major exporter of both unwrought metal and copper wire.
“The metals markets in the short-term remain at the mercy of the Ukraine situation, moving back and forth between risk-off and risk-on dynamic,” said Gianclaudio Torlizzi, a partner at consultancy T-Commodity.
Couple these factors with a rise in global inflation rates an increasing demand for copper, due to its crucial role in building computer chips and electric vehicles, and it is clear to see why copper prices are soaring, reaching an all time high at the start of the month at almost $11,000 per tonne.
But what does this have to do with the telecoms industry?
Before the advent and widespread adoption of fibre-optic technology for fixed-line communications, the majority of the world deployed copper networks to provide telephony and broadband services to customers. While most developed markets are in the process of replacing these copper networks with fibre, reliance on this technology in developing countries is still widespread.
The relative accessibility of valuable copper in these networks makes digging up network cabling an enticing prospect for thieves, with cable theft resulting in enormous disruption to network operations and customer services every year.
In 2021, for example, Movistar’s Chilean unit reported having 4,000 cable cuts related to theft, with this total rising to 10,000 over the past three years. Telefonica Argentina, similarly, has suggested that a million metres of copper cable had been stole in the last year alone, affecting roughly 1,200 customers each day in 2021. Repairing and replacing the stolen cables is not cheap, reportedly costing the operator around $18 million per year. The Latin American region, has had a notable problem with cable theft , particularly in Chile, Venezuela, Brazil, and Argentina, for many years - a problem that has only been exacerbated by rising copper prices.In 2021, for example, Movistar’s Chilean unit reported having 4,000 cable cuts related to theft, with this total rising to 10,000 over the past three years. Telefonica Argentina, similarly, has suggested that a million metres of copper cable had been stole in the last year alone, affecting roughly 1,200 customers each day in 2021. Repairing and replacing the stolen cables is not cheap, reportedly costing the operator around $18 million per year.
Earlier this week, Costa Rica’s state utility company, ICE, announced that copper cable thefts had cost them around $11 million over the past three years
Clearly, handling these theft-related disruptions is an expensive business, sometimes prohibitively so. For some operators, in fact, the cost of replacing the damaged infrastructure can be simply too high to justify; in Venezuela, for example, some operators have chosen not to replace stolen equipment, leaving customers entirely without service.
As a result of this increasing disruption, authorities in Latin America have been cracking down on cable theft with varying degrees of success. Back in February, Chilean police notably seized a shipment of roughly 150km of copper cable stolen from Movistar’s network, valued at around $100,000.
Operators in many of these markets have been pushing for their governments to take a stronger stance against cable theft and network vandalism, proposing everything from harsher criminal sentences to greater regulation of national metal supply chains to lower the value of black-market trade.
But despite this gradually increasing focus from police and government organisations, the battle to prevent network disruption in the first instance remains a major problem that the operators must solve on their own. Telecom Argentina, for example, has proposed installing alarms along the network, while Chile’s VTR has suggested they may employ drones to patrol their network.
Analysts predict that copper prices will gradually fall back to previous levels over the next few years as the international market regains stability. In the short term, however, it seems likely that this problem for LatAm operators will continue to get worse before it gets better.
https://www.totaltele.com/512929/LatAms-costly-copper-conundrum-The-impact-of-cable-theft
Are you a Rio Tinto mine worker? Contact us to describe the issues in your struggle.
The five-year labor agreement for 1,300 workers at Rio Tinto’s Kennecott Bingham Canyon mine and refining facility in Utah is set to expire at midnight Thursday, March 31. The mine and smelting operation, 25 miles southwest of Salt Lake City, includes one of the largest open-pit copper mines in the world, also known as the “richest hole on earth.”
Earlier this month, rank-and-file workers, who include heavy-equipment operators, line operators and maintenance workers, rejected a contract proposal backed by the United Steelworkers (USW), the International Union of Operating Engineers, the International Association of Machinists and the International Brotherhood of Electrical Workers.
Rio Tinto worker with copper slabs (Rio Tinto media)
The deal included annual raises of 4 percent in the first year and 3 percent in years two through five, which amounts to $1.18 over five years. It also maintained substandard wage and benefits for new hires and insufficient paid time off for workers on exhausting work schedules. Workers want substantial wage increases to protect them from the sharp rise in living costs in the Wasatch Front, the metropolitan region in the north-central part of Utah. Housing prices have jumped 23.6 percent in Salt Lake County, with the median single-family home selling for $580,000 in February. Average gas prices in the state are $4.43 a gallon, 20 cents higher than the national average.
“This is our livelihood, and we want a fair deal to better provide for our families,” David Gearhart, a smelter worker with 17 years at Kennecott, told ABC4-TV in Salt Lake City, “We want to be able to go on vacation and not just live to work. We’ve sacrificed a lot over the last two years of the pandemic to keep Kennecott making copper and making money. We just want to be shown appreciation for that. They called us ‘essential employees’ in 2020, we’ll show it now,” he said, adding that workers were prepared to strike if no deal was reached by the deadline.
“Now, they’re not worth anything,” the worker’s wife, Rene, added. “My husband was sick, and he was in the ICU. And they caught it at work. He got deathly ill, and so did I. It was terrible, I didn’t know if he was going to live or die,” she told the ABC4 reporter.
Rio Tinto, which bought Kennecott Utah Copper’s assets in 1989, is a massive UK- and Australian-based multinational corporation and the world’s second-largest metals and mining corporation. The company made $21 billion in profits last year, more than doubling its 2020 profits. The price of copper, a key metal for energy generation, transmission, and storage, including for the rapidly expanding electric vehicle battery production, has risen from $2.19 a pound on March 30, 2020, to $4.74 on Monday.
The Kennecott mine, which opened in 1906, produces nearly 20 percent of the US’s copper production, as well as gold and silver. Rio Tinto is also recovering previously overlooked minerals from mining sludge, including rhenium, tellurium and bismuth, which are used in products ranging from smartphones and solar panels to jet engines and military explosives.
Last September, Rio Tinto CEO Jakob Stausholm met with Biden administration officials involved in securing critical mineral supply and countering the domination of China, according to the Wall Street Journal .
Mine workers face dangerous and deadly conditions daily from heavy machinery, including giant trucks and shovels, and in the smelting and refining areas. In 2017, Albert Lozano, 64, died after exposure to sulphur dioxide while working at the Garfield smelter.
There a long history of bitter class conflict at the Kennecott’s Utah operations, including a bitter strike of largely Greek immigrant workers led by the Western Federation of Miners in 1912. On Sept. 19, 1912, the Salt Lake Tribune reported, “With 800 foreign strikers armed with rifles and revolvers strongly entrenched in the precipitous mountain ledges across the canyon from the Utah Copper Mine raking the mine workings with a hail of lead at every attempt of railroad employees or deputy sheriffs to enter the grounds, the strike situation has reached its initial crisis.”
Bingham Canyon Mine, south of Salt Lake City, Utah, 22, May, 2019 (Photo by Farragutful)
Despite efforts to pit immigrant workers against each other, including by using strikebreakers from Mexico in 1912, the workforce consolidated into a powerful force including workers of all races and nationalities. Significant strikes, led by the left-wing International Union of Mine, Mill and Smelter Workers (IUMMS) and involving large numbers of Mexican-American workers, erupted at Kennecott’s operations in Utah, New Mexico and Arizona in 1948, 1955 and 1964.
The United Steelworkers union waged a Cold War anti-communist campaign against the IUMMS and absorbed its membership in the 1960s. By the late 1970s and early 1980s, the USW abandoned any resistance to the corporations and adopted the corporatist doctrine of labor–management partnership, which led the destruction of the jobs of hundreds of thousands of steelworkers and copper miners.
The isolation and defeat of the bitter 1983–1984 strike against Phelps Dodge by the coalition of unions led by the USW helped set the stage for a corporate assault against the working class over the next decade.
During the Phelps Dodge strike, the unions told the miners that they could rely upon Arizona’s Democratic governor, Bruce Babbitt. The so-called “friend of labor” mobilized hundreds of state police to occupy the mining towns of Morenci, Ajo and Clifton to protect the scabs being hired to replace the strikers.
More recently, the USW and other unions have been involved in the isolation and betrayal of the six-month lockout of 780 Rio Tinto Alcan aluminum smelter workers in Alma, Quebec, in 2011–2012; 1,300 Asarco copper miners in Arizona and Texas in 2020; 900 Rio Tinto aluminum smelting workers in British Columbia in 2021; and the two-month strike by 2,400 workers at Vale Inco ’s nickel, copper, cobalt and precious mining complex in Sudbury, Ontario. In each case, the USW and other unions collaborated in rolling back wages, pensions and working conditions, which were won through generations of struggle.
Rio Tinto management is depending on the USW to block a strike and string out workers well past the contract expiration before pushing through another pro-company contract. As company spokeswoman Lita Diesley told the Tribune, “Rio Tinto has a positive track record with unions and that there hasn’t been a Kennecott strike in decades.”
If workers compel the unions to strike, then the USW will do everything it can to isolate the striking workers, starve them into submission and force them to accept concessions that benefit the company and the union officials, from the local to the international, who would help Rio Tinto to impose these concessions.
That is just what the USW has done to 30,000 oil refinery and petrochemical workers who were also prepared to strike. USW President Tom Conway extended the contract for more than three weeks after the February 1 deadline and then suddenly announced a four-year sellout deal, which includes a 2.5 percent raise in the first year and an average annual wage increase of 3 percent, far below the rate of inflation, now running at a 40-year high of 7.9 percent. The deal was announced three days after Conway met with President Biden and top energy and Defense Department officials and agreed to block any strike that could disrupt the administration’s plans to ramp up its military confrontation with Russia over Ukraine. Meanwhile, the oil industry is reaping record profits through price-gouging.
Workers at the Chevron refinery in Richmond, California, revolted, however, and voted down two USW-backed contracts, forcing the USW to call a strike, which it is now working to isolate. The USW is not paying a penny in benefits from its multimillion-dollar “Strike & Defense Fund,” even though it controls $1.5 in assets and pays Conway a salary over $221,000 plus perks. There are no press releases on the union’s website about the struggles under way in California and Utah.
There is enormous support for a concerted fight back in the working class. The last two years of the pandemic have seen 1 million people needlessly die in the US due to the prioritizing of profit over human life by the corporate and political establishment. At the same time, the corporations and billionaires have never done better. Runaway inflation is driving workers into struggle to defend their livelihoods and millions are opposed to another war for the giant oil corporations and banks.
To unite with the growing wave of struggles, Rio Tinto workers must take the conduct of their fight out of the hands of the USW and other pro-company unions and join the growing number of workers who are building rank-and-file workplace committees to fight for the demands they need, not what the corporate executives and union bureaucrats say is affordable.
Mine workers who want to prepare a real struggle and build an independent committee to link up with other workers in a national strike against the energy, metals and mining giants should contact the World Socialist Web Site today.
SHANGHAI, Mar 31 (SMM) - Overnight nickel futures showed signs of falling after an increase following LME nickel in day trading. The contract is still under the influence of money game.
On the supply side, the pandemic has brought transportation problems, and the supply of Jinchuan nickel in Shanghai is relatively tight. As the price difference between SHFE and LME nickel remains great, and the supply of Sumitomo, NORNICKEL, NIKKELVERK nickel and nickel briquette is still tight. In terms of nickel pig iron, the production and transportation problems of NPI plants in Liaoning and Inner Mongolia have been seriously affected, and the output is expected to fall in March.
On the demand side, the cost efficiency of self-dissolved nickel briquette in the nickel sulphate plant has not recovered amid high futures prices. In addition, the output of the downstream precursor plants and the ternary cathode material plants did not contract in March thanks to their in-plant stocks, but the inventory in April will be low, hence there is possibility of production cuts. In terms of stainless steel, the operating rates of steel mills were lower than expected, and spot transactions were muted against the backdrop of high raw material prices. To sum up, under the background that futures prices deviate from fundamentals and the pandemic intensifies, nickel prices are bound to return to the fundamentals.
Pure nickel : As the recent futures prices have deviated from the spot supply and demand pattern, SSMM now suspended offering premium/discount quotations of 1# Jinchuan nickel, 1# imported nickel and nickel briquette. SMM prices of 1# refined nickel, 1# Jinchuan nickel, 1# imported nickel are available as usual. This notice complies with IOSCO standards. Jinchuan nickel was quotated at 218,800-220,000 yuan/mt, with an average price of 219,400 yuan/mt, down 1500 yuan/mt from yesterday. NORNICKEL nickel was offered at 219,000-220,000 yuan/mt, and the average price was 1400 yuan/mt lower than the previous day. The price decline was mainly due to the downward trend of SHFE nickel driven by LME nickel. Nickel briquette was quotated at 216,800-218,000 yuan/mt, with an average price of 217,400 yuan/mt, down 500 yuan/mt from yesterday. At present, the cost efficiency of nickel briquette has not yet recovered, and the expectation of downstream procurement is not optimistic. There were few quotations from traders amid violently fluctuating SHFE nickel prices.
NPI: Recently, an overseas steel mill purchased thousands of tonnes of high-grade nNPI from Indonesia, and the transaction price was equivalent to 1,675 yuan/mtu (delivery to port, tax included). At present, domestic NPI prices are maintained at a high level under the support of high cost, price difference and tight supply. The downstream transactions were thin, and the steel mills still have poor acceptance of high-priced raw materials in the short term. The tug-of-war between upstream and downstream is still intensive. In addition, due to the impact of FENI imports, domestic steel mills try to purchase high-grade NP as many as possible, which also leads to higher prices.
Nickel sulphate: The volatility of nickel prices has not completely subsided, but nickel sulphate has now reached the time for centralised purchasing. Inquiries and offers have gradually become active, and the upstream was somehow willing to lower their prices. According to SMM research, due to the delay in the procurement cycle, upstream manufacturers currently have sufficient inventory, while some downstream enterprises' raw material inventory has dropped to a low level. The market demand has gradually become clear despite the volatility of nickel prices. However, due to the comprehensive impact of factors such as cost, capital and inventory, the differences in the quotations of upstream companies still exist. According to the comprehensive understanding of upstream and downstream participants, the price range of salt factory was 45,000-48,000 yuan/mt. Some quotations were still higher than 50,000 yuan/mt due to cost problems. However, the acceptable prices of the downstream was still below 46,000 yuan/mt. Although there are still some differences in the acceptable prices of the two sides, the possibility of successful transactions has picked up.
Stainless steel: The SS contract fluctuated near the 10-day moving average, and the overall range stayed above the 20,000 yuan/mt. In the spot market, due to the impact of the pandemic, transactions were poor. The Wuxi Dongfang Steel City market has been closed, and relating staff are quarantined. But some traders' warehouses are not in the Steel City, and orders can be delivered normally. Nonetheless, the overall market transaction was too poor, and regional logistics and transportation are also limited. Spot prices in Wuxi were relatively stable yesteraday. The prices of 304 cold-rolled coils moved between 20,300-20,600 yuan/mt, and the prices of 304 hot-rolled coils were between 19,700-19,900 yuan/mt. As of 10:30 am (Beijing time), the SHFE SS 2205 contract stood at 20,310 yuan/mt, and the spot premiums in Wuxi were 160 - 460 yuan/mt. (Spot prices of deburred edge products = Spot prices of burr edge products + 170 yuan/mt).
[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]
VANCOUVER, BC, March 30, 2022 /CNW/ - Taseko Mines Limited (TSX: TKO) (NYSE MKT) (TGB; LSE: TKO) ("Taseko" or the "Company") is pleased to announce a new 706 million ton proven and probable sulphide reserve for the Gibraltar Mine, a 40% increase as of December 31, 2021. The new reserve estimate allows for a significant extension of the mine life to 23 years with total recoverable metal of 3.0 billion pounds of copper and 53 million pounds of molybdenum.
Highlights from the new reserve:
Note: Taseko's 75% owned Gibraltar Mine is located north of the City of Williams Lake in south-central British Columbia. All dollar amounts are in Canadian dollars (C$) and units are imperial unless stated otherwise.
Stuart McDonald, President and CEO, commented, "Gibraltar has been our cornerstone asset since it was restarted 17 years ago, and with the extended mine life we expect it will continue to generate significant cashflow for many years to come. Over the last two years there has been a dramatic shift in the long-term outlook for copper, as the world accelerates the transition to a green economy. With the improved market outlook, our engineering team updated pit designs which have added 200 million tons of additional reserves to the life of mine plan. The mine now has a 23-year mine life with significant leverage to copper prices going forward. At current copper prices, the mine NPV increases to over $2 billion (75% basis, after-tax)."
Richard Tremblay, Senior VP, Operations, added, "The additional tons in the new reserve are at a similar grade as Gibraltar's previous reserves. While the life of mine strip ratio has increased slightly, there has been no change to the mine plan over the next five years where copper production is expected to average approximately 128 million pounds per year. The updated pit designs are based on a conservative long-term copper price of US$3.05 per pound (previously US$2.75 per pound), and incorporate material that was previously classified as resources."
Mr. McDonald concluded, "Recent market activity and global events continue to show the value of a long-life, steady-state copper mine in a top mining jurisdiction. With our near-term growth plans in Arizona, and longer-term development projects in British Columbia, Taseko is very well positioned to build a North America based mid-tier copper producer."
| 1 The NPV and cash flow is based on copper prices of $4.25 (2022), $3.90 (2023) and US$3.50 per pound long-term, and a molybdenum price of US$18 (2022), US$15 (2023) and US$13 per pound long-term and a foreign exchange rate of 1.3:1 (C$:US$). |
| Gibraltar Mine Sulphide Mineral Reserves as of December 31 , 2021 at 0.15% Copper Cut-off | ||||
| Category | Tons (millions) | Cu Grade (%) | Mo Grade (%) | Cu Eq. (%) |
| Proven | 509 | 0.25 | 0.008 | 0.27 |
| Probable | 191 | 0.23 | 0.008 | 0.24 |
| Ore Stockpiles | 6 | 0.18 | 0.007 | 0.20 |
| Total Proven and Probable | 706 | 0.25 | 0.008 | 0.26 |
https://finance.yahoo.com/news/taseko-announces-40-increase-gibraltar-221500531.html
Copper explorer Hot Chili has upgraded its mineral resource estimate at the company’s Costa Fuego copper-gold hub in Chile boosting the previous total indicated resource estimate by an impressive 67 per cent to 725 million tonnes grading at 0.47 per cent copper equivalent for 2.8 million tonnes of contained copper and 2.6 million ounces of gold.
The mineral resource upgrades also include a 53 per cent hike in the high-grade indicated resource to 156 million tonnes grading at 0.79 per cent copper equivalent containing 1 million tonnes of copper and 850,000 ounces of gold.
Management says the high-grade indicated resource, using a cut-off of 0.6 per cent copper equivalent, is accounting for at least one third of contained copper and gold – an increase in 13 per cent from the previous estimate.
Hot Chili’s Costa Fuego copper-gold project in coastal Chile, 600km north of Santiago is made up of the Cortadera, Productora and San Antonio deposits and all have updated mineral resource estimates.
Of the three deposits, Cortadera tops the list delivering the lion’s share of resource growth for Costa Fuego handing over an indicated resource of 471 million tonnes at 0.46 per copper equivalent, up a tidy 134 per cent from the previous estimate.
At Productora, the revised mineral resource estimate has resulted in an increase in high grade indicated material, using the 0.6 per cent copper equivalent cut-off grade. The company says the updated mineral resource estimate is considered more robust than the previous 2016 estimate with improved understanding on the controls of mineralisation.
To round off the trifecta is a maiden mineral resource estimate for San Antonio. Despite much of the resource drilling focusing on Cortadera and Productora, San Antiono has delivered an encouraging 4.2 million tonnes grading at 1.2 per cent copper equivalent utilising only 4922 metres – paltry compared to the 92,000m of sunk into Cortadera.
San Antonio might be the smallest of the three resources, but the company says it is an important addition to the Costa Fuego inventory, representing the first high-grade shallow satellite deposit outside of its larger siblings providing valuable feedstock in Costa Fuego’s early mine schedule.
The revamped mineral resource estimates caps off a busy 18 months for the Perth-based explorer that has included 52,000 metres of resource drilling at Cortadera, purchase of 100 per cent of the Cortadera copper-gold porphyry discovery and execution of an offtake agreement with mining heavy weight, Glencore for future concentrate production.
Costa Fuego is projected by the company to be in production within five years. A preliminary feasibility study forecast annual production of 100,000 tonnes of copper and 70-80,000 ounces of gold.
The world is hungry for advanced, low-risk, senior copper developments with near-term production potential. Copper prices are driving higher and new meaningful copper supply is fast becoming a mirage.
Hot Chili is well positioned to deliver into this forecast supply gap and contribute to the decarbonisation super cycle, particularly due to Costa Fuego’s lower economic hurdle resulting from its low elevation location and proximity to existing infrastructure; abundant grid power with high renewables contributions.
Three drill rigs continue churning out the metres at Hot Chili’s Costa Fuego copper-gold hub as the company enters the next stage of development at the same breakneck speed it has become renowned for. Drilling will reportedly focus on upgrading the Cortadera and Productora resources to a higher confidence resource category and advance a preliminary feasibility study due for release in the September quarter.
Hot Chili’s Costa Fuego has now cemented its place as a top-ten copper development project with one of the shortest timeframes to first production amongst senior copper development projects globally – and it just the beginning.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
Much has been said about the trials and tribulations of the aluminum market, particularly of the impact on smelter output from energy rationing in China last year and then rapidly escalating energy prices in Europe this winter.
Russia’s invasion of Ukraine turbocharged prices. Fears rose over already constrained oil and natural gas supplies to Europe getting even worse. In the face of rapidly escalating energy costs, European smelters began partial and even complete closures of smelters pending a drop in power costs.
But, of course, the dynamic driving aluminum prices has been having exactly the same impact on all smelting or refining processes that are heavily reliant on electricity. For example, EAF blast furnaces for steel have also faced similar pressures.
Today, however, we’ll take a look at zinc smelters and zinc prices.
Meanwhile, the MetalMiner weekly newsletter includes similar analysis every Wednesday, covering base metals, steel, precious metals and a wide variety of factors impacting metals markets.
Rising zinc prices
Zinc is not normally considered a sister metal to aluminum. However, from a cost of production profile, it is remarkably similar.
So, it’s no surprise that Reuters reports the same dynamic playing out in Europe for zinc as for aluminum.
Firstly, exchange and trade inventory has been falling dramatically. It’s fallen to the point where the LME’s European warehouses are virtually empty when cancellations pending physical loadout are taken into account.
LME-registered stocks in the United States have fallen to a low of 25,925 tons. Available tonnage is lower still at 19,825 tons, the post reports. That compares to this time last year, when New Orleans alone held almost 100,000 tons of zinc.
For addition zinc analysis, the MetalMiner Monthly Metals Outlook, available to corporate subscribers, breaks down the market comprehensively.
Physical delivery premiums reflect shortfall
Secondly, and not surprisingly in view of the above, physical delivery premiums also underline the dire shortage of physical metal.
The premium for special-high-grade zinc at the Belgian port of Antwerp has risen to $450 per ton from $170 last October before the winter heating crisis kicked in. Meanwhile, the Italian premium has exploded from $215.00 to $462.50 per ton over the same time frame, according to Reuters.
In the U.S., Fastmarkets estimates Midwest physical premiums are up by 24% to 26-30 cents per pound ($573-$661 per metric ton).
This is largely an energy-related tightness. Russia is not a significant zinc supplier to Europe. However, the war is a direct cause of high power costs. So, to that extent, Europe and North America are going to be beholden on solutions to the conflict before power costs stand much chance of easing.
The situation in the Far East, by comparison, is almost a parallel universe. The LME’s Singapore warehouse holds nearly 82,000 tons. SHFE warehouses hold over 177,000 tons. As such, those figures raise the prospect of an arbitrage-induced flow of metal from east to west in coming months.
Reuters relays ILZSG estimates that the zinc market posted a deficit last year of 194,000 tons, largely a result of energy issues. That is contrary to predictions earlier in 2021 that the market would see a surplus of 353,000 ton. That’s a half-million-ton loss of supply, initially in China and then in Europe.
But China’s energy problems are easing. With that, aluminum and zinc production has been rising strongly this quarter. What seems less likely is a resolution anytime soon to Europe’s woes.
Relief for zinc consumers appears to be increasingly distant (in the West, at least).
https://agmetalminer.com/mmwp/2022/03/31/zinc-prices-rising-as-inventory-disappears-by-the-day/
United Arab Emirates: Emirates Global Aluminium, the largest industrial company in the United Arab Emirates outside oil and gas, and PT Indonesia Asahan Aluminium (INALUM), today signed a Memorandum of Understanding that could lead to the licencing of EGA’s UAE-developed smelting technology for a brownfield aluminium smelter expansion in Indonesia.
His Excellency Husin Bagis, Ambassador of the Republic of Indonesia to the UAE, His Excellency Saeed Mohammed Al Tayer, EGA Vice Chairman, and Musabbeh Al Kaabi, EGA Board member witnessed the signing at the Indonesia pavilion at Expo 2020 Dubai. The agreement was signed by EGA’s Chief Executive Officer Abdulnasser Bin Kalban and INALUM’s President Director Hendi Prio Santoso.
Under the agreement, EGA and INALUM will engage in a feasibility study of the use of EGA’s technology in a planned, up to 400,000 tonnes per year expansion of INALUM’s Kuala Tanjung smelter in North Sumatra.
EGA will also explore the potential to invest in the expansion and off-take metal, should it be developed with renewable energy. The existing aluminium smelter at Kuala Tanjung uses electricity generated with hydropower. The companies will also explore further cooperation opportunities throughout the aluminium value chain.
EGA and INALUM are already working together on the potential upgrade using EGA technological know-how of the existing aluminium smelter at Kuala Tanjung, under an agreement signed in 2020. The project aims to boost production from the existing reduction cells by around 20,000 tonnes per year or approximately 10 per cent. Design work for a pilot section of the project has been completed. EGA has completed a series of similar upgrades across its sites in Jebel Ali and Al Taweelah over recent decades.
EGA and INALUM are also together exploring the potential of developing a greenfield aluminium smelter in Indonesia using EGA’s technology.
Abdulnasser Bin Kalban, Chief Executive Officer of EGA, said: “This agreement further deepens our cooperation with INALUM, which is based on the potential use of EGA’s technology in a number of development projects in Indonesia. Our aim is to grow our position as the technology provider of choice in our industry, developing revenue streams for EGA from technology licensing and potentially further opportunities, while strengthening the relationship between our two countries.”
Hendi Prio Santoso, President Director of INALUM, said: “We are pleased with the progress of our relationship with EGA, which we are confident will lead to the application of EGA’s leading smelting technology in Indonesia. We look forward to further milestones in this brownfield expansion and our other projects in the near future.”
EGA has developed its own aluminium smelting technology in the UAE for more than 25 years. EGA has used its own technology in every smelter expansion since the 1990s and has retrofitted all its older production lines.
In 2016, EGA became the first UAE industrial company to license its core process technology internationally, in a deal with Aluminium Bahrain (ALBA). ALBA’s Potline 6, built using EGA’s DX+ Ultra technology, began production in 2018.
In 2020, EGA signed an agreement with NEO Aluminio Colombia which could lead to the export of EGA technology for the development of the South American country’s first aluminium production facility.
-Ends-
Contacts at EGA:
Simon Buerk
sbuerk@ega.ae
LONDON- Aluminium prices were on track to register their biggest quarterly gain since 1988 on Thursday, driven up by supply disruptions and increased production costs resulting from Russia's invasion of Ukraine.
Nickel, meanwhile, headed towards its largest quarterly rise since 2003, helped by a short squeeze on the London Metal Exchange (LME) that caused a price spike this month.
Russia produces about 6% of the world's aluminium and 10% of its nickel, along with other metals, energy and grains.
Sanctions against Russia have cut or complicated supply routes and driven up the price of energy used to power smelters. High costs had already forced some aluminium and zinc smelters in Europe to reduce output.
Benchmark aluminium on the LME was down 0.1% at $3,546 a tonne by 1050 GMT on Thursday but up 26% this quarter.
LME nickel was up 0.6% at $33,080 and 58% higher over the quarter.
Both metals reached record highs in March, though nickel's was later cancelled by the LME as it sought to stabilise the market after a savage price spike on March 8.
Metals prices are likely to rise further as inflation pushes investors towards commodities while tight supply of industrial metals and the risk of further sanctions constraining Russian supply also boosting prices, said ING analyst Wenyu Yao.
"Upside risk will dominate in the next few months," she said.
Among threats to demand are measures to contain the spread of COVID-19 in China, the biggest metals consumer. Chinese factory activity contracted in March, but the government says it will prop up economic growth.
LME copper was down 0.1% at $10,358 a tonne on Thursday but up about 6% in the first quarter. Prices reached a record high in March.
Zinc was down 0.3% at $4,136 but up about 17% for the quarter after also hitting a record peak in March.
Lead rose 0.3% to $2,425.50 and has gained about 5% in the first three months of 2022.
Tin was up 0.5% at $42,720 and up 10% in the first quarter, having reached a record high in March to help it towards an eighth consecutive quarterly gain.
(Reporting by Peter Hobson Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)
SHANGHAI, Mar 31 (SMM) - Shanghai and LME base metals mostly closed with gains as the energy issue came back amid extensive doubts on Russia-Ukraine talks, pushing up natural gas prices by more than 10%.
LME copper rose 0.19%, aluminium added 2.83%, lead added 1.67%, and zinc fell 0.14%.
SHFE copper rose 0.11%, aluminium added 1.01%, lead added 1.28%, zinc rose 0.97%, nickel jumped 2.31%.
Copper: LME copper opened at $10,441/mt yesterday and then fell to $10,350/mt. At last, the prices closed at 10,371 yuan/mt, up 0.19%. Trading volume was 11,000 lots, and open interest stood at 256,000 lots.
The most-traded SHFE 2205 copper contract opened at 73,710 yuan/mt in overnight trading, and once rose to the highest price of 73,870 yuan/mt. At last, the prices closed at 73,750 yuan/mt, up 0.11%. Trading volume was 32,000 lots, and open interest stood at 160,000 lots.
On the macro front, due to the Russia-Ukraine conflict, copper prices continued to fluctuate at a high level. At the same time, the strong growth of ADP employment in the US in March attracted the market’s attention to the US Fed's interest rate hike.
In the spot market, the copper cathode trading in Shanghai was basically at a standstill in the last two trading days due to the COVID-19 outbreak. Under the demand for cash exchange of some traders, the premiums dropped rapidly. Shanghai Puxi will begin the closed-loop management tomorrow, and most of Shanghai's warehouses are located in Puxi, which leads to the widespread expectation that trading in Shanghai will pick up after March 5. During this period, the goods will stagnate both in and out of the warehouses and in and out of Shanghai. It is expected that premiums will fall. On the last two trading days of this week, there will be almost no transaction in the market.
SHFE copper prices are expected to move between 73,300-73,900 yuan/mt today, and LME copper will trade between $10,300-10,400/mt; spot premiums are likely to fluctuate between 220-400 yuan/mt.
Aluminium: Overnight, the most-traded SHFE 2205 aluminium contract opened at 22,970 yuan/mt, with the highest and lowest prices at 23,030 yuan/mt and 22,830 yuan/mt before closing at 22,910 yuan/mt, up 230 yuan/mt or 1.01%.
LME aluminium opened at $3,470.5/mt on Wednesday and closed at $3,546.5/mt, an increase of $97.5/mt or 2.83%.
On the supply side, the resumption of domestic aluminium production has accelerated, but the output has not reached the level of the same period last year. The pandemic has continued to affect the transportation efficiency of aluminium ingots in some areas. On the demand side, the COVID outbreaks in many places in China disrupted downstream production, causing aluminium ingot social inventory to grow. In the short term, the domestic market will face more negative factors, which are primarily reflected in the accumulation of social inventory in what should have been the peak consumption season and the impact of the pandemic on downstream sectors and logistics.
Lead: Overnight, LME Lead opened at $2,379.5/mt. Dragged on by energy crisis as a result of geopolitical influences, natural gas prices rose. LME lead rose as the broad metals market went up as a whole. The contract closed at $ 2429.5/mt, up 1.67%.
Overnight, the most-traded SHFE 2205 lead opened at 15,680 yuan/mt. The longs intensively entered the market boosted by the energy issue as well as supply difference across different regions in early trade, and the contract once hit a high of 15,840 yuan/mt. It finally closed at 15,835 yuan/mt, up 1.28%. The open interest stood at 51,286 lots, up 3,061 lots from the previous trading day.
Zinc: Three-month LME zinc lost $6/mt or 0.14% to close at $4,176/mt. The open interest was flat from a day ago. LME zinc inventory lost 150 mt to 142,100 mt yesterday. On the macro front, Russia-Ukraine situation added to the mystery, and natural gas prices rose by about 10%; while Germany said to prepare for the Russian "cut-off" of energy supply and started the level I emergency plan. LME zinc is expected to move between $4,160-4,210/mt.
The most traded SHFE 2205 zinc contract closed at 27,035 yuan/mt, up 260 yuan/mt or 0.97%. The open interest added 464 lots to 113,000 lots. SHFE zinc is expected to move between 26,600-27,100 yuan/mt, and 0# Shuangyan zinc flat over SHFE 2205. On the fundamentals, the production curtailment and suspension across smelters fermented, and the longs took the lead amid expanding supply void.
Overnight, doubts about the situation in Russia and Ukraine dragged down European and US stocks, while oil, gas and metals rebounded across the board. European natural gas rose nearly 10%, LME nickel rose over $1,000/mt in one day, Russian stock indexes rebounded before the short selling ban was lifted on Thursday. Germany prepared for Russian "supply cuts", and launched a level I emergency plan for natural gas and called on consumers to "save gas". Putin and the German chancellor agreed that experts from both sides discuss the purchase of natural gas in rubles. U.S. fourth-quarter real GDP annualized final value stood at 6.9% on a quarterly basis, slightly lower than market expectations. March ADP employment numbers slightly exceeded expectations. Shanghai maintained strict pandemic control policies in place.
Tin: SHFE tin stabilised after a slight drop in the overnight trading, and remained at highs. Market wait-and-see sentiment was strong. The domestic tin inventory under warrants did not change much, while the overseas inventory continued to drop. The mainstream spot transaction prices were still concentrated around 350,000 yuan/mt, but the market transaction declined. SHFE tin will hover at highs amid stable supply and demand.
Nickel: The most-traded SHFE 2205 nickel contract continued to fluctuate in overnight trading, while LME nickel rose after falling for three consecutive days. Nickel futures opened at 227,600 yuan/mt in overnight trading and then fluctuated weakly. At last, the prices closed at 225,050 yuan/mt, 5,080 yuan/mt higher than the previous trading day, up 2.31%. Open interest fell 7,049 lots to 53,000 lots, and trading volume was 89,000 lots.
On the whole, nickel futures rebounded. The trend of SHFE nickel is closely related to LME nickel futures. The spot market is still in short supply due to the large fluctuation of nickel futures and the huge import losses. On fundamentals, nickel sulphate is expected to reduce production due to high cost, and steel mills also plan to cut production due to pandemic and high raw material costs. On the whole, the demand for pure nickel may weaken, and the Indonesian nickel matte may have an incremental expectation. Under the weak supply and demand, SHFE nickel is strongly influenced by LME nickel and the capital game. It is expected that SHFE nickel will fluctuate during the day.
I have to repeat yet again that this is not just a war but an economic war, and not just a crisis but a metacrisis. As such, the latest attack from Moscow was always obvious to those expecting both sides to deliberately hurt the other while strengthening their own geostrategic position: using Russian energy as a weapon against Western sanctions.
Russia’s key Caspian oil pipeline is to be closed “for repairs” that will last two months, taking around 1mbpd out of circulation; but, eclipsing that, within a week Russia will demand payment in roubles for its gas from “hostile countries” – which means Europe.
Obviously, this is a breach of contract. Shock! Horror! Contracts might be broken! You think freezing FX reserves, sanctions, talking about naval blockades, proposing the introduction of letters of marque allowing privateers to seize Russian property at sea, as well as Russian forced nationalisations --to say nothing of blowing up civilians and threatening the use of nuclear weapons on state TV-- is business as usual? Contract, shmontract.
Equally obviously, this has a benign interpretation and a grave one. The benign one is Europe will swap EUR for RUB and then give the RUB back to Russia for gas. Except that Putin is introducing this new radical measure because he says there is no point in selling Russian gas or oil for dollars or euros if he can’t spend them: they are funny money to him under sanctions. As such, the grave interpretation is Putin attempting to get his own funny money accepted as equivalent to the dollar and euro, even if it is managed by a central bank where everyone is either quitting or trying to quit, and as the last remaining Russian liberal, Anatoly Chubais, leaves both the Kremlin and the country in opposition to the war.
Yet paying Russia in roubles would both prop up RUB and undermine Western sanctions. Putin would clearly chisel away at them: “Yes, I have the euros: but now I need you to remove the following measures so I can benefit from them….” Indeed, EU countries are already saying they won’t pay in roubles. Yet don’t expect Putin to blink: he “loses money” by not selling energy, but it’s money he literally cannot spend. Better to escalate, ‘shake the box’, and try to split the West, as I have repeatedly warned was the risk.
As such, we could be looking at the scenario where Russian energy taps are turned off. Helpfully for Russia, Germany just underlined this will mean a crippling recession. European gas prices jumping 30% was a knee-jerk reaction that is only a down-payment on what we would ultimately see. We were already getting market calls that oil was heading back over $150 in the near future, and Brent was up to $121.50 at time of writing: that benchmark also overlooks the far larger squeeze on the industrial workhorse fuel that is diesel. That is what drives the trucks that drive goods from farms, factories, or ports to warehouses or retailers.
As soon as Friday, the US may announce a plan to help Europe move away from Russian gas: well, it better kick in before the following Friday. And this is the same US unable to square the circle of its own energy needs, its own shale energy (due to green policies), Canadian energy (due to green policies), energy held by geopolitical opponent Venezuela, and energy held by traditional Middle East allies (due to Iran policy, which is the inverse of what the US is doing vs. Russia, and yet expecting good outcomes - as dismembered in this Wall Street Journal op-ed.)
The EU was already looking at spending lots on energy subsidies. Some in the US Congress are talking about stimulus cheques if retail gasoline prices are over $4 a gallon. The UK government, whose Office for Budget Responsibility is forecasting the steepest one-year decline in living standards since records began in the 1950s, just cut fuel duty 5bp a litre, which takes prices all the way back to the level of a week ago(!), and tweaked national insurance thresholds while promising income tax cuts, which will help the middle class and not the poor. Clearly, even while not doing enough, fiscal deficits and public debt will growth – and as rates are also rising.
Moreover, unless the surge in energy prices is short-lived --which hinges on the war and the metacrisis suddenly resolving themselves(!)-- then this is how you return to something like a 70’s-style wage-price spiral. Yes, it isn’t firms paying higher salaries to compensate for inflation, it’s the state, via direct transfers – but is the final outcome better? If we don’t do that we face stagflation, recession, and soaring populism. But if we do, global market prices won’t go down, and it is the world’s poorest who will bear the brunt of higher prices. They do populism too.
Indeed, fertilizer is soaring – leading to headlines like “Coffee Farmers Face ‘Mega Emergency’ as Fertiliser Costs Soar”, talking about Central America; Ukrainian media reporting “Russian invaders try to undermine Ukraine's sowing campaign” and are “chaotically mining the Ukrainian territory and deliberately destroying agricultural machinery” means staple food prices are going to go up for another reason; steel prices are leaping, which will hit manufacturing and construction; and LME nickel went limit up yesterday – as trading was shut down and trades cancelled *again*. This is what key commodity ‘markets’ look like now: a total mess.
Related: Big Oil Is No Longer “Unbankable”
So much so, that commodity trading houses are calling for emergency central-bank intervention, evidenced by a letter sent by the European Federation of Energy Traders pleading for emergency liquidity support. The warnings of ‘this smells like 2008’ for the real economy are now there for all to see.
Yet the lesson from 2008 is that printing money pushes up asset prices without resolving underlying structural problems. If we don’t get central-bank support, current volatility and margin calls may, as some in the industry warn, see firms fail. However, if we CTRL-P into a market with not enough energy, fertilizer, Ukrainian wheat, steel, etc., then what do you think the impact will be for everyone except those trading them – who had been making massive profits until recently? Higher prices, until we deal with the real underlying problem. Which is the entire world order. Which higher prices destabilise.
Meanwhile, Russia Today chief Simonyan says: "Next step - barter payments with airplanes, high-speed trains, whatever we need." I was warning about barter and countertrade returning just last week. Except who will be swapping stuff with Russia to help them evade sanctions?
As NATO meets today and US President Biden pow-wows with the EU, what might be their response to Russia’s rouble move? Logically, either: kick the can down the road - for a week; blink and let Putin win (which is unlikely); or escalate - which is most probable.
If so, how? More weapons into Ukraine and more sanctions on Russia. But that won’t solve the energy problem. In which case, the risks increase of the West trying to pressure China economically to get it to pressure Russia – all the more so if the scenario ahead is a Western recession anyway – which itself hits all Asian exporters.
Oh, how clever we thought we were with our slick 70’s-proof economies! Oh, how clever we thought we were with our 20’s- and 30’s-proof global architecture!
By Zerohedge.com
More Top Reads From Oilprice.com:
https://oilprice.com/Energy/Gas-Prices/Soaring-Energy-Prices-And-Stimulus-A-Toxic-Cocktail.html
By Malvika Gurung
Investing.com -- In a conference in New Delhi on Sunday, Union steel minister Ramchandra Prasad Singh stated that India will be importing coking coal from Russia, a move which comes at a time when several Western nations are imposing heavy sanctions on Russia, condemning its invasion of Ukraine.
The steel minister’s statement came days after India bought and other commodities at discounted rates from Russia, post the US and its European allies slapping sanctions on Moscow.
Coking coal is a major ingredient used in steel manufacture, and India will import twice the quantity of the key material. Singh informed that the country has already imported 4.5MTs of coking coal, without giving details on the said period, cited a Reuters report.
Furthermore, vessels carrying a minimum of 1.06 million tonnes of coking coal and thermal coal will be reaching Indian ports by the end of March, informed Kpler.
This is the highest figure imported by the country since Jan 2020, added the report.
Moreover, several traders believe that because many countries including Japan, have slapped sanctions on Russia, the latter is expected to offer coking and thermal coal to India and China at competitive prices.
NEW DELHI: India is trying to ensure steady supplies of coking coal for domestic steel companies including from Moscow, the top civil servant at the ministry of steel Sanjay Kumar Singh told Reuters on Monday, amid a surge in global prices.Steel companies are reeling from the impact of high global prices of coking coal, used in steelmaking, after Russia's invasion of Ukraine.Australia, India's top supplier of coking coal, raised prices to $700 per tonne from $200 per tonne earlier this year, Singh said."Pricing has been a challenge," Singh told Reuters, adding "whatever sourcing is available, we are definitely trying."India meets around 85% of its overall coking coal needs from imports totalling 50-55 million tonne every year. The government aims to bring down its import dependence to 65% by 2030/31.Indian companies are aiming to reduce their dependence on Australia through Russian imports, but supplies have been affected, steel minister Ramchandra Prasad Singh had told a conference in New Delhi on Sunday.The government is trying to secure supplies from Moscow, Singh said, adding that the mechanism, including modes of payments, are yet to be settled."Russia is definitely one of the important sources," Singh said."In this kind of scenario, it is a country to country arrangement. Individually, companies are also in touch," he said.India, a major buyer of Russian goods from commodities to weapons, has not placed any bans on imports unlike the West which has imposed sweeping economic sanctions.
Supplies of ores from the east of Europe decreased due to Russian aggression in Ukraine, posing a problem for metallurgical companies and metal producers, some of the biggest industries. in the country.
The most problematic supply issue is that of iron ore. Russia is the eighth largest producer of iron ore in the world and many Slovak companies relied on it with supplies before the sanctions were implemented. Recently, imports from Ukraine were halted as well.
Ukraine is another key supplier for Slovak metallurgists and many metallurgical products from the country are used by Slovak engineering and construction companies.
“Supplies of Ukrainian iron ore fell by 30 to 40%. Unfortunately, we already have to talk about whether our companies can keep their production at full volumes,” said Alexej Beľjajev, president of the Association of Industrial Unions.
American steel producer US Steel is the biggest metallurgical company in Slovakia, with more than 9000 employees. The American steel producer confirmed their production relied on the iron ore from Ukraine and Russia.
Looking for alternative suppliers is not easy as Brazil, Australia, and South Africa have the closest suitable mines.
OFZ, a Slovak producer of silicon, is also having issues with imports. Director Branislav Klokoc said his company needed quartzite from northern Ukraine, but because most of the mines are near Chernobyl, controlled by Russia, imports halted.
Klokoc said that because of the previous tension between Ukraine and Russia, most metallurgists managed to stock up on supplies. These, however, won’t last for long.
At the end of 2021, Portugal became coal-free after shutting down its 628MW Pego coal-fired power plant, privately owned by utility Tejo Energia. Pego’s closure came just ten months after the shutdown of the 1,250MW Sines coal plant, owned by national utility EDP.
Portugal effectively phased out coal eight years ahead of schedule. At a time when some European countries are wondering whether to delay their own coal exits in the wake of the Ukraine war – think Germany – Portugal’s example offers lessons on how to manage a transition, what role carbon pricing and renewable investments can play, and how utilities have to be involved in the development of just transition plans.
The Iberian nation is “the perfect example of how once a country commits to quitting coal, the pace of the phase-out inevitably accelerates”, said Kathrin Gutmann, Europe Beyond Coal campaign director, on the day the Pego coal plant was shut down.
Even as natural gas prices climb to new heights and coal displaces gas in some countries, the Portuguese government has declined any chance to bring its coal plants online again. “This would be total nonsense,” Portugal’s Environment Minister João Pedro Matos Fernandes told national media early in March.
Related
Portugal committed to shut down its two coal-fired power plants in Pego and Sines by 2030 at the COP23 UN climate conference in Bonn, Germany, in 2017. Only two years later, however, Prime Minister António Costa announced the intention to bring the closure of Pego forward to 2021 and Sines to 2023, following the advice of several environmental groups.
“Public pressure from environmental NGOs was an important factor,” says Francisco Ferreira, president of Portuguese environmental NGO ZERO. “For many years we have been showing that it didn’t make sense to continue to use such an inefficient fuel with such a big environmental impact, and proposing these [same] dates [for a phase-out].”
Carbon pricing further accelerated the closure of plants as coal became unprofitable compared with cheaper renewable sources.
The EU’s objective to reduce greenhouse gas emissions by at least 55% below 1990 levels by 2030 pushed prices in the EU’s emissions trading system (ETS) to an all-time high of nearly €97 per tonne in early February 2022, compared with an average of €25 per tonne only two years earlier. The Portuguese government also decided in 2018 to end public subsidies for coal.
“There has been a combination of carbon pricing measures and an increase of renewable energy investments that have harmed the economic viability of coal,” says Artur Patuleia, senior associate at think tank E3G. “The economics deteriorated in such a way the utilities themselves decided to shut down the plants earlier,” he told Energy Monitor.
Renewables boost
Portugal has seen major investments in renewables, bringing their share of the power mix to 61% in 2021, up from 39% in 2017.
“What we see is that it is mainly renewables that have absorbed what used to be coal-fired electricity generation," says Patuleia. "The conclusion is countries that invest in renewables can cope with the end of coal."
Hydropower makes up the lion’s share of renewable energies in Portugal, with 7GW of capacity installed, reports Portugal’s Association for Renewable Energies (APREN). The country started the development of large-scale hydro power plants in the 1950s, and it became Portugal’s main source of power generation in the 1970s – with coal gaining prominence only in the 1980s.
Portugal’s energy market faced a wave of liberalisation in the 1980s and 1990s and opened up to independent power producers, which developed small-scale hydro plants and later introduced wind and solar capacity. “The aim was to reduce the external energy dependency of the country and, soon after, of course, to fight climate change, since its impacts in Portugal were well observed since the 1990s,” says Pedro Amaral Jorge, CEO at APREN.
“The high endogenous resources availability and public policy strategy have been the main drivers to achieve a high share of renewables in the electricity mix and final energy consumption,” he adds.
However, as the country faced a severe drought at the start of 2022, wind energy has taken the lead in supplying electricity. In January 2022, gas made up approximately 30% of the country's power mix.
“We are seeing new renewable capacity, but at the same time Portugal keeps gas capacity [for back-up],” says Ferreira.
“Therefore, it is not entirely true that we are replacing coal with renewables, because due to the ongoing drought conditions, we are partially replacing coal with new renewables, but also using natural gas,” he explains.
Decarbonising the power sector
Portugal aims to achieve an 80% share of renewables in its power mix by 2030, and could even reach this goal four years earlier than scheduled, in 2026, Fernandes told national news agency Lusa at the end of 2021. Its largest utility, EDP, wants to provide 100% renewables-based electricity by the end of the decade.
APREN’s Amaral Jorge says decarbonising Portugal’s entire power system by 2035 would require “an enormous effort”. However, “this is a plausible scenario given the necessity to […] comply with the [EU’s] ‘Fit for 55’ goals, and also the expected role of green hydrogen [made from renewable electricity] in Portugal, to assure stability in a power system with a high share of variable renewables,” he adds.
Shutting down the Pego and Sines coal plants will contribute to Portugal’s decarbonisation goals. EDP announced last year it intends to transform the coal plant in Sines (150km from Lisbon) into a renewable hydrogen ‘hub’.
EDP’s board said in October 2021 it would convert Sines “into a centre of hydrogen tech excellence”, with 200MW of renewable capacity and 100MW of electrolysers by 2025 – potentially scaling beyond that at a later stage – and the creation of an R&D centre.
For this, Portugal’s largest utility has partnered with some 12 entities including power companies Galp and ENGIE as well as wind energy manufacturer Vestas. The ‘GreenH2Atlantic’ project has been granted a €30m grant by the European Commission via its Horizon 2020 R&D programme.
This should help Portugal achieve its goal to install 2–2.5GW of electrolyser capacity by 2030. The government announced a first auction for government support in 2022, which is likely to take the form of a carbon contract-for-difference scheme to stimulate demand for green hydrogen.
“However, to achieve [Portugal’s green hydrogen goals], Portugal must tackle important issues such as licensing and permitting procedures [for wind and solar installations], lack of grid capacity and a shortage of qualified human resources in the upcoming years,” APREN’s Amaral Jorge says.
An economic and social plan
In parallel, the Portuguese government decided to launch an auction for the conversion of the Pego plant, so power companies could submit their projects to use the plant’s grid access.
That tendering process is still ongoing at the time of writing. However, the bid submitted by Spanish utility Endesa obtained the best score, according to a preliminary government report. The proposal submitted by Endesa – 70% owned by Italy’s Enel Group – foresees a 365MW solar PV project and 246MW of wind farms, as well as battery storage infrastructure and green hydrogen electrolysers.
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The need to support coal regions and workers in the fossil fuel industry has taken centre stage in the energy transition. As Europe strives to ‘leave no one behind’ on its road to climate neutrality, Portugal’s management of its coal phase-out shows that national governments and utilities must play a major role in a just transition.
Portugal’s just transition plans have focused on coal plant workers, as Portugal has no mines. The government has ensured a strong involvement of utilities in reskilling and creating jobs, while investing in renewable energies and upgrades to its power grid.
One of the government’s most striking measures has been to include just transition aspects as bonus criteria in the project tender to reconvert the Pego coal plant.
“What is interesting about the auction for Pego’s reconversion is it combines an economic plan with a social plan, where workers can get guaranteed income support if they follow reskilling programmes,” says E3G’s Patuleia.
Fit for a phase-out
With the closures of Sines and Pego last year, Portugal became the fourth EU member state to stop burning coal, after Belgium in 2016, and Sweden and Austria in 2020.
The dire economics of coal have prompted several countries across Europe to speed up the process, including Germany, with the new federal government looking to bring forward its phase-out date to 2030, from the 2038 agreed in 2019. Hungary also announced in 2021 that it would bring forward the closure of its last-standing lignite plant by 2025, five years ahead of schedule.
However, coal will still have a limited role in the EU beyond 2030. Both the Czech Republic and Slovenia announced their coal exit by 2033 at the beginning of the year. In turn, Poland has not yet firmed up a date to stop burning coal, pledging instead to shut down its coal mines by 2049.
Nevertheless, several experts agree the EU’s 'Fit for 55’ climate and energy package could accelerate Europe’s coal phase-outs through a strong ETS, renewable energy investments and the taxation of fossil fuel products.
“It is important to have an effective emissions trading system, and it’s very important to have ambitious renewable energy targets, maybe even going beyond what the European Commission has proposed,” says E3G’s Patuleia.
The EU’s climate package is currently being negotiated by MEPs and member states, with divisions already emerging over how ambitious the EU ETS should be given recent price spikes. In turn, any reform to EU energy taxation rules will require unanimous approval from all member states, a hurdle previous efforts failed to overcome.
Increasing the interconnections in the EU’s energy market will also increase security of supply and, in turn, benefit Europe’s most coal-dependent countries. Portugal has very limited cross-border energy flows, but the solid integration of the Iberian energy market has been instrumental in Portugal and Spain balancing their systems.
“We do have the possibility of diversifying and investing in different sources of renewables, and particularly wind and solar – but at the same time, we have extremely limited interconnections, and that makes us more vulnerable to supply shortages,” says ZERO’s Ferreira.
“If Portugal can do this transition despite these constraints, definitely some other countries can do that, because they have more favourable circumstances than us,” he sums up.
Results for the year ended 31 December 2021
LONDON, UK / ACCESSWIRE / March 30, 2022 / Anglo Pacific Group PLC (‘Anglo Pacific’, the ‘Company’ or the ‘Group’) (LSE: APF, TSX: APY) is pleased to announce its record full year results for the year ended 31 December 2021, consistent with the trading update published on 27 January 2022. The Company has also published its audited 2021 Annual Report and Accounts, which are available on the Group’s website at www.anglopacificgroup.com and on SEDAR at www.SEDAR.com. The following statement should be read in conjunction with the audited financial statements.
2021 Portfolio Highlights
2021 2020 $m YoY% $m Kestrel 48.1 107% 23.3 Voisey’s Bay 16.5 – Narrabri 3.4 (12%) 3.9 Mantos Blancos 5.7 55% 3.7 Maracás Menchen 3.3 358% 0.7 Four Mile 0.3 (40%) 0.5 Royalty and stream income 77.3 140% 32.1 Dividends – LIORC & Flowstream 5.6 (39%) 9.2 Interest – McClean Lake 2.4 7% 2.3 Royalty and stream related revenue 85.3 95% 43.6 EVBC* 3.0 5% 3.0 Principal repayment – McClean Lake 1.3 41% 0.9 Less: Metal streams cost of sales (4.0) – Total portfolio contribution 85.6 80% 47.5
* Following the application of IFRS 9, the royalties received from EVBC are reflected in the fair value movement of the underlying royalty rather than recorded as royalty income.
Financial Highlights
Record annual portfolio contribution of $85.6m (2020: $47.5m) with 45% of this generated in the final quarter
Portfolio contribution comprises $77.3m of royalty and stream income, $8.0m of other royalty related revenue, $4.3m of other portfolio contribution less $4.0m of stream cost of sales
Record results driven by strong performances at Kestrel and Voisey’s Bay – with the former producing $26m in Q4 2021 – over 50% of total contributions in FY 2020
Profit after tax, of $37.5m (2020: Loss after tax $23.9m), which includes valuation and impairment charges and reflects a $30.5m valuation increase, primarily for Kestrel and EVBC, and a loss on disposal of the Narrabri royalty of $19.0m
Basic earnings per share of 18.03c (2020: loss of 13.23c)
60% increase in Adjusted earnings 1 per share to 25.18c (2020: 15.69c)
per share to 25.18c (2020: 15.69c) New longwall panel added to 500 series mine plan at Kestrel, increasing expected volumes within the Group’s private royalty lands by 10% and smoothing expected volume stepdown over the remaining life of the royalty
21 st century commodities now represent 75% of the Group’s royalty assets on the balance sheet (2020: 32%)
century commodities now represent 75% of the Group’s royalty assets on the balance sheet (2020: 32%) Net debt at year-end of $90m (2020: $33.3m) reflecting the $205m Voisey’s Bay acquisition in March 2021 and the fact that the record Q4 2021 revenue was not received until January 2022
Pro-forma net debt at 1 April 2022 expected to be ~$60m, with H1 2022 cashflow expected to drive rapid deleveraging
Final dividend proposed of 1.75p per share which will take the total dividend for FY 2021 to 7p per share in line with the Company’s guidance during the year
~$120m of liquidity available to finance further growth initiatives
Our model means that we are fully exposed to commodity prices but do not have direct exposure to operating cost inflationary pressures – a highly attractive position to be in given current commodity and inflationary dynamics
The record Q4 2021 portfolio contribution was based on an average coking coal price of $308/t – which is half the current spot price
Recent geopolitical events and impact on commodities
The record 2021 results precede the dreadful tragedy currently unfolding in Ukraine. The Company has made a donation to The Disasters Emergency Committee to assist with the unfolding humanitarian crisis.
The ramifications of the invasion by Russian forces has the potential to create significant global economic consequences for the foreseeable future. The initial impact of the severe sanctions being placed on Russia will likely result in an energy shock not seen since the early 1970s, at a time when inflation is already running significantly above long-term averages.
In times of significant inflation, hard assets such as commodities are expected to outperform. We are seeing material commodity price increases, particularly for commodities from which the majority of the Group’s near-term revenues are derived, as illustrated in the table below.
30/03/21 FY 21 Average Q4 21 Average Spot Spot Vs FY 21 Average Coking coal $/t 117 221 308 596 182% Cobalt $/lb 22.50 24.0 29.60 38.30 60% Vanadium $/lb 8.25 8.20 8.30 12.30 50% Copper $/lb 3.98 4.23 4.40 4.65 10% Uranium$/lb 31.10 36.10 45.50 59.10 64% Gold $/oz 1,686 1,799 1,795 1,954 9%
Coking coal prices have now reached levels of ~$600/t – the highest price level ever achieved. To put this into context, the coking coal price this time last year was ~$120/t. The record quarter we achieved at Kestrel in Q4 2021 was based on an average daily coking coal price of ~$308/t. Although we are not assuming that pricing will remain at these levels, but given that volume levels are expected to be at a similar level to FY 2021, the outlook for the year ahead could produce a wide spectrum of possible outcomes. We calculate that a $50/t increase in the coking coal price should produce an additional $3.5m of revenue per quarter.
Julian Treger, outgoing Chief Executive Officer of Anglo Pacific, commented:
“I am delighted to report a record year for Anglo Pacific, with contribution 80% higher than in 2020 and 17 times higher than when I joined back in 2013. I am extremely proud of the team and our achievements transforming the business. There remains huge potential for Anglo Pacific, and I leave the Company in safe and talented hands and in a strong position for further growth.”
Marc Bishop Lafleche, Chief Executive Officer Designate of Anglo Pacific, commented:
“The record FY 2021 results have been well flagged to the market and are in-line with previous announcements. The global economy is now facing inflationary pressures unseen over the past 30 years. In the past, hard assets such as commodities have outperformed in periods of significant inflation, and Anglo Pacific is exceptionally well positioned to provide investors with exposure to non-precious commodity prices without direct exposure to operating cost inflation incurred by the mining sector. This is the unique benefit of the royalty and stream business model.
Year-to-date commodity prices are substantially higher than the levels driving our record Q4 2021 results. We expect similar levels of production from the assets in our portfolio, and with a more than doubling of coking coal prices as well as resilient performances in cobalt and copper prices, the near-term outlook for the business is very strong. We intend to use this higher cash flow to reduce our borrowings in the first instance and then recycle into growth opportunities. We will continue to develop our portfolio in line with our strategy, with a focus on commodities which will support and benefit from the move towards a low carbon future. This will create an even better, diverse and growing asset base for the benefit of all stakeholders.
Looking ahead, we continue to anticipate a period of strong commodity pricing in the medium-term, driven by growing demand for commodities required to achieve global climate change objectives which is likely to be intensified by an underinvestment in new production capacity over the past decade. With our business model’s natural inflation pass through, a record commodity price environment, OECD portfolio footprint and ~$120m financing capacity, we are well positioned to continue to grow the business and generate value for our shareholders.”
https://www.digitaljournal.com/pr/anglo-pacific-group-plc-announces-final-results
Last Price $ Last Trade Change $ Change Percent % Open $ Prev Close $ High $ low $ 52 Week High $ 52 Week Low $ Market Cap PE Ratio Volume Exchange HCC - Market Data & News Trade
Today Warrior Met Coal Inc (NYSE: HCC) is trading 4.20% lower.
The latest price, as of 12:00:09 est, was $36.20. Warrior Met Coal dropped $1.58 so far today.
162,655 shares have traded hands.
As of the previous close, Warrior Met Coal has moved YTD 46.43%. The company expects its next earnings on 2022-05-04.
For technical charts, analysis, and more on Warrior Met Coal visit the company profile.
About Warrior Met Coal Inc
Warrior is a U.S.-based, environmentally and socially minded supplier to the global steel industry. It is dedicated entirely to mining non-thermal metallurgical (met) coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia. Warrior is a large-scale, low-cost producer and exporter of premium met coal, also known as hard coking coal ('HCC'), operating highly efficient longwall operations in its underground mines based in Alabama. The HCC that Warrior produces from the Blue Creek coal seam contains very low sulfur, has strong coking properties and is of a similar quality to coal referred to as the premium HCC produced in Australia. The premium nature of Warrior's HCC makes it ideally suited as a base feed coal for steel makers and results in price realizations near the Platts Premium LV FOB Index price.
To get more information on Warrior Met Coal Inc and to follow the company's latest updates, you can visit the company's profile page here: Warrior Met Coal Inc's Profile. For more news on the financial markets be sure to visit Equities News. Also, don't forget to sign-up for the Daily Fix to receive the best stories to your inbox 5 days a week.
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NEW DELHI : Millions of small enterprises are struggling with sourcing inputs as high commodities prices overseas prompt manufacturers to sell their produce abroad. Representatives of micro, medium and small enterprises (MSMEs) said they are forced to defer new orders as they wait to finalize new raw material purchase prices.
Steel prices have risen $200-250 per tonne globally relative to Indian prices, and MSMEs are worried as they are not in a position to compete with global buyers. “We are forced to squeeze our overheads and production costs, and it is badly impacting our bottom line. The situation is such that the buyers, both in B2B and B2C, are unable to absorb these prices and there is a sharp month-on-month in prices of raw materials such as steel, polyester raw material and even in textile," said Federation of Indian Micro and Small and Medium Enterprises (FISME) president Animesh Saxena.
Last week, fuel prices began rising after a long gap, thanks to the assembly elections.
Petrol and diesel prices were revised upwards for the fifth time in six days on Sunday, taking the overall hike to ₹3.70-3.75 per litre on auto fuel.
“We have had a number of consultations with the government, and they are sensitive to our problems. But unfortunately, we don’t have a price regulatory mechanism in place, and hence nothing has been done as yet. The government says it is a free economy and that they cannot intervene," Saxena added.
Queries sent to the spokespeople for the ministries of micro, small and medium enterprises and commerce and industry on Saturday remained unanswered till press time.
While engineering exports remain robust, exporters remain concerned over the rising cost, said Engineering Exports Promotion Council (EEPC) chairman Mahesh Desai. Desai said EEPC has approached the government to address concerns of MSMEs facing a sharp increase in raw material and shipping prices, severely impacting their operating cost and margins.
“All our exports are booked at old rates, and now, the steel prices and shipping costs have gone up due to the Russia-Ukraine crisis. We have asked the government to help exporters, especially MSMEs, with additional finances and special rates to fulfil orders amid rising costs," Desai said.
Mint earlier reported that several European ports are not allowing Russian vessels to berth and ships have been stuck due to blockade in the Black Sea and Sea of Azov amid a growing container and ship shortage that has driven up freight rates. Also, most major shipping lines are European, which are not accepting Russian containers, impacting several India-bound Russian containers.
EEPC’s Desai added that they would also renegotiate prices with buyers, as the old prices are no longer sustainable and new orders are taking time to finalize due to the high input costs.
A.S Firoz, a former chief economist at the steel ministry, said the crisis presented opportunities for steelmakers to enter markets such as Europe and North Africa. He said the domestic steel market had not fully recovered from the covid-19 related disruption, but the export opportunity could help them expand and enhance margins.
India’s apex exporters’ body, the Federation of Indian Export Organisations (FIEO), has identified sectors where Russian exports to the EU exceed $500 million. The EU buys iron and steel products worth $3.8 billion from Russia.
“Higher demand for steel would likely continue as the demand from the West is good. It could remain this way for six to seven months because even if the war ends in Ukraine, the country will likely take longer to rebuild the domestic industry," said Jindal Steel and Power Ltd (JSPL) managing director V.R. Sharma.
The EU accounts for 15% of Indian exports, and shipments to the region grew 59% to $50.7 billion in the 10 months to January 2022.
“There is a sharp surge in exports currently, but they are indirect exports. India is exporting raw materials such as cotton, iron ore and steel and the high commodity prices are boosting the value of these exports. But the government is not focusing on exporting finished products manufactured by MSMEs," said India SME Forum president Vinod Kumar.
“We MSMEs are dependent on a few suppliers, and our negotiation power is also so, and if input costs keep moving in this fashion, we will not be able to protect our margins. This has created a huge danger on the sector and also the jobs that the sector creates," Kumar added.
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Global commodity shifts in the wake of the Russian invasion of Ukraine
Shifting global commodity patterns in the wake of the Russian invasion of Ukraine are proving seismic.
On Friday, the US agreed to attempt to deliver an additional 10m tonnes of LNG to Europe in 2022, equivalent to around 14% of total US LNG exports last yea,r as Europe weans itself off its dependence on Russia, the world’s largest energy producer. In the longer term, the US has agreed to supply a further 35m tonnes of LNG to Europe per year out to 2030, should the additional LNG consumption remain consistent with existing European decarbonisation plans.
Splash is also reporting today on how Germany is booking floating storage and regasification units (FSRUs) to move away from piped Russian gas. Two energy companies, RWE and Uniper, are finalising contracts to charter three FSRUs that could be used to import liquefied natural gas (LNG) directly into Germany as early as next winter.
Leaning in a different direction, India has announced plans to double the amount of coking coal it imports from Russia.
“We are moving in the direction of importing coking coal from Russia,” steel minister Ramchandra Prasad Singh told a conference in New Delhi yesterday. Vessels carrying at least 1.06m tonnes of coking and thermal coal are set to deliver the fuel to Indian ports this month, the most since January 2020, data from consultancy Kpler showed. There are a further 400 ships en route to call at Russian ports over the next two weeks
China, Japan, South Korea and Taiwan are also all showing strong Russian import coal volumes, according to data from shipping platform Sea/.
As of today, there are 489 merchant ships in Russian waters, according to Sea/, down from 637 a week ago. Out of the 489 recorded today, 80% have arrived in the past week. January 8 was the day this year with the highest number of merchant ships in Russian waters, when 814 were recorded.
Moreover, Sea/ data clearly shows there are a further 400 ships en route to call at Russian ports over the next two weeks.
Taking a leaf out of the playbook of sanctioned ship operators from Iran and Venezuela, Russian tankers are increasingly switching off their automatic identification systems (AIS) to try and avoid detection.
For the week ending March 25, Israeli maritime artificial intelligence platform Windward recorded at least 33 occurrences of so-called “dark activity”, more than double the weekly average of 14 in the past year.
On the ground in Ukraine reports emerged today of the dire situation at the strategically important port city of Mariupol, which lies on the northern banks of the Sea of Azov.
The Ministry of Foreign Affairs in Ukraine tweeted on Monday that Russian forces have turned the besieged city “into dust” with reports of carpet bombing emerging.
Mariupol is the main obstacle preventing Russia from connecting Crimea to the two self-proclaimed republics in the eastern Donbas region.
Finally in today’s roundup of shipping news connected to the war in Ukraine, Turkey’s military deactivated a mine on Saturday that had drifted in from the Black Sea, setting off a loud explosion north of Istanbul, days after Russia warned several of them had washed away from Ukrainian ports.
https://splash247.com/global-commodity-shifts-in-the-wake-of-the-russian-invasion-of-ukraine/
By Enrico Dela Cruz
March 28 (Reuters) - Dalian iron ore climbed about 6% on Monday and the Singapore Exchange benchmark rebounded above $150 a tonne, as traders cheered China's move to boost its short-term fund injection to counter any possible market liquidity tightness.
Other steelmaking ingredients trading on the Dalian Commodity Exchange and steel prices on the Shanghai Futures Exchange also rose, despite the risk-off sentiment in other assets amid China's heightened COVID-19 curbs.
The most-traded Dalian iron ore, for September delivery DCIOcv1, rose as much as 5.9% to 882.50 yuan ($138.46) a tonne, its highest since Aug. 30.
Iron ore's most-active May contract on the Singapore Exchange SZZFK2 gained 1.7% to $156.85 a tonne.
"The market initially sold off in the first 15 minutes but has since reacted very positively to the People's Bank of China injecting 150 billion renminbi in seven-day reverse repos this morning – shoring up short-term liquidity before the end of the current quarter," said Atilla Widnell, managing director at Navigate Commodities in Singapore.
"More aggressive liquidity injections provide the market some degree of comfort and confidence that local banks will not face a funding squeeze," he said.
China will also soon roll out measures to make it easier for private companies to issue bonds, China's securities regulator said late on Sunday.
Heightened coronavirus restrictions in top steel producer China, with the financial hub of Shanghai launching a two-stage lockdown of the city of 26 million people, could further dampen growth outlook for the world's second-biggest economy.
A 15% pullback in Shanghai nickel SNIcv1 after the stainless steel raw material posted on Friday a record weekly gain, also prompted profit-taking in Shanghai stainless steel futures. The benchmark contract SHSScv1 tumbled 6.3%.
Construction steel rebar on the Shanghai exchange SRBcv1 gained 1.8%, while hot-rolled coil SHHCcv1 advanced 1.5%.
Dalian coking coal DJMcv1 climbed 1.4% and Dalian coke DCJcv1 added 1.1%.
https://www.nasdaq.com/articles/dalian-iron-ore-hits-7-month-high-on-chinas-liquidity-support
CONAKRY- Guinea's ruling junta has reached an agreement with Rio Tinto and a Chinese-backed consortium to resume activities at the huge Simandou iron ore deposit, the mines minister said, after resolving infrastructure disputes.
Simandou holds more 4 billion tonnes of ore according to Guinea's government, making it the largest known deposit of its kind, but despite the ore being very high-grade, Simandou remains untapped decades after its discovery, largely due to legal disputes and political instability.
Guinea's transitional authorities said this month that the site's development would be halted as they sought clarification on how Guinea's interests would be preserved.
The government's move was seen as a way to put pressure on Rio and Winning Consortium Simandou to find a way to collaborate on the costly infrastructure needed to transport ore from Simandou to the port.
Mines Minister Moussa Magassouba said on state television late on Saturday that a framework agreement had been signed between the government and companies involved in the project: Rio Tinto, the Aluminium Corp of China (Chinalco) and the Chinese-backed SMB-Winning consortium.
He said the companies had "put aside many egos, many other interests to return to what is a win-win partnership for all parties."
Magassouba said infrastructure projects must be completed by December 2024 and commercial production must start by March 31, 2025, a timeline analysts say is ambitious given the scale of the infrastructure that needs to be built.
The agreement primarily concerned developing a 670 km (419 mile) railway from the Simandou site to a new deep water port, a plan that Magassouba said would cost about $15 billion.
He said the government had negotiated and obtained 15% stakes in the rail, port and mines, while the new infrastructure would become Guinean state property upon completion.
"This framework agreement will allow the joint development of this gigantic project ... and allow the acceleration of the process and a resumption of work," Fadi Wazni, chairman of SMB-Winning consortium board, said. "The framework clearly outlines the key principles for all parties to work together on the co-development of infrastructure and sets out how the project will be built to international Environmental, Social, and Governance standards," Bold Baatar, Rio Tinto's head of Copper said in statement.
Rio Tinto has held rights to Simandou since 1997. It owns a 45.05% stake in the southern half, Blocks 3 and 4, of the deposit, with Chinalco holding 39.95% and Guinea's government the remaining 15%.
SMB-Winning won a government tender in November 2019 for Blocks 1 and 2.
Once it is fully up and running, Simandou is expected to produce 100 million tonnes of iron ore a year - with blocks 1 and 2 producing 60 million tonnes a year and Rio's blocks producing 40 million a year, JP Morgan analysts said earlier this month. (Reporting by Saliou Samb, additional reporting by Helen Reid Writing by Cooper Inveen; Editing by Bate Felix, Elaine Hardcastle)
Unions’ strike partially impacts banking services; stir in Visakhapatnam opposing steel plant sale
Members of All Trade Unions picketing Sub Collectors Office Road as part of nationwide strike, In Dindigul, Tamil Nadu on March 28, 2022. | Photo Credit: G. Karthikeyan
Unions’ strike partially impacts banking services; stir in Visakhapatnam opposing steel plant sale
Central trade unions on March 28 began a two-day nationwide strike to protest against the Government’s alleged wrong policies that are affecting farmers, workers and people.
Their demands include the scrapping of the labour codes, no privatisation of any form, scrapping of the National Monetisation Pipeline (NMP), increased allocation of wages under MNREGA (Mahatma Gandhi Rural Employment Guarantee Act) and regularisation of contract workers among others.
The central trade unions that are part of this joint forum are INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, SEWA, AICCTU, LPF and UTUC.. About 20 crore workers are expected to join the strike. The strike notices have been given by the unions in various sectors, such as coal, steel, oil, telecom, postal, income tax, copper, banks, and insurance, among others.
The unions in railways and defence sector are making mass mobilisation in support of the strike at several hundred spots, the joint forum had said earlier. Taking cognisance of the call, the Ministry of Power on Sunday had issued an advisory to States and other agencies to be on high alert and ensure round the clock electricity supply and stability of the national grid.
Hera are the updates:
National
SAIL, RINL, NMDC workers join nationwide strike
Thousands of workers of State-owned SAIL, RINL and NMDC on March 28 joined the nationwide strike, affecting production at steel plants and mines.
Around 8,000 non-executive Rashtriya Ispat Nigam Limited (RINL) workers out of 11,000 of the total did not come to work on Monday as part of the ongoing nationwide strike, a company official said.
He further informed that production has been affected at the unit as only one furnace out of three is functional at the plant in Visakhapatnam. While one was already under maintenance, the second one has been shut down as a precautionary measure.
Rajesh Sandhu, Secretary of NMDC Sanyukt Khadaan Mazdoor Sangh that represents workers at the NMDC operated mines, said around 10,000 non-executive employees of the company are observing the protest.
“Workers of NMDC mines and offices in Chhattisgarh, Andhra Pradesh, Karnataka and Telangana, are on strike today,” he said.
Work at important mining complexes like Bacheli in Chhattisgarh and Donimalai in Karnataka are completely closed, Sandhu added.
Besides RINL, workers of Steel Authority of India Limited (SAIL) have also joined the protest, Steel Workers Federation of India (SWFI) said.
“Thousands of SAIL workers across its plants and mines in states like Chhattisgarh, Odisha and West Bengal refrained from coming to work,” SWFI’s working President P.K. Das said, adding the association is assessing the impact of protest.
SAIL and RINL are steel making companies under the Ministry of Steel. NMDC is the country’s largest iron ore mining company under the Ministry. — PTI
Karnataka
Life remains unaffected in Karnataka
The call for a nationwide strike by central trade unions did not affect normal life in Karnataka on Monday.
It was business as usual for transport services, Government offices and educational institutions.
However, industrial belts in Bengaluru and some other parts of the State saw demonstrations by workers.
According to Prakash K. of Centre of Indian Trade Unions (CITU), the protests and demonstrations took place in a “decentralised” manner in the State. He claimed that banking and insurance services were hit.
In Bengaluru, demonstrations took place in Peenya Industrial Area, Bommanahalli, Bommasandra, K.R. Puram, Yelahanka, Bidadi, Kengeri and Anekal, Prakash told PTI.
Similarly, there were protests in taluk headquarters in many parts of the state, the trade union leader claimed.
He said there will be a “centralised” demonstration at Freedom Park in Bengaluru on March 29 by the 10 trade unions, including CITU, AITUC and INTUC.
However, the Bharat Mazdoor Sangh (BMS) did not participate in the two-day strike, Mr. Prakash said. — PTI
Tripura
Nationwide strike fails to evoke much response in Tripura
The two-day nationwide strike failed to evoke much response in the BJP-ruled Tripura on March 28, the first day of the stir, officials said.
Attendance in Government offices and educational institutions was normal. Private schools, however, remained shut citing the safety of the students in the wake of the strike.
Vehicles were seen plying on roads while train services and flight operations were normal.
Banks, financial institutions, markets and business establishments remained open in Agartala, the state capital.
“Life was normal across the state today despite the strike. There was no detention or campaign in favour of the bandh in the state capital or elsewhere,” a senior police officer said.
Earlier, the Tripura Government had said its offices will remain open on Monday and Tuesday. The State authorities also mandated the employees to report for duty on these two days.
“Any exception to the Government order will be viewed seriously,” a Government notification issued on March 26 night read. — PTI
National
Coal workers join nationwide strike; production of dry-fuel to be hit
A large section of coal workers across India has joined the nation-wide two-day strike which is likely to affect the production and despatches of the dry fuel, HMS-affiliated Hind Khadan Mazdoor Federation said on March 28.
Coal workers who have joined the nation-wide strike have responded well and their active participation shows their dissatisfaction against the policy of the Centre aiming to destroy the existence of State-owned CIL and coal industry as whole, Hind Khadan Mazdoor Federation said.
The production of coal and despatches are also likely to be affected due to the protest, Nathulal Pandey, President of HMS-affiliated Hind Khadan Mazdoor Federation told PTI.
“As per the information received, the workers have participated in the strike all over India with great enthusiasm showing their unity, strength and determination to oppose the anti-labour, anti-people policies of the Central Government.
The Centre has decided to sell 160 running mines for a nominal amount of ₹28,747 crore to private companies under the National Monetisation Pipeline, he said.
“Earlier continuous strike/ protest of the coal workers compelled the Centre to slow down their policy of privatisation of coal mines. Unions as well as workers want to withdraw the unpopular 4 Labour Codes amalgamating 29 existing labour laws,” he said.
All the four central trade unions at Western Coalfields Ltd. (WCL)have participated in the strike. “Good response from the workers towards the strike reflects that strike will be successful in WCL,” he said.
In Eastern Coalfields Ltd. (ECL), strike is successful in some areas only, he said and expressed hope that as time progresses, success rate will also increase.
He claimed that the strike is successful at Bharat Coking Coal Ltd. and Mahanadi Coalfields Ltd. (MCL) also. The workers even blocked services of trains.
The production of Northern Coalfields Limited. (NCL) is affected due to the strike. In South Eastern Coalfields Ltd. (SECL), workers at all the 13 areas, except two, have gone on strike. Production and despatch of coal are paralysed, he said.
CITU general secretary Tapan Sen said that the strike by the coal workers has been above 60% till now and added that some collieries are completely closed.
“In Southern Eastern Coalfields Ltd, it is more than 80%...in WCL it is more than 60%. In Jharkhand area, we are still collecting report. In certain areas there is complete strike. In other collieries the coal dispatch was stopped because there was no production,” he said.
It is not a coal strike but a general strike by all the workers, he added. — PTI
New Delhi
Production at RINL plant affected as 8,000 workers join nationwide strike
Around 8,000 workers of Rashtriya Ispat Nigam Ltd. (RINL) did not report for work on March 28, affecting production at the company’s 7.5 million tonnes-steel plant in Visakhapatnam, Andhra Pradesh.
There are around 11,000 non-executive workers at the plant and out of them, about 75% did not come for work as part of the ongoing nationwide strike, according to a company official.
“We had to shut down one furnace as a precautionary measure. One was already under maintenance. Only one furnace is working (at the plant),” the official said while responding to a query related to the impact of workers going on strike.
There are three blast furnaces of 2.5 million tonnes per annum each at the plant. RINL produces about 18,000 tonnes of hot metal on a daily basis. — PTI
Puducherry
Private buses ply in Puducherry; banking services partially affected
Privately-operated buses plied normally on March 28 in Puducherry even as banking services were partially affected due to the two-day national strike called for by various trade unions to against the alleged anti-people, anti-worker and anti-farmers policies of the Central Government.
Schools and Government offices functioned as usual while branches of some of banks did not function as workers abstained from work impacting services.
Police personnel were deployed in strength at all vantage points.
Privately-operated buses and also those operated by Puducherry Government-owned Road Transport corporation were plying as usual. Industrial establishments remained closed in most of the estates, according to sources.
Members of various unions held demonstrations at various places condemning the Centre’s policies. — PTI
Haryana
Public transport services impacted in Haryana as roadways employees join nationwide strike
Public transport services were affected in Haryana on March 28 as the Roadways employees joined the two-day nationwide strike.
Commuters had to face a tough time as the bus services remained suspended at several depots of Haryana Roadways.
The roadways employees held protest at many depots in the state as part of the strike.
Sarbat Singh Punia, a leader of the joint front of 10 unions of roadways employees, said that “in all the depots bus services are suspended”.
In some districts, prohibitory orders under Section 144 of the CrPC were imposed to maintain law and order during the strike under which a ban has been imposed on the gathering of five or more persons in a 100-metre area of the bus stands, officials said.
Mr. Punia claimed that employees and workers of some other departments, including public sector banks and municipal bodies, are also participating in the nationwide strike.
Meanwhile, public transport buses were plying normally in neighbouring Punjab, officials said.
“Our bus services are running normally in Punjab,” an official of the State Transport Department said.
Naresh Gaur, Deputy General Secretary of Punjab Bank Employees Federation, however, said the employees of nationalised bank employees joined the strike and the banking services remained affected in Punjab. — PTI
Telangana
Trade unions in Telangana raise unified voice against the Centre’s “anti-worker” policies
Activists from Left parties raising slogans during the nationwide strike against the Centre’s economic policies, in Hyderabad, Telangana on March 28, 2022. | Photo Credit: G. Ramakrishna
Raising a unified voice against the Centre’s “anti-worker” policies, members of various trade unions staged sit-in demonstrations at multiple locations in the State’s coal belt region as the 48-hour nationwide strike called by the joint forum of central trade unions began this morning.
Members of the Singareni Collieries Workers’ Union (SCWU), affiliated to the AITUC, staged a demonstration in front of the RK-7 underground coal mine in Srirampur area of Mancherial district this morning.
Slogans denouncing the Centre’s attempts to auction the four coal blocks in Telangana for commercial mining rent the air. The SCWU general secretary V Seetharamaiah led the demonstration.
Kozhikode, Kerala
Strike near-total in Kozhikode
Migrant labourers at the Kozhikode Railway station trying to fit into an autorikshaw as public transport is scare owing to the nationwide strike of trade unions, in Kerala on March 28, 2022. | Photo Credit: K. Ragesh
Public transport was severely affected, and hotels, shops and other business units remained largely closed in Kozhikode district on the first day of the two-day national strike called by central trade unions against the Union Government’s anti-labour policies, on March 28.
The Kerala Road Transport Corporation did not operate their services. Most of the shops, except a few shops selling tea, coffee, and snacks, were shut. Major markets in Kozhikode city such as the one at Palayam and Valiyangadi, too did not function. Fruits and vegetables were seen left in the open outside some shops in Palayam.
Wayanad, Kerala
Hartal-like situation in small towns of Wayanad
The strike led to a hartal-like situation in small towns of the district with shops, educational institutions and business establishments remaining closed. Attendance was low in Government offices and financial institutions.
Only eight out of 160 employees turned up for duty at the collectorate in Kalpetta, District collector A. Geetha said.
While private and KSRTC buses, auto rickshaws and taxi vehicles stayed off the road, two-wheelers and other private vehicles plied. However, Mananthavadi Taluk was exempted from the strike owing to the Aratu festival at the Sre Bhagavati temple at Valliyoorkavu near Mananthavady. No services were operated from the Sulthan Bathery and Kalpetta KSRTC depots.
Long queues of vehicles were seen on the Kerala-Karnataka and Kerala-Tamil Nadu State borders, including Tholpetty, Muthanga and Thaloor.
No untoward incidents were reported from anywhere in the district, police said.
Chennai, Tamil Nadu
Heavy rush in Chennai Metro trains due to strike
There was huge crowd at suburban railway stations too, owing to the bus strike as part of the nationwide strike called by the central trade unions.. | Photo Credit: R. Ragu
Chennai Metro trains and stations witnessed heavy crowds on Monday morning as most of the MTC buses were not available as a result of the all-India strike which was announced by the Centre of Indian Trade Unions.
Koyambedu station was particularly packed with queues extending up to almost its entrance.
According to officials of Chennai Metro Rail Limited (CMRL), up to 10 a.m. nearly 40,000 passengers had used the train services since 5 a.m. on Monday. “We noticed that some of the important junctions like Koyambedu where hundreds of people take buses walking into our station and boarding a train. By the end of the day, we may know how many people travelled,” an official said.
Of late, about 1.5 lakh passengers travel in Chennai Metro trains through the week and the figures fall significantly during the weekend.
West Bengal
Life hit in parts of Bengal
Life was disrupted at some places in West Bengal in the wake of a two-day nationwide strike called by central trade unions from March 28.
Transport services were affected in a few districts as protesters blocked roads and halted train movement at some railway stations on the Howrah and Sealdah sections.
Railway officials, however, said there were no reports of any major disruption so far.
Operations at offices, educational institutions and commercial establishments were unaffected in most parts of the state, even as the trade unions backed by the Left Front exuded confidence that the strike would be successful on both days.
Banking services were partially impacted as branches in a few areas downed shutters with a section of employees not reporting for duty, while many ATMs remained closed.
However, there was hardly any impact on the functioning of new-generation private sector banks. — PTI
Thiruvananthapuram, Kerala
Essential services, including transportation and food delivery hit in Kerala
A view of the deserted Ernakulam bypass road, in Kerala on March 28, 2022. | Photo Credit: H. Vibhu
Normal life and commerce sputtered to a halt in Kerala on the first few hours of the nationwide general strike called by trade unions to protest against the “anti-labour” policies of the Bharatiya Janata Party (BJP)-led Central government., on Monday, March 28, 2022.
The 48-hour shutdown commenced on Sunday at midnight and will end at the same time on Tuesday.
The industrial action is particularly acute in Kerala, where pervasive left and Congress trade unions marshalled almost total resistance to the Centre’s proposal to amend the labour laws.
The shutdown disrupted essential services, including transportation and banking. Nationalised banks will remain shut till Wednesday.
Kochi, Kerala
Protesters prevent some employees from entering BPCL
All employees unions in the State and the country except the Bharatiya Mazdoor Sangh are taking part in the protest.
The protestors on March 28 morning tried to prevent some employees from entering Bharat Petroleum Corporation Limited (BPCL) in Kochi.
Certain employees tried to enter the BPCL premises as the Kerala High Court had on Friday restrained five trade unions from participating in the nationwide strike.
Considering a plea filed by the BPCL challenging the trade unions in the company joining the protest, Justice Amit Rawal had issued an interim order restraining the unions from going on strike according to their call from 7 a.m. on March 28 to 7 a.m. on March 30. — PTI
Andhra Pradesh
Stir in Visakhapatnam opposing steel plant sale
Left party workers stage a ‘rasta roko’ as part of the ‘Visakha bandh’ and general strike to oppose privatisation of PSUs, at Maddilapalem, in Visakhapatnam on March 28, 2022. | Photo Credit: K.R Deepak
Hundreds of workers took part in protests across Visakhapatnam on Monday as part of the two-day nation-wide strike called by trade unions opposing the Centre’s move to privatise public sector undertakings, with the Visakhapatnam Steel Plant being the epicentre of the stir.
The protestors also gave a call for Vizag bandh on March 28, which drew a moderate response.
Workers, under the aegis of the Joint Action Committee, staged a demonstration outside the main gate of the VSP, raising slogans against the Centre’s bid to go ahead with the strategic disinvestment of the steel plant.
They decried the statements made by Union Ministers in Parliament on the steel plant issue and said they were grossly misleading.
They vowed to thwart the Centre’s plans by all means and said their fight would continue till the end.
Trade unions AITUC, CITU and others staged a rasta-roko at Maddilapalem junction in Visakhapatnam, blocking traffic on the NH-16.
Police took the protesting trade unionists into custody and cleared the traffic. — PTI
National
Unions’ strike partially impacts banking services
A Canara Bank branch wearing a deserted look in Dindigul, Tamil Nadu, on March 28, 2022. | Photo Credit: G. Karthikeyan
Banking services were partially impacted on March 28 as a section of bank employees did not report for duty in support of the two-day nationwide general strike called by central trade unions.
However, there was hardly any impact on the functioning of new generation private sector banks.
Transactions at many public sector banks have been impacted as employees have not reported for duty. Besides, there might be a delay in cheque clearances and Government treasury operation might also be affected by the strike.
The impact of the strike is prominent in eastern India as many branches of public sector banks there are closed, All India Bank Employees’ Association (AIBEA) general secretary C.H. Venkatachalam said.
In the other regions, branches are open as officers are present but services are being impacted due to many employees participating in the strike, he said. — PTI
National
Bank unions protest against privatisation of public sector banks
Bank unions are protesting against the Government move to privatise two public sector banks as announced in Budget 2021-22. They are also demanding an increase in interest rate on deposits and reduction in service charges.
Besides AIBEA, Bank Employees Federation of India (BEFI) and All India Bank Officers’ Association (AIBOA) are also part of the two-day strike call.
All Indian Trade Union Congress (AITUC), Centre of Indian Trade Unions (CITU) and Indian National Trade Union Congress (INTUC), among others are demanding scrapping of the proposed changes in labour laws and privatisation in any form. Increased allocation of wages under MNREGA (Mahatma Gandhi Rural Employment Guarantee Act) and regularisation of contract workers are also part of their demands.
Most of the banks, including State Bank of India (SBI), had informed their customers about the proposed strike and likely impact on the services in advance. — PTI
National
Central trade unions begin two-day nationwide strike
All India Trade Union Congress (AITUC) general secretary Amarjeet Kaur on Monday said, “The two-day nationwide strike by the joint forum of central trade unions has begun this morning”.
About the impact of the agitation, she said that the entire coal belt (mining area) is affected in Jharkhand, Chhattisgarh and Madhya Pradesh.
She also said that there is a good response in industrial areas of Assam, Haryana, Delhi, West Bengal, Telangana, Kerala, Tamil Nadu, Karnataka, Bihar, Punjab, Rajasthan, Goa, Andhra Pradesh and Odisha.
The AITUC official noted that the banks and insurance sectors are affected all over India, while steel and oil sectors are also seeing partial impact due to the strike. — PTI
Ms. Kaur said that she has got preliminary reports that markets are closed in Odisha.
Workers of NMDC went on a complete strike at its mine in Bacheli and Bhilai Steel Plant employees also refrained from working, AITUC said. — PTI
(With inputs from Agencies)
By Enrico Dela Cruz
March 29 (Reuters) - Prices of steelmaking ingredients in China climbed on Tuesday on hopes for additional policy support to shore up the world's second largest economy and biggest steel producer now battling a COVID-19 surge.
The most-traded Dalian iron ore for September delivery DCIOcv1 ended daytime trading 0.5% higher at 867.50 yuan ($136.24) a tonne.
Rising for a fourth straight session, Dalian iron ore touched a session high of 879 yuan, near Monday's seven-month peak at 882.50 yuan.
Iron ore's most-active May contract on the Singapore Exchange SZZFK2 was down 0.1% at $154.80 a tonne by 0703 GMT.
Dalian coking coal DJMcv1 climbed 3.2% and coke DCJcv1 gained 3.5%.
Still, traders were cautious in pushing iron ore prices higher following the Dalian exchange's announcement of higher transaction fee and margin requirement for speculative trading.
Dalian iron ore has risen about 30% this year, notwithstanding recent moves by Chinese authorities to curb a rally amid concerns about inflation as commodity prices soared.
Iron ore's advance also came despite COVID lockdowns in China that could further dampen growth prospects for the top metals consumer.
"Expectations of policy support in China outweighed concerns of weaker demand amid lockdowns," ANZ commodity strategists said in a note.
China's central bank is likely to lower banks' reserve requirement ratios in the second quarter, the official Securities Times reported on Tuesday, citing analysts.
Fitch Ratings, in a statement, said the costs of iron ore and coal were likely to remain high in 2022 due to geopolitical tensions and state-mandated measures to reduce carbon emissions.
It also expects steel demand to recover "quite strongly" in the second quarter when the lockdowns are lifted.
Despite the lockdowns, traders said some mills particularly in China's steel production hub in Tangshan city and factories in other areas hit by the coronavirus surge continued to operate.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 0.3%, while hot-rolled coil SHHCcv1 slipped 0.7%. Stainless steel SHSScv1 slipped 0.8%.
(Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Subhranshu Sahu)
((enrico.delacruz@thomsonsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
https://www.nasdaq.com/articles/dalian-iron-ore-hovers-near-7-month-high-on-china-stimulus-hopes
JOHANNESBURG, March 29 (Reuters) - Rio Tinto (RIO.L), (RIO.AX) and a Chinese-backed consortium risk losing their mining licences if they fail to meet a tight construction timeline for the Simandou iron ore mine in Guinea, the West African country has said.
Guinea's government has grown increasingly impatient with the mining firms that control the giant Simandou deposit which has not been developed since Rio was first granted an exploration licence for it 25 years ago.
The ruling junta signed an agreement on Saturday with Rio Tinto and Winning Consortium Simandou (WCS) under which the firms will collaborate on a 670-kilometre (416 mile) railway and a port to get Simandou's high-grade ore to market. read more
"The framework agreement gives Guinea a very precise calendar with significant penalties up to and including the withdrawal of the mining licence, for any mining company that does not respect its commitments," Guinea's presidency said in a video statement on Twitter on Monday night.
The threat to withdraw the licences has not previously been reported. Rio Tinto declined to comment on the penalties and WCS did not immediately respond to a request for comment.
Guinea's mines minister has said the railway and port infrastructure must be completed by the end of 2024, and commercial production must start by March 31 2025, a timeline analysts say is ambitious for a project with significant environmental and social impacts to navigate.
"The worry for investors is that this ultimatum may incentivise the developers to cut corners," said Eric Humphery-Smith, senior Africa analyst at Verisk Maplecroft.
Rio Tinto's chief executive of copper, Bold Baatar, has said the framework sets out how the project will be built to international Environmental, Social, and Governance standards. Rio Tinto declined to provide details.
Rio Tinto owns a 45.05% stake in the southern half, Blocks 3 and 4, of Simandou, with Aluminium Corporation of China (Chinalco) holding 39.95% and Guinea's government the remaining 15%. SMB-Winning - the consortium behind WCS - won a government tender in November 2019 for Blocks 1 and 2.
Chinalco did not immediately reply to a request for comment.
In re Application of Benjamin Steinmetz for an Order to Take Discovery from Vale S.A., Vale Americas Inc., Rio Tinto plc, and Rio Tinto Limited Pursuant to 28 U.S.C. § 1782, No. 20-mc-212 (AJN) (S.D.N.Y. Jan. 19, 2022) [click for opinion]
Petitioner Benjamin Steinmetz ("Steinmetz"), a foreign citizen, served as an adviser to third party BSG Resources Limited ("BSGR"), which was the rights holder for the development of iron ore mining concessions in the Simandou region of Guinea. In 2010, BSGR and Respondent Vale S.A. entered into a joint venture, whereby Vale S.A. acquired a 51% stake in the aforementioned mining rights. Three years later, the Guinean Technical Committee for the Review of Mining Titles and Agreements opened an investigation into BSGR's acquisition of the rights and issued a finding that BSGR's mining licenses had been procured by bribery, ultimately withdrawing the licenses in April 2014.
Shortly thereafter, Vale S.A. commenced arbitration proceedings against BSGR in the London Court of International Arbitration (the "LCIA"). Following years of proceedings, the LCIA awarded Vale S.A. over $2 billion in damages, which award was later recognized by the courts in the United Kingdom and in New York. Simultaneously, Respondent Rio Tinto plc filed an action in the U.S. District Court for the Southern District of New York (the "SDNY") under the Racketeer Influenced Corrupt Organizations Act ("RICO"), alleging that Steinmetz had conspired with BSGR and with Vale S.A. and Vale Americas Inc. (collectively, the "Vale Respondents") to fraudulently steal Rio Tinto plc's mining rights. The latter action was ultimately dismissed as time barred.
In 2019, Vale S.A. initiated proceedings in the United Kingdom's High Court against Steinmetz, alleging that he and others fraudulently induced Vale S.A. to enter the mining joint venture with BSGR. To support his defense efforts in the UK litigation, Steinmetz filed an application in the SDNY for discovery under 28 U.S.C. § 1782 ("Section 1782") against each of the four Respondents, including the Vale Respondents, Rio Tinto plc and Rio Tinto Limited (collectively, "Respondents"). This request was based on his belief that each held information relevant to what Vale S.A. knew when it entered the joint venture, and on how BSGR procured its mining licenses, which would directly support Steinmetz's defenses in the UK litigation.
The court explained that three statutory requirements must be met for a district court to be able to grant a Section 1782 petition: (1) the person from whom discovery is sought must reside (or be found) in the district in which the application is made; (2) the discovery must be for use in a proceeding before a foreign tribunal; and (3) the application must be made by a foreign or international tribunal or any interested person. If these requirements are met, the district court has discretion as to whether to grant the discovery sought.
The court first considered whether any Respondent resided in or was "found" in the district. Because residence was undisputed, the court considered only whether the Respondents could be "found" in New York. The court explained that the statutory scope of "found" extends to the limits of personal jurisdiction consistent with due process.
Steinmetz accordingly proffered an earlier, unrelated SDNY ruling that Vale S.A. had significant contacts with New York, arguing that this meant that Vale S.A. "resides" or "is found" in New York for purposes of Section 1782. However, the court was unpersuaded, noting that the parties in that case did not meaningfully contest personal jurisdiction.
Finding that no Respondent was "at home" in New York, and thus the court lacked general jurisdiction over the Respondents, the court turned to whether, under a specific jurisdiction analysis, any Respondent had sufficient "minimum contacts" with the jurisdiction in order to compel its participation in discovery. After careful analysis, the court determined that it had specific jurisdiction over Vale S.A. and Rio Tinto plc, based on their participation in a series of 2008 and 2009 meetings in New York related to the Simandou mining rights, and because information related to the Rio Tinto plc's RICO litigation would be unavailable but for Rio Tinto plc's forum contacts.
The court determined that it lacked personal jurisdiction, however, over the remaining two Respondents—Vale Americas and Rio Tinto Limited—which were largely ignored in Steinmetz's briefing. Steinmetz argued only that Vale Americas's status as the U.S. representative for Vale S.A. (which is listed on the NYSE), meant that Vale Americas could be expected to have information about matters which Vale S.A. had filed or had considered filing with the U.S. Securities Exchange Commission (the "SEC"), including any information in connection with the JV Agreement. The court found that this could not form the sufficient "minimum contacts" to establish jurisdiction, as such a finding would effectively nullify personal jurisdiction requirements for any corporation that filed documents with the SEC.
After satisfying itself that the threshold jurisdictional requirements were met as to Vale S.A. and Rio Tinto plc, the court then considered the substance of the discovery requests Steinmetz aimed at these Respondents, explaining that "once a district court is assured that it has jurisdiction over the petition, it 'may grant discovery under § 1782 in its discretion."' The court outlined four non-exhaustive discretionary factors for consideration, focusing its discussion on the fourth factor—"whether the request is 'unduly intrusive or burdensome'"—and finding that this factor weighed heavily against granting the application.
Specifically, the court noted that the requests in Steinmetz's application were vastly overbroad and insufficiently tailored to the issues in the UK litigation. For example, Petitioner's application sought "[a]ll documents and communications concerning Vale's activities in Guinea" over a nearly ten-year period. The court recognized that issuing a more narrowly tailored discovery order, rather than denying relief outright, is generally preferred, but found that the framing of the requests was so overbroad that "the Court lack[ed] visibility as to what a more tailored order could look like."
The court further found that these burdens were exacerbated by the fact that many of the documents sought were held abroad, that the employees who worked on the Simandou matter were located abroad, and that gathering information would be incredibly onerous on Respondents. Finally, the court noted that some of the documents sought would likely fall under a protective order issued in Rio Tinto's earlier RICO litigation, and the requested relief would serve to undermine confidence in protective orders. As a result, the court denied Steinmetz's application in its entirety.
Sara Pitt of the Los Angeles office contributed to this summary.
https://www.lexology.com/library/detail.aspx?g=0c4ce380-582f-492b-83f1-39eb3cf7350d
Thousands of workers of state-owned and boycotted work for a second day on Tuesday as part of the nationwide strike, affecting steel production and mining operations, a leader said.
Rajesh Sandhu, Secretary of Sanyukt Khadaan Mazdoor Sangh said all non-executive workers have boycotted work to join the two-day nationwide strike which will end on Wednesday morning.
"Intensifying their protest against government policies, workers stopped state transport buses in Chhattisgarh for about six hours from 5 a.m," Sandhu said adding NMDC would incur a loss of about Rs 200 crore due to the protest.
Over 10,000 non-executive employees of the company are observing the protest at NMDC mines and offices in Madhya Pradesh, Chhattisgarh, Andhra Pradesh, Karnataka and Telangana, Sandhu said.
J Ayodhya Ram, the President of the Steel Plant Employees (CITU), said workers at the plant in Visakhapatnam did not report for work on Tuesday as well.
Around 8,000 non-executive Rashtriya Ispat Nigam Limited (RINL) workers out of 11,000 are taking part in the ongoing nationwide strike called by central trade unions.
He further said production has been affected at the unit as only one furnace out of three is functional at the plant in Visakhapatnam. One was already under maintenance, the second one has been shut down as a precautionary measure.
In a statement, Steel Authority of India Limited (SAIL) said, "There was no impact of the strike on its production as the attendance at all its units was normal."
As many as 10 central trade unions on Monday began a two-day nationwide strike to protest against the government's alleged wrong policies that are affecting farmers, workers and the general public. The strike notices have been given by the unions in various sectors, such as coal, steel, oil, telecom, postal, income tax, copper, banks, and insurance.
SAIL and are steel making under the Ministry of Steel. NMDC is the country's largest iron ore mining company under the ministry.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Get a quick look at expectations on China’s iron ore and steel markets for the next quarter, as well as the impact of the continuing Russia-Ukraine war in the rebar-scrap market. Our editors in the US are watching gasoline prices, and oil and gas business sentiment, while polyethylene trade is in focus in Asia.
1. Ukraine conflict sparking jump in Chinese steel exports
What’s happening? China has been lifting its exports of finished and semi-finished steel in March as buyers in Europe, the Middle East and in other parts of Asia have been unable to source material from Ukraine and Russia due to the conflict. Some Chinese mills have noted their export volumes reached close to 500,000 mt in the first week of March.
What’s next? A majority of respondents in S&P Global Commodity Insights’ Q2 survey said they expected the conflict to result in higher Chinese steel exports. March orders indicate a big jump in exports over April-May, and the stronger overseas demand could help offset tepid domestic steel demand, and keep prices well supported.
2. … while Turkish export rebar-import scrap spread widens
What’s happening? The Turkish export rebar-import scrap spread has widened to a record high, with Turkish sellers achieving higher export rebar prices to Europe. Turkey received an increased quota, following the redistribution of quotas taken away from Russia and Belarus. European rebar buyers seem to be able to afford to pay the 25% duty if a quota is exhausted, as Turkish rebar is still cheaper than domestic rebar. Turkish mills have also seen strong steel billet export demand following cancellations and delays for CIS-origin material due to the Ukraine invasion.
What’s next? It’s expected that Turkish mills will have to pay more for scrap once they return to buy, with substantial May shipment cargoes required to fulfil their recent finished and semi-finished steel exports. Shortages of basic pig iron from the Black Sea make ferrous scrap the main alternative for mills. The Turkish rebar-scrap spread might narrow slightly, though, if scrap prices catch up with recent increases in rebar prices.
3. California could foreshadow gasoline demand decline in entire US
What’s happening? In Q4 2021, the US West Coast saw a decline in gasoline demand which was more pronounced than the entire country. This coincided with regular unleaded gasoline prices in the area reaching $4/gal. In the latest reporting week, the EIA indicated regular gasoline retail prices in California of $5.70/gal while the US averaged $4.24/gal. Over the last month, as price increases accelerated, California mobility was more tempered relative to the overall US. Weekday mobility is more inflexible than weekend mobility because a larger component is comprised of driving to work.
What’s next? With California gasoline prices being so much higher than the rest of the country, it may be a leading indicator of what could ultimately be seen in the rest of the US with regards to demand impairment. As prices rise to ever more elevated levels, price elasticity is not seen as behaving linearly and demand losses grow disproportionately. Demand losses are estimated be about 35,000 b/d in a low elasticity sensitivity case, to around 300,000 b/d in a high elasticity sensitivity case. This demand loss would be mostly felt in discretionary driving and be reflected in weekend mobility data. If weekend mobility data declines, losses in gasoline demand would begin to mirror that which had already been observed in the West Coast and specifically California.
4. US oil, gas activity index signals growth in major basins
What’s happening? Oil and gas industry executives responding to the Federal Reserve Bank of Dallas’ Energy Survey in March reported a broad expansion in business activity from Q4 2021 to Q1 2022 with increases in production, capital expenditures, employment and overall operating costs. Nearly 52% of respondents reported an increase in oil production in Q1 along with 47% reporting an increase in natural gas production. Less than 7% of survey respondents reported a decrease during the quarter.
What’s next? The overall rise in oil and gas business sentiment in Q1 mirrors activity in the field and could be an indicator of what’s to come in some of the largest shale basins across the Dallas Fed’s Eleventh District – most notably the Permian. In the West Texas-New Mexico play, rig counts, new well drilling and completions are edging back toward pre-pandemic levels in late March, just as production tests new record highs at over 14 Bcf/d. According to a recent forecast published by S&P Global, Permian production could grow by close to 2 Bcf/d by year-end 2022.
5. Asia polyethylene prices reacts to high oil prices
What’s happening? Demand in Asia was weak, and some traders preferred to buy polyethylene on a hand-to-mouth basis in the local market, given market uncertainties. In South Asia, HDPE film prices are at a record high due to limited supply in the international market. Meanwhile, domestic shortage in India on the back of a shutdown of a major PE producing plant due to feedstock issues has been pushing prices higher in the region.
What’s next? Traders expect plant operations in Asia to be reduced due to a lack of Russian naphtha and higher crude costs. Cracker operators are facing high costs and cannot offer lower despite weak demand, traders said. Participants in South Asian region are waiting for fresh offers for May, which they expect to be higher. An upcoming maintenance turnaround in India, a key PE-producing region in South Asia, is also likely to keep the sentiment bullish. Chinese traders were exporting domestic and imported material to Southeast Asia, due to weak domestic demand amid coronavirus-led lockdowns and high inventories. Other sellers were holding high offers, expecting demand to rebound after the lockdowns ease.
Source:Platts
https://www.hellenicshippingnews.com/commodity-tracker-5-charts-to-watch-this-week-45/
Prices of steelmaking ingredients in China climbed on Tuesday on hopes for additional policy support to shore up the world’s second largest economy and biggest steel producer now battling a COVID-19 surge.
The most-traded Dalian iron ore for September delivery DCIOcv1 ended daytime trading 0.5% higher at 867.50 yuan ($136.24) a tonne.
Rising for a fourth straight session, Dalian iron ore touched a session high of 879 yuan, near Monday’s seven-month peak at 882.50 yuan.
Iron ore’s most-active May contract on the Singapore Exchange SZZFK2 was down 0.1% at $154.80 a tonne by 0703 GMT.
Dalian coking coal DJMcv1 climbed 3.2% and coke DCJcv1 gained 3.5%.
Still, traders were cautious in pushing iron ore prices higher following the Dalian exchange’s announcement of higher transaction fee and margin requirement for speculative trading.
Dalian iron ore has risen about 30% this year, notwithstanding recent moves by Chinese authorities to curb a rally amid concerns about inflation as commodity prices soared.
Iron ore’s advance also came despite COVID lockdowns in China that could further dampen growth prospects for the top metals consumer.
“Expectations of policy support in China outweighed concerns of weaker demand amid lockdowns,” ANZ commodity strategists said in a note.
China’s central bank is likely to lower banks’ reserve requirement ratios in the second quarter, the official Securities Times reported on Tuesday, citing analysts.
Fitch Ratings, in a statement, said the costs of iron ore and coal were likely to remain high in 2022 due to geopolitical tensions and state-mandated measures to reduce carbon emissions.
It also expects steel demand to recover “quite strongly” in the second quarter when the lockdowns are lifted.
Despite the lockdowns, traders said some mills particularly in China’s steel production hub in Tangshan city and factories in other areas hit by the coronavirus surge continued to operate.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 0.3%, while hot-rolled coil SHHCcv1 slipped 0.7%. Stainless steel SHSScv1 slipped 0.8%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Editing by Rashmi Aich and Subhranshu Sahu)
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US aid could be coming for critical minerals firms in Australia after trade dialogue between the nations
Iron ore futures hit 7 month highs
Ramelius get $100m debt package. Are more deals brewing?
The good ole US of A is starting to throw its financial muscle behind critical minerals with one eye on something it really doesn’t like – China’s dominance in the battery metals supply chain.
While Western economies talk a big game about the energy transition, they are uncomfortably wedded to the dominance of China as a manufacturing powerhouse in the industry.
That comes with two broad concerns.
Like with Russian energy supplies and its invasion of Ukraine, the level of control of the supply chain by a belligerent competing power could cause major supply shocks in the event of tensions between the White House and Beijing.
Secondly, there are concerns about the ESG standards of Chinese supply. Chinese coal production is on track to grow at a rate more than double Russia’s total exports this year.
Now the US wants to make it easier for US and Australian investors to finance critical minerals projects in their respective countries.
Trade minister visits the States
The thought bubble came out of talks between Federal Trade Minister Dan Tehan and US counterpart Gina Raimondo in the States this week, where critical minerals was put on the table ahead of the “Inaugural Strategic Economic Dialogue”.
It included a delegation of CEOs of critical minerals and rare earths businesses at home and in the USA.
“This delegation will help deepen the ties between Australian critical minerals businesses, potential investors, and the US government,” Tehan said.
“Our Government is working to help facilitate partnerships between Australian critical mineral project proponents and potential sources of offtake and investment.
“As global demand grows for critical minerals for use in rechargeable batteries, electronic devices and advanced technologies, Australia is well positioned to become a trusted supplier of critical minerals to the US, and the world.”
According to the US Department of Commerce the energy transition is looking to secure a “resilient and diversified supply” of materials for wind turbines, EV chargers, batteries, solar panels and semiconductors.
Aussie resources are on the table, with the countries looking at financing mechanisms to support private investment between the two nations following the industry roundtable.
“They noted the executive-level roundtable on critical minerals held on March 30 highlighted the commercial potential for both Australian and U.S. industries and underscored the need to strengthen capabilities across all segments of the supply chain, including extraction and downstream processing,” the DOC said in a press statement.
“Australia and the United States will look at how their respective financing mechanisms could be better coordinated and leveraged to support private investment in supply chains.”
A number of Australian companies are looking to open supply chains for critical minerals in America, with some hitting snags including opposition from local communities.
Among the large Australian lithium companies operating in the States are Ioneer (ASX:INR) and Piedmont Lithium (ASX:PLL), both of whom are positioning themselves as suppliers into a local lithium supply chain.
Lynas (ASX:LYC), the largest rare earths producer outside of China, which operates in WA’s Goldfields and Malaysia, has also been working with the US Department of Defense on the establishment of a rare earths plant in Hondo, Texas.
Lynas (ASX:LYC), Piedmont (ASX:PLL) & Ioneer (ASX:INR) share prices today:
Iron ore futures scale multi-month highs
The big miners were driven higher, sending the materials sector soaring by 1.77% this morning after Dalian futures hit their highest level in 7 months yesterday and drove higher this morning.
Dalian iron ore for September is fetching US$141.79/t (900 Yuan), with spot prices for benchmark 62% Fe fines rising 1.2% to just under US$153/t yesterday according to Fastmarkets MB.
Singapore’s May contract is even more bullish, with traders offering US$160.65/t this morning amid expectations China will see through its Covid lockdowns and stimulate the economy later in the year.
BHP (ASX:BHP) was up 2.82% today to $51.99. Up 22.72% YTD, the world’s biggest miner is closing in on all time highs of $54.55 it hit amid last year’s iron ore boom.
Iron ore miners share prices today:
Is Ramelius gearing up for more M & A?
Ramelius Resources (ASX:RMS) has been one of the most acquisitive mid-tier gold miners in recent years.
Having added the Edna May gold mine off Evolution to its 250,000-odd ounce a year portfolio a couple years ago, it’s taken juniors Explaurum and Apollo Consolidated off the market to snare their Tampia and Rebecca gold projects in WA.
The Marda gold mine from the administrators of Southern Cross Goldfields and the high Penny gold mine via the takeover of Spectrum Metals was another one.
That’s a lot of work for a few short years, but the company remains debt-free and powder dry.
Today it announced a new $100 million debt facility “for general corporate purposes” with a consortium consisting of Commbank, BNP Paribas and NAB.
The facilities remain undrawn with a two-year term and one-year option on top of that. Could another junior mine-buy or larger deal be on the way?
Curiously Musgrave Minerals (ASX:MGV), a fast moving Mid West explorer which has been mooted as a potential takeover target for a host of big names including Ramelius, has muscled in on RMS territory.
The Rob Waugh led gold junior has acquired the Mount Magnet South project on RMS’ doorstep from a private vendor, comprising 294km2 of ground immediately south of the Mt Magnet gold mine and 40km from MGV’s Cue gold project.
Ramelius Resources (ASX:RMS) share price today:
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