Mark Latham Commodity Equity Intelligence Service

Friday 21 February 2020
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Reckoned by many to be the best Epidemiologist team in the world

Coronavirus particle


Imperial researchers have released estimates on the proportion of people who may die from the disease.

According to the latest estimates from the team, from the MRC Centre for Global Infectious Disease Analysis at Imperial, one percent of people with the disease will die from their infection.

Our estimates suggest the impact of the unfolding epidemic may be comparable to the major influenza pandemics of the twentieth centuryProfessor Neil FergusonReport co-author

This is the fourth report from the team, who are also part of J-IDEA, the Abdul Latif Jameel Institute for Disease and Emergency Analytics.

Since the emergence of the new coronavirus (COVID-19) in December 2019, the team have adopted a policy of immediately sharing research findings on the developing pandemic. The new report presents an assessment of the severity of the likely health impact of COVID-19.

A key measure of severity of any outbreak is the case fatality ratio (CFR) - the proportion of people with a disease who will eventually die as a result of infection. Quantifying this can be challenging.

Cases of infection are detected through surveillance, which typically occurs when ill people seek healthcare. Depending on the demands a healthcare system is under, and the capacity to undertake testing, confirmed case numbers reported during an outbreak only ever represent a fraction of the true levels of infection in the community.

In addition, it can take weeks for the final clinical outcome of someone infected with a respiratory virus such as COVID-19 to be known and reported.

For the new report, the researchers used statistical models that combined data on deaths and recoveries reported in China and in travellers outside mainland China, as well as infections in repatriated citizens.

Dr Ilaria Dorigatti, co-author of the report, said: “The estimates published in today’s report rely on limited data and the next few weeks will provide valuable information on the outcome of current infections, which will allow us to refine our estimates and fill our knowledge gaps on the severity of this new virus.”

Dr Lucy Okell, report co-author, added: "It's critical to work out the chance of dying from COVID-19 for those who become infected, and who is most at risk, but our estimates remain uncertain at the current time. Most cases reported so far remain in hospital or quarantine and we don’t yet know how many will eventually recover or die.  Deaths tend to be reported promptly but there is less information on how many people have recovered from the virus. We are likely to be missing cases who have milder symptoms but there is limited information on how common these are. However, our team has tried to account for these factors, and we are continuing to compile as much data as possible on the outbreak to reduce uncertainty about this critical issue."

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Professor Neil Ferguson, co-author of the report, explained: “Understanding the likely impact of the unfolding pandemic caused by the COVID-19 virus on human health will be critical to informing the decisions made by countries in the coming weeks in how best to respond to this new public health threat. Our estimates – while subject to much uncertainty due to the limited data currently available – suggest that the impact of the unfolding epidemic may be comparable to the major influenza pandemics of the twentieth century. It is therefore vital that countries across the world continue to work together to accelerate the development and testing of effective treatments and vaccines, on the fastest possible timescale. Surveillance and data sharing also need to be further enhanced to allow the spectrum of disease severity caused by this virus to be better understood.”

https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-2019-nCoV-severity-10-02-2020.pdf

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China's politics

China’s elite politics are a black box and

the country’s leaders like to keep it that way. That’s what

makes the events of this weekend so perplexing even to seasoned

China watchers.

On Saturday, the ruling Communist Party’s top theoretical

publication, Qiushi Journal, released a speech showing that

President Xi Jinping was directing efforts to contain the

country’s spreading novel coronavirus on Jan. 7, nearly two

weeks before his first public remarks on the topic. The

comprehensive account of Xi’s involvement upended the previous

official narrative on China’s response, prompting speculation

about why it was unveiled now.

“The speech raises more questions than it answers,” said

Susan Shirk, a former U.S. deputy assistant secretary of state

and author of “China: Fragile Superpower.” “The style and

contents of the speech are puzzling. It’s odd for the top leader

to provide a detailed time line like this.”

The speech’s publication comes as Xi and other top leaders

punish local leaders in the face of public anger over

authorities’ initial response to the outbreak after the death of

Li Wenliang, a doctor who was sanctioned for attempting to bring

the virus to light. The illness, which has already killed more

than 1,700 people, has disrupted global trade and prompted China

to quarantine some 60 million people -- roughly the population

of Italy.

Death of a Doctor Poses the Greatest Threat to China’s Xi

Yet

“It’s extremely rare for Qiushi to release one of Xi’s

internal speeches just two weeks after he made it,” said Gu Su,

a professor of philosophy and law at Nanjing University who has

written books about China’s political system. “This exception

was made under the pressure of public opinions after doctor Li

Wenliang’s death and the escalation of the harm caused by the

epidemic.”


Beijing’s Struggle


Perhaps the simplest explanation for the speech’s release

is to show that Xi has been actively engaged in handling the

crisis from an early date, contrasting with what the party has

portrayed as the slower response of officials from Hubei

province, the center of the outbreak. Last week, Hubei’s top

party official was replaced by Shanghai’s former mayor, Ying

Yong, and Wuhan’s party secretary was also removed.

Beijing has long struggled with the question of how to

impose order from the center in a continent-sized country of 1.4

billion people. From bad debt to graft to environmental

regulations, local officials often have more to gain by doing

their own thing than listening to national leaders. The practice

is so common it has an adage: “The mountains are high, and the

emperor is far away.”

Four Key Dates, Four Missed Chances for China to Contain

Virus

“It’s part of an overall strategy to paint any failures to

prevent and control the spread of the virus as the fault of

local leaders,” Trey McArver, partner at China-based consultancy

Trivium China, said of the speech’s release. “The piece shows

that Xi and the central leadership are on top of things.”

Still, if quelling criticism was the objective, it seems to

have failed. Chinese internet users were quick to point out the

discrepancy between Xi’s public and private comments, while many

analysts asked why the speech’s publication was necessary at all

for a leader officially designated the “core” of China’s

political system.

The time line shows Xi first addressed the issue with

China’s supreme decision-making body, the Politburo Standing

Committee, before Chinese scientists told their peers around the

world about the new virus. He also didn’t order a quarantine of

Hubei until 15 days after he first discussed the issue, even

though by that point Chinese scientists already had confirmed

evidence of human-to-human transmission.


‘Seeking Truth’


“For Xi to authorize the speech’s publication at this

juncture seemed strongly defensive, as though he needed to make

clear that he didn’t bear any of the blame for the slow initial

response to the discovery of the virus in Wuhan,” said Richard

McGregor, a senior fellow at the Lowy Institute and author of

“The Party: The Secret World of China’s Communist Rulers.” “In

fact, it does the opposite, by seemingly putting him on par with

the top officials in Hubei, in Wuhan, in being late to recognize

the gravity of the public health criss as it was unfolding.”

Qiushi Journal is run and overseen by the Communist Party’s

Central Committee, which is headed by Xi. The name means

“Seeking Truth,” which was used by former leader Deng Xiaoping

to distance the party from the personality cult of Mao Zedong,

the only Chinese leader in history more powerful than Xi.

Xi’s Pick to Save China From Virus Is Loyalist Who Lured

Tesla

Shirk, the former U.S. diplomat who is also chair of the

21st Century China Center at UC San Diego, said the speech’s

release may be aimed at getting the six other members of the

Standing Committee to assume “collective responsibility.” She

also raised another possibility: “Might the Standing Committee

and retired elders have pressed him to acknowledge his own

responsibility in the public cover up during the critical early

stages of the epidemic?”

Probably no one outside of the tiny upper elite in China

knows the answer. What’s clear, however, is that the leaders of

the world’s second-biggest economy are having a hard time

communicating their plans to control the virus.

“The speech underlines something that has been apparent

from the start,” McGregor said. “That Xi and the central

government are struggling to control the narrative of the crisis

in a way that sends consistent signals to the population,

Chinese government officials and the international community.”


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Gold breaks out

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Gold powers through $1,600 like a hot knife through butter

Gold prices breached the elusive and psychological level of $1600 today, as genuine concerns continue to grow in regards to the coronavirus (COVID-19).


According to a report by CNN the coronavirus has now infected more than 73,000 people around the world, mostly in mainland China. The death toll has now risen to 1,873 individuals, which includes five people who resided outside of mainland China.


The possible repercussions of this contagious disease spreading beyond China’s borders could be profound, and dramatically affect the global economy. We live in an interconnected world where what happens in one part of the world can have a dramatic affect globally.


As of 5:07 PM EST gold futures basis the most active April contract is currently up $18.80 and fixed at $1605.20. This is a net gain of 1.19%. It is not just gold that is trading dramatically higher on the day. Silver for example is currently up $0.43 which is a net gain of 2.43%, with March futures currently fixed at $18.165. Platinum has also shown a strong gain today up 2.76%, and after factoring in today’s gain of $28.70 is currently fixed at $995.50. However once again the largest percentage gainer is palladium, which has gained 8.59% in trading today. After factoring in today’s gain of $199, palladium futures are currently fixed at $2516.


These gains have occurred even though there is extreme dollar strength providing strong headwinds. Currently the dollar index is up 0.33%, and fixed at 99.325. The index is now trading above the highs achieved in August and September 2019. In fact the last time the dollar had this type of strength occurred during the week of March 27, 2017.


Dollar strength becomes very apparent when looking at the current price of spot gold which is fixed at $1602.60. According to the KGX (Kitco Gold Index) normal trading has added $26.50 in value, however after factoring in a decline of $4.70 based on dollar strength the net result in spot gold is a gain of $21.80.


In conjunction to higher precious metals pricing is lower U.S. equities vis-à-vis two of the three major indexes. The Dow Jones Industrial Average lost over 165 points in trading today (-0.56%), and the S&P 500 is off by 3/10 of a percent at 3370. The only index bucking today’s selloff is the NASDAQ composite which is currently in essence unchanged. The tech heavy index is currently up 0.01%, and fixed at 9731.77.


It seems that market sentiment has once again refocused upon potential repercussions of the COVID-19 virus, which continues to infect more individuals raising both the number of reported cases as well as deaths. Until an effective treatment and vaccine can be developed it seems highly likely that this epidemic will spread beyond the borders of China.


As long as this virus remains unchecked it is likely that we will see more downside pressure in global equities and higher pricing in the safe haven asset class which includes the precious metals, as well as the U.S. dollar.


For those who would like simply use this link.


Wishing you as always, good trading,


https://www.kitco.com/commentaries/2020-02-18/Gold-powers-through-1600-like-a-hot-knife-through-butter.html

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Dow drops over 300 points on Fed comments, coronavirus worries

U.S. equity markets turned sharply lower Thursday midmorning as investors digested fresh comments from the Fed and rising fears over the coronavirus.


The selling pushed the S&P 500 and the Nasdaq Composite off record highs and clipped over 300 points off the Dow Jones Industrial Average before giving back some of those losses.


Fed Vice Chairman Richard Clarida told CNBC the market was too aggressive in pricing in a Fed rate cut later this year which investors including Keith Fitzgerald of Money Map Press cited as the catalyst for the sudden reversal in the equity markets.


While globally, the People’s Bank of China cut its loan prime rate 10 basis points to 4.05 percent in a move designed to help cushion the Chinese economy from the damage caused by the coronavirus outbreak.


China’s National Health Commission said at least 74,576 people in the country have been sickened by the coronavirus outbreak, which has killed 2,118. The number of cases in South Korea, which reported its first death due to the virus, more than doubled to 82.


Procter & Gamble and Norwegian Cruise Line Holdings were among the U.S.-based companies to warn Thursday that the coronavirus would hit their bottom lines.


P&G said the outbreak would hurt both supply and demand in China.


Meanwhile, Norwegian Cruise Line Holdings reported better-than-expected fourth-quarter results and warned the coronavirus outbreak will put a dent in its bottom line.


Elsewhere, Morgan Stanley reached a deal to buy online broker E-Trade for $13 billion in stock, marking the largest takeover by a Wall Street bank since the financial crisis.


The private-equity firm Sycamore Partners has agreed to buy a controlling stake in L Brands’ Victoria’s Secret for $525 million. Chairman and CEO Leslie Wexner will step aside once the deal is completed.


Meanwhile, shares of space-tourism venture Virgin Galactic were lower for the first time in nine days. Shares were up 223 percent this year through Wednesday.


On the earnings front, ViacomCBS posted a 3 percent drop in revenue in its first earnings report since the two media companies merged late last year.


Six Flags Entertainment lost $11.2 million in the fourth-quarter as park admissions, spending on food and merchandise and sponsorships declined.


Looking at commodities, gold was up 0.9 percent at $1,626 an ounce, its highest in almost seven years. West Texas Intermediate crude oil was also higher by 0.9 percent, trading at $53.80 a barrel.


U.S. Treasurys rallied, pushing the yield on the 10-year note down 5.6 basis points to 1.514 percent.


In Europe, Britain’s FTSE was down 0.2 percent while Germany’s DAX and France’s CAC were off 0.6 percent and 0.5 percent, respectively.


CLICK HERE TO READ MORE ON FOX BUSINESS


Asian markets ended mixed with China’s Shanghai Composite gaining 1.8 percent and Japan’s Nikkei adding 0.3 percent. Hong Kong’s Hang Seng slid 0.2 percent.


Related Articles


https://finance.yahoo.com/news/stocks-slip-wake-biggest-wall-143014548.html

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Macro

Global Economic Policy Direction Now Hinges on China’s Next Move

(Bloomberg) -- The broad policy direction for many of the world’s central banks and governments now hinges on one question: how will the Chinese government respond to the economic shock caused by the coronavirus?


The Communist Party’s elite Politburo has urged the nation to meet its economic targets this year, an imperative that could shake the government’s recent reluctance to fire up large-scale stimulus.


If it translates into an all-out loosening of monetary policy and a ramp up in government spending, key trading partners that have been slammed by the hit to exports, supply chains, commodities and tourism may see short-term pain followed by a rapid snap back.


The economic shock is expected to dominate discussions at this week’s meeting of finance ministers and central bankers at a Group of 20 summit in Riyadh, Saudi Arabia. International Monetary Fund Managing Director Kristalina Georgieva on Friday suggested there may be a need for “synchronized or, even better, coordinated measures to protect the world economy.”


Much depends on which levers China pulls. Near-term options include further cuts to central bank funding rates and more tax relief to hard-hit sectors as well as flush liquidity for the financial system. The emphasis for now remains on not over-doing it, though there are signs the resolve is softening.


The People’s Bank of China could further cut the proportion of deposits banks must hold as reserves. Local governments are being allowed to speed up bond sales to fund infrastructure like highways and health facilities.


Economists from Goldman Sachs Group Inc to UBS Group AG and BNP Paribas SA see more easing steps ahead.


Real gross domestic product is now forecast to grow 5.8% this year, according to the median result in a Bloomberg survey, down from 5.9% last month. That would be the weakest in three decades.


The unknown is whether officials will really relax their rigid clampdown on borrowing in an economy where total debt is heading toward 300% of national output, making financial stability a political priority.


“The key for China’s trading partners is not so much the composition of China’s stimulus but, rather, that the stimulus is tailored to reflect the features of the shock.” said Nathan Sheets, a former Fed official who is now chief economist for PGIM Fixed Income.


China’s factories are vital links in the supply chains for multinational companies. Hubei province, an industrial powerhouse with an economy the size of Sweden’s, remains in lock-down while a mix of curbs on factory production and travel remain in place elsewhere too, complicating the task of getting the economy back up to speed.


China Effect


HSBC Bank Plc economists led by Janet Henry estimate the hit to tourism revenue will be the biggest drag on Asia. They also highlight China’s role at the center of the global supply chain for electronics will delay a nascent recovery after a prolonged slump.


The Asia-focused lender has cut its 2020 global GDP forecast to 2.3% from 2.5% on the back of the China effect.


Analysis by Tom Orlik at Bloomberg Economics shows that Australia, South Korea, Japan Singapore, Hong Kong and Thailand are among the most exposed in the region while Brazil, Germany and South Africa are high up the list of global vulnerability.


President Xi Jinping has stressed the hit to growth will be short term and has used opportunities like a half hour phone call with Malaysia’s Prime Minister Mahathir Mohamad to assure the fallout will be contained.


One worry: Because China is experiencing a supply side shock that’s upended production and distribution, a conventional stimulus such as lower interest rates or higher public spending may not be enough to turn things around, according to former IMF chief economist Olivier Blanchard.




Governments across Asia are already gearing up to respond.


Koichi Hamada, an adviser to Japanese Prime Minister Shinzo Abe, said more fiscal stimulus will be needed if the fall out worsens.


Singapore is poised to roll out extra spending, Malaysia will announce stimulus next month, while Indonesia plans faster spending.


Story continues


https://finance.yahoo.com/news/global-economic-policy-direction-now-040000474.html

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Zimbabwe recession deeper than thought?

News / National


by Staff reporter

Nyasha Mutseyekwa, a minivan transporter in Zimbabwe's capital Harare, cannot afford new tyres for his ramshackle kombi, selling at US$45 for a good second hand.

Whether he opted to pay in US currency or in the devalued local bond notes at the equivalent black market price, Mutseyekwa would have to save up for months to get the US$90 for the two tyres - that have been punctured by potholed roads.

Used to pumping his flat tyres for ZW$5 each, this replacement is just too much and risks pushing him out of business.

The mechanic has told him the tyres are so much damaged and patched through vulcanised adhesive "plaster" on previously punctured holes that they will simply need a replacement, not plugs.

"Replacing tyres is damn expensive my brother," said the 44-year-old Mutseyekwa, who has two vehicles on the road, a wife and two children to support in the working class surburb of Sunningdale.

"The bond notes are now worthless, and these mechanics don't want them anymore. They want US dollars, for their labour and all motor spares."

Even though the government banned the use of US dollars last year, the greenback has become the most widely used currency in the country, with many preferring it as an accepted alternative to the worthless bond note currency.

Many Zimbabweans have simply adopted the greenback as their own, notes and all, in what is known as "dollarisation."

For almost a year, strict exchange controls have severely limited access to dollars.

A black market in hard currency has spread in response, and as once-sky-high revenue runs dry, Zimbabwe's economy is in free-fall.

The issue of foreign currency shortages persists despite the re-introduction of the Zimbabwean dollar last year. The cash shortage remains one of the most pressing economic issues.
US dollar hoarding has not ceased and confidence in the local currency continues to erode. Though a weaker currency should make Zimbabwean exports more attractive, primary sector production is undermined by tough operating conditions.

The practice adopted by minibuses, vendors, supermarkets and small stores in Harare over the last couple of months to charge in US dollars to Zimbabweans with access to greenbacks is fast spreading.

Food sellers, dental and medical clinics, and others are starting to charge strictly in US dollars or their black market equivalent - putting many basic goods and services out of reach for a large number of Zimbabweans.

The latest rise in prices, underlined with a sharp $20 hike last week in the price of mealie meal -which is in short supply - topped academics' traditional benchmark for hyperinflation. The government has not published inflation data for almost a year.

"I can't talk of bond notes anymore, because in that currency you have to quote different prices every hour," said Muchaneta Moyo, 26, who sells ladies clothes in the Old Mutual flea market next to East-gate mall, and has recently pegged her prices to the dollar.

"You have no choice but to charge in US dollars."

The government of President Emmerson Mnangagwa brought in the strict controls in the forex regime when it banned use of the US dollar, but has given mixed signals, giving some sections of industry and commerce exemptions and exceptions in charging in US dollars although it has become illegal for certain segments of the economy, particularly industry, to charge in foreign currency.

The Confederation of Zimbabwe Industries (CZI) has urged the government to demonstrate clarity on the currency position on whether the country is still under the multi-currency environment.

In a report titled "Synopsis of Currency Developments In The Past Year And Recommendations On Way Forward", CZI highlighted how the government is contradicting itself over the enforcement of SI 142 by coming up with all manner of exemptions and exceptions enabled by licence or legislation, varying with the legal instrument.

"It can be argued that government has to a certain extent initiated the re-dollarisation mode and undermining the local currency by demanding payment of certain fiscal obligations and services in foreign currency through exemptions, exceptions and exclusions," CZI said in the damning synopsis.

Among the causes of this uncertainty as noted by CZI are cases where government agencies are legally allowed to charge in US$ thereby undermining SI 142.

Government still requires certain duties and fees in US$ and government has licensed other operators and traders in the economy to charge in foreign currency.
Financial research firm Equity Axis said the "currency saga has created a dislocation in the economy and it is threatening any efforts for economic rebound."

"The re-introduction of the local currency has failed to wield confidence, and its continuous depreciation in value has become a strong variable to inflationary pressures," the leading financial research firm said.

Oil revenue was initially able to bolster artificial exchange rates, though the black market grew and now is becoming unmanageable for the government.

As the country experiences one of its worst economic slowdown characterised by high inflation and a GDP contraction in 2019, the net fuel import bill registered a 20 percent decline in 2019 compared to the previous year.

While Zimbabwe is a net importer of both diesel and petroleum blend, depressed demand pushing consumption downwards combined with foreign currency shortages have seen the fuel import bill plummeting, noted Equity Axis.

Data from the Zimbabwe National Statistics Agency (Zimstat) show that diesel imports decreased by 16 percent to $861,2 million in 2019 from $1,0 billion in 2018. During the same period, petrol imports recorded a 27 percent decline to $361,3 compared to $494,7 million in 2018.

Cumulative diesel and petrol import bill in 2019 slipped to $1,2 billion from $1,5 billion in 2018, representing a difference of 20 percent.

Economists said global oil prices remained largely stable in 2019, thus, the decline in Zimbabwe's fuel imports is largely reflective of the country's own economic woes where foreign currency shortages has made it difficult for government to secure enough fuel from regional suppliers, the research firm noted.

"The fuel sector has been feeling the pain of economic slowdown that several other sectors including electricity sector are already reeling under," the report said.

Mnangagwa has maintained his predecessor's policies on capital controls.

Yet, the spread between the strongest official rate, of some 17 bond notes per dollar, and the black market rate, of around 250 per bond note, is now huge. While sellers see a shift to hard currency as necessary, buyers sometimes blame them for speculating.

Ronald Mutepfa, a bicycle repair man, needed a medical operation priced at US$350.

"The bicycles I fix, I don't charge in US dollars. Its unbelievable that they want all that money in US dollars for my treatment," said Mutepfa, who had to borrow from a clothing shop at exorbitant interest rates to pay for the surgery.

In just one year, Zimbabwe's currency has weakened markedly against the greenback, and official real GDP growth was since lowered by 9,6 pts to -6,5 percent.
Mnangagwa seem to have no solution to black market traders, he blames for inflating the numbers.

"You have mentioned the issue of money changers selling our money to the people; yes, we see that on TV and we are still asking ourselves what we can do to deal with that. It is something that we are still looking at," Mnangagwa told the party supporters recently at the Zanu-PF women's league national assembly at the party's Shake-Shake headquarters.

Economists said the economy faces persistent headwinds.

Zimbabwe's ever-positive Finance minister Mthuli Ncube sees the economy expanding by three percent this year despite the country experiencing its worst economic crisis in a decade.

"We have our own projection of three percent, so you can see that generally there is a feeling that this will be a better year. So, we are sticking to our three percent rate of growth," Ncube said following a meeting with Chinese officials who arrived in Zimbabwe on January 11 as part of a five-nation tour of the continent.

Authorities believe there will be a rebound in 2020 thanks to improved agriculture and mining output - arguably the pillars of the fragmented economy.

But NKC African Economics analyst Jee-A Van Der Linde said unfortunately, this is unlikely to happen, as the country faces a second successive poor harvest season in 2020.

"Zimbabwe finds itself in a region that is in the grips of the worst drought in four decades - the reservoir at Lake Kariba was recorded as 8,4 percent full by December 27 compared to 52,4 percent full the previous year and down from 11,1 percent on December 1, 2019.

"Patchy rainfall thus far has meant that local maize producers have mostly missed their window for planting - usually during November and December. Moreover, drier conditions should lead to poor yields in cereal crops later this year," Linde said.

The UN has warned that up to eight million Zimbabweans will require food aid in 2020.
Tobacco harvesting is currently underway and the cash crop - a top foreign currency earner - is also likely to under-perform this year.

The Tobacco Industry and Marketing Board (Timb) has stated that crops which were planted in September 2019 were heat stressed and have been subject to severe moisture deprivation.

Timb statistics paint a gloomy picture of the planted hectarage this season - suggesting significantly reduced yields, especially in areas with limited or no irrigation facilities.

"Things are not looking any brighter for mining," Linde said.

"Shortages in fuel and electricity have led to considerable downtime at mines and industrial operations. The latest data shows that third-quarter mining output declined by more than 20 percent on an annual basis in 2019, as prolonged power outages affected an estimated 80 percent of Zimbabwe's miners. Gold was one of the main laggards, down 23 percent (year-on-year) (y-o-y) in Q3. Moreover, as palladium and platinum prices roared higher in 2019, local production in Q3 tanked by 13 percent y-o-y and 17 percent y-o-y, respectively. It is inconceivable that foreign investors would want to enter such an inhospitable business environment."
Linde said an economic rebound in 2020 is far-fetched.

"The reality is that economic conditions are extraordinarily tough and external factors have flung the economy into disarray. The protracted drought means agriculture will more than likely suffer even more in 2020, making it unlikely that growth will emanate from this sector.

"Electricity and fuel shortages are set to weigh heavily on mining, which means growth must come from somewhere else.

‘The government is broke and will not be able to stimulate the economy through fiscal spending. Moreover, a deepening food shortage suggests that Zimbabwe could be headed for a humanitarian crisis, which will entail devastating consequences. We do not expect to see any meaningful economic growth in 2020, and the situation, both economically and socially, is expected to deteriorate further before improving," Linde said.

In an upscale Five Avenue shopping centre, bread, the traditional breakfast meal, increased to $18, from $14, and eggs have jumped to $100 for a tray of 36 up from $80 in the past month, according to tracking by Daily News on Sunday reporters. In the same period, a 10 kgs pocket of potatoes jumped a whopping 80 percent. The runaway prices have dampened Valentine celebrations this weekend.
Most Zimbabweans, earning just US$15 a month at the black market rate, are nowhere near being able to save hard currency.

"My salary is in bond notes, where do I get the US dollars? Who don't they just dollarise, so that we all earn in US dollars, and goods and services are just sold in US dollars officially? Like what happened in 2009. We used to sing dollar-for-two yakauya naTsvangirai. They must return the US dollar. Bond notes have dismally failed," said Charity Murerwa, a 37-year-old teacher who, like many, was seeking a worker to do vending jobs for her at

Mupedzanhamo flea market, to bring in some hard currency.

Mnangagwa has vowed never to adopt the United States dollar as the major instrument of trade in Zimbabwe despite the bond notes plunging against the greenback since its introduction last year, fuelling inflation and worsening economic turmoil.

"No progressive nation can progress without its own currency. However, we have so many among our people who fight this decision. We will not revert back to a basket of currencies, never, never, never," Mnangagwa told Zanu-PF members at an annual party conference outside the capital.

http://www.bulawayo24.com/index-id-news-sc-national-byo-179354.html&ct=ga&cd=CAIyHDhlNDgwYmMzNTgyYzM1M2Q6Y28udWs6ZW46R0I&usg=AFQjCNG2Kes3ubqEWTo82Zm0ipsmj3qyT

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Climate subsidies not 'environmentally defensible', Environment commissioner says

The Government should ignore "special pleading" from polluters receiving taxpayer subsidies or risk failing to meet its climate targets, the Parliamentary Commissioner for the Environment says.


In sharply-worded comments on a planned overhaul of climate change legislation, Simon Upton – a former National party cabinet minister – essentially said the changes did not go far enough, and were too corporate friendly.


A Government bill making significant changes to the Emissions Trading Scheme (ETS) is winding its way through Parliament. The scheme is a major tool to lower greenhouse gas emissions and will be vital in meeting New Zealand's climate change commitments.


ROBYN EDIE/STUFF The aluminium smelter at Tiwai Point. Its owner receives subsidies to cover most of the smelter's atmospheric pollution.


While an overhaul of the scheme has been broadly welcomed, some of the proposed changes have been contentious.


READ MORE:


* Polluters making 'windfall gains' from scheme to reduce emissions


* Bill puts Southland businesses in firing line: Dowie


* Free carbon credits worth billions to continue being allocated for decades


* Industrial emitters will pay more for emissions, eventually


A key matter of contention is the fate of long-standing subsidies given to a handful of polluters.


When the scheme began in 2008, exporters with high-intensity emissions – primarily steel, aluminium and methanol manufacturers, together known as Emissions Intensive, Trade Exposed (EITE) firms – were deemed to be vulnerable to overseas competitors, and were thus given free carbon credits covering most of their pollution.


The intent was for the subsidies to quickly wind down, and disappear completely by 2025. The phase-out was delayed in 2012 and not reinstated.


The new bill proposes phasing the subsidies out, but slowly; reducing from 90 per cent now to 80 per cent by 2030, to 60 per cent by 2040, and 30 per cent by 2050.


On Sunday, Stuff reported some companies are likely making "windfall gains" from these subsidies, due to outdated methodology that is over-compensating some recipients.


In comments to MPs considering the bill late last week, Upton spoke out against the subsidies and the slow rate at which they would be phased out.


"In all likelihood, we have been giving units to businesses that did not need them, or are less efficient than their overseas competitors," he said.


"Free allocation… Should be about protecting the environment. This is not what New Zealand's current free allocation system does."


CAMERON BURNELL/STUFF Parliamentary Commissioner for the Environment Simon Upton.


The primary issue was the lack of criteria to decide what companies are entitled to subsidies, he said.


To receive a subsidy, a company merely needs to show it is emissions-intensive and is - or could be - internationally trading its products.


"It does not need to show that meeting its obligations under the ETS would put it out of business, or that if the activity was relocated overseas, that would increase global emissions," Upton said.


He raised the possibility of overseas industries setting up in New Zealand to take advantage of the subsidies, which would make it difficult for the country to meet climate targets.


The bill also increases the level of assistance for agriculture - which is currently outside the ETS, but could be included from 2025 - from 90 per cent to 95 per cent, as part of Labour's coalition agreement with NZ First.


With a phase-out rate of 1 per cent, it would mean farmers would be subsidised for nearly a century.


In their own comments on the bill, subsidy recipients have said the free credits are vital to protecting them from overseas competitors, some of whom face no price on their pollution.


"[W]e stress that the risk of carbon leakage remains," Business NZ said in its submission on the bill.


Others had said any adjustments to the free allocation would disincentivise them from investing in emissions reduction.


Upton, however, urged MPs to ignore these appeals.


"Frankly, it is up to the Government, and not the EITE businesses, to decide who should receive subsidies for emission reduction technologies," he said.


"You should ignore this special pleading."


VICTORIA UNIVERSITY OF WELLINGTON Economist Dr Geoff Bertram is a long-time critic of the Emissions Trading Scheme.


Several other experts have been critical of the changes to the ETS, arguing they don't go far enough.


Among them is economist Dr Geoff Bertram, who described the ETS as a "dog's breakfast" and said New Zealand should just acknowledge it wasn't willing to take climate change seriously.


"So thoroughly has the scheme been captured to date by rent-seeking special interests that it has served only to enrich insiders at the expense of the rest of the country, while failing completely in its ostensible purpose of reducing nationwide emissions," Bertram said.


"The outlook under the proposed legislation is for more of the same."


MPs are considering changes of the bill under the select committee process and will report back ahead of its second reading.


https://www.stuff.co.nz/environment/climate-news/119499480/climate-subsidies-not-environmentally-defensible--environment-commissioner&ct=ga&cd=CAIyGjU3YmM5ZDYyY2E0NzBlYzQ6Y29tOmVuOkdC&usg=AFQjCNEbEcQTR-VGWVIF7Zry_xW3C5o0s

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No plan b: QE4 brewing - have mercy on US all!

Policy-makers have gone mad and the general public doesn't quite understand how dire the situation is. Everyone's bullish on the U.S. economy; can you find anyone that isn't saying that "things are looking good, overall," or that doesn't have his money tied to deflationary assets?


Assets, which perform well in deflation, have done the impossible for 40 years, while inflation has plummeted from the 1970s craze.


The entire investment world is OPERATING under the premise that inflation is a thing of the past. Interest rates reflect no concerns with inflation. Bond investors are locking in yields that make no sense for anyone who anticipates 2% inflation or higher in his lifetime, and there's a housing shortage in many desired areas due to lack of construction.


Central banks are throwing everything they've got into the fire, but they can't seem to spark the inflation needed to raise rates higher and normalize. Without relevant interest rates, no one is afraid of leveraging and the default of lousy businesses is gone.


Think about it, since that's the real bubble – the idea that inflation has been solved by what the Davos crowd is referring to as "Disruptive Deflation."


The theory is that there's so much innovation and so many benefits to the breakthroughs we enjoy in technology that prices keep compressing and our lives continue to get more efficient, without tacking on additional costs.


On our smartphones, we browse the web, take photos, calculate, communicate and stay up-to-date on global events. This contraption fits in a pocket and is affordable to most of the world's population. Therefore, the argument goes, the economy has disinflation.


Like all other This Time It's Different concepts, this one will blow up in our faces as well.


Another category that is blowing up in our faces right now – and causing champagne bottles to be opened and poured like kings in Turkey and other manufacturing capitals outside of Southeast Asia – is the coronavirus.


Courtesy: Zerohedge.com


The demand for steel is down 80%. The truth is that we haven't begun to feel the impact from the virus on financials yet, but this indicator just shows you the level of DISRUPTION and the size of the DROP in activity, in the world's second largest economy and its manufacturing DOMINATOR.


Pollution levels have dropped by 50% in China, which also proves just how much of an impact these unfortunate circumstances have on their workforce and on the world, as a whole.


If we don't see signs of relief and progress soon, it won't end as swiftly and neatly as SARS did.


Millennials, who are definitely not in the habit of trusting their elected officials, are pushing the price of Bitcoin above $10,000 yet again and I'm not discounting a 30%-40% move upwards in the next few months.


The chart looks ripe for a BREAKOUT!


Courtesy: Zerohedge.com


Bitcoin is no longer a bet on some obscure idea. It is a calculated investment, based on the fact that it is leading the internet of value. The World Wide Web connected the planet and made the world like one village, but the blockchain will cause unheard-of improvements in lowering the costs of the middle-man, who SUCK UP a fifth of the price of an item in some cases.


The bull market in stocks is truly not over. We keep seeing how ready investors are to bail on equities at the first sign of trouble. This isn’t the way these bull markets end.


On top of that, investors are quite happy with buying bonds. This shows me that they're so cautious that the upside doesn't bother them whatsoever – they seek wealth preservation.


Courtesy: Zerohedge.com


In order to show you just how the mindset of the market has altered, check out the yield that lenders are willing to accept from the Greek government.


Truly, these are unprecedented times for all of us.


When the history books close our chapter, we will all know the real cost of PRINTING CURRENCY out of thin air.


Courtesy: U.S. Global Investors


https://www.kitco.com/commentaries/2020-02-17/No-plan-b-QE4-brewing-have-mercy-on-us-all.html

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Baltic dry, copper, oil, tech and China continue to call for market crash soon...

In this update we are going to review a small but important range of commodities / lead indicators which strongly suggest that the seemingly endless bullmarket in US equities is living on borrowed time and will end sooner rather than later, and given how long it has lasted and how extremely overvalued it has become, the downturn will likely start with a crash phase.


Regardless of what the eventual impact of the Coronavirus epidemic is, US stockmarkets in particular seem to be in a state of denial about the actual real-world consequences of the Chinese shutdown and impact on the global supply chain and corporate profitability everywhere, and some elements even seem to be gloating about China’s misfortune and predicament, completely oblivious to the fact that this is going to have a negative impact on almost everyone.


The following points were made by a reader and while I don’t necessarily concur with all he has written, I am open to the possibility that all or much of this may be correct, and if it is, we are looking at serious problems emerging before much longer…


I am getting reports from friends in SE Asia of the precipitous collapse of global freight as the full impact of China's colossal shutdown impacts across its economy and now, unsurprisingly, the global economy. Port ship handling in Malaysia, Singapore and Japan is down 50% already; i.e. shipping freight.


Supply chains across all sorts of industries are collapsing as all components made in China dry up for all sorts of products from cars to i-phones and computers. There has never been a Global economic disruption on this scale in history as nCoV's contagion rate is 4 x as fast as SAR's and 5 to 8 x as virulent. The Chinese have been economical with the truth concerning deaths, infection rates and the numbers of those now under full quarantine. The real numbers have been variably estimated at being 5 to 10 times the official figures. All attempts at real reporting on the scale of this pandemic are being heavily censored but what I have seen emerging on youtube is very scary / harrowing.


International air and sea travel is in virtual freefall as people are now reluctant to travel or simply can't travel on so many air and sea routes due to these now being closed down by States protecting their populations from infection. Holidays to SE Asia are in a state of collapse in Australia and Europe.


Stock market highs are entirely due to major market manipulative forces / players and not due to any underlying fundamental economic reasons, hence, the market is now totally defying gravity. The MSM is even beginning to acknowledge this fact and most market experts see a major correction / recession as being imminent.The commodity of the last resort gold (and silver) looks set to go ballistic and takeovers of underdeveloped gold mining assets is in "blast off mode" in Australia. All top brokers in the Australian gold markets are foreseeing AU$ 3,000 / ounce gold by the end of 2020. It's already at AU$ 2,343 / ounce. Silver is the huge sleeper...but not for much longer!”


Our roundup of the charts starts with a review of the bullmarket in its entirety using an 11-year chart for the S&P500 index. On this chart we see that this bullmarket has been going on for almost 11 years now, from the low in the Spring of 2009, with the latest upleg, which is really steep, taking the index up to a target at trendline resistance at the top of the expanding uptrend channel shown, which is clearly a good point for it turn down, especially given how steeply it has risen in the recent past. One of the big arguments currently being put forward by bulls is that “the market can’t drop because Trump is going to win the election in November by a landslide” This may well be true, but since the market moves to discount larger economic developments 9 months in advance of them, it means that it is already right now discounting a Trump victory.


Now let’s turn our attention to the lead commodities / indicators which are already calling time on this bullmarket.The first is the Baltic Dry index, which is the cost of shipping. On the 14-month chart for the BDI we see that, just since the start of September it has plummeted from 2500 to just above 400, meaning that the cost of shipping is just one-sixth of what it was about 5 months ago. That should tell you all you need to know about the state of world trade – just don’t expect Wall St to go pasting this chart up on sidewalk billboards.


Next copper, which had an extraordinary string of 13 down days in a row on heavy volume a few weeks ago. This drop brought it down to an important support level in a deeply oversold state and we looked for a weak rebound to alleviate this oversold condition, which has since occurred, but as we can see on its latest 6-month chart, the tight pattern that has formed looks like a bear Pennant, not an intermediate base, and if this interpretation is correct, then another severe downleg will begin soon that will see copper crack the key support and drop, probably steeply, to the next important support level below $2.00 that can be seen on the 5-year chart below. If this happens it will be very bad news for the global economy. Copper is not called Dr Copper for nothing – weakness in copper is frequently an early warning sign of an impending recession (in this case depression) which is why it so called.


Another commodity signaling serious problems ahead is oil, which has dropped steeply within the same timeframe as copper, as we can we on the 6-month chart for Light Crude below, and it too is rallying feebly from an important support level to alleviate its oversold condition, but the pattern that has formed so far this month also looks like it will turn out to be a countertrend bear Flag / Pennant that will be followed by a drop to new lows.


The 5-year chart enables to see where Light Crude is likely to go if it breaks below the nearby support just below $50. If this support is breached oil will target the next important support level at around $42.50, and if that fails, as we would expect it to in a crash scenario, then Light Crude is likely to find itself back in the high $20’s or even lower. Needless to say, such a scenario is likely to be accompanied by a severe decline in the stockmarket.


One reason that US stockmarkets have managed to stay elevated despite the looming severe problems, is the recovery in the Chinese stockmarket in recent weeks. On the 6-month chart for the Shanghai Composite index we can see that, following it opening with a big gap down after the end of the Chinese lunar New Year holidays it has made what at first sight looks like an impressive recovery due to the government pledging to pump billions into the market and also banning short-selling. However, on closer inspection this looks like nothing more than a “dead cat bounce” that has only succeeded in bringing the market up to resistance towards the top of the gap and close to its falling moving averages. If it now proceeds to roll over and drop again, this is likely to put pressure on lofty US markets.


But if you want more compelling evidence that it’s 1 minute to 12 on the market clock, or more like 5 seconds to 12, then take at the following 2 long-term charts for Apple and Microsoft, which shows them ending their long parabolic bullmarkets with spectacular vertical blowoff tops. Could they go even higher before they crash and burn? – maybe, but the higher they go the greater the probability that they will suddenly flip to the downside, and the initial plunge is likely to be brutal. Many investors in these stocks up to now are not so stupid as one might think – they know the situation is unsustainable but are looking to sell to an even bigger idiot before the music stops – just make sure you are not around when it does because the exits will be instantly jammed solid.


It is very hard to believe that these stocks are at these levels, especially given Apple’s presence in China, and the fact that they are is viewed as an indication of a staggering complacency rooted in dire ignorance.


When you read and understand what is written in the articles Cognitive Dissonance and China is Disintegrating you should be able to comprehend that these stocks are very likely to crash and burn as the whole market goes down like the Titanic.


Looking at the charts above, especially those for the Tech stocks Apple and Microsoft, it should be obvious that the vast majority of investors are now living in “cloud cuckoo land” oblivious to the catastrophic fallout that a dead stop of the Chinese economy will lead to, especially as the global debt situation was precarious before all these latest problems.


We will shortly be looking at some Apple and Microsoft Puts on the site, with an awareness that they could make one last stab higher before they cave in. Close inspection of their 6-month charts turns up that they may make one final vertical run to new highs and even more overbought extremes before they are exhausted and reverse into a crash.


https://www.kitco.com/commentaries/2020-02-17/Baltic-dry-copper-oil-tech-and-china-continue-to-call-for-market-crash-soon.html

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Commercial Transport China

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Sulphuric Acid Goes Negative

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CoronaVirus Update

China share of world trade, now and in 2003.

Three Asian countries uncomfortably near epidemic. 


China's traffic, improving from zero, but still 40-50% below averages. 

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Hong Kong: Accident waiting to happen?


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Is PE Having Its WeWork Moment…???

Is PE Having Its WeWork Moment…???

For the better part of a decade, institutional investors have redeemed capital from active strategies and dumped it into Private Equity (PE). What’s the benefit of PE for allocators? You get to have levered equity returns without the volatility of actually owning public equities. Unlike stocks that often fluctuate wildly, PE is marked-to-model (M-T-M), hence quarterly volatility is minimal. Then, when there’s a liquidity event, you get to see how well you did. Or at least, that was the theory. However, by the time of the liquidity event, usually someone else is in charge of the position. Meanwhile, you’ve used the nice smooth M-T-M to earn yourself a bunch of bonuses and maybe even a promotion to somewhere else that’s ring-fenced from your allocation decisions at your prior job. In many ways, the funds and the allocators themselves are both incentivized to mark the numbers higher and hope that they’re proven right.

Over the past year, I have been highly critical of the Ponzi Sector. You have businesses with no hope of ever showing profits, focused on using VC capital to create revenue growth in the hope of an IPO. As the IPO window has now closed, these companies are in something of a bind; if they slow growth to reduce losses, they become no-growth incinerators of capital and if they keep going, they may find that they cannot make payroll one day—remember WeWork? You also have the issue of the VCs themselves; do they really want to fund this thing anymore? A year ago, they knew they could put money in at a $1 billion value because Softbank would do the $10 billion round and then they could dump it on retail. Even if it was a down-round from Softbank, who cared, they set the mark and everyone else felt like they got a bargain in the IPO. However, times have changed; who would still value a fake business at $1 billion if there was no hope of an IPO in the near future? These sorts of little dramas are getting sorted out behind closed doors and not a day goes by without us hearing of another round of VC unicorn layoffs. As the VC ecosystem has a slow-motion coronary, it’s worth asking what else looks like VC; where else can you mark-up your friend’s portfolio if he’s willing to mark-up yours.

Well, PE sure looks similar—fake marks, unrealistic expectations and a lot of incentive to ignore reality in the hope of bluffing your way into an IPO. In VC, this all ended when Uber (UBER – USA) and Lyft (LYFT – USA) both had down-rounds, followed by WeWork failing to raise capital at any price. Since then, we’ve seen failures by many smaller companies like Casper (CSPR – USA), which serve to remind equity investors why they shouldn’t buy VC IPOs. However, PE was notably absent in this drama until recently. Is the bankruptcy of EnCap’s Southland Royalty, PE’s very own WeWork moment?

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Dry Bulk's Binary Coronavirus Fate: Snap-Back Or Wipeout

Dry bulk shipping — the world's largest transport market by volume — has thrown in the towel on the first half of 2020.


The focus has instead turned to the second half, when prospects for freight rates are increasingly binary: either very strong or catastrophically weak.


During Tuesday's quarterly conference call by dry bulk owner Golden Ocean GOGL, +3.77%, the company's chief commercial officer, Thomas Semino, said, "Coronavirus is causing significant disruptions in trade flows. It is too early to forecast the potential impact beyond the short term, but it is unlikely that normal business operations will quickly resume.


"Many market observers expect a quick recovery in the second half of 2020. We would, of course, welcome this, but it's simply too soon to tell," Semino conceded.


Golden Ocean is among the largest dry bulk owners listed on Wall Street; its largest shareholder is famed shipping tycoon John Fredriksen. But despite its stature, it declined to conduct a question-and-answer session with analysts at the end of its call, something it hasn't done before.


The upside scenario is that the virus is contained in the coming months, China builds more infrastructure to stimulate its economy, and the country imports iron ore and coal for steel production at far above normal levels.


The Arrow Shipbroking Group wrote on Monday, "While the mainstream media focused on China's latest plans to reduce taxes and interest rates, there are signs that preparations for a sizable stimulus are taking place behind the scenes. Local government special purpose bond (SPB) issuance hit a new record in January [714.8 billion Chinese yuan]. SPBs are used to fund infrastructure projects, and a sharp rise in new bonds suggests that Beijing is gearing up for another round of infrastructure investments to boost its economy."


Breakwave Advisors, which created the Breakwave Dry Bulk Shipping ETF BDRY, -0.97% to mimic the Baltic Dry Index with an exchange-traded fund, opined in a report on Tuesday, "If history is a guide, expect an impressive rally later this year. Given the severity of the decline, such a potential upturn could be significant ... once conditions begin to improve in China."


During a webinar on the coronavirus presented by Capital Link on Friday, Giovanni Ravano, co-CEO of shipping brokerage IFCHOR, said, "I definitely think the short-term disruptions will be compensated for by a catch-up effect. There will be opportunities for significant price action on the underlying commodities as well as on the dry bulk [earnings] results."


Ravano believes there will be a drawdown of commodity stockpiles during the outbreak period, and once the outbreak is contained, those stockpiles would need to be replenished. "This will create shortages and a lot of volatility, which is good for traders," he said.


There should also be fewer Capesizes (bulkers with capacity of around 180,000 deadweight tons) competing for business in the second half.


According to Semino, current rates "are extremely untenable for owners of older vessels. There were five Capesizes demolished in January, reports of five additional Capes scrapped in February and nine sold for scrapping in the next six months. The longer the weakness persists, the greater the likelihood that more will be scrapped."


The risk, of course, is that the coronavirus outbreak could continue for an extended period, into the second half or beyond, limiting the ability of China to pursue infrastructure stimulus and capping consumption. "The [dry bulk] recovery will be very much a function of how long the crisis lasts," Ravano acknowledged. "If they don't find a solution [soon], that is not good for the dry bulk complex."


U.S-listed dry bulk companies like Golden Ocean are generally in better shape to weather the storm because they've spent the past decade bolstering their balance sheets and modernizing their fleets. That said, most of the world's dry bulk fleet is privately held.


Even stronger public players like Golden Ocean face significant financial damage if the crisis continues for an extended period.


According to Clarksons Platou Securities shipping analyst Frode Mørkedal, Golden Ocean's "cash buffer" of $163 million "will allow some breathing room for a while, but with cash breakeven at $13,800 per day for Capesizes, the market needs to pull higher during the second quarter to avoid a prolonged cash burn."


Putting that cash burn in perspective, he estimated that based on current rates, Golden Ocean's first-quarter EBITDA (earnings before interest, tax, depreciation and amortization) "could drop below $10 million versus interest payments of $13 million and debt repayments of $28 million."


Not all dry bulk owners will be able to survive that kind of burn. In a client note last week, Stifel analyst Ben Nolan warned, "If the coronavirus puts continued pressure on dry bulk demand, there are some companies that may inch towards bankruptcy."


At the Tradewinds Shipowners Forum New York event last Thursday, Scorpio Bulkers SALT, +0.58% President Robert Bugbee said, "Very soon the game changes to: Which companies can survive?"


Financial results announced by Golden Ocean do not reflect the current rate environment, which is near all-time lows.


Before the market open on Tuesday, Golden Ocean reported net income of $41 million for the fourth quarter of 2019 versus net income of $23.6 million in the fourth quarter of 2018. Adjusted earnings per share came in at 27 cents, better than the 23 cents per share that analysts expected.


According to Semino, "The strength of the market in the third quarter impacted our results in the fourth quarter, as a number of the strong fixtures [spot contracts] we concluded in the third quarter were for voyages that actually occurred in the fourth quarter."


Golden Ocean achieved average rates of $21,668 per day in the fourth quarter of 2019. Clarksons Platou Securities estimates that Capesize rates are now just $2,500 per day.


Golden Ocean announced that it would be paying a cash dividend of 5 cents per share for the fourth quarter, a third of the 15-cents-per-share dividend in the third quarter but still equating a cash payout of $7.2 million.


A private owner facing the coronavirus threat might opt to preserve every cent for a cash buffer, but public companies face pressure to maintain payouts. Golden Ocean highlighted in its quarterly release that "it remains committed to returning value to its shareholders," whereas Mørkedal noted, "Given the weak dry bulk outlook, we would not have been surprised if dividends had been cut to zero."


More FreightWaves/American Shipper articles by Greg Miller


Image Sourced from Pixabay


© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.


https://www.marketwatch.com/story/dry-bulks-binary-coronavirus-fate-snap-back-or-wipeout-2020-02-18%3Fmod%3Dinvesting&ct=ga&cd=CAIyGmM4M2EyMmUwMWZlNTViZGM6Y29tOmVuOkdC&usg=AFQjCNGNQk3T-nQ1WL7LMu-kWkezBl2Rq

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February seen as an 'economic write-off' for China

The rate of new infections in China of the Covid-19 virus seems to have stabilised, just as the death toll climbed above 2,000 and 75,193 confirmed cases of coronavirus are being monitored across the globe. However, the ripple effects the pandemic have wreaked on global supply chains are only now being felt, and questions linger on how long the impact on commodities such as zinc, lead, copper and gold will last.


The extended Chinese Lunar New Year holiday has ended but a return to work by millions of migrants has been slowed to a trickle. A combination of transport restrictions, quarantine periods, staffing shortages and a government-mandated staged return to work means the normal post-holiday bounce back in economic activity won't happen.


Not unlike the unfolding scenario with copper supply and demand, WoodMac is flagging acid storage at capacity as a major headache for Chinese zinc smelters, with 11 significant operations having either shut down or curtailed production. Depending on many factors, these smelters plan to restart later this month, or to defer production as far out to May.


"The extent of the cutbacks at some of the smelters and others will be the result of smelters bringing forward planned maintenance, and so this month's shortfall in output will be recoverable later in the year. However, the longer the disruption to transport and the Chinese economy lasts, the greater the likelihood of significant cuts in refined production," WoodMac analysts said Tuesday.


Zinc smelter production cuts will not only affect the zinc market in China but will have a knock-on effect in the rest of the world, as they cut China's appetite for imported concentrates. This will put the rest of world's concentrate market further into surplus and put additional upward pressure on zinc treatment charges.


For lead, reduced primary production will reduce the need for imported concentrate, pushing treatment charges upwards. However, should the situation return to normal, WoodMac expects the slow refilling of the scrap battery supply chain within China may incentivise its primary smelters to try and take advantage of a slow ramp-up in secondary lead production by buying imported concentrate, potentially pushing treatment charges lower.


Although the number of cases beyond China's borders is limited, the influence on global ‘just in time' supply chains is spreading to manufacturers outside China. A shortage of Chinese-produced components has the potential to undermine the recovery in the global manufacturing sector that, was only just getting under way in the wake of the de-escalation of the US-China trade war.


The impact of the virus is already being felt keenly by the global automotive sector, with Hyundai being forced to close factories in South Korea, as have other manufacturers elsewhere in Asia. Fiat Chrysler announced that one of its European plants might have to close due to a shortage of critical parts.


With shipping times of 6-8 weeks from China to Europe, the impact of the coronavirus may not begin to filter through until March-April on European and US users of Chinese-made components.


Although Chinese authorities are moving to provide support to the economy through interest rate cuts, proposed tax breaks and other measures, these will have minimal impact on an economy that has "effectively been put on hold" by the efforts to contain the spread of the virus.


Long-lasting effects


The longer the lockdown is maintained, the greater the probability of lasting economic damage to households and businesses. WoodMac warned the longer the situation took to resolve, the more deferred demand could be destroyed.


"In such a situation the critical unknown will be whether China's zinc and lead producers will be willing to return production to pre-crisis levels despite potentially weaker demand or whether the likely cashflow squeeze on consumers will be transmitted through the zinc and lead value chain, constraining the recovery in output," said WoodMac.


Meanwhile, the World Gold Council weighed in on Covid-19's potential impact on gold.


Extrapolating from the 2002 SARS epidemic in southern China, director of investment research Juan Carlos Artigas said it was all but certain that China's consumer demand would ease by 10-15% for the March quarter.


Whether demand rebounds or continues to soften will depend on the duration of the epidemic and its impact on global economic growth. The impact on gold's price performance is less clear.


"If the situation is resolved relatively quickly and the global impact is contained, the outcome may be limited to softer Chinese gold demand and a transient impact on price," said Artigas.


"If the epidemic spreads further and continues to affect investor sentiment, global flight-to-quality flows, amidst concerns of a global deceleration, may have a more sustained (positive) impact on the gold price."


The gold price rose Tuesday close to a seven-year high of US$1,608.20, before closing at $1,603.30/oz.


Moody's Investors Service said Tuesday it had increased the top end of its price sensitivity range for gold by 4%.


"We have expanded our price sensitivity range for gold, based on supportive factors including lower-for-longer interest rates and geopolitical uncertainties," analysts said.


The sensitivity range was increased at the higher end by $100/oz, to $1,400, while the lower end of the range remains $1,100/oz. This changes the midpoint to $1,250, from $1,200.


https://www.mining-journal.com/politics/news/1381283/february-seen-as-an-economic-write-off-for-china&ct=ga&cd=CAIyGjU3YmM5ZDYyY2E0NzBlYzQ6Y29tOmVuOkdC&usg=AFQjCNGVASrB2AnkscN9w5AnaYoV8hqWk

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China Is the Real Sick Man of Asia

The mighty Chinese juggernaut has been humbled this week, apparently by a species-hopping bat virus. While Chinese authorities struggle to control the epidemic and restart their economy, a world that has grown accustomed to contemplating China’s inexorable rise was reminded that nothing, not even Beijing’s power, can be taken for granted.


We do not know how dangerous the new coronavirus will be. There are signs that Chinese authorities are still trying to conceal the true scale of the problem, but at this point the virus appears to be more contagious but considerably less deadly than the pathogens behind diseases such as Ebola or SARS—though some experts say SARS and coronavirus are about equally contagious.


China’s initial response to the crisis was less than impressive. The Wuhan government was secretive and self-serving; national authorities responded vigorously but, it currently appears, ineffectively. China’s cities and factories are shutting down; the virus continues to spread. We can hope that authorities succeed in containing the epidemic and treating its victims, but the performance to date has shaken confidence in the Chinese Communist Party at home and abroad. Complaints in Beijing about the U.S. refusing entry to noncitizens who recently spent time in China cannot hide the reality that the decisions that allowed the epidemic to spread as far and as fast as it did were all made in Wuhan and Beijing.


The likeliest economic consequence of the coronavirus epidemic, forecasters expect, will be a short and sharp fall in Chinese economic growth rates during the first quarter, recovering as the disease fades. The most important longer-term outcome would appear to be a strengthening of a trend for global companies to “de-Sinicize” their supply chains. Add the continuing public health worries to the threat of new trade wars, and supply-chain diversification begins to look prudent.


Events like the coronavirus epidemic, and its predecessors—such as SARS, Ebola and MERS—test our systems and force us to think about the unthinkable. If there were a disease as deadly as Ebola and as fast-spreading as coronavirus, how should the U.S. respond? What national and international systems need to be in place to minimize the chance of catastrophe on this scale?


Epidemics also lead us to think about geopolitical and economic hypotheticals. We have seen financial markets shudder and commodity prices fall in the face of what hopefully will be a short-lived disturbance in China’s economic growth. What would happen if—perhaps in response to an epidemic, but more likely following a massive financial collapse—China’s economy were to suffer a long period of even slower growth? What would be the impact of such developments on China’s political stability, on its attitude toward the rest of the world, and to the global balance of power?


China’s financial markets are probably more dangerous in the long run than China’s wildlife markets. Given the accumulated costs of decades of state-driven lending, massive malfeasance by local officials in cahoots with local banks, a towering property bubble, and vast industrial overcapacity, China is as ripe as a country can be for a massive economic correction. Even a small initial shock could lead to a massive bonfire of the vanities as all the false values, inflated expectations and misallocated assets implode. If that comes, it is far from clear that China’s regulators and decision makers have the technical skills or the political authority to minimize the damage—especially since that would involve enormous losses to the wealth of the politically connected.


We cannot know when or even if a catastrophe of this scale will take place, but students of geopolitics and international affairs—not to mention business leaders and investors—need to bear in mind that China’s power, impressive as it is, remains brittle. A deadlier virus or a financial-market contagion could transform China’s economic and political outlook at any time.


Many now fear the coronavirus will become a global pandemic. The consequences of a Chinese economic meltdown would travel with the same sweeping inexorability. Commodity prices around the world would slump, supply chains would break down, and few financial institutions anywhere could escape the knock-on consequences. Recovery in China and elsewhere could be slow, and the social and political effects could be dramatic.


If Beijing’s geopolitical footprint shrank as a result, the global consequences might also be surprising. Some would expect a return of unipolarity if the only possible great-power rival to the U.S. were to withdraw from the game. Yet in the world of American politics, isolation rather than engagement might surge to the fore. If the China challenge fades, many Americans are likely to assume that the U.S. can safely reduce its global commitments.


So far, the 21st century has been an age of black swans. From 9/11 to President Trump’s election and Brexit, low-probability, high-impact events have reshaped the world order. That age isn’t over, and of the black swans still to arrive, the coronavirus epidemic is unlikely to be the last to materialize in China.


https://www.wsj.com/articles/china-is-the-real-sick-man-of-asia-11580773677

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Netherlands cuts commodity consumption


Dutch people are rapidly reducing the consumption of materials

Dutch people are rapidly reducing the consumption of materials

21 February 2020 00:00Last update: 59 minutes ago

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In 2018, the Netherlands consumed more than 20 percent fewer materials per inhabitant than in the year 2000. Material consumption per inhabitant is lower than the average in the European Union (EU) and the so-called raw material footprint per inhabitant is smaller. The Central Bureau of Statistics reports this on Friday in the publication Circular Economy in the Netherlands .

Material consumption in the Netherlands during the entire measured period was already considerably lower than in neighboring countries Belgium and Germany and many other European countries. "Only three countries, Spain, the United Kingdom and Italy, had a lower material consumption," says CBS.

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Oil

OPEC Underestimates China Virus

(Bloomberg Opinion) -- The Covid-19 virus is a human tragedy for many who have been affected by it and it’s having a profound impact on the lives of a large part of the Chinese population. The impact on the rest of the world of the disease’s dislocation of the Chinese economy is yet to be fully felt. Forecasts of only a modest impact on oil demand worldwide are far too optimistic.


A comparison of the latest forecasts from the world’s three big oil agencies — the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries — highlights the huge uncertainty that exists over the virus’s repercussions for oil demand. As may be expected for a body representing oil producers, OPEC sees the impact as minimal, having just cut its first-quarter forecast for global oil demand by only 400,000 barrels a day. That looks like wishful thinking. The IEA’s revision is three times as big, and if its forecast bears out, it’s deep enough to tip the world into its first year-on-year drop in demand in more than a decade.


China’s own oil consumption is down sharply as factories stay closed and travel restrictions remain in place even after the extended Lunar New Year holiday comes to an end. Congestion on roads in major cities is far below normal levels. The chart below shows journey times in Shanghai, and other Chinese cities mirror that pattern. My colleagues at BloombergNEF estimate that China’s jet fuel use is now down by 240,000 barrels a day from pre-virus levels, with departures from Chinese airports down by around 80%.


Pollution statistics also capture the slowdown in economic activity and fuel use — something that under different circumstances might be reason to celebrate. China’s nitrogen dioxide emissions fell 36% in the week after the holiday from the same period a year earlier, according to the Centre for Research on Energy and Clean Air. A slowdown of 25%-50% across industrial sectors such as oil refining, coal-fired power generation and steel production contributed to the drop, according to the independent research organization.


However, even as the Covid-19 virus hits consumption, the number of very large crude carriers hauling cargoes to China has risen. That’s because independent refiners are taking advantage of the drop in crude prices to fill their storage tanks with cheap cargoes, even as they cut run rates. That’s to some extent cushioning producers now. But those stockpiles will hit future demand for crude from China’s teapot refineries, even after the immediate effect of the virus dissipates.


At the same time, the Chinese government is in the process of building and filling a strategic stockpile similar to the U.S. Strategic Petroleum Reserve, as it becomes ever more dependent on imported supplies. It may also be using the price drop to boost purchases for long-term storage, raising the risk that it will cut them again as prices recover, crimping demand for imported oil in the future. By contrast, China’s state-owned processors are seeking to reduce the volumes supplied under term contracts.


Even with reduced refinery runs, China is producing more fuel than it needs. Exports of gasoline and diesel have soared, according to shipping intelligence firm Vortexa. But they aren’t finding ready buyers. Most of these additional fuel exports are ending up in storage tanks in Singapore amid subdued regional demand.


That brings us back to concerns over just how bad the reverberations from Covid-19 will be. The China of 2020 is very different to that of 2003, and so today’s epidemic is likely to have a much bigger international impact than the SARS virus to which it is most often compared. For a start, China’s oil consumption now is more than twice what it was when SARS hit and last year the country accounted for more than three-quarters of the growth in global oil demand, according to the IEA.


In the past 17 years, China has also become much more closely linked to the rest of the world economy. Chinese travelers accounted for about 20% of total spending on tourism in 2018, according to the United Nations World Tourism Organization, while China itself was the fourth most popular destination. The virus will effect both of those figures in 2020.


Story continues


https://finance.yahoo.com/news/opec-underestimates-china-virus-070012762.html

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IEA: Oil Demand To Fall For First Time In A Decade

The IEA slashed its demand forecast for the first quarter of 2020, predicting that global oil consumption will contract for the first time in over a decade.


In its first publication on the oil market since the outbreak began, the International Energy Agency (IEA) dramatically revised its oil demand forecast, predicting consumption will actually contract by 435,000 bpd, the first outright decline year-on-year since the global financial crisis more than a decade ago. Previously, the agency expected consumption to increase by 800,000 bpd from a year earlier.


For the full-year in 2020, the IEA cut demand growth by 365,000 bpd to just 825,000 bpd. That would be the lowest annual increase since 2011, and slightly below the growth figures for 2019, which itself was a down year.


The coronavirus continues to ravage China. Beijing released revised data, and the new number of infected cases is vastly higher than previously reported, raising questions about the severity of the crisis.


The number of cases jumped 45 percent after the data revision to nearly 50,000, which increased the global total by a third to 60,000. Those numbers could still be an undercount. Still, the number of new cases on a per-day basis seems to have peaked earlier this month, offering hope that the outbreak is slowing.


Even still, the effects on the oil market are deep. China accounted for about three-quarters of oil demand growth last year, so the crisis has struck a blow to total global consumption.


Related: Oil Rig Count Inches Higher As Prices Stabilize


ChemChina, a state-run refining company, announced that it would cut refining runs by 100,000 bpd. According to Reuters, the total refining reductions now total 1.5 mb/d. “As refining crude oil has turned into a loss-making business, (it’s) better to store crude oil instead of refining it,” a source with the company told Reuters.


The IEA’s numbers are based on an assumption that China’s economy “returns progressively to normal in 2Q20.” However, “[t]he crisis is ongoing and at this stage it is hard to be precise about the impact.”


Demand estimates are still a bit of guesswork. A Reuters analysis looks at actual import data from the Chinese government, and finds that in the first 12 days of February, China imported 7.58 mb/d of oil, down from 8.88 mb/d a year earlier, and down from 9.67 mb/d in January. The data also shows that shipping queues are backed up, which suggests that cargoes might unload quickly when port bottlenecks clear.


Meanwhile, financial markets may not exactly be moving on, but the rally in equities on Wednesday suggest that investors are growing confident that the worst may be over. “’Coronavirus? What coronavirus?’ That’s what the markets seemed to be saying Wednesday as the S&P plowed (once again) to all-time highs,” Raymond James wrote in a note.


But the effects will linger, and are not isolated to China. The IEA says that the reduction in trade and tourism could shave off 0.4 percentage points from U.S. GDP growth in the first quarter.


Related: Africa’s Largest Oil Nation Could See Production Drop 35%


For the oil and gas industry, the effects are more severe. “Lower oil prices, if sustained, are also bad news for highly responsive US oil companies, but we are unlikely to see an impact on output growth until later in the year,” the IEA wrote in its monthly Oil Market Report. “The effect of the [coronavirus] on the wider economy means that it will be difficult for consumers to feel the benefit of lower oil prices.”


The IEA said that the oil market was already heading into the first half of 2020 with a bit of a supply surplus. The demand destruction as a result of the coronavirus will magnify this overhang. The agency said that the “call on OPEC,” or the amount that OPEC would need to produce in order to balance the market, falls from 29.4 mb/d in the fourth quarter of 2019 to just 27.2 mb/d in the first quarter of 2020. However, the group produced 1.7 mb/d more than that in January, a rather large implied surplus.


That helps explain the group’s rush to coordinate additional production cuts.


Still, the 600,000 bpd would not be enough to close the gap, at least in the first half of the year. That’s especially true if Libya brings disrupted supply back onto the market. But the IEA sees the gap narrowing in the second half as the worst of the coronavirus clears.


By Nick Cunningham of Oilprice.com


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Read this article on OilPrice.com


https://finance.yahoo.com/news/iea-oil-demand-fall-first-000000453.html

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The United States is projected to be a net exporter of crude oil in two AEO2020 side cases

The U.S. Energy Information Administration (EIA) projects that the United States will export more crude oil and petroleum products combined than it imports (net exporter) until 2050, but under certain conditions, it could become a net exporter of crude oil on its own in the future as well. EIA’s Annual Energy Outlook 2020 (AEO2020) includes two side cases—one with more oil and gas supply and one with higher oil prices—in which the United States becomes a net crude oil exporter within the next decade.


In the AEO2020 Reference case, which reflects current laws and regulations, EIA projects that the United States will remain a net importer of crude oil through 2050, despite domestic crude oil production increases in the coming years. The United States produced about 12 million barrels per day (b/d) in 2019; in the Reference case, EIA expects U.S. crude oil production to plateau at 14 million b/d in the mid-2020s and then begin to decline in the mid-2040s.


In the AEO2020 High Oil and Gas Supply case, which includes assumptions for more domestic crude oil resources, the United States becomes a net crude oil exporter starting in 2025 and maintains that status through 2050. In this case, U.S. crude oil production gradually increases from 12 million b/d in 2019 to 18 million b/d in 2026 and remains higher than that level through 2050.


In the AEO2020 High Oil Price case, the United States becomes a net exporter of crude oil starting in 2023, but it only maintains that status through 2027. In this case, the United States returns to being a net importer of crude oil after 2027 as U.S. crude oil production declines. The initial increase in crude oil production is steepest in this case, reaching 19 million b/d in 2025, but then declines through the rest of the projection period. In this case, the United States produces less than 12 million b/d of crude oil by the late 2040s. Relatively quick development limits technological improvements that occur over time, ultimately leading to a decline in production.


Recent growth in U.S. crude oil production has been driven by the development of tight oil resources, primarily in the Southwest, which includes the Permian Basin that spans parts of western Texas and eastern New Mexico. EIA expects development to continue in the Southwest: in the Reference case, 37% of cumulative U.S. crude oil production between 2020 and 2050 originates from this region. Although production volumes vary across regions in the side cases, the Southwest still accounts for 37% of cumulative crude oil production from 2020 to 2050 in the High Oil and Gas Supply and High Oil Price cases.


Principal contributors: Corrina Ricker, Albert Painter


https://go.usa.gov/xd5Kq

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India Oil Demand Negative too

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Market Movers Europe, Feb 17-21: Coronavirus exerts pressure on oil, LNG, ethylene; Europe loses another nuclear reactor

In this week's Market Movers: The corona virus outbreak in China and its effect on demand will remain the focus for most commodity markets; and the European power market will look at the impact on the supply side of reactor closures.


The oil market will this week be looking for further clarity on the effect of the coronavirus outbreak on Chinese demand and how producers will respond. Last week the International Energy Agency forecast that the first quarter of 2020 would mark the first quarterly contraction in global oil demand in more than a decade.


Various crude suppliers from West Africa, the Far East of Russia and the Americas will look poised to lower their offer prices to the Asian market as major refineries in Northeast Asia continue to slash their run rates and crude throughput because of the virus.


OPEC has been dithering alongside Russia on whether to implement further cuts in production in response to the fall in demand. However, it looks like the next meeting of OPEC and its partners in OPEC plus will go ahead as planned on March 5 in Vienna. Data on exports from OPEC kingpin Saudi Arabia is expected to be out this week from oil information provider the Joint Organisations Data Initiative. This should shed a little more light on the impact of the virus.


The coronavirus' impact on demand can be seen in the LNG market as well .On Thursday, Shell will release its much anticipated global LNG outlook. This is regarded by market players as a key report on market conditions in the short-to-medium term.


As you can see from the chart on your screen, the JKM Asian spot LNG price has fallen to its lowest level since S&P Global Platts began assessing it in 2009. The coronavirus has compounded the factors driving the price down. However, before the outbreak, the global LNG market was already oversupplied. LNG from new projects in Australia and the US more than offset demand growth, which itself was crimped by mild winters in Asia and Europe.


As well as the Shell report, the market will be looking for more details on how supply to China is being managed. Qatar, the world's top LNG exporter after Australia, has said it is talking with Chinese customers to redirect supplies because of the coronavirus situation. Other suppliers, such as Indonesia have also deferred supplies under a contract that was supposed to start deliveries in January. It now expects cargo deliveries to begin by April.


Back in Europe, the petrochemical market will be looking to see whether cracker operators will cut run rates to curb the growing oversupply of ethylene. The coronavirus is the main culprit here because it has seriously eroded demand in China for downstream polyethylene and glycols.


Glycols are used in antifreeze and polyester fibres.


This has meant the loss of export opportunities for European producers and competition from imports diverted to Europe from China. Should cracker runs be cut, this would tighten the European propylene market. Polypropylene is widely used in the automotive industry.


And that takes us to our social media question: How likely do you think it is European crackers will cut run rates? Tweet us your reply using the hashtag #PlattsMM.


And talking about supply reductions, the European power market is about to lose a third reactor in a matter of weeks with the closure this coming Saturday of France's oldest nuclear unit, Fessenheim 1.


This follows closure of Germany's Phillipsburg 2 and Switzerland's Muehlberg reactors at the end of 2019


You would think removal of 2.6 gigawatts of capacity within a 120-kilometer radius would prompt a price response. However, record-low nuclear generation this winter has barely dented European markets due to the mild winter and renewables stepping into the breach. During recent storms the hourly prices have turned into negative territory in several countries.


And finally, the weather will also be in focus when the International Maritime Organisation meets in London this week to assess the change to bunker fuel specifications it imposed globally on 1st of January, capping the sulphur in bunker fuel at 0.5%, and discuss what the next steps might be.


One topic of discussion will be a possible switch of focus from local emissions to wider carbon emissions and climate change, and whether the shipping industry can do more on this issue.


Thanks for kicking off your Monday with us and have a great week ahead!


http://plts.co/zpM330qiknA

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GCC economies at risk from coronavirus, OPEC+ cuts: S&P Global Ratings

Dubai — The six countries in the Gulf Cooperation Council are at risk of tepid economic growth following the outbreak of the coronavirus in China, a major importer of oil and natural gas from the Persian Gulf region, according to S&P Global Ratings.


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"Recent developments could weigh on growth prospects in the GCC, already affected by low oil prices and geopolitical uncertainty,” S&P Global Ratings said Monday in a report. The GCC consists of Saudi Arabia, the UAE, Bahrain, Oman, Kuwait and Qatar.


"Under our base-case scenario, however, we expect the impact on our ratings to be limited for now.”


Brent crude futures have fallen over 10% since the beginning of January due to the outbreak of the deadly virus, which has disrupted global travel, dampened Chinese demand for energy products and stoked fears of a hit to the global economy.


China contributes between 4% to 45% of GCC countries' total exports of goods, the ratings agency said. Oman is most exposed to China with 45% of its goods exports going to China, and the UAE is the least exposed at 4.2%, it said.


"We think the impact of the new coronavirus on GCC economies will be felt mainly in terms of export volumes,” the agency said. "Exports could decline in view of an anticipated slowdown of economic growth in China, which in our base case we project at 5% in 2020 compared with 6.1% in 2019.”


Saudi Arabia accounts for 12.4% of China's total oil/gas imports, while Oman represents 7.2%, the agency said. The UAE's share is 2.8% while Kuwait is 5%.


OPEC+ impact


Gulf economies could falter if OPEC+ oil cuts are extended beyond March, hurting the countries' fiscal balance, the ratings agency said.


An extension of the cuts beyond March "could affect our estimates of fiscal and current account receipts for GCC sovereigns,” it said.


OPEC+, led by Saudi Arabia and Russia, is in the midst of cutting 1.7 million b/d through to March to soak up excess supply. The group, which deepened its cuts from 1.2 million b/d in 2019, is mulling shaving another 600,000 b/d from production on expectations that the coronavirus will reduce Chinese oil demand. Saudi Arabia, the UAE and Kuwait are OPEC members, while Oman is part of the non-OPEC group. Together OPEC and non-OPEC signatories to the production cut deal are called OPEC+.


"Notwithstanding the spread of the virus, we still expect oil prices to remain at $60/b in 2020 and decline to $55/b from 2021,” ratings said.


http://plts.co/65cs50yobi6

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Kuwait minister says neutral zone output to reach 550,000 b/d by year-end

Dubai — Crude oil production from the neutral zone where Saudi Arabia and Kuwait share output equally will reach 550,000 b/d by the end of the year after a pumping trial from the region started on Sunday, according to Kuwait's oil minister.


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Saudi Arabia and Kuwait will gradually ramp up production from the offshore al-Khafji field and the onshore Wafra field, Khaled al-Fadhel said, the state-run KUNA news agency reported on Sunday.


Al-Khajfi is owned by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co., a unit of state-run Kuwait Petroleum Corp., and Wafra is operated by KGOC and Saudi Arabian Chevron.


Saudi Arabia and Kuwait signed agreements in December to restart production from the neutral zone which has been shut in for more than four years. Oil ministers in both countries have said that the resumption of production would not impact their commitments to OPEC+ cuts.


The agreements signed in December also included a provision to start studies on developing the Dorra gas field in in the neutral zone, al-Fadhel said on Sunday.


Kuwait, which has an OPEC+ quota of 2.67 million b/d, is complying with that level, he added.


Kuwait plans to boost its oil production capacity to 4 million b/d, he said.


http://plts.co/dlVA50ynY8r

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Iraq's prime minister-designate to name cabinet, including oil minister, this week

Highlights


Iraq's prime minister-designate Mohammed Allawi said he will name members of his cabinet this week, including the oil minister, pending approval of parliament on his choices of ministers for OPEC's second-largest crude producer.


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The cabinet members are "independent" candidates who will be picked without any political interference, Allawi said Saturday in a tweet.


Thamer Ghadhban, Iraq's current oil minister and deputy prime minister for energy affairs, has held the post since November 2018. It is not known if he will stay in the new cabinet, which will replace that of outgoing Prime Minister Adel Abdul Mahdi, who resigned last year in the face of protests demanding political and economic change. The protests, which started in October last year, have occasionally disrupted oil supply from some fields and refineries without impacting overall production and exports.


Ghadhban has been in the Iraqi oil sector since becoming a field and reservoir engineer in 1973, and moved up the ranks until 2003 when, after the US-led invasion, he was named by the Americans as CEO of the oil ministry. Ghadhban also served as oil minister between 2004-2005.


OPEC+ compliance


Iraq produced more oil than it agreed for most of last year as part of the OPEC+ deal , which is currently trimming 1.7 million b/d of oil from the global markets through March.


The country earlier this month said its January production fell 70,000 b/d to 4.47 million b/d, still above its OPEC quota of 4.46 million b/d.


The latest S&P Global Platts OPEC survey also showed overproduction in January, at 4.6 million b/d, breaking a four-month trend of improving compliance.


The alliance is mulling another 600,000 b/d cut to make up for the loss of demand from the world's top oil importer China, which is grappling with the economic fallout from the outbreak of the deadly coronavirus.


Iranian gas


Iraq's oil ministry has signed various agreements to treat associated gas in all of the country's oil fields in a bid to stop importing Iranian gas for power generation, the state-run Iraqi News Agency reported on Sunday.


Currently Iraq can produce around 1.3 billion standard cubic feet/day of gas out of its oil fields, Hamid Younis, deputy minister for gas affairs told INA.


It plans to produce 2 Bscf/d, Younis added.


The US has again extended a waiver allowing Iraq to import Iranian electricity and natural gas during US sanctions against the Islamic Republic, a US State Department spokesman said last week.


This is the sixth waiver the US has issued for Iraq since US sanctions on Iran energy exports snapped back in November 2018. After an initial 45-day waiver, the State Department issued two 90-day waivers in a row followed by two 120-day waivers in a row in June and then October.


Previously, the US had asked Iraq to show signs that it was reducing its imports of Iranian gas and power to meet its electricity demand. It also urged Iraq to establish contracts with US companies.


http://plts.co/P84d50ynUeg

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Russia Is Defeating The U.S. In The Middle East Oil Game

Historically, Russia goes to great lengths to hide or disguise its strategic intentions but it clearly feels empowered enough in the Middle East to very obviously stake its claim in the region – excluding, for the time being only, Saudi Arabia – by stating that a slew of Russian companies are to spend up to US$20 billion on oil projects in Iraq in the near term. “Since [U.S. President Donald] Trump outlined the new U.S. foreign policy of not engaging in conflicts abroad unless they were directly aligned with U.S. interests [October 2019], and then effectively withdrawing from Syria and from supporting the Kurds, Russia and China have felt that they can bring forward their plans to bring Iraq within their geopolitical arc of influence,” a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com last week. “They know that provided that they do not impinge on Saudi Arabia and, at a pinch the UAE and Kuwait, or launch attacks against U.S. personnel, then they can basically do whatever they want anywhere else, hence this announcement from Russia last week,” he added.


Before this announcement - which specifically mentioned Zarubezhneft, Tatneft, and Rosneftegaz as companies interested in pursuing specific but as yet unnamed projects, in addition to those Russia companies already active in the country (including Lukoil, Bashneft, and GazpromNeft) – Russia had adopted its usual stealth approach to building up its presence in Iraq. “It is incremental colonialism, beginning one day with one relatively small contract being taken up by some Russian company nobody has heard of, then more Russian companies turn up in the same place under ‘contractor’ terms having been engaged by the company you gave the original contact to, then security companies turn up to guard all of the personnel, and suddenly you have a major Russian occupation of part of your key oil and gas infrastructure,” the Iraq source underlined,


The oil and gas prize for the Russians in Iraq is, of course, huge, but many in the industry do not realise that it is still underestimated. The official figures for oil are that Iraq has around 149 billion barrels of reserves (18 per cent of the Middle East total and 9 per cent of the global total) and is currently the second-largest oil supplier in OPEC, after Saudi Arabia. All of this oil coming at a mean average ‘lifting cost’ per barrel in Iraq of US$2 to US$3 per barrel, according to the IEA, at least as competitive as Saudi Arabia. For gas, the official figures are slightly less impressive, but they are likely even more underestimated than the oil figures, with Iraq having about 135 trillion cubic feet of reserves (the 12th largest in the world), mostly associated at the moment with oil fields in the supergiant fields in the south of the country. However, despite the occasional increase in reserves estimates over the past few years – extremely modest by the standards of its neighbours, incidentally – much of Iraq still remains unexplored or under-explored compared with other major oil-producing countries. Related: A Middle East Financial Crisis Is In The Making


According to the International Energy Agency (IEA), and derived from the landmark United States Geological Survey (USGS) 2000 assessment and subsequent updates, the level of ultimately recoverable resources at that time was around 232 billion barrels of crude and natural gas liquids. Even this, though, might prove on the low side, added the IEA, as a detailed study by Petrolog around that time reached a similar figure but did not include the parts of northern Iraq in the KRG area or examination of the geological anomalies prevalent in the central and western regions of the country. Even using the much more conservative USGS number, Iraq had just a decade ago only produced around 15 per cent of its ultimately recoverable resources, compared with 23 per cent for the Middle East as a whole at that time. At that point, of the 530 potential hydrocarbon-bearing geological prospects identified by – only - geophysical means in Iraq only 113 had been drilled, with oil being found in 73 of them, a success rate of 65 per cent. Although more of these geophysically-identified sites have now been drilled many more new ones have arisen due to identification by more sophisticated analysis of seismic and historical data.


“The Russians have done their own testing of potential oil and gas reserves over the years and they think it is about double the current official estimates on both of those [oil and gas],” the Iraq source told OilPrice.com last week. This is one of two key reasons why Russia has exploited every opportunity to expand its footprint in the north and south of Iraq. In the north it has been extremely successful so far in using its corporate proxy, Rosneft, to gain control over key elements of the region’s oil and gas infrastructure while in the south it had been forced by the U.S.’s own former ambitions to tread more stealthily. Although it has always been able to rely on being able to use Iran’s political and military over Iraq for its own purposes, these had to be sidelined for a while, at least whilst the real power in Iraq – Moqtada al-Sadr – was getting settled in to his power-broking role. As this was initially founded on the ultra-nationalist message (‘Iraq for the Iraqis, with no undue foreign influence’, in essence) of his election-winning ‘Sairoon’ power bloc, Moscow was able to tinker only the edges. Related: Saudi Arabia’s Oil Exports Dropped 11% In 2019


In such strategies, though, Russia is a master, and the influence it can ultimately wield starting from such a tiny access point is absolutely extraordinary. The most recent example of this – and a template for such strategies for any aspiring superpower, frankly – was the ‘awarding’ of a hitherto unknown development block in the middle of a wasteland by a hitherto unknown Russian company at a time when no one else was aware that anything was due to be awarded. As highlighted in-depth by OilPrice.com at the time, Russia’s Stroytransgaz (an almost unknown Russian oil and gas company - except by the U.S. whose Office of Foreign Assets Control extensively sanctioned it in 2014) signed a preliminary contract with the oil ministry in Baghdad for oil and gas exploration in Anbar province (a wasteland as far as Iraq’s oil and gas sector development goes). On the face of it, there was – and is - no real prospect of any substantial amounts of oil or gas being recovered from its Block 17 and additionally stationing any normal oil and gas workers there would be perilous to say the least, as it is an area torn by warring tribal communities, which even Islamic State avoided where possible.


The key to this, though – and vital in understanding the purpose behind the announcement of a doubling (possibly tripling) of Russian overt investment into Iraq – is that the area is critical in Russia fortifying its presence in the central Middle East and being able to secure a warm water multi-layered military presence in the Mediterranean. “Russia risked full-on military confrontation with the U.S. to get a full-scale Black Sea port [Sevastopol] with access into the Mediterranean when it annexed Crimea in 2014, so there’s nothing it won’t do to build out its foothold in Syria and in the transit and supply route to Syria, which includes Iraq,” said the Iraq source. In this context, then, Block 17 in Anbar – and the US$20 billion investment announced last week – makes perfect sense for the Russians, as it intends to secure what the U.S. military used to call ‘the spine’ of Islamic State where the Euphrates flows westwards into Syria and eastwards into the Persian Gulf. Along the spine running from east to west are the historical ultra-nationalist and ultra-anti-West cities of Falluja, Ramadi, Hit and Haditha, and then there is Syria, with its key strategic ports of Banias and Tartus. By happy ‘coincidence’ both Banias and Tartus are also extremely close to the massive Russian Khmeimim Air Base and the S-400 Triumf missile system. Although the base only came in to operation in 2015 supposedly to help in the fight against Islamic State, Russia appears to have changed its tactical plans for it, having also signed a 49 year lease on it, with the option for another 25 year extension. A short flight away is Russia’s Latakia intelligence-gathering listening station.


By Simon Watkins for Oilprice.com


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Haftar’s Forces Attack Libya Sea Port, Almost Blow Up LPG Tanker

Offloading operations for fuel vessels in a port in Tripoli have been halted, Libya’s National Oil Corporation (NOC) announced on Tuesday, according to Reuters, as military forces led by Khalifa Haftar were responsible for projectiles striking near a highly explosive LPG tanker.


“Fuel vessels have evacuated urgently from Tripoli port today after projectiles struck meters away from a liquified petroleum gas (LPG) tanker discharging in the port,” a statement on NOC’s website read.


The LPG tanker and a gasoline tanker have since left the port and relocated to safer waters.


NOC is now looking for alternative ways to supply fuel to its capital.


Haftar forces said earlier in the day that they attacked a sea port in Tripoli as the violence escalates and the timing of getting its oil industry back on its feet in doubt. The total losses so far resulting from the mess that is the current blockade of oil ports and oil pipelines is in excess of US$1.7 billion, with production below 125,000 bpd, according to NOC—a figure that is a far cry from the 1.2 million bpd Libya was producing in early January.


The blockade is the latest in the long-hard fight for control of the country and its oil revenues between the Libyan National Army, affiliated with the eastern government, and the Government of National Accord, which has been recognized by the UN. All oil revenues go into accounts controlled by the GNA and NOC, but the LNA is looking to change that with the blockade.


Yesterday, the Prime Minister of the UN-recognized Government of National Accord said that Libya is facing a financial disaster if Haftar’s Libyan National Army does not lift the oil port blockade.


NOC’s chairman Mustafa Sanalla warned that if the blockade is not soon lifted, Libya could lose all of its oil production.


By Julianne Geiger for Oilprice.com


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Saudi energy minister likens impact of coronavirus to a ‘house on fire’

Saudi energy minister likens impact of coronavirus to a ‘house on fire’


By Annmarie Hordern on 2/19/2020


HOUSTON (Bloomberg) - Saudi Arabia gave the clearest signal yet of its concerns about the impact of the coronavirus on oil markets, comparing the situation to a blaze that needs the fire brigade.


In his first public comments on the virus since January, when he said the epidemic would have a “very limited impact” on oil demand, Saudi Energy Minister Prince Abdulaziz bin Salman described more urgent circumstances to an audience in Riyadh on Wednesday.


When asked about the impact of the coronavirus on oil, the prince equated it with a burning house, according to people who heard the comments, but asked not to be named because the event was closed to the press. You can either treat it with a garden hose and risk losing the building, or call the fire brigade, he said.


Some would say that calling the fire brigade projects panic and it could damage the furniture, the prince said. But doing so would simply be acting responsibly, and you would save the house, he said, according to the people.


The Saudi Energy Ministry didn’t immediately reply to a request for comment.


The prince’s statements offer an explanation of why, behind closed doors, Saudi Arabia has been an advocate for an emergency meeting of the Organization of Petroleum Exporting Countries in order to deepen production cuts. Despite those efforts, the group seems to have abandoned tentative plans for urgent talks in February after the kingdom failed to persuade Russia.


The toll on oil consumption from the epidemic has been severe. Chinese refineries are throttling back to cope with weak demand, processing 25% less oil than they were last year. World oil consumption will decline this quarter for the first time in more than a decade as the virus reduces travel and economic activity in China, according to the International Energy Agency.


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Rally in Oil not confirmed by Refining Margins

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Oil and Gas

Oil union in Argentina's Vaca Muerta play calls off strike

Buenos Aires — An oil union in Neuquen, Argentina's biggest oil and natural gas basin, called off a threat to go on strike after companies vowed to not fire some 700 workers, a union leader said Thursday, easing concerns about the impact on oil and gas production.


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"We have reached an agreement to halt all of the layoffs," Guillermo Pereyra, secretary general of the Union of Private Oil and Gas Workers in Rio Negro, Neuquen and La Pampa, said on Radio 10.


Last week, Pereyra had threatened to call a strike if even one worker was fired, which would have hobbled a basin that produces 47% of the country's 514,000 b/d of crude and 62% of its 127 million cu m/d of gas. The basin is home to Vaca Muerta, the country's biggest shale play, which is driving a recovery in oil and gas production after more than a decade of decline.


Pereyra said the agreement comes at an opportune time for the sector, given that the government plans in the next few weeks to submit to Congress a bill designed to shield the sector from the country's economic and political volatility. This is key for widening access to what is needed most to develop Vaca Muerta: low-cost capital.


The bill "can not be debated in a state of conflict," the union leader said. "We are committed to keeping the peace."


As part of the agreement, companies and the union agreed to sit down for talks with the federal government as well as authorities in Neuquen and Rio Negro provinces in order to find ways to emerge from a crisis hitting the sector.


PRICE CONTROLS


Companies reined in investment in August after a freeze on diesel and gasoline prices slashed crude prices to just above breakeven levels in Vaca Muerta, hitting profits and making it harder to create and carry out strategies.


Some 17 rigs have been sidelined, Pereyra said.


Last week, Argentinian President Alberto Fernandez asked oil companies for proposals to adjusting the price intervention, saying it is important to increase oil and gas production and exports.


Pereyra said there is a lot to do to develop the potential of Vaca Muerta, including building a third backbone gas pipeline, extending another gas line to Brazil and constructing a liquefaction terminal for exporting supplies.


"We have to build all of this infrastructure to export the surplus of gas," he said.


Until this infrastructure is in place, companies are expected to focus their investment in the oil window of Vaca Muerta, given that there is ample pipeline capacity and export potential.


Argentina is producing 514,000 b/d, above the demand average of 500,000 b/d, and Vaca Muerta, one of the world's biggest shale plays, is providing a little more than 100,000 b/d of the total production from less than 10% of its acreage so far in development, according to data from the national Energy Secretariat.


http://s.einnews.com/hMU5UKSsZz

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U.S. says sanctions mean Russia can’t finish Nord Stream 2 pipeline

U.S. says sanctions mean Russia can’t finish Nord Stream 2 pipeline


By Patrick Donahue and Matthew Miller on 2/16/2020


MUNICH (Bloomberg) - President Donald Trump’s top energy official said he’s confident that Russia won’t be able to complete the Nord Stream 2 gas pipeline in the Baltic Sea -- and signaled that the U.S. will press forward with its opposition to the project.


Asked about Russian efforts to circumvent U.S. sanctions on the pipeline by completing it on its own, U.S. Energy Secretary Dan Brouillette said “they can’t” -- and dismissed claims that project owner Gazprom PJSC will face only a short delay.


“It’s going to be a very long delay, because Russia doesn’t have the technology,” Brouillette said in an interview at the Munich Security Conference on Saturday. “If they develop it, we’ll see what they do. But I don’t think it’s as easy as saying, well, we’re almost there, we’re just going to finish it.”


The pipeline, which would pump as much as 55 billion cubic meters of natural gas annually from fields in Siberia directly to Germany, has become a focus for geopolitical tensions across the Atlantic. Trump has assailed Germany for giving “billions” to Russia for gas while it benefits from U.S. protection.


Nord Stream 2’s owners had invested 5.8 billion euros ($6.3 billion) in the project by May 2019, according to company documents.


U.S. sanctions in December forced Switzerland’s Allseas Group SA, which was laying the sub-sea pipes, to abandon work, throwing the project into disarray. The U.S. has said Europe should cut its reliance on Russia for gas and instead buy cargoes of the fuel in its liquid form from the U.S.


“It’s distressing to Americans that, you know, Germany in particular and others in Europe would rely upon the Russians to such a great degree,” Brouillette said, adding that he is unaware of additional sanctions should Russia move to defy the U.S.


Even as he spoke, signs emerged that Gazprom’s attempts at completion may be underway. A Russian pipe-laying vessel, the Akademik Cherskiy, left the port where it had been stationed in Nakhodka on Russia’s Pacific coast last Sunday. Russian Energy Minister Alexander Novak last year mentioned that vessel as an option to complete the pipeline in Denmark’s waters. The vessel is now expected to arrive in Singapore on Feb. 22, according to ship-tracking data on Bloomberg.


While Gazprom has said it’s looking at options to complete the pipeline, it hasn’t given any details on where it will find the ship to do the work. One of the pipeline’s financial backers, Austrian gas and oil company OMV AG, has predicted that the Russians will follow through.


“From my point of view, they will find a solution,” Rainer Seele, OMV’s chief executive officer, told Bloomberg on Saturday.


The pipeline was just weeks away from completion, with 94% already constructed, when U.S. sanctions halted work. There’s a small section in Denmark’s waters that needs to be finished. Before the halt, Nord Stream 2 hoped to finish construction by the end of 2019 or in the first few months of this year. That would allow gas deliveries in time to supply Europe by winter 2020-2021.


Besides OMV, Nord Stream 2’s other European backers are Royal Dutch Shell Plc, Uniper SE, Engie SA and Wintershall AG.


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Ashtead competes work on Northern Lights CCS project in North Sea

Subsea equipment specialist Ashtead Technology has completed subsea installation monitoring work to support the Northern Lights Carbon Capture Storage project (CCS) in the North Sea.


The Northern Lights project, developed by Equinor in partnership with Shell and Total, is the first of its kind in the region. The project aims to securely collect and transmit CO₂ from onshore sources and store this under the seabed.


This project marks the first occasion Ashtead Technology has been involved in a CCS program. It provided a leading subsea services company with its integrated deflection monitoring system (DMS) and associated equipment.


The DMS is a suite of structural monitoring systems to assist offshore construction operations, combining powerful software with modular technology.


Using the DMS, Ashtead Technology personnel and equipment successfully monitored the installation of an Integrated Satellite Structure (ISS).


Ashtead said that, during the placement of the structure, the DMS system was configured for autonomous independent operations, communicating data to one of the installation ROVs. Advanced positioning tools and measuring sensors enhanced the accuracy of the data collected, ensuring the reliability of the data.


The development of the Northern Lights project is made up of several processes. CO₂ from industrial sources in the Oslo fjord area was first captured, then liquified, and transported to an onshore terminal on Norway’s west coast. From there, the liquified CO₂ was transferred by pipeline to a subsea offshore permanent storage location in the North Sea.


The CCS project is instrumental in helping to reduce CO₂ emissions and is a step towards the European Union’s efforts to limit global warming to 1.5°C above pre-industrial levels.


Allan Pirie, CEO of Ashtead, said: “This is the first time we have used [the DMS] application in the CCS development market. We are very pleased to have seen this successfully completed and to have played a part in the Norwegian sector’s ambitions towards a zero-carbon future.


“We expect to see an increasing demand for our support services across the blue economy industries as our vast years of experience and range of unique technologies are further recognized for projects across the energy transition.”


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Valaris picks up bag of new contracts for rig fleet

Offshore drilling contractor Valaris, formerly known as EnscoRowan, has been awarded a new batch of contracts and extensions with Murphy Oil, BP, Premier Oil, Kosmos, Walter Oil & Gas, and an undisclosed operator in Australia.


In its fleet status report published on Friday, Valaris said that the 2014-built drillship Valaris DS-15 (Renaissance) was awarded a contract extension due to the exercise of a one-well priced option with Murphy in the U.S. Gulf of Mexico, with an estimated duration of 45 days from late March 2020 to early May 2020.


The initial deal with Murphy was announced in October 2019, in a previous fleet status report.


The company also stated that it won deals for its Valaris DS-12, DS-9, DS-7, 8503, and MS-1 floaters.


The 2014-built Valaris DS-12 was awarded a one-well contract with BP offshore Egypt, with an estimated duration of 120 days from February 2020 to June 2020. According to information from Bassoe Analytics, the rig would work on a $200,000 dayrate.


The SHI-built five-year-old Valaris DS-9 was also awarded a one-well contract with Premier Oil offshore Brazil, expected to begin in July 2020, with an estimated duration of 60 days.


The Valaris DS-7 drillship was awarded a five-well contract with BP offshore Senegal and Mauritania that is expected to start in September 2020, with an estimated duration of approximately 320 days. Bassoe claimed that the rig would work on a $235,000 rate.


The ten-year-old Valaris 8503 semi-submersible contract with Kosmos in the U.S. Gulf of Mexico was extended by approximately 80 days from early April 2020 to late June 2020 to complete the well in-progress.


The nine-year-old Valaris MS-1 Jurong-built semi-submersible was the only rig that did not have a disclosed name of the charterer. It was awarded a one-well contract with an undisclosed operator offshore Australia that is expected to start in July 2020, with an estimated duration of approximately 120 days. Its dayrate, according to Bassoe, is $225,000.


The only jack-up that won a new deal was the Valaris JU-75. It was awarded a one-well contract with Walter Oil & Gas in the U.S. Gulf of Mexico, which started in late December 2019, with an estimated duration of 40 days.


The rig was also awarded a one-well contract with the company set to start in February 2020, with an estimated duration of 30 days. Under this contract, the Valaris JU-75 will work on a $60,000 dayrate.


Apart from this, Valaris said in the fleet status report that it sold and retired four rigs and classified another for sale.


Upon completing its previous contracts in October 2019 and January 2020 respectively, Valaris JU-96 and Valaris 6002 were sold and retired from the offshore drilling fleet. Apart from these, Valaris 5006 and Valaris JU-68 were also sold and retired. The one rig classified as for sale was the Valaris JU-70.


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Westwood: More offshore EPC spending in 2020, prices remain a focus

Significant cost reductions have improved E&P cashflows and should drive increased offshore tendering activity in 2020 with pricing expected to remain competitive, according to market research provider Westwood Global Energy Group.


Westwood said on Thursday that contractors would need to remain focussed on profitability and avoid being locked into low-margin purgatory.


The company identified that oil markets were off to a rocky start in 2020 over several unrelated circumstances, namely, heightened tensions in the Middle East, Australian bushfires, and the rise of the COVID-19 (Corona) virus in China.


For the offshore oil & gas sector, however, 2020 should be the second year of growth for an industry still reeling from the most severe downturn in its history.


Westwood Global expects $63 billion of contract awards for new offshore oil and gas production infrastructure in 2020 – a 49 percent increase over 2019 and the highest in seven years.


Floating production systems (FPS) spend is projected to reach $20 billion in 2020 after hitting $13.5 billion last year.


Latin America will dominate activity with major awards such as Mero 3, Itapu, and Sergipe underpinning $7 billion of spend. Africa will also feature with Woodside’s focus FPSO already awarded to MODEC in January and BP’s PAJ, and Shell’s much anticipated Bonga SW projects currently expected to be awarded late in the year. Other major awards anticipated are Western Gas’ Equus in Australia and LLOG’s Shenandoah in the USA.


Subsea tree contract awards underwhelmed in 2019 with only 212 tree orders – significantly lower than the 263 in 2018.


Much of this can be attributed to delay in award of certain key contracts such as Payara, Mamba, and Sangomar. With these major projects now expected this year – Sangomar was awarded to Subsea Integration Alliance in early January – 2020 looks like a bumper year with 321 of projected tree awards and $10 billion of subsea equipment order value for contractors.


Increasing orders are a welcome reprieve for a beleaguered offshore EPC supply chain still reeling from the worst downturn in its history. The recovery remains fragile, according to Westwood.


With most E&Ps budgets based on $60-$65/bbl, there is very little room for pricing growth, meaning contractors must continue to look within themselves to improve margins and profitability of their operations.


“If oil prices do continue to stick to their current $55-$65/bbl groove, contractors will more than ever need to clearly understand future tender activity and contracting dynamics. This will enable them to prioritize internal resources and stay right-sized and relevant. Overall, 2020 is expected to see a jump in offshore E&P infrastructure tenders, as E&Ps rush to lock in low costs,” the company stated.


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KrisEnergy sheds asset offshore Vietnam for cash consideration

Singapore’s KrisEnergy has entered into a farm-out agreement with a “major international oil and gas company” for the transfer of its entire 100 percent working interest in the Block 115/09 production sharing contract offshore Vietnam for a nominal cash consideration.


KrisEnergy said on Friday that the sale was done by its wholly-owned subsidiary KrisEnergy Vietnam 115 Ltd.


The cash consideration given took into account that the transfer of the exploration block reduces the company’s liabilities and mandatory work commitments comprising a 3D seismic acquisition program of at least 850 square kilometers along with the processing of the data and the drilling of one exploration well.


The company added that it believed it was more prudent to allocate KrisEnergy’s limited capital to funding near-term development, in particular the development of the Apsara oil field in Cambodia Block A.


The transfer of Block 115/09 working interest and operatorship is subject to a number of conditions including approvals from the relevant government authorities. The long stop date for the farm-out agreement is June 30, 2020.


Block 115/09 covers an area of 7,382 square kilometers in the southern Song Hong Basin where water depths range mainly between 60 meters and 200 meters. KrisEnergy became the operator of the block in March 2014.


KrisEnergy added that further details of the transfer would be announced when necessary and that stakeholders and potential investors who were in doubt as to the action they should take should consult their stockbrokers, bank managers, solicitors, accountants, or other professional advisors.


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This is how the year starts in Oil

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Global Natural Gas Market Still Wrestling with Coronavirus Impacts

The global natural gas market is grappling with demand loss in China that’s resulted from the coronavirus outbreak, as spot prices in Northeast Asia have continued to tumble, more ships are idling, and buyers and sellers are trying to find a place for deferred cargoes.


Total SA, Royal Dutch Shell plc and Qatargas have all rejected force majeure notices from China National Offshore Oil Corp. (CNOOC) since last week asserting that the state-owned company doesn’t have cause to refuse delivery of liquefied natural gas (LNG). PetroChina has also received force majeures from its customers and has warned that it could do the same unless downstream demand rebounds.


The situation has prompted further negotiations. CNOOC did receive the cargo from Total it had tried to prevent with force majeure, according to energy and ship brokerage Poten & Partners.


“Sources say that the two parties have come to an understanding under which CNOOC took the cargo in return for Total deferring other cargoes,” the firm said Thursday. “Total has found other buyers in its portfolio to take at least some of these cargoes.”


The virus has wedged its way into an evolving global gas market that has been transformed by new players, increasing volumes and flexible U.S. supply contracts that have helped liquidity and prompted more spot trading. Falling demand in one of the world’s largest buying regions has compounded a global supply glut and come at a time when prices are also at record lows in the United States and Europe.


The LNG spot price in Northeast Asia fell below $3.00/MMBtu last week and has continued to spiral downward, shedding 25 cents over the last week to about $2.70 on Friday.


Poten said Qatargas has agreed to a deferment schedule and terms with CNOOC, as well, while China Petroleum & Chemical Corp., aka Sinopec, has reportedly agreed with ExxonMobil Corp. to do the same under Papua New Guinea LNG contracts. The firm added that major trading houses have stepped up to take spot volumes, while countries such as India are buying cargoes opportunistically at steep discounts of around $2.50/MMBtu.


The market is essentially in uncharted territory, especially if the glut persists and prices remain subdued. The outbreak now finds sellers trying to find a home for missed shipments and how best to price them, Poten noted.


There were 15 floating cargoes throughout Asia on Friday, according to ClipperData. That’s up from nine floating cargoes earlier in the week, an indication of China’s ability to absorb supplies. ClipperData’s ship tracking on Friday also showed that three vessels were diverted in Asia.


According to Poten, China is expected to take 49 cargoes between February and April, or 3.3 million metric tons less than the brokerage previously forecast. Data intelligence firm Kpler said earlier this week that Chinese LNG imports have dropped by 23% year/year since January 22, when Wuhan, the epicenter of the outbreak, was quarantined.


Longer-term, Wood Mackenzie estimated this week that China’s gas demand could be cut by anywhere from 6 billion cubic meters (Bcm) (211 Bcf) to 14 Bcm (494 Bcf) this year depending on the length of time required to contain the virus. Travel and economic restrictions have already cut into natural gas consumption in the country, particularly industrial demand, the firm said.


While few cargoes have left the U.S. for China since last year due to an ongoing trade dispute, the outbreak is putting even more pressure on already low prices. Stockpiles in Europe are already brimming and if more cargoes head there amid the outbreak it could further undermine the continent’s ability to inject gas and take in more LNG over the summer.


European forward prices have “left lifters of U.S. cargoes facing the possibility that they will not recover variable costs for much of summer 2020,” Poten said.


https://www.naturalgasintel.com/articles/121063-global-natural-gas-market-still-wrestling-with-coronavirus-impacts

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OIL FUTURES: Oil dips as coronavirus uncertainty clouds outlook

Singapore — 0238 GMT: Crude oil futures edged lower in mid-morning trade in Asia Monday amid an uncertain demand outlook in the wake of the coronavirus outbreak.


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At 10:38 am Singapore time (0238 GMT), April ICE Brent crude futures were down 16 cents/b (0.28%) from Friday's settle at $57.16/b, while the NYMEX March light sweet crude contract edged lower 3 cents/b (0.06%) at $52.02/b.


"The oil price action continues to be swayed backward and forwards by news flow around the Covid-19 [coronavirus] infection/death rates and the prospects of OPEC+ agreeing a quota cut to balance off the demand slowdown," AxiCorp's chief market strategist Stephen Innes said Monday.


Prices have been volatile recently. Oil futures settled higher Friday amid optimism that oil demand destruction has peaked amid a slowdown in coronavirus cases outside China.


"However, with a reality check about to set in when the China high-frequency data start to roll in, and in the absence of the Russian compliance commitment, any excuse to sell still feels like the sentiment in the market right now," Innes added.


Travel restrictions and contagion fears were still preventing some employees in China from returning to work and factories expected only partial production restarts.


"While there remains a lot of uncertainty with regards to the coronavirus, in the ebb and flow of things around a matter as such, we may once again be seeing stabilisation set in through the week for markets," IG's market strategist Pan Jingyi said.


"This is of course barring any sudden worsening of the coronavirus situation," Pan added.


Meanwhile, the US added oil rigs for the week ending February 14, according to UOB analysts citing Baker Hughes data.


The increase was just two rigs and this brought the total to 678 oil rigs, still much lower to the 857 rigs recorded one year ago, the analysts highlighted in their industry note Monday.


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Asia gasoline to be driven by US supply tightness but naphtha hit by cracker run cuts

Singapore — Asian gasoline is set to be driven by supply tightness in the region and the US this week despite demand destruction due to the coronavirus outbreak, while naphtha is expected to sag on waning end-user demand, market sources said Monday.


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As for the other light end product, LPG, traders are keeping an eye on Saudi Aramco's acceptance of March term nominations, which will set the tone on Middle Eastern trading.


GASOLINE DRIVEN BY US STRENGTH


A combination of US supply-driven bullishness and more refinery run rate cuts in China will provide further support to Asian gasoline this week, with market participants focusing on the US gasoline inventory data to be released mid-week, for signs of a possible drawdown due to unplanned outages at major US refineries.


The outage at Phillips 66's gasoline-making FCC in its 258,000 b/d Bayway refinery in Linden, New Jersey, is poised to tighten supply in the US Atlantic Coast, providing a boost to the US NYMEX RBOB futures contract, which will in turn further underpin Asian cracks, sources added.


The physical FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude averaged $8.64/b last week, climbing up 18.52% from the $7.29/b average a week earlier, Platts data showed.


Meanwhile, refiners in China have cut crude throughput in January and are making more cutbacks in February, S&P Global Platts reported earlier. Reduced supply and logistics concerns have slowed down gasoline exports from China.


Japanese refineries over February 2-8 had also cut runs by 3.6% from the week before, according to latest data from the Petroleum Association of Japan.


Traders, however, expect the coronavirus to cap gasoline demand, as construction, manufacturing and transportation activities screech to a halt across major regional economies.


STEAM CRACKER RUN RATE CUTS EYED


The Asian naphtha market will keep an eye on further steam cracker run rate cuts this week, on the back of lower downstream demand from China and weakening petrochemical margins, with some crackers already implementing run cuts, market sources said. This is expected to lower demand for naphtha feedstock.


"Demand for naphtha is less, crackers are cutting run rates a bit too," a Middle East producer said.


Steam cracker operators are expected to buy more LPG feedstock for March due to its deep discount to naphtha, and with ample supply of European arbitrage naphtha cargoes arriving in Asia in March, cash differentials have fallen to a one-month low.


The CFR Korea spot cash differential for naphtha with minimum 70% paraffin was assessed at plus $19/mt on Friday, down $5/mt on the week, reflecting a recent spot purchase by South Korea's Yeochun Naphtha Cracking Center for H2 March delivery at that level, market sources said.


Traders expect the FOB Arab Gulf cash differential to slide further this week, as more spot cargoes are being offered out of the Middle East, adding to supply in the East of Suez market .


This comes at a time when South Korean naphtha sellers are concerned they would have to decrease exports to China due to the coronavirus outbreak.


Reflecting the weakness, the March/April Mean of Platts Japan naphtha swaps backwardation narrowed by $2.75/mt day on day to $6.75/mt at Friday's Asian close.


SAUDI MARCH ACCEPTANCE TO SET LPG TONE


Asia's LPG market will look out for Saudi Aramco's acceptances of March-loading term nominations for signs of any impact further OPEC oil cuts would have on Middle East LPG supplies, though some sources said such reductions by the group would have already been factored in.


So far, ADNOC and Qatar have announced no cuts for March, though some moderate loading delays had slightly widened the backwardation last week. But the backwardation has started to narrow recently on nagging concerns over slowing Chinese petrochemical and retail demand for LPG due to the coronavirus scare.


This comes even as Western arrivals are expected to be steady in March.


Traders also expect a slight demand pick-up in China this week, though some fear that buyers would continue to delay purchases.


Traders expect FOB Middle East differentials to hover at low single-digit premiums.


Some demand has emerged from Japan and South Korea, as CFR prices lag FOB Middle East levels, indicating healthy Western supply.


But Taiwan's appetite for cheap LPG has yet to be seen. CFR North Asia propane prices have recovered from recent lows, though remain subdued below $400/mt. Differentials have shown recovery, though are expected to stay at low double-digit discounts to the contract price.


Steady supply of propane slated for March arrivals from the US will also weigh down propane prices, though some Middle East spot mixed cargoes offered could help to narrow the wide premiums above propane that has been seen in recent weeks.


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Karoon comes up dry in Peruvian offshore well

Australia’s Karoon Gas has failed to find oil in the Marina‐1 exploration well, located in Block Z‐38 Tumbes Basin offshore Peru.


The well is being drilled using the Stena Forth drillship, which arrived to Peru in early Janaury. It was spud in late January.


By February 17, the Marina well reached a depth of 1654m MD. Initial results from the shallower sections of the well were disappointing. Karoon continued drilling to reach the deeper primary targets.


In an update on Monday, Karoon Energy said that it had drilled down to a depth of 3021mm MD near the top of the Cardalitos Formation.


Mudlogging and LWD logging results from the Primary targets in the Tumbes Formation indicated that the well encountered thin water bearing sands with no oil and only minor gas shows. Final logging is now being completed and Marina‐1 will be plugged and abandoned.


According to Karoon, Marina‐1 provided a large amount of valuable data on the geological setting for this region of the Tumbes Basin. Several potential reservoir sequences were encountered in the well, unfortunately these sections were water wet and provide no prospectivity at this location.


The well results will now be thoroughly analysed, but no further drilling is planned in Block Z38 in this campaign, Karoon said.


Operationally the well has progressed to plan, on time and within budget, with no safety or environmental incidents. The total drilling operation is still estimated to take 30 days.


Karoon’s wholly owned subsidiary, KEI (Peru Z‐38) Sucursal del Peru, owns a 40% operating equity interest in the Block Z‐38 with Tullow Oil holding 35% and Pitkin Petroleum holding the remaining 25% equity interest.


Mark MacFarlane, Tullow Chief Operating Officer, commented: “This is the first ever well in the deep-water section of the under-explored Tumbes basin. We will now integrate the important well information with the seismic data that we are currently reprocessing and update our prospect inventory for blocks Z-38 and Z-64. Tullow is building an extensive exploration position in Peru and, while this result is not what we had hoped for, we remain positive about Peru’s wider offshore exploration potential.”


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ALP to tow Coral South FLNG from South Korea to Mozambique

Dutch shipping company ALP Maritime Services has been selected by a joint venture between TechnipFMC and JGC to provide a spread of five vessels related to the Coral South project offshore Mozambique.


ALP said that its project involvement included the towage operation from South Korea to offshore Mozambique by the company’s three 300ts bollard pull ALP Future class vessels.


On arrival at the offshore site, the three vessels will be joined by two additional vessels from the ALP 19,000 bhp fleet.


Together, the vessels will keep the 432-meter-long Coral Sul FLNG accurately in position, while a mooring vessel connects the pre-laid mooring chains to the FLNG.


On completion of the mooring operation, two of the five ALP-vessels will continue to support further operations on site.


Arjan van de Merwe, project manager of ALP, said: “ALP is very proud to have been selected for this project. It is the first deepwater FLNG build to date and it is the first floating production plant to be installed in Mozambique and on the all African east coast.


“Our vessels have the endurance to perform the towage non-stop while complying with stringent in-field vessel specifications expected when operating in close vicinity of the FLNG for extended duration.


“This contract involves a combination of our 24,400 bhp units and our 19,000 bhp units, tailored to our client’s requirements. Within each vessel segment we operate a number of vessels.


“That offers ALP optimum vessel scheduling flexibility while offering our client guaranteed availability whenever the FLNG is delivered at the shipyard and ready for departure.”


This award comes following the launching of the Coral South FLNG hull in South Korea last month.


The eight-story FLNG accommodation module, which will house up to 350 people, was also ready to be lifted and integrated with the hull system. Fabrication activities are also well underway for the 12 gas treatment and LNG modules, with all main equipment ready for integration and first deck stacking executed.


It is worth stating that the operator of the project, Italian oil major Eni, said at the time that the launch marked the timely progress of the project, which exceeded 60 percent completion and was in line with production start up by 2022.


The Coral South project is located in the exploration concession of Area 4 in the Rovuma basin, which will put in production 450 billion cubic meters of gas from the giant Coral reservoir.


It is worth reminding that the contract for the Coral South FLNG project was awarded to TechnipFMC – together with JGC Corporation and Samsung Heavy Industries – back in June 2017.


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Concho/Devon/Diamondback Reports Q4

Concho, Devon to spend less in 2020 as investors press for returns

Arunima Kumar

2 MIN READ

(Reuters) - Shale producers Concho Resources Inc (CXO.N) and Devon Energy Corp (DVN.N) reined in spending plans for the year as investors try to save cash in the backdrop of weak oil and gas prices.

U.S. oil producers have been under pressure from investors to cut back on drilling new wells and instead use the cash for dividends and buybacks.

Concho lowered its 2020 capital expenditure to between $2.6 billion and $2.8 billion, the midpoint of which is 10% lower than last year, while Devon lowered the top end of its 2020 exploration and production budget by $50 million to a range of $1.7 billion to $1.85 billion.

Concho said it would increase quarterly dividend by 60% to $0.20 per share, while Devon raised its by 22% to $0.11 per share.

Burgeoning oil production at the prolific U.S. Permian basin also helped both companies beat Wall Street’s profit estimates.

Devon marginally raised its full-year output forecast to a range of 7.5% to 9% compared with 2019, citing “exceptionally strong well performance” in the Delaware Basin of the Permian.

Concho said oil production volume for 2020 is expected to increase 10% to 12% year-over-year, pro forma for the sale of its New Mexico Shelf assets.

Excluding items, Concho posted a profit of $1.03 per share, well above analysts’ average estimate of 79 cents per share. Devon beat consensus by 1 cent at 33 cents per share, according to Refinitiv IBES.

Rival shale producer Diamondback Energy Inc’s (FANG.O) quarterly profit also beat estimates as production soared about 65% to 301,284 barrels of oil equivalent per day. The company’s plans to spend $2.8 billion to $3 billion in 2020 were broadly flat compared with last year.

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ADNOC awards deals worth $1.65 billion to Petrofac

Oilfield services provider Petrofac Emirates has been awarded two contracts, together worth around $1.65 billion with Abu Dhabi National Oil Company (ADNOC) in the United Arab Emirates.


The engineering, procurement (including novated long lead items), construction, transportation, offshore installation and commissioning contracts are for ADNOC’s Dalma Gas Development Project, Petrofac said on Tuesday.


The work scope encompasses offshore packages at Arzanah island and surrounding offshore fields, located around 140 km off the north-west coast of the Emirate of Abu Dhabi.


The first package, valued at $1.065 billion, is for gas processing facilities at Arzanah island. Under the terms of the 33-month lump-sum contract awarded to Petrofac, the scope of work includes inlet facilities with gas processing and compression units, power generation units, utilities and other associated infrastructure.


For the second package, valued at $591 million, Petrofac is leading a Joint Venture with SapuraKencana HL Sdn. Bhd. Abu Dhabi. Under the terms of the 30-month lump-sum contract, the scope of work includes three new well-head platforms, removal and replacement of an existing topside, new pipelines, subsea umbilicals, composite and fibre optic cables.


The Dalma project is a key part of the Ghasha ultra-sour gas concession which is central to ADNOC’s strategic objective of enabling gas self-sufficiency for the UAE.


George Salibi, Chief Operating Officer – Engineering & Construction, commented: “We are fully committed to supporting continued and sustainable investment in Abu Dhabi’s oil and gas industry through our strategic focus on maximising local delivery, and are pleased that our approach will generate substantial In-Country Value for the local economy.”


We reinforced our commitment to maximizing value for the #UAE through the $1.65 billion Dalma EPC contracts for the Ghasha Gas Development. 70 percent of the total award will flow back into the #UAE’s economy via our in-country value program. pic.twitter.com/R6clW5rWIZ — ADNOC Group (@AdnocGroup) February 18, 2020


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Big miners confident coronavirus effects can be contained. But what if they aren't?

The big miners and many analysts are working on the assumption the epidemic will be brought under control over the next five or six weeks – within the March quarter – and that activity will then bounce back sharply. Across China, people are returning to work. If China’s assessment is accurate, about 160 million people should have returned to work by now, although something akin to that number are thought to be still experiencing restrictions on their ability to travel outside their homes. Loading The miners’ thesis is that first-quarter economic growth in China will be hit hard by the virus. That slump will be reflected in severe disruption to global supply chains and in delays and deferrals of orders for raw materials by Chinese customers, with isolated instances where customers have invoked force majeure to avoid penalties. If the virus can be contained by the end of next month, however, there is an expectation of a very sharp rebound and a spike in demand for commodities – and in their prices – as China’s steel mills and factories go into overdrive to make up for the lost production.


With the Chinese authorities loosening monetary policy and expected to take further actions to stimulate the economy, it is conceivable that a post-virus growth spurt could more than counter the negative impact of the epidemic – provided that impact is short-lived. Loading The easing of the trade tensions with the US after the two companies reached their phase one agreement to halt hostilities earlier this year will help, although it should be noted that, while the US lowered the tariffs on some of China’s exports to the US, most of China’s exports are still covered by tariffs. China has also made a number of commitments to buy an additional $US200 billion ($300 billion) of US goods (including a big increase in agricultural products) over the next two years compared to what it purchased in 2017. Its capacity to deliver on that commitment was questioned from the outset and the impact of the virus on its economy will only deepen the scepticism. There are some "get out" clauses in the trade truce, including market conditions and the ability to source elsewhere if US producers aren’t competitive.


If the virus isn’t contained within the next couple of months and if there was a renewal of trade tensions, the impact on China’s economy and its demand for raw materials could be quite severe. Loading With or without renewed trade tensions, the flow-on effects of the virus within China and in the region will have an impact on global growth that was already going to be muted to some degree by the slowing of China’s growth rate as a result of the trade war. The International Monetary Fund has estimated the trade conflict would shave about 0.8 per cent from global growth this year. China was already going to struggle to hold its growth rate around last year’s 6.1 per cent – its weakest in nearly three decades – and, given that it is the single-biggest contributor to global growth, accounting for nearly 30 per cent of that growth in recent years, any further slowdown in China will slow global growth even more. Loading


The restrictions on travel between China and the rest of the world have effects well beyond the tourism sector. China’s pivotal role within global supply chains means the economic impacts aren’t confined within China, as our education, travel and leisure sectors and companies that source components from China such as Apple and carmakers around the world have discovered. The miners, who have access to on-the-ground intelligence, might be right in their assessment that the economic impacts of the virus will be relatively short-lived, with the epidemic contained by the end of the March and the economic damage swiftly remedied by a stimulus-accelerated torrent of catch-up activity by China’s industries. Let’s hope so, but given the volatile and rubbery nature of the data China has been releasing on the spread of the virus, it is difficult to predict anything with confidence, including how lengthy and deep the direct and indirect effects of the virus might be.


https://www.brisbanetimes.com.au/business/companies/big-miners-confident-coronavirus-effects-can-be-contained-but-what-if-they-aren-t-20200219-p5429x.html&ct=ga&cd=CAIyGmM4M2EyMmUwMWZlNTViZGM6Y29tOmVuOkdC&usg=AFQjCNHdY4ZDL8a9CPRO2l5FPJJ0D2hwk

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Sudbury's iconic Superstack easing into retirement

The long plumes that used to flow from the Superstack in Copper Cliff have been reduced to wisps as the mega chimney nears retirement and two mini versions take over.


You could call it a passing of the baton, although in this case it’s more like breaking one really big one in half.


In fact, each of the replacement stacks is closer to a third of the size of the original.


The Superstack stretches 1,250 feet in height and is more than 100-feet-wide at its base. The new stacks are much slimmer and top out at 450 feet.


Lights now adorn the shorter towers and one is already emitting puffs of smoke.


“One of the new stacks is currently in operation for venting the fluid bed dryer and the Superstack is still used for occasional venting of process gases until the second stack is in operation,” said Danica Pagnutti, with Vale corporate affairs, in a message to The Star.


She said there is still some work to do on “required equipment” for the other new stack before it can also kick into gear.


“Timelines to completion are still being determined,” said Pagnutti. “Once the second stack comes into operation, Vale will be able to decommission the Superstack.”


A fixture on the Sudbury skyline for almost 50 years, the giant chimney has become obsolete due to progress made on emissions through the company’s $1-billion Clean AER project.


A new wet gas cleaning plant has “reduced sulphur-dioxide emissions from the smelter by 85 per cent,” Pagnutti said, while a secondary baghouse “has reduced metals particulate by 40 per cent,” meaning the miner no longer requires such a large stack for the smelter.


Taking the massive structure down will take some time, however.


The inner steel liner will be removed soon after decommissioning in order to “mitigate anticipated corrosion,” according to a Vale fact sheet, but there is “no immediate need for the shell to be demolished,” meaning the stack will likely dominate the horizon for a few more years while the company considers ways to bring it down.


When this does occur, expect more of a gradual dismantling than a sudden, dramatic collapse.


“Given the Superstack’s proximity to the smelter, explosives will not be used,” the company said. “Extensive study will be conducted to determine the best way to safely and carefully demolish the concrete shell.”


Vale expects to save up to $5 million annually in maintenance costs, while its fuel bill for operating the stack is expected to decline by 50 per cent.


“By changing to two smaller and more efficient stacks, natural gas consumption is estimated to drop by nearly half, from 94 million cubic metres per year to 48 million cubic metres per year,” Vale said. “This reduction is equivalent to the annual fuel requirements of approximately 17,500 homes, or one-third of all households in the City of Greater Sudbury.”


Greenhouse gases will also be cut by nearly half, the miner said, as the new stacks require far less energy to operate than the Superstack.


“Vale will reduce greenhouse gas emissions by approximately 40 per cent, from 270 kilotonnes to 150 kT annually by the time the project is complete,” the company said.


Construction on the two new stacks was finished late last year.


Going with a pair of shorter chimneys was seen as optimal “because each can be located closer to gas sources within the operation, which is more energy-efficient and cost-effective,” Vale said.


jmoodie@postmedia.com


https://www.thewhig.com/news/local-news/sudburys-iconic-superstack-easing-into-retirement/wcm/c37e4d1a-937d-46bb-aef2-5c53118b1ac7&ct=ga&cd=CAIyGjU3YmM5ZDYyY2E0NzBlYzQ6Y29tOmVuOkdC&usg=AFQjCNEYYgP4KADndy9QmXF7rG9jOEpR9

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Glencore predicts decreased carbon emissions by 2035

British-Swiss mining company Glencore has predicted a 30% reduction in carbon emissions by 2035 as its coal resources deplete over time, but the company will not set itself climate targets.


In February 2019 the company set out a commitment to the objectives of the United Nations Intergovernmental Panel on Climate Change and the Paris Agreement, which set out efforts to limit the global temperature increase this century to 1.5° C. The company set out a “Paris-consistent” strategy in 2019, pledging more transparency in its fossil fuel investments.


Glencore said in a statement that it expects its carbon emissions to drop largely due to depletion of the company’s coal resource base in Colombia, with smaller-scale reductions in South Africa and Australia also contributing. Glencore expects its Colombian coal operations to have closed by 2035.


Glencore is yet to set firm targets for its carbon footprint, and company CEO Ivan Glasberg described targets to become “net-zero” companies by 2050 as “wishy-washy ideas” because 2050 is a long way off.


The company has, however, cut its direct emissions and the emissions produced from its operations by 9.7% since 2016, including through the use of renewable energy sources. Glencore initially pledged to cut these emissions by 5% in 2017.


Glencore’s capital expenditure in 2019 was weighted towards energy transition materials including copper, cobalt and nickel. The company reported a drop in annual profits for 2019 due to lower commodity prices, with earnings before interest, tax, depreciation and amortisation falling 26% to $11.6bn in the year to December.


https://www.mining-technology.com/news/glencore-predicts-decreased-carbon-emissions-by-2035/

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Oil reaches two-week high on hope for Chinese demand revival

Oil reaches two-week high on hope for Chinese demand revival


By Saket Sundria and Grant Smith on 2/19/2020


SINGAPORE (Bloomberg) - Oil rose to a two-week high on hopes that economic stimulus from China can revive demand battered by the coronavirus, and as a number of OPEC nations faced threats to their production.


Brent futures increased for a seventh day, the longest run of gains since early 2019, even as Chinese refineries slashed processing by 25% from last year as the virus hit travel and economic activity.


Crude is being supported along with equities by signs that China, the world’s biggest oil importer, is considering steps to shore up its economy, such as direct cash infusions and mergers to revive its airline industry.


Prices are also drawing support from a range of supply disruptions.


Cease-fire talks were suspended in OPEC member Libya after the capital’s port was shelled by forces loyal to military commander Khalifa Haftar, who has choked off the country’s exports. And Venezuela’s ability to export crude was further threatened as the U.S. sanctioned a unit of Russia’s Rosneft PJSC for maintaining ties with President Nicolas Maduro and the state-run oil company.


“The Rosneft story and the outage in Libya could help make the market less oversupplied in the first quarter,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. Equities are also lending support to crude, he said, citing expectations that “this virus situation will all be sorted out at some stage.”


Brent for April settlement climbed 79 cents, or 1.4%, to $58.54 a barrel on the ICE Futures Europe exchange as of 10:29 a.m. in London, after gaining more than 8% in the past six sessions. West Texas Intermediate for March delivery advanced 71 cents, or 1.4%, to $52.76.


Besides the involuntary losses in OPEC countries, the cartel and its partners are contemplating deepening the deliberate production cutbacks they’ve made this year. A committee representing the OPEC+ alliance recommended earlier this month that the producers should curb supply by a further 600,000 barrels a day to offset the impact of the coronavirus.


Rosneft Trading, the main exporter of Venezuelan crude, was targeted by the U.S. for helping to sell the commodity that bankrolls Maduro’s regime. The sanctions are the toughest in the U.S. Treasury’s arsenal and render Rosneft Trading effectively untouchable to international companies, including shipowners, insurers and banks.


Meanwhile, the latest attack in Libya forced authorities to evacuate tankers carrying gasoline and liquefied petroleum gas before they had unloaded, according to an official from state-run National Oil Corp. The nation’s crude output has dropped to around 123,000 barrels a day from 1.2 million a day before a blockade of ports by Haftar’s supporters started in mid-January.


Related News ///


FROM THE ARCHIVE ///


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Venezuela’s Maduro Shakes Up PDVSA, Declares Oil ‘Emergency’

(Bloomberg) -- Venezuela’s President Nicolas Maduro declared an “energy emergency” as he announced a commission to revamp state oil company Petroleos de Venezuela SA, redoubling efforts to shore up the nation’s crumbling oil industry.


Economy Vice President Tareck El Aissami will lead the commission, which will focus on boosting crude production, Maduro said. El Aissami, who is already an external director at PDVSA, will be joined by former Energy Minister Asdrubal Chavez as commission vice president, Defense Minister Vladimir Padrino, armed forces Strategic Operational Commander Remigio Ceballos and others.


“I won’t accept more excuses,” Maduro said at an event with PDVSA workers broadcast on state television. “Either we produce or we produce. Venezuela has to be an oil power.”


The intervention, which installs a key Maduro loyalist at the top of the state oil producer, came a day after the U.S. imposed sanctions on a unit of Rosneft PJSC -- the biggest exporter of Venezuelan crude -- in a move that threatens Venezuela’s ability to export oil.


Boosting crude sales is essential to maintaining Maduro’s grip on power in the economically ravaged country. His regime has previously proposed giving majority shares and control of its oil industry to big international corporations, which would forsake more than a decade of state monopoly. Maduro said he had “investment offers” for more than $25 billion in oil production projects and refinery rehabilitations. He did not provide details.


The oil commission will also include current Energy Minister Manuel Quevedo, Interior Minister Nestor Reverol, Transportation Minister Hipolito Abreu, Science and Technology Minister Gabriela Jimenez, Social Labor Minister Eduardo Pinate. The commission will also include seven oil industry workers, a militia member and a state university president.


Maduro said the commission will issue measures to “guarantee national energy security and protect the industry from imperialist aggression.”


While Maduro vowed to increase production to 2 million barrels a day two years ago, the goal remains far from reach as the country enters its seventh year of economic decline. Production fell to 733,000 barrels a day in January, a 36% drop from a year earlier, according to OPEC secondary sources.


January output from PDVSA’s joint ventures with international oil firms accounted for 56% of total oil and gas production, while the company alone produced 44%, according to PDVSA data seen by Bloomberg.


Rosneft Trading accounted for about half of Venezuela’s 874,649 barrels a day of exports in January, according to shipping reports and tracking data compiled by Bloomberg. It’s unlikely that other trading companies will step in and take charge of volumes traded by Rosneft following the imposition of sanctions, FGE analysts said in a note earlier Wednesday.


In the midst of tightening U.S. restrictions on Venezuelan crude, global benchmark Brent extended its longest rally in a year.


(Adds production data in ninth paragraph; minor changes throughout.)


--With assistance from Lucia Kassai and Alex Vasquez.


To contact the reporter on this story: Fabiola Zerpa in Caracas Office at fzerpa@bloomberg.net


To contact the editors responsible for this story: Patricia Laya at playa2@bloomberg.net, Catherine Traywick, Joe Carroll


For more articles like this, please visit us at bloomberg.com


Subscribe now to stay ahead with the most trusted business news source.


©2020 Bloomberg L.P.


https://finance.yahoo.com/news/venezuela-prepares-pdvsa-shakeup-stem-202632840.html

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EIA expects natural gas production and exports to continue increasing in most scenarios

According to projections published in the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2020 (AEO2020), total dry natural gas production in the United States will continue to increase until 2050 in most of the AEO2020 cases, primarily to support growing U.S. exports of natural gas to global markets. The United States began exporting more natural gas than it imports on an annual basis in 2017, driven by increased liquefied natural gas (LNG) exports, increased pipeline exports to Mexico, and reduced imports from Canada. In most of the AEO2020 cases, net natural gas exports continue to increase through 2050, and most of the increase is in the near term.


The AEO2020 Reference case represents EIA’s best assessment of how U.S. and world energy markets will operate through 2050, assuming no significant changes in energy policy occur. Side cases show the effects of changing model assumptions: the High and Low Oil Price cases simulate international conditions that could drive crude oil prices higher or lower, and the High and Low Oil and Gas Supply cases vary production costs and resource recoverability within the United States.


EIA expects dry natural gas production to total 34 trillion cubic feet (Tcf) in 2019 once the final data is in. In the AEO2020 Reference case, EIA projects that U.S. dry natural gas production will reach 45 Tcf by 2050. Production growth results largely from continued development of tight and shale resources in the East, Gulf Coast, and Southwest regions, which more than offsets production declines in other regions. Dry natural gas production from these three regions accounted for 68% of total U.S. dry natural gas production in 2019 and, in the Reference case, 78% of dry natural gas production in 2050.


Most of the increase in dry natural gas production is coming from natural gas formations such as the Marcellus and Utica in the East region and the Haynesville in the Gulf Coast region. A smaller but still significant portion of the growth is from natural gas production in oil formations (also known as associated gas), especially in the Permian Basin in the Southwest region.


In the Reference case, both U.S. natural gas exports by pipeline and U.S. LNG exports continue to grow through 2030. LNG exports account for most of the export growth because more LNG export facilities are becoming operational and more projects are under construction. In the Reference case, EIA projects that LNG exports will almost triple, from 1.7 Tcf in 2019 to 5.8 Tcf in 2030, the equivalent of nearly 16 billion cubic feet per day (Bcf/d). LNG exports remain at this level through 2050 as U.S.-sourced LNG becomes less competitive in world markets and as more countries become global LNG suppliers.


U.S. LNG exports are more competitive when oil prices are high (as in the High Oil Price case) and U.S. natural gas prices are low (as in the High Oil and Gas Supply case) because of pricing structures that link Brent crude oil prices to LNG prices in many world markets. In the High Oil Price case, U.S. natural gas net exports reach nearly 13 Tcf by the late 2030s, most of which is LNG. Conversely, in the Low Oil Price case and Low Oil and Gas Supply case, U.S. LNG is less competitive globally and remains lower than 5 Tcf per year through 2050.


By comparison, pipeline trade of U.S. natural gas is less sensitive to changes in assumptions about domestic natural gas supply and world oil prices. Pipeline trade of natural gas is highest in the High Oil and Gas Supply case because low domestic natural gas prices reduce U.S. natural gas imports from Canada.


Principal contributors: Dana Van Wagener, Katie Dyl


https://go.usa.gov/xdQSN

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Flaring emissions – Tracking Fuel Supply – Analysis

Few countries systematically measure, record and release flaring data publicly. The lack of monitoring equipment and limited oversight make it difficult to precisely quantify the amount of gas-flaring around the world. However, based on satellite measurements, the Global Gas Flaring Reduction (GGFR) Partnership publishes flaring estimates for around 85 countries.


Based on satellite data, over 140 bcm of gas were flared globally in 2017, equal to Africa’s total natural gas consumption that year. As a result, 270 MtCO 2 and 3 Mt of methane were released into the atmosphere.


Only five countries (Russia, Iraq, Iran, the United States and Algeria) are responsible for more than 50% of flaring globally.


Russia recorded the largest flaring volumes but also showed the largest decrease in 2016-17 in absolute terms (a drop of 2.5 bcm). There has been particular concern recently about the level of flaring in some tight-oil areas of the United States. It is estimated that 3 bcm to 4 bcm were flared in the Permian region alone in 2017 (EDF, 2019; Rystad, 2018). But there are also large volumes flared in the Middle East, e.g. Iraq flared around 18 bcm in 2018.


In the Sustainable Development Scenario (SDS), the volume of gas flared drops dramatically over the next decade. Flaring is soon eliminated in all but the most extreme cases, with less than 13 bcm flared from 2025 onwards, less than 10% of the 2017 level.


https://iea.li/2HGDbO5

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EIA Reports -151 Bcf Draw in Natural Gas Storage

Into The Vortex - EIA Reports -151 Bcf Draw in Natural Gas Storage


Natural gas futures have rallied back near $2, last week we saw a bigger than expected draw of -151 Bcf in natural gas storage. Ahead we focus on the coronavirus affect, LNG and Mexican exports and the winter outlook for the US.


A tricky shoulder season with Meteorologists expect an abnormally hot September but with Imelda just popping up expect variability. October is looking warm in Texas for now but cooler elsewhere. The focus will continue on Sabine Pass and Mexico and perhaps LNG exports given Trade Wars are the overhang du jour.



https://traderscommunity.com/index.php/oil-energy/1968-eia-natural-gas-inventories-preview-102

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Mime Petroleum works to strengthen liquidity ahead of Balder Future project

Independent development and production company Mime Petroleum has issued a NOK 300 million ($32.2M) senior unsecured bond with maturity in February 2025 ahead of the Vår Energi-operated Balder Future project in the North Sea.


Vår Energi is the operator of the Balder Future project with a 90 percent ownership interests, while Mime Petroleum is the only partner and it has a 10 percent ownership interest.


Mime said that the bond issue was completed on February 7, 2020. The company added that this would optimize its capital structure and strengthen its liquidity position ahead of the Balder Future project in the North Sea.


The Balder Future project includes the refurbishment of the Jotun FPSO, new subsea production systems and 14 new wells with a total investment of NOK 19.6 billion ($2.16 billion).


The redevelopment will unlock an additional 136 million boe and production is planned to commence in the autumn of 2022. The field is expected to produce up to 2045.


Vår Energi submitted the PDO for the Balder Future project in December 2019. The project is expected to prolong the production lifetime of the Balder and Ringhorne fields’ production lifetime to 2045.


All these activities will take place while ordinary production continues at the Balder and Ringhorne fields.


The Balder field is located in production license PL 001 – the very first license on the Norwegian Continental Shelf (NCS).


Also, Vår Energi awarded an EPCI contract to Rosenberg Worley in for the lifetime extension of the Jotun A FPSO earlier this year. Also, Baker Hughes and Ocean Installer will engineer, procure, construct and install new subsea production systems (SPS), umbilicals, risers, and flowlines for the FPSO.


The Jotun A FPSO will be brought to shore mid-2020 for its upgrade and life extension. During the summer of 2022, the vessel will be reinstalled in the area between the Balder and Ringhorne fields.


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Inpex inks MoUs for long-term gas supply from Abadi project

Japanese oil and gas firm Inpex has signed memorandums of understanding (MOUs) with PT PLN Persero (PLN) and PT Pupuk Indonesia for the long-term domestic LNG and pipeline natural gas supply from the Abadi LNG project offshore Indonesia.


Inpex said on Thursday that the MOUs were signed by its subsidiary Inpex Masela, and on behalf of its joint venture partner Shell Upstream Overseas Ltd.


The agreements were signed in the presence of Indonesia’s Minister for Energy and Mineral Resources Arifin Tasrif in Jakarta on February 19, 2020.


The company added that discussions would now begin regarding sales and purchase agreements for the long-term LNG and natural gas supply from the project.


These will include LNG for natural gas-fired power plants operated by PLN and natural gas – 150 million scf per day – to a coproduction plant, which will be constructed by Pupuk Indonesia.


Inpex added that the long-term supply of LNG and natural gas from Abadi was consistent with the Indonesian Government’s focus on optimizing domestic natural resource utilization and would provide significant contributions to Indonesia where gas demand continues to grow, including multiplier effects that will benefit the country, particularly in the eastern region.


Abadi is the first large-scale integrated LNG development project operated by Inpex in Indonesia and follows on from the Ichthys LNG project in Australia.


Inpex and Shell will develop Abadi via an offshore production facility and a 9.5 million tonnes per annum (mmpta) onshore LNG plant, at an estimated cost of $20 billion.


As previously reported, Inpex received approval from Indonesian authorities for the revised Plan of Development (POD) for the Abadi LNG project back in July 2019.


In October of the same year, Inpex signed a seven-year additional time allocation for the Masela PSC and a 20-year extension for the Abadi LNG project with Indonesia’s upstream oil and gas regulator SKK Migas.


Spotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email.


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Glencore slams BP's net-zero target as it outlines measures to cap coal use

Glencore slams BP's net-zero target as it outlines measures to cap coal use


The chief executive of coal giant Glencore dubbed BP's 2050 net-zero target "wishy-washy" as he outlined how his firm will cap coal production through to 2035.


Ivan Glasenberg, who heads up the Swiss mining firm, announced on Wednesday (18 February) a new projection to reduce its overall carbon footprint by 30% over the next 15 years.


The majority of the emissions reductions needed to meet this target will be delivered capping coal production at mines in Colombia and Australia. Glasenberg did not provide any time-bound numerical targets for the cap, saying instead that Glencore would operate in line with the “natural depletion” of coal at its existing mines rather than bluntly closing them.


“As we rebalance our portfolio towards commodities supporting the transition to a low-carbon economy, we expect the intensity of our scope 3 emissions to decrease,” a statement from Glencore said.


As it produces less coal, the firm will begin producing more of the metals and minerals used to make electric vehicle (EV) batteries, including zinc, cobalt, copper and nickel. While the production of these materials is lower-carbon and their use will help to decarbonise the transport sector, sustainability challenges persist around resource efficiency and human rights abuses in supply chains.


Glencore’s latest annual report, unveiled at the same meeting on Wednesday, revealed that the firm recorded a $404m (£313m) net loss in 2019. This was largely due to $2.8bn (£2.16bn) in impairment charges, largely driven by a need to write down the value of its coal assets.


Recent research found that the number of insurance firms withdrawing cover for coal companies and assets has more than doubled between 2018 and 2019, as national green policies were bolstered and citizen climate protests grew in size and frequency on a global basis.


Paris or bust?


Glasenberg was, as expected, quizzed at Wednesday’s meeting around Glencore’s decision not to set Paris-aligned, public-facing, long-term targets.


Glasenberg also said Glencore would begin publishing full carbon footprint reports on an annual basis, starting in April 2020. The firm currently does not calculate its Scope 3 (indirect) emissions, including emissions produced when the coal it sells is burned by third parties. Once this data is collected and reported, Glencore has pledged to develop an investor-facing roadmap outlining how it plans to align with the Paris Agreement trajectory.


According to the IPCC, meeting the Paris Agreement’s more ambitious 1.5C trajectory will require global emissions to reach net-zero by 2050 at the latest.


Several fossil fuel firms have announced net-zero targets for, or ahead of, 2050, including Eni and BP. Glasenberg said Glencore had not followed suit because he believed these targets to be “wishy-washy” due to their long-termism and lack of supporting roadmaps.


He said: “You can come out with many statements. You want to be carbon-neutral by 2050. How are you getting there? How are you going to do it? Very hard to say. It’s a long way out.”


Surprisingly, his sentiments echo those voiced by green campaigners, who have criticised BP for failing to disclose how it would meet its 2050 aim without relying heavily on carbon offsetting – and its decision not to include Scope 3 emissions, which account for the largest proportion of its overall carbon footprint, in the aim.


But campaign groups are ultimately calling on firms like BP and Glencore to degrow, or else fully exit the fossil fuel sector, as Orsted has since it rebranded from DONG in 2017.


Sky’s business presenter Ian King, for example, has said Glencore’s decision to produce coal in any capacity was at odds with the Paris Agreement.


Sarah George


https://www.edie.net/news/6/Glencore-slams-BP-s-net-zero-target-as-it-outlines-measures-to-cap-coal-use/&ct=ga&cd=CAIyGjBlMDRkYTQxNmY2YWRlMjY6Y29tOmVuOkdC&usg=AFQjCNGV35TgmoqF-Rx7LRDbjpqxe_azw

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Calima picks up strategic infrastructure in the Montney

Calima Energy is one step closer to a development decision on its Montney oil and gas leases in British Columbia, Canada, after securing the acquisition of the Tommy Lakes pipeline network and associated processing, storage and compression equipment just 20km away.


The newly acquired infrastructure represents a significant piece of the puzzle that Calima will need to pull together to get its new liquids rich gas find in the Montney to market.


It is essentially a cost-efficient access point to a number of major regional gas pipeline networks.


The infrastructure being acquired is capable of transporting up to 50 million cubic feet per day of gas and 1,500-2,000 barrels per day of well-head condensate via the North River Midstream pipeline and the Jedney processing facility. The company also said that the facilities are in excellent condition and their acquisition significantly reduces development lead times.


Calima said the acquisition cost, including performance bonds was approximately A$825,000 despite management saying that the estimated cost of replacement being in the region of A$85 million. The facilities will now be placed in suspension at an annual up-keep cost of A$420,000 until a partner is identified or financing finalised.


The company said it has received regulatory approval to construct a pipeline that connects its suspended wells on ‘Pad A’ to the Tommy Lakes facilities. Calima will now move forward with completion of the field development plan ahead of a final investment decision. The Tommy Lakes acquisition is subject to the customary consents and approvals of the regulator.


Calima Managing Director, Alan Stein said: “This is a significant strategic acquisition that gives the Company access to markets in a very cost-efficient manner. With gas prices showing consistent increases over the last 6 months development economics are showing steady improvement. With a replacement value of $85 million the re-use of Tommy Lakes significantly reduces capital cost however, just as importantly, avoids the time involved in permitting and constructing new facilities. The Calima Lands are now ready for development once a funding partner is secured.”


Concurrent with the acquisition of the Tommy Lakes infrastructure, Calima said it has entered into an option agreement to acquire 11 gas production wells on or before 1 April 2022 in the Tommy Lakes field. These wells provide Calima with the option to use gas as fuel as part of the start-up sequence for the facilities if required.


Although it still has a few regulatory hoops to jump through, Calima looks to be well placed to move forward with a development plan decision that appears to only require funding to get a green light from the decision makers.


Is your ASX listed company doing something interesting ? Contact : matt.birney@wanews.com.au


https://thewest.com.au/business/public-companies/calima-picks-up-strategic-infrastructure-in-the-montney-c-707404&ct=ga&cd=CAIyHGY5ZDllMzk5NWUzYTU3MGU6Y28udWs6ZW46R0I&usg=AFQjCNEzJRGID7LeCJ0LeFwjH0dJaH-q9

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EIA Oil and gas report

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Cabot Oil and Gas: Grim Reading

HOUSTON — Cabot Oil & Gas Corp. (COG) on Thursday reported fourth-quarter net income of $146.9 million.

The Houston-based company said it had profit of 36 cents per share. Earnings, adjusted for one-time gains and costs, came to 30 cents per share.

The results met Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was also for earnings of 30 cents per share.

The independent oil and gas company posted revenue of $461.4 million in the period, falling short of Street forecasts. Five analysts surveyed by Zacks expected $477.6 million.

For the year, the company reported profit of $681.1 million, or $1.64 per share. Revenue was reported as $2.07 billion.

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Alternative Energy

GM shuts Australia, New Zealand operations; sells Thai plant to Great Wall

FILE PHOTO: File photo of General Motors logo outside its headquarters at the Renaissance Center in Detroit


By Hilary Russ and Yilei Sun


NEW YORK/BEIJING (Reuters) - General Motors Co said it would wind down its Australian and New Zealand operations and sell a Thai plant in the latest restructuring of its global business, costing the U.S. auto maker $1.1 billion.


The moves will accelerate GM's retreat from unprofitable markets, making it more dependent on the United States, China, Latin America and South Korea, and give up an opening to expand in Southeast Asia.


They come after the company told analysts this month that restructuring GM's international operations outside of China to produce profit margins in the mid-single digits would represent "a $2 billion improvement" on two years ago.


GM has forecast a flat profit for 2020 after a difficult 2019, and is facing ballooning interest in electric car rival Tesla Inc .


GM is "focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility," especially in electric and autonomous vehicles, GM Chair and CEO Mary Barra said in a statement late on Sunday.


The latest changes - a continuation of GM's retreat from Asia that began in 2015 when it announced it would stop making GM-branded cars in Indonesia - will lead to cash and non-cash charges of $1.1 billion. Some 600 jobs will be lost in Australia and New Zealand, while GM said about 1,500 jobs would be affected by the sale in Thailand.


Barra has prioritized profit margins over sales volume and global presence since taking over in 2014.


In 2017, she sold GM's European Opel and Vauxhall businesses to Peugeot SA and exited South Africa and other African markets. Since then, Barra has decided to pull GM out of Vietnam, Indonesia and India.


"THE END OF AN ERA"


Like Britain, Australia and New Zealand are right-hand drive markets. With sales of GM's Australian Holden brand plummeting, the company could not justify the investment to continue building right-hand drive vehicles, GM President Mark Reuss said.


The move stoked anger in Australia, where GM Holden long ranked among the country's best selling car companies after the first locally made mass-production car rolled off the assembly line with a Holden badge in 1948.


Amid continuous decline in new car sales, GM said it was ending Australian factory production in 2017 and last year called time on former best-seller the Commodore as part of a shift towards more compact SUVs and utility vehicles.


Australian Prime Minister Scott Morrison said on Monday he was disappointed and angry at the decision, although not surprised.


"Australian taxpayers put billions into this multinational company. They let the brand just wither away on their watch," he told reporters in Melbourne.


GREAT WALL GOING ABROAD


Great Wall, one of China's biggest sport-utility vehicle makers, said it will sell cars from the Thai manufacturing base, which also has an engine plant, in Southeast Asia and Australia as it seeks global sales amid a slowing domestic market.


"There is no choice, if we don't go global, we will not survive," Wei Jianjun, chairman of the Baoding-based automaker, said last year when Great Wall opened a plant in Russia.


It also signed an agreement in January to buy GM's car plant in India. The Thai transaction is expected to be completed by the end of 2020.


"Such an acquisition could give Great Wall quick access to the ASEAN market, and Thailand is a good choice for its production base amid the country's established supply chain in the automotive industry," said Shi Ji, analyst at Haitong International.


Great Wall is likely to face fierce competition from Japanese automakers which dominate Thailand's domestic car sales. Thailand produces around 2 million vehicles each year, with just over half exported.


Great Wall may consider also building pickup trucks and SUVs in Thailand, a source familiar with the matter told Reuters .


The firm, which is building a car plant with BMW in China, sold 1.06 million cars last year, including 65,175 units for export.


(Reporting by Hilary Russ, Joe White, Yilei Sun, Chayut Setboonsarng, Byron Kaye and Kevin Buckland; Editing by Christopher Cushing and Richard Pullin)


https://finance.yahoo.com/news/general-motors-wind-down-australia-021901964.html

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EDF: Recovery in sight?

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Europe Floors It in the Race to Dominate Car Batteries

(Bloomberg) -- Outside the German town of Arnstadt, workers for China’s Contemporary Amperex Technology Co. Ltd. (CATL) are hustling to build Europe’s biggest electric-car battery plant.


The site, which covers an area equivalent to about 100 football fields, previously housed one of the continent’s largest solar-panel factories. During a visit in October, wooden crates filled with surplus equipment were stacked up outside the metal-clad structure to make way for car-battery-making equipment. Roaring bulldozers swarmed a nearby lot to prep for construction of a new building.


The $2 billion project—one of about a half dozen battery factories under construction in Germany alone—worries European policymakers, who are desperate to ensure their auto industry doesn’t lose competitiveness in the transition to electric vehicles. EV sales in Europe are expected to jump to 7.7 million in 2030 from just under half a million in 2019, according to forecasts from BloombergNEF. Those vehicles will mainly be powered by batteries from Asian manufacturers like CATL, unless European companies fight back and build a local supply chain.


EVs and clean transportation are at the heart of the European Union’s Green Deal, a more than €1 trillion ($1.1 trillion) European Commission policy initiative aimed at making the EU carbon neutral by 2050. The plan includes replacing large power plants with smaller, more local, renewable energy sources while eliminating combustion engines in buses, cars, and trucks. After betting on dirty diesel for too long, European politicians and the heads of Volkswagen, Daimler, and BMW are vowing to build a greener supply chain for all of those vehicles.


“If we let China own the battery, then we lose out on the centerpiece of electric cars,” says German Deputy Economy Minister Thomas Bareiss. “I’m not sure that’s the best approach for our auto industry.”


Europe has only a patchwork of small battery players. The biggest chunk of the value of a European-made electric car belongs to Asia—China, Korea, and Japan account for more than 80% of the world’s EV battery production, and companies such as CATL, LG Chem, and Samsung SDI control Europe’s biggest battery factories.


To change that, the European Commission set up the Battery Alliance initiative. In December it approved €3.2 billion in aid for projects approved or currently under way at 17 companies, including BASF, BMW, and Fortum. The measure is meant to encourage greater investment in factories by these and other European companies.


National governments are also committing large sums to battery efforts, especially in Germany. In early February its economy minister, Peter Altmaier, announced a €5 billion project for battery cells in Germany and France. Altmaier has been a leading proponent of developing a local battery sector. The goal, as he sees it, is to build “the best and most sustainable batteries in Germany and Europe.” There is no other option, he has said, if its carmakers are to succeed.


European players, including Belgian materials technology company Umicore N.V. and German chemical company BASF SE, make battery materials from catalysts to cathodes. But there is little mining of key ingredients like lithium, and no capacity to turn those resources into high quality vehicle batteries. A desire to bring lithium and other materials closer to the production line is partly driving the efforts. “Lithium hydroxide doesn’t travel well,” say Andreas Scherer of AMG Advanced Metallurgical Group NV. “It doesn’t like to sit in a bag in the belly of a ship for six weeks—that’s bad for quality.”


Stringent environmental rules and community opposition to more mines could slow the momentum. Land owners and environmental groups fear the resulting emissions and pollution. Finland’s Keliber Oy in November postponed its planned initial public offering and the construction of a lithium mine on appeals against its environmental permit.


Some countries are pushing ahead. Support from the European Commission to mine battery metals—and the potential riches—motivated Dietrich Wanke to trade a career in Australian mining for the green hills of the Lavant valley in Wolfsberg, Austria. Wanke is the Chief Executive Officer of European Lithium, a startup mining company that aims to become a supplier of raw material for batteries. It operates from an abandoned test tunnel in Austria, where government geologists looking for uranium in the 1980s found lithium instead.


Story continues


https://finance.yahoo.com/news/europe-floors-race-dominate-car-050012431.html

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A powerful argument for another interconnector

The State Government says the re-energising of the Heywood electricity interconnector between South Australia and Victoria highlights the vital need for the proposed interconnector between SA and NSW.


The Heywood Interconnector, which was knocked out during storms on February 1 when towers in Victoria fell, had half its capacity restored on Monday and is expected to be back to its full operational capacity of 650 MW by the end the of the month.


“Whilst we are not completely out of the woods yet, mild weather and careful management through February has helped us cope with the loss of our single largest source of electricity,” said Minister for Energy and Mining van Holst Pellekaan.


“The fact is that if we had another interconnector with New South Wales we wouldn’t have needed to rely on expensive interventions by the Market Operator to keep the lights on.


“An SA-NSW interconnector would have also provided greater security for Victoria, and meant South Australia could have done more to protect the Portland aluminium smelter from irreparable damage.


“AEMO directed emergency measures such as managing our four big batteries to ensure the survival of the Portland smelter and the 3000 jobs associated with it, and that was the right thing to do.


“We had to weigh the risks of blackouts in South Australia if something went wrong at the smelter whilst we were trying to save it, versus the near certainty of the smelter at Portland being irreparably damaged and 3,000 jobs lost if we did not agree to supply electricity from South Australia.


“Had the SA-NSW interconnector been in place there would have been no need to choose between saving jobs in Victoria and keeping the lights on in South Australia, as South Australia could have more easily supported the smelter via New South Wales.


“Better interconnection will significantly reduce the risk of blackouts whilst delivering cheaper and cleaner power across the NEM.”


The SA/NSW interconnector will run between Robertstown, in South Australia’s mid-north, and Wagga Wagga, in New South Wales, via Buronga and with an additional line between Buronga and Red Cliffs, in Victoria


Its 800 MW capacity will be able to deliver enough energy to power 240,000 homes.


Independent modelling indicates that typical residential electricity bills are estimated to reduce annually by about $66 in South Australia and $30 in NSW.


For small businesses, bills are estimated to reduce annually by $132 in South Australia and $71 in NSW. These savings are estimated to start flowing after the project’s completion.


https://www.miragenews.com/a-powerful-argument-for-another-interconnector/&ct=ga&cd=CAIyGjU3YmM5ZDYyY2E0NzBlYzQ6Y29tOmVuOkdC&usg=AFQjCNHpXsgbW1d5Z14tUIjRg-t48tuVz

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Agriculture

How Agri-Business Corporations Influence UN Institutions - IDN-InDepthNews

OPINION


How Agri-Business Corporations Influence UN Institutions


Viewpoint by Anuradha Mittal


The writer is the founder and executive director of the Oakland Institute.


SAN FRANCISCO (IDN) – As Dr. Agnes Kalibata arrived in Rome on February 10, 2020 to meet with Dr. QU Dongyu, Director General of the Food and Agriculture Organization (FAO), her appointment as the UN Secretary-General Guterres' Special Envoy to the 2021 UN Food Systems Summit was rejected by over 175 civil society organizations from 83 countries.


By 2021, when the UN summit will take place, an estimated one billion people will be suffering from chronic undernourishment while climate crisis is already the defining issue of the century.


While strong political will is urgently needed to tackle this human made disaster, the appointment of Dr. Kalibata – President of the Alliance for a Green Revolution in Africa (AGRA) – to lead, prepare, and design the Summit, hijacks yet another global forum to promote fossil-fuel based corporate industrial agriculture.


In order to measure the implications of this capture of a UN Food Summit by AGRA, it is essential to look at the history of the organization.


Founded by the Bill and Melinda Gates Foundation and the Rockefeller Foundation, AGRA has worked since its inception in 2006 to open up Africa—seen as an untapped market for corporate monopolies controlling commercial seeds, genetically modified crops, fossil fuel-heavy synthetic fertilizers and polluting pesticides.


Willfully ignoring the past failures of the Green Revolution and industrial agriculture, AGRA continues to promote the same – orienting farmers into global value chains for the export of cash crop commodities.


Its finance-intensive and high input agricultural model is dependent on constant subsidy, which is drawn from increasingly scarce public resources. Furthermore, AGRA's model of fossil fuel-based industrial agriculture is laying waste to the environment.


Synthetic fertilizers are responsible for a significant share of greenhouse gas emissions. Nitrogen from these fertilizers is poorly absorbed by plants, and subsequently leaches into water systems and escapes into the atmosphere in the form of nitrous oxide. Long distance transport adds carbon emissions.


As industrial monoculture plantations spread, family farmers, pastoralists, and Indigenous communities, who are the stewards of the land and guardians of agricultural biodiversity, are marginalized and forced off their land.


It is not a coincidence that Dr. Kalibata also serves on the board of the International Fertilizer Development Center (IFDC). AGRA is after all a mouth-piece of agro-industrial corporations and their shareholders.


The influence of agri-business corporations over United Nations institutions has been growing in recent years. Speaking at the informal briefing to Member States, organized in Rome for Dr. Kalibata, FAO Director General Dr. QU Dongyu emphasized the imperative of strengthening partnerships with the private sector, describing it as "the most powerful engine of innovation and investment for food systems transformation."


Dr. QU Dongyu seems to forget that the first investors and private actors in agriculture are the farmers themselves. FAO’s own data show that "Family farms occupy around 70-80 percent of farmland and produce more than 80 percent of the world's food in value terms."


In the face of climate crisis, Dr. QU Dongyu ignores that "family farmers preserve and restore biodiversity and ecosystems, and use production methods that can help reduce or avert the risks of climate change."


And that according to FAO itself, "family farmers ensure the succession of knowledge and tradition from generation to generation, and promote social equity and community well-being.”


In the face of growing hunger amidst plenty and abundant scientific evidence, priority of any food summit should be to organize the transition of agriculture to a model of food production that reduces carbon emissions, soil degradation, and conserve biodiversity.


This requires a rapid shift from corporate-dominated industrial agriculture to family farms working in harmony with nature and maintaining diverse ecosystems.


Appointment of a wrong candidate to lead the UN Food Systems Summit is a deliberate attempt to silence the farmers of the world who feed, nurture, and protect the planet.


AGRA’s takeover of the summit will fuel global hunger and further compound the climate crisis.


Read the call to revoke AGRA’s Agnes Kalibata As Special Envoy to 2021 UN Food Systems Summit. [IDN-InDepthNews – 16 February 2020]


Photo: Dr. Agnes Kalibata, Rwanda's Minister of Agriculture and Animal Resources from 2008 to 2014. Source: IFDC Website


IDN is flagship agency of the International Press Syndicate.


facebook.com/IDN.GoingDeeper - twitter.com/InDepthNews


https://www.indepthnews.net/index.php/opinion/3312-how-agri-business-corporations-influence-un-institutions&ct=ga&cd=CAIyGmNlZDA1YTEzMDg0MTJhMzc6Y29tOmVuOkdC&usg=AFQjCNGK0YMtEZQlR7pNPMiS7m5QcCcc3

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Locusts


Locust Swarms Ravaging East Africa Are the Size of Cities

A devastating pest outbreak is threatening millions of people with hunger.

By David Herbling and Samuel Gebre
Photographs and video by Patrick Meinhardt

https://www.bloomberg.com/features/2020-africa-locusts/

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Higher CPO price seen to bode well for KLK’s upstream segment

Kuala Lumpur Kepong Bhd


(Feb 18, RM23.14)


Maintain neutral with an unchanged target price of RM23.64: Kuala Lumpur Kepong Bhd’s (KLK) normalised earnings for the first quarter ended Dec 31, 2019 (1QFY20) were at RM178.8 million — up 14.8% year-on-year (y-o-y). Despite its 1QFY20 revenue contracting marginally by 0.2% y-o-y to RM4.08 billion, the earnings growth was mainly boosted by a better crude palm oil (CPO) price. This offset a reduced fresh fruit bunch (FFB) production.


All in, KLK’s 1QFY20 financial performance was within our but slightly below consensus’ expectations — 20.2% and 19.9% of FY20 earnings estimates respectively.


The segment’s profit improved 23.7% y-o-y to RM157.7 million, mainly attributable to a favourable CPO price — RM2,207 in 1QFY20 versus 1QFY19’s RM1,840 per tonne. However, the segment incurred a higher cost of CPO production in view of an 11.5% y-o-y decline in FFB production to 978,000 tonnes.


KLK’s manufacturing segment’s profit contracted 18.4% y-o-y to RM80 million, in tandem with a revenue decline to RM1.9 billion or 12.8% y-o-y, owing to a lower selling price. The property segment’s profit expanded 22% y-o-y to RM13.6 million, mainly supported by a higher revenue of RM52.2 million (31.1% y-o-y).


Our earnings estimates are unchanged for now. In line with our expectations, a strong CPO price recovery from October 2019 had a positive impact on KLK’s 1QFY20 financial performance. Thus, KLK would be the first, in our coverage, to record annual earnings based on the elevated CPO price, boding well for the upstream segment.


Meanwhile, we expect the oleochemical segment to remain resilient as a contraction in profit margin is to be partially offset by higher capacities coming on stream. A steady profit increase is expected for KLK’s property segment, although the impact on the group is minimal. — MIDF Research, Feb 18


https://www.theedgemarkets.com/article/higher-cpo-price-seen-bode-well-klks-upstream-segment&ct=ga&cd=CAIyGmJjODg2NzM5ODJjMmFkNGU6Y29tOmVuOkdC&usg=AFQjCNFvMSquVSEKQfD7afdVnFdNTzZVz

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Warning of agricultural 'digital arms race' in EU

Friends of the Earth Europe has called on the European Commission to regulate data generated in agriculture via new technologies to avoid a few global corporations consolidating their dominance in the farming and food chain.


"Europe is on the verge of allowing centralisation and concentration of [farming] data at an unprecedented scale, with the absence of any regulation," a new report published by the NGO warned on Wednesday (19 February).


Student or retired? Then this plan is for you.


Digital farming, sometimes called "precision agriculture", refers to a technology-enabled approach to monitor and optimise the processes along the agricultural value-chain.


However, the report reveals that these innovative practices threaten to turn farmers into "data harvesters" - dependent on agribusiness and tech corporations if left unregulated.


"Unless regulation is brought in, farmers face a dystopian future, abandoned to giant corporations who seek to gain unprecedented control over Europe's fields," said food campaigner at Friends of the Earth Europe, Mute Schimpf, who added that this is "an avoidable crisis", where the EU must protect its farmers.


In 2017, a European Parliament study already pointed out that "those who own the data can direct and control the data sets, are in the central position of power to create the added value and earn a major share of income generated in agriculture".


In the last decade, investment levels have significantly increased in the digital farming sector, with this market expected to reach over €10bn by 2025.


However, according to campaigning NGO, the key players in the digital farming market - Bayer/Monsanto, DuPont/Dow, Syngenta/ChemChina, BASF - have a long record of pushing environmentally-harmful industrial agriculture in the EU.


"We are watching an agricultural digital arms race where the winner will dominate and control our food, countryside, and the farmers that feed us," Schimpf warned.


Digital dependency?


The European Parliament has previously acknowledged that there is a "high risk" that European farming becomes dependent on non-European companies for digital farming, what may lead to "anti-competitive practices including price discrimination and speculations in commodity markets that may affect food security".


This presents a challenge for the commission, which wants to reduce such dependencies along the digital value chain, according to a draft of the European Data Strategy seen by EUobserver, which is to be published on Wednesday.


However, according to Friends of the Earth Europe, the commission's regulatory approach is unlikely to propose rules to govern the fast-developing digitalisation of farming - despite their potential harm for the objectives of the Green Deal.


Meanwhile, the EU Court of Auditors recently called on the commission to improve to use of new technologies for monitoring environmental requirements and develop further action plans under the Common Agriculture Policy (CAP).


https://euobserver.com/environment/147488&ct=ga&cd=CAIyGmNlZDA1YTEzMDg0MTJhMzc6Y29tOmVuOkdC&usg=AFQjCNGVFVJAkQLg-MzHNKIZX9uPHSrFN

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Sirius Minerals is “quality” investment, repeats Anglo American

Next week Sirius shareholders are scheduled to vote on the £400mln deal


Anglo American PLC (LON:AAL) has repeated Sirius Minerals PLC (LON:SXX) is a “quality” investment that will “fit well” into the FTSE 100 group’s strategy.


The platinum giant said Sirius’s project in North Yorkshire is attractive in terms of scale, resource life and operating cost profile.


Next week, Sirius shareholders are scheduled to vote on Anglo’s £405mln takeover deal, which the board has been pushing for.


On Wednesday, hedge fund manager Odey Asset Management hammered the offer, claiming it “does not represent fair value for shareholders” in Sirius, as Anglo American “would be willing to bid substantially more”.


Odey manager Henry Steel noted that the mining giant has not declared its 5.5p per share offer for Sirius as a “final” offer deliberately because the deal may either collapse or a third party could join in, allowing Anglo to place a counter bid.


Anglo American's performance


In the year to 31 December, Anglo American posted 8% higher revenue at U$29bn, for underlying earnings (EBITDA) up 9% to US$10bn.


Net debt stretched 40% to US$4.6bn, while total dividend went up 9% to US$1.09 per share.


Production inched up 1%, driven by higher coal and iron ore and offset by lower diamond production at De Beers as expected, due to works at the Venetia mine in South Africa.


The platinum price dipped 2% in the year but has been recovering in the second half thanks to "strong investor demand".


Platinum production is expected to be 2.0-2.2mln ounces in the new year.


Shares rose 1% to 2,118.5p on Thursday at the opening bell.


--Adds detail--


https://www.proactiveinvestors.co.uk/companies/news/913306/sirius-minerals-is-quality-investment-repeats-anglo-american-913306.html&ct=ga&cd=CAIyHDIxMDNmMzMzMjUzNWY3YTU6Y28udWs6ZW46R0I&usg=AFQjCNFQ_9LSiK36AH0-1tObAAvFRamhs

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ECC bans onion export, sets wheat procurement target at 8.25m tonnes

ISLAMABAD: Panicked by rising inflation affecting the general public, the government on Wednesday banned export of onions and set a target of wheat procurement for coming season on federal and provincial levels at 8.25 million tonnes at a minimum price of Rs1,365 per 40 kg.


The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, presided over by Finance Adviser, which stopped short of banning export of chillies and sounded a warning to the market by announcing that 500,000 tonnes of wheat could be imported in case of any shortage during the year.


The ECC also decided that in case of release of wheat stocks from the federal government maintained by Pakistan Agricul­tural Storage and Services Corporation (Passco) to the provinces, which would be responsible for bearing the burden of incidentals. In this regard, the Khyber Pakhtun­khwa administration is reported to have already agreed to pay incidental charges for 100,000 tonnes of wheat it had received from Passco in recent months.


The decisions about wheat procurement target and its possible import, ban on export of onions or that of chillies were taken without prior movement of formal summaries.


On the other hand, the ECC also gave post facto approval of charging fuel price adjustment (FPA) to farmers with retrospective effect from Jan 1. Sources said the Power Division in consultation with the finance ministry had already applied FPA on power tariff for farming community as determined by the regulator on the ground that this sector was already getting subsidy on electricity rates and hence FPA waiver could not be allowed.


However, it was decided by the ECC that FPA would be restricted to a maximum of Re1 per unit and the adjustment exceeding this limit would be rolled over to the next month.


For “1,263.2 MW RLNG based power generation Project near Trimmu Barrage by Punjab Thermal Power Ltd” the ECC allowed that gas sales agreement should be signed by Sui Northern with Trimmu on the basis of “take or pay” and “as and when available”.


This would mean the scheme would not be bound — like similar LNG-based power projects at Balloki and Haveli Bahadur Shah — to have guaranteed gas supplies and pay for fixed quantities even if failed to utilise committed gas quantities.


The ECC also approved a clarification to be issued by the Ministry of Commerce (MoC) for change in the nomenclature of export-oriented industries under which finance ministry will release within 14 days the subsidy to SNGPL on account of gas supply to five export sectors within two weeks on the receipt of claim by Petroleum Division.


Under a past decision, the supply of gas/RLNG to export-oriented sectors including textile, carpets, leather, sports and surgical goods is made at a fixed rate of $6.5 per unit. SNGPL is issuing at present invoices to these sectors at the Oil and Gas Regulatory Authority notified tariff where subsidy claim (differential of actual tariff and concessional tariff) of the preceding months is submitted on eighth of every month to Petroleum Division.


The Petroleum Division after its processing by the Finance Division will release the difference as subsidy to SNGPL. This involves almost a month from the date of subsidy invoice and actual disbursement to SNGPL while the export-oriented industry pays only $6.5 per mmBtu against actual invoices raised by SNGPL owing to orders of the Lahore High Court.


The petroleum ministry had proposed that the MoC should issue an SRO to change the nomenclature of five zero-rated industries to export-oriented sector, including textile (including jute, carpets, leather, sports and surgical goods). The existing subsidy mechanism will continue till June.


Now, the SNGPL will issue upfront adjusted invoices at a concessional tariff of $6.5 per mmBtu to export consumers and simultaneously raise verified subsidy claims for the differential amount of the preceding month within first eight days and the Finance Division would release the subsidy amount within a week. No interest or late payment surcharge will be applicable on the subsidy amount. This will also streamline the GST mechanism for gas billing to these sectors.


The ECC also approved amendment in Import Policy Order 2016 (SRO 237(1)/2019) under which the Halal logo from the country of origin would continue to be cleared by customs till April 30.


It also allowed import of five controlled chemicals — acetone, anthracitic acid, ethyl ether, hydrochloric acid and sulphuric acid — by commercial importers after the ministries of commerce and narcotics control gave an undertaking that the latter had already developed a foolproof post-clearance mechanism for the commercial importers of the controlled permitted quantity, prohibition to all unregistered entities.


Technical supplementary grants of Rs451.681 million for Naya Pakistan Housing and Development Authority, Rs110m in favour of planning ministry for Afghan Projects, Rs5.9m for capacity building of teachers training institutes and training of elementary teachers in former Fata, GB, AJK, and ICT were also okayed.


Published in Dawn, February 20th, 2020


https://www.dawn.com/news/1535580&ct=ga&cd=CAIyHDhlNDgwYmMzNTgyYzM1M2Q6Y28udWs6ZW46R0I&usg=AFQjCNF0SurYcP2mnYAjtvgjMQKTTQOA1

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Precious Metals

Feds seek Osgoode Environmental Justice & Sustainability Clinic’s help in Ring of Fire – YFile

In what is being described as “a stunning success,” Osgoode Hall Law School’s Environmental Justice and Sustainability Clinic has received word from the federal Minister of Environment and Climate Change that its request for a regional impact assessment for proposed mining and road infrastructure in Ontario’s Ring of Fire has been accepted.


Minister Jonathan Wilkinson granted the clinic’s request, with reasons, in a Feb. 10 letter addressed to clinic co-director, Professor Dayna Scott. He stated that the Impact Assessment Agency of Canada has been instructed to meet with the clinic in order to shape the terms of reference for the regional assessment.


The Ring of Fire is a large deposit of minerals, including nickel, copper, zinc, gold and most notably chromite, that has been discovered in the Far North of Ontario. It is in a remote part of the province, inhabited almost exclusively by Indigenous peoples.


The regional impact assessment will look at the mining and road proposals for the area and assess their cumulative impacts on Indigenous way of life, harvesting practices and jurisdiction, as well as climate change mitigation and fragmentation of the boreal forest.


“Building roads to the mine site could potentially threaten the integrity of one of the largest intact boreal forests remaining in the world, a globally significant wetland, and a massive carbon storehouse,” Scott said. “It also could threaten the ways of life of Indigenous peoples who have been the stewards of those lands since time immemorial.”


Scott, who is the York Research Chair in Environmental Law & Justice in the Green Economy, described the government decision to conduct the Ring of Fire regional impact assessment as “a major accomplishment” for the Environmental Justice and Sustainability Clinic.


The clinic works to advance environmental justice and sustainability in Canada by carrying out a variety of legal work on a pro bono basis for a number of clients (individuals, communities, NGOs, municipalities, First Nations, social enterprises, etc.), often in cooperation with external public interest-oriented lawyers and legal service organizations. Students in the clinical program perform legal work supervised by experts in the field.


“One of the clinic’s projects for the year was to assist one of the remote First Nations in the region with work on the ongoing project-level environmental assessment,” Scott said. “In the course of that work, it became obvious that the interests at stake would be better protected through a regional assessment. Since the process for requesting a regional assessment is a novel part of the new federal legislation (the Impact Assessment Act), we weren’t sure how the request would be handled by the Minister.”


Scott said two students in clinic co-director Professor Estair Van Wagner’s Natural Resource class – Christie McLeod and Isaac Twinn – and three Environmental Justice and Sustainability Clinic students – Madhavi Gupta, Edith Barabash and Patrick McCaugherty – worked on research related to the file. McLeod, a clinic alumna from 2017-2018 and a JD/MES student, and Twinn also participated in the actual drafting of the request.


“What is most exciting for me in this stunning success for the clinic is the prospects for the federal Impact Assessment Agency to meaningfully partner with the Indigenous Governing Authorities in the region, so that they can resume the work of deliberating on the relative merits of competing visions for the future of their homelands,” Scott said. “When that process broke down, and the process was reduced to those First Nations being merely ‘consulted on’ the proponents’ proposals, the prospects of a lasting resolution of the conflict had begun to fade.”


https://yfile.news.yorku.ca/2020/02/12/feds-seek-osgoode-environmental-justice-sustainability-clinics-help-in-ring-of-fire/#.Xkai44gwgLA.twitter

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Can coronavirus trigger a 'black swan' event? Gold price is watching the negatives - analysts

(Kitco News) With gold trading at the higher end of its narrow trading range, analysts say that a coronavirus-related shock event could trigger a rally into $1,600 an ounce and higher.


Without a shock event, gold is likely to remain between $1,550 and $1,590 an ounce as the professional sector keeps the precious metal bid alive amid plenty of uncertainty left in the market.


“For gold really to move, it would be some kind of exogenous shock, which might push it higher,” Rhona O’Connell, INTL FCStone head of market analysis for EMEA and Asia Regions, told Kitco News on Friday.


The biggest risk to watch with coronavirus is a possibility that it could trigger a “black swan” event in China or elsewhere in the world said Capital Economics head of Global Economics Service Jennifer McKeown and assistant economist Bethany Beckett.


“Such events are, by definition, difficult to predict, but we can think of a few possibilities. We have long warned about risks to the Chinese property sector, related particularly to high levels of debt. Sales have already ground to a halt and, if they fail to pick up soon, the resulting pressure on property firms could trigger a wave of defaults,” the economists said on Friday.


“A collapse in the Chinese property market would have direct ramifications for commodity exporters, including Australia and Brazil. But it might also spark a more general increase in risk aversion and associated financial market disturbance,” they added.


When it comes to gold, there is a lot one can learn by looking at the tight range the precious metal has been in for the past few weeks, forming a triangle formation, said O’Connell.


“You can draw lines on the chart of the declining highs and the rising lows, which points to a triangle formation. Once a commodity has broken decisively out of a triangle formation, there tends to be a reasonably large move, usually of the sort of magnitude of the base of the triangle,” she noted.


Gold’s resistance is still at $1,600 and prices are staying close to that level, which is encouraging, said Gainesville Coins precious metals expert Everett Millman.


“Anything that takes us above $1,585 is bullish and could get us to $1,600,” he told Kitco News. “Really, it is just building up safe-haven demand that hasn’t broken that dam yet, but it is still there.”


Weak physical demand caps gold’s gains


Aside from an external shock, O’Connell is neutral on prices with a tilt to the downside, citing weak physical demand, which will fail to support gold prices once the professional market decides to sell off.


“The mood at the moment, with no physical demand coming out of China, which is normally the world’s largest consumer, [is that] there is a bit of a vacuum lying below it, in terms of the physical market. It is the professionals that drive it in the short-term. But if it comes under any pressure… bargain hunting would have to come from the professional sector,” she described.


If gold does not move into the $1,590s and higher, investors might start to question why it is not going higher and might begin to liquidate, O’Connell added.


All about interest rates


At the end of the day, gold is watching how central banks deal with the adverse economic effects of the coronavirus and how much they choose to ease, which is always positive for gold.


Federal Reserve Chair Jerome Powell testified to Congress and Senate this week, hinting that if the U.S. economy does begin to slow due to external factors, he will not have much room to maneuver as rates are already pretty low, said O’Connell.


“Powell started flagging up that Congress might want to start thinking about potential fiscal activity … The point Powell is making is that rates are pretty low and if the economy does start to look like it was going into recession… there isn’t much room to maneuver and [he] might need fiscal policy to kick in. That in an election year is going to be something very interesting to watch,” O’Connell pointed out.


It is no longer a given that the Fed will just stay pat on rates this year, which will be key to watch during the March monetary policy meeting, Millman noted.


“Everybody was set on rates not going anywhere, but we do have a lot of reasons to believe that they are going to have to cut soon. Seeing what happens in March is going to be crucial for the gold market, at least in the medium term,” Millman said.


As of Friday afternoon, the CME FedWatch tool was estimating only a 10% chance of a rate cut in March. But, the chances for a rate cut go up to 41.5% in September.


A stock market correction may hit in the springtime, is the Fed prepared to react? What will happen to #gold? Peter Hug weighs inhttps://t.co/j75VCEhMrl@DanielaCambone #gold #equities #investing #KitcoNews — Kitco NEWS (@KitcoNewsNOW) February 11, 2020


3-day weekend


Many analysts are neutral on gold next week because of the slate of data released this week and the three-day weekend that follows with the President’s Day holiday on Monday.


Investors will still be busy digesting Powell’s testimonies to Congress and Senate, U.S. inflation and retail data, said Millman.


“The holiday on Monday is going to lower volumes for the week. We had a lot of economic data come out Friday and I think markets will need time to digest all of that,” he said.


Data to watch


The biggest event next week will be the FOMC minutes from January’s meeting, which are due to be released on Wednesday afternoon.


“We get the minutes FOMC minutes, which as always will be something interesting to watch. The theme that the bar for the Fed to hike is far higher than for it to cut will likely still be eyed,” said TD Securities commodities strategist Daniel Ghali.


Ghali also highlighted Chinese loan data as important to watch next week.


Other key data sets include Tuesday’s NY Empire State manufacturing index, Wednesday’s U.S. PPI and housing starts, Thursday’s Philadelphia Fed manufacturing index, and Friday’s U.S. manufacturing PMI with existing home sales.


https://www.kitco.com/news/2020-02-14/Can-coronavirus-trigger-a-black-swan-event-Gold-price-is-watching-the-negatives-analysts.html

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Oreninc Index down as dollars and average deal size increased

Last Week: 46.97


This week: 43.06


The Oreninc Index fell slightly in the week ending February 14th, 2020 to 43.06 from 46.97 a week ago as the dollars announced and average deal size increased.


The coronavirus outbreak continues to dominate the news with the death toll having increased past 1,380 and the number of infections from the virus in China almost at 64,000. China reclassified how cases are counted which resulted in a jump of almost 15,000 cases in China.


With much of China on lock-down, the International Energy Agency forecast a drop in global oil demand for the first time in a decade, as the economic impacts continue to be felt. China’s GDP growth this year is expected to come in well under the 6% forecast at the start of the year. Another challenge for oil producers emerged after BP promised to zero out all its carbon emissions by 2050.


In the US, the Federal Reserve Bank of New York cut its liquidity providing repurchase agreements by more than analysts had forecast. Meanwhile, Federal Reserve Chairman Jerome Powell told Congress the US economy is “in a very good place.” The main concern being the forecast US$1 trillion federal budget deficit this year.


On to the money: total fund raises jumped to $75.2 million, a two-week high, which included one brokered financing for $6 million, a two-week low, and one bought-deal financing for $6 million, also a two-week low. The average offer size jumped to $2.35 million, a one-week high, while the number of financings remained the same at 32.


Gold came fighting back to close up at US$1,584/oz from $1,570/oz a week ago. The yellow metal is up 4.4% so far this year. The US dollar index saw another strong week as it closed up at 99.12 from 98.68 last week. The VanEck managed GDXJ closed up at US$40.97 from $40.25 a week ago. The index is down 3.05% so far in 2020. The US Global Go Gold ETF also closed up at US$16.51 from $16.21 a week ago. It is down 5.98% so far in 2020. The HUI Arca Gold BUGS Index closed down a smidge at 225.36 from 226.55 last week. The SPDR GLD ETF inventory continued to rise as it closed up at 923.99 tonnes from 916.08 tonnes a week ago.


In other commodities, spot silver closed up a touch at US$17.74/oz from $17.70/oz a week ago. Copper seems to have bottomed out for now closing the week up at US$2.60/lb from $2.55/lb a week ago. The oil price also improved as WTI closed up at US$52.05 a barrel from $50.32 a barrel a week ago.


The Dow Jones Industrial Average continued to gain to close up at 29,398 from 29,102 a week ago. Canada’s S&P/TSX Composite Index also closed up at 17,848 from 17,655 the previous week. The S&P/TSX Venture Composite Index closed down again at 570.49 from 574.16 last week.


Summary


Number of financings remained at 32.


One brokered financing was announced this week for $6 million, a two-week low.


One bought-deal financing was announced this week for $8 million, a two-week low.


Total dollars increased to $75.2 million, a two-week high.


Average offer up to $2.35 million, a one-week high.


Financing Highlights


Rupert Resources (TSXV:RUP) opened and closed a $13.1 million non-brokered private placement.


Agnico subscribed for 15.4 million units @ C$0.85.


Each unit is comprised of one share and 0.75 of a warrant exercisable @ C$1.00 for three years.


Strategic investment by Agnico Eagle Mines, who now holds 9.9% of Rupert.


Proceeds will be used to explore the Pahtavaara project in Finland.


Major Financing Openings


Rupert Resources (TSXV:RUP) opened a $13.08 million offering on a best efforts basis. Each unit includes a warrant that expires in two years.


opened a $13.08 million offering on a best efforts basis. Each unit includes a warrant that expires in two years.


Troilus Gold (TSXV:TLG) opened a $10 million offering on a best efforts basis. The deal is expected to close on or about February 28th.


opened a $10 million offering on a best efforts basis. The deal is expected to close on or about February 28th.


Rubicon Minerals (TSX:RMX) opened a $8.01 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis. The deal is expected to close on or about February 27th.


opened a $8.01 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis. The deal is expected to close on or about February 27th.


Irving Resources (CSE:IRV) opened a $5.4 million offering on a best efforts basis.


Major Financing Closings


https://www.kitco.com/commentaries/2020-02-17/Oreninc-Index-down-as-dollars-and-average-deal-size-increased.html

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Palladium Sets Record After Record as Wider Deficit Fuels Surge

Palladium Sets Record After Record as Wider Deficit Fuels Surge

2020-02-19 07:34:16.129 GMT



By Ranjeetha Pakiam

(Bloomberg) -- Palladium surged above $2,800 an ounce,

extending its record-breaking rally on forecasts for a widening

deficit. Gold is trading near the highest level since 2013 on

concerns over the spread of the new coronavirus and how it’s

impacting global growth.

The metal used in catalytic converters is already up more

than 40% in 2020 on expectations stricter environmental

standards will spur higher loadings of the material in cars,

draining global supply that’s already struggling to meet demand.

The shortage is set to widen to 1.9 million ounces from 1.1

million ounces last year, according to Anglo American Platinum

Ltd.

“A deficit equivalent to about 20% of the palladium market

is expected to be sustained this year, helping explain the surge

in prices,” said Vivek Dhar, an analyst at Commonwealth Bank of

Australia. Demand is being driven by environmental regulations,

particularly in China, which has increased palladium use in

vehicles and should offset any recent weakness in car sales, he

said.

Spot palladium jumped as much as 8.4% to $2,849.61 an

ounce, an all-time high, with prices climbing about $100 in 30

minutes. The market pared gains to trade 4.3% higher at

$2,743.32 by 3 p.m. in Singapore.

Why Palladium Is Suddenly a More Precious Metal: QuickTake

The rally may also be driven by stimulus measures in China,

as well as expectations high prices are here to stay. “Sometimes

investors look for a reason to justify buying an asset even if

prices have already rallied massively,” said ABN Amro Bank NV

strategist Georgette Boele. “Normally gold and palladium don’t

rally like this. This time, they hope it is the new normal.”

Spot gold added 0.1% to $1,603.91 an ounce. Prices had

touched $1,611.42 in early January, the highest since 2013, as

geopolitical tensions flared. The unfolding health emergency has

seen holdings in global exchange-traded funds backed by bullion

expand to a record.

Gold investors are assessing the impact of the disease on

economic growth and appetite for risk amid speculation that the

Federal Reserve will feel increased pressure to reduce interest

rates. The U.S. central bank has said the effects of the virus

have presented a “new risk” to the outlook and traders will

study minutes from the Fed’s latest meeting, due later

Wednesday, for any hint of a dovish tone.

Among other main precious metals, silver rose 0.6% and

platinum advanced 1.2%.

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Corona virus: is more debt the solution?

The decline of the American empire continues relentlessly. The citizens look towards their government for guidance and all they see is maniacal debt worship. Monkey see…monkey do:


New statistics show that credit card debt of millennials now rivals total student loan debt.


The nation’s so-called “leaders” now appear to function mainly as debt clock operators.


They look like deck hands on a titanic ship of debt. There are gaping holes in the hull, but the focus is on “making growth great” by loading the overloaded ship with even more crates of debt.


The US government seems obsessed with providing debt-oriented welfare handouts to banks, the military, and stock market investors.


Anyone poor who gets sick is told they don’t need medical welfare, but they will be miraculously healed if they put all their savings into the stock market.


The growth rate of Corona cases outside of China is alarming. Corona is widening the horrifying path of destruction created by the debt virus.


"It is big. It's going to paralyze China. It's going to cascade throughout the global economy…We should pay more attention to this. And we should try and resist our inclination to buy the dip," -Mohamed El-Erian, chief economic advisor for Allianz, Feb 3, 2020.


Double-click to enlarge this US stock market chart.


While debt and Corona spiral out of control, America’s leaders waste time drafting legislation to encourage citizens to invest their savings into the stock market… after a ten-year bull run!


What do India’s citizens think about the situation? For the answer to this key question,. When the going gets tough, the tough get going, and go for the gold!


When Indians engage in fear trade (ETF) buying rather than love trade (jewellery) buying, it’s a major red-light signal for the world’s risk-on markets.


The world’s “Queen of Assets” is breaking out to the upside from a beautiful symmetrical triangle pattern.


My $1670 target zone could be hit quite quickly as governments race to print and borrow money to support stock markets and stop already-pathetic GDP growth numbers from turning negative.


I’ve urged investors to drop the fantasy that the US government will make them great with more spending and more debt, carry lighter positions in the stock market, and add some bullion for comfort.


It’s plain common sense, given the late stage of the business cycle, global obsession with debt, and the rise of Corona.


The bottom line: The citizens of India understand, but does anyone else?


Double-click to enlarge this spectacular silver chart. I’ve highlighted an impressive inverse H&S bull continuation pattern, and both investors and stop loss enthusiasts are getting some great entry opportunities.


Note the bullish volume pattern at the bottom of the chart. As Corona worsens globally, governments and central banks will resort to what they do best: printing and borrowing more money.


Trump’s tariff taxes pounded the global economy but the Fed bailed him out with a blast of rate cuts and “QE that is not QE”. Now, Corona could be the final nail in the GDP growth coffin.


The IMF chief predicts that China will have a V-shaped recovery from the virus, and growth will surge towards 10%. That’s possible, and it would create enormous love trade demand for gold and silver.


Unfortunately, it’s too early to predict the end of Corona. I also think that while the QE and interest rate policy “welfare programs for the rich” have created a stock market that no longer represents the mainstream economy…governments and central banks can still print and borrow enough money to promote a higher priced stock market.


Gold bullion will remain the star of the global assets show until stock market analysts become convinced that no matter how horrible earnings and GDP growth becomes, they will get bailed out with more QE and lower rates.


Until that happens, my focus in my https://gracelandjuniors.com newsletter is helping investors pick individual stocks that are leaders of the pack. Once the bailout view becomes universal, mining stock ETFs like GDX, GOEX, GDXJ, and SIL will stage upside breakouts, and join individual leaders and gold bullion in major bull runs. By Stewart Thomson Contributing to kitco.com Follow @KitcoNewsNOW www.gracelandupdates.com


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.


https://www.kitco.com/commentaries/2020-02-18/Corona-virus-is-more-debt-the-solution.html

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Palladium prices up 8% on the day, looking at new record highs on deficit concerns

(Kitco News) The precious metals sector is rallying across the board, but palladium’s surge is blowing gold, silver, and platinum out of the water.


March palladium futures were up nearly 8.1% on the day, last trading at $2,504.70 an ounce as the supply-demand outlook continued to boost prices to new highs. Spot prices hit record highs of 2,590 an ounce earlier in the session.


Palladium’s record levels continue to surprise many analysts, surpassing most price projections last year and ignoring 2020’s calls for a price correction.


“At the start of the year, we were looking for upside risk for the palladium market, but prices have rallied further than we thought they would. Given how tight the market is, it is likely that we are going to continue to see further upside risk,” Standard Chartered precious metals analyst Suki Cooper told Kitco News on Tuesday.


Prices are likely to continue to climb with any price dips looking to be short-lived, Cooper added.


The critical factor to watch going forward, especially with the coronavirus economic fallout on everyone’s mind, is whether there is a slowdown in auto production-led palladium buying, the analyst noted. The precious metal is widely used in catalytic converters by the car industry.


“Palladium rally has been led by industrial demand rather than investment demand,” Cooper pointed out.


The supply-demand fundamentals still point to a supply deficit this year. “Even though there are concerns that factories have been closed and there is a drop in auto production, it still doesn’t look like the potential decline of palladium demand will be enough to swing the market deficit. The market is still likely to be undersupplied for this year,” she said.


Johnson Matthey's report released last week also underscored that the palladium deficit is likely to widen in 2020.


“The palladium market deficit widened to over 1 million ounces in 2019, as combined primary and secondary supplies grew only modestly, while auto-catalyst demand surged higher on the back of new [emissions] legislation in China and more stringent testing regimes in Europe,” Johnson Matthey said. “The palladium deficit is likely to deepen in 2020, as an increasing number of Chinese and European vehicles meet China 6 and Euro 6d legislation, respectively.”


This will lead to even higher prices in 2020, following a 72% rise in the last 12 months.


A lot depends on how the auto industry does this year, noted ING head of commodity strategy Warren Patterson and the bank’s senior commodity strategist Wenyu Yao.


“[Widening deficit] will depend on how the auto industry performs this year, and at the moment, it is not looking that constructive. Last week China Passenger Car Association (CPCA) estimated that car sales could drop by more than 30% MoM in February, after posting its biggest decline of 22% MoM in January,” the analysts wrote on Tuesday.


Some analysts are still projecting a move lower in palladium. Commerzbank head of commodity research Eugen Weinberg said he expects a correction soon.


“[Higher prices] can be only partly explained by the ongoing production problems in South Africa due to power supply disruptions and this year’s renewed high supply deficit,” Weinberg said. “As we see it, the fact that market participants are focusing on the problems on the supply side means that they are ignoring the risks to demand, which are at least equally as important.”


It all comes down to car output for 2020, he added. “Increased risk aversion on the financial markets, a strong U.S. dollar and significantly lower new-car registration figures in China and Europa point to a price correction,” Weinberg said.


On the supply side, things are not looking to improve significantly until 2023, Cooper said.


“We did an analysis looking at supply outlook was in South Africa. In the near term, it doesn’t look like there is much room for growth opportunities in terms of palladium output. Many of the projects are more likely to yield increase in output around 2023,” she said.


In Russia, which is the world’s largest producer, the situation is similar. “We are looking at a timeframe of at least three years,” Cooper noted. “It is more likely that we are going to see output stabilizing at best but more likely declining this year.”


https://www.kitco.com/news/2020-02-18/Palladium-prices-up-8-on-the-day-looking-at-new-record-highs-on-deficit-concerns.html

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Copper, gold & the coronavirus

China 2-rho Divergence Indicator© gauges coronavirus impact on copper & gold prices


February 18, 2020


I introduced a market gauge in my January 13th Kitco commentary to track progress of U.S./China trade as implementation of Phase I begins and future negotiations proceed. Then the Wuhan coronavirus appeared in Hubei Province. The commodity market stress that followed caused my China 2-rho Divergence Indicator© to approach levels near those that occurred during the height of U.S./China trade tensions in August and early-September. Recently, this gauge peaked signaling the worst may be over for key commodities and the Chinese yuan – at least for the short-term.


Is it a pandemic? Nobody knows for sure; coronavirus infections are being recounted to the upside in China and the death toll continues to rise. This is an economic and viral shock to the world that is hard to quantify. That uncertainty alone underpins a range for safe-haven gold: a solid floor around $1,500 per ounce and the mercurial $1,600-level above - at least for now. If China's growth falls to just several percent and supply chains are disrupted for months, the upper level for gold could be much higher, perhaps $1,800.


Copper and oil prices could head much lower with collapsing demand from the world’s second largest economy. For the short-term, it appears February 11th was a reversal to the upside for these two embattled commodities. My China indicator should prove a useful guide for what may lie ahead as it did for U.S./China trade negotiations this summer and fall.


2-rho Divergence© Technique


2-rho Divergence© is a technique for developing powerful market indicators. The inputs are market variables that share a historical correlative relationship; the output monitors the divergence of those relationships as they deteriorate in distressed markets. The magnitude d of a 2-rho Divergence Indicator© is a number between zero and twice the square root of two (0

China 2-rho Divergence Indicator©


The China 2-rho Divergence Indicator© has three China-sensitive inputs: copper price, gold price and the Chinese yuan. China has led copper demand for years. Even as the Chinese move toward a more consumer-based economy less dependent on industrial metals, copper remains an important global benchmark. China produces and consumes the most gold in the world and its citizens consider the yellow metal an important store-of-wealth. Finally, although tightly controlled by the People’s Bank of China, the yuan has a market component and is a bellwether of their economy.


Figure 1 shows copper, gold and yuan over a five-year period through Friday’s closing prices.


In this chart the Chinese yuan is expressed as CNYUSD, the inverse of the more common USDCNY designation


Figure 1a


Figure 1b


Figure 1. China-sensitive input variables: copper, gold & Chinese yuan


Figure 1a plots Comex copper and the yuan demonstrating a rough positive correlation for the two (in this example, the yuan is expressed as CNYUSD so an increasing value denotes currency strength; a decrease, weakness). On January 10th, the U.S./China Phase I negotiation appeared a done deal and it was signed January 15th. Although there was initial exuberance in global equity markets on the trade resolution, copper prices and yuan strength soon declined on news of the severity and spread of the Wuhan coronavirus (1a, blue arrows).


Figure 1b is a graph of Comex copper and Comex gold. Close inspection shows periods of both positive and negative correlation, the latter case associated with times of market stress (copper down, gold up) or exuberance (copper up, gold down). After January 10th gold prices rise followed by the fall in copper prices (1b, blue arrows).


Statistics support the long-term correlation observations. Persistent positive correlations of copper and the yuan over 5 years occur 58% of the time; and negative, only 8%. A correlation is persistent when its short- and longer-term rolling correlations have the same sign – for this analysis, 1-month and 3-month time periods. By contrast, persistent correlations of copper and gold register 41%; and negative, 21%.


Accordingly, the China Indicator is a scalar, d, that measures how far apart these two sets of correlations come together or move apart. The greater the divergence, the greater the magnitude of d. Since correlations are bounded by +/- 1.0 the theoretically highest divergence in the correlation plane is twice the square root of two or 2.82.


Figure 2 is a 5-year plot of the China Indicator with three noted cases of extreme divergence (d>1.95) and a fourth peak associated with the coronavirus outbreak that falls just short of extreme. The average divergence over this period is 0.78.


Figure 2. China 2-rho Divergence Indicator© (5-years)


As I detailed in my January commentary, the first case spans late-2014 and early-2015 when it appeared China’s economy was slowing much faster than expected. This created a “risk-off” sentiment that caused copper prices to tumble, gold prices to rise and the yuan to weaken. Divergence peaked at 2.2465 on January 30, 2015 (point 1).


The second and third cases occurred this summer and early-fall as U.S/China trade tensions escalated. Similar to the 2015 case, a “risk-off” caution drove gold and copper prices in different directions as the Chinese currency weakened. The first peak (point 2) has a maximum of 2.0144 on August 23, 2019; the second (point 3), a maximum of 2.2080 on September 24, 2019.


As expectations grew for a Phase I deal, the indicator fell rapidly to below average divergence with a bottom on January 10, 2020 (d=0.3012).


Although the first cases of the coronavirus in Hubei province occurred in late-December 2019, its impact on global markets was not felt until later in January when the virus was detected in other countries. With some irony the first death attributed to the virus occurred January 11, pouring the first splash of cold water on Phase I exuberance – at least in the commodity space. Divergence rapidly developed to a peak divergence of 1.8399 on February 11th. Friday’s close was off the peak at 1.7223 and trending down (red arrow). A look at how the relevant correlations developed over this period is instructive to understand the dynamics of the coronavirus on markets and what may come next.


Coronavirus 2-ρ Divergence©


Figure 3 is a Correlation Map (rho-Map©) of copper correlations with gold and copper correlations with the yuan. The time period is January 10 to February 14, 2019. The X-axis is a short-term Pearson rolling correlation and the Y-axis is a correlation over a longer-term. This analysis uses correlation time periods of 1-month (X) and 3-months (Y). Each data point represents a given market-day when the two correlations are computed from closing prices.


Figure 3. Correlation Map of copper-gold & copper-yuan correlations


The data points in Figure 3 are connected in a time sequence to create a Correlation Trajectory for each correlation set. Divergence of the two trajectories is defined as the distance between trajectory endpoints for a given market-day.


Unlike the copper-yuan correlation, copper-gold accelerates away from its positive historical bias. This is typical for the “risk-off” markets experienced in August-September 2019 (i.e. copper down, gold up). Increasing divergence is a result of such departures as evidenced by the maximum separation of trajectories on February 11th (point 4, dashed magenta arrows of length 1.8399).


Importantly, a second peak could occur if the copper-yuan correlations remain in the upper-right quadrant and the copper-gold correlations move deeper into the bottom-left quadrant of negative persistence. Alternately, if 1-month copper-gold correlations continue to decline in negativity (red arrow), the worst may indeed be over for the near-term (i.e. divergence continues to decrease).


Coronavirus impact on copper, gold prices going forward


The 2-rho Technique© constructs indicators based on two sets of historical correlations. Each set contains correlations of two market variables over two time periods. Departures from the norm offer insight into prevailing market conditions. Extreme departures or divergence often provide leading indication of key market reversals from their tops and bottoms and thereby herald a trend to normalcy.


The recent divergence peak of Figure 2 fell short of extreme levels but did confirm reversals of copper and gold prices on February 11. If a second peak appears due to delayed impacts of the coronavirus on supply chains and the global economy it will likely be at severe levels. Past events of extreme divergence demonstrate the power of the indictor to anticipate bottoms and tops. As explained in my January commentary, over the last five years extreme divergence of the China 2-rho Divergence Indicator© flagged three periods of market stress followed by yuan peaks and copper-to-gold ratio lows. The latter, by the Gundlach copper-gold relationship, can often lead U.S. 10-year Treasury yield bottoms (see Note 1).


I intend to write future commentaries to track both the China and Gundlach copper-gold indicator as we continue down the evolving path of the coronavirus and the longer journey of follow-on U.S./China trade negotiations. Hang on.


Cheers!


https://www.kitco.com/commentaries/2020-02-18/Copper-gold-the-coronavirus.html

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Relief Canyon mine in Nevada, US, pours first gold

Canadian precious metals mining firm Americas Gold and Silver has achieved its first gold pour from the Relief Canyon Mine in Nevada, US.


The company noted that the first gold pour was achieved in nine months from the start of production in May last year.


The Relief Canyon mine is located at the southern edge of the Pershing Gold and Silver trend, along the Humbolt Range, approximately 95 miles north-east of Reno.


The project comprises an open-pit mine and heap leach processing facility. The company’s landholdings on the prospect cover approximately 25,000 acres that include the Relief Canyon mine asset and its surrounding areas.


The company said that it has now completed initial construction of the gold mine within a budget of $28m and $30m.


Americas Gold expects to significantly increase precious metals production with the gold contribution from the Relief Canyon Mine, which is expected to produce around 60,000oz and 70 000oz this year.


Commercial production from the mine is expected before the end of the second quarter this year.


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Meanwhile, all-in sustaining costs for this year are expected to range between $900 and $1,100 per gold-equivalent ounce (GEO).


Americas Gold and Silver president and CEO Darren Blasutti said: “Relief Canyon will provide the company with significant exposure to gold and increase the Company’s precious metals production.


“Relief Canyon’s employees, contractors and the corporate team have worked diligently over the past nine months to bring this operation online within a short timeframe.”


The company also said silver production from the Cosala Operations in Sinaloa, Mexico, increased by 28% to 572,036oz last year from 448,150oz in 2018.


https://www.mining-technology.com/news/relief-canyon-mine-pours-first-gold/

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Geophysics Survey Finds New Targets at Commander's Pedro Gold Project

Commander Resources Ltd. reports results from a 70 line kilometre Induced Polarization survey completed at the Company’s Pedro Gold project.


Commander Resources Ltd. (TSXV:CMD) (“Commander”) is pleased to report results from a 70 line kilometre Induced Polarization survey completed at the Company’s Pedro Gold project in late 2019. The Pedro property is located 100 Km from Torreon, Mexico in the northeastern part of the State of Durango and approximately 30 km west of the town of Mapimi. The wholly owned 1,750 ha property was acquired directly by Commander in 2016 from Bearing Lithium.


Highlights:


Epithermal gold target measuring 4 km by 1 km defined by gold in soil and rocks


70-kilometre IP survey completed in 2019


Deep vertical feeder veins identified


Numerous additional zones identified beneath post-mineral cover


The Pedro epithermal gold system was discovered by Bearing Resources Ltd. in 2012 during a regional program exploring for silver and is defined at surface by a combined gold (>20 ppb) and arsenic (> 100 ppm) soil anomaly with dimensions of 4000 metres by 1000 metres. Outcrop exposure comprises prominent hematite-stained silica-rich ridges of angular chalcedony fragments and silicified sedimentary rocks within an angular course breccia. The host rock to these breccias is mostly Ahuichila Formation conglomerate. The mineralization extends beneath post-mineral volcanic rocks, colluvium (range front fanglomerate) and alluvium to the north and east. Rock sampling of the exposed zones returned values in rock from background levels to a maximum of 2.3 gpt (197 samples with 53 greater than 0.25 gpt and 9 greater than 1 gpt). Samples were collected by previous operators, primarily Bearing Lithium and Newmont de Mexico in 2012 and 2013.


Following initial soil and rock sampling the property was briefly optioned by Newmont de Mexico, S.A de C.V who drilled 1,744m in 11 drill holes. The Newmont program was specifically designed to test for Carlin-style deposits within the Caracol Formation which underlies the Ahuichila Formation conglomerate and did not target the outcropping epithermal breccias. Their drilling did however encounter gold within epithermal breccias including in hole LP-013-R which returned a core length of 10.5 metres grading 0.51 gram per tonne gold from oxidized silicified conglomerate of the Ahuichila formation (see news release from Bearing Lithium dated July 3, 2014 and the associated QA/QC statement).


The recently completed induced polarization survey outlined the known zones and distinguished discreet deep features below the conglomerate which are interpreted to be feeders to the surface mineralisation. The IP targets show elevated resistivity with associated low to moderate chargeability. Results indicate that some surface exposed zones are stratabound along the basal contact of the Ahuichila formation while adjacent zones have a deep vertical expression reflecting possible feeder structures. In addition, the survey outlined targets within beneath post mineral cover, suggesting a much larger footprint to the system. See figure 1 and maps located on the company website at:


https://www.commanderresources.com/assets/docs/Pedro_web_2020203.pdf


Discussion


The Pedro epithermal gold system covers a large area with discreet linear silica breccia zones penetrating the basal contact of the Ahuichila Formation conglomerate and underlying calcareous siltstone of the Caracol Formation as well as possible lateral mineralization along the contact. Rock textures and the local presence of sinter suggest the upper levels of an epithermal system with potential for bulk mineable heap leach targets. The IP survey was important in identifying vertical zones beneath some surface exposures that are interpreted to be deep feeders in the system and where higher grades should be targeted. Commander plans to complete additional mapping and prospecting in the newly identified zones. As a Prospect Generator Commander will seek partners for the project.


2019 IP Survey and QA/QC


Geofisica TMC from Durango Mexico was contracted to complete the seventy line-kilometre survey which was undertaken in late 2019. The survey had a line spacing of 100m and a pole-dipole array with nominal a spacing of 50 meters and ten dipoles for a model depth penetration of 250 m. Results were exported to RES2DINV for inversions in software developed by M.H. Loke. Data was interpreted by Joel Simard, P Geo./Geoph.


Historical samples mentioned in this release were prepared and analyzed by ALS Chemex at its labs in Chihuahua, Mexico, and Vancouver, Canada. Soils were analyzed as part of a multi-element inductively coupled argon plasma (ICP) package using aqua regia digestion with over-limit results being reanalyzed with assay procedures using ICP-AES. Gold analyses for rocks were performed on a 30-gram sub-sample by fire assay with an ICP-AES finish.


Robert Cameron, P. Geo. is a qualified person within the context of National Instrument 43-101 and has read and takes responsibility for the technical aspects of this release. In addition, Mr. Cameron was also the QP for the previous operator.


About Commander Resources:


Commander Resources is a Canadian focused exploration company following the Prospect Generator business model that has leveraged its success in exploration through partnerships and sale of properties, while retaining equity and royalty interests. Commander has a portfolio of base and precious metal projects across Canada and significant equity positions in Maritime Resources Corp. (MAE-TSX.V) and Aston Bay Holdings (BAY-TSX.V). Commander also retains royalties from properties that have been partnered, optioned or sold. The Company has two active partnerships with Fjordland and HPX on its South Voisey’s Bay Nickel project in Labrador and with Freeport McMoRan on its Burn copper/gold project in British Columbia.


On behalf of the Board of Directors


Robert Cameron, P. Geo.


President and CEO


For further information, please call:


Robert Cameron, President and CEO


Toll Free: 1-800-667-7866


info@commanderresources.com


@CommanderCMD


www.commanderresources.com


Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


This news release may include forward-looking statements that are subject to risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward looking. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements except as required under the applicable laws.


Click here to see the educational profile for Commander Resources Ltd. (TSXV:CMD) and to request an investor presentation.


SOURCE


http://bit.ly/2udP771

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Gold prices pop to 7-yr high on safe-haven, chart-based buying

(Kitco News) Gold prices are moderately up and have hit a seven-year high in midday U.S. futures trading Thursday. Featured this week in the precious metals markets is a marked uptick in safe-haven demand as the negative economic consequences from the coronavirus outbreak appear to be increasing. A sell-off in the U.S. stock market today worked to push the precious metals to daily highs in late-morning trading. April gold futures hit a new contract high and were last up $8.30 an ounce at $1,619.80. March Comex silver prices were last up $0.014 at $18.325 an ounce.


This week’s impressive price performances in the gold and silver markets have prompted fresh technical and chart-based buyers to step in on the long sides of those markets.


The coronavirus outbreak remains on or close to the front burner of the global marketplace, and today the concerns seem a bit greater. China’s central bank cut its one-year loan prime rate to 4.05% from 4.15% and the five-year loan rate to 4.75% from 4.80%. The move was not surprising and is an effort to keep the world’s second-largest economy afloat as the negative impact of the covid-19 outbreak is growing. China’s manufacturers are running out of needed materials and some have shut their doors. This situation is impacting global businesses and underscores the significance of the world supply chain that has many links in China.


There is now talk that with supply shortages of some commodities in China, those commodity prices could actually rise on the world market due to hoarding and China’s manufacturers scrambling to procure those commodities. Such talk is ironic given the coronavirus has worked to crimp global economic growth, including pushing several raw commodity prices lower on expectations for reduced demand for them.


The Federal Reserve said in its FOMC meeting minutes released Wednesday afternoon that it is closely monitoring the economic impact of the coronavirus outbreak.


While it’s been reported the rate of spread of the coronavirus (now called covid-19) has slowed significantly recently, other health experts say there is little sign of the virus easing due to its high contagion level. Reports said the Hubei province in China had around 350 new confirmed cases Wednesday, down from nearly 1,700 on Tuesday. Two covid-19 infected passengers of the cruise ship quarantined in Japan have died, with two Japanese government officials reported to have been infected.


The key outside markets today see crude oil prices higher and trading around $54.00 a barrel. Meantime, the U.S. dollar index is up and hit another multi-month high today. The greenback bulls have benefited greatly from safe-haven demand amid the heightened global uncertainty.


Technically, the gold bulls have the solid overall near-term technical advantage and have gained power this week by restarting a three-month-old price uptrend on the daily chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $1,650.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,581.80. First resistance is seen at today’s contract high of $1,626.50 and then at $1,635.00. First support is seen at today’s low of $1,606.60 and then at $1,600.00. Wyckoff's Market Rating: 8.5


March silver futures bulls have the overall near-term technical advantage with this week’s strong gains. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the January high of $18.895 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $17.67. First resistance is seen at this week’s high of $18.45 and then at $18.50. Next support is seen at Wednesday’s low of $18.135 and then at $18.00. Wyckoff's Market Rating: 6.0.


https://www.kitco.com/news/2020-02-20/Gold-prices-pop-to-7-yr-high-on-safe-haven-chart-based-buying.html

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Commerzbank: Investment demand continues to underpin gold

Inflows of gold into exchange-traded funds have now risen for 21 business days in a row as investment demand continues to underpin the market, said Commerzbank analyst Daniel Briesemann. Spot gold Thursday climbed to a seven-year high of $1,618 an ounce. Briesemann noted the metal’s gains are somewhat surprising considering recent strength in equities and the U.S. dollar. “The thinking behind this appears to be that China, and possibly other countries, will implement stimulus measures such as rate cuts to boost their economies after the Covid-19 virus,” Briesemann said. As of 9:44 a.m. EST, spot gold was up $3.80 to $1,615.10 an ounce.


By Allen Sykora of Kitco News; asykora@kitco.com


SP Angel: coronavirus to ding car sales, may impact palladium


Commodities brokerage SP Angel say some analysts wonder how long palladium’s dramatic rise will continue due to the impact of the coronavirus on China’s economy. SP Angel reiterated some of the highlights of the recently released Johnson Matthey report, which put a palladium supply/demand deficit at more than 1 million ounces in 2019 and suggested the gap will be even wider than this year. Demand has been boosted by more stringent emissions regulations, meaning more palladium required for each auto catalyst. However, SP Angel pointed out, the chief executive of Faurecua, a French-based company that develops automotive technology, believes Chinese auto sales could fall by 1.2 million vehicles this year. Also, the chairman of the China Association of Automobile Manufacturers has said auto sales will drop by more than 10% in the first half of 2020. “The economic knock-on effects of the virus depend on the extent to which the virus spreads, and as it has not yet been contained, it is hard to predict how the auto market will be affected,” SP Angel said. “However as the death toll continues to rise and more people don’t go to work, buyer demand will continue to fall and supply chains in the auto industry will continue to be disrupted.” Palladium topped $2,800 an ounce for the first time ever Wednesday. As of 8:44 a.m. EST Thursday, the metal was down $18to $2,597 an ounce.


By Allen Sykora of Kitco News; asykora@kitco.com


CIBC looks for U.S. dollar to eventually weaken


Canadian bank CIBC looks for the U.S. dollar to give up some of its recent strength. The U.S. currency has attracted buying as a safe haven amid worries about the coronavirus in China. “However, so long as coronavirus fears dissolve over the next few months, the greenback should give back that strength,” CIBC said. Europe’s economic picture remains “murky” and the factory sector remains weak. Thus, bank said an eventual recovery in both the euro and sterling (as Brexit unfolds) will therefore be later and shallower than CIBC’s prior forecasts. Still, the strengthening of other major currencies “should then see the dollar weaken in the medium term. In the long-run, the U.S.’s inferior current account balance relative to other countries, such as Europe’s and Japan’s, should favor those currencies and accordingly see the dollar weaken.”


By Allen Sykora of Kitco News; asykora@kitco.com


Commerzbank: Asian gold demand muted


Gold demand in Asia remains muted, said Commerzbank analyst Daniel Briesemann. He cited data from the Swiss Federal Customs Administration showing that the country exported “only” 40.6 metric tons of gold to China and Hong Kong in January, and as little as 9 tons to India. “And demand in the two leading gold-consumer countries is likely to remain subdued given that gold prices there are very high (at nearly a record high in India and at their highest level in 7½ years in China),” Briesemann said. “The situation in China is currently compounded by the Covid-19 virus, as a result of which many jewelers are still closed.”


https://www.kitco.com/news/2020-02-20/Gold-Silver-Precious-Metals-Daily-News-Briefs.html

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Silver: Pandemic Panacea

(Kitco News) - Pan American Silver Corp. (NASDAQ, TSX: PAAS) late Wednesday reported a profit for the fourth quarter and announced an increase in its dividend.


Adjusted earnings during the fourth quarter were put at $68.9 million, or 33 cents per share, compared to a net loss of $2 million, or a penny, in the same quarter of 2018.


Net earnings in the October-January period were $51.7 million, or 25 cents a share, a turnaround from a loss of $63.6 million, or 42 cents, a year earlier. Fourth-quarter net earnings included a $40.1 million impairment charge on the Manantial Espejo mine in Argentina due to the increase in export taxes and a “challenging” business environment in the country, Pan American said. This was partially offset by $33.7 million in investment income, mostly due to a 17% equity interest in New Pacific Metals Corp.


BMO Capital Markets reported that the adjusted earnings of 33 cents a share topped the market consensus of 25 cents, although the bank also said it doubts the consensus estimate included the New Pacific investment gains.


For full-year 2019, Pan American listed adjusted earnings of $158 million (78 cents) and net earnings of $111.2 million (55 cents).


"Strong, low-cost production generated operational cash flow of $282 million in 2019, which allowed Pan American to retire $60 million of debt, dividend approximately $29 million to shareholders, invest in new projects such as our La Colorada skarn discovery, and increase our cash position," said Michael Steinmann, president and chief executive officer. "In 2020, we are expecting silver and gold production growth of approximately 7% and 16%, respectively.”


As a result, he continued, the board of directors increased the quarterly dividend by 43%. More specifically, the cash dividend will rise from $0.035 to $0.05 per share, payable around March 12 to shareholders of record as of the close on March 2.


Net cash generated from operating activities in the fourth quarter totaled $129.5 million, the highest in the company's history, Pan American said.


Consolidated fourth-quarter silver and gold production were 6.6 million and 173,900 ounces, respectively, both higher than in the same period a year earlier. Pan American also produces zinc, lead and copper.


Annual silver and gold production was 25.9 million ounces and 559,200 ounces, as previously reported. Both were within guidance.


https://www.kitco.com/news/2020-02-20/Pan-American-Silver-reports-4Q-profit-hikes-dividend.html

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No Let Up in Demand to Invest in Gold as ETFs Expand, China-US Trade Expulsions

PRICES to invest in physical gold touched last month's 7-year spike at $1611 per ounce in London trade Wednesday, backing off after setting yet another record in Euro terms as global stock markets, bond yields and commodities rallied from this week's earlier drops so far.


Priced in the Euro, gold bullion today set its 5th new all-time high in 5 sessions, reaching €1491 per ounce.


Bullion in China meantime rose 1.2% to new 7-year highs on the Shanghai Gold Exchange, but the US Dollar-price premium for metal landed in the No.1 gold consumer nation fell towards zero versus London quotes, as the Yuan fell to worse than 7 per USD on the currency market.


Gold futures and options trading jumped on the Comex derivatives market Tuesday, leaping 73% from the previous session to the highest so far this month.


Gold-backed ETF investment vehicles , led by the SPDR Gold Trust (NYSEArca: GLD), expanded for the 20th trading day in succession according to data compiled by Bloomberg.


"There is a lot of stock market money looking for a safe haven and finding it in gold," Bloomberg quotes precious metals trader David Govett at London brokers Marex Spectron.


"There must be a top somewhere, but I don't think we have found it yet."


"The stronger Dollar is not really curbing inflows to gold," adds Stephen Innes at Australian spread-betting brokers Axicorp. "From an inflation perspective, a stronger US Dollar is working against the Federal Reserve's inflation target, and is pointing towards lower interest rates."


Betting on US interest rates now sees just a 1-in-6 chance that the Fed will leave its cost of borrowing unchanged by year-end, down from 2-in-5 this time a month ago.


Showing a typically negative correlation of -0.68 with the Dollar's trade-weighted index over the last decade, prices to invest in gold now shows a strongly positive r-coefficient of +0.51 on a 52-week basis.


After Japan reported end-GDP shrinking over 6% annualized at the end of 2019, new data from the world's No.3 national economy today showed new machinery orders fell faster in December, while imports sank in January – both before the Covid-2019 virus shutdown activity in neighboring giant China.


US investment bank Morgan Stanley says that economic growth in China – source of one-fifth of global GDP – could slow to 3.5% annualized this quarter, the worst in 3 decades , as fewer than half the nation's factories have so far re-opened after last month's Lunar New Year festival.


The Beijing authorities meantime expelled 3 journalists from the Wall Street Journal today, either angered by a WSJ headline calling China "the sick man of Asia" or by Tuesday's designation of 5 Chinese state media outlets as 'foreign government agencies' by the US State Department.


Last month's arrest of Charles Lieber – chairman of Harvard University's chemistry department – for leaking secrets to Beijing "dovetails with Washington's aggressive 'China Initiative'," says the South China Morning Post, "which began in 2018 [and now includes a] 'whole of society' counter-intelligence strategy to further guard against Beijing 'stealing our technology and intellectual property in an effort to erode United States economic and military superiority'," according to the White House.


Acquitted a fortnight ago of impeachment charges by the Senate, Trump yesterday granted clemency to nine US white-collar crime felons variously guilty of theft, fraud and corruption, plus 2 drug dealers.


White-collar prosecutions fell in 2019 to the fewest in at least 3 decades, data from Syracuse University's analysis of federal records said, down 8.5% from the year before and extending a trend begun during the Obama administration.


http://bit.ly/38CgbM5

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Base Metals

What to Analyze About the Franco-Nevada Corporation (FNV)? – News Welcome

Analysts Estimation on Franco-Nevada Corporation (FNV) Stock:


The current analyst consensus rating stood at 2.8 on shares (where according to data provided by FINVIZ, 1.0 Strong Buy, 2.0 Buy, 3.0 Hold, 4.0 Sell, 5.0 Strong Sell). Analysts opinion is also an important factor to conclude a stock’s trend. Many individual analysts and firms give their ratings on a stock. While Looking ahead of 52-week period, the mean Target Price set by analysts is $81.27.


Performance of the FNV Stock:


Franco-Nevada Corporation revealed performance of 2.35% during the period of last 5 trading days and shown last 12 months performance of 54.88%. The stock moved to 25.28% in last six months and it maintained for the month at 9.94%. The stock noted year to date 2019 performance at 11.91% and changed about 17.77% over the last three months. The stock is now standing at 0.30% from 52 week-high and is situated at 67.15% above from 52-week low price.


Technical Indicators of Franco-Nevada Corporation Stock:


The share price of FNV is currently up 3.80% from its 20 days moving average and trading 10.40% above the 50 days moving average. The stock price has been seen performing along above drift from its 200 days moving average with 24.72%. Moving averages are an important analytical tool used to identify current price trends and the potential for a change in an established trend. The simplest form of using a simple moving average in analysis is using it to quickly identify if a security is in an uptrend or downtrend.


RSI momentum oscillator is the most common technical indicator of a stock to determine about the momentum of the shares price and whether the stock trading at normal range or its becoming oversold or overbought. It also helps to measure Speed and change of stock price movement. RSI reading varies between 0 and 100. Commonly when RSI goes below 30 then stock is oversold and stock is overbought when it goes above 70. So as currently the Relative Strength Index (RSI-14) reading of Franco-Nevada Corporation stock is 72.22.


Although it is important to look for trades in a direction of bigger trends when stocks are indicating an opposite short-term movement. Like looking for overbought conditions when bigger trend remained down and oversold conditions when bigger trend is up. In order to check a bigger trend for FNV a 14-day RSI can fell short and considered as a short-term indicator. So in that situation a Simple moving average of a stock can also be an important element to look in addition to RSI.


Looking into the Profitability indicators on Franco-Nevada Corporation stock we analyze the stock’s Profitability ratios.


Franco-Nevada Corporation Profitability Spotlight:


Franco-Nevada Corporation (FNV) Volatility Indicators:


Volatility of the Franco-Nevada Corporation remained at 1.26% over last week and shows 1.66% volatility in last month. In addition to number of shares traded in last few trading sessions volatility also tells about the fluctuation level of the stock price, commonly a high volatility is the friend of day traders. Volatility is also measured by ATR an exponential moving average (14-days) of the True Ranges. Currently, the ATR value of company’s stock is situated at 1.82.


Franco-Nevada Corporation (FNV) has a market capitalization of $21.80B. Knowing about the market capitalization of a company helps investor to determine the company size, market value and the risk. The stock moved up 0.86% to value at $115.6 on Friday trading session. FNV recorded volume of 440880 shares in most recent trading session as compared to an average volume of 541.45K shares. It shows that the shares were traded in the recent trading session and traders shown interest in FNV stock. The stock P/E & is 108.34 and EPS is $1.07 against its recent stock value of $115.6 per share.


The price-to-earnings ratio or P/E is one of the most widely-used stock analysis tools to determine a stock’s valuation that also shows whether a company’s stock price is overvalued/overbought or undervalued/oversold. If P/E is lower, then stock can be considered undervalued and if it’s higher then the stock is overvalued. Price to earnings P/E of the stock is 108.34.


https://newswelcome.com/2020/02/17/what-to-analyze-about-the-franco-nevada-corporation-fnv/&ct=ga&cd=CAIyHDc1NzY2NWRiYTk1ODllNzg6Y28udWs6ZW46R0I&usg=AFQjCNGiPf-rnEuOZFYTr3w4NiIUbyr1i

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What to Consider on Southern Copper Corporation (SCCO) Stock? – News Welcome

Southern Copper Corporation (SCCO) has a market capitalization of $31.10B. Knowing about the market capitalization of a company helps investor to determine the company size, market value and the risk. The stock declined -0.51% to value at $39.26 on Friday trading session. SCCO recorded volume of 492166 shares in most recent trading session as compared to an average volume of 717.91K shares. It shows that the shares were traded in the recent trading session and traders shown interest in SCCO stock. The stock P/E & is 20.17 and EPS is $1.95 against its recent stock value of $39.26 per share.


First we will be looking for the boiling points and excitability of Southern Copper Corporation (SCCO) stock, it purposes common trait for traders and value investors.


Volatility Indicators for Southern Copper Corporation:


Volatility of the Southern Copper Corporation remained at 1.83% over last week and shows 2.35% volatility in last month. In addition to number of shares traded in last few trading sessions volatility also tells about the fluctuation level of the stock price, commonly a high volatility is the friend of day traders. Volatility is also measured by ATR an exponential moving average (14-days) of the True Ranges. Currently, the ATR value of company’s stock is situated at 1.03. Beta value is also an important factor that helps to know how much the Market risk lies with the trading of subjective stock. Beta indicator of this stock lies at 0.97. In case you don’t know, when beta is higher than 1 then risk is higher and if beta is lower than 1, then risk will be low.


Looking into the Profitability indicators on Southern Copper Corporation stock we analyze the stock’s Profitability ratios.


Profitability Spotlight for Southern Copper Corporation:


Gross margin is detected at 52.50% that represents the percent of total sales revenue that the company retains after direct cost of goods sold. Operating Margin which tells about what proportion of a company’s revenue is left over after paying for variable costs of production such as wages & raw materials is noted at 38.50%. Net profit margin of the company is 20.70% that shows how much the company is actually earning by every dollar of sales.


Return on Investment (ROI) of stock is 14.80%. ROI ratio tells about the efficiency of a number of investments in a company. Return on Assets (ROA) which shows how much the company is profitable as compared to its total assets is observed at 9.50%. Return on Equity (ROE), which tells about the profitability of the corporation by evaluating the profit it generates in ratio to the money shareholders have invested, is noted at 22.00%.


The price-to-earnings ratio or P/E is one of the most widely-used stock analysis tools to determine a stock’s valuation that also shows whether a company’s stock price is overvalued/overbought or undervalued/oversold. If P/E is lower, then stock can be considered undervalued and if it’s higher then the stock is overvalued. Price to earnings P/E of the stock is 20.17.


Analysts Estimation on Stock:


The current analyst consensus rating stood at 2.4 on shares (where according to data provided by FINVIZ, 1.0 Strong Buy, 2.0 Buy, 3.0 Hold, 4.0 Sell, 5.0 Strong Sell). Analysts opinion is also an important factor to conclude a stock’s trend. Many individual analysts and firms give their ratings on a stock. While Looking ahead of 52-week period, the mean Target Price set by analysts is $39.28.


Now entering into the performance part of the article on Southern Copper Corporation stock we should check the stock’s actual performance in the past.


Performance of the SCCO Stock:


Southern Copper Corporation revealed performance of 1.60% during the period of last 5 trading days and shown last 12 months performance of 24.87%. The stock moved to 31.66% in last six months and it maintained for the month at -10.41%. The stock noted year to date 2019 performance at -7.58% and changed about 5.14% over the last three months. The stock is now standing at -12.41% from 52 week-high and is situated at 33.58% above from 52-week low price.


Technical Indicators of Southern Copper Corporation Stock:


RSI momentum oscillator is the most common technical indicator of a stock to determine about the momentum of the shares price and whether the stock trading at normal range or its becoming oversold or overbought. It also helps to measure Speed and change of stock price movement. RSI reading varies between 0 and 100. Commonly when RSI goes below 30 then stock is oversold and stock is overbought when it goes above 70. So as currently the Relative Strength Index (RSI-14) reading of Southern Copper Corporation stock is 45.2.


Although it is important to look for trades in a direction of bigger trends when stocks are indicating an opposite short-term movement. Like looking for overbought conditions when bigger trend remained down and oversold conditions when bigger trend is up. In order to check a bigger trend for SCCO a 14-day RSI can fell short and considered as a short-term indicator. So in that situation a Simple moving average of a stock can also be an important element to look in addition to RSI.


The share price of SCCO is currently down -1.51% from its 20 days moving average and trading -4.04% down the 50 days moving average. The stock price has been seen performing along overhead drift from its 200 days moving average with 7.02%. Moving averages are an important analytical tool used to identify current price trends and the potential for a change in an established trend. The simplest form of using a simple moving average in analysis is using it to quickly identify if a security is in an uptrend or downtrend.


https://newswelcome.com/2020/02/17/what-to-consider-on-southern-copper-corporation-scco-stock/&ct=ga&cd=CAIyGjUxMWZlZTJlZDg0ZjkwMjg6Y29tOmVuOkdC&usg=AFQjCNEYYE16oytA9Ok0SBsfj8qJ1PRJ-

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SMM Evening Comments (Feb 17): Shanghai base metals closed mostly higher on Chinese support measures

SHANGHAI, Feb 17 (SMM) – Most of nonferrous metals on the SHFE closed higher on Monday, as investor sentiment improved following China’s fresh efforts to cushion the blow from the coronavirus outbreak.


Copper added close to 1% to its highest since the market reopened after the Lunar New Year holiday. Lead and tin climbed 0.7%, and zinc rose 0.4%. Aluminium and nickel shed about 0.3%.


The ferrous complex traded mixed. Iron ore surged close to 2.7% to register a five-day winning streak, rebar rose 1.2%, and hot-rolled coil gained 1.1%, while coking coal and coke lost 0.3%, and stainless steel sank 0.6%.


The People's Bank of China (PBOC) on Monday said it was lowering the rate of 200 billion yuan ($28.65 billion) worth of one-year medium-term lending facility (MLF) loans to financial institutions by 10 basis points (bps) to 3.15%.


PBOC’s move came after China's Finance Minister on Sunday said that Beijing would roll out targeted and phased tax and fee cuts. The Ministry of Finance said on Saturday that it would provide 8 billion yuan in a second round of support for virus prevention and control efforts.


The head of Wuhan Leishenshan hospital said over the weekend that a turning point for the epidemic has been reached. China reported 2,048 additional coronavirus cases by the end of February 16, bringing the total case count to 70,548, according to a statement from National Health Commission.


The preliminary reading of Japan’s fourth quarter (Q4) 2019 GDP showed that the country’s economy shrank at the fastest pace in almost six years, triggering recessionary fears of Asia’s top-tier economy. Singapore and Thailand cut their growth outlooks for this year.


China’s futures markets have suspended night trading session until further notice.


Copper: The most-traded SHFE 2004 contract climbed to its highest since January 23 at 46,500 yuan/mt, before it closed the day 0.96% higher at 46,490 yuan/mt. It is likely to continue to test 46,500 yuan/mt, but uncertainty around the epidemic will hamper upside potential in copper prices. The 2002 contract finished its last trading day 0.85% higher at 46,030 yuan/mt, with settlement price of 45,750 yuan/mt, and 101,775 mt of cargoes were delivered.


Aluminium: The SHFE 2004 contract slipped to its lowest in more than a week at 13,660 yuan/mt, before it recovered some ground to close the day 0.26% lower at 13,690 yuan/mt. Investors lacked confidence in the March and April contracts, as the resumption of downstream consumers remained subdued amid the epidemic outbreak.


Zinc: The most-liquid SHFE 2004 contract rose for a third straight day, gaining 0.41% on the day to end at 17,260 yuan/mt, its highest close in a week.


Nickel: The most-traded SHFE 2004 contract strengthened slightly in afternoon trade, recouping some of earlier losses to end the day 0.34% weaker at 105,210 yuan/mt. SHFE nickel still sits around 105,000 yuan/mt, which it has been hovering around since last week. The 2002 contract wrapped up its trading at settlement price of 104,360 yuan/mt, with 12,552 mt being delivered.


Lead: The most-liquid SHFE 2004 contract rose 0.7% on the day to end at 14,445 yuan/mt, its highest close since January 23, as bullish funds continued to enter the market. SHFE lead extended the rally from last week, but the pace appeared to have slowed slightly as strong resistance lies at the 20-day moving average and 14,600 yuan/mt.


Tin: The most-traded SHFE 2006 contract reversed an earlier slip to its highest in two weeks at 135,600 yuan/mt, before closing the day 0.7% higher at 135,530 yuan/mt. SHFE tin is supported by the 10-day moving average, but faces resistance at 136,000 yuan/mt.


https://news.metal.com/newscontent/101028374/smm-evening-comments-feb-17-shanghai-base-metals-closed-mostly-higher-on-chinese-support-measures&ct=ga&cd=CAIyGjc4YzcxMDA3MjAzOTRjMmU6Y29tOmVuOkdC&usg=AFQjCNF2UdEa3VgytCRkRj4IyoitGFLE4

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BHP Warns on Coronavirus

Anglo-Australian mining multinational BHP anticipates a net demand loss due to the coronavirus Covid-19 outbreak in China unless the widespread disease is contained by the end of next month.

The company expects to revise its expectations for economic and commodity demand growth downwards if the virus is not demonstrably well contained.

The death toll from the virus has reached 1,873, with 98 new deaths in China, and the number of infection cases has increased to 73,000 worldwide as of the end of 17 February. The total number of disease recoveries stood at 12,552.

BHP CEO Mike Henry said: “We delivered a strong set of half-year results, grounded in solid operational performance. Underlying EBITDA was up 15%, to $12bn, and return on capital employed increased, to 19%.

“Despite near-term uncertainty – due to the coronavirus outbreak, trade policy and geopolitics – we remain convinced about the positive underlying fundamentals of our commodities. We see enormous potential to reliably deliver exceptional financial and operational performance, and to grow value and returns.”

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Havilah Resources has Curnamona Craton rare earth potential confirmed by expert

Based on independent expert Ken Collersons' recommendations, Havilah proposes to carry out rare earth elements mineralogical and metallurgical recovery studies on drill samples from the Kalkaroo copper-gold project and Croziers copper prospect over the next few months.


Rare earth elements are of strategic importance given the Australian Government’s efforts in promoting international investments


( ) will increase rare earth study work at several Curnamona Craton tenements in South Australia after the discovery potential was confirmed by independent expert Ken Collerson.


Collerson noted geochemical similarities with carbonatites from the largest rare earth elements (REE) deposit in the world at Bayon Obo in China to Havilah’s Kalkaroo Copper Gold Project and Croziers copper prospect, which has encouraged the company to carry out REE mineralogical and metallurgical recovery studies on drill samples over the next few months.


REE are of relevance and strategic importance given the Australian Government’s recent efforts in promoting international investment in the development of critical minerals resources within Australia.


Collerson also observed that because the REE may be recovered as a by-product of the copper-gold concentration process at Kalkaroo, this could potentially provide an economic advantage for the Kalkaroo project compared to those projects that are solely REE based.


Kalkaroo Copper project “at an economic advantage”


Havilah technical director Dr Chris Giles said: “The value upside for Havilah is that if REE can be economically recovered in a mineral concentrate as a byproduct of the standard copper and gold recovery processes it could provide a further revenue stream for the Kalkaroo copper-gold project.


“As Professor Collerson has observed, this potentially puts Kalkaroo at an economic advantage compared with stand-alone REE producers.


“The critical questions for Havilah are what mineral(s) host the REE and can the REE be recovered and concentrated to produce a saleable, direct shipping by-product along with copper concentrates?


“Without detracting from our other work, these are the questions that we propose to address with experimental work over the next few months in collaboration with local well credentialed academic experts.”


Next steps


Havilah proposes to investigate the REE recovery options, with the following key tasks planned:


Complete shallow drill holes at the Kalkaroo project and Croziers prospect areas to obtain samples that are suitable for metallurgical recovery studies;


Mineralogical studies to determine the identities and physical properties (such as size, shape and density) of the REE-bearing mineral phases; and


Metallurgical tests designed to establish recoveries of REE minerals from the drill samples.


Accelerated Development Initiative application


The company has recently been advised by the South Australian Department for Energy and Mining (DEM) that its Expression of Interest for an Accelerated Development Initiative application entitled “Investigation of REE Mineralisation in the Benagerie Dome” has advanced to the next stage.


Havilah has been invited by DEM to submit a detailed proposal, which it is now in the process of preparing.


The proposal will include the three key tasks listed above, with the metallurgical study being carried out in collaboration with well renowned academic experts in this field at the University of South Australia.


https://www.proactiveinvestors.com.au/companies/news/913194/havilah-resources-has-curnamona-craton-rare-earth-potential-confirmed-by-expert-913194.html&ct=ga&cd=CAIyGjE0ZWYzM2IyYjQyY2VlNzA6Y29tOmVuOkdC&usg=AFQjCNFrijaaCe-Qdw7RctD4T19vunLGC

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Canadian mega-miner gets serious about Latin’s Peru project

Perth based junior explorer Latin Resources with a market cap of just over $1m has done a deal with one of the world’s largest miners and serial acquirers, TSX listed heavyweight First Quantum Minerals. Latin’s free carried JV deal with the multi-billion dollar First Quantum may see the drill rods turning at Latin’s largely dormant but potentially tier-1 Pachamanca-MT03 copper project in southern Peru within weeks.


Under the terms of the deal, a wholly-owned subsidiary of the $CAD8.40b market capped First Quantum, may proceed with a rights assignment and option to earn an initial 51% of the project after putting down some 4000m of drilling into the project.


First Quantum will proceed with the drilling if a geophysical survey throws up compelling drill-ready porphyry copper targets.


First Quantum can officially exercise its first earn-in option after an initial 4000m worth of drilling and any required technical studies to support the establishment of a contained copper resource of one million tonnes or more.


Latin is set to receive a total of US$500,000, staged over the option period of 48 months.


First Quantum can then take its stake in the project through to 80% on a decision to mine, whilst Latin is free carried all the way through to the decision.


Meanwhile, First Quantum will have an option to buy Latin’s 20% share, after an independent valuation, while the ASX-listed company will retain a 2% royalty.


The goliath First Quantum will also have the right to reduce the Latin’s royalty to 1% via a hefty US$40m cash payment.


Latin Managing Director Chris Gale said:“ The extension of terms granted by Antares (First Quantum) is a positive indication that they are very keen to start drilling on our MT03 Project. Latin will be free carried right through to a decision to mine, this means that our Peru operations are fully funded.”


“If FQM move to mine the project this will mean a sizable and significant operation providing an exceptionally bright future for Latin, either through a significant 20% retained participation, or sizeable royalty stream.”


Under the deal, it looks like First Quantum will fund at least 12 months’ worth of exploration across this world-class copper province in a corner of the globe renowned for its mining-friendly climate.


Porphyry copper-gold deposits account for the world’s largest source of copper and despite an average grade of around 0.4%, these deposits enjoy multi-generational mine lives thanks to their sheer size, which is normally hundreds of millions to billions of tonnes.


Latin’s Pachamanca-MT03 copper project is itself located directly along strike from NYSE-listed Southern Copper’s Tia Maria porphyry copper deposit that is host to 639m tonnes grading 0.39% copper and 0.19g/t gold.


Porphyry copper-gold deposits account for the world’s largest source of copper despite an average grade of around 0.4%, with Peru and Chili combined accounting for one-third of third of the global copper supply according to Latin.


These deposits enjoy multi-generational mine lives thanks to their sheer size, which is normally hundreds of millions to billions of tonnes.


To put these numbers into perspective, closer to home, copper cut-off grades around the 0.25% mark are going gangbusters at mining heavyweight Newcrest’s Cadia mine in NSW, as economies of scale and ongoing improvements in mining and processing result in almost unbelievably low unit mining costs.


Latin said there is also a massive, 125 billion pounds of contained copper in published reserves and resources at the Cuajone, Toquepala and Cerro Verde copper mines, all within 130 km of its project.


First Quantum’s flagship Peruvian asset, the Haquira deposit contains a total reported “open pit” resource of 867.72m tonnes grading 0.445% copper, 0.029g/t gold, 1.39g/t silver and 0.009% molybdenum.


With underground resources last reported in 2010 by Quantum running at 41.85m tonnes grading 1.07% copper, 0.096g/t gold, 3.74g/t silver and 0.012% molybdenum, southern Peru’s copper belt is clearly a land of the giants.


With a smorgasbord of minerals on its plate in play in Peru and exploration about to crank up, Latin should provide plenty of news flow in the months to come once all the relevant approvals are all in.


First Quantum is a first-class counterparty who clearly has amazingly deep pockets. If the JV partners even get a sniff of a big porphyry in Peru it will be off to the races for Latin.


First Quantum is already a mega copper miner with the technical ability to find deposits and the know how to develop them and perhaps most importantly, is sizable enough to get them into production.


First Quantum famously bought the Ravensthorpe nickel project in Western Australia from BHP Billiton in 2009 for a cool USD$340m


In 2013 it successfully made a hostile play for Inmet Mining Corporation in a deal that was worth around CAD$5b.


Clearly this is one mining outfit to be taken seriously and Latin has done well to even get it interested in its Peruvian project.


…now for some success with the drill bit.


Is your ASX listed company doing something interesting ? Contact : matt.birney@wanews.com.au


https://thewest.com.au/business/public-companies/canadian-mega-miner-gets-serious-about-latins-peru-project-c-707712&ct=ga&cd=CAIyGmNmZjIzZTIyMzZkZTNkYzU6Y29tOmVuOkdC&usg=AFQjCNG0FOMflayZ5GJLipE7zcwFT1PS6

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Steel

Steel Inventory Rising Sharply


The inventories of hot-rolled coil (HRC) held by both steelmakers and traders across China have witnessed significant rises since the Chinese New Year holiday (January 24-February 2), Mysteel Global has learned. Resumption of trading of coils was interrupted while mills continued to operate normally, with the result that prices have declined considerably.

As of February 5, HRC stocks at Mysteel’s 37 regularly surveyed flat steelmakers hit a historical high since May 2015 to touch some 1.6 million tonnes, up by 646,300 tonnes from the inventory total as of January 22, Mysteel’s survey showed.

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Iron Ore

Vacancies in iron ore plant in Nigeria

Home Equipment vacancies in iron ore plant in Nigeria


Vacancies in iron ore plant in Nigeria


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Coal

The casualties of Mongolia's doomed love affair with coal

All the rooms in the three-storey Songinokhairkhan hospital in western Ulaanbaatar, Mongolia's capital city, are full. They are mostly occupied by small children being treated for respiratory problems, according to the busy nurses here.


The cause is heavy pollution, mainly from the country's decades-long over-reliance on coal.


Children's hospitals in the area are overburdened and paediatricians can only treat the symptoms of health problems caused by air pollution, they are unable to remove the cause.


A young mother, Ganchimeg, waits for the fever to let up in her one-year-old daughter's trembling body. They have been here all day. "She's been coughing a lot," says the tired mother. "When we came here they told me it's probably pneumonia." Her daughter smiles, and then coughs.


UNICEF declared Mongolia's air pollution problem a "child health crisis" in a 2018 report which stated: "In the last 10 years, incidences of respiratory diseases in Ulaanbaatar alarmingly increased including a 2.7-fold increase in respiratory infections per 10,000 population.


"Pneumonia is now the second leading cause for under-five child mortality in the country. Children living in a highly polluted district of central Ulaanbaatar were found to have 40 percent lower lung function than children living in a rural area."


Ganchimeg and her daughter, who has a high fever and will not stop trembling, at Songinokhairkhan hospital, western Ulaanbaatar [Fredrik Lerneryd/Al Jazeera]


Ariunsanaa and Oyun (Mongolians tend only to use one name), are a young couple living in Ulaanbaatar's western ger district. Gers are traditional Mongolian yurts - small wooden structures in which whole families live.


Both their children - a four-year-old son and a one-year-old daughter - have been hospitalised this winter with fever, coughing and, eventually, pneumonia. "Same old story every winter," says Ariunsanaa, preparing suutei tsai and biscuits inside their ger while the TV shows flickering images of a conflict far away.


"It's the same strain of the flu that returns every winter, and every year it takes its toll on the kids a lot worse than the previous winter.


"Medicines and antibiotics aren't free, you know," he adds.


Behind a curtain hangs Ariunsanaa's shaman coat. Interest in Mongolian Shamanism has risen among the young, after being banned during Communist rule. Local people seek Ariunsanaa's counsel on matters from relationships to health.


Inside the overcrowded Songinokhairkhan hospital in Ulaanbaatar. All rooms of the three-storey hospital are occupied, mostly by small children with respiratory problems [Fredrik Lerneryd/Al Jazeera]


The price of success


This is not all that has changed here since the fall of Communism.


Democracy's arrival in Mongolia in 1990, alongside an economic boom from the country's rich coal resources, gave birth to a market-economy class system defined by stunning income inequality.


"Despite strong overall growth, job creation and poverty alleviation remains a significant challenge," is how the International Monetary Fund summarised the situation in its 2019 member-country report.


I don't want to be pregnant again, I'm too afraid. When pregnant, both times during winters, I was constantly afraid that air pollution would lead to birth defects Oyun


So, while doctors recommend that people - especially those with small children - leave Ulaanbaatar for fresh air, this is a luxury that few can afford.


"I don't want to be pregnant again, I'm too afraid," says Oyun. "When pregnant, both times during winters, I was constantly afraid that air pollution would lead to birth defects."


Ariunsanaa and Oyun's home in a working-class neighbourhood of western Ulaanbaatar [Fredrik Lerneryd/Al Jazeera]


In the mid-2010s, Mongolia, riding the wave of its mining boom, was hailed as "the world's fastest-growing economy" by the World Bank. But the global financial crisis and subsequent boom and bust in commodity prices dealt a severe blow to Mongolia, fuelling poverty, unemployment and despair.


A $5.5bn bailout from the International Monetary Fund helped pull Mongolia's economy off its knees.


In 2018 the country produced 34.4 million tonnes of oil equivalent (TOE) of coal - a record. Overall, the National Statistical Office (NSO) of Mongolia says, the mining industry represents nearly 22 percent of the nation's revenue for 2019.


Despite this, coal is not the magic bullet for Mongolia that many believed it to be; it is also a poisoned chalice. It is proving to be a "resource curse", whereby a country's over-reliance on one or a limited number of natural resources - in Mongolia's case, coal and copper - can lead to a failure to invest in other sectors as well as a higher risk of corruption.


In its 2019 report, Freedom House, the US government-funded NGO, highlights increasing corruption levels within the mining sector in Mongolia, despite - or perhaps because of - "vaguely written and infrequently enforced" anticorruption laws.


But most of all, coal is dirty and its over-use has triggered a health and environmental crisis in Ulaanbaatar as well as further afield.


The view from Ariunsanaa and Oyun's home in one of Ulaanbaatar's ger districts [Fredrik Lerneryd/Al Jazeera]


'There were a lot of people sick'


On the Mongolian steppe, seemingly far removed from the centre stage of the coal industry, the effects of this over-reliance on coal are already hitting the country's nomadic population hard.


The Batbold family's ger, camouflaged by snow, sits surrounded by valleys outside Karakorum, the ancient Mongol capital founded by Genghis Kahn.


There are other gers within walking distance, dotted between enclosures for the animals and giant piles of wood to heat these rudimentary homes. Other than that, these families live alone - as Mongolian nomads have done for centuries.


It is a way of life. But Mongolia's nomads, reliant on livestock and mostly contributing to the cashmere industry, now stare the consequences of climate change right in the eye, embodied by a man-made catastrophe they call the "dzud", a term for the severe winters marked by starvation, cold and financial hardship that they now endure every year.


Chantsaldulam and Banzragch Batbold prepare supper for their seven children inside the family ger on the Steppes of Mongolia. Life is becoming difficult for the family in the face of increasingly harsh winters [Fredrik Lerneryd/Al Jazeera]


Millions of livestock have died due to the dry summers followed by the extreme winters over the past decade in Mongolia, according to a 2018 report by the research journal, Nature.


It states: "Alleviating the impacts of climate change on herder communities, through strengthening adaptive capacities, risk reduction strategies, including reducing herder vulnerability to future hazards, and resilience in degraded environments, will be a crucial challenge."


This extreme weather phenomenon is the scourge of every nomad's daily life. "Here, winter starts in the summer," says Chantsaldulam Batbold.


Here, winter starts in the summer Chantsaldulam Batbold


She is paying "tribute" to the sky, mountains and soil outside the family ger by throwing spoons of fresh cow's milk into the air, in a kind of offering. "We thought the summer would be good; it wasn't. There is no grass for the animals and the winter is getting harder."


Every day, the family takes the livestock - 100 cows, goats, horses and sheep - out in search of suitable pastures. "We can't get enough hay to them due to higher prices, and even if we had, it's not nutritious enough," says Banzragch Batbold as he saddles his horse. Chantsaldulam hands him a thermos with warm suutei tsai, a traditional Mongolian beverage consisting of milk, salt, tea leaves and water.


The nearby river is ice-covered and melted snow serves as drinking water. All seven Batbold children, who range in age from nine months to 10 years, see their father off and play outside until their mother hauls them back inside. Three of them, who attend boarding school in Ulaanbaatar, returned from school with the flu just before Christmas - another effect of the pollution, Chantsaldulam suspects.


"There were a lot of people sick at the school, as is usually the case this time of the year," she says.


Mongolia's nomadic communities must battle the harsh winter to find pasture for their livestock [Fredrik Lerneryd/Al Jazeera]


As inside any typical Mongolian ger, life is divided into sections: the kitchen area; beds; a couch for visitors; a shrine for valuables, family portraits, clothing and a TV set. The heart of the ger is the stove, which provides heat during the harsh winter season.


The temperature can reach 30°C inside the ger while outside it gets as cold as minus 20°C.


Climate change has been particularly extreme in Mongolia, where the average temperature has increased by 2.2°C since 1940 - compared to 0.85°C for the planet in general - causing havoc with weather patterns.


According to a 2019 report from the European Institute for Asian Studies, Mongolia's mining sector is to blame for this and, therefore, for the resulting compromised biodiversity and worsening public health. The report states: "Mining activities and mining-related infrastructure projects have, indeed, contributed to the rapid increase of CO2 emissions in the country, the vast erosion of pasture land and deforestation."


The choice for those living on the ground? Put up with it or get out.


"On the steppe, you're on your own," laments Chantsaldulam. Many have opted for the latter, heading to Ulaanbaatar's ger districts, where thousands of former nomads-turned-city-dwellers reside in a socioeconomic parallel society.


In 2001, Ulaanbaatar's total population was 630,000; in 2014 it had reached over one million. It is now 1.6 million. One in four inhabitants of Ulaanbaatar lives in what the International Monetary Fund describes as "shanty towns" - the ger districts - and 28.4 percent of the population are living below the poverty line, according to Mongolia's National Statistical Office.


Chantsaldulam and Banzragch know both worlds but fancy neither; climate change has altered everything, everywhere.


"When you walk alongside your animals, day in and day out for many years, you realise what's at stake," says Banzragch. "The wheel of life is shifting on its axis."


Children at Preschool 68 in Ulaanbaatar. The school uses air purifiers and ventilators, and never opens the windows, in a bid to keep pupils safe from pollution [Fredrik Lerneryd/Al Jazeera]


Extreme measures


Ulaanbaatar was called Urga ("Palace") until 1924, when, as the capital of the new Mongolian People's Republic, it adopted its Soviet-style name, which means "Red Hero".


Mountain plateaus surround the city, which functioned as a Buddhist meeting point in the 1700s. Winds come from Siberia in the north, turning the winters into long, cold periods of existence under a veil of smog. At 1.6 million, the population of the city has trebled since 1989. Ulaanbaatar's undeveloped outskirts have swelled like balloons and these ger districts lack sustainable access to electricity and clean water, making coal - now, government-issued briquettes - the only option for cooking and heating.


As a result, the authorities blame Ulaanbaatar's ger districts for 80 percent of the recent years' hazardous air pollution levels which are taking their toll on residents. Small children, the elderly and pregnant women are particular prey for infections, viruses and diseases, which spread easily in poorly ventilated facilities.


A preschool named "63" in Gachuurt, eastern Ulaanbaatar, has taken extreme measures to protect its children.


"We've installed air purifiers, updated ventilators and keep all windows closed at all times to guarantee our 150 pupils access to fresh air and clean food," says principal Nyamsuren Enkhtsetseg.


The view through the window on the second floor, however, shows the preschool's neighbour is a heating plant. Raw coal emissions from it sweep over a part of Ulaanbaatar where the ban on raw coal has yet to be implemented, forcing all children to wear protective masks whenever they play outside. "We've begged the authorities to remove it; but nothing's happened," sighs Enkhtsetseg.


A woman without her briquette-coupon tries to purchase a bag at one of the distribution points in Ulaanbaatar. She will go away empty-handed and unable to heat her home [Fredrik Lerneryd/Al Jazeera]


In December 2018, the Mongolian government banned the use of unprocessed, raw coal for domestic cooking and heating, a directive which has been implemented in six of Ulaanbaatar's nine düüregs (districts) so far. The ban will take effect in the remainder in 2021.


Government-issued coal briquettes, which are "cleaner" than raw coal but are still rationed, provide a substitute and have helped to nearly halve the city's air pollution levels. The briquettes, made from coal powder and coking coal from the southern Gobi region, are produced at a newly built plant in Ulaanbaatar and sold at certified "briquette stations" throughout the capital.


Residents who need heating coal must show ration vouchers to buy them for $1 a bag - no voucher, no briquettes.


At one of the distribution sites, a woman without her briquette coupon is trying to purchase a bag, anyway. The briquette vendors shake their heads; there is nothing they can do. If they sell to unauthorised customers they risk a 30 percent salary deduction.


"How am I supposed to heat our home tonight?" the woman asks, then turns and leaves the station, her two children trying to keep up with her.


It is doubtful that rationing will be respected by everybody. People will always find a way around it - especially when the cold bites. "People are using briquettes just like the old raw coal and burning them the same way," Byambajargal Losol, a physicist at the Mongolian Science Academy, told AFP in November last year. "The briquettes are thick and compact so they require twice as much oxygen to burn, compared to raw coal."


Eight residents of Ulaanbaatar have suffocated to death in their sleep due to carbon monoxide poisoning after burning briquettes, and 1,000 people have been hospitalised with symptoms of nausea and breathing difficulties since October last year UNICEF


But the raw coal ban signals political responsibility, proclaims Gabymbyme Haldai, head of Ulaanbaatar’s Air Pollution Reduction Department. "The briquette transition has halved our air pollution levels in just one winter. Now, the production capacity at the briquette plant must increase and the ban implemented in wider areas."


Haldai sees no problems with Mongolia’s dependence on coal. "Coal makes Mongolia energy independent," he states.


Questions about sustainable energy investments seem to annoy him. "I don't know where you come from or what energy sources you use. Here, we experience extreme weather conditions," Haldai says.


The ban on raw coal, however, "will only take Mongolia so far", says Alex Heikens, UNICEF's Mongolia representative. "Its visible positive results might end up counterproductive. Only 90 percent decreased air pollution will make any real difference to climate and people's health."


Eight residents of Ulaanbaatar have suffocated to death in their sleep due to carbon monoxide poisoning after burning briquettes, and 1,000 people have been hospitalised with symptoms of nausea and breathing difficulties since October last year.


Miners haul raw coal from a semi-illegal mine in Nalaikh, Mongolia. The production and demand from the local mines in Nalaikh have dropped by 80 percent since the ban on raw coal [Fredrik Lerneryd/Al Jazeera]


'Times have never been so hard'


Government attempts to curb pollution - most notably by banning the use of raw coal in some areas - have brought new hardships to those reliant on the mining industry for a living.


Darkness falls over the industrial remnants of Nalaikh's now-closed and abandoned open-pit coal mine, 40km east of Mongolia's capital, Ulaanbaatar. The once state-owned mine shut down because of the fall in demand for raw coal, but the coal reserves are still there. They are now hauled out of narrow, small-scale shafts run in semi-illegal fashion, providing middlemen with raw coal to sell on the black market.


A dirt road ends at a 120m-deep shaft here. Five miners drink Coca-Cola and smoke cigarettes inside a ger, which has been raised next to the shaft. "I've been a miner since I was a kid," says Khurelshagai, smiling at clips of his daughters on his phone. "But times have never been as hard as today."


From the 1950s, Nalaikh Coal was a major local job provider and an important provider of energy to Ulaanbaatar. But it was also the primary contributor of carbon dioxide emissions and high levels of hazardous, atmospheric particles called PM2.5. These microscopic particles enter the lungs and the bloodstream, and are responsible for turning Mongolia's capital into one of the world's most polluted cities.


This used to be a place of pride. Now, it looks like a warzone Tserengund, coal miner


"There is really no affordable alternative [to coal] in terms of clean fuel," said Delgermaa Vanya, health and environment officer at the World Health Organization in a 2019 report. "As a result, in the winter months over 600,000 tonnes of raw coal are burned for heating in the city’s approximately 200,000 gers, accounting for about 80 percent of Ulaanbaatar’s winter pollution."


The ban on raw coal has helped Mongolia's ecological and financial climate - but it has also rewritten life in Nalaikh, where locals talk of shattered businesses and a lost future. Industrial-scale coal production is a thing of the past there, although small quantities of raw coal are still hacked and scavenged from semi-illegal, squatted shafts and sold, either to Ulaanbaatar's remaining raw-coal heating plants or on the black market.


Workers at a briquette station in Ulaanbaatar. Each bag costs $1 [Fredrik Lerneryd/ Al Jazeera]


Mongolian democracy is primarily embodied as the financial liberalisation of big industries, says Tserengund, one of the miners. He is having a smoke on the slope overlooking the 120m-deep narrow shaft. He has coughed, dug and stooped his way through narrow shafts for 20 years to provide for his wife and son. His only reward will be a broken body. "The boss can't pay me; I just get daily coal rations for heating and cooking. But I have no other choice, we don't want to freeze to death."


Night temperatures fall close to minus 30°C. Nalaikh's last coal miners catch their breath upon the slope; they have the air of guardians of a lost industrial kingdom. Tserengund looks around, seeing more than just the piles of gravel, debris and a silent industrial no-man's land.


"This used to be a place of pride," he laments. "Both my grandparents and parents worked here. In the summers, cows pastured in the surrounding hills. Back then, the place was green."


"Now," he sighs, "It looks like a war zone."


https://www.aljazeera.com/indepth/features/casualties-mongolia-doomed-love-affair-coal-200209085415566.html&ct=ga&cd=CAIyGjBlMDRkYTQxNmY2YWRlMjY6Y29tOmVuOkdC&usg=AFQjCNH2xwKUs4uppk3JbmWJbV-OipbWg

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Coal in China

During the days of Feb 6 -12, which is also the first week after the extended China Spring Festival holiday, the weight average operating rate of Fenwei’s 66 sampled representative thermal coal mines declined to 67.95% from pre-Spring Festival holiday 82.2%. The weekly output fell by 16.24% and the inventory fell by 13%. Meanwhile 20% mines increased their selling prices at 19 yuan/t averagely. Below chart is the summary for your comparison.

 


 

We Fenwei monitor representative 66 thermal coal mines at 400 Mtpa in major production areas of Shanxi, Shaanxi and Inner Mongolia China, with different ownerships including 30 state owned/18 local state owned/18 private mines to weekly monitor their output, operating rate, inventory, coal price and cost& profit. Besides, we also monitor the same data of 53 coking coal mines and 60 coke plats.

 

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Glencore hit by coal

Glencore GLNCY -3.71% PLC swung to a loss in 2019 as subdued prices for commodities—including coal—weighed on earnings in its industrial unit and prompted the miner to write down the value of key assets.

The Anglo-Swiss commodities company booked $2.8 billion in impairment charges, which contributed to a net-loss of $404 million, down from a profit of $3.41 billion in 2018.

Glencore is the biggest exporter and producer of thermal coal among the world’s major diversified mining companies, leaving it exposed to a steep decline in the price of the fossil fuel in recent years. The price of coal delivered into ports in Northern Europe—a benchmark for sales from Glencore’s coal-mining operations in Colombia—fell 39% in 2019 amid a flood of cheap liquefied-natural gas, as well as policies designed to reduce greenhouse-gas emissions.

The drop in prices, which has extended into 2020, prompted Glencore to write down its Colombian coal assets by almost $1 billion, the company said in its annual report Tuesday.

The charges also included impairments to oil operations in Chad, stemming from the expiration of oil-exploration licenses. Glencore had failed to reach an agreement with the country’s government about extending them. The company also impaired its copper and cobalt mine in the Democratic Republic of Congo by $300 million to reflect falling cobalt prices and its decision to halt production at the mine in November.

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Steel, Iron Ore and Coal

52-Week Company Lows

According to GuruFocus' list of 52-week lows, these Guru stocks have reached their 52-week lows.


Exxon Mobil


The price of Exxon Mobil Corp. (NYSE:XOM) shares has declined to close to the 52-week low of $60.65, which is 28.6% off the 52-week high of $83.49. The company has a market cap of $256.79 billion.


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Its shares traded with a price-earnings ratio of 18.06 and a price-sales ratio of 0.99 as of Feb. 14. The trailing 12-month dividend yield is 5.74%. The forward dividend yield is 5.74%. GuruFocus rated Exxon Mobil's business predictability at 3 stars.


ExxonMobil is an integrated oil and gas company that explores for, produces and refines oil around the world. The company is the world's largest refiner and one of the world's largest manufacturers of commodity and specialty chemicals.


Net income for the fourth quarter of 2019 was $5.69 billion compared to $6 billion for the prior-year quarter.


Chairman and CEO Darren W. Woods bought 2,858 shares on Feb. 10 at a price of $59.86. The price of the stock has increased by 1.32% since.


Nucor


The price of Nucor Corp. (NYSE:NUE) shares has declined to close to the 52-week low of $47.15, which is 25.7% off the 52-week high of $62.04. The company has a market cap of $14.23 billion.


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Its shares traded with a price-earnings ratio of 11.39 and a price-sales ratio of 0.64 as of Feb. 14. The trailing 12-month dividend yield is 3.40%. The forward dividend yield is 3.41%. The company had an annual average earnings growth of 17.80% over the past 10 years.


The largest steelmaker in the United States by production volume, Nucor uses electric arc furnaces to produce a wide variety of steel products. Nucor is involved in every phase of the steelmaking value chain, from collecting and processing scrap to manufacturing value-added fabricated steel products.


Fourth quarter 2019 net earnings were $134.25 million compared to $681.07 million for the comparable period of 2018.


Franklin Resources


The price of Franklin Resources Inc. (NYSE:BEN) shares has declined to close to the 52-week low of $24.36, which is 33.1% off the 52-week high of $35.82. The company has a market cap of $12.1 billion.


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Its shares traded with a price-earnings ratio of 9.71 and a price-sales ratio of 2.11 as of Feb. 14. The trailing 12-month dividend yield is 4.31%. The forward dividend yield is 4.43%. The company had an annual average earnings growth of 3.70% over the past 10 years.


Franklin Resources provides investment services for individual and institutional clients primarily in the U.S. At the end of January 2018, Franklin had $770.8 billion in assets under management, composed primarily of equity (44%), fixed-income (37%) and hybrid (19%) funds.


Net income for the fourth quarter of 2019 was $350.5 million compared to $275.9 million in the prior-year quarter.


Continental Resources


The price of Continental Resources Inc. (NYSE:CLR) shares has declined to close to the 52-week low of $26.20, which is 51.0% off the 52-week high of $52.04. The company has a market cap of $9.73 billion.


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https://finance.yahoo.com/news/52-week-company-lows-154305840.html

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Commodity Tracker: 5 charts to watch this week

The ongoing outbreak of coronavirus, known officially as COVID-19, continues to dominate commodity and energy market developments, as illustrated by this week’s pick of charts from S&P Global Platts news editors. Plus, key trends in EU and US electricity markets.


1. COVID-19 stalls Chinese workers’ return to manufacturing centers…


What’s happening? China’s coastal provinces are heavily dependent on migrant labour from other provinces. Every year millions of these migrant workers go home for the Lunar New Year, travelling back to the coastal cities when the holiday ends. They go back to jobs on construction sites, in factories and across the service sector. This year the annual migration has stalled due the coronavirus (COVID-19) outbreak, as shown by data from Chinese technology company Baidu. Movement of people into the coastal province of Guangdong after the lunar new year is way down compared to last year. Guangdong is home to more industrial enterprises than another province, many of them privately owned, small and medium sized, manufacturers reliant on migrant labour. The same trend can be seen in Zhejiang and Jiangsu, two other coastal provinces with a large number of private enterprises.


What’s next? State-owned companies are less reliant on migrant labour. The State Council, China’s government, recently announced that 97% of central government-controlled petroleum and petrochemical companies had resumed work. But supply of oil products is not the issue. Demand is the problem. With so few people travelling after the new year and a lack of workers in the coastal provinces, oil demand from the transport, construction and petrochemical sectors is taking a dive. The government has to balance the drive to get people back to work, and the economy moving, with efforts to contain COVID-19 – no easy task. Look for rising levels of internal migration to indicate that China’s economy is spluttering back to life and that oil demand is back on the rise.


2. …and adds to woes for already weak LNG market


What’s happening? China is the world’s second-largest LNG importer behind Japan. Quarantines and travel restrictions imposed to restrict the spread of COVID-19 have caused a demand contraction, hitting an already oversupplied global LNG market.


What’s next? The impact of the outbreak is expected to worsen in coming weeks as economic activity in key manufacturing hubs struggles to rebound, keeping a lid on natural gas demand and triggering more LNG trade flow disruptions. As the previous item shows, travel restrictions were still preventing millions of industry employees in China from returning to work in the week ending February 14 and factories expected only partial production restarts, with some delaying a return to operations until late February or early March.


3. Slump in Chinese construction and autos hits global steel


What’s happening? Steel hot-rolled coil (HRC) prices in Asian, EU and US markets have been falling as inventories swell. The glut has been sparked by lower demand from China’s construction and automotive industries, where activity has plunged due to measures to curb the spread of COVID-19. US domestic prices have shed 5% over the past month, and Chinese domestic prices almost 10%.


Go deeper: Podcast – COVID-19 crushing China’s steel and iron ore demand


What’s next? With the Chinese, the world’s largest steel producers and exporters, experiencing logistics delays and even docking and unloading restrictions on ships carrying steel into the Philippines and South Korea, exporters elsewhere are eyeing new trade opportunities in China’s usual steel export markets. In flat products, exporters from India, Japan and Russia are seeking new trade, and in long products, Turkish, Middle Eastern and again Russian exporters are keeping a close eye on developments.


4. Successive storms test European wind turbines, power grids


What’s happening? Record wind power generation has its downsides. Storms have swept across Europe the last two weekends, sending UK grid frequency below 49.7 Hertz February 9 and triggering a call for static response from the system operator. When winds are excessive, turbines go into survival mode, automatically reducing or shutting down production. Storm Ciara led to a multi-gigawatt shortfall in UK wind forecasts, even if generation was high at 13 GW – and frequency dropped to 49.6 Hertz. A big slice of this shortfall would have been embedded, distribution-connected capacity, effectively invisible to the transmission system operator. In the event, National Grid dealt with the frequency dive. The lack of inertia on the system, however, is an on-going challenge as dispatchable plants close and more offshore wind farms open.


What’s next? Strong winds are forecast to continue into the current week, with February shaping up to be the third month in a row when European wind generation records are broken. The UK alone is forecast to have close to 15 GW of wind on the system all through Tuesday, equivalent to 50% of demand. There are now over 205 GW of wind capacity installed across Europe, the park averaging 85 GW generation in the most recent week. Average European wind generation this winter stands at around 62 GW, almost 10 GW up on year. Even deficit market Finland has now seen negative hourly prices due to surplus wind spilling from Sweden and Denmark.


5. New England power capacity auction clears at lowest price ever


What’s happening? The New England power market operator’s auction for electricity supplies to be delivered in 2023/24 recently cleared at $2/kW-month, the lowest price since the auction has been conducted. Reductions in expected future power demand and other factors were cited as reasons for the low clearing prices.


What’s next? Next year’s capacity auction will be influenced by a variety of factors on both the supply and demand side, many of which remain uncertain. However, the volume of resources that elect to retire from the market and market design changes being implemented to improve fuel security will impact clearing prices in the next auction. Low capacity prices have been an issue across the US and several proceedings are underway to address problems in these multi-billion dollar markets.


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Iluka to spin off BHP iron ore royalty business to new company

Iluka Resources has announced plans to demerge its royalty business at the BHP-operated Mining Area C (MAC) iron ore project in Western Australia following a company review.


Iluka holds a royalty over iron ore produced from MAC which is located in the Pilbara region.


The demerger will establish an ASX listed firm RoyaltyCo that will separate the MAC project royalty business from its mineral sands business, the two businesses of Iluka.


In November last year, Iluka Resources announced that it is considering structural separation of the Mining Area C royalty (MAC) through demerger.


Iluka Resources chairman Greg Martin said: “After a thorough review, the Iluka Board considers that a demerger represents the optimal way to unlock value for shareholders by establishing two unique pure-play ASX listed companies with separate management teams who are able to pursue independent strategies and growth opportunities.


“The business characteristics, capital intensity and risk-return profiles of Iluka and RoyaltyCo differ and hence will likely appeal to different types of investors, with the proposed demerger presenting an opportunity for Iluka shareholders to determine their preferred level of exposure to each business.”


Following the demerger, Iluka noted that it will retain sufficient financial flexibility to support its mineral sands project pipeline. The company will own a 15% interest in RoyaltyCo.


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Iluka Resources managing director Tom O’Leary said: “RoyaltyCo is expected to generate attractive cash flows from the MAC Royalty supporting dividends for its shareholders.


“The demerger will allow each management team to focus on pursuing growth opportunities and adopt capital allocation and investment frameworks appropriate for the strategy and risk profile of each business.”


In a separate announcement, Iluka suspended operations at its Sierra Rutile operation in Sierra Leone following a community disruption.


The disruption is expected to be resolved shortly and operations will be resumed over several days.


https://www.mining-technology.com/news/iluka-spin-off-iron-ore-royalty-business/

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$500 million coal mine announced for Tuscaloosa County

Warrior Met Coal plans to develop a new $500 million underground coal mining facility in northern Tuscaloosa County over the next five years, creating 350 new jobs.


The project, to be located on Brandon School Road, is scheduled to start construction March 1 with operations projected to begin during the second quarter of 2025.


Warrior Met mines non-thermal metallurgical, or met coal, used in steel production by metal manufacturers in Europe, South America and Asia.


The Blue Creek reserve project is expected to produce, based on current market pricing of approximately $150 per metric ton, more than $1 billion in coal over the life of the mine. The development will be a single longwall mine and is expected to have the capacity to produce an average of 4.3 million short tons per year of premium High-Vol A met coal over the first ten years of production.


It is one of the last remaining large-scale untapped premium High Vol A met coal mines in the United States.


The Tuscaloosa County Industrial Development Authority (TCIDA) approved tax abatements Wednesday for the project, according to Bryan Chandler, TCIDA interim executive director.


Average starting salaries for mining jobs with the project are anticipated to be around $85,000 a year, officials said.


Warrior Met Coal CEO Walt Scheller said the project will “transform” Warrior.


“Our commitment to this new initiative demonstrates our continued focus on being a world‐class premium met coal producer supplying the global steel industry. We appreciate the good working relationship we have with all our local officials, and we look forward to this project producing jobs and economic benefits for West Alabama," Scheller said.


Tuscaloosa County Commission Chairman Rob Robertson said the project is estimated to produce more than $11 million in education taxes from new construction and new purchases from the initial phase.


Gov. Kay Ivey, in a statement, said she was “extremely pleased” by the announcement.


“The jobs they create will provide real careerbuilding opportunities for Alabamians," Ivey said. "Further, the metallurgical coal to be produced in this new operation will enhance our state’s global trade footprint as it moves through the Port of Mobile and to Warrior Met customers around the globe.”


https://www.al.com/business/2020/02/500-million-coal-mine-announced-for-tuscaloosa-county.html&ct=ga&cd=CAIyGjBlMDRkYTQxNmY2YWRlMjY6Y29tOmVuOkdC&usg=AFQjCNGQLkYt1o3NRq3KhMebHu81jpExB

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