The International Energy Agency released a report Friday detailing ten actions governments and consumers could take collectively to lower oil demand, warning that sky-high gasoline prices could soar even further as peak driving season approaches.
The IEA is an autonomous organization made up of more than 30 member countries that operates under the umbrella of the Organization for Economic Co-operation and Development (OECD).
PENCE GROUP PUSHES US ENERGY INDEPENDENCE IN SECOND PHASE OF $10M AD CAMPAIGN
Most of the world's advanced economies are members of the IEA, including the U.S., Japan, Germany and France. China and India are affiliated "association countries" but do not have voting privileges.
In its report, the IEA says that "emergency measures" should be taken right now to cut the use of fossil fuels, and argues that if the world's advanced economies would "fully" implement its recommendations, the demand for oil could be lowered by 2.7 billion barrels within four months. The organization says that amount is enough to fuel every car in China.
DEMOCRATIC COMMITTEE CHAIR CALLS OIL CEOS TO TESTIFY AMID GAS PRICE SPIKE
"As a result of Russia’s appalling aggression against Ukraine, the world may well be facing its biggest oil supply shock in decades, with huge implications for our economies and societies," IEA Executive Director Fatih Birol said in a statement announcing the proposal's rollout.
"IEA Member Countries have already stepped in to support the global economy with an initial release of millions of barrels of emergency oil stocks, but we can also take action on demand to avoid the risk of a crippling oil crunch," Dr Birol continued. "Our ‘10-Point Plan’ shows this can be done through measures that have already been tested and proven in multiple countries."
Here are the actions the plan calls for:
Reduce speed limits on highways by at least 10 kilometers an hour, which is roughly 6 miles an hour. Work from home up to three days a week when possible. Ban the use of private cars on Sundays in major cities. Cut the price of taking public transit while encouraging walking and biking to destinations. Ban the use of private cars on certain weekdays in major cities. Incentivize carpooling. Promote efficient driving for freight trucks. Use high-speed and night trains instead of planes where possible. Avoid business air travel where alternative options exist. Reinforce the adoption of electric and more efficient vehicles.
The IEA also acknowledged that increasing the supply of oil and suspending gas taxes would help bring down prices at the pump.
https://www.foxbusiness.com/markets/10-ways-to-lower-oil-prices-iea
March 21 (Reuters) - Aluminium prices rose on Monday after Australia’s announcement to ban exports of alumina and aluminium ores to Russia exacerbated fears of supply disruption of the lightweight metal.
The move will limit Russia’s capacity to produce aluminium, one of its critical exports, the Australian government said.
“This could see Russia having to rely on China for any shortfall in alumina,” ING said in a note.
Russia accounts for about 6% of global supply of aluminium and 10% of nickel, and is a major producer of natural gas used to generate electricity that powers production of metals.
German aluminium maker Trimet will cut production at its main factory in Essen by half in the coming weeks amid huge costs for the energy-intense production process.
Three-month aluminium on the London Metal Exchange (LME) climbed 3.7% to $3,507 a tonne by 0940 GMT, after hitting a peak since March 10.
The most-traded May aluminium contract on the Shanghai Futures Exchange closed up 2.3% at 23,105 yuan ($3,635.38) a tonne, having earlier hit its highest since March 8.
“Traders are concerned about any further disruption in supply as the war extends,” said Kunal Sawhney, chief executive officer at research firm Kalkine.
“The demand for aluminium has soared globally while there is a supply deficit that may keep supporting aluminium prices in the near-to medium-term.”
Ukraine defied a Russian demand that its forces lay down arms before dawn on Monday in Mariupol, where hundreds of thousands of civilians have been trapped in a city under siege and laid to waste by Russian bombardment.
FUNDAMENTALS
* LME copper fell 0.9% to $10,243 a tonne, lead inched 0.1% to $2,254, zinc was 1.8% higher at $3,895 and tin fell 1.4% to $41,705.
* ShFE copper rose 0.1% to 72,880 yuan a tonne, lead eased 0.2% to 15,200 yuan, zinc gained 0.6% to 25,560 yuan and tin climbed 1% to 337,000 yuan. The most-traded August nickel contract fell 5.6% to 196,100 yuan a tonne, having earlier hit a one-week low at 195,000 yuan.
* The LME will raise its daily price limit for nickel trading to 15% from 12% effective Monday, it said.
* Barrick Gold has ended a long-running dispute with Pakistan and will now start to develop one of the world’s biggest gold and copper mining projects under an agreement signed on Sunday.
* Top metals consumer China kept its benchmark interest rate for corporate and household lending unchanged on Monday, as expected, although analysts say the case for monetary stimulus is building amid mounting external risks to an already slowing economy.
* For the top stories in metals and other news, click or ($1 = 6.3556 Chinese yuan renminbi) (Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V and Ed Osmond)
In cases damages confirmed, the repair of facilities at the marine terminal of the Caspian Pipeline Consortium may take 1.5-2 months
Caspian Pipeline Consortium
MOSCOW, March 22. /TASS/. The repair of facilities at the marine terminal of the Caspian Pipeline Consortium near the Black Sea port of Novorossiysk may take 1.5-2 months and result in oil export drop by about 1 mln barrels per day, Russian Deputy Energy Minister Pavel Sorokin said, cited by the Ministry’s press service.
"If damages are confirmed - it will take about 1.5-2 months. This is a rather serious timeframe and we see the risk of about 1 mln barrels per day may go out. Certainly, we would like that the recovery takes place as soon as possible and consequences are closed out, because this affects Russian companies, this affects in particular on production of Russian companies in the region. Therefore, we will endeavor to rectify these potentially serious consequences," the official said.
Facilities were damaged because of a heavy storm, the deputy minister said. There are three oil loading facilities on the site, one was damaged and the other one is under survey, Sorokin noted. "This is an extremely hazardous situation in terms of environment, no spills, no damages to the water area are allowed," he added.
His newer project is renovating an old seaside mansion into a hotel complex, which also employs dozens of locals. Says Eva Ambus, one of the first employees at Saka Manor, “Tõnis has injected new life into Ida-Virumaa.”
Yet his concern reached beyond the Ida-Virumaa region’s environment. For years, it was looked down upon as a Russian-speaking enclave suspected of being closer to Moscow than to Tallinn. In Sillamäe, former uranium workers, who spoke only Russian, were highly skilled but unemployed. Mr. Kaasik reconverted uranium facilities to bring his battery recycling business online in 2003, seeing it as his chance to turn waste into something useful and create jobs.
Tõnis Kaasik was Estonia’s first environment minister after the USSR collapsed. A sense of duty, including to the Russians left behind by the Soviets, keeps him creating opportunities for the region’s people.
“Estonia wasn’t a member of NATO yet but really wanted to be,” says Cheryl Rofer, a nuclear researcher. “Tõnis felt strongly … about Estonia and wanted it to be a better place.”
As a government inspector for the Soviets, Tõnis Kaasik witnessed the lack of environmental care in a region tasked with supplying the USSR’s nuclear arsenal with enriched uranium. When the regime collapsed, Mr. Kaasik became Estonia’s first environmental minister, and with the help of the international community began to contain the waste hazard that threatened the Baltic Sea.
In bone-chilling wind, Tõnis Kaasik makes his way through a maze of blackened red brick facades, metal pipes, and old chimneys to visit his staff at EcoMetal, the battery recycling company he carved out of an old Soviet uranium refinery that once fueled the USSR’s nuclear weapons arsenal.
In the distance, smoke billows from Soviet-era power and chemical plants, forming deep clouds above the chilly Baltic seashore. Used batteries arrive here at the European Union’s easternmost commercial port, which receives natural gas container ships as a major connecting point between Russia and Europe.
For years, this now-important industrial town was shrouded in mystery, reeling from its past as a secret uranium enrichment city. By the time the USSR collapsed, a major Soviet industrial capital had become a radioactive depository with a large, unemployed, mostly Russian-speaking population. But Tõnis Kaasik – environmental activist, Estonia’s first minister of the environment, and a green entrepreneur – gave the region, and its people, a new lease on life.
Why We Wrote This Tõnis Kaasik was Estonia’s first environment minister after the USSR collapsed. A sense of duty, including to the Russians left behind by the Soviets, keeps him creating opportunities for the region’s people.
Drawn to the Ida-Virumaa region’s cliffs and waterfalls as a geography student more than 50 years ago, Mr. Kaasik stayed as the Soviet regime made him an environmental inspector in charge of the forest in Estonia’s northeast. He witnessed the lack of environmental care that poisoned his country’s soil and soul, and decided to dedicate his life to helping it heal.
In independent Estonia he spearheaded the effort to rid Sillamäe of its radioactive legacy, guided by a “great sense of ‘the Soviets did this terrible thing to our country, and we would really like to heal those wounds,’” says Cheryl Rofer, a retired chemist from Los Alamos National Laboratory in New Mexico, whom Mr. Kaasik invited to the radioactive site in Sillamäe in 1998. She was instrumental in helping to get NATO to participate in its remediation.
Oil shale and later, uranium
Before war broke out in Ukraine, Estonia had pledged to stop producing electricity from shale oil by 2035. Ida-Virumaa’s rich oil shale deposits make the country nearly the highest per capita carbon emitter in Europe. Moscow once imported its best minds to work on the big shale-powered plants it built here. “The end products and the money went back to the Soviet Union; the environmental legacy stayed here,” Mr. Kaasik says. The industry had polluted the groundwater, decimated forests, and scarred the landscape with myriad “waste hills.”
After discovering that uranium could be extracted from the rock on the Ida-Virumaa coast, the Soviets built a top-secret city dedicated to processing the ore. By the 1990s an estimated 100,000 metric tons of uranium had been produced in Sillamäe, used in the manufacturing of 70,000 nuclear weapons. The place was never to be entered or left without approval. Nobody was allowed to know what happened there, “but I knew,” says Mr. Kaasik.
With the greater freedoms of Mikhail Gorbachev’s glasnost and perestroika, Mr. Kaasik took part in the successful 1987 protest movement to ban the opening of a new phosphorus mine, an event seen as helping to foster the dissolution of the Soviet government in Estonia. Only after Estonia gained independence in 1991 did the world discover Sillamäe’s secret past. Mr. Kaasik, as the first Estonian environment minister, had to deal with the legacy.
“There are problems linked to uranium mining all over the world, but Sillamäe may be one of the biggest,” remembers Ms. Rofer, a former nuclear-disarmament specialist who has led environmental cleanup projects worldwide, from Los Alamos to Kazakhstan. In Sillamäe, “there was a kilometer-long, half-a-kilometer-wide pile of tailings from what must have been 50 years of processing a variety of material, all of them having some radioactive material,” says Ms. Rofer. The waste was only yards from the sea; waves and rain could have washed off radioactive material into the ocean, toward Finland.
“There was all this waste left and my task was to cover this dump, make it secure,” says Mr. Kaasik. “That took 11 years and cost €28 million.” The international community, including the European Union, helped.
Ms. Rofer remembers Mr. Kaasik’s eagerness to gain NATO support. “Estonia wasn’t a member of NATO yet but really wanted to be,” she says. “Tõnis felt strongly about the dangers that the waste pond represented, and he felt strongly about Estonia and wanted it to be a better place.”
The remediation also paved the way for Sillamäe’s economic recovery. By 2003, with the radioactive waste turned into a gigantic green hill, the local harbor, which the Soviet military had bombed in the 1960s, could be rebuilt. Although the war in Ukraine and sanctions against Russia are widely expected to deal an economic blow to the region, the port had helped Sillamäe regain its position as a commercial bridge between the East and the West. “It was a must to solve this problem,” says Mr. Kaasik. “If it is not clean, nobody comes.”
“Now I had to think about what to do next,” Mr. Kaasik says.
Isabelle de Pommereau Aleksandr Arhipov (right) is the chief technologist of Tõnis Kaasik’s battery recycling company in northern Estonia. Mr. Kaasik (left) created the company at the former uranium processing plant where Mr. Arhipov was sent to work by the USSR when he was 21 years old.
Some workers were producing rare earth metals at the old plant, but Sillamäe was hurting. Former uranium workers, who spoke only Russian, were highly skilled but unemployed. Mr. Kaasik felt compelled to help. “The work had to be related to previous industrial work,” he says. Mr. Kaasik reconverted old uranium facilities to bring EcoMetal online in 2003, seeing it as his chance to turn waste into something useful. EcoMetal recycled 20,000 tons of batteries last year, producing 12,000 tons of lead and lead alloys.
Aleksandr Arhipov was 21 years old when he was uprooted from his native Tomsk in Siberia to work in Sillamäe. He saw his world collapse two decades later in 1990 when he went from being a Soviet citizen to being the former occupier, part of a group that was often mistrusted and hated by Estonians. “It was bad,” he recalls.
Mr. Kaasik hired Mr. Arhipov and 60 other ex-uranium workers. The job gradually gave him stability, and enabled him to surmount the trauma of Estonian independence. He says he has found his place as a full-fledged, Russian-speaking Estonian.
For many years, Estonia’s industrial northeast was looked down upon as a Russian-speaking enclave suspected of being closer to Moscow than to Tallinn. In the wake of Moscow’s 2014 annexation of Crimea, fear of the Kremlin using its Russian minorities to destabilize the West brought attention to Ida-Virumaa. Stability in the Russian-speaking region continues to be important in light of the war Russia is waging in Ukraine.
“Sillamäe is becoming normal,” says Mr. Kaasik. In Estonia, “there are Russian-speaking and Estonian-speaking Europeans.”
From Soviet barracks to mansion hotel
In 1971, Mr. Kaasik was a student measuring a 23-meter waterfall in Ida-Virumaa when a Soviet border guard arrested him, thinking he was a spy. The military barracks he was taken to was a 17th-century mansion with stunning views of the Baltic Sea. The historic home deserved better, he remembers thinking. One day, he told himself, he would restore it, so people could discover the region’s nature and history.
Just before EcoMetal took off, in 2001 Mr. Kaasik saw an ad in the newspaper: Saka, the manor he’d once been a prisoner in, was being auctioned off by the government. He bought it and has been renovating it one room at a time, yet another way of fulfilling his pledge to help Ida-Virumaa heal. More than 30 locals have jobs at the manor, a working hotel complex that is stimulating other economic development.
“Tõnis has injected new life into Ida-Virumaa,” says Eva Ambus, one of the first locals hired at Saka Manor. At first, when she couldn’t afford a car, Mr. Kaasik paid for her 27-mile round-trip commute by taxi, making it possible for her and many other employees to work in a struggling region with little public transportation. Ms. Ambus took a different job last year but is considering a return to her old one. “I miss Saka very much,” she says.
“I have no choice,” says Mr. Kaasik.“I feel some responsibility.”
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Zacks Stock Strategist and the editor of Zacks Commodity Innovators newsletter, Jeremy Mullin, joins the discussion to talk about the red-hot commodities sector.
It’s not just oil and natural gas which are at multi-year highs. Fertilizers like potash, metals like nickel and copper and agriculture products like wheat have been on a huge run too.
Is it too late for investors to dive into commodity stocks in 2022?
Or is there still further upside in some of these stocks?
Buy the Companies, Not the Commodities
Jeremy had plenty of advice for investors trying to navigate the commodities market including that he thinks investors should focus on the actual commodities companies and not the actual commodities themselves.
The reason?
With commodity prices at multi-year highs, the companies have tremendous free cash flows. Energy companies, for instance, are paying dividends, special dividends and doing massive share buybacks with all of their free cash flow. You won’t get that from trying to trade the commodity itself.
5 Commodity Stocks for Your Short List
1. Mosaic MOS
Mosaic produces potash and phosphate, two of the three top crop nutrients. The shares are up 66% year-to-date and have soared over 580% the last 2-years.
Yet Mosaic is still cheap, with a forward P/E of just 5.9. Earnings are expected to soar 125% year-over-year as fertilizer prices jump.
Mosaic pays a dividend, currently yielding just 0.7% but it announced it was increasing the dividend by the second quarter of 2022 and it will start a new $1 billion share buyback program.
Should those interested in the agriculture industry consider Mosaic?
2. Freeport-McMoran FCX
Freeport-McMoran is one of the world’s largest publicly traded copper producers but it also mines gold and molybdenum.
With copper soaring, FCX shares have done the same, jumping 803% over the last 2 years. They have continued to outperform in 2022, adding another 19.5%.
FCX announced in Nov 2021 a $3 billion share repurchase program and a base and variable dividend that would be $0.60 per share in 2022.
Freeport-McMoran is still cheap, with a forward P/E of 13.
If you’re looking for a copper play, should FCX be on your list?
3. Southern Copper Corp. SCCO
Southern Copper is also one of the world’s largest copper producers. In 2021, net sales hit a record high of $10.9 billion, up 36.9% from 2020, thanks to higher product prices. Copper was up 51.1% year-over-year.
Southern Copper is using some of its free cash flow on dividends, with the base dividend currently yielding 5.2%.
Shares are up 24% year-to-date but are not as cheap as FCX, with a forward P/E of 19.
If you’re looking for a big base dividend, should you be considering Southern Copper?
4. BHP Group BHP
BHP Group is an Australian commodity giant with business in oil, copper, coal, nickel and potash, among other commodities.
Like the others, BHP Group is seeing strong free cash flows. It currently pays a dividend yielding 10.2%.
Shares are up 17.6% year-to-date but BHP Group is still cheap, with a forward P/E of just 8.8.
Earnings are expected to be up another 20% this year.
If you want to own a company with exposure to several different commodities, should BHP Group be on your short list?
5. Rio Tinto Group RIO
Rio Tinto is a mining giant headquartered in London. It mines iron ore, copper, aluminum and minerals globally.
In 2021, Rio Tinto saw record full year results with sales up 42% year-over-year.
It saw free-cash-flow of $18 billion, of which it paid out 79% to shareholders. Rio Tinto’s dividend is currently yielding 10.4%.
Shares are up 14.2% year-to-date but remain attractively valued with a forward P/E of just 7.1.
Should Rio Tinto be on your short list?
What Else Do You Need to Know about Commodity Stocks in 2022?
Tune into this week’s podcast to find out.
Investor Alert: Legal Marijuana Looking for big gains?
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You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
https://www.nasdaq.com/articles/is-it-too-late-to-buy-the-commodity-stocks
At approximately 9am local time on February 21, 1972, a Boeing 707 airplane dubbed Spirit of ‘76 landed in Shanghai’s Hongqiao airport.
The airplane’s main door opened, and out walked US President Richard Nixon.
The trip shocked the world. There had been no formal communication or diplomatic ties between the US and China for 25 years. And Nixon’s voyage not only normalized relations between the two countries, but it kickstarted decades of worldwide economic growth.
Back then, the US was the richest and most powerful economy in the world. But as a consequence of that prosperity, the US was also a very expensive place to produce.
US companies were on the lookout for inexpensive, foreign manufacturing hubs where they could cheaply produce their products and sell them back to the US market.
China became that cheap manufacturing hub.
Eventually China was producing just about everything from T-shirts to antibiotics. And because the cost of production was so low in China, consumers around the world benefited.
Combined with cheap oil, a functioning global supply chain, and relative peace and stability, cheap Chinese production helped keep prices low and constrain inflation for decades.
But these trends are rapidly coming to an end.
For starters, China is now an economic superpower; many of its largest cities, in fact, have a per-capita GDP that exceeds the United States and Western Europe.
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Wages have increased dramatically in China over the years because of this increase in prosperity, which means that it’s no longer cheap to manufacture most lower-end products there.
A lot of manufacturing has already shifted to cheaper places like Vietnam, Bangladesh, etc. But even those countries are quickly becoming more expensive places to produce. And they don’t have nearly enough capacity to keep up with global manufacturing demand.
Some large companies are starting to bring their manufacturing back home. This is becoming more popular now as global stability wanes.
Plus businesses learned during the COVID-19 lockdowns, and the resulting global supply chain dysfunction, that manufacturing at home is more reliable.
That may be true. But manufacturing in a ‘rich’ country is also a LOT more expensive.
So, regardless of whether a business chooses to manufacture at home or abroad, they’re almost guaranteed to suffer higher production costs. And that means consumers will be paying more.
This trend is a massive reversal from decades of cheap foreign production that kept prices low. But it only scratches the surface of why inflation will likely persist for years to come.
(British economist Charles Goodhart, a former central bank official, describes this phenomenon in his new book The Great Demographic Reversal. It’s definitely worth reading to understand this trend.)
Historic shifts in the labor market will also be a major contributor to inflation.
For example, there have never been more retirees in the history of the world than there are right now. And their numbers are growing.
According to Federal Reserve data, an additional 1.5 million people in the United States retired early during the first year of the pandemic. There will likely be more to come.
Plus US Labor Department statistics show that millions of other individuals, including young people, abandoned the idea of working altogether because of the pandemic.
Traditionally there’s a steady balance between the number of jobs in the economy, and the number of workers in the labor force. Sometimes there are shocks, like during the Great Recession in 2008, when millions of jobs vanished, practically overnight.
Now the converse has taken place: millions of workers have vanished, practically overnight.
The end result is that there are 11.3 million unfilled jobs in the United States– a record high– because so many people simply quit the labor force.
Of course, another key labor trend is that younger workers aren’t interested in most traditional jobs.
Countless teenagers aspire to be Instagram starlets, or to live-steam themselves playing video games for a living. They have little interest in construction, transportation, or manufacturing jobs.
So, in summary, we have former ‘low cost’ manufacturing hubs becoming a lot more expensive. Plus a constrained work force back home that limits production and pushes costs higher.
This is all highly inflationary.
And there’s absolutely nothing the government or central bank can do about it. Gen Z 20-somethings aren’t going to suddenly decide to start working traditional jobs just because the Federal Reserve raises interest rates by 0.25%.
Most likely the politicians will make it much worse– which is another key factor in future inflation.
Nancy Pelosi stated on Friday that inflation was solely Vladimir Putin’s fault and insisted that their multi-trillion dollar deficit spending is “reducing the national debt” and “not adding to inflation.”
The President, meanwhile, has blamed inflation on “greed”, while the Federal Reserve insists that higher prices are a result of supply chain dysfunction.
Not one of these institutions– Congress, the White House, or the Fed– seems capable of looking at their own actions.
The Fed refuses to consider that inflation is due to their dizzying expansion of the US money supply– the largest since 1943.
Congress refuses to consider that inflation is due to their insane deficit spending– the largest ever in US history.
And the White House refuses to consider that inflation is due to its fetish for anti-competitive regulations and constant attacks on capitalism.
So, when the three key institutions charged with keeping inflation in check refuse to understand why there’s a problem, it’s hard to imagine they’re going to fix it.
There are plenty of other lingering inflation factors as well; geopolitical conflict is obviously inflationary. COVID-19 continues to be very inflationary. Environmental fanaticism is inflationary.
And just like the challenge of increased manufacturing costs, and labor market demographic trends, these issues cannot be magically fixed by politicians or central bankers.
In essence, policymakers are completely powerless to do anything about inflation.
There’s an irrational hope that inflation will quickly reverse, and prices will return to 2019 levels– just as soon as Putin leaves Ukraine… and the global supply chain dysfunction works itself out.
But this is wishful thinking.
First, both of those resolutions could take a very long time.
But more importantly, the trends I outlined are much larger and could keep prices elevated for years to come.
So, if your “Plan A” is depending on the government for prosperity and price stability, it’s time to take a hard look at your Plan B.
There is no ‘green transition’
It has become common, in recent years, to hear assertions that the world is already in the midst of a transition to a green economy. A prominent example from Australia is billionaire iron ore magnate and recent convert to “green hydrogen” Andrew Forrest, who recently claimed that “the journey to replace fossil fuels with green energy ... is now violently on the move”. This kind of “green triumphalism”, however, is little more than a fantasy—one that is (and often consciously intended to be) a barrier to winning the kind of radical change we need.
It’s understandable that some would believe a “green transition” is underway. After all, we’re constantly bombarded with propaganda to that effect. These days it’s no longer viable for the rich and powerful and their political servants simply to deny the reality of climate change and other environmental challenges. The new fad is to talk up whatever (inevitably small-scale) green initiatives are happening, and spruik the array of magical technological fixes that, like Forrest’s beloved “green hydrogen”, are always somehow just on the verge of taking off.
The propagandists of the “green transition” point to rapid increases in global investment in renewable energy and other green technologies over the past decade or so. And when you look at the raw numbers, they appear to provide some backing for the argument. Global investment in renewables was projected by the International Energy Agency (IEA) to come in at US$367 billion in 2021—up from $359 billion in 2020 and $336 billion in 2019. That’s a lot of new wind turbines, solar panels and hydroelectric power stations.
Those figures alone, however, are far from telling the whole story. The $367 billion investment in renewables in 2021 has to be seen in the context of the $1.9 trillion the IEA estimates was spent globally on energy production as a whole, a figure that includes $813 billion specifically on fossil fuels.
This points to a problem that quickly becomes apparent when you look at the relative position of fossil fuels and renewables in the global energy mix over time. The portion of energy coming from renewables has increased—from 6.6 percent in 1990, when climate change was first gaining serious attention, to 8.8 percent in 2010 and 12 percent in 2020. But a 5.4 percent increase over three decades, including only a slight acceleration to 3.2 percent in the decade to 2020, is hardly the kind of “transition” that scientists think is necessary to avoid runaway warming. If we continue at the current rate, the portion of renewables in the global energy mix will still be only just over 20 percent in 2050.
The reason for this slow progress is clear. While renewable energy production has grown significantly in the past 30 years, so too has the fossil fuel industry. In 1990, total global energy production from fossil fuels was 83,048 terawatt-hours (TWh). In 2019, before the artificial dip in production caused by the COVID-19 pandemic and associated public health measures, it was 136,131 TWh—an increase of 64 percent. The production of renewable energy has increased at a faster pace—rising from 6,226 TWh in 1990 to 17,466 TWh in 2019. Because it comes from such a low base, however, this 180 percent jump has had very little impact on overall global emissions.
A report by the IEA published in early March—Global Energy Review: CO2 Emissions in 2021—shows clearly why increasing investment in renewable energy alone doesn’t make a genuine “green transition”. The report found that in 2021 total global CO2 emissions rose at a record pace of 6 percent to a new high of 36.3 billion tonnes, despite, at the same time, “renewable power generation registering its largest ever growth”.
Perhaps the best way to judge whether a “green transition” is underway, however, is to look at concentrations of greenhouse gases in the atmosphere. The data on this is much more reliable than countries’ self-reported emissions, which are often the product of some highly dubious accounting methods. It’s the figures on concentrations of CO2 and methane in the atmosphere that show most clearly the disconnect between the increasing amount of green rhetoric from politicians and business leaders, and the unfortunately very gloomy reality.
Afghan authorities mentioned that China is eager about Afghanistan’s mining sector
Kabul:
China’s mining firm Metallurgical Corp of China (MCC) will open an workplace in Afghanistan’s capital Kabul by the top of this month, native media reported citing officers as saying on Saturday.
Afghanistan possesses an enormous quantity of intact mines and pure sources, together with lithium reserves, in addition to different helpful sources.
China is eyeing almost USD 1 trillion value of untapped mineral deposits in Afghanistan after the Taliban takeover of the war-torn nation.
5 Chinese language firms obtained particular visas and arrived in Afghanistan final yr in November to conduct on-site inspections of potential lithium tasks.
Esmatullah Burhan, a spokesperson for the Ministry of Mines and Petroleum, mentioned that the management of the Islamic Emirate of Afghanistan (IEA) has assessed the settlement on Mes Aynak copper mission and has discovered no issues, Ariana Information reported.
Burhan mentioned that mining at Mes Aynak in Logar province will start quickly.
Mes Aynak web site holds 11.08 million tonnes of copper, in response to MCC estimates.
In the meantime, Afghan authorities mentioned that China is eager about Afghanistan’s mining sector greater than every other nation, Ariana Information reported.
The Taliban took over Afghanistan after coming into Kabul in August 2021, resulting in the collapse of the Ashraf Ghani led authorities and mass evacuations.
For many of the nineteenth century, the Russian and British empires contended over Afghanistan in what was generally known as the Nice Recreation. The geopolitical competitors recognised the strategic place of Afghanistan, and its potential to affect South Asia.
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ISLAMABAD: Imports of energy, edible oil, Covid-19 vaccines, iron, steel, and its scrap in the first eight months of this fiscal year have doubled compared to last year, widening the trade deficit massively, Pakistan Bureau of Statistics (PBS) data showed on Saturday.
These components have not only pushed the country’s total imports to a new high, but also its goods exports-imports gap to a whopping $31.95 billion in July-February FY2022. As a consequence, the trade deficit ballooned 82.2 percent higher over $17.53 billion recorded in the same period of FY2021.
Imports, in the period under review, of petroleum products picked up 116.56 percent to $6.25 billion, LNG 105.3 percent to $3.08 billion, and purchases of medicinal products from overseas soared 407.4 percent to $3.64 billion over the same period of last year.
During these eight months, crude imports also increased 80 percent to $3.1 billion, palm oil 53.8 percent to $2.44 billion, electrical machinery 47.5 percent to $1.36 billion, iron and steel scrap 31.5 percent to $1.65 billion, iron and steel 29.4 percent to $1.97 billion, plastic materials 29.3 percent to $2.0 billion, and imports of mobile phones inched up 7.6 percent to $1.4 billion.
It is to be noted that during July-Feb 2021-22, total imports surged to $52.47 billion, while exports remained at $20.56 billion.
In the same fiscal period a year ago, imports arrived at $33.86 billion and exports $16.32 billion. Which shows a 25.95 percent growth in exports and 55 percent jump in imports.
Over the last several months, the increasing trade deficit has pressured the country’s balance of payment position. The country posted a current account deficit of $12.1 billion in the eight months (July-February) of FY2022, versus the surplus of $994 million in the same period last year.
The current account deficit declined 78 percent to $545 million in February from $2.531 billion a month ago. However, the deficit widened steeply on a year-on-year basis as it stood at $34 million in February 2021.
The country’s exports of knitwear increased 33.9 percent to $3.3 billion, readymade garments 25.1 percent to $2.52 billion, bed-wear 20.3 percent to $2.19 billion, cotton cloth 28.2 percent to $1.58 billion, rice (others) 9.87 percent to $1.11 billion, cotton yarn 43.4 percent to $815.4 million, towels 17.26 percent to $716.1 million, basmati rice 31 percent to $432.3 million, made-up article (excluding towels and bed wears) 9.9 percent to $556 million, while plastic materials exports rose 27.3 percent to $266.6 million.
Exports edged 7.88 percent higher to $2.82 billion in February 2022 over the previous month, whereas rose 36.36 percent compared to the same month a year ago. Pakistan sold goods worth $2.614 to overseas buyers in January 2022, while the monetary volume of exports in February 2021 was $2.068 billion.
Interestingly, trade performance in the 28-day February was comparatively encouraging, as exports for the first time reached $100/day this month. On Saturday, Abdul Razak Dawood, Adviser to the Prime Minister on Commerce and Investment, chaired a consultative meeting to discuss the trade trends for FY22 in the federal capital.
Officials of the Ministry of Commerce shared provisional trade figures compiled by Pakistan Bureau of Statistics (PBS). The meeting was informed that imports in February 2022 declined 2.14 percent to $5.907 billion over the previous month’s imports of $6.036 billion; however, they were reported to have increased 28.4 percent compared to $4.601 billion in February 2021.
Officials informed the PM’s aide there were signs of an easing trend in imports and an uptrend in exports. The adviser was informed that in terms of markets, Pakistan’s exports to the United States grew 25 percent, United Arab Emirates 118 percent, Netherlands 94 percent, Germany 60 percent, Italy 102 percent, Spain 90 percent, United Kingdom 27 percent, China 17 percent, Bangladesh 62 percent, and exports to Turkey climbed 157 percent. Razak in the end advised ministry officials to make necessary interventions if and when required to maintain the exports growth momentum.
https://www.thenews.com.pk/print/942969-energy-food-metals-push-imports-to-record-high
Australia will donate more military equipment, humanitarian aid and coal to Ukraine's effort to defend itself from invasion while placing additional sanctions on Russia.
The announcement on Sunday morning follows discussions between Prime Minister Scott Morrison, Defence Minister Peter Dutton, and their Ukrainian counterparts.
An additional $21 million worth of Australian Defence Force equipment will seek to meet priority requests from Ukraine, which is on top of $70 million in military assistance Australia has already provided.
The government also announced an additional $30 million in humanitarian assistance that will focus on protecting displaced women and children from Ukraine and addressing food shortages.
Australia announced an additional $51million in funding to support Ukraine on Sunday as well as coal shipments and a ban on exports of bauxite used to make aluminum to Russia (pictured: Prime Minister Scott Morrison)
The UNHCR estimated three million refugees have fled Ukraine since Russia's invasion on February 24 (pictured: refugees at Medyka on the Polish border on Saturday)
According to the UNHCR, about three million refugees have fled Ukraine since Russia's unprovoked invasion on February 24.
Australians who want to support those fleeing Ukraine can make tax deductible donations to approved organisations supporting Ukrainian refugees in Poland, Romania, Slovakia, and Hungary.
Ukrainians fleeing the conflict who have arrived in Australia can now apply for a three-year temporary humanitarian visa.
In defending the decision not to expand permanent visa caps, Mr Morrison previously said he expected the majority would want to return to Ukraine when the conflict ended.
'We shouldn't make the mistake to think every person who is seeking to leave Ukraine doesn't want to return to their home country,' he said
Australia will also donate at least 70,000 tonnes of thermal coal for Ukraine's power stations with coal producers bombarded with calls for supply over the past few weeks from Ukraine and other countries like Poland that were reliant on Russian supplies.
Mr Morrison on Sunday declared an immediate ban on exports of alumina and aluminum ores, including bauxite, to Russia as an additional sanction on Moscow.
Australia will provide an extra $21 million in military equipment to Ukraine on top of a previous $70 million worth last month that included missiles and ammunition (pictured: a Ukrainian armoured vehicle in Kyiv)
'Russia relies on Australia for nearly 20 percent of its alumina needs,' Mr Morrison said in a joint statement from several ministries.
The statement said the ban would limit Russia's capacity to produce aluminium, which is a critical export for the country.
'This significant step demonstrates the Morrison Government's absolute commitment to holding the Putin regime to account for the egregious way in which it is flouting international law and the law of armed conflict by invading its neighbour without justification, and targeting innocent civilians,' it said.
Russia is also the world's third largest oil producer, with the conflict and boycott on Russian oil leading to a surge in global oil prices.
Australia previously joined 30 countries in releasing a combined 60 million oil barrels from reserves to stabilise prices with thirty million barrels from the US strategic reserve.
Australians who want to donate to refugees can now receive a tax deduction for approve organisations (pictured: a Ukrainian refugee with his child arrives in Moldova)
Experts are forecasting about $2.20 per litre petrol prices at Australian service station over the next few months as crude oil prices hover around $110 a barrel.
The new aid package follows a previous $70 million in lethal and non-lethal military aid, which Mr Morrison said would include missiles and ammunition.
Other new humanitarian aid announced on Sunday included an additional $30 million in emergency humanitarian assistance, focused on protecting women, children, the elderly and the disabled.
'To help address education and critical protection needs for children, people living with a disability and those facing risks of gender-based violence, Australia will provide $10 million through non-government organisations under the Australian Humanitarian Partnership,' the statement said.
'We will provide $8 million to the United Nations Population Fund to protect displaced women and girls from gender-based violence and ensure access to sexual and reproductive health services.'
Australia will also contribute $10 million to the World Food Programme to help address increasingly severe food shortages.
Another $2 million will be given to the Emergency Action Alliance Ukraine Appeal to enhance the response of Australian NGOs, funding which will attract matched private donations.
Ukrainian President Volodymyr Zelenskiy called on Saturday for comprehensive peace talks with Moscow and also urged Switzerland to do more to crack down on Russian oligarchs who he said were helping wage war on his country with their money.
Ukrainian President Volodymyr Zelensky on Saturday (pictured) again urged Moscow to agree to peace talks
British intelligence warned that Russia, frustrated by its failure to achieve its objectives since it launched the invasion on February 24, was pursuing a strategy of attrition that could intensify the humanitarian crisis.
Russian forces have taken heavy losses and their advance has largely stalled since President Vladimir Putin launched the assault, with long columns of troops that bore down on Kyiv halted in the suburbs.
But they have laid siege to cities, blasting urban areas to rubble, and in recent days have intensified missile attacks on scattered targets in western Ukraine, away from the main battlefields.
The negotiations taking place in Vienna to revive the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), were reportedly close to fruition when Russia’s demand that Western sanctions not impact its trade with Iran suddenly upended the talks. Russia insisted on guarantees that Western sanctions imposed over its invasion of Ukraine would not hinder its trade with Iran, which is expected to soon be free of U.S. sanctions imposed by President Donald Trump. Not surprisingly, this Russian demand was unacceptable not just to the United States, but also to France, Britain, and Germany, and threatened to scuttle the deal—and the sanctions relief that Iran expected from it.
However, an alternative was soon suggested: the parties would negotiate a time-consuming workaround where other countries would take over Russia’s responsibility of storing the enriched uranium that Iran built up after the Trump administration withdrew from the agreement. But following the Iranian foreign minister’s visit to Moscow, the Russians scaled this back to just Western economic sanctions not applying to Russia continuing its nuclear cooperation with Iran, as envisaged by the 2015 Iranian nuclear accord.
Russia’s back-and-forth over this issue is the latest example of Moscow’s ambivalent approach to the JCPOA. On the one hand, Moscow strongly supported the achievement of the JCPOA in 2015 and continues to back its revival now. Despite whatever other differences it has with the West, Russia shares its interest in forestalling Iranian acquisition of nuclear weapons. Evidence for this positive Russian view of the JCPOA comes from those close to the negotiations who have reported how Russian diplomats have helped Tehran and Washington overcome their differences and reach compromise solutions that have allowed for agreement to be reached. Moscow presumably would not have done this if it had not wanted the JCPOA to be reached in 2015 or revived now.
Still, there have also been reports that Moscow is far more worried about the negative implications of U.S.-Iranian cooperation than about the possibility of a nuclear-armed Iran. Thanks to U.S.-sanctions, Tehran has been more dependent on Russia than it would be otherwise. By contrast, when the United States lifts sanctions on Iranian petroleum exports, Russia must face competition or even a loss of market share to Tehran now that traders are less willing to buy Russian oil. And if U.S.-Iranian cooperation in the nuclear realm ever led to a broader Iranian-American rapprochement, then Tehran and Washington could conceivably work together against Moscow’s interests. While this is a possibility that seems hardly likely in the near-term, worst-case analysts in Moscow see the prospect of Iranian-American cooperation as posing a real threat to Russian interests.
Evidence for this more negative Russian view of the JCPOA comes from occasional press reporting about non-public statements made by Russian officials and private conversations with Russian scholars not involved with the JCPOA negotiations. Revelations made by former Iranian foreign minister Mohammad Javad Zarif also indicate that he saw Moscow as working with Iranian hardliners to scuttle the original JCPOA talks.
Thus, if Moscow has ambivalent views on this issue, especially regarding Iranian-American cooperation at Russia’s expense, then why has it supported the negotiations that led to the signing of the JCPOA in 2015 and its resumption now? The answer appears to be related to a Russian view that so long as Tehran favors the JCPOA, it is not in Russia’s interests to oppose it. For Russian opposition would risk the possibility of Iran going ahead with the other JCPOA signatories (America, Britain, France, Germany, and China) without Russia. This would not only make Russia look impotent but could accelerate the broader rapprochement between Washington and Tehran that Moscow has long feared. And especially at a time when Moscow has become so isolated internationally due to its invasion of Ukraine, it cannot afford to upset relations with Iran. So, Moscow scaled back its demands at the JCPOA negotiations when Tehran made its objections clear.
But having done so, Moscow would not be displeased if the JCPOA negotiations broke down as a result of irreconcilable Iranian-American differences. Indeed, renewed Iranian-American tensions would undoubtedly be welcome in Moscow if they distracted the West from its current focus on the war in Ukraine.
Mark N. Katz is a professor of government and politics at the George Mason University Schar School of Policy and Government, and a nonresident senior fellow at the Atlantic Council.
Image: Reuters.
The Tennessee Board of Regents and the Tennessee Higher Education Commission announced a collaborative partnership with Amazon Web Services on Friday. The partnership will train, upskill and certify 5,000 Tennesseans in cloud computing by 2025.
The announcement was made at the Health and Humanities Building Theater at Nashville State Community College. Nashville State President Shanna Jackson delivered opening remarks regarding the initiative.
“We at Nashville State are always working for new ways to serve the Greater Nashville area,” Jackson said. “The partnership ... will expand our capacity to provide current and future students with more career opportunities and, at the same time, help meet the increasing workforce demands of Nashville’s tech sector.”
Russia’s assault on Ukraine is changing the world—except Washington, D.C., where the Biden Administration is continuing its war on fossil fuels as if energy security doesn’t matter.
The latest strike came Monday when the Securities and Exchange Commission voted 3-1 to advance a proposed rule requiring public companies to disclose climate risks. The proposal, which was issued with only Democratic votes, is contrary to SEC history, securities law, and sound regulatory practice.
Public companies are already required to report “material” events and risks, which the SEC defines as information a reasonable person would consider important. SEC Chairman Gary Gensler is redefining materiality as whatever BlackRock and progressive investors want to know. The 510-page proposal will require the public disclosure of risks to physical assets from climate change as well as from government anti-carbon policies.
Companies will have to report greenhouse-gas emissions generated directly by their operations (e.g., refining oil) as well as from their energy consumption. Companies will also have to report what are called Scope 3 emissions from their supply chains and customers if they are material, which will be in the eyes of progressive investors.
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Gautam Adani’s relations with Saudi and Lanka
Founder and chairman of the Adani Group, Gautam Adani, is an Indian industrialist and one of the world’s wealthiest individuals. Ahmedabad, Gujarat, India, is the company’s headquarters.
He is a first-generation entrepreneur whose main idea is to infuse “Growth with Goodness” through his nation-building vision. Due to an unexpected dip in shares at the Adani Group, he lost his title as Asia’s second-richest man on June 17, 2021.
In his nation-building ambitions, Mr Adani, a first-generation entrepreneur, is guided by the idea of merging “Growth with Goodness.” Each of the Group’s firms is committed to aiding India’s development of world-class infrastructure capabilities.
The Group has a long history of forming strategic alliances with global leaders that wish to be a part of India’s growth story. Long-term relationships have resulted from these foreign corporations’ global competence in their respective businesses, paired with Adani Group’s local execution and market capabilities. The list includes Wilmar Group, Total SA, and Elbit Systems, to name a few.
The Adani Foundation, Group’s Corporate Social Responsibility arm, is one of his key areas of interest. Every year, approximately 3.4 million people in 2315 villages throughout 18 Indian states benefit from the Foundation’s pan-India projects in education, sustainable livelihoods, healthcare and community infrastructure development.
Sri Lanka’s opposition claims that the Adani Group is sneaking into the country through the back door.
The Adani Group comprises seven publicly traded companies with a total market capitalization of over with operations in energy, ports and logistics, mining and resources, gas, defense and, airports and aerospace. In every business industry in India, the Group has developed leadership positions. “It is with grave sadness we see the Adani Group’s decision to enter Sri Lanka through the back door. We don’t like it when people try to avoid competition. It harms our damaged economy, exacerbates balance-of-payments problems, and adds to the anguish of our population,” said Ajith P. Perera, chief executive of Sri Lanka’s largest opposition party, the Samagi Jana Balawegaya (SJB or United People’s Force).
The announcement follows a previous deal between India’s Adani Group and Sri Lanka’s Northern Province to build two renewable energy projects in Mannar and Pooneryn. According to official sources, the Memorandum of Understanding (MoU), signed on March 11, 2022, has attracted attention due to its apparent secrecy.
According to a top officer with the government-owned company, Ceylon Electricity Board, Adani is considering investing in Sri Lanka’s energy and wind sectors (CEB). The Adani company recently signed a deal with Sri Lanka to build and operate the Western Container Terminal at Colombo Port.
The remarks came a day after Adani Group chairman Gautam Adani met with Sri Lankan President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa in Colombo, just weeks after his company signed a deal with the state-owned Sri Lanka Ports Authority (SLPA) to develop and operate the crucial Colombo Port’s Western Container Terminal (WCT).
“I had the honour of meeting President @GotabayaR and Prime Minister @PresRajapaksa. The Adani Group will look into new infrastructure collaborations in addition to constructing Colombo Port’s Western Container Terminal “Adani sent out a tweet.
“India’s strong links with Sri Lanka are anchored to centuries-old historical ties,” Adani wrote on Twitter, sharing photos of his two Sri Lankan meetings.
According to the Daily Mirror newspaper, the billionaire businessman arrived on the island on Sunday with a delegation of ten people aboard two chartered flights.
Based in Ahmedabad, India, the Adani Group recently signed an agreement with the Lankan government-owned Port Authority to build the Colombo Port’s West International Container Terminal. The USD 700 million Build-Operate-Transfer agreement, is the most significant foreign investment in the port industry.
The visit coincided with the Adani Group’s signing of a contract to run the Colombo Port’s WCT in September. Local port trade unions thwarted their attempt to take control of the Eastern Container Terminal (ECT). By introducing the WCT, the government dissolved the ETC tripartite agreement with India and Japan.
Sri Lanka’s cash-strapped economy will also benefit from the Adani investment.
Sri Lanka’s economy is on the verge of collapse due to past debts — primarily the repayment of sovereign bonds — and the devastating impact of Covid-19 on the island’s primary revenue generators — tourism and international remittances. Though the country has categorically rejected an IMF loan, concerns about the country’s capacity to service $1.5 billion in debt due next year remain.
The risk premium for default in Sri Lanka is the highest in Asia. The country’s FX reserves are around $3 billion, up from $2.8 billion in July due to a $787 million special drawing rights allocation from the International Monetary Fund. Even so, it’s only enough to pay six weeks’ worth of imports. Inflation is hovering at 6%, and food costs have increased by 11% since last year.
China’s ports in Sri Lanka, here’s what India said
The purchase is geopolitically significant because it is the first Indian port operator in Sri Lanka and the most influential foreign investment in its port industry. Even though Colombo Port supplied the Indian market essentially, no Indian investor had expressed interest in participating in Sri Lanka’s port industry. That is until the Chinese invaded the country.
Sri Lanka has now emerged as a critical battleground in India’s South Asian rivalry with China. The most recent example is port investments.
The CWICT, according to ADANI, will have a quay length of 1400 metres and an alongside depth of 20 metres, allowing it to dock ultra-large vessels. It is projected that 3.5 million containers would be processed.
Ports are increasingly being seen as strategic assets rather than just commercial ones. The investment comes a decade after China Merchant Ports (CM Ports) and Aitken Spence, a Sri Lankan conglomerate, signed a 35-year concession agreement with the Sri Lankan Ports Authority in 2011 to operate the southern terminal, known as the Colombo International Container Terminal (CICT), under a build-operate-transfer model.
The arrival of CM Ports was a watershed moment in Colombo Port’s history. CM Ports is one of the top 10 terminal operators globally, with a presence in over 40 ports across the world. The Colombo Port’s competitiveness was boosted by its global experience and efficiency. In 2012, Aitken Spence sold their investment in the southern terminal, leaving CM Ports with an 85% stake.
In the first half of 2018, the Colombo Port grew by ten, making it the fastest-growing sport. In 2019, it handled 7.2 million containers, with the CICT handling over 40% of them.
In addition, CM Ports acquired the Hambantota Port on the island’s southern shore in 2017 under a 99-year lease that sparked outrage.
Adani’s investment in the western terminal is seen as a game-changer amid increased Chinese influence in Sri Lanka’s port industry and erroneous perceptions about China’s debt-trap diplomacy. Beijing’s substantial investments in Sri Lanka’s ports had been a concern for New Delhi, which believed they had strategic implications. China’s involvement in the construction and operation of Hambantota Port caused particular worry, notwithstanding India’s rejection of the port’s construction in the first place.
Even though India and Sri Lanka have had tense relations, the new Adani agreement is considered commercially and strategically beneficial to all parties concerned.
Commercially, more than 70% of Colombo Port’s transhipment business is linked to the Indian market – much of it. According to available statistics, with Adani port terminals, having an Indian partner is a welcome development in forging new relationships in the Indian maritime and logistics sector. According to the firm, Adani Group also owns and operates Mundra, India’s fastest-growing sport. While the Mundra port has multiplied in recent years, it still trails behind Colombo due to India’s cabotage rules, allowing only Indian-registered ships to go on local routes. Colombo would see increased competition as Indian states eventually lift these limitations.
Sri Lanka benefits from its strategic location and one of the world’s busiest shipping routes when partnering with foreign enterprises, port operators, and logistics organizations. v. In 2014, a Chinese submarine moored at CICT, raising security worries among Indian onlookers. While the new agreement will not ban Chinese activities, it will alleviate their concerns. It also supports India’s investment policy in strategically critical commercial ports, as it has done in Iran’s Chabahar and Oman’s Sohar.
India also proved its ability to continue to exert influence over its neighbour to achieve its goals. Ports are increasingly being seen as strategic assets rather than just commercial ones. Countries can spread their power, influence, and forward defence capabilities without owning and spending a fortune on an overseas military post if they have control over and easy access to vital ports. Adani’s investment in Sri Lanka has given India a strategic advantage. Even though India and Sri Lanka have had tense relations, the new Adani agreement is considered commercially and strategically beneficial to all parties concerned.
https://www.inventiva.co.in/stories/gautam-adanis-relations-saudi-lanka/
An industrial steelmaking mill in operation. Steelmakers are feeling squeezed by rising fuel costs on two fronts, as the energy-intensive sector primarily relies on metallurgical coal or electricity.
Source: Frank Huang/E+ via Getty Images
An energy price spike triggered by Russia's invasion of Ukraine has laid bare supply chain vulnerabilities that could curb global growth in the near term.
Flows of Russian oil, natural gas and coal have been disrupted, driving up prices for available energy commodities. Russian metals and mining companies have continued to make shipments and avoid sanctions despite broad global opposition to their government's war on Ukraine, but higher energy costs have battered Europe's aluminum, nickel and steel sectors, as well as South Africa's platinum miners. Russia's invasion came as prices for many metals were already increasing due to supply tightness for commodities such as aluminum, nickel and coal.
Some metal producers in less affected parts of the world such as the U.S. and Canada benefit from relatively lower energy costs, but they may be unable to quickly compensate for decreased production from higher-cost countries. Mining companies may also be reluctant to expand amid sudden price surges due to the expensive, years-long development process to grow production. The combined commodity and energy inflation is poised to diminish demand for metal-intensive consumer products and drive down global growth, analysts and companies said, though it may also accelerate a move away from fossil fuels by some companies.
"This whole war in Ukraine is going to fuel prolonged and severe inflation globally," said Tom Mulqueen, head of research at Amalgamated Metal Trading Ltd.
Steel, aluminum, nickel get pricey
Recent spikes in energy prices could push more European metals such as aluminum out of the market, analysts and industry experts said. European metal producers are subject to fluctuations in electric costs, which often follow natural gas prices as the region is heavily dependent on Russian supply. Eurometaux, which represents major European metal producers including Glencore PLC and Norsk Hydro ASA, sounded the alarm in a Jan. 18 letter about rising energy costs and resulting cuts to aluminum and zinc production. European gas prices leaped to $67.92 per MMBtu in early March, up 139% from the start of the year.
"Europe is probably the place in the world that will be by far the most impacted," said Jean Simard, president and CEO of the Aluminum Association of Canada. "It's unfortunate, given the situation in Ukraine, but Canada is benefiting."
For steelmakers, the squeeze from rising fuel costs is coming on two fronts as the energy-intensive sector primarily uses either blast furnace or electric arc furnace technology. The former relies heavily on metallurgical coal, while the latter requires other energy inputs such as electricity from a grid.
"It's almost like it's a double whammy," said Ronnie Cecil, an analyst with S&P Global Commodity Insights' Metals and Mining Research team. "You can't escape from this either way. If you're a coal-based steelmaker, you're going to be hit by the massive increase in coking coal prices. If you're an electric arc furnace steelmaker, particularly in Europe, you're going to be fried by the power costs."
In a March 8 note, B. Riley Securities analysts Lucas Pipes and Matthew Key increased share price targets on coal companies producing metallurgical coal due to rising prices. Commodity Insights assessed the Australian premium low-vol hard coking coal at $670/t as of March 14, representing an increase of more than 50% in one month. As coal prices soared, so too have prices for liquid natural gas and oil, which has recently traded for over $100 a barrel.
Timna Tanners, a mining analyst with Wolfe Research LLC, noted that coal prices also face upward pressure from other sources, including impacts related to COVID-19. While prices were already climbing, the Russia-Ukraine conflict sent the price of the metallurgical coal used in steelmaking skyward.
"The market is really paying the price for not having an alternative to Russian coal [or] Ukrainian coal," Tanners said.
The high price of diesel
Miners without much exposure to natural gas or power prices are under pressure due to the rapidly increasing price of diesel fuel. The price of Brent crude jumped to over $130 a barrel as the invasion of Ukraine ramped up, though it began to fall closer to $100 a barrel in recent trading.
While iron ore is among the few commodities to avoid war-related price volatility, its miners still depend on heavy, diesel-fueled trucks.
Energy accounted for about 15.8% of mined iron ore costs in 2021, and that proportion has been as high as 17.5% in the past decade, according to Commodity Insights data. A BHP Group Ltd. spokesperson confirmed to Commodity Insights that energy costs are increasing as a result of Russia's invasion of Ukraine, and said the company is well-positioned to manage them.
Iron ore miner Fortescue Metals Group Ltd. is "operating in an environment of industry-wide cost inflation due to strong demand for labor and skilled resources, as well as an exposure to external factors, including the escalating cost of diesel," CEO Elizabeth Gaines said in an email.
Energy accounts for 19%-20% of copper mining costs, according to Commodity Insights data, and the industry will be spared some of the effects of rising energy prices where hydropower is a significant energy source, such as in Canada and Chile. But analysts noted most truck fleets operating in large open-pit copper mines use fossil fuels.
"It's massively exposed to diesel," said Mark Fellows, CEO of Skarn Associates, a U.K.-based consultancy that focuses on carbon emissions in the mining sector. "The same is true to a large extent for gold."
Remote mines without direct access to energy are set to be hit hardest by rising energy prices, due to their dependence on diesel generators, Dan Kemp, chief investment officer at Morningstar Investment Management, said in an email. Rising energy costs are "likely to offset some of the benefit of rising prices on the profitability of miners," Kemp said.
On that front, South Africa's platinum producers are among the miners most heavily exposed to rising energy prices, in part because platinum prices have not jumped as much as many other metals in recent months, resulting in less ability to absorb higher costs, said Jason Holden, a Commodity Insights analyst.
How automakers are rethinking supply models amid war, pandemic, earthquakes
The global auto industry just can't catch a break: automobile wire harnesses made on picnic tables because of a war in Ukraine, semiconductor plants halting production from an earthquake in Japan and backed-up ports in China amid rising COVID-19 cases are straining vehicle supply chains — again.
Forecasters expect millions of vehicles will be cut from production schedules this year and next as these events keep pushing automaker procurement departments, more than two years on, to work overtime navigating the bottlenecks. And that may be forcing automakers to rethink the just-in-time delivery model they've relied on to keep costs low.
"We’re looking for ways to move bearings, stampings, some wire harnesses," said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners LLP consulting firm. "So it’s not massive components that are being held up, but it is a problem. The unfortunate reality is it's not the first supply crisis we’ve had in the past two years."
S&P Global Inc.'s mobility team last week downgraded its 2022 and 2023 global light vehicle production forecast by 2.6 million vehicles for both years to 81.6 million and 88.5 million, respectively. Worst case could be a hit of as many as 4 million vehicles, said Mark Fulthorpe, the team's executive director for global production forecasting.
A big portion of that comes from halted vehicle production in Russia and Ukraine and increased risks for work stoppages because of semiconductor constraints, Fulthorpe said. Also factoring into the drop is decreasing demand as customers face inflation, including increasing costs from gas and energy prices.
"Many people if they've managed to remain in employment since the COVID crisis broke, typically they've saved quite a bit of money on travel, leisure spend that was seen as potentially a great enabler for pent-up demand to be released as we go forward," Fulthorpe said. "Now, we're thinking that that is a much more moderate effect, that some of the future demand will have been destroyed."
Wire harnesses were among the first components to feel the impact of the conflict in eastern Europe. Half of Ukrainian auto suppliers who have invested in the country since the late '90s produce wire harnesses, and it's the No. 10 producer for them in the world with 3.4% of global sales, according to AlixPartners.
Plants owned by BMW AG and Volkswagen AG have faced downtime due to parts shortages, leading BMW to cut its margin forecast and VW CEO Herbert Diess to warn the disruptions could risk the company's annual outlook. In its annual report, Daimler AG's Mercedes-Benz warned strong pricing "will not fully offset rising raw-material prices."
Downtime at a VW plant in Poland also has halted temporarily Ford Motor Co.'s Tourneo Connect compact van built there in a partnership, and the automaker is monitoring the situation, John Gardiner, spokesman for Ford of Europe, said in a statement.
Elsewhere, Ford has halted production at its plants in Saarlouis and Cologne in Germany. A Ford supplier also has said it cannot supply the parts for a 13.2-inch SYNC4 infotainment screen for the updated Focus in Europe. Production of the vehicle with the eight-inch screen continues.
"Supply of these parts are being moved to a new location in Europe but until this is up and running, the 13.2-inch screen with SYNC4 will not be available to customers," Gardiner said. "We apologize to customers for the inconvenience that this will cause but trust they will understand the exceptional circumstances."
Wire harnesses, in particular, are a challenge because they require a high labor content and often months of training, Fulthorpe said. Some automakers are looking elsewhere for the part, such as other eastern European countries or Mexico. Some have gotten more creative for now, Wakefield said.
"Some are insourcing," Wakefield said. "They are going to Germany or Italy in rare cases. It's a temporary thing. They'll have picnic tables with a testing device and a bunch of people twisting wires and testing the electrical connections on them for the short term."
Some automakers like Stellantis NV have found they've been better protected. CEO Carlos Tavares has said the automaker sources more of its components like wire harnesses from northern Africa rather than eastern Europe like its German rivals.
In a note last Tuesday, analysts with Morgan Stanley suggested automakers may have to rework supply chains designed for global, just-in-time delivery: "We believe the Russia-Ukraine conflict has the potential to accelerate a number of structural changes in the global auto industry."
That would increase insurance costs and wrap up automakers' capital in stockpiling certain parts rather than investing it in their products, creating a "new order of globalization," Andrea said.
"All of that has to be looked at in terms of how long these supply chains are," he said. "You have to start looking at risk and reward: whether the risk of lengthening that supply chain is too much, if it’s not to the benefit of putting that close by."
Semiconductors
Most pressingly, a 7.3-magnitude earthquake last Wednesday in Japan halted production at a number of semiconductor fabrication plants. The part is needed in vehicles from automated driving functions and infotainment to heated seats and emissions controls.
Renesas Electronics Corp., a key maker that experienced a fire at one of its plants last year that affected semiconductor access, initially idled production at three plants in response to the earthquake but started resuming lines last week. All three were expected to return to pre-earthquake operations by Wednesday.
An outcome of Russian steel production, Ukraine is the largest exporter of neon — half of whose global consumption goes to helium-neon lasers, according to AlixPartners. They're used to etch circuit patterns onto wafers of silicon in semiconductor production, a process called lithography.
That means semiconductors could be facing another capacity challenge in the future, especially if the conflict in Ukraine is prolonged. For now, chip fabricators don't expect disruptions in the near-term. A conflict between Ukraine and Crimea in 2014 taught them to rely less on neon, diversify sourcing and build safety stocks of up to six months.
"If the risk was to emerge, it will probably be in the second half of this year, and then possibly into the first half of 2023," Fulthorpe said. "At the moment, it's not an enormous risk, but it's certainly something that we should not ignore."
Palladium also is used in the production of semiconductors, and nearly a quarter of it comes from Russia.
Nickel for EVs
Russia is the third-largest producer of nickel behind Indonesia and the Philippines. Russia represents 10% of global nickel production, but it's the largest for mining production battery-grade nickel globally and No. 2 for its refined production after China, according to AlixPartners.
Nickel is an important element for electric-vehicle batteries. Although some automakers are moving away from using the expensive mineral, it continues to remain critical for the ramp-up of EV production.
A short squeeze pushed the price of nickel to more than $100,000 per ton earlier this month. It's now around $43,000 per ton, higher than historical averages.
"Right now, it’s a price issue," Wakefield said. "If supply curtails from Russia, it’s a huge issue. Nickel is already a tight metal."
The best-case scenario, he said, would be if China starts buying more nickel from Russia while western nations have sanctions in place, opening more supply for them from places like Australia, Canada and Indonesia.
But increasing costs of raw materials and logistics already have gotten to some EV makers. Tesla Inc. recently raised prices in the U.S. and China, and Rivian Automotive Inc. increased the price on reservations for its electric vehicles only to reverse the decision following an uproar from customers. Lucid Group Inc. CEO Pater Rawlinson told Reuters last week that it was an "inevitability" the California-based startup would have to look at price hikes.
"Ten to 15% of the cost (for an EV battery) was in the nickel," Wakefield said. "Now, it’s another $1,000 to $2,000 for a battery. That’s a real impact."
As General Motors Co. on Monday launched production of the Cadillac Lyriq EV, the automaker said for now it's maintaining its 2022 financial outlook, which includes $13 billion to $15 billion in operating profit following a record $14.3 billion for 2021.
"The geopolitical risks you highlight are real, but we're not a new automaker," GM President Mark Reuss told reporters. "If you look at some of the rare earth materials that are required for EVs and other things in our vehicles, we've got a great purchasing organization that works on this partnership with our great supply base to really make sure that we do things in advance of any episodic geopolitical conditions that happen on long-term buys on things like nickel and other rare earth materials in particular for cells in EVs."
China outbreak
Meanwhile, China is grappling with the country’s largest outbreak since the pandemic began in Wuhan more than two years ago because of a new version of the quickly spreading, but less severe, omicron variant. The country recently reimposed lockdowns in a number of cities. Efforts to prevent the spread led to downtime for two days last week at Tesla's Shanghai plant and experts have warned of shipping delays from backed-up ports.
"It looks worse than last year when they shut down the power and had that magnesium problem," Wakefield said.
Adding to the potential stressors is the Biden administration threatening to respond if Beijing decides to give material aid to Russia to support its war in Ukraine. GM's Reuss emphasized the advantages of a global, redundant supply chain.
"It's not just people that only supply in China," he said, "but the global suppliers that are in China, North America and other places, and so we leverage that global footprint. We never have just one answer on those things."
August 2021
Inflation is above our 2% target. We expect it to rise further in the coming months, but then fall back to our target
November 2021
We expect inflation to rise to around 5% in the spring, but then fall back
February 2022
We expect inflation to rise to around 7% in the spring, but then fall back
March 2022
We expect inflation to rise to around 8% in spring 2022 and perhaps even higher later this year.
Mukesh Ambani and Gautam Adani tiptoed around each other for years to reach the top two rungs of Asia’s wealth ladder. tiptoed around each other for years to reach the top two rungs of Asia’s wealth ladder. While one of them built an empire in telecom and retail, the other established a lock on transport and energy distribution. Increasingly, though, the two billionaires from India’s Gujarat state are starting to overlap, setting the stage for a clash that could alter the country’s business landscape. Given the duo’s proximity to politics, the shock is bound to reverberate through the corridors of power as well.
In the latest sign of their coalescing orbits, the Adani Group has discussed the idea of buying a stake in Saudi Aramco from the oil-rich kingdom’s Public Investment Fund, potentially linking the investment to a broader tie-up or asset swap deal, according to Bloomberg . This is just months after Ambani’s Reliance Industries Ltd. and Aramco called off more than two years of talks to sell 20% of the Indian conglomerate’s oils-to-chemicals unit to the Saudi behemoth for about $20 billion to $25 billion-worth of Aramco shares. In an attempt to cement the partnership, Reliance even got Aramco chairman Yasir Al-Rumayyan to join its board as an independent director last year.
Aramco, the No. 1 crude oil producer, is still a better fit with Ambani’s Reliance, which owns the world’s largest refining complex at Jamnagar in Gujarat. Reliance is also a leading manufacturer of polymers, polyester and fiber-intermediates. But, Adani, too, has wanted to enter petrochemicals by putting up a $4 billion acrylics complex near his Mundra port in Gujarat in collaboration with BASF SE, Borealis AG, and Abu Dhabi National Oil Co., or Adnoc. Covid-19 put a dampener on the plan. This wasn’t the first retreat from his petro-ambitions: Nothing also came of a plant in Gujarat, which was looking to rope in Taiwan’s CPC Corp.
Adani’s main interest in hydrocarbons continues to be coal. He mines it in India and Indonesia, produces coal-fueled power at plants like the one in Mundra and berths vessels laden with the stuff at his vast network of ports. Exports of coal from the Carmichael mine would start soon, the group said in December, after slogging for a decade over the environmentally controversial project in Australia’s Galilee Basin. But while coal is very much India’s past and present, it’s not the future. Which is why Adani made a big bet on solar power. He also started circling around plastics.
After Adani set up a new petrochemicals subsidiary last year, it became clear that sooner or later he was going to try and breach the moat of stable cash-flows established by the rival group’s founder Dhirubhai Ambani, India’s “Polyester Prince” (and father of Reliance’s current boss). The tantalizing question is whether Adani’s ambitions include a refinery as well.
Back in 2018, Aramco and Adnoc were going to partner with state-owned Indian firms to set up a mammoth $44-billion refinery. That plan has gone nowhere after the project lost its original site in India’s Maharashtra state because of local political opposition. Could the Adani Group insert itself into a revival of that project? For now, the preliminary talks with Aramco seem to have a modest focus: collaboration in renewable energy, crop nutrients or chemicals, according to Bloomberg . However, if Aramco is still keen on owning a captive refinery in India, the contours of its Adani partnership might well expand.
That would put the billionaires in direct competition — though not for the first time. In June last year, Ambani told his shareholders he was embarking on his life’s “most challenging” undertaking by making a pivot to clean power and fuel. He followed up with a blitzkrieg of acquisitions in the field. Before that, it was Adani who wanted to be the world’s largest renewable energy producer by 2030. By revealing his plans for four gigafactories in Jamnagar — one each for solar panels, batteries, green hydrogen and fuel cells — Ambani put Reliance in the lead role in India’s climate-change narrative. And he did it just before the COP26 summit in Glasgow where Prime Minister Narendra Modi made a bold commitment to lower the country’s dependence on fossil fuels.
Analysts like to clump Ambani and Adani together as a kind of India Inc. duopoly. “By backing the ‘2As’ at the expense of other companies, both domestic and foreign, the government is encouraging an extraordinary concentration of economic power,” economist Arvind Subramanian, an adviser to the Modi administration until 2018, and Josh Felman, a former International Monetary Fund official in New Delhi, wrote in a recent Foreign Affairs article about how India’s inward turn could stymie its rise.
The two superstar business groups are indeed reducing the competitive intensity in the broader economy by swallowing smaller and weaker firms adjacent to their operations. Still, every indication suggests they’ll compete fiercely against each other. Ambani took the telecom route to emerge as the czar of India’s consumer data; Adani wants to come in from the other end by providing storage services to bits and bytes, powered by green energy. Ambani is engaged in a brutal contest with Amazon.com Inc. for control of the grocery supply chain. Adani warehouses grain for the state-run Food Corp. of India and owns the country’s No. 1 edible oil brand.
Their balance sheets are different. For the past five years, firms linked to Adani have been hyperactive in the international debt market, borrowing more than any other Indian company. Ambani, meanwhile, has turned Reliance into a sparsely leveraged fortress--not a bad place to be as global interest rates harden. Visions are different, too. While Adani, 59, supplies grid power (and cooking gas, in partnership with with France’s TotalEnergies SE) to households, Ambani, who’s five years older, imagines a future in which “every house, every farm, factory and habitat could, in principle, free itself from the grid by generating its own power.” Will the two billionaires try to shape policies--and influence politics--according to their competing goals? You bet. A confrontation looks almost guaranteed. Investors in India should grab some popcorn.
TOP STORY
EU lawmakers are struggling to home in on compromises on a pivotal reform of the bloc’s carbon market, with some wary of stirring public anger over heightened energy bills amid the unfolding crisis in Ukraine.
AVIATION/SHIPPING
The global shipping and ports industries face long-term climate impact costs rising up to $25 billion annually in the absence of action to cut emissions, but ports are lagging on mitigation despite the key role they potentially play for the shipping sector to adopt a net zero goal.
Low-cost airline Ryanair has set itself a net zero target for 2050 – a goal that more than half of which it said will be met using a mix of carbon offsets and sustainable aviation fuels.
EMEA
EUAs jumped to a six-day high above €81 on light trading Tuesday ahead of tomorrow’s quarterly options expiry, while energy prices were also generally higher as little progress appeared to be made towards reaching a ceasefire agreement in Ukraine.
UK heavy industries are urging the British government to protect them from the potential collapse of an offshoot of Russian energy firm Gazprom, one of Britain’s biggest suppliers of gas and related carbon allowances.
Polish utility PGE reported a 23% rise in its coal-fired power generation, it said in financial results on Tuesday, outpacing an 18% rise in its overall output amid a post-pandemic demand recovery.
AMERICAS
A Canadian asset manager has launched an investment vehicle that will buy performance credits and offsets under Alberta’s Technology Innovation and Emissions Reduction (TIER) regime and hold them as the carbon price jumps this decade.
The March auction for the Massachusetts Global Warming Solutions Act (GWSA) settled well below $1.00, an enormous departure from all previous sales in the power sector cap-and-trade programme.
ASIA PACIFIC
China on Tuesday released the five-year plan for its energy sector, but without announcing any new or improved climate change or carbon emissions targets for the industry.
INTERNATIONAL
Four months on from a UN emissions trade deal, governments remain puzzled over how host countries should authorise international transfers and many other practicalities, a virtual meeting heard this week.
The US Securities and Exchange Commission (SEC) climate disclosure rules are a welcome step towards improved corporate climate action worldwide, a conference heard on Tuesday as investors urged firms to stay focused on long-term climate goals in the face of the current energy crisis.
VOLUNTARY
Investment managers SparkChange have signed a strategic deal to manage the emissions inventory of an Australian company looking to expand into European and North American carbon markets.
London is in a strong position but faces significant competition from cities worldwide in its bid to become a global hub for climate finance and the voluntary carbon market, a conference in the UK capital heard on Tuesday.
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CONFERENCES
North American Carbon World (NACW) 2022 – Apr. 6-8 in Anaheim, California – presented by the Climate Action Reserve: Learn, collaborate, and network on carbon markets and climate policy at NACW, North America’s largest carbon event. NACW features comprehensive and up-to-date information, key thought leaders advancing innovative climate solutions, and the best networking opportunities with colleagues in the business, government, nonprofit, and academic sectors. NACW will dive into the status and future of North American carbon markets, climate policies, innovative solutions, natural climate solutions, net zero pledges and beyond, transportation and LCFS markets. www.nacwconference.com
City Week 2022: Resetting Priorities for a Better Future – Apr. 25-27 at London Guildhall: Now in its 12th year, City Week is the premier gathering of the international financial services community. Organised in partnership with the UK Government and leading City institutions, City Week brings together industry leaders and policy makers from around the globe to consider the future of global financial markets. Each day will address a specific theme, with Day 1 focussing on “Meeting the climate change challenge – the role of financial services in achieving net zero”. www.cityweekuk.com
Reuters Events: Global Energy Transition 2022 – June 14-15 in New York City: The conference unites CEOs and changemakers from the energy, industrial, and government ecosystems to shed light on the defining issue of our time, and help companies meet a uniquely difficult challenge. Over two days and five critical themes, we will define the future of energy, inspire a decade of action, and prepare the sector for challenges still to come, with diverse voices from around the world bringing passion and expertise to deliver a new path forward. Find out more by visiting the website today: https://bit.ly/35H7cgb
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BITE-SIZED UPDATES FROM AROUND THE WORLD
Carbon Pulse has teamed up with CME Group to provide its clients with regular updates on the global carbon markets. Check out these briefs for the latest insights on pressing trends and events impacting markets, published every other week. Registration required
INTERNATIONAL
Gut feeling – UN chief Antonio Guterres has warned that the war in Ukraine risks pushing global climate targets out of reach. In a video address to an Economist conference, Guterres said: “The fallout from Russia’s war in Ukraine risks upending global food and energy markets, with major implications for the global climate agenda. As major economies pursue an ‘all-of-the-above’ strategy to replace Russian fossil fuels, short-term measures might create long-term fossil fuel dependence and close the window to 1.5C. Countries could become so consumed by the immediate fossil fuel supply gap that they neglect or knee-cap policies to cut fossil fuel use…This is madness. Addiction to fossil fuels is mutually assured destruction.” (The Guardian)
EMEA
Cambo comeback – Oil company Shell is reconsidering its recent decision to remove investment from the UK’s Cambo oil field, the BBC reported, citing anonymous sources. In December, Shell said the economic case – along with possible regulatory delays – meant it was withdrawing from the Cambo project. While oil was $70 per barrel at the time, it has since risen consistently over $100 per barrel. While the company’s official position had not changed, it did acknowledge that the economic, political, and regulatory environment had changed enormously since the decision was announced just three months ago.
Blue’s cruise – German Vice-Chancellor Robert Habeck has secured several hydrogen cooperation contracts with the UAE, with the first blue hydrogen expected to be shipped to Germany in 2022. The climate merits of blue hydrogen are often questioned though, because it relies on fossil gas as the primary feedstock whereas green hydrogen is made from water electrolysis. The vice-chancellor welcomed the planned cooperation between German and Emirati companies and the planned research cooperation involving German research institute Fraunhofer and the UAE’s energy ministry. Germany aims to import the lion’s share of the 3 million tonnes of “clean” hydrogen it aims to use by 2030. As a consequence, securing contracts with potential exporters like the UAE became a top priority, with the previous administration overseeing the launch of the Germany-UAE energy partnership in 2017. The announcement, made during Habeck’s trip to Abu Dhabi, comes a day after he announced a major LNG supply deal with Qatar, with both agreements aimed at helping Germany reduce its reliance on Russian gas. (Euractiv)
Vorsprung durch Tesla – Tesla has opened its first European e-car production hub with its gigafactory near Germany’s capital Berlin, shaking up the industry in the birthplace of the internal combustion engine, Clean Energy Wire reports. Tesla head Elon Musk handed over the first electric cars produced at the site to clients. Musk also invited top-level government representatives such as chancellor Olaf Scholz and economy minister Robert Habeck to the opening ceremony, who hailed the speed of the factory’s planning and construction. Start of production at the gigafactory is a crucial day for the mobility transition in Germany, Habeck said. “The path towards electromobility is another step away from oil imports,” he added, making a connection to the current energy supply debates following the invasion of Ukraine.
ASIA PACIFIC
Laying down the law – South Korea’s state council on Tuesday approved the enforcement decree of the Framework Act on Carbon Neutrality, meaning the nation now has legislated its targets of cutting emissions 40% below 2018 levels by 2030 and reaching net zero emissions by mid-century. The legislation obligates all ministries to hammer out detailed plans on how they intend to meet those goals within their portfolios. The legislation also recognises the opportunity to purchase international carbon credits under Article 6 of the Paris Agreement. Korea currently plans to buy around 30-33 mln such units by the end of this decade.
Tackle demand, not supply (maybe) – ExxonMobil is warning the Australian state of Victoria that those who rely on gas for heating, cooking, and hot water face the threat of price spikes and possible supply shortages if the Victorian government proceeds with a proposal to halve gas use, The Age reports. State government officials have indicated a 25% cut by mid-decade and a 50% cut by 2030, and are conducting public consultations for a roadmap that will outline plans to achieve emissions reduction targets, including using electrical appliances for heating rather than gas, improving energy efficiency, and focusing on alternative fuels such as hydrogen or biogas. However, ExxonMobil, which operates the Bass Strait oil and gas fields off Victoria’s coast, is growing increasingly concerned about the prospect of aggressive targets to slash gas consumption as the government builds a strategy to reduce the state’s high reliance on the fossil fuel. Interestingly, oil company executives have often called for climate and energy policymakers to address demand for fossil fuels, and not just supply, to avoid price shocks as the world transitions to a lower carbon future. At an energy conference last year, Reuters reported that Exxon Mobil Chief Executive Darren Woods said that “As policies around the world change and governments look to try to reduce their economies’ dependence on oil and gas … if we don’t balance the demand equation and only address the supply, it will lead to additional volatility.”
Road to net zero – It is “technically viable” for Singapore’s power sector to achieve net zero emissions and aspirations to do so by 2050 are “realistic,” an expert committee tasked to examine the future of the country’s energy system said, Channel News Asia reports. To achieve that, “transformational changes” will have to be made to the entire energy value chain – from supply and demand to the development of the country’s power grid. For example, Singapore must diversify its energy supply by having more electricity imports and using low-carbon hydrogen for power generation, as part of nine recommended strategies in the report. Other strategies include accessing carbon credits, maximising solar power, exploring other low carbon options such as CCS, geothermal, and nuclear, managing growth in demand, improving the grid, leveraging digital technologies, and shaping end user consumption patterns. However, the committee noted that the process of reaching net zero will be challenging given the uncertainty of technology and geo-economic trends, as well as Singapore’s limited renewable energy potential.
AMERICAS
Alive till ’25 – Canadian PM Justin Trudeau on Tuesday announced an agreement reached by his ruling centre-left Liberal Party and the left-wing NDP to keep the minority Liberal government in power until Parliament rises in June 2025. The parties agreed to prioritise seven actions under this agreement, including tackling the climate crisis through achieving net zero emissions no later than 2050 and developing a plan to phase out public financing of the fossil fuel sector. The agreement could help ensure support for the Liberals’ various climate policies, including the post-2022 carbon pricing benchmark that will see Canada’s ‘backstop’ CO2 price rise to C$170 in 2030 from C$65 in 2023.
Still standing – The coal-fired power plant in Bow, New Hampshire has won another year’s funding from a programme designed to guarantee future electricity supplies, although at about three-quarters of previous levels. The two units at Merrimack Station, the last coal-fired power plant in New England, will receive about $785,000 per month for being on call in the 2025-26 period under what is known as the forward capacity market. Merrimack Station is owned by Granite Shore Power, an investment group that bought it from Eversource in 2017. It operates as a “peaker plant,” providing power occasionally to meet peak demand or when other fuels are unavailable such as during winter when most natural gas is used for heating rather than power. (Concord Monitor)
VOLUNTARY
Setting up shop – Oil major Shell and Indian project developer EnKing International have incorporated their joint venture agreed last year, which will seek to generate over 100 mln nature-based carbon credits over the next five years. The $1.6-bln JV, incorporated in India, has been given the name Amrut, which in Sanskrit means to obtain immortality, EnKing CEO Manish Dabkara said on LinkedIn.
Quality credit control – The Carbon Credit Quality Initiative (CCQI) on Tuesday published the second version of its methodology to provide a deep assessment of voluntary emission reductions (VERs). The environmental NGO-led initiative is trialling its approach on three project types and four offset standards, assessing VER quality against seven criteria and various sub criteria and formulating a ranking on a scale of 1-5. CCQI has not yet released its scores for these initial project types and standards.
AVIATION
SAFfy taffy – Delta has signed an agreement with sustainable aviation fuel (SAF) maker Gevo as part of its goal of fuelling 10% of its operation with SAF by the end of 2030, the company said in a press release. Through the agreement, Delta expects to receive roughly 283.9 mln L of SAF annually for seven years, anticipated to start in mid-2026. “SAF is existing technology that is crucial for the industry to achieve its net zero goals,” said Pam Fletcher, Delta’s chief sustainability officer. Delta will need to secure 1.5 bln L annually by the end of 2030 to meet its 10% SAF procurement commitment and approximately 15.1 bln gallons annually if it were to fly solely on SAF.
SCIENCE & TECH
Aerials and the Answer – Oil major BP’s venture capital arm, bp ventures, has made a £3 mln equity investment in a pioneering unmanned aerial vehicle (UAV) business that uses drones and AI to detection methane. The business, named Flylogix, combines its UAV with AI, satellite communications, and methane sensor technology, from partner SeekOps, to monitor and measure methane across the globe. Bp’s new investment supports the company’s ‘Aim 4’ of installing methane measurement on all existing major oil and gas processing sites by 2023 and delivering a 50% reduction in methane intensity across its operations. (Gasworld)
AND FINALLY…
New dimension – A new ‘3D’ pilot designed to capture CO2 from industrial activities at steelmaker ArcelorMittal’s Dunkirk site has begun operations. Funded by the EU’s Horizon R&D programme, it includes the verification of the DMX carbon capture process developed by IFPEN and designed to be replicable across heavy industry. During the demonstration stage, the pilot will capture 0.5 tonnes of CO2 an hour, equating to more than 4,000 tonnes per year. (Gasworld)
Got a tip? How about some feedback? Email us at news@carbon-pulse.com
By Eileen Soreng and Praveen Menon
(Reuters) – Russia might look to its giant neighbour to replace Australian alumina supplies cut off by sanctions, but Chinese aluminium smelters need all the feedstock they can get and may be worried about secondary sanctions from the West, industry analysts say.
Australia on Sunday imposed an immediate ban on exports to Russia of alumina and aluminium ores, including bauxite, in response to Moscow’s invasion of Ukraine.
The move squeezes Russian aluminium giant Rusal, the world’s No.2 producer outside China. It gets about 19% of its alumina from Australia’s Queensland Aluminium (QAL), in which it holds a 20% stake.
Graphic: Australia’s ban on alumina exports to Russia tightens the raw materials screw on Rusal: https://fingfx.thomsonreuters.com/gfx/ce/egvbkbnempq/Rusal%20Alumina%20Dependency.PNG
While there is no concrete evidence that Russia is seeking Chinese alumina supplies, analysts say close ties, proximity and the size of the Chinese market make it a logical option.
China, the top global aluminium producer, is likely to step in and absorb Australian alumina exports that had previously headed to Russia and could then potentially on-sell supplies, said Wood Mackenzie senior manager Uday Patel.
“Chinese firms could buy alumina from QAL and then sell back to Rusal,” Patel told Reuters.
“(China) could also sell some of its domestic production, but note that alumina demand in China is also increasing this year as Chinese smelters lift output after all the power constraint issues in 2021.”
QAL and Anglo-Australian mining giant Rio Tinto, which owns 80%, did not respond to requests for comment about what would happen to the alumina exports meant for Russia and if they were receiving requests from Chinese companies.
Rusal could not be reached for comment but said previously it was evaluating the effects of the Australian move.
ANZ analyst Soni Kumari agreed China’s domestic demand would constrain what it can do for Russia.
“Russia could turn to China, but the country does not have enough export surplus given their requirement to feed domestic smelters,” she said. “Further, Chinese exporters would be cautious too due to fear of secondary sanctions.”
Washington has warned China against taking advantage of business opportunities created by sanctions and helping Moscow evade export controls or process its banned financial transactions.
Kazakhstan could step up to help offset Russian shortages, Kumari said, while other suppliers could include Brazil, Jamaica and Guinea.
‘PARIAH STATE’
China has refused to condemn Russia’s action in Ukraine or call it an invasion. Beijing has also opposed economic sanctions on Russia, which it says are unilateral and are not authorised by the U.N. Security Council.
“Russia is its key ally but at the same time China doesn’t want the stigma of being seen as a pariah state for helping Russia,” said Patel.
He said there was talk in the market of some tonnages of alumina booked to be shipped from China to Russia via eastern Russian ports.
Reuters could not independently verify any additional alumina shipments or planned shipments to Russia from China.
China exported 7,967 tonnes of alumina in the first two months of this year of which 698.6 tonnes went to Russia, according to Chinese customs data.
Last year, its alumina exports were at 119,891 tonnes, with 1,822 tonnes going to Russia.
The loss of Australian supplies is not the only issue for Rusal, which supplies about 6% of global aluminium.
Among Rusal’s other major alumina suppliers, the Nikolaev refinery in Ukraine with a capacity of 1.75 million tonnes a year, is out of commission because of the conflict.
There are also supply chain issues at Rusal’s 2 million tonnes a year Aughinish alumina refinery in Ireland, WoodMac said.
European nations and the United States have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on Feb 24 in what it calls a “special military operation”.
The sanctions and ongoing conflict, along with supply constraints caused by the pandemic, have pressured commodities markets and triggered record price hikes. [MET/L]
Aluminium is a key metal due to its use across sectors from auto, aerospace, packaging, machinery and construction sectors to production of military equipment and ammunition.
Graphic: Aluminium prices: https://fingfx.thomsonreuters.com/gfx/ce/zgpomyblnpd/Pasted%20image%201648087056449.png
(Additional reporting by Shivani Singh, Min Zhang and Beijing newsroom; editing by Lincoln Feast.)
https://wtvbam.com/2022/03/24/china-faces-challenges-supplying-russia-with-alumina-analysts/
Since seizing power in September 2021, Guinea's military junta has increasingly attempted to streamline mining activities and agreements to benefit what leaders have repeatedly dubbed "Guinea's interests."
Led by Colonel Mamady Doumbouya, the junta has spent months at loggerheads with foreign mining companies operating in the West African country, despite earlier assurances of continuity in mining operations.
Guinea is the world's second-largest producer of bauxite, a main source of aluminum. According to the World Bank, Guinea's mining sector contributes approximately 35% to the country's GDP. But the recent upheavals in the sector could threaten the future of the industry.
Operations at Simandou halted
Anglo-Australian mining giant Rio Tinto and its partners have been ordered to stop all work on the vast Simandou iron ore project after Doumbouya requested clarification on how the mine will preserve Guinea's national interests.
In a statement, the ruling junta said Doumbouya had "requested the implementation of the exploitation of the Simandou deposit taking into account the interests of Guinea. Unfortunately, to date, despite his request, which dates from December 2021, there has been no progress."
Doumbouya has repeatedly assured that the junta is acting in Guinea's best interests
The provisional government says any developer of the mine must also build a railway from Simandou, in the southeast of the country, to the port of Conakry to ship their product overseas. If they do not comply, developers will risk losing the project.
In 2021, Rio Tinto flagged plans to built a shorter and less-costly railway to Nimba, in Liberia; however, the proposal was rejected by Guinea.
Guinea currently owns a 15% stake in Blocks 3 and 4 of Simandou, while Rio Tinto and China's Aluminam Corp. own stakes of 40% and 15% , respectively.
With estimated iron ore reserves of 2.4 billion tons, Simandou is considered one of the world's largest mines of its kind. However, ongoing legal disputes and the costs associated with infrastructure have left it largely untapped.
Other mining companies 'spooked'
With the future of the Simandou project in doubt, analysts are warning of potentially devastating consequences for Guineans.
Economist Mamady Fanta Keita told DW that more than 45,000 people would risk losing their jobs should the Simandou project not resume operation soon.
"Simandou is already one of the biggest iron ore mining projects in Africa," he said. "Not only is it mining iron, but it [supports] lots of of infrastructure programs in Guinea. ... Therefore, the stopping of works at Simandou is a real problem for the people."
Thousands of mining workers risk losing their jobs on the Simandou project alone
Though the military junta has maintained that it simply wants to secure the best deals for Guinea, Keita is concerned that officials are taking the wrong approach.
"This could have been done without hindering the work at Simandou," he said. "I have seen many people who are directly affected by the decision. Even my friends working at the Simandou project are at home not working."
He said the relationship between the junta and mining companies was rapidly deteriorating, despite earlier positive signs to the contrary.
"At the start, the collaboration was good, because, when the junta came to power, they never wanted to disturb the mining companies," he said. "But, now, looking at the junta's behavior on Simandou, other mining companies are likely to be spooked," Keita said.
Guinea's military junta initially said maintaining stability in the country was the main goal
Seeking solutions
In an attempt to find a way forward, talks are now underway in Guinea between Rio Tinto officials and the military junta.
"We're in discussion with the government of Guinea and support their view that co-investment and the development of rail and port infrastructure is the best way to develop Simandou projects," Rio Tinto's president of Copper International Operations, Bold Baatar, told reporters in Conakry last week.
Baatar said the mining company aimed to "work with the government and all other partners to create the appropriate structure to advance the Simandou project for Guinea and all stakeholders."
This is not the first time that coup leaders have attempted to interfere with existing mining deals in Guinea.
In 2008 then military leader Captain Moussa Dadis Camara also vowed to block mining sector projects and renegotiate contracts after seizing power following the death of longtime President Lansana Conte.
https://www.dw.com/en/guinea-military-junta-stokes-nerves-of-mining-sector/a-61234381
Southeast New Mexico’s shale-based oil geyser is still pumping crude at record levels, pushing output to a new production milestone in 2021, with prospects for a lot more to come.
The state produced a record 442.7 million barrels last year – up 18% from 2020 – and most industry experts now expect New Mexico’s spigots to pump out half a billion barrels this year.
“New Mexico continues to benefit from record-high production, with more coming as we go into the summer,” said New Mexico Oil and Gas spokesman Robert McEntyre. “We don’t offer projections, but with the rig count rising, it’s certainly safe to say 500 million barrels is absolutely within reach this year.”
That represents a phenomenal, prolonged boom in the Permian Basin, where the shale oil revolution has raised state production by three-fold since 2016, elevating New Mexico to the second largest producer in the U.S. after Texas.
The steady increase reflects extraordinary geology in the Permian, particularly on New Mexico’s side of the basin in Lea and Eddy counties, where modern technology has allowed producers to crack open layers of hard shale rock to tap into huge reservoirs of trapped crude. Once penetrated, oil from those Permian wells gushes out in spurts of productivity that far surpass virtually any other basin in the U.S. or other countries.
Those geysers, combined with today’s skyrocketing oil prices, are now flooding state coffers with unprecedented revenue. And the boom times are likely here to stay, at least for the next few years, given the vast shale-based reservoirs yet to be tapped in southeastern New Mexico and West Texas, said Raoul LeBlanc, vice president for nonconventional oil and gas at IHS Markit, a global energy consultant.
“The Permian Basin remains the best place to drill in the U.S. in terms of profitability,” LeBlanc told the Journal. “Plays in other basins will likely grow given today’s prices, but we believe the Permian Basin will remain the primary growth place for the country going forward.”
That will continue even when prices eventually decline, because the Permian’s shale-based gushers allow producers to earn returns at much lower levels than at today’s nearly $100-per-barrel price, LeBlanc added. Even at $25 per barrel, which producers faced throughout much of the pandemic, IHS Markit estimates that more than 10% of prime shale reservoirs in the Permian and other U.S. basins – or about 2,000 potential wells – would still remain profitable.
“At $40 a barrel, that expands to about 70,000 wells, and at $80, it’s about 350,000,” LeBlanc said. “That offers many years of potential production growth, since only about 16,000 wells are drilled throughout the U.S. in any given year.”
High prices will endure
With prices now hovering at $100 per barrel, industry experts are particularly bullish on the short-term outlook in New Mexico’s oil patch, especially since prices are unlikely to decline much in the near term. Uncertainty over worldwide oil and gas supplies reigns because of the war in Ukraine, plus the erratic ups and downs in economic recovery from the coronavirus.
The pandemic led to massive market oversupply in 2020 as economies locked down and global consumer demand for oil contracted by about 20%. Prices fell to record lows that year, with production, in turn, plummeting nearly overnight in most countries.
In the U.S., total domestic output fell from about 13 million barrels per day before the pandemic to about 11 million by mid-2020, according to the U.S. Energy Information Administration.
But as global vaccination campaigns gained momentum in early 2021 and economies began to reopen, consumer demand has ramped back up much faster than production. That created a steady rebound in prices that pushed oil into the $90-per-barrel range by late last year – the highest market price in a decade, up from about $65 per barrel before the pandemic.
And now, following the Russian invasion in Ukraine, prices are fluctuating wildly, given the uncertainty over continued oil exports from Russia, which accounts for about 10% of global supplies. Russian oil continues to flow into Europe, but both the U.S. and the United Kingdom have banned Russian imports. That briefly drove crude prices to a new 15-year high above $130 per barrel in early March, with U.S. gasoline prices climbing to a record of over $4.20 per gallon.
https://www.abqjournal.com/2481046/scratching-the-surface.html
Decades of lobbying weakened Americans’ gas mileage and turbocharged pain at the pump
The oil and automotive industries, as well as the Koch network, undercut efforts to make today’s fleet of vehicles more efficient and less reliant on fossil fuels.
For roughly a decade, the U.S. oil industry and its backers touted American oil abundance and “energy dominance.” But in the face of Russia’s invasion of Ukraine and resulting sanctions, gasoline prices immediately spiked 79 cents a gallon in the span of two weeks, briefly touching a record high of $4.43 a gallon, and the market’s been in turmoil ever since.
Domestic oil drillers have proved unable or unwilling to offer drivers rapid relief, with one oil executive warning that shale companies were already struggling and would not be able to increase production. Indeed, weekly crude oil production in the United States hovered at 11.6 million barrels a day through February and into mid-March, federal data shows – down from pre-pandemic heights of over 13 million.
The pain at the pump for American drivers has roots that run deeper than today’s crisis. In recent years, while fracking’s supporters were shouting “drill baby drill,” the oil industry began lobbying behind the scenes to undercut programs designed to make vehicles more fuel-efficient or less reliant on fossil fuels. Alongside automakers, they helped pave the way for a boom in gas guzzlers that attracted consumers when gas prices were relatively low: In 2021, a stunning 78% of new vehicles sold in the United States were SUVs or trucks, according to the Wall Street Journal. American carmakers like Ford, General Motors, and Fiat Chrysler have nearly abandoned making sedans for U.S. drivers altogether.
That was a step in the wrong direction, efficiency advocates say. “We absolutely should be moving to establishing independence from fossil fuels, both for geopolitical and for public health and climate reasons,” said Luke Tonachel, director of the Natural Resources Defense Council’s (NRDC) clean vehicles and fuels group. “I think our best tool to fight petro-dictators is to shake off the need for the petroleum that is the source of their power.”
The recent bigger-is-better boom is creating big problems for drivers as gas prices soar because once a vehicle is built, keeping up with maintenance and deploying a few tips and tricks are about all your average driver can do to improve a car’s fuel efficiency beyond its design specs. Until today’s cars are retired, American drivers are pretty much stuck with hundreds of millions of vehicles built while gas prices largely hovered between $2 and $3 a gallon.
But while conversations about fuel efficiency are often dominated by debates about whether buyers or sellers should shoulder the blame for the stampede towards SUVs over Priuses, there’s another often-ignored actor in the room.
Federal rules shape the menu of options offered to consumers by requiring automakers to achieve fleet-wide averages on fuel efficiency. A quick look back shows the oil industry’s fingerprints (alongside those of car manufacturers) on gambits to grind down those fuel efficiency standards, leaving everyday Americans more dependent on oil.
“Least efficient globally”
This isn’t the first time Americans have been burned by vehicles that fail to deliver good mileage – nor that foreign governments sought to leverage that inefficiency against American drivers. In fact, today’s fuel-efficiency framework was born in response to another oil supply crunch with geopolitical roots almost 50 years ago.
In 1973 the average gas mileage of new American cars had plummeted to an all-time low of 12.9 miles per gallon (MPG) — or about half the Ford Model T’s 25 MPG, according to The Atlantic. That same year, the first major oil crisis hit the United States in the form of an oil embargo by OPEC. As the Nixon administration scrambled to respond, oil rationing soon followed.
In response, the federal government created the Corporate Average Fuel Economy standards, or CAFE standards, designed to push automakers to make increasingly efficient cars by raising fleet-wide minimum requirements every year.
That push worked for about the first decade. From 1975 to 1987, average fuel economy rose quickly – but then it declined between 1988 and 2004, as the Energy Department reported last year.
Average fuel economy rose again, by 29% between 2005 and 2020, the Energy Department added. But a closer look suggests that by other measures, efforts to improve the average gas mileage of all the cars, SUVs, and light trucks driving America’s streets slowed to a crawl in recent years despite technological leaps and bounds in hybrid and electric vehicles.
“Even as standards have tightened over time, the actual sales-adjusted fuel economy rating of new vehicles has been unchanged at around 25 miles per gallon since 2014,” the Wall Street Journal reported in January. “No wonder U.S. vehicles are among the least efficient globally.”
A November 2021 Environmental Protection Agency report touts the climb in fuel efficiency in 2020, noting a 0.5 mile-per-gallon gain to 25.4 MPG, “a record high.” But efficiency advocates noted those numbers actually fell short of federal targets, faulting loopholes in the law that they say promote larger vehicles.
“We’re facing a climate crisis, yet automakers are producing cars that are barely more fuel efficient on average than what they sold a year earlier, even as technology improves,” Avi Mersky, senior transportation researcher for the American Council for an Energy-Efficient Economy, said in a statement that month. “They’re following the letter of the standards but exploiting all the weaknesses in the regulation to keep making gas guzzlers. It’s terrible for the climate and it costs drivers at the pump, especially now as gas prices are increasing.”
Oil prices settled higher on Friday, but posted a second straight weekly loss, after a volatile trading week with no easy replacement for Russian barrels in a tight market. Brent crude futures settled up $1.29, or 1.2%, to $107.93 a barrel, a day after surging nearly 9% in the biggest daily percentage gain since mid-2020. U.S. West Texas Intermediate crude futures settled up $1.72, or 1.7%, at $104.70 a barrel, adding to the previous session's 8% jump. Prices hit 14-year highs nearly two weeks ago, encouraging bouts of profit-taking since then. The volatility of crude prices has been boosted by the supply crunch from traders avoiding Russian barrels and dwindling oil stockpiles. However, prices have been pressured by worries about demand with COVID-19 cases surging in China while stumbling nuclear talks with Iran have been a wild card on the market. The volatility has scared some investors out of the oil market, which could exacerbate price swings. Meanwhile, output from the Organization of Petroleum Exporting Countries and its allies in February undershot targets even more than in the previous month, sources said. The International Energy Agency said oil markets could lose 3 million bpd of Russian oil from April.
Asian LNG Prices Slide as Concerns Over Supply Ease
Asian spot liquefied natural gas prices fell last week, tracking European gas prices, as concerns over disruptions of Russian gas slightly eased. The average LNG price for May delivery into north-east Asia was estimated at $35.50 per metric million British thermal units (mmBtu), down $2.50, or 6.6%, from the previous week, industry sources said. Asian demand is still muted with north-east Asia consuming an average of 54% of global LNG imports in the first two months of 2022, compared to 67% last year. In Europe, prices were calmer last week as both sides (Russia and Europe) toned down their rhetoric on cutting existing Russian gas exports to Europe. The Dutch TTF premium to Asian LNG prices should ensure Europe continues to pull LNG away from Asia for the time being. The European Commission last week published a blueprint to cut EU dependency on Russian gas by two-thirds this year and end all Russian fossil fuel imports well before 2030. Some experts say it will be hard to achieve and possibly trigger a competitive and costly dash for the fuel when energy prices are already inflicting economic pain. The Commission proposes importing around 50 billion cubic meters of liquified natural gas.
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https://www.indrastra.com/2022/03/oil-posts-second-consecutive-weekly.html
March 21, 2022
On behalf of the over 11,500-member American Association of Professional Landmen (AAPL) and our 38 affiliated local associations across North America, I am writing to you to express our opposition to recent statements by your administration implying domestic oil and gas producers could provide more U.S. energy but for the actions of the industry. This assertion is not only inaccurate but fails to recognize energy policy decisions that have contributed to the precarious position in which we now find ourselves due to the conflict in Ukraine.
Although we wholeheartedly applaud the Administration’s decision to ban imports of Russian produced oil, the cumulative impact of the Administration’s other decisions, such as: canceling the Keystone XL pipeline permit; suspending or rescinding previously granted drilling leases; stalling approvals for LNG export facilities; and failing to hold a single federal onshore oil and gas lease sale since taking office, have had the chilling effect of disincentivizing decisions to make current and future investments in safe, dependable, and affordable American oil and gas supply. Less than two years ago, the United States achieved energy independence, but that is no longer the case, and we now find our government calling upon adversarial nations like Venezuela, Iran and Saudi Arabia to produce more energy for Americans when we could do it at home — safer, more efficiently and with less risk to the environment and to national security.
Unfortunately, such energy supply deficiencies were predicted as early as January 2021. According to the bipartisan Center for Strategic & International Studies (CSIS) statement on the President’s inaugural day moratorium on federal oil and gas leasing, “[w]ith nearly 25 percent of U.S. oil and gas production coming from federal lands, the policy shift may have significant implications for future investment and production.”1
And just last week, President Biden’s press secretary, Jen Psaki, made a questionable claim when asked by a reporter why the administration is not doing more to tap into domestic energy supply, including restarting lease sales on federal lands. Psaki responded that the United States is already producing oil “at record numbers” and said, “there are 9,000 approved drilling permits that are not being used.” She continued that, “the suggestion that we are not allowing companies to drill is inaccurate. I would suggest you ask the oil companies why they’re not using those if there’s a desire to drill more.”2 Strangely, Psaki refers to drilling “Permits” rather than “Leases.” Oil companies may own a lease on federal land but must subsequently obtain a permit to drill. This process to obtain a drilling permit can take months or even years to acquire.
Although Psaki’s statements may have been intended to reference the pace at which new permits to drill are being issued, her statements are not only misleading but show a lack of understanding of how domestic oil and gas exploration and production functions. “That accusation is a complete red herring,” said American Exploration & Production Council CEO Anne Bradbury. “It's really a distraction from the fact that this administration has paused leasing on federal lands, something that we’re concerned about and something that we think needs to continue right away. The fact is that industry is producing at a higher level on existing leases on federal lands than in the last 20 years and these leases take many years to explore, to develop and produce on,” Bradbury added. This sentiment has been echoed by the American Petroleum Institute as well as other energy trade groups. “This represents a fundamental misunderstanding as to how this process works,” API president and CEO Mike Sommers said of Psaki’s comments. “Once you lease land there is a whole process that you have to go through. First you have to actually discover whether actually there is oil and gas in that land. Second of all, you have to get a permit to actually develop that land.” Sommers added, “Right now we actually are developing more leases than we have in two decades so the White House certainly doesn’t have their facts straight on this.” Energy Workforce and Technology Council CEO Leslie Beyer similarly said, “some permits are viable and some are not,” as a reason for why many are sitting unused. The federal leasing moratorium also isn’t helpful in the current energy environment, she said.3
As to why companies are not using the 9,000 approved oil drilling leases, API’s Vice President of Upstream Policy, Kevin O’Scannlain, explains in The Red Herring of Unused Leases report:
Oil companies have financial incentive to produce oil on leased federal lands, because they have to pay “rent” and are at risk of losing their leases until they begin producing. The law already requires companies to either produce oil and/or gas on leases or return the leases to the government — the so-called “use it or lose it” provision — generally in the first 10 years. When a company acquires a lease, it makes a significant financial investment at the beginning of the lease in the form of a non-refundable bonus bid and pays additional rent until and unless it begins producing. What’s more, it can even be illegal to simply sit on excess federal land leases. For federal onshore, the Mineral Leasing Act prevents any one company from locking up unproductive excessive federal acreage. Plus, it’s not as quick and easy as merely flipping a switch since it takes years of work to determine whether the leased land even holds enough oil to be commercially viable. Then, there’s the long process of overcoming “administrative and legal challenges at every step along the way.” The lengthy process to develop them from a lease often is extended by administrative and legal challenges at every step along the way. The argument about “unused” leases is a red herring, a smokescreen for energy policies that have had a hamstringing effect on oil production. Ultimately, energy policies affect the energy investment climate. Government policies can either discourage or encourage oil producers to take the risk of investing billions of dollars, plus considerable time and effort, to find out whether or not the lands they lease are viable sources of oil. Psaki has made the claim about “unused” federal leases before. It has become a line the White House pivots to when pressed to explain why it isn’t doing more to support American oil and gas production.”4
The Wall Street Journal’s editorial board has made similar arguments noting that, “regulatory uncertainty and political hostility to fossil fuels discourage long-term investments.” The editorial board explained that “President Biden’s anti-domestic energy policies have made his the first administration in at least twenty years to go an entire year without selling a single onshore lease. The Biden Administration isn’t just refusing to grant additional leases — it has actually revoked a permit that could bring 830,000 barrels of crude oil daily to the U.S.5 In a controversial move during his first day in office, President Biden revoked the permit allowing extension of the Keystone XL pipeline to Alberta, Canada. If completed, the pipeline could potentially provide the U.S. with more oil than it currently buys from Russia.”6 Moreover, according to a Department of Interior report, the U.S. had more than 37,000 oil and gas leases just last year — so 9,000 is a small number comparatively — and just because an oil company has a lease doesn’t mean they can just start drilling.7 They must organize and safely manage their reservoir and satisfy several regulatory requirements, such as an onsite inspection, environmental review and permit approval. This process can actually take up to 10 years. Experts say even if these companies start drilling more oil wells today, it could take anywhere from six months to years for that oil to start flowing.8
AAPL’s advocacy to increase domestic energy supply — whether on federal leases or otherwise – is a mainstream position supported by a majority of Americans. In a recent Morning Consult poll released March 1, 2022, “90 percent of American voters support the U.S. developing its own domestic energy resources rather than relying on foreign energy sources.” Moreover, “85 percent believe producing natural gas and oil here in the U.S. helps America maintain a leadership role during a period of global uncertainty” and “84 percent agree that producing natural gas and oil here in the U.S. helps make our country and allies more secure against actions by other countries such as Russia.”9
Above all, AAPL and its members, along with the remainder of the oil and gas industry, stand ready to provide safe, affordable, environmentally sound and abundant domestic energy production for the American people. We are committed to working with the Biden administration to promote sound energy policies that can immediately begin to offer stability and confidence in making investment decisions while alleviating the current supply issues and restoring America’s energy independence.
Respectfully,
James T. Devlin, CPL
President
American Association of Professional Landmen
cc:
The Hon. Jennifer Granholm
Secretary
U.S. Department of Energy
1000 Independence Ave., SW
Washington, DC 20585
The Hon. Debra Haaland
Secretary
U.S. Department of the Interior
1849 C Street, NW
Washington, DC 20240
The Hon. Tracy Stone-Manning
Director
Bureau of Land Management
U.S. Department of the Interior
1849 C Street NW
Washington, DC 20240
1 Ben Cahill, Biden Makes Sweeping Changes to Oil and Gas Policy (CSIS, January 28, 2021); https://www.csis.org/analysis/biden-makes-sweeping-changes-oil-and-gas-policy
2 Tyler Olson, Energy industry swipes back at Psaki 'red herring' comment on oil and gas leases (Fox Business Network, March 8, 2022); https://www.foxbusiness.com/politics/energy-industry-psaki-oil-and-gas-leases-ceraweek
3 Id.
4 Craig Bannister, API Explains How Psaki’s ‘9,000 Unused, Approved Drilling Permits’ Is ‘Red Herring’ to Distract from WH Policies (CNSNews, March 8, 2022); https://www.cnsnews.com/blog/craig-bannister/api-explains-how-psakis-9000-unused-approved-drilling-permits-red-herring
5 Biden’s Fossil-Fuel Blockade (Wall Street Journal Editorial Board, March 4, 2022); https://www.wsj.com/articles/joe-bidens-fossil-fuel-blockade-onshore-drilling-leases-oil-gas-russia-11646409502
6 Janae Bowens and Konner McIntire, Fact Check Team: Why isn't the US producing more oil? (ABC News, March 4, 2022); https://katv.com/news/nation-world/fact-check-team-why-isnt-the-us-producing-more-oil
7 Id.
8 Id.
9 9 in 10 U.S. Voters Support American Energy Production Over Reliance on Foreign Energy: New API Poll (API, March 1, 2022); https://www.api.org/news-policy-and-issues/news/2022/03/01/new-api-poll-highlights-support-for-american-energy
A Kazakh oil worker walks along a newly-opened oil pipeline at a railway station Atasu December 15, 2005. REUTERS/Shamil Zhumatov/File Photo
LONDON, March 23 (Reuters) - Russian officials announced this week sea storms had caused major disruption to Kazakh oil flows to global markets, leaving traders scrambling to find out the extent of the damage.
The reality soon set in: politics was at least as important as how long repairs might take in determining when exports through the pipeline would resume.
The Caspian Pipeline Consortium line that runs from fields in Kazakhstan and terminates in the Russian port of Novorossiisk on the Black Sea coast ships 1.2% of global oil to world markets.
That includes oil produced in Kazakhstan by U.S. majors Chevron (CVX.N) and Exxon Mobil (XOM.N) and European companies Shell , Total and Eni (ENI.MI) at three major fields operated by them.
Any major disruption to CPC flows will add to the strain on a global oil market facing one of the worst supply crunches since the Arab oil embargo in the 1970s.
"There may well be storm damage, but it is politically well-timed storm damage," Paul Donovan from UBS said.
The CPC pipeline has been in the spotlight since Russia's invasion of Ukraine began on Feb. 24, leading to restricted Russian exports and an oil price spike.
The United States has imposed sanctions on Russian oil, but said flows from Kazakhstan through Russia should run uninterrupted.
But the 1,510-km pipeline running from giant fields in Kazakhstan, developed by U.S. oil majors, as well as Shell, Eni and Total, is effectively under Russia's control as it crosses Russian territory and has loading facilities on Russia's Black Sea coast.
STORM DAMAGE UNCLEAR
On Tuesday, CPC said one of three loading facilities has been damaged by a storm.
Then Russia's deputy energy minister Pavel Sorokin said the second berth could have also been damaged. Russian energy officials do not usually comment on the CPC pipeline, which is run by an international consortium.
Then on Wednesday, shipping agents said all CPC loadings have been suspended because of storm damage.
At least five oil traders and officials working with CPC loadings said the extent of the damage was unclear and inspections were ongoing.
One official said he believed damage was minimal as the facilities have been designed to withstand storms. Another said it was serious and could take several months to repair.
Sorokin said the maintenance could take up to two months, which could lead to exports falling by up to 1 million barrels per day (bpd).
"Eventually the threat is that CPC will force the shut in of fields in Kazakhstan," one executive with an international firm said on condition of anonymity.
Russia has said Western sanctions over Ukraine amount to an economic war against it. Officials have said Moscow would resort to all available tools to defend itself, including possibly limiting energy supplies to Europe.
Kazakhstan, which relies heavily on CPC revenues as well as flows of oil and gas to China, has not commented on the suspension.
The country would work with Russia to find ways to re-route oil if the suspension is prolonged, one Kazakh energy official said, adding finding alternative routes for all CPC volumes would be difficult.
On Tuesday, Russian Deputy Prime Minister Alexander Novak said the two countries have agreed to set up a working group to boost oil transit to China. read more
In January, Russia sent military help to Kazakhstan following a plea from President Kassym-Jomart Tokayev to help quash protests across the country that started over fuel prices but quickly escalated into broader political protests.
The CPC disruptions would reduce revenues to the government of Kazakhstan, as well as to the global majors operating there.
An LNG processing plant is seen in Cameron, Louisiana in August 2020. — AFP file pic
HOUSTON, March 19 — Two years ago, the American liquefied natural gas (LNG) company Tellurian was in free fall: Its stock price collapsed, it laid off 40 per cent of its staff, and suspended a key project in Louisiana.
Now, executive chairman Charif Souki says investors “are lining up at the door to ask me: ‘Can we finance your project?’”
At the annual CERAWeek energy conference in Houston, Souki told AFP that LNG projects have been boosted by the renewed emphasis on energy independence after Russia’s invasion of Ukraine.
“Global market demand and the desire of the Europeans to divest from their reliance on Russian gas... those are all positive market signals, which will obviously help stimulate those projects and get them moving towards final investment decisions,” said Charlie Riedl, vice president of the natural gas industry’s advocacy group.
On March 8, the United States banned all imports of LNG, petroleum and coal from Russia, and has for years encouraged its European allies to decrease their dependence on their eastern neighbour.
The White House, in a statement, also argued that “federal policies are not limiting the production of oil and gas.”
“To the contrary, the Biden administration has been clear that in the short-term, supply must keep up with demand,” it added.
Eight LNG terminals operate in the United States, pumping out 14 billion cubic feet (400 million cubic meters) per day, and fourteen other terminals have already been approved by the Federal Energy Regulatory Commission (FERC).
That’s the case for Driftwood LNG, Tellurian’s future liquefaction plant and export terminal, south of Lake Charles, Louisiana.
Stalled for a year and a half, the company will finally break ground on the massive project next month. Once completed, the site will be able to export 3.6 billion cubic feet per day.
Charif said that “in principle, we should be able to provide LNG in 2026” to the oil companies Shell, Vitol and Gunvor.
The Gulf Coast will see plant construction accelerate in the coming months: Five projects have already been approved by FERC in Louisiana, with seven more in Texas and Mississippi.
Faster regulatory approvals
Since its first exports in 2016, the Gulf Coast has become a key hub for global LNG shipments.
A network of pipelines connects the states’ ports to gas fields across the country, from the Permian and Haynesville basins in the south to the Marcellus, the country’s largest onshore reserve, in the northeast.
Once the gas arrives on the coast, it is liquefied and transferred onto LNG tankers, most of which head off to Europe.
Earlier this month, not far from the future Tellurian site, Venture Global LNG saw its first tanker depart from its brand new Calcasieu Pass terminal.
The export terminal and its accompanying liquefaction plant were built off the coast of Louisiana in just 29 months — a record time for such a project, according to the company’s CEO, Mike Sabel.
He added that, in his estimation, the government’s regulatory approvals for both Calcasieu and another project near New Orleans have been “faster than they were before” the war in Ukraine.
“They’re being very supportive, so I’m very optimistic that they’re going to approve projects more quickly,” he said.
‘A lose-lose-lose proposition’
In a room reserved for him at the CERAWeek convention, Sabel shows a few journalists a video of tugboats, which he said were named after his children, manoeuvring near the new plant.
He notes another reason for the sector to celebrate: In early February, the European Commission ruled that gas could, under certain conditions, contribute to the fight against climate change.
“That’s a big deal for banks that are sensitive to policy pressure, and public pressure, to support the infrastructure investments,” he said.
According to the Natural Gas Supply Association, each liquefaction plant requires an investment of US$10 to US$20 billion. Only nuclear power plants require more up-front capital.
However, not everyone is so happy about the gas sector’s bright future.
“Expanding gas production in the US is a lose-lose-lose proposition for communities in the Gulf (of Mexico), Europe, and the climate,” Nikki Reisch of the Center for International Environmental Law (CIEL) told AFP.
“LNG has all the climate impacts of fracked gas plus the added emissions from energy-intensive liquefaction, cooling and transportation. What’s more, it puts the health and livelihoods of people on the fencelines of extraction and export at risk,” she added.
“The war should be an impetus for increasing investments in renewables, electrification and efficiency, not doubling down on dirty energy sources,” she said. — AFP
Germany, which relies heavily on Russian gas, gave a warning on Saturday that it has major concerns about securing supplies for next winter as ministers headed to the UAE for energy talks.
Minister for Economic Affairs Robert Habeck said the government is doing all it can to secure alternatives.
"If we do not obtain more gas next winter and if deliveries from Russia were to be cut then we would not have enough gas to heat all our houses and keep all our industry going," he said.
Supplies are "not yet completely guaranteed", Mr Habeck told Deutschlandfunk radio.
He added that the government of Europe's largest economy was preparing for the possibility of shortages "which we hope can be avoided."
On Saturday Mr Habeck was due to travel to Qatar, one of the world's three largest exporters of liquefied natural gas, which European states are increasingly counting on as a means of weaning themselves off Russian gas after Moscow's invasion of Ukraine.
Later he was expected to travel to the UAE.
Half of Germany's LNG imports come from Russia.
Mr Habeck, also minister for climate affairs, has already recently visited Norway, as well as current top global exporter the US.
Germany has faced criticism over its opposition to an immediate embargo being imposed on Russian energy supplies as a means of choking off a major source of Moscow's foreign earnings.
It believes a boycott could cripple the German economy with surges in energy prices as well as shortages.
Last week British Prime Minister Boris Johnson urged the West to end its “addiction” to Russian energy as he travelled to Saudi Arabia to push for increased oil and gas production.
The founder of the Ukrainian branch of Extinction Rebellion (XR), causing Gazprom disruption, said the war in Ukraine could be stopped “tomorrow” and called on climate protesters worldwide to demonstrate in the offices of the Russian energy giant.
The climate activist, who just wanted to go by the name Grisha, said: Independent He said expressing solidarity with Ukraine while pouring money into the invading country through oil and gas imports is a “problem” and that Russian fossil fuels should be “blocked”.
One of the millions displaced by the Russian invasion that began a little over three weeks ago. The war destroyed several cities and reportedly killed thousands of civilians.
talk to Independent Coming from Ukraine, Grisha said his entire country was mobilized to resist the attack. Its contribution is not to join the war at the front, but to accelerate the war against fossil fuels.
“I am not an army man. (a) I don’t know how to fight or shoot with his gun,” he said. “We’re trying to focus on different things other people can do.”
The climate activist said he would like to see more civil disobedience targeting Russian fossil fuels across Europe; this could include XR groups and other protesters who have gathered outside Gazprom offices to prevent people from going to work.
“We believe that if Gazprom stops today, the war will end tomorrow,” the 38-year-old journalist said.
Grisha says he’s not ‘military man’ but steps up campaign against Russian fossil fuels (supplied)
Gazprom, the world’s largest natural gas company in terms of production, has significant influence both in Russia and beyond, as it supplies about 40 percent of Europe’s gas. Its subsidiaries have offices across the continent, including a few in the UK.
Other companies have begun to distance themselves from the Russian state-owned energy firm since the start of the war in Ukraine, including Shell, which cut ties with Gazprom earlier this month.
In the UK, the health secretary has reportedly told hospitals to stop using the energy giant’s gas. Germany blocked a new Gazprom pipeline in response to Russian aggression days before the war began.
Europe has so far not banned gas imports from Russia. But the war in Ukraine has raised even more alarm about the world’s dependence on fossil fuels.
Gazprom is the world’s largest natural gas company and supplies 40 percent of Europe’s needs (AFP via Getty)
Besides its impact on the climate crisis, world leaders are expressing concern about how that money is spent in the Russian context.
Earlier this week, a European Union environmental chief said that the bloc’s reliance on Russian fossil fuels is funding a “war chest”.
US president Joe Biden banned Russian oil and gas imports last week because of the war in Ukraine, saying it would help deal a blow to Vladimir Putin’s “war machine”.
In the United Kingdom, where Russian oil is being phased out, concerns have also been raised that the public may unintentionally finance the war by filling up cars or paying energy bills.
Grisha says he wants to see more civil disobedience against fossil fuels in Europe (supplied)
Translated by Nastya, a Ukrainian XR activist, Grisha says her group wants to encourage the global community to protest fossil fuels as the war continues, creating slogans and posters for that, although activism is hard to work with. Air raid sirens are ringing frequently and there are attacks in the background.
The 38-year-old XR Ukraine founder said it’s important to see groups around the world helping Ukrainian refugees, but that it’s just a plasterboard.
“Many people in Ukraine want to stay, they don’t want to leave and they want to go back to their country. Therefore, it is very important not only to stop the source of the problem, but also to stop the result,” he said.
Svitlana Krakovska, a Ukrainian scientist who participated in the latest Intergovernmental Panel on Climate Change report, said: Guard fossil fuels triggered both the climate crisis and the war in Ukraine.
“Burning oil, gas and coal is causing warming and effects that we need to adapt to. And Russia sells these resources and uses the money to buy weapons. “Other countries are dependent on these fossil fuels, they are not ridding themselves of them,” he said.
“This is a fossil fuel war. It is clear that we cannot continue to live this way, it will destroy our civilization.”
Britain said last week it will no longer import Russian oil by the end of the year and is exploring options to reduce gas imports.
Meanwhile, the European Union said it plans to phase out its dependence on Russian fossil fuels by 2027.
Grisha told Independent He thought it was “very strange” to see the EU impose sanctions on Russia, yet still pay what he claims is billions for Russian gas and oil since the war began.
According to a tracker run by the Europe Beyond Coal campaign group, the bloc has paid Russia more than 17 billion euros for fossil fuels since the invasion began on February 24.
An EU official said Independent It has launched an unprecedented sanctions response to the war in Ukraine and has just passed a fourth package that includes a “wide-ranging” ban on new investment in Russian energy.
“It works, we’re already seeing the effect on the Russian economy – the stock market has closed, the ruble has lost half its value and companies are fleeing the country,” they said.
As Boris Johnson flew to the Gulf this week to ask for more oil to replace supplies from Russia, he was accused by the Labour leader, Keir Starmer, of “going cap in hand from dictator to dictator”.
At the same time, a report produced by the International Energy Agency (IEA) underlined just how limited the options are for any economy seeking to replace Russian crude and other oil products.
It says global oil demand is projected to be nearly 100m barrels per day (bpd) this year, lower than previously forecast because of the shock to global growth caused by the war in Ukraine. Russia produces about 10m bpd and exports about half of that plus about 3m bpd of oil products. It is unclear, however, how much of that supply might now be at stake.
The IEA thinks that at least 1.5m bpd of oil and 1m bpd of oil products are likely to be lost from Russia, from April until at least the end of the year, as buyers either reject supplies voluntarily or do so to avoid breaching sanctions. It says: “These losses could deepen should bans or public censure accelerate.”
“In reality, no one country can plug the hole that Russia would leave in the market in the event of a global ban,” says Sophie Udubasceanu, global crude oil expert at energy market analysts ICIS. So where can the world try to source anything up to 5m extra barrels of oil a day?
Saudi Arabia and the UAE
It is no surprise that the Gulf should be the first stop on the UK prime minister’s itinerary. Saudi, with 2m bpd spare, and the United Arab Emirates with 1.1m bpd are the only two leading oil producers with immediate spare capacity to offset a Russian shortfall. As the IEA notes, however, they are so far “showing no willingness to tap into reserves”.
Both are members of the Opec+ cartel of oil-producing countries, which meets again on 31 March to decide on output levels. Opec members agreed to raise output by a modest 400,000 bpd earlier this month, despite full knowledge of the Ukraine situation.
A Saudi/UAE increase including their spare capacity would “potentially lead to the demise of the Opec+ cooperation”, says Saxo Bank analyst Ole Hansen, signalling such a move is unlikely.
He also points out that no oil producer would ever max out their spare capacity, the maintenance of which is an important price stabiliser and a buffer in case of unforeseen disruption.
Iran
The IEA reckons Iran has about 1.2m bpd of spare capacity in theory but there are some serious caveats. The first is the need for sanctions to be lifted, via a resolution in talks between Tehran and western economies about reviving the 2015 deal on Iran’s nuclear ambitions. Even then, the IEA says, it is likely to take another six months at least before 1m bpd from Iran could be factored in.
Iran has 100m barrels in floating storage that could be accessed quickly but it would take months to feed into the global supply chain.
Venezuela
Like Iran, Venezuela remains subject to US sanctions that would have to be lifted if its production was to increase. A return to 2015 output would mean an extra 1.8m bpd eventually but that would trickle through very gradually.
“A few hundred-thousand barrels would be the initial impact with a continued recovery likely to take years and billions of dollars of new investments,” says Hansen.
A revival of Iran’s nuclear deal could help ease global oil prices by bringing a major producer back into the market, the foreign minister said.
Simon Coveney, who is playing a significant role in trying to save the Joint Comprehensive Plan of Action (JCPOA) agreement, said he hoped progress could be made within days.
The deal, which eases sanctions on Iran in exchange for Tehran giving up ambitions to build a nuclear weapon, has faltered since then US president Donald Trump pulled out in 2018.
Russia is one of the signatories to the JCPOA deal and the invasion of Ukraine has complicated efforts to save the deal because of the sanctions imposed on Vladimir Putin’s country.
Irish Foreign Affairs Minister Simon Coveney said the Ukraine war provided an added incentive to get the deal with Iran back on track (David Young/PA)
The JCPOA was agreed in 2015 by Iran, the five permanent members of the UN Security Council – the UK, US, France, China and Russia – and Germany.
Mr Coveney’s involvement stems from his role as the UN Security Council’s facilitator for the deal.
The US, UK and European Union are seeking to break away from Russian oil and gas, and Mr Coveney said: “Certainly having a big new player in the market, if you like, Iranian crude oil coming back into the market with the removal of sanctions, would be a very attractive prospect in terms of reducing pressure on oil prices, because of sanctions on Russia, which are likely, I think, to remain for quite some time.”
He said: “I think that is an added incentive to try to get a deal done now.”
Following Joe Biden’s election as President efforts have stepped up to salvage the agreement, with 11 months of on-and-off talks in Vienna appearing to be on the cusp of a breakthrough.
Mr Coveney told BBC Radio 4’s Today: “What certainly has been a problem for the last 10 days or so is that the sanctions that now apply to Russia – because of their illegal war in Ukraine and the brutality that we’re seeing and the potential war crimes on a daily basis that we’re seeing – meant that Russia was concerned that they would not be able to benefit from the removal of sanctions on Iran as a result of signing off on a deal.
“And that has caused tension and delay. But that seems to have been resolved in the last few days”.
Mr Coveney said “we look as if we’re almost there” and “that’s a good news story when the world needs one”.
https://www.standard.co.uk/news/uk/iran-ukraine-ireland-russian-donald-trump-b989216.html
In the wake of the crisis in Ukraine, last week U.S. Secretary of Energy Jennifer Granholm called upon American energy producers to increase output “to stabilize the market and minimize harm to American families.” This comes after more than a year of the Biden administration taking deliberate steps to discourage, and in some cases halt, oil and natural gas production in our country, in addition to calling for an end to drilling, during the 2020 campaign. American consumers are suffering with skyrocketing prices and feeling the repercussions of canceled pipeline projects, halted leases on federal lands, delayed approvals for permits and the discouragement of additional expansion — all poor, short-sighted decisions that are exacerbated by the war.
This crisis should be a wakeup call that we need strategic, collaborative American energy policy that treats oil and natural gas as an asset and not a liability. Just months ago, the administration’s pleas to foreign countries to increase their production, while undercutting local jobs and local investment, had a chilling effect on domestic energy development. Efforts to shame lenders for providing capital to oil and natural gas companies further slowed energy production and essential infrastructure development.
Expanding oil and natural gas production and transportation requires foresight, planning and investment that are rooted in certainty. Securing permits and permission to access rights of way can take years, longer still with an administration intent on obstructing development. The oil and natural gas industry shares the commitment to meet our nation and allies’ energy needs and is operating as quickly as possible given the consequences of policy decisions designed to slow things down.
The conflict in Ukraine painfully demonstrates that national security and energy security are inextricably linked. The United States plays an important role in contributing to stability by providing reliable energy at home and abroad. Texas is the nation’s leader in oil and natural gas production, responsible for 43% of total U.S. oil production and 26% of total U.S. natural gas production in 2021. If Texas were its own country, it would be the third largest natural gas producer in the world, behind only the United States and Russia.
According to the Energy Information Administration, the U.S. met more than a quarter of European demand last year for liquified natural gas, with the majority of those exports originating from the Gulf Coast. Annually, Texas exports approximately 4 billion cubic feet a day of liquified natural gas. For perspective, that’s enough natural gas to meet the needs of 22 million households. And our national export capacity is on track to be the world’s largest by end of 2022, according to the American Petroleum Institute. Without liquified natural gas shipped from the Gulf Coast, Europe would be suffering from an energy crisis even more than they are today.
Clearly, we have the resources and a globally unmatched commitment to the environment to responsibly meet the energy needs of our nation and our allies. According to data from the Environmental Protection Agency, as reported recently by the Houston Chronicle, carbon dioxide emissions in the U.S. decreased more than 8% from 2010 to 2019, while they rose in China and Russia by more than 25% and 21% during the same period. We must reestablish a focus on American energy security and recognize that no one produces the oil and natural gas the world needs in a more environmentally responsible way than American producers.
Texas and America are poised to lead if federal policymakers embrace forward-thinking, collaborative policies that harness the natural resources, technology and innovation that have made this nation the global front-runner in energy and environmental progress. We need a strategic American energy policy, not a game of whack-a-mole.
Todd Staples is president of the Texas Oil & Gas Association and former Texas agriculture commissioner. He wrote this column for The Dallas Morning News.
DUBAI, United Arab Emirates -- Yemen’s Houthi rebels unleashed one of their most intense barrages of drone and missile strikes on Saudi Arabia's critical energy facilities on Sunday, sparking a fire at one site and temporarily cutting oil production at another.
The salvo marked a serious escalation of rebel attacks on the kingdom as the war in Yemen rages into its eighth year and peace talks stall.
The attacks did not cause casualties, the Saudi-led military coalition fighting in Yemen said, but struck sites belonging to one of the world's most important energy companies and damaged civilian vehicles and homes. The coalition also said it destroyed a remotely piloted boat packed with explosives dispatched by the Houthis in the busy southern Red Sea.
Hours after oil giant Aramco's CEO Amin H. Nasser told reporters the attacks had no impact on oil supplies, the Saudi energy ministry acknowledged that a drone strike targeting the Yanbu Aramco Sinopec Refining Company caused “a temporary reduction in the refinery’s production."
The disruption, as oil prices spike in an already-tight energy market, “will be compensated for from the inventory," the ministry said, without elaborating.
Another aerial attack later in the day struck a fuel tank at an Aramco distribution station in the port city of Jiddah and ignited a fire.
The relentless wave of strikes revealed the expanding reach and precision of the rebels and the persistent gaps in the kingdom’s air defenses. A sophisticated strike in 2019 on Aramco oil facilities knocked out half the kingdom’s oil production and threatened to ignite a regional crisis — an attack that the U.S. and Riyadh later alleged came from Iran.
The attacks on Sunday came as Saudi Arabia's state-backed Aramco, the world's largest oil company, announced its profits surged 124% in 2021 to $110 billion, a jump fueled by renewed anxieties about global supply shortages and soaring oil prices.
Aramco, also known as the Saudi Arabian Oil Co., released its annual earnings after weeks of intense volatility in energy markets triggered by Russia’s invasion of Ukraine.
The international oil benchmark Brent crude spiked over $107 on Sunday after nearly hitting a peak of $140 earlier this month. Saudi Arabia and the United Arab Emirates have so far resisted Western appeals to increase oil production to offset the loss of Russian oil as gasoline prices skyrocket.
Yehia Sarie, a spokesman for Yemen’s Iran-backed Houthis, said the rebels had launched “a wide and large military operation" in retaliation for the Saudi-led “aggression and blockade” that has turned much of Yemen into a wasteland.
The escalation followed a flurry of diplomacy over the weekend in Oman’s capital of Muscat. The U.N. special envoy for Yemen, Hans Grundberg, met with the chief Houthi negotiator and Omani officials to discuss “a possible truce during the holy month of Ramadan" in early April, the U.N. mission said.
The White House condemned the attacks, blaming Iran for supplying the Houthis with missile and drone parts, as well as training and expertise.
“It is time to bring this war to a close, but that can only happen if the Houthis agree to cooperate with the United Nations,” said U.S. National Security Advisor Jake Sullivan. “The United States stands fully behind those efforts.”
The Saudi-led military coalition reported aerial strikes on a range of facilities: an Aramco liquified gas plant in the Red Sea port of Yanbu, an oil storage plant in Jiddah, a desalination facility in Al-Shaqeeq on the Red Sea coast and an Aramco oil facility in the southern border town of Jizan, among others.
The extent of damage on Saudi infrastructure remained unclear, and the ministry said only the Yanbu refinery saw a temporary drop in output. A joint venture between Aramco and China, the $10 billion Yanbu Aramco Sinopec Refining Company on the Red Sea pumps 400,000 barrels of oil a day.
The Saudi Press Agency shared photos of firetrucks dousing leaping flames with water and a trail of rubble wrought by shrapnel that crashed through ceilings and pocked apartment walls. Other images showed wrecked cars and giant craters in the ground.
The barrage comes days after the Saudi-based Gulf Cooperation Council invited Yemen’s warring sides for peace talks in Riyadh — an offer dismissed out of hand by the Houthis, who demanded that negotiations take place in a “neutral” country.
Negotiations have floundered since the Houthis have tried to capture oil-rich Marib, one of the last remaining strongholds of the Saudi-backed Yemeni government in the country’s north.
Yemen’s brutal war erupted in 2014, after the Iran-backed Houthis seized the country’s capital, Sanaa. Saudi Arabia and its allies launched a devastating air campaign to dislodge the Houthis and restore the internationally recognized government.
But years later, the war has settled into a bloody stalemate and created one of the worst humanitarian crises in the world.
Coalition airstrikes have struck civilian targets in Yemen like hospitals, telecommunications centers and wedding parties, drawing widespread international criticism.
Repeated Houthi cross-border attacks have rattled world energy markets and raised the risk of disruptions to output at Aramco sites.
As part of its 2021 report, Aramco said it stuck to its promise of paying quarterly dividends of $18.75 billion — $75 billion last year — due to commitments the company made to shareholders in the run-up to its initial public offering. Nearly all of the dividend money goes to the Saudi government.
Despite Saudi Crown Prince Mohammed bin Salman’s increasing efforts to diversify the Saudi economy away from oil, the kingdom remains heavily dependent on oil exports to fuel government spending.
Riding on its 2021 income surge, Aramco said it expects to raise its capital expenditure to between $40 and $50 billion this year to meet growing energy demand, a sizable increase from last year’s spending of $31.9 billion.
Aramco shares were up over 3% on Sunday to trade around 43.20 riyals ($11.50) a share on Riyadh’s Tadawul stock exchange.
New Zealand’s sanctions on Russia have not stopped the war in Ukraine. They may have made our parliamentarians feel better, and Tony Blinken was quick to congratulate us on falling into line with the US “high-impact sanctions.” The language is combative, but the evidence shows sanctions do not work. They can have significant blow-back effects, particularly if not combined with effective diplomacy.
There are already signs that Western sanctions will impose significant blow-back on the sanctioners. Russia has watched the way the US-led west has used sanctions to impose its own laws on other countries, and has prepared its defences. It is one of the most autarkic countries in the world, a major oil and gas producer, the main source of grain exports, has extensive rare earth materials, and is a major exporter of fertilisers.
Europe is dependent on its natural gas for heating and for industry, and the price of oil and as has risen to add to already rapidly rising inflation across the world. Russian consumers will be less impacted by sanctions than the rest of the world. We will certainly feel the effects here, as the price of fertilisers as well as petrol rises.
Not only that, there are signs that sanctions on Russia will expedite moves to replace the US dollar as the preferred payment for oil and gas. China, Iran, and India are moving to pay for these materials in their own currencies. The US’s ability to run massive deficits and pay for its bloated military are heavily dependent on the privileged status of the dollar. Reports are emerging of the Saudis moving to consider payment for oil in other currencies. That could be huge in its effects on world trade and US hegemony.
U.S. oilfield services companies Halliburton Co HAL.N and Schlumberger said on Friday they have suspended or halted Russia operations in response to U.S. sanctions over Moscow’s invasion of Ukraine.
The disclosures followed widespread departures by energy, retail and consumer goods businesses and a series of European Union and U.S. bans on providing oil technology to Russia or importing its energy products.
Halliburton said it immediately suspended future business and would wind down its operations in Russia after earlier ending shipments of sanctioned parts and products to the country.
Schlumberger has ceased new investment and technology deployment while continuing with existing activity in compliance with international laws and sanctions, the company said in a statement late on Friday.
“We urge a cessation of the conflict and a restoration of safety and security in the region,” Schlumberger Chief Executive Olivier Le Peuch said.
Oilfield services provider Baker Hughes declined to comment on its Russia operations.
Energy companies BP PLC BP.L, Shell RDSa.L, Equinor ASA EQNR.OLand Exxon Mobil have suspended business or announced plans to exit their Russia operations.
Russia, which calls its invasion of Ukraine a “special military operation”, is among the world’s largest oil and gas producers and exports 7 million to 8 million barrels per day of crude and oil products.
Its energy operations rely largely on home-grown service providers.
-Reporting by Chavi Mehta in Bengaluru, additional reporting by Gary McWilliams and Liz Hampton; Editing by Arun Koyyur
https://globalnews.ca/news/8695139/united-states-oil-halliburton-schlumberger-russia/
Kosmos Energy Provides Ghana Pre-emption Update
DALLAS--(BUSINESS WIRE)--Mar 21, 2022--
Kosmos Energy (NYSE/LSE: KOS) (“Kosmos” or the “Company”) announced in November 2021 that it had received notice from Tullow Oil plc (“Tullow”) and PetroSA that they intend to exercise their pre-emption rights in relation to the sale of Occidental Petroleum’s interests in the Jubilee and TEN fields in Ghana to Kosmos, announced October 13, 2021.
After execution of definitive transaction documentation and receipt of required government approvals, Kosmos and Tullow have now concluded their pre-emption transaction. For PetroSA, the process is ongoing and remains subject to execution of definitive agreements and required government approvals.
https://www.galvnews.com/news_ap/business/article_bb1cce2c-64e2-5bb1-ba63-38bea6e0903b.html
By ISABEL DEBRE, Associated Press
DUBAI, United Arab Emirates (AP) — Yemen’s Houthi rebels unleashed one of their most intense barrages of drone and missile strikes on Saudi Arabia's critical energy facilities on Sunday, sparking a fire at one site and temporarily cutting oil production at another.
The salvo marked a serious escalation of rebel attacks on the kingdom as the war in Yemen rages into its eighth year and peace talks stall.
The attacks did not cause casualties, the Saudi-led military coalition fighting in Yemen said, but struck sites belonging to one of the world's most important energy companies and damaged civilian vehicles and homes. The coalition also said it destroyed a remotely piloted boat packed with explosives dispatched by the Houthis in the busy southern Red Sea.
Hours after oil giant Aramco's CEO Amin H. Nasser told reporters the attacks had no impact on oil supplies, the Saudi energy ministry acknowledged that a drone strike targeting the Yanbu Aramco Sinopec Refining Company caused “a temporary reduction in the refinery’s production."
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The disruption, as oil prices spike in an already-tight energy market, “will be compensated for from the inventory," the ministry said, without elaborating.
Another aerial attack later in the day struck a fuel tank at an Aramco distribution station in the port city of Jiddah and ignited a fire. Later at night, the roar and thump of missile interceptors rattled the port city as the Saudi military coalition said it destroyed more projectiles over Jiddah. Residents posted footage on social media showing streaks of light from missile defenses pierce the dark sky.
The relentless wave of strikes revealed the expanding reach and precision of the rebels and the persistent gaps in the kingdom’s air defenses. A sophisticated strike in 2019 on Aramco oil facilities knocked out half the kingdom’s oil production and threatened to ignite a regional crisis — an attack that the U.S. and Riyadh later alleged came from Iran.
The attacks on Sunday came as Saudi Arabia's state-backed Aramco, the world's largest oil company, announced its profits surged 124% in 2021 to $110 billion, a jump fueled by renewed anxieties about global supply shortages and soaring oil prices.
Aramco, also known as the Saudi Arabian Oil Co., released its annual earnings after weeks of intense volatility in energy markets triggered by Russia’s invasion of Ukraine.
The international oil benchmark Brent crude spiked over $107 on Sunday after nearly hitting a peak of $140 earlier this month. Saudi Arabia and the United Arab Emirates have so far resisted Western appeals to increase oil production to offset the loss of Russian oil as gasoline prices skyrocket.
Yehia Sarie, a spokesman for Yemen’s Iran-backed Houthis, said the rebels had launched “a wide and large military operation" in retaliation for the Saudi-led “aggression and blockade” that has turned much of Yemen into a wasteland.
The escalation followed a flurry of diplomacy over the weekend in Oman’s capital of Muscat. The U.N. special envoy for Yemen, Hans Grundberg, met with the chief Houthi negotiator and Omani officials to discuss “a possible truce during the holy month of Ramadan" in early April, the U.N. mission said.
The White House condemned the attacks, blaming Iran for supplying the Houthis with missile and drone parts, as well as training and expertise.
“It is time to bring this war to a close, but that can only happen if the Houthis agree to cooperate with the United Nations,” said U.S. National Security Advisor Jake Sullivan. “The United States stands fully behind those efforts.”
The Saudi-led military coalition reported aerial strikes on a range of facilities: an Aramco liquified gas plant in the Red Sea port of Yanbu, an oil storage plant in Jiddah, a desalination facility in Al-Shaqeeq on the Red Sea coast and an Aramco oil facility in the southern border town of Jizan, among others.
The extent of damage on Saudi infrastructure remained unclear, and the ministry said only the Yanbu refinery saw a temporary drop in output. A joint venture between Aramco and China, the $10 billion Yanbu Aramco Sinopec Refining Company on the Red Sea pumps 400,000 barrels of oil a day.
The Saudi Press Agency shared photos of firetrucks dousing leaping flames with water and a trail of rubble wrought by shrapnel that crashed through ceilings and pocked apartment walls. Other images showed wrecked cars and giant craters in the ground.
The barrage comes days after the Saudi-based Gulf Cooperation Council invited Yemen’s warring sides for peace talks in Riyadh — an offer dismissed out of hand by the Houthis, who demanded that negotiations take place in a “neutral” country.
Negotiations have floundered since the Houthis have tried to capture oil-rich Marib, one of the last remaining strongholds of the Saudi-backed Yemeni government in the country’s north.
Yemen’s brutal war erupted in 2014, after the Iran-backed Houthis seized the country’s capital, Sanaa. Saudi Arabia and its allies launched a devastating air campaign to dislodge the Houthis and restore the internationally recognized government.
But years later, the war has settled into a bloody stalemate and created one of the worst humanitarian crises in the world.
Coalition airstrikes have struck civilian targets in Yemen like hospitals, telecommunications centers and wedding parties, drawing widespread international criticism.
Repeated Houthi cross-border attacks have rattled world energy markets and raised the risk of disruptions to output at Aramco sites.
As part of its 2021 report, Aramco said it stuck to its promise of paying quarterly dividends of $18.75 billion — $75 billion last year — due to commitments the company made to shareholders in the run-up to its initial public offering. Nearly all of the dividend money goes to the Saudi government.
Despite Saudi Crown Prince Mohammed bin Salman’s increasing efforts to diversify the Saudi economy away from oil, the kingdom remains heavily dependent on oil exports to fuel government spending.
Riding on its 2021 income surge, Aramco said it expects to raise its capital expenditure to between $40 and $50 billion this year to meet growing energy demand, a sizable increase from last year’s spending of $31.9 billion.
Aramco shares were up over 3% on Sunday to trade around 43.20 riyals ($11.50) a share on Riyadh’s Tadawul stock exchange.
Associated Press writers Samy Magdy in Cairo and Tom Strong in Washington contributed to this report.
Chief executive identifies North Africa gas access as Italian major unveils 2022-2025 strategy while boosting dividend
Italian major Eni can access 14 trillion cubic feet of gas resources in the short to medium term, to help diversify Europe away from Russian supplies.
Initially, the extra gas would be piped from the company's assets in North Africa.
“The war in Ukraine is forcing us to reconsider the world as we know it. It is a humanitarian tragedy and has created new threats to energy security which we must meet without abandoning our ambitions for a just transition,” stated chief executive Claudio Descalzi
Presenting Eni’s 2022-2025 strategy, the Eni boss said incumbent strategies and the atest four-year plan have made the company well prepared to address these challenges.
“Our immediate response to the current crisis has been to leverage our established alliances with producing countries to find replacement energy sources for Europe’s energy needs,” said Descalzi.
“We can make available to the market more than 14 Tcf of additional gas resources for the short to medium term (which) complements our work to develop new decarbonised products and services which can (also) help deliver energy security."
In a short period, the war in Ukraine has already had a major effect the world economy. The United States and the European Union have levied sanctions on an unprecedented scale against Russia, energy prices have skyrocketed, and with the Black Sea closed, the world’s most fertile region is no longer linked to its markets. This will cause an appreciation of food prices that could wreak havoc in the European periphery.
Russia and Ukraine are important sources for raw materials that are now all but shut off from the world economy. Ukraine, for example, exports about half the world’s supply of semiconductor-grade neon, hitting an industry that had already been plagued by pandemic-related shortages. While this bears the potential to significantly appreciate manufactured goods from cars to consumer electronics, it is primarily industrialised nations that will shoulder the costs.
The war’s impact on the Middle East
Rather, it is the war’s effects on the food prices that should really worry us. Russia and Ukraine boast some of the most fertile soil in the world, making them world-leading exporters of agriculture produce. Especially grains and oil seeds can be produced here at relatively low cost, and in close proximity to their main export markets. Many countries are highly dependent on basic foodstuffs from Russia and Ukraine, especially those in the Middle East.
Egypt imports almost 70 per cent of its wheat from Russia and Ukraine. In 2019, 73 per cent of the Egyptian population benefitted from bread subsidies, an enormous strain on public finances. But attempts to cut subsidies run a high risk of causing unrest. The country has already banned the export of several foodstuffs and is currently seeking new sources for wheat and vegetable oil. It is unlikely, however, that Egypt will be able to finance new imports on its own.
Tunisia and Lebanon both import about half their wheat from the Black Sea region. While the former is still grappling with the recent power grab by President Saied, the latter is more politically fractured than ever. Since the Lebanese Central Bank’s ponzi scheme imploded, the country’s currency has been in free fall. The Lebanese government has already petitioned the US for $20 million in order to buy grain on the world market. And with grain silos diminished to only a quarter of their previous capacity after the explosion in the port of Beirut, food security in Lebanon is precarious to say the least.
Adding to pre-existing fiscal worries in most Middle Eastern countries, two years of a global pandemic only exacerbated the economic crisis.
Turkey is highly dependent on Russian and Ukrainian wheat as well, with 64.5 per cent and 9.6 per cent of its imports respectively. Even if the Turkish government is able to negotiate sanctions wavers for food imports from Russia, the prospect of rising food and energy prices poses an existential threat to President Erdogan, who currently presides over a historic economic downturn and hopes to be re-elected in the coming year.
Adding to pre-existing fiscal worries in most Middle Eastern countries, two years of a global pandemic only exacerbated the economic crisis. Thus, the current situation has the potential to spell chaos in the region. Research suggests that there was a direct link between rising food prices and the protests that led to the Arab Spring. Even though food shortages and higher prices were not the reason for every protest, they undoubtably were a contributing factor that triggered pre-existing grievances. It is no coincidence that ‘bread’ was one of the three demands all Egyptian protesters during the revolution rallied behind.
With the pre-Arab Spring political order more or less restored, the people may not have the degree of participation, but they at least demand a decent life. If this becomes unattainable due to drastically rising costs of living, however, the fragile ruling bargain may erode sooner rather than later. This time, regimes across the region are prepared, but suppression and co-optation can only buy time, and conflicts are becoming more likely with each passing week.
The implications for Europe
It is, however, not just the Middle East region that will face major challenges. As has already been seen in the aftermath of the wars in Syria and Libya, European actors will also once again be confronted with new migration movements – a situation that has already put European unity to the test several times in the past. Since the coming food shortages may last up to two years, the southern periphery of Europe can also once again expect to see people leaving their home countries in the face of war, hunger, and a lack of prospects. As Emanuel Macron recently emphasised, all EU member states must already take precautions to cope with or ideally cushion developments in the Middle East.
Against the backdrop of the past from 2011 onward, states such as Saudi Arabia, the United Arab Emirates, and Kuwait have no interest in a new destabilisation of their own environment.
To this end, the EU’s biggest member states in particular must launch new aid programmes at the national and international level, and it is not only EU structures that need to act. The involvement of international organisations such as the FAO, the WFP, or the World Bank can also be helpful in ensuring that the necessary funds reach the affected countries. Moreover, as almost all agricultural areas in the region will come under pressure from climate change and water stress, the EU's agricultural policy needs to be reconsidered and connectivity with the Middle East strengthened. This can happen especially in the areas of water-saving cultivation options, but also in the planting of heat-resistant grain varieties.
Since the food crisis is also a fiscal challenge, emergency financial programmes must be set up in addition to food supplies to provide timely assistance to countries such as Egypt, Jordan, Lebanon, and Yemen to stabilise their national budgets. This must also take place with the involvement of the regional players – first and foremost the Gulf monarchies, which are in a good financial position.
Saudi Aramco logs 124% profit growth in 2021 as Covid-19 shocks waned
Saudi Aramco’s net profit soared 124 per cent last year as global growth recovered from the Covid-19 downturn, the oil giant announced on March 20, hours after Yemen’s Huthi rebels targeted some of its sites.
Aramco, the crown jewel of Saudi Arabia’s oil-dependent economy, did not say if the cross-border attacks, which targeted diverse locations in the kingdom, caused damage to its own facilities.
A Saudi-led coalition that supports Yemen’s government against the rebels reported no casualties but “damage” from air defence systems intercepting missiles and armed drones, without specifying whether Aramco’s infrastructure was among sites affected.
“Aramco’s net income increased by 124 per cent to $110.0 billion in 2021, compared to $49.0 billion in 2020,” the company said in a statement.
The oil giant achieved a net income of $88.2 billion in 2019 before the coronavirus pandemic hit global markets, resulting in huge losses for the energy and aviation sectors, among others.
A strong rebound last year saw demand for oil increase and prices recover from their 2020 lows, and Brent crude has lately repeatedly spiked above $100 per barrel, driven by supply concerns centred on the Russia-Ukraine conflict.
One of the world’s largest producers of gas and one of the biggest oil producers, Russia is grappling with mounting Western sanctions.
“Our strong results are a testament to our financial discipline, flexibility through evolving market conditions and steadfast focus on our long-term growth strategy,” Aramco president and CEO Amin Nasser said, acknowledging also that “economic conditions have improved considerably”.
Yemen’s Iran-backed Huthi rebels said on March 20 that they launched cross-border drone and missile attacks on the kingdom, targeting a number of “vital and important” establishments – including Aramco facilities.
The Saudi-led military coalition, meanwhile, said it intercepted and destroyed ballistic missiles launched towards Jizan in southern Saudi Arabia as well as nine armed drones targeting other areas in the kingdom.
“Initial investigations indicate the militia used Iranian cruise missiles that targeted al-Shaqeeq desalination plant and Aramco’s Jizan bulk plant,” it said in a statement, adding other targets included a Dhahran al-Janoub power station, a gas station in Khamis Mushait and an Aramco gas plant in Yanbu.
It said that the “hostile attacks” and scattered debris after interception caused “some material damage”, without specifying which sites were damaged.
The Huthis have repeatedly targeted Saudi Arabia, including Aramco’s sites.
In 2019, aerial assaults on two Aramco facilities in the eastern region temporarily knocked out half of the kingdom’s crude production, underscoring the vulnerability of its infrastructure.
The six-nation Gulf Cooperation Council plans to hold talks in Riyadh from March 29 in the latest bid to end Yemen’s conflict. The Huthis, while saying they are not opposed to talks, have said they won’t travel to “enemy” territory.
CEO Nasser cautioned that the company’s outlook remained uncertain due in part to “geopolitical factors” and, in an allusion to the effect of the recent price spikes on consumers, also noted that “energy security is paramount for billions of people”.
“We [therefore] continue to make progress on increasing our crude oil production capacity, executing our gas expansion programme and increasing our liquids to chemicals capacity,” Nasser added.
Oil-rich Gulf countries, including Saudi Arabia, have so far resisted pressure from Western allies to raise oil output to rein in prices, stressing their commitment to the OPEC+ alliance of oil producers, which Riyadh and Moscow lead.
Saudi Aramco’s statement said capital expenditure in 2021 was up 18 per cent on 2020 at $31.9 billion, a figure it expects to rise to approximately $40-50 billion this year, before further growth.
It also announced a dividend of $18.8 billion for the fourth quarter of 2021.
Aramco floated 1.7 per cent of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world’s biggest initial public offering (IPO).
Saudi Arabia has sought both to open up and diversify its economy, especially since Mohammed bin Salman’s appointment as crown prince in 2017.
Last month, the kingdom shifted four per cent of Aramco shares worth $80 billion to the country’s sovereign wealth fund – a move seen as a possible prelude to further opening up the oil giant.
“Governments don’t make deals” when it comes to directing U.S. oil and gas resources to specific nations, said Amy Myers Jaffe, managing director of the Climate Policy Lab at Tufts University’s Fletcher School. “You don’t have government-to-government oil companies.”
That means the United States may not be able to do much to immediately ease the energy crunch for European states that are seeking to cut their imports of natural gas from Russia by two-thirds this year in response to Vladimir Putin’s invasion of Ukraine. Russian gas shipments to Europe reached 5.5 trillion cubic feet of gas in 2020, up more than 25 percent from a decade ago.
The energy crisis for America’s cross-Atlantic allies is still forcing a shift in policies for the Biden administration, which had come into office pledging to drive a transition away from fossil fuels and toward clean energy. Republicans and European leaders alike are pushing the White House to use U.S. energy production as a way to help Germany and other countries reduce their dependency on Moscow.
“Hopefully, we are beyond [European dependence on Russia] and producing more energy to provide them by next winter,” Republican Alaska Sen. Dan Sullivan said in an interview.
The issue is expected to be a central topic when Biden visits Europe to attend a NATO summit and a European Council meeting scheduled for Thursday. The White House’s senior adviser for energy security, Amos Hochstein, and members of the State Department’s Bureau of Energy Resources are expected to accompany him, a person familiar with the plans said.
The White House did not reply to questions. The State Department declined to comment on who would be accompanying Biden.
The visit comes after European Commission Vice President Maroš Šefčovič met with national security and energy officials in Washington this week, said an EU energy official who requested anonymity to discuss details. They included Deputy Energy Secretary David Turk, who has coordinated much of the Biden administration’s response to energy supply challenges.
EU leaders are also making their requests public.
France’s minister for the ecological transition, Barbara Pompili, said during a March 10 event that she had told U.S. Energy Secretary Jennifer Granholm that week, “You have to increase your production if you’re going to help us.”
“She told me she will try to do that,” Pompili added.
But Biden will have to be wary of making promises his administration can’t keep. The sheer scale of Europe’s gas needs in a market that is already running tight on supply will create a huge hurdle, as will the U.S. government’s relatively small influence on short-term issues in the energy markets.
Energy analysts say the EU plan to cut Russian imports by 102 billion cubic meters (3.6 trillion cubic feet), or two-thirds of its Russian purchases, isn’t realistic, but that a wartime effort might see the bloc find new sources for 50 to 60 percent of that target. Still, such a shift would strain the global LNG market.
The U.S. is on course to become the leading LNG supplier in the world this year. But its LNG export companies are running near full capacity, with 80 percent of their cargoes going to Europe, said Ross Wyeno, the lead Americas LNG analyst at S&P Global. Venture Global LNG started initial shipments from its Calcasieu Pass plant in Louisiana this month and will fully ramp up by the beginning of 2023, but otherwise no new capacity is expected to come online until 2024.
“I don’t think the answer is the U.S. is going to offset the entirety of Russian gas with LNG exports,” said Charlie Riedl, head of the trade association Center for Liquefied Natural Gas, in an interview. “That’s something I’d be happy to be wrong on, but I don’t think it’s going to offset the entirety of Russian gas.”
The sudden European demand for more gas could help finance the building of new LNG facilities, but it would take at least one to two years to build them after executives give the green light to start construction, Riedl said. European companies, which to date have not been big investors in U.S. LNG plants, could decide to sign relatively short-term supply contracts lasting 10 years or so, he added.
“I do think Europe is emerging as a major market, not just for U.S. LNG, but other suppliers,” Riedl said.
Complicating Europe’s plans will be the weather, which is the main driver of gas demand as people turn their thermostats up or down. Even before Russian tanks crossed into Ukraine, European gas inventories were dwindling because of cold temperatures in 2021. That was offset, however, by milder temperatures in Asia, which allowed Europe to receive LNG cargoes that would normally have headed to South Korea, China or Japan.
“Europe got bailed out by a warm winter in Asia,” Freeport LNG Chief Executive Michael Smith said at an energy conference in Houston last week.
The EU energy official who spoke to POLITICO on condition of anonymity to discuss conversations with the Biden administration admitted that the bloc’s requests are tough to meet. A major concern is bringing in enough natural gas to rebuild storage levels ahead of next winter’s heating season — auguring painful price spikes and potential shortages if the EU fulfills its plan to ditch most Russian energy.
Another person familiar with the conversations between the EU and the Biden administration agreed that Europe’s requests are vague. EU officials have pressed the Biden administration to ramp up U.S. production and exports, but the Biden administration contends there’s little it can do immediately since the government does not run the oil and gas sector.
“Europe’s big problem is the inability to articulate a realistic short-term energy security strategy within the boundaries of its decarbonization agenda,” said Nikos Tsafos, energy and geopolitics chair at the Center for Strategic and International Studies, in an email. “The end result is that despite the enormous political will for change, there is no real roadmap to realize this change yet.”
The Biden administration did give Europe and the oil and gas industry a potential boost Wednesday by allowing two existing Cheniere LNG export terminals to expand the number of countries that it can sell its gas to, fulfilling long-standing industry requests.
Europe’s turn away from Russia comes at a time when its natural gas inventories are already extremely low, giving it less cushion if demand spikes. European storage tanks are expected to hold about 1 trillion cubic feet of gas by the middle of this year, a steep drop from 3 trillion cubic feet at the same point in 2020, according to data from RBN Energy.
The EU has been in close contact with major U.S. natural gas producers and exporters, such as Cheniere, Tellurian and Sempra, along with industry groups LNG Allies and the American Petroleum Institute, the EU energy official said.
But the person added the EU is wary of supporting fossil fuel industry messaging that’s been pressuring the Biden administration to expand natural gas production.
That’s because natural gas is unpopular in the EU given widespread opposition to fracking and pollution from methane, a potent greenhouse gas that is the target of a global climate change campaign. The official noted the EU is walking a fine line in lobbying for more U.S. natural gas while trying to keep its aggressive, near-term climate targets in check. The EU has pledged to cut emissions of methane, the main component of natural gas, by 70 percent of 2020 levels by 2030, and wants to slash emission of carbon, which is released when gas is burned, by 55 percent below 1990 levels this decade.
“You have to be very careful about what you hear, what you get — the promises — and distinguish between what the industry would ask for anyway and what they’re asking for in the context of the current situation,” the EU official said. “I am very cognizant of that division.”
Leslie Palti-Guzman, head of the LNG analysis firm Gas Vista, noted the discrepancy. The French government in 2020 stepped in to quash a potential LNG deal between its partially state-owned company Engie and the American LNG company NextDecade over fears that U.S.-produced gas was too dirty. Engie eventually concluded the deal after side-stepping the government.
But now Europe is expected to triple its imports of LNG from the United States, according to Gas Vista forecasts.
“Europe finally sees salvation in U.S. LNG, and nobody talks about ‘dirty-fracking’ any longer,” Palit-Guzman said.
Josh Siegel contributed to this report.
https://www.politico.com/news/2022/03/21/biden-europe-russian-gas-00018189
Gas prices volatile amid geopolitical uncertainty
Nord Stream 2 has been suspended by Germany
Natural gas prices have dropped heavily from historic peaks over the past week, with the UK benchmark tumbling from an eye-watering £8 per therm to £2.46 since March 7.
Wholesale costs remain historically elevated with prices at 46p per therm this time last year.
However, the drop-off reflects the wild volatility of the current gas market which seems highly influenced by ensuing geopolitical tensions.
OANDA senior market analyst Craig Erlam argued that gas prices have fallen amid reports of negotiations between Russia and Ukraine, which has eased fears of supply shortages and conflict disruptions.
The European Union (EU) so far has also failed to follow the US in restricting Russian gas supplies to its markets, with the trading bloc still split over energy sanctions.
He told City A.M.: “Negotiations are not guaranteed to lead to an agreement that involves Russian troops leaving Ukraine, and we’ve already seen plenty of setbacks, but the fact that they are happening and reportedly progressing is helping to keep some of the pressure off gas prices.”
The energy analyst also warned that another rally in prices is possible – with prices spiking in December and March over the past six months – as the possibility to reduced supplies remains, making negotiations a key weight on elevated prices.
Erlam noted: “While Russian exports have continued and the EU has been exploring alternative options over the longer term, the risk of further sanctions disrupting flows, as we’ve seen with oil, or gas being weaponised remains. As long as negotiations are happening, that risk is reduced.”
UK Natural Gas Futures: Prices have dipped from March’s early surge (Source: ICE)
Read more Saudi Aramco ramps up oil and gas spending after doubling profits to $110bn
EU scrambles for supplies from global markets
So far, the EU has staved off the prospect of blackouts over the winter with top-ups in liquified natural gas (LNG) – chiefly from the US.
It has also pushed for supplies from non-Russian markets, although the bulk of LNG in the Gulf States has been secured with long-term contracts from Asian markets.
Nevertheless, German reached a long-term gas supply deal with Qatar yesterday – easing supply fears.
The trading bloc relies on Russia for around 40 per cent of its natural gas – with the number being higher in key economies such as Germany – and has suffered over the past six months amid cut export growth from Kremlin-back gas giant Gazprom.
Last week, natural gas stores were reported as only being 26 per cent full – with the EU now set to bring forward proposals to ensure storage across the continent is at 90 per cent ahead of next winter.
Commerzbank analyst Carsten Fritsch also highlighted there have been fewer gas bookings from the continent over the past few weeks, despite Russia committing to supplying global markets – dropping 20 per cent over the past week.
He also noted that no gas at all has arrived in Germany via the Yamal pipeline through Poland since 15 March, while 20 per cent less has also been delivered via Nord Stream.
Nathan Piper, head of oil and gas research at Investec, told City A.M. that while prices have dipped – he expected them to remain historically high amid sustained market tensions.
He said: “UK gas prices have eased somewhat as milder conditions reduce heating demand and near term risk of Russia restricting gas supply passes, for now. However we expect gas prices to remain elevated, compared to the long term average as Europe competes with Asia for incremental LNG volumes.”
https://www.cityam.com/gas-prices-volatile-amid-geopolitical-uncertainty/
ISLAMABAD:
Pakistan is going to face another setback as premiums on oil import have risen sharply due to the shortage of petroleum products, especially diesel, in the global market following the Russia-Ukraine war.
According to sources, Pakistan had been paying a premium of 3% to 4.5% on the import of petrol and diesel, but it has gone up suddenly, as petroleum products are becoming scarce.
Over the past few days, sources said, the premium on petrol and diesel import had risen to 6.5% and 10.5% respectively, which would lead to an increase in prices of the two oil products.
The scarcity of diesel in the global market can be gauged from the fact that when Pakistan State Oil (PSO) floated an import tender, no importer expressed interest in it.
Apart from that, the surging global crude oil prices, in the wake of the Russia-Ukraine conflict, have hurt the collection of revenue on petroleum products.
Though the revenue flow through the sale of petroleum products is an easy source of income for the government, it has squeezed taxes in a bid to keep oil prices at lower levels and rein in inflation in the country.
Two types of taxes - petroleum levy and general sales tax - are imposed on the sale of petroleum products.
So far, the government has collected Rs114 billion in petroleum levy, which is far lower than the budgetary target of Rs610 billion for the current fiscal year. PHOTO: FILE
Pakistan is going to face another setback as premiums on oil import have risen sharply due to the shortage of petroleum products, especially diesel, in the global market following the Russia-Ukraine war.
According to sources, Pakistan had been paying a premium of 3% to 4.5% on the import of petrol and diesel, but it has gone up suddenly, as petroleum products are becoming scarce.
Over the past few days, sources said, the premium on petrol and diesel import had risen to 6.5% and 10.5% respectively, which would lead to an increase in prices of the two oil products.
The scarcity of diesel in the global market can be gauged from the fact that when Pakistan State Oil (PSO) floated an import tender, no importer expressed interest in it.
Apart from that, the surging global crude oil prices, in the wake of the Russia-Ukraine conflict, have hurt the collection of revenue on petroleum products.
Though the revenue flow through the sale of petroleum products is an easy source of income for the government, it has squeezed taxes in a bid to keep oil prices at lower levels and rein in inflation in the country.
Two types of taxes - petroleum levy and general sales tax - are imposed on the sale of petroleum products.
So far, the government has collected Rs114 billion in petroleum levy, which is far lower than the budgetary target of Rs610 billion for the current fiscal year.
Experts believe that the government may hardly be able to collect Rs150 billion in petroleum levy by the end of fiscal year in June 2022.
In the international market, the West Texas Intermediate (WTI) crude price touched $111 per barrel while Brent crude rose to $115 per barrel following the start of Russia-Ukraine war.
However, Prime Minister Imran Khan has announced a reduction of Rs10 per litre in prices of petrol and diesel and has also put a freeze on them for a few months as political tensions are boiling over.
The premier is facing a no-trust move filed by the joint opposition in the National Assembly.
As the government keeps petroleum prices suppressed, it needs to pay price differential claims to the oil industry to help it stay afloat. In this regard, the Economic Coordination Committee (ECC) has recently approved a supplementary grant of Rs11.73 billion.
The government is said to be bearing a burden of Rs28 billion on account of price differential claims for a fortnight.
However, the global crude oil prices are set to soar further following the slapping of sanctions on Russia due to its invasion of Ukraine, which will restrict its fuel sales.
Russia ships seven to eight million barrels of crude oil and its products to the global market.
Besides the Organisation of the Petroleum Exporting Countries (OPEC) - an oil-producing cartel, Russia is also a key player in oil supply and can shake the international market.
Despite the imposition of sanctions, the US is importing oil from Russia to meet domestic needs. The US Treasury has allowed American companies to buy Russian oil through an intermediary bank in a third country, which has not joined the sanctions on Russia.
Last year, Washington imported around 700,000 barrels per day of crude oil and refined petroleum products from Moscow.
Hong Kong traders have also rushed to offer the best conditions following the decision of the US Treasury.
Experts say the US and western nations have limited options for blocking the flow of revenue to Russia through the sale of petroleum products.
They could force OPEC members to increase production and flood the market with oil to stabilise prices. However, at present, the US is not enjoying good relations with OPEC lynchpin Saudi Arabia.
On the other hand, Iran - also a big oil producer - has been under sanctions since long. Washington will have to ease sanctions on Tehran to clear the way for increase in oil supply in the global market.
If tensions continue to flare up between the western countries and Russia, the oil prices will go up further and shortages will deepen.
In this situation, Pakistan needs to look for ways to open its border with Iran for oil import.
At present, Pakistan does not have a waiver from the US for oil import from Iran as traders are not able to open Letters of Credit for fuel purchases.
To find a way out, Pakistan should have a barter trade or currency swap arrangement with Iran. Otherwise, the high oil import cost will swallow Pakistan’s foreign currency reserves.
Published in The Express Tribune, March 23rd, 2022.
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https://tribune.com.pk/story/2349170/oil-scarcity-lifts-import-premiums
Alok Sharma: North sea gas extraction won't solve energy crisis
German Vice-Chancellor Robert Habeck has secured several new contracts with the United Arab Emirates (UAE) to import blue hydrogen. While considered a renewable energy source, blue hydrogen is derived from natural gas through the process of steam methane reforming (SMR). Unlike its "green" cousin – which is created using renewable electricity – blue hydrogen also uses carbon capture and storage (CCS) to bury emissions underground.
Mr Habeck said following his visit to Abu Dhabi: “The accelerated expansion of hydrogen supply chains is a very pivotal factor in the transition to sustainable energy." Berlin has laid out plan to import some three million tonnes of blue hydrogen to be used by 2030. As a consequence, securing contracts with potential exporters like the UAE became a top priority, with the previous administration overseeing the launch of the Germany-UAE energy partnership in 2017. The UAE has ideal sunny weather conditions for the cost-effective production of hydrogen from renewable energies and wants to “deliver the first hydrogen to Germany in 2022,”
Germany is ready to increase its gas reliance
EU leaders will meet to discuss new sanctions
But German Chancellor Olaf Scholz has come under intense pressure over the current crisis in Ukraine. Even before Vladimir Putin's horrifying invasion, Berlin had been warned of its over-reliance on gas./ Germany imports some 40 percent of its supplies from the Kremlin, which has made sanctioning Russian energy more complicated for the EU. Despite publishing an energy strategy detailing how the bloc will scupper energy ties with Putin, the EU has still yet to follow the UK and the US in sanctioning Russian oil. Some countries, such as Ireland and Lithuania, have suggested that an embargo on the Russian oil industry is absolutely necessary to cut off Moscow's main source of income. READ MORE: Iran suddenly just became VERY powerful and it's the EU giving them all the power
Putin has sparked an energy crisis
Trending
It is now looking increasingly likely that oil will be sanctioned but gas left off the table as this would be less damaging for the EU's economy. But that will also provoke more arguments within the bloc. Polish Prime Minister Mateusz Morawiecki said: “Fully cutting off Russia’s trade would further force Russia to consider whether it would be better to stop this cruel war.” France has argued that there should be no “taboos” in terms of sanctions if the situation in Ukraine gets worse. Mr Habeck said on public radio DLF on March 19 that completely slashing Russian energy imports could mean a “three percent to five percent loss of GDP”, which would lead to “some people no longer earning any money at all". DON'T MISS
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Germany is heavily reliant on Russia
For 50/50 chance of limiting rise in global temperatures to 1.5C, 19 countries including US and UK must end their energy production first, a new report says, adding poor oil producers like Angola could end production by 2050.
Key objective, enshrined in the 2015 Paris Agreement, is to cap global heating "well below" 2C, and 1.5C if possible. (AP Archive)
Rich countries must end their oil and gas production by 2034 to cap global heating at 1.5 degrees Celsius and give poorer nations time to replace fossil fuel income, according to a report.
The 70-page analysis from the Tyndall Centre for Climate Change Research comes on Tuesday as nearly 200 nations kick off a two-week negotiation to validate a landmark assessment of options for reducing carbon pollution and extracting CO2 from the air.
The overarching objective, enshrined in the 2015 Paris Agreement, is to cap global warming "well below" 2C, and 1.5C if possible.
Some poorer nations produce only a tiny percentage of global output but are so reliant on fossil fuel revenues that rapidly removing this income could undercut their economic or political stability, the Tyndall Centre report showed.
Countries such as South Sudan, the Republic of Congo and Gabon have little economic revenue apart from oil and gas production. By contrast, wealthy nations that are major producers would remain rich even if fossil fuel income were removed.
READ MORE: World 'sleepwalking' to climate catastrophe: UN
Phasing out coal first
Oil and gas revenue, for example, contribute eight percent to US GPD, but the country's GDP per capita would still be about $60,000 –– second highest in the world among oil and gas producing nations -–– without it, according to the report.
"We use the GDP per capita that remains once we've removed the revenue from oil and gas as an indicator of capacity," lead author Kevin Anderson, a professor of energy and climate change at the University of Manchester, told the AFP news agency.
There are 88 countries in the world that produce oil and gas.
"We calculated emissions phase-out dates for all of them consistent with the Paris Agreement temperature goals," Anderson said. "We found that wealthy countries need to be at zero oil and gas production by 2034."
The very poorest countries can continue to produce out till 2050, according to the calculation, and other countries such as China and Mexico are somewhere in between.
READ MORE: G20 still hooked on fossil fuels despite 'green recovery' pledges
GDP deciding factor
For a 50/50 chance of limiting the rise in global temperatures to 1.5C, 19 countries in which per capita GDP would remain above $50,000 without oil and gas revenue must end production by 2034.
Included in this tranche are the US, Norway, Britain, Canada, Australia and the United Arab Emirates.
Another 14 "high capacity" nations where per capita GDP would be about $28,000 without income from oil and gas must end production in 2039, including Saudi Arabia, Kuwait and Kazakhstan.
The next group of countries –– including China, Brazil and Mexico –– would need to end output by 2043, followed by Indonesia, Iran and Egypt in 2045.
Only the poorest oil and gas producing nations such as Iraq, Libya and Angola could continue to pump crude and extract gas until mid-century.
READ MORE: COP26: Several nations pledge to end overseas fossil fuel finance
Source: AFP
https://www.trtworld.com/life/rich-nations-must-end-oil-production-by-2034-in-climate-fight-55735
The European Union wants to replace Russian gas with other sources fast, which is certain to put more upward pressure on fuel prices. Germany is negotiating with Qatar for its LNG, but so are Japan and South Korea.
German Vice-Chancellor and Minister for Economic Affairs and Climate Action Robert Habeck has visited Qatar to try and secure shipments of liquefied natural gas (LNG) that would replace as much Russian gas as possible as quickly as possible. The Persian Gulf emirate said companies from both countries would “re-engage and progress discussions” regarding long-term contracts.
The German official declared it “good news,” but there is a long way to go before the European Union can get the gas volumes it regularly needs to fulfill the goals from its recent U-turn in energy policy, prompted by Russia’s invasion of Ukraine. For instance, Germany doesn’t even have LNG terminals with regasification facilities to get the fossil fuel to its households, heat and power plants, and the industry.
The government in Berlin recently said it would urgently build two terminals, which exemplifies Europe’s woes even better.
Energy keeps fueling inflation
The war in Ukraine worsened an already severe energy crisis and galloping inflation. Gas shortage was one of the initial drivers. In the meantime, costs spread to various segments of the economy.
Fertilizer, steel, electricity, aluminum, diesel, and wheat are all at record highs or testing them, alongside other commodities and energy and food prices. Moreover, Russia is threatening to ban uranium exports, just as Belgium decided to extend the life of its last nuclear power plants by a decade until 2035. The United Kingdom is reportedly considering multiplying the capacity of its nuclear energy fleet.
Russia is threatening to ban uranium exports, adding upward pressure to energy price inflation
The European Commission said it would make it obligatory for member states to refill gas reserves to at least 90% by September 1. The storage level is at 26%, the lowest in four years. When prices are extremely elevated and volatile, restocking will come at an enormous cost to gas buyers, traders, and consumers. Analyst Seb Kennedy said and estimated “a fierce energy bidding war” is coming.
The EU also declared 2030 as its deadline to end dependence on Russian fossil fuels, but just days later, European Commission President Ursula von der Leyen said the date would be pushed forward to 2027. On top of that, there are more than ambitious short-term targets, especially for gas. In the meantime, the EU signaled it could include energy in sanctions against Russia.
Global race for Middle Eastern LNG, oil
Habeck was not the only high-ranking guest in Qatar in the past week. South Korean Prime Minister Kim Boo-kyum traveled to Doha, and so did the representatives of Japan’s government. It earlier let some long-term supply deals expire as it wouldn’t renew them at sky-high prices, landing in what may be an even worse position now.
Qatar and the United States, Europe’s biggest LNG supplier, are the world’s biggest producers of the fuel, which is transported by sea. Russia delivers most of its gas by pipelines. It has a 66% share in Germany’s gas imports.
The government in Berlin and the entire EU are primarily looking for fast solutions, but it implies they would increase the pressure on a tight LNG market, mostly covered by long-term agreements. They must compete with China and other Eastern Asian countries that are used to paying premiums to secure the supply of liquid gas from the Middle East, so another surge in prices is guaranteed.
Qatar has little wiggle room for now
However polite Qatari officials are to foreign dignitaries, the country has little maneuvering space to divert deliveries or boost production in the short term. It has a major LNG investment plan to increase the capacity by half, but the results are not scheduled to be seen until the end of 2025.
Habeck also visited the United Arab Emirates for the same purpose and, additionally, to talk about a deal for liquefied green hydrogen, an alternative for gas. UK Prime Minister Boris Johnson went there, too, and to Saudi Arabia, trying to secure more oil.
The EU is looking to source more gas from Azerbaijan, Algeria, and Norway. Germany and Norway are discussing a hydrogen pipeline project. One solution for the EU could be to get gas from the UK, converting LNG and sending the fuel by pipeline.
Raising capacity for LNG imports, notably from the US, and strengthening gas and electricity interconnections in the Balkans, the North Sea, Italy and subsequently North Africa, are among the options EU countries are currently considering to diversify from Russian energy supplies.
On Liquefied Natural Gas (LNG), the EU will be seeking assurances from US President Joe Biden, who landed in Brussels on Wednesday (23 March) to attend EU, G7 and NATO summits.
“Tomorrow, I will discuss with President Biden how to prioritise LNG deliveries from the United States to the European Union in the coming months,” European Commission president Ursula von der Leyen said on Wednesday (23 March).
“We are aiming to have a commitment for additional supplies for the next two winters,” she told EU lawmakers in Brussels.
On gas, Azerbaijan, Qatar, the US, and Scandinavian countries are considered the main options among EU countries, while on oil, many are turning towards Saudi Arabia and the United Arab Emirates.
A few countries see renewable energies as a pivotal solution but immediate plans for green energy production are generally postponed. Coal remains a backup option for Germany and the Czech Republic.
All strategies to end dependency on Russian resources will take time, though.
Some countries, like France, Slovakia, and the Czech Republic, believe this goal can be reached by the end of the decade. The only exception is Italy. Although the country imports 40% of its gas from Russia, ENI CEO Claudio Descalzi said Italy could end its dependence on Russian gas by 2023.
According to draft conclusions from the EU summit on 24-25 March, EU leaders are expected to vow to “work together on the joint purchase of gas, LNG and hydrogen”.
However, finding alternatives to Russia’s energy supplies will be a tough equation.
The Balkans and Southern Europe
Most southern European countries are trying to reinforce connections with North Africa and the Balkans, with new gas and electricity connections.
For Greek PM Kyriakos Mitsotakis, the main priority is to strengthen the country’s electricity interconnection with Egypt. Environment minister Konstantinos Skrekas told the press that the connection will be created through a submarine cable.
“In addition, we are also looking at strengthening our cooperation with neighbouring countries in the Balkans. Our country already imports energy from Bulgaria, part of which is produced by the existing nuclear power plant there. Our aim is to conclude long-term bilateral contracts, which will ensure a stable energy supply at very low prices and contribute to the competitiveness of our economy” the ministry added.
Plans are in place to improve the gas submarine storage facility in Kavala and the government also plans to construct a second floating LNG terminal in Alexandroupolis.
Bulgaria depends heavily on Russian energy, importing between 70-90% of its gas and 60% of its oil from Moscow. However, the government is determined to end this dependency.
The government wants to avoid signing any new contract with Gazprom this year and is considering importing gas from Azerbaijan through Greece. The gas pipeline through this channel is expected to be launched in the autumn of this year. Additional quantities of LNG are expected from the terminal in Alexandroupolis, in which Bulgaria has a stake.
Romania is less dependent on Russian oil and gas compared to other countries in the region. Energy minister Virgil Popescu said the country is expected start extracting gas from the Black Sea this year, which may add roughly one billion cubic meters of gas annually. However, this investment, as well as a larger one, depends on changes to the offshore law, which a fast adoption is expected.
A few days before the start of the conflict in Ukraine, Romanian energy minister Virgil Popescu had a series of meetings with officials from Azerbaijan, Bulgaria, Qatar, Saudi Arabia and Turkey to discuss new supply routes. Romanian officials also talked with Bulgaria and Greece for the interconnection of networks, so that Azeri gas can start flowing through the European grid.
Slovenia mulls increasing imports from North Africa through Italy’s pipeline system. The government is in talks with Algeria, already a major supplier for Slovenia, to restart supplies. They are discussing pipeline availability with Italy and potential supplies through the Croatian LNG terminal in Krk. Slovenian President Borut Pahor and energy minister Jernej Vrtovec recently visited Qatar to discuss the gas situation.
Italian foreign minister Luigi di Maio has begun a tour of countries with resources to create sustainable alternatives. After Algeria, Qatar, Congo and Angola, the minister announced an agreement with Mozambique. However, these initiatives do not seem to be enough to fully replace Russian gas and oil dependency. Rome imports 90% of its annual gas supplies and 45% of it comes from Russia.
Spain is the least affected by a possible energy embargo on Russia, as it imports less than 10% of its gas from there. Most of its gas come from Algeria, while coal is imported chiefly from Colombia and Indonesia.
The Iberian country, together with Greece, Italy and Portugal have launched an initiative aiming to build consensus on reforming European electricity markets, official sources told EURACTIV’s partner EFE.
Northern and Central Europe
The UK imports only 4% of Russian gas. However, despite pressure from Conservative MPs, ministers have ruled out fracking for shale gas as an option.
Instead, the government says it will increase investment in North Sea oil and gas exploration and increasing the share of renewable energy production.
PM Boris Johnson will travel to Saudi Arabia and mulls visiting Qatar, despite the opposition being against such a visit for political reasons.
France is not dependent on Russian resources: between 20 and 30% of gas and 10-20% of oil is imported from Russia. Prime Minister Jean Castex stressed the need to increase LNG import capacity and the development of renewable energies.
While Germany is heavily dependent on Russian gas, it is not worried about securing sufficient supplies of oil. However, the country has put in place coal power generation as a backup strategy. German Vice-Chancellor Robert Habeck visited the US, Norway, Qatar and the United Arab Emirates to secure LNG and as much pipeline gas as possible.
Last year, The Netherlands spent €16 billion on Russian fossil fuels. While the government is still discussing a long-term solution to phase out Russian gas, they are taking measures to increase import capacity of LNG. A reopening of the giant but depleting Groningen gas field has been ruled out for now, although pressure is mounting on the Dutch government to reconsider its decision. The country is also trying to speed up investments and efforts towards sustainable energy.
Finland has the Baltic connector as an alternative. However, most of its energy supplies currently come from Russia.
In Poland, PKN Orlen (the main Polish state-owned oil industry company) does not make explicit declarations regarding future term contracts for Russian oil. It claims that the oil port in Gdańsk is sufficient to ensure supplies in the event of an embargo. However, it is still not clear where exactly Poland would import oil from as refineries are unanimous in the country. For gas, the country awaits the launch of Baltic Pipe to import Scandinavian gas.
Slovakia is almost completely dependent on Russian gas (85 %) and on oil imports, however, the country has the intention to become less and less dependent.
The Slovak government relies on LNG imports from the terminal on Krk in Croatia, whose gas should come from the US. The country has a relatively large gas storage capacity, and the government is foreseeing filling the storage before next winter.
According to opposition party leader Robert Fico, a potential halt to Russian supplies would mean rising energy prices and the loss of a significant portion of government revenue from transit. “For the US, stopping gas and oil supplies from Russia to Europe is a win on all fronts. For Europe and especially dependent Slovakia, it is a pure catastrophe. A sharp increase in the price of everything, a drop in economic output, a drop in living standards,” he added.
After the outbreak of the war, the Ministry of Economy first reassured that even if Slovakia ran out of strategic oil reserves (currently for four months), the country should still be able to draw it through the Adria oil pipeline, which can be filled from the Croatian port of Omisalj. However, technological problems would still remain in place to synthesise the refined product.
The Czech government has so far not confirmed any alternative imports or plans, however, gas imports from Norway are under discussion. Czech Parliament speaker Markéta Pekarová Adamová visited on Monday (21 March) her counterpart in the United Arab Emirates, Saqr Ghobash. According to Pekarová, energy security was among the topics.
However, the Czech economy is still highly dependent on coal. It is expected that due to the energy crisis, the planned coal phase-out will be postponed. The country also wants to build a new nuclear unit by 2036.
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The Oscar-style ceremony recognised the passionate, committed and growing network of people within the industry determined to play their role in leading the fight against climate change.
The awards, now in their third year, are designed to help showcase Irish wind energy and to give prominence to a field that is sometimes overlooked.
Among them a Young Person of the Year award winner, an excellence in training award for the many green jobs coming on stream, awards for community and education initiatives and the coveted ‘Champion of Renewables award’.
Young Person of the Year Award Winner, Cian Brogan from Energia Renewables, presented by Katerina Petrova of Greencoat Renewables Champion of Renewables Award presented to Dr Paul Deane of UCC by Karina Dennigan of Bord na Móna Excellence in Operation and Maintenance Award – The team from Vestas celebrate their win The Nature+ Energy Project, represented by Emma King and Anthony Gibbons, took home the Sustainable Development Award
Dr Paul Deane, Champion of Renewables Award winner, said: “I’m so delighted to accept this award for my and my colleagues in MaREI. It is so important now to have independent voices in research. And to look to Ireland to play to our strengths to reduce our emissions, it’s not just about climate issues anymore, its about social issues and, as we have seen beyond our borders, it’s now about very relevant security issues.”
Noel Cunniffe, chief executive, Wind Energy Ireland, said that this year’s winners are an inspiring group of people working hard to drive sustainability through their organisations and he is proud to be part of an industry that is doing so much to tackle climate change.
“The quality of nominees and award-winners shows the wealth of talent we have in this space, a growing, passionate, committed and growing network of people determined to ensure that wind energy leads Ireland’s fight against climate change.”
“These awards provide a welcome opportunity to highlight the great work being done in the wind and renewable energy industry in Ireland. It shines a light on the innovation and leadership taking place across all areas of wind farm development.”
Cunniffe said that the crisis in Ukraine right now drives home the need to accelerate the push towards energy independence for Europe. “While Ireland relies very little on Russian gas, what is happening now exposes the vulnerability of our continent to being so dependent on a country that is invading its neighbour,” he said. “Every cent and every euro used to buy Russian oil and gas is paying for the missiles and the bullets being used on the people in Ukraine right now.”
Wind Energy Ireland has just released its February Wind Energy report, which showed that wind energy provided 53 per cent of Ireland’s electricity in February 2022. This is the highest share of demand ever achieved by wind in Ireland.
Wind energy was also the number one source of electricity throughout the month and on February 5 set a new all-Ireland record for the amount of wind energy on the system at 4,584 MW.
“These results show the ever-increasing importance of wind energy and renewables for the Irish energy sector,” Cunniffe said. “It is vital that we bring through new wind farms as quickly as possible in the coming months and years to ensure we can consistently achieve figures like this if we are to meet the targets set in the Climate Action Plan.”
The report also highlights the importance of wind energy in cutting the price of wholesale electricity, with results showing that during the windiest periods of the month, wholesale prices were almost €100 cheaper per MWh than during less windy days, at €134.25 per MWh, versus €229.62.
“The fact that wholesale prices fall when wind energy production is high shows that wind energy will play an increasingly important role in the coming months, mitigating the worst effects of the predicted price increases for consumers due to spiralling fossil fuel import prices,” said Cunniffe. “The report also highlighted the dramatic increase in energy prices between February 2021 and 2022, with wholesale electricity prices rising almost three-fold.
“Wind energy is ready to lead the way to an 80 per cent renewable electricity system by the end of the decade and on to a zero-carbon electricity system by 2035.”
“The recent publication of the Climate Action Plan provides a roadmap for how this will be delivered. The plan sets out positive steps towards regular renewable auctions for onshore and offshore renewables, and there is a big focus on putting in place the foundations to deliver an offshore wind sector which will thrive in Ireland in the years ahead.”
Cunniffe said that we are already racing against the clock to deliver on Ireland’s renewable energy potential. “It is essential that across government, we see the leadership and resources needed to achieve the delivery dates set out in the Climate Action Plan.”
Communities around the country receive a huge amount of money each year through wind farm community benefit funds.
“The 2020 report into community benefit funding shows the steady growth of our renewable energy sector. Last year, it contributed over €4 million to local communities in direct benefit funding,” said Cunniffe. “This is on top of the more than 5,000 jobs which wind energy is supporting in Ireland and nearly €50 million to rural county councils in commercial rates.”
These community funds support initiatives, clubs, sports and academic ambitions in the local area. “It is especially heartening to see the benefits communities felt during a difficult 2020 because of Covid, with the funds supporting care services, home comforts, and promoting exercise throughout counties in Ireland,” said Cunniffe.
“It is so important for people living close to wind farms to feel and see the direct benefits, not just in cleaner electricity and the wider climate change benefits, but in day-to-day improvements to their towns and villages.”
RI plans to buy more offshore wind power to help meet goal of 100% renewable energy
Show Caption Hide Caption Biden injects hope in renewable energy supporters President Joe Biden's renewable energy push is injecting hope in supporters but major challenges loom, including the coronavirus pandemic and the restoration of hundreds of thousands of lost jobs. (March 3) AP
PROVIDENCE — Gov. Dan McKee is moving ahead with a plan to ramp up Rhode Island’s supply of power from offshore wind farms that would be developed off the coast of Southern New England.
Legislation introduced in the General Assembly at the request of the McKee administration would require that a request for proposals be issued this summer for another 600 megawatts of offshore wind energy.
The plan comes despite uncertainty over the sale of National Grid’s electric and natural gas operations in Rhode Island. The transaction with Pennsylvania-based PPL Corp. is on hold pending court appeals from the attorneys general in Rhode Island and Massachusetts. Any new contracts for offshore wind would have to be signed by whichever company owns the utility business.
Rhode Island is already home to the first offshore wind farm in the nation — a 30-megawatt demonstration project near Block Island that went online five years ago — and National Grid has signed a contract to buy another 400 megawatts of capacity from the Revolution Wind project that is awaiting federal permission to begin construction in Rhode Island Sound.
If the new procurement goes forward as planned, it would mean that more than 80% of Rhode Island’s electricity would be renewable, putting the state within reach of a proposed target of getting all of its power from wind, solar and other non-fossil fuel sources by the end of this decade.
Offshore wind is key to making that goal, as well as to a more ambitious objective of reaching net-zero greenhouse gas emissions across all sectors of the economy, including heating and transportation, by 2050. In small and densely populated Rhode Island, there are no other in-state renewable energy options that would be able to deliver the same amount of power.
How the increase in offshore wind supplies could affect rates is unclear, but, judging by recent contracts in Rhode Island and other Northeastern states, it could potentially save consumers money in the long run.
Even though Rhode Islanders are paying hundreds of millions of dollars in above-market costs for the Block Island Wind Farm, the Revolution project, by displacing oil-burning power plants and other more expensive generators, is expected to yield net savings of $90 million — or about 50 cents a month for the typical ratepayer. And contracts for larger projects in Massachusetts have come in with even lower prices than the Revolution agreement.
Plan for more offshore wind first announced in 2020
It was McKee’s predecessor in the governor’s office, Gina Raimondo, who put forward the 100% target a year and a half ago, describing it as the most aggressive renewables initiative in the nation. Not long before Raimondo left Rhode Island to become U.S. secretary of commerce, she announced the plan for the 600-megawatt RFP (request for proposals).
But between McKee’s transition from the lieutenant governor’s office, the COVID crisis and the proposed sale between National Grid and PPL, the procurement stalled.
The delay didn’t sit well with some in the environmental community who believe the state needs to act with more urgency to move away from fossil fuels and ensure that the state can comply with the emissions-reduction mandates put in place with the enactment last year of the Act on Climate.
When the war in Ukraine started, and with it the prices of sunflower oil, it took trader Lars Schipper a few days to let it take effect, he says. The price of sunflower oil skyrocketed overnight, from 1,500 euros per tonne to 2,000 in the vegetable oil market. “Then you will be scared. And I don’t get nervous that easily.”
That week – of 24 February – Ukrainian truck drivers arrived at Schipper’s company in Werkendam, with tanks full of sunflower oil. They said the last one for the time being, because they would join the fight once back in Ukraine. “Weird”, said Schipper. “One of the drivers said that he would eventually come back to the Netherlands to deliver oil. That determination struck me: knowing for sure that you will come back, while what you are going to do is life-threatening.”
The ‘drama’ in Ukraine has an impact on the market for vegetable oils (in addition to sunflower oil, for example, rapeseed oil and soybean oil), says Frans Claassen of MVO, the Dutch chain organization for oils and fats. Ukraine is the largest producer of sunflower oil worldwide. Exports have come to a standstill due to the war in the country. In 2018, Ukraine produced more than 5.1 million tons of sunflower oil, according to the United Nations Food and Agriculture Organization – about 25 percent of the world’s export market.
How do you trade in sunflower oil when almost everything has come to a standstill because of the war, and the prices of all vegetable oils are soaring?
The Netherlands processes about 900,000 tons of sunflower oil per year. And more than 70 percent of that comes from Ukraine, says Claassen. The rest comes mostly from other European countries, such as Germany, Hungary, France and Spain. But the producers there also use a lot of Ukrainian sunflower seeds. The entire chain is struggling with major shortages, says Claassen of MVO. “It is a matter of weeks before the shelves of bottles of sunflower oil in the supermarket run out. Fortunately, consumers can turn to other vegetable oils. There is no need to panic.” Supermarkets Jumbo and Plus have only been giving customers a maximum of one bottle of sunflower oil since this week – as a precaution against hoarding behaviour.
Margarine, cookie, chips, frying fat
It is more difficult for producers and traders to switch to alternatives to sunflower oil than for consumers. All the oil imported by the Netherlands is used by companies that make margarine, biscuits and chips, but also by producers of frying oil and cosmetic items. Many of those products can be made with other types of oil, but the label is no longer correct. It then in fact becomes a different product, which is admittedly very similar to the original. Claassen: “Companies are now trying to replace their products at lightning speed, so that consumers can continue to buy everything and the shelves do not run out.” Think, for example, of frying fat without sunflower oil – that’s fine, says Schipper. It usually consists of a mix of vegetable oils.
How did Ukrainian exports come to a standstill? This consisted of two flows: a flow of sunflower oil seeds, which were processed into oil by refineries elsewhere in Europe. And a stream of ‘ready-to-use’ refined sunflower oil. Many of those flows came from southern ports such as Odessa’s, Claassen says. There, ships with sunflower seeds or oil departed for Rotterdam, for example, where the major refineries in the Netherlands are located, such as those of food giants Cargill and ADM. But those southern ports are now closed for fear of Russian attacks, Claassen says. Previously, ships were even hit by Russian missiles.
Trader Schipper mainly bought refined sunflower oil from Ukraine, about 300 tons per week. So that was transported overland to his company Oiltrade Werkendam. He imports the rest of the oil from other European countries. In total, he got around 35 percent of his income from sunflower oil, the rest from other oils. The last shipment of sunflower oil from Ukraine arrived at Schipper two weeks ago, he says. Many Ukrainian refineries are closed. Employees joined the fight in the war or fled. The refineries also suffered from high energy prices. Schipper: “In addition, entire transport companies are down. It has become very difficult to get a permit to transport because of the war.” Some roads are also closed or impassable.
Global trade Oil export restrictions in various countries
The cessation of the Ukrainian export of sunflower oil affects the world market for vegetable oils. More and more countries have introduced export restrictions since the war. They do that for several reasons. They may be doing it to keep stock of their own, or they may be trying to take advantage of prices rising due to scarcity. For example, Hungary, a major European producer of sunflower oil, has taken additional measures to restrict exports. The EU is now discussing this with the country, says Frans Claassen of MVO, the chain organization for oils and fats. Indonesia has imposed restrictions on palm oil exports, which is often used by manufacturers as an alternative to sunflower oil. The country was already struggling with palm oil shortages due to the aftermath of the corona pandemic, says Claassen. Argentina has temporarily suspended all soybean oil exports, it’s not entirely clear why. Claassen: “There is a lot of emotion in the market, which drives up prices. But there is enough vegetable oil in the world.” “It is important that food security is not about the highest bidder”, says Claassen. “Countries such as India, which imports a lot of vegetable oils, should also be able to continue to buy. We also hope for understanding from consumers, there are plenty of alternatives. Hoarding is useless.”
How does Schipper deal with the shortages? And with the prices rising so fast? Although the market is in flux, the director of Oiltrade himself is “not hesitant”. This is partly because he can fall back on other vegetable oil types for sale. However, he can no longer accept new customers, while the telephone continues to ring.
The trader sells a lot of ‘no’, also to existing customers – often food producers and industrial companies in the Netherlands. They usually have a contract for six months, but most refineries no longer deliver anything, or at most 25 percent of what has been agreed – and that is decreasing all the time. According to the contracts, this is ‘force majeure’ for both Oiltrade and the refinery. Schipper: “But it remains difficult for morality not to keep an appointment.”
The trader sees panic increasing among his customers. Factories with a lot of staff – “of 300 employees” – are especially “nervous”. It comes on top of high energy and grain prices. And they are sometimes tied to price agreements with, for example, a supermarket. Twenty people work at Oiltrade.
Schipper now calls his customers daily, instead of weekly. Sometimes they ‘sigh’ together, advice is impossible in wartime, he says. “You can no longer give pleasant advice about the weather and the plants that are doing well.”
Hoarding behavior
The trader cannot go along with the hoarding behavior of customers. A customer who orders one pallet of frying oil every week does not suddenly receive two. He does have soy oil from Argentina or Brazil for them, or rapeseed oil from Germany. But he only sells them at the high prices that brokers set on the vegetable oil market. The price of soybean oil increased from 1,250 euros per tonne in January to 2,200 this week. And palm oil shot up from 1,600 euros per tonne in January to 2,300 euros. The course of those prices is fairly erratic, per day it can differ by about 100 euros per tonne. Sometimes he buys a little extra on a “good” day.
But Schipper no longer buys in advance, even though it could well be that prices continue to rise. Sowing season is in two weeks. Although fighting is mainly going on around the cities, so that it may still be possible to sow here and there, it is very uncertain whether the harvest in September and the transport around it will be successful. Schipper: “But suppose that the negotiations between Ukraine and Russia go well, while I would have bought before the third quarter. Then the price would plummet, leaving me with all that expensive oil. Those kinds of losses could run into the millions. Then I could close the tent.”
A version of this article also appeared in NRC Handelsblad on 19 March 2022
By Brenda Goh and Dominique Patton
SHANGHAI (Reuters) -Volkswagen will form joint ventures with Huayou Cobalt and Tsingshan Group to secure nickel and cobalt supplies for electric vehicles in China, the world’s No. 1 car market, and to slash costs at a time of surging raw material prices.
The move is part of a 30 billion euro ($33 billion) push by the world’s second-largest carmaker to build a network of battery cell factories and secure more direct access to vital raw materials that are needed to supply them.
Volkswagen , Huayou Cobalt and Tsingshan have signed a memorandum of understanding for a joint venture in Indonesia, where more than 10% of the world’s laterite nickel ore reserves are located, to focus on nickel and cobalt raw material production.
At the final expansion stage of the venture, it will be able to supply raw materials for 160 gigawatt hours worth of electric vehicle batteries, Volkswagen China Group said in a statement.
This corresponds to an annual output of around 120,000 tonnes of nickel and 15,000 tonnes of cobalt, Huayou said in a separate filing to the Shanghai Stock Exchange.
Volkswagen’s second joint venture will be formed with Huayou in China’s southwestern Guangxi region for the refining of nickel and cobalt sulfates, precursor and cathode material production, it said.
“The cooperation aims to achieve significant cost advantages, secure the raw material supply and achieve a transparent and sustainable supply chain,” it said. “The two partnerships target to contribute to the Group’s long term target of a 30-50% cost reduction on each battery.”
Global nickel prices have surged almost 400% this year due to the Ukraine crisis, as Russia is a major supplier and its invasion of Ukraine and the subsequent imposition of sanctions on Moscow by the West lit a fire under an already hot market.
Prices on the London Metal Exchange got a further boost on March 8 when they doubled to $100,000 per tonne in a matter of hours, after Tsingshan bought large amounts of nickel to reduce its short bets on the metal and its exposure to costly margin calls.
Prices have dropped sharply since then however, after the LME was forced to halt trading for a period and reopened with new trading limits.
Privately owned Tsingshan has become the world’s top nickel producer thanks to its development of a low-cost process to make the metal. It already has major investments in Indonesia, including other joint ventures with Huayou
Volkswagen’s move comes as rivals, from Tesla to BYD, are raising prices for EVs due to higher raw material costs, and follows Ford’s announcement last week spelling out plans for a nickel cell joint venture in Turkey.
On Saturday, the chief executive of Chinese EV manufacturer Li Auto, Li Xiang, said on his official Weibo account that battery makers had increased prices at a rate he called “outrageous” in the second quarter, and warned that those EV makers that had not raised prices yet would likely have to soon.
Asked to comment on Li’s remarks, Chinese battery maker CATL, which supplies major car makers including Tesla, told Reuters on Monday that it had raised prices for some battery products due to rising raw material costs.
https://www.shorenewsnetwork.com/2022/03/21/volkswagen-china-says-will/
ArcelorMittal, the world’s biggest steel maker has tied up with Greenko , one of the largest home grown renewable companies to use cleaner energy alternatives instead of fossil fuels like coal or natural gas to fire its critical infrastructure like blast furnace and smelters. This is part of the steelmaker’s efforts to switch to cleaner energy sources to decarbonise production around the world.Steel production is source of up to a tenth of global carbon-dioxide emissions.Together the two companies will develop ‘round the clock’ renewable energy project -- a 975 MW solar and wind farm -- in Andhra Pradesh that will be owned and funded by ArcelorMittal but designed, constructed and operated by Greenko, the companies said in a statement on Tuesday.
Another similar sized farm is expected to come up after the completion of the first phase, whose commissioning is expected bymid-2024, said officials aware of the plans. Arcelor Mittal will be investing $600 million (Rs 4500 crore) for the first phase and is expected to incur similar investment in the second phase as well. This till date will be the largest investment made by a steel company towards greener, cleaner energy in the country.Greenko will also be providing its pumped hydro storage infrastructure that is it independently building in Andhra Pradesh, along with its cloud based platform to provide firm, reliable 24x7 green power and overcome the intermittent nature of wind and solar power generation. The alliance will help to source over 20% of the electricity requirement at Arcelor Mittal’s Hazira, Gujarat plant -- that it acquired in 2019 with partner Nippon Steel -- from renewable sources, reducing carbon emissions by approximately 1.5 million tonnes per year.
Thus, the project offers the steel maker the dual benefits of lower electricity costs and lower CO2 emissions, and improves the return on investment potential for Arcelor Mittal. ArcelorMittal Nippon Steel India (AM/NS India), will enter into a 25 year off-take agreement with ArcelorMittal for round the clock renewable electricity annually from the project.ArcelorMittal’s joint venture company in India, ArcelorMittal Nippon Steel India (AM/NS India), will enter into a 25 year off-take agreement with ArcelorMittal to round the clock renewable electricity annually from the project.“Large amounts of green energy are one of the key foundations for both a net zero economy and a decarbonised steel industry,” said Aditya Mittal, CEO, ArcelorMittal.
“We are excited about the potential of replicating this model in other regions. It demonstrates how establishing partnerships and collaborating across the supply chain can help us to progress faster towards our decarbonisation targets.”ArcelorMittal’s rapid decarbonisation is part of a $10 billion global green transformation strategy that kicked off in 2020 and is spearheaded by Mittal (46) himself, after taking over last year, from his father Laxmi Mittal, the sprawling empire that stretches across Europe, Asia, Americas and Africa.
The company also explored bidding for a large solar power portfolio of Spring Energy , a renewable platform of Actis Llp.“This is a pioneering partnership … and we hope it will serve as a blueprint for the adoption of renewable power for large-scale steel manufacturing in India. These efforts will also represent a notable contribution to India’s own commitment to build 500 GW of renewable energy capacity by 2030,” said Anil Kumar Chalamalasetty, CEO and Managing Director at Greenko.Steel companies, much like fossil fuel behemoths are under pressure from policy makers, climate activists and Wall Street to shun legacy practices of carbon emission. ArcelorMittal’s India operations are currently centred around Essar Steel India, located in Hazira, Gujarat, which it acquired for Rs 42,000 crore – the largest asset sale through the country’s bankruptcy courts – with its 40% joint venture partner Nippon Steel Corporation (NSC) of Japan.Most Indian steel makers that rely on significant captive energy sources, are trying to address the issue of global warming and bringing down emissions in their manufacturing units.
For example, Tata Steel and Tata Power in October 2021 had signed a Power Purchase Agreement (PPA) to develop a grid-connected solar project in Jharkhand and Odisha. The two also signed a PPA for a duration of 25 years to set up 41MW solar project, which will be a combination of rooftop, floating and ground mounted solar panels.Similarly, JSW Steel has earmarked Rs 557 crore to be spent on Best Available Technologies (BAT) for environmental sustainability during FY 2020-21. The company is further planning to invest around Rs 10,000 crore in the coming decade to achieve the stated carbon reduction target by FY 30. Naveen Jindal-led Jindal Steel and Power is also working on a Hydrogen project through Syngas which is used to reduce Iron to produce DRI. It brings down the CO2 emission levels.Even state run Steel Authority of India had a new Joint Venture Company GEDCOL SAIL Power Corporation Limited (GSPCL) to develop a small Hydro Electric Plant of 10 MW (3 x 3.33 MW) capacity at Mandira Dam, Rourkela.
Northvolt is six-years-old. But with funding from Volkswagen and Goldman Sachs, it is becoming a serious player in the electric vehicle battery production market. It is building a new plant in northern Germany that will supply Europe. The goal is to start cranking out lithium-ion batteries by 2025 at 60 gigawatt-hours per year — enough to build 1 million electric vehicles.
The European Union is phasing out the internal combustion engine by 2040, while the Biden Administration wants half of all U.S.-sold vehicles to run on electricity by 2030. If electricity can replace gasoline, that would help countries meet their climate goals.
In the United States, General Motors, Ford Motor Co., and Stellantis support President Biden’s initiative. In Europe, policymakers have approved granting $3.5 billion under the European Battery Innovation project to move away from fossil fuels, including developing rare earths. Among the companies in line to get funding are Fiat Chrysler, BMW, and Tesla, along with Arkema, Borealis, Enel X, Solvay, and Sunlight Systems.
Electric vehicles comprise 2% of the global car market. The U.S. Energy Information Administration projects passenger vehicles, fleets, and smaller trucks that use electricity and gas to grow from 1.31 billion vehicles in 2020 to 2.21 billion by 2050. It estimates that hybrids will make up 34% of cars in developed countries and 28% in emerging economies by 2050.
As for Northvolt, the German factory would be its third. It also announced two others that will go up in Sweden in 2024 and 2025. The company says that its latest facility will have several critical advantages. It is centrally located, and it is connected to one of the cleanest energy grids in Europe — powered by onshore and offshore wind energy. The plant is expected to leverage economies of scale to reduce battery costs.
“It matters how we produce a battery cell,” says Peter Carlsson, Northvolt’s chief executive, in a statement. “If you use coal in your production, you embed a fair amount of CO2 into your battery, but if we use clean energy, we can build a very sustainable product. Our philosophy is that new energy-intensive industries, such as battery manufacturing, should be established in actual geographical proximity to where the clean energy is produced.”
Driven by Decarbonization
The push to decarbonize is prompting other automakers to take similar steps. Mercedes-Benz is working with Envision AESC to produce electric batteries by 2025. The Mercedes-Benz plant in Tuscaloosa, Alabama, has been the production plant for large sport utility vehicles since 1997. The same plant will now be producing all-electric vehicles. The automaker says that it will invest at least $46 billion by 2030 into the development of electric vehicles.
Meantime, Ford is building a battery factory in Turkey that will be done by 2025. It is also building one in Germany, which will produce 1.2 million vehicles over six years, with a total product investment of $2 billion. Ford says it will introduce three new electric passenger vehicles and four new electric commercial vehicles in Europe by 2024; it plans to sell more than 600,000 electric vehicles in the region by 2026. It is all part of Ford’s effort to achieve zero emissions for all vehicle sales and carbon neutrality across European by 2035.
And Tesla has a gigafactory in Shanghai, China. It expects to build 500,000 cars a year. It also has a lithium-ion battery factory in Nevada and is building one in Germany. It will produce batteries, battery packs, powertrains. Gigafactories are also under construction in Austin, Texas.
Tesla says that it expects to sell 20 million electric vehicles by 2030 — a company that thinks it can recover 92% of a battery’s materials. Fossil fuels are extracted and used once; it notes that the lithium-ion battery materials are recyclable. Once the raw materials are in the lithium-ion cells, it says that they will remain there until the end of the car’s life. Tesla says recycling is much less than purchasing raw materials on the open market to build new batteries.
“The opening of our new battery plant in Alabama is a major milestone on our way to going all-electric,” says Ola Källenius, Chairman of the Board of Management of Mercedes-Benz Group AG. “With our comprehensive approach including a local cell sourcing and recycling strategy, we underline the importance of the U.S., where Mercedes-Benz has been successful for decades.”
“Our march toward an all-electric future is an absolute necessity for Ford to meet the mobility needs of customers across a transforming Europe,” adds Stuart Rowley, chair, Ford of Europe. “It’s also about the pressing need for greater care of our planet, making a positive contribution to society and reducing emissions in line with the Paris Climate Agreement.”
The advisory firm Wood MacKenzie says that electric batteries will hit an inflection point in 2027 — the place where the economies of scale are at that place in which price and quality are getting better at an expedited pace. The electric vehicle rollout will then be unstoppable.
The auto industry is gearing up to produce an increasing number of electric vehicles — a product of the globe’s decarbonization goals and the improving economies of scale. It means developing clean energy and new jobs tied to battery production. Ford, Mercedes, and Volkswagen are helping to lead the charge, but more carmakers and companies will enter the fray.
EV and new energy vehicle (NEV) sales in the pivotal Chinese market jumped 157.5% to 3.52 million units in 2021.
After more than quadrupling in value last year, lithium carbonate continues to soar in 2022.
Oil and commodity markets have been taking out fresh highs after the shuttering of Ukrainian ports, sanctions against Russia, and disruption in Libyan oil production sent energy, crop, and metal buyers scrambling for replacement supplies. Russia is one of the world's biggest exporters of key raw materials, from crude oil and gas to wheat and aluminum, and the possible exclusion of supplies from the country due to sanctions has sent traders and importers into a frenzy.
Base metals prices have been coming off recent highs (and in the case of aluminum, copper, and tin, all-time highs) set earlier in the month that were spurred by fears over the potential for disruption to Russia's metal exports following its invasion of Ukraine. Broad-based supply concerns remain, ranging from the potential for sanctions targeting exports, to actual output disruption and logistical dislocations (see 'Implications of the Russia-Ukraine crisis for metals' for details).
But the Ukraine crisis is only layering onto another more powerful trend: the global transition to low-carbon energy.
The energy transition is driving the next commodity supercycle, with immense prospects for technology manufacturers, energy traders, and investors. Clean energy technologies require more metals than their fossil fuel-based counterparts, with prices of green metals projected to reach historical peaks for an unprecedented, sustained period in a net-zero emissions scenario.
But few, if any, green metals have witnessed a price explosion as epic as that of lithium.
After more than quadrupling in value last year, lithium carbonate continues to soar in 2022, according to Benchmark Mineral Intelligence. The mid-March assessment by the battery supply chain research outfit shows that battery-grade lithium carbonate (EXW China, ≥99.5% Li2CO3) is averaging $76,700 a tonne, up 10% over just two weeks and 95% since the beginning of the year. A year ago, the commodity was trading at $13,400 a tonne.
The rally in lithium hydroxide, used in high-nickel content cathode manufacture, is accelerating, up 120% so far this year, narrowing the discount to lithium carbonate, which historically is priced below hydroxide.
Benchmark says that Chinese inventory levels for hydroxide, carbonate, and spodumene feedstock remain very low, sustaining the high price environment:
"Robust demand for material, and hence high prices, will be sustained in the near-term, with expectations that the seasonal recommencement of supply from domestic Qinghai brines in the coming months will provide little relief to the growing market deficit."
Many investors who got burned by the last lithium price bust of 2018 have probably been watching on the sidelines, not sure what to make of the current mega-rally.
To be fair, China's spot market, where small tonnages can have big price impacts, may be accentuating the scale of this mega-rally, but make no mistake about it: this is no false flag, with everything from mined spodumene to high-purity hydroxide, and every component of the lithium processing chain experiencing a wild price surge.
The price explosion tells you that lithium supply is simply nowhere near enough to feed this demand surge.
Demand Explosion
The last lithium boom five years ago was attributed to a failure by producers to anticipate the demand wave emanating from China's subsidy-driven roll-out of EVs.
The subsequent supply response, particularly from hard-rock spodumene producers in Australia, proved to be overkill leading to the price bust of 2018-2020.
Consequently, new mines were mothballed, expansion projects were deferred, and many explorers folded operations and left to try their luck elsewhere.
Then suddenly, in a classic boom-bust-boom commodity cycle, it happened: lithium producers have been caught flat-footed again, ill-prepared to meet the current even stronger demand surge fueled by the global energy transition and EV revolution.
But the ongoing lithium boom has plenty of steam.
EV and new energy vehicle (NEV) sales in the pivotal Chinese market jumped 157.5% to 3.52 million units in 2021, marking robust growth in an otherwise lackluster domestic automotive market.
Many electric buses in China have switched to lithium iron phosphate (LFP) batteries. Two years ago, Tesla Inc. (NASDAQ:TSLA) introduced LFP batteries in its standard range Model 3s in China and dropped the starting price from 309,900 yuan ($48,080) to 249,900 yuan ($38,773). Last year, the EV kingpin Tesla announced that it's switching battery chemistry for all standard-range Models 3 and Y from nickel cobalt aluminum (NCA) chemistry to an alternative, older technology that uses an LFP chemistry. CEO Elon Musk has revealed that the improving energy density of LFP batteries now makes it possible to use the cheaper, cobalt-free batteries in its lower-end vehicles so as to free up more battery supply of lithium-ion chemistry cells for Tesla's other models.
But Chinese battery-makers are now discovering that you can play around with the metallic cathode mix as much as you want, but lithium still rules.
In a recent report, Benchmark Intelligence says that record-high Chinese lithium carbonate prices have pushed the costs of lithium iron phosphate – or LFP cells – higher than high-nickel cells on a dollar per kilowatt-hour basis, compared to a deep discount historically. Indeed, the analysts have warned that the chaos in nickel metal markets may spill over onto the metal's use in the battery supply chain, potentially reversing the LFP trend.
Over 250,000 large wind turbines are operational around the world, but their development is debated by experts. Should the development of this energy source be continued or disrupted?
Feedback of countries where wind turbines are predominant
Never before have there been so many wind turbines installed around the world as in 2020: in total, the new equipment can produce around 114,000 megawatts (MW). The best year so far was 2015, with 70,000 MW, according to a report of the International Energy Agency (IEA) on the renewable energy market (Renewable Energy Market Update). Despite the pandemic, twice more wind farms have been installed compared to 2019. This corresponds to a wind farm of 13 MW installed every hour on the planet. These 114,000 MW of wind power installed in 2020 represent over six times more than installed in France in twenty years (almost 18,000 MW).
IEA, generally moderate in its forecasts, expects the installation of 80,000 MW in 2021 and 2022. This wind power development concerns all continents and primarily Asia, China being global leader in this field. The United States rank second, with a record year in 2020 for wind power development. The UK, which has an entire industrial and port sector, is global leader in offshore wind power.
Wind power installed in France is relatively stable year after year, around 1,500 MW (the average of the last four years), i.e., twice less than that installed in Germany. We don’t find this stability in time in Spain, which alternates delays, but has great ambitions (it had tender calls for 6,300 MW of wind and solar power in 2021).
The global wind power market is of three types: onshore development (in over fifty countries), offshore development (in 10 countries), but now the market for the renewable of onshore wind farms as well, as it is nearing twenty years of operation and needs replacement with stronger and more efficient installations.
The development of variable renewable energy (wind turbines and photovoltaic panels for power generation) is primarily determined by economic reasons. Wind and solar costs per kilowatt-hour (kWh) are steadily declining, while conventional energy costs are rising: carbon tax on fossil fuels, nuclear safety standards.
European leaders: Germany, Spain, the UK
The countries with a strong development of wind power are those where there are regular wind corridors, of sufficient power and without people living nearby. The location of wind turbines responds primarily to a logic of storage and geographic availability of the wind resource. At global level, the United States of America and China have the largest installed capacity, while in Europe Germany is leader (63,000 MW at the end of 2020), followed by Spain (27,000 MW) and the UK (24,000 MW). France ranks fourth, with 18,000 MW of installed power, almost exclusively onshore (figures from Wind Europe, February 2021).
With an average of a quarter of the operating time, can the wind turbine be cost effective?
French renewable energy expert Paul Neau believes it is necessary to distinguish between two elements that are often a source of confusion in wind energy debates: the load factor, on the one hand, and the operating time, on the other hand.
The load factor is the ratio between the power generated (in kWh) and the installed power (in kilowatts, kW). It is around 25% for onshore wind power and easily reaches 405 for offshore wind power. Load factors increase steadily.
A wind turbine produces power in 80% and up to 90% of the time, at a variable power, depending on wind speed. It is a perfectly predictable production, which the network manager takes into account in the energy mix to meet the power needs of consumers, which are also variable. The precision of the forecast on electricity production by wind and solar power increases from year to year, on the one hand due to the progress in the weather forecast, on the other hand due to the feedback of experience.
The cost price of one megawatt-hour (MWh) of wind power is sustainable, as it does not depend on the evolution of fuel prices, but on wind. Moreover, the decommissioning costs are modest and taken into account upstream, as a wind turbine has no hidden costs like toxic waste for example. Moreover, it is a mature technology with feedback from at least thirty years of experience. The only unknown remains how much the wind resource will produce (production that can prove to be lower than expected), but this translates in essence into a longer amortization period.
The Energy Regulatory Commission (CRE) has launched several tenders for wind farm projects in there years (CRE deliberation no. 2021-141, May 2021). It retained 162 files, totaling 3,500 MW, at an average price of EUR 62.7/MWh. It should be noted that the new nuclear power is much more expensive, as evidenced by the European pressurized reactor (EPR) project at Hinkley Point in the UK, at over EUR 105/MWh.
Profitability
It all depends on what is meant by profitability. A wind turbine operates more than 80% of the time, but with variable production. Its actual production is estimated to be equivalent to what it would deliver if it operated at about a quarter of the time at full power, to supply more than 18,000 MW of installed capacity (more than 8% of France’s electricity, according to operator of the French electricity transmission network (RTE, 2020). This efficiency increases with the widening of the blades and straps of new generation machines. The performance is maximum at sea, where it exceeds 40% of rated power (produced in optimal operation). The onshore average must also be weighted according to the territories.
Economically, a wind turbine is very profitable
Project financing responds to a purely capitalist logic: very significant financing at the beginning (approximately EUR 1.3 million per MW), generally through debts to banks; then, once the projects have been validated, a very high return on investment, sometimes exceeding 10%, for fifteen to twenty years. For all farms before 2017, power is purchased at a fixed contract price, often well above market prices. This mechanism, designed to support an expanding industry, has resulted in the enrichment of large financial promoters and players. Today, the sector is becoming more and more mature, and the prices offered in the most recent auctions have dropped considerably. But previous contracts must be honored until they expire, and a ‘supplementary remuneration’ mechanism remains. This protects investors and operators during the direct sale of electricity: it is added to the proceeds of the sale as long as it has not reached market prices. The excess is then used to reimburse selling costs. According to a 2018 report by the Court of Auditors, it represents almost one billion euros a year financed by a share of the tax on electricity bills.
Are the benefits of wind turbines greater than the disadvantages (acoustic, visual)?
The noise of a wind turbine is mainly due to the blade tips that cut the air at about 250 km/h. The treatment of these extremities has gradually made it possible for the new generations of wind turbines to be less noisy than the previous ones. In particular, inspired by the wings of owls, these tips are equipped with a device (a kind of comb) to reduce emissions at the source. As with other potential inconveniences or impacts (creating projected shadows, collision with flying wildlife), another type of preventive action is restricted operation or temporary shutdown of the machine during periods of risk. For example, the wind turbine will operate at a slower rate, with lower power production, but especially with lower noise emissions, at certain sensitive times for the neighborhood, such as summer evenings.
Too often, electricity is seen as clean energy, regardless of its means of production, which are generally unseen. In the case of wind (or solar) power, production is decentralized. This production will generate local and reversible impacts, but not proportional to conventional, fossil, and nuclear means of production (climate change, soil pollution, production of highly toxic waste etc.). According to the noise regulations in force (the strictest European regulations), the noise pollution produced by wind turbines is limited to a total threshold of 35 decibels outdoors, in broad daylight.
Sleep disorders due to turbine noise
The problem is that this threshold does not take into account the nature of the sounds produced by wind turbines. But a rural environment, even with agricultural activity, does not produce mechanical and repetitive sound like that of wind turbines for hours. A recent study even revealed that their noise, even low, could be heard five times more often at night (known as the ‘swoosh’ effect) up to three kilometers away. This could explain sleep disorders reported by dissatisfied residents. The problem is finally starting to be taken seriously, as systematic noise control has been in place since the beginning of 2022.
Visual effect – hundreds of masts
For visual inconveniences, since 2011, the law only allows the installation of equipment more than 500 meters from the nearest homes, as for any installation classified for environmental protection (ICPE). But it does not set any limit for the number of wind turbines visible from a person’s home. If landscape impact studies are to indicate at least this ‘visibility’, this does not preclude the construction of a new farm. Thus, in some villages in Champagne or Hauts-de-France, the inhabitants confess the feeling of being surrounded by wind turbines, sometimes with up to 200 masts visible around a single village. The visual effect is also noticeable if the wind turbines are located in the axis of the sun, the shadow cast by the moving blades causing a so-called ‘stroboscopic’ effect, which is particularly unpleasant for homes.
Finally, regulations require each mast to be equipped with flashing light emitting diodes to signal the presence of wind turbines to aircraft, but due to lack of coordination between farms, these markers cause substantial light pollution, especially in sparsely populated areas.
Carbon footprint of wind turbines
RTE has compiled a carbon footprint balance for wind and solar power generation in France in 2019. The 45 terawatt-hours (TWh) produced by wind turbines avoided emitting 22 million tons of CO2 per year (5 million tons in France and 17 million tons in neighboring countries). Thus, every kWh of wind and solar power produced in France in 2019 avoided the emission of approximately 490 grams of CO2. In addition, the Ecological Transition Agency estimates that the emissions needed to produce wind power are between 12 and 15 grams of CO2 per kWh. These two results determine the net balance of production of one kWh of wind power, at about 475 grams of CO2.
Another way to characterize the energy balance, and therefore the carbon balance, is to calculate the energy recovery time. The latter is given by the number of months of operation required to payback the energy required for the manufacture of wind turbines, the construction of the farm, its operation for about twenty years and its dismantling. This energy payback time has been calculated by ADEME (Agence de la transition écologique): it is 6 to 12 months for onshore wind power and 7 to 14 months for offshore wind power.
CO2 emissions from wind turbines, lower than nuclear power, but higher than hydropower
In order to measure the full energy balance, it is necessary to perform an analysis of its entire life cycle (LCA), from resource extraction to recycling, including construction, maintenance and operation. The CO2 emissions mentioned by Paul Neau are slightly lower than those of nuclear (16 g CO2 equivalent/kwh), but higher than those of hydropower (4 g CO2 equivalent/kwh). Much of the impact of wind power on the environment is actually related to the extraction and construction of wind turbines. These require concrete, copper, aluminum, composite materials, but also electronic components (for the rotor) and, in less than 10% of cases, rare metals for certain types of magnets. At the end of its life, after twenty to thirty years of use, a wind turbine can be completely dismantled. While it was more than 90% recyclable, today it is no longer recyclable in the same proportions. Although promising, the processes of recycling the composite materials that make up the blades and recovering the metals from the rotor are still in their infancy.
Life cycle analysis does not take into account other effects of wind power. Thus, we can count the number of dead birds killed by blades, but this does not indicate the impact of a poorly located farm on the habitat of certain fragile populations, such as the eagle. Also, LCA does not take into account the effect of wind power on the sensitive and social relationship with a landscape and an environment. However, this report misses out on the political stakes: some economies of scale may have a low carbon footprint but may suddenly artificialize a large area. In contrast, citizen- and community-led projects may be better accepted and more directly linked to needs, but they take longer, and some may prove to be more ‘carbon-intensive’ and less competitive. The challenge of an energy policy is to know not only its cost and return, but also the uses from the energy produced, to whom it belongs and who benefits.
Wind power in Romania
An Erste Group study proved that Dobrogea region ranks second in Europe, after Scotland, in terms of wind power production potential.
Romania could increase by over four times its quantity of electricity produced annually by unlocking the potential of offshore wind resources, according to the study ‘Romania’s Offshore Wind Energy Resources’. The study identified a total natural capacity of 94 GW (94 million kW) of wind power in the Romanian offshore sector, of which 22 GW through turbines with fixed foundation on the seabed and the others through floating turbines. The annual production could reach 239 TWh (239 billion kWh), of which 54.4 TWh produced by turbines fixed on the seabed.
Offshore wind potential
In Europe, offshore wind projects have recently been built at about 60 km from shore, a distance that is right in the transition zone between shallow and deep waters in the case of Romania.
A large part of Romania’s exclusive economic zone consists of deep-water areas (over 50 m), being suitable only for floating turbines (installed on floating platforms). Wind speed increases with the distance to the shore, only the central part of the deep-water sector having higher average wind speeds (almost 7 m/s).
Nearly 6,000 MW of new wind projects could be operational in the next ten years, equivalent to an investment of about EUR 10 billion. At the moment, there are about 3,000 MW locally in wind projects, most of them in Dobrogea. Technological progress will allow the installation of these new units beyond the Dobrogea area, some of which will also have storage units, and network problems will be partially solved by increasing the interconnection capacity.
The study identifies two potential clusters with most favorable conditions for a first stage of offshore wind development, based on fixed turbines.
The first cluster allows a capacity factor of 33-35%, in water depths below 50 m at 40-60 km from the shore. (The capacity factor reflects the difference between the rated and actual capacity of a turbine at a given location, or the ratio of current to maximum power). This cluster strikes the right balance between wind resources and costs of the required offshore network, given the possibility to inject the output in the Constanta Sud electrical substation and the proximity to the Port of Constanta.
The second cluster presents marginally better wind resources, but the existing onshore power transmission line is further inland, and the connection grid would have to be extended through the Danube Delta, which is a protected area.
Offshore wind potential offers the prospect of investing in ‘green hydrogen’ production and consumption capacity as well as the creation of nationwide industrial value chains in the field of offshore wind and hydrogen, with a positive impact on the number of jobs nationally.
The studies analyze several problems to find a solution for the exploitation of offshore wind resources in the Black Sea, among which are:
Network development to avoid overloading.
Development of proximity ports, these being essential both in the manufacturing stage of certain components, but also in the installation, operation, and maintenance phases.
The development by the government of the ‘Maritime Spatial Plan’ (MSP), with the involvement of all stakeholders and in accordance with the European Union MSP Directive. This plan is critical to avoiding the friction between potential maritime activities and strategic priorities.
A regional framework for cooperation and integration with Bulgaria in this sector. A joint offshore wind project will be beneficial both for increasing the connection of the networks and for the perspective of the coupling of the electricity markets of the two Member States.
Overcoming the limitations of the national power transmission system in the Dobrogea region, an area where significant onshore energy production capacities already operate, both renewable and nuclear, which will be supplemented, in turn, in the coming years.
https://energyindustryreview.com/analysis/to-continue-or-not-wind-power-generation-in-europe/
A team of scientists led by Nanyang Technological University, Singapore (NTU Singapore) has developed a method to effectively produce and extract plant-based oils from a type of common microalgae.
As the oils produced from the microalgae are edible and have superior properties as those found in palm oil, the newly discovered method would serve as a healthier and greener alternative to palm oil.
Compared to palm oil, the oil derived from the microalgae contains more polyunsaturated fatty acids, which can help reduce ‘bad’ cholesterol levels in blood and lower a person’s risk of heart disease and stroke. The microalgae-produced oil developed in collaboration with scientists from the University of Malaya, Malaysia, also contains fewer saturated fatty acids, which have been linked to stroke and related conditions.
Palm oil is the world’s most popular vegetable oil, featuring in around half of all consumer products, and plays a central role in a large range of industrial applications[1]. Farmers produced 77 million tonnes of palm oil for the global market in 2018, and that is expected to grow to 107.6 million tonnes by 2024[2].
However, the rapid expansion of oil palm plantations is blamed for massive deforestation in several countries[3], destroying the habitat of endangered native wildlife.
To produce the oils, pyruvic acid, an organic acid that occurs in all living cells, is added to a solution with the algae Chromochloris zofingiensis and exposed to ultraviolet light to stimulate photosynthesis. The NTU team has separately developed cost-cutting innovation to replace the microalgae culture medium with fermented soybean residues while improving the yield of microalgae biomass.
After 14 days, the microalgae is washed, dried, and then treated with methanol to break down the bonds between the oils and the algae protein, so that the oils can be extracted. The team has also developed green processing technology to extract efficiently microalgae-derived plant oils.
To produce enough plant-based oil to manufacture a store-bought chocolate bar that weighs 100 grams, 160 grams of algae would be required.
The algae oil innovation presents a possible alternative to the cultivation of palm trees for oil. It also reflects NTU's commitment to mitigating our impact on the environment, which is one of four humanity’s grand challenges that the University seeks to address through its NTU 2025 strategic plan.
The results of the study were published in the peer-reviewed academic publication Journal of Applied Phycology in February.
Professor William Chen, Director of NTU’s Food Science and Technology (FST) Programme, who led the project, said: “Developing these plant-based oils from algae is yet another triumph for NTU Singapore, as we look to find successful ways to tackle problems in the agrifoodtech chain, especially those that have an adverse impact on the environment. Uncovering this as a potential human food source is an opportunity to lessen the impact the food supply chain has on our planet.”
A triple-pronged approach to climate change: algae
Besides serving as a greener alternative to cultivating palm trees for plant-based oils or fat, the NTU-developed technique also has the potential to help cut down on greenhouse gas emissions, as well as food waste.
The scientists say that when scaled up, the production of the plant-based oils with natural sunlight, instead of using ultraviolet lights, would help remove carbon dioxide from the atmosphere by converting it to biomass and oxygen via photosynthesis. As the microalgae grows, it converts carbon dioxide to biomass at relatively fast rates.
In a separate study, the scientists at NTU’s Food Science and Technology programme have also developed a process to produce the key reaction ingredient needed to cultivate the microalgae oil, pyruvic acid. This is done by fermenting organic waste products, such as soybean residues and fruit peels, which would not only reduce production costs, but help cut down on food waste.
Prof Chen added: “Our solution is a three-pronged approach to solving three pressing issues. We are capitalising on the concept of establishing a circular economy, finding uses for would-be waste products and re-injecting them into the food chain. In this case, we rely on one of nature’s key processes, fermentation, to convert that organic matter into nutrient-rich solutions, which could be used to cultivate algae, which not only reduces our reliance on palm oil, but keeps carbon out of the atmosphere.”
The scientists will be working on optimising their extraction methods to improve yield and quality. The research team has received interest from several food and beverage partners and could explore scaling up their operations within two years.
Due to the oils’ properties, the NTU team will be exploring adding them to plant-based meats to improve their texture and nutritional properties. They also hope to explore pharmaceutical and cosmetic uses in products such as topical creams, lipsticks, and more.
Reference: Chen JH, Wei D, Lim PE, Xie J, Chen WN. Screening and effect evaluation of chemical inducers for enhancing astaxanthin and lipid production in mixotrophic Chromochloris zofingiensis. J Appl Phycol. 2022;34(1):159-176. doi:10.1007/s10811-021-02618-6
This article has been republished from the following materials. Note: material may have been edited for length and content. For further information, please contact the cited source.
VANCOUVER, BC, March 22, 2022 /PRNewswire/ — USA News Group – Set for several exciting new 2022 rollouts, the market for electric vehicles (EVs) is expected to continue its exponential growth, which is project to surpass +41.30% CAGR through to 2026. However, along the road towards an EV revolution, major markets such as the US have fallen behind in lithium production, much to the detriment of their clean energy ambitions. In order for EV automakers such as Tesla Inc. (NASDAQ:TSLA), Rivian Automotive, Inc. (NASDAQ:RIVN), and Lucid Group, Inc. (NASDAQ:LCID) to continue their push for more of their creations to hit the roads, the global lithium supply needs to be bolstered by the efforts of major miners and lithium developers, such as Rio Tinto Group (NYSE:RIO) and Lithium South Development Corporation (TSXV:LIS) (OTCQB:LISMF) respectively.
In order to keep up with the surging global demand, things are developing quite rapidly at one of the world’s premium salars—the Hombre Muerto North Lithium Project (HMN Li) located inside of the prolific Lithium Triangle within Salta Province, Argentina.
The project is being developed by and Lithium South Development Corporation (TSXV:LIS) (OTCQB:LISMF), which recently announced an expansion of its land holdings in the area, by acquiring an additional 2,400 hectares (nearly 6,000 acres) through three non-contiguous claim blocks approximately 5 kms to the north of its 2,089-hectare Alba Sabrina claim block.
The new areas were acquired to provide a potential water source and a location for anticipated future plant and processing facilities, while eliminating the need for Lithium South to locate any future development on their current salar locations.
“Our Company is approaching 2022 with the goal of increasing our high-quality lithium resource and completing a project Feasibility Study,” said Lithium South President Adrian F.C. Hobkirk. “Lithium South is well financed to complete these objectives at a time of record high lithium carbonate prices.”
As outlined in its 2022 Corporate Plan, Lithium South Development has already defined a high-quality lithium resource on their salar, and plans to significantly expand the known resource with a drill program and further pumping wells. Drill permissions were stated to be expected in January 2022, while road as well as drill pad construction had already been initiated.
Contained within the HMN Li Project’s prospects is Lithium South’s commitment to undertake a Feasibility Study using industry proven conventional evaporation and if warranted, a highly-anticipated technology known as Direct Lithium Extraction (DLE).
The current HMN Li Project resource located at the Tramo claim block is defined as 571,000 measured and indicated tonnes Lithium Carbonate Equivalent at 756 ppm Li, with a low Li to Mg ratio of 2.6:1 as reported in 2018, in a NI 43-101 report.
Local experts, Eon Minerals are currently performing conventional evaporation test work to produce battery grade lithium carbonate and confirm this industry standard lithium extraction process. In addition, three 2,000-liter bulk samples of HMN Li’s high-quality brine is awaiting laboratory test work by three DLE developers; Chinese-based Chemphys Chengdu, California-based Lilac Solutions, and Eon Minerals. Results from both conventional and DLE test work are expected in Q1 2021 and will potentially define the optimal process for lithium production at the HMN Li Project.
“We are very pleased to move our project forward towards the pilot plant stage, as part of our evaluation of the best process to use in achieving lithium production at the HMN Li Project,” said Lithium South President, Adrian F.C. Hobkirk.
Meanwhile in another part of the world, mining giant Rio Tinto Group (NYSE:RIO) is embroiled in what’s shaping up to be a potentially major legal battle with the country of Serbia, regarding the company’s planned “Jadar” lithium mine project which promised to make Rio Tinto one of the world’s Top 10 lithium producers.
Rio Tinto already committed $2.4 billion to develop lithium-borates in the Jadar valley in 2021. However, widespread local opposition over concerns for environmental damage led to the local municipality scrapping the plan in late December.
“The project is paused until we in Serbia agree on what we want to do, whether we want to go farther in exploration, exploitation and use of lithium or not,” said Serbian Prime Minister, Ana Brnabic, thus kicking the can down the road until after her country’s upcoming April general election. “I think it is a decision for the future, and I believe it would be smarter, better and fairer if it is brought by the political elites that will lead the country in the next four years.”
Undeterred, Rio Tinto has expressed that it remains committed to developing and advancing Jadar, upholding the highest environmental standards, and that it has been in regular dialogue with local communities throughout the project.
California-based EV truck manufacturers Rivian Automotive, Inc. (NASDAQ:RIVN) announced back in October it will opt to build its battery cells in-house, after originally sourcing its battery tech from Korea’s Samsung SDI.
“Given the paramount importance and impact of the battery system on vehicle range, performance, and price, we have built in-house capabilities across the entire value chain,” said Rivian in a company statement, adding that includes battery cell development, battery manufacturing expertise and critical raw materials sourcing.
Rivian also announced in July 2021, it was ready to invest $5 billion in its second US assembly plant.
Industry giants Tesla Inc. (NASDAQ:TSLA) recently signed a deal to source another key battery component (graphite) from outside of China—through Australian company Syrah Resources and its operations in Mozambique.
Tesla recently said no company was capable of domestically producing US graphite to the required specifications and capacity needed for its production. Graphite is used in the lithium-ion batteries powering EVs. Approximately 70% of all graphite comes from China, and there are few viable alternatives for batteries.
Rivalling Tesla is speculative up-and-comer Lucid Group, Inc. (NASDAQ:LCID), whose 2030 EV production goals would be half of what Tesla’s currently producing now. By 2026, the company reportedly has plans to build a plant in Saudi Arabia, after comments were made by Chairman Andrew Liveris regarding the company’s next focus after successfully producing and selling cars in the USA.
Currently the Lucid Air is the reigning production EV range holder, at 520 miles between charges. But perhaps gaining more interest from the market, are rumors of a potential partnership with Apple to move forward on the Apple Car.
Welcome to Foreign Policy’s Africa Brief.
The highlights this week: Mali’s former prime minister dies in detention, Egypt holds talks on the Iran nuclear deal, and Somaliland seeks recognition.
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Big Oil Brings Fear and Hope in Namibia
As oil and gas prices surge following sanctions against Russia, Africa may be well-positioned to become a global energy production hub. But a large majority of African countries are feeling the economic pain as net importers. This has prompted governments to begin accelerating oil and gas exploration.
One of the biggest oil and gas discoveries on the continent was made last month by TotalEnergies and Shell off the coast of Namibia. It is thought the offshore deposits could hold about 3 billion barrels of oil in total and provide an estimated $3.5 billion annually in royalties and taxes for the Namibian government.
But Namibia’s energy ambitions clash with a global export market that is increasingly opposed to fossil fuel investments. In neighboring South Africa, legal action led to a temporary blocking of seismic hydrocarbon searches while activists lobbied against an East African crude oil pipeline that will run from oil fields in Uganda to a port in Tanzania.
Community pushback. However, the most controversial development is in the northeastern Okavango Basin, where Canadian firm ReconAfrica is in conflict with local communities that say they were not adequately consulted about exploratory drilling—claiming environmental damage.
In a response, Recon Africa said it follows international best practices. “For us, the climate crisis is already happening,” said Namibian activist Ina-Maria Shikongo of Fridays For Future Windhoek. “Our rainy seasons have shifted and so our growing seasons have become shorter.”
Africa, which contributes the least to global greenhouse gas emissions, is the continent worst affected by climate change. “We need to focus on climate adaptation and not having polluters in the mix,” Shikongo said.
Resource curse. Instability in oil-producing states like Nigeria, Angola, and Mozambique has contributed to human rights violations, theft, environmental devastation, and major security issues—a phenomenon Namibians fear.
“Everywhere, there are minerals; there are wars,” Shikongo said, particularly when communities remain impoverished. Namibians hope that their government learns from the experience of Africa’s biggest oil producer, Nigeria, and ensures the entire population benefits rather than a small elite.
One of the ways the government can do that is to require open contracting, suggests Graham Hopwood, executive director of the Institute for Public Policy Research based in Windhoek, Namibia. The country could also adopt some of the new measures introduced by South Africa, where new mining rights applicants must have a minimum of 30 percent Black Economic Empowerment (BEE) shareholders, suggests Kennedy Chege, a researcher and doctoral candidate at the University of Cape Town.
Difficult negotiations. The Namibian government is keenly aware of the challenge ahead. One of the youngest countries on the continent, it also has one of the most unequal wealth distributions in Africa—second only to neighboring South Africa using the Gini ratio as a measure of inequality. Around 70 percent of Namibia’s farmland is owned by white people; Namibia’s government only owns a 10 percent stake in projects involving the country’s natural resources.
Namibian President Hage Geingob, who sees himself as a “unifier,” has often promised in his party’s manifesto a more transparent Namibia centered on delivering opportunities for citizens.
“We have gold and diamonds. We don’t see a big difference. It still goes outside in raw form: Its value is added outside, jobs are created outside, and technology transferred,” Geingob said in an interview about the discoveries. “There must be some kind of value addition in the country. That is the only way you can say there will be more jobs created … and money will stay in the country.”
Economic blueprint. Experts are quietly confident that explorations will greatly transform the country’s economic future. “Sixty percent of the revenue will come back to Namibia through taxes and royalties,” Chege told Foreign Policy. Namibian Energy Minister Tom Alweendo has hailed the discoveries a “great period for the people of Namibia.”
Now, the country’s ruling South West Africa People’s Organisation must learn from the failures of other petrostates and draft sensible policies around the management of oil wealth and on safeguarding environmental health. “We still have hope that we could be a role model and a good example for the rest of Africa,” Hopwood said.
The Week Ahead
Monday, March 28: The United Nations Security Council holds a briefing on Sudan.
Tuesday, March 29: The U.N. Security Council holds a briefing on the U.N. mission in the Democratic Republic of the Congo.
Thursday, March 31: OPEC and non-OPEC members meet virtually.
What We’re Watching
Mali’s ex-PM dies. Mali’s former prime minister Soumeylou Boubèye Maïga, arrested last year by Mali’s ruling junta over corruption allegations, died on Monday of an undisclosed illness at a hospital. Maïga had been detained since August 2021 following a military coup in May that year.
The news came a day after former Nigerian President Goodluck Jonathan ended a two-day visit to Mali without any agreement on a date for democratic elections. As Maïga’s health deteriorated, his family reportedly unsuccessfully pushed for him to be allowed to travel abroad for medical treatment.
Niger’s president, Mohamed Bazoum, reacted in a tweet, saying his death under arrest was similar to an assassination. “I thought that such assassinations belonged to another era,” Bazoum wrote. As previously covered in Foreign Policy, Mali’s military intends to stay in power entirely undeterred by regional and Western ostracism.
Israel-Egypt-UAE talks. Egyptian President Abdel Fattah al-Sisi hosted talks with Israeli Prime Minister Naftali Bennett and Sheikh Mohammed bin Zayed Al Nahyan, the crown prince of Abu Dhabi, on Monday, in an effort to forge a coalition that could stand against Iran “and send an important message to Washington.”
According to Israeli media outlets, the three leaders held discussions over the consequences of the Ukraine war amid reports that the United States will soon return to the 2015 nuclear deal with Tehran, which Israel opposes.
Algeria-Spain tensions. Algeria recalled its ambassador to Spain in protest after Madrid shifted from a position of neutrality on the disputed territory of the Western Sahara. Spanish foreign minister José Manuel Albares backed a 2007 proposal by Morocco to offer the Western Sahara autonomy under Moroccan sovereignty.
Relations between Algeria and Morocco have broken down over the region, which Rabat claims as its own territory, governing most of the area since Spain withdrew in 1975. But Algeria hosts and supports the Polisario Front, the Sahrawi group that seeks self-determination for the region. Algiers is Spain’s largest natural gas supplier, and the decision could prove costly for Madrid at a time of unprecedented price volatility in the energy market.
Somaliland sovereignty. Somaliland’s leader, Muse Bihi Abdi, and its foreign minister, Essa Kayd Mohamoud, visited Washington last week, urging recognition of the territory’s sovereignty and separation from Somalia.
However, the Biden administration insisted the region will continue to be treated under the framework of a “single Somalia policy.” For the last 30 years, the self-declared nation has functioned as a relatively peaceful de facto state, having its own currency, military, government institutions, and regular democratic elections since 1991.
Some African leaders hard-pressed by separatist movements in their own countries are reluctant to recognize Somaliland, fearing it would embolden secessionist claims. As FP’s Robbie Gramer and Mary Yang examine, U.S. officials—while eager to engage in partnership—fear that full recognition would severely damage relations with the African Union, which does not recognize Somaliland.
https://foreignpolicy.com/2022/03/23/namibia-oil-resource-curse/
After a lengthy pandemic pause, the International Seabed Authority is set to debate mining regulations for minerals like copper, manganese, cobalt and nickel beneath international waters that make up about 54 percent of the world’s oceans. It’s a nascent industry that’s getting more attention in light of the mineral-intensive transition away from fossil fuels.
The U.S. is in jeopardy of being left at the starting gate because it has not ratified the U.N. Convention on the Law of the Sea, a requirement to be a member of the ISA.
“There’s certainly a risk in getting left behind in the negotiations,” said Andrew Friedman, an associate manager at Pew Charitable Trusts focused on seabed mining. “The U.S. runs the risk of not being able to influence the trajectory of these negotiations.”
The talks come at a time when the International Energy Agency is projecting that demand for minerals like those underneath the seafloor will rise exponentially by 2040, driven by products like electric vehicles and battery storage for renewable energy. And the Biden administration is facing challenges opening new mines on land as states and local communities put up barriers.
There’s a sense of urgency to the negotiations because Nauru, a Pacific island nation, triggered a deadline last year that requires the ISA to complete regulations by July 2023 or allow miners to operate under whatever rules are in place at that time.
The U.S. will not only be unable to vote on the regulations, it will also forfeit its ability to sponsor companies to compete for contracts in international waters since all contractors need a sponsoring state within the ISA.
It’s not just the minerals and investment capital the U.S. might miss out on. Supply chain implications are also of critical interest, said Duncan Wood, a vice president at the Wilson Center, since battery manufacturing is a field currently dominated by China.
“The U.S. needs to focus on domestic production and working in friendly countries to boost and secure supply of critical minerals,” Wood said. “Think about a conflict with China over Taiwan, where we stop buying semiconductors and stop buying rare earth elements from China. That will be a disaster. This is now blatantly a matter of national security.”
The State Department declined to comment.
The U.S. has resisted embracing the Law of the Sea convention since 1982, when then-President Ronald Reagan cited its restrictions on seabed mining as his reason for not signing. Since then, repeated attempts to ratify the document have failed to make it to a full vote in the Senate.
Top priorities at the ISA meetings will include issues such as assessing the impacts on the marine environment and determining a fair royalty system for companies or countries doing the mining.
The ISA has already been issuing “exploration contracts” in which state-backed enterprises and private companies have exclusive rights to explore for a certain mineral and study the marine environment, but no commercial extraction has occurred. Of the 31 exploration contracts issued, 19 are located in an area off the Pacific Ocean between Hawaii and Mexico that is rich in rare earth elements and other minerals.
The U.S. has not sponsored any such exploration contracts, but there is domestic interest. Maryland-based Lockheed Martin, the world’s biggest defense contractor, is involved in two British projects. China has sponsored five contracts, and Russia, South Korea, India, Germany, France and Japan are also involved.
But environmentalists and other seabed mining skeptics say there just isn’t enough scientific knowledge as to how dredging the seafloor and extracting minerals could stir sediment in the ocean and affect ecosystems. Friedman says the ISA lacks the capacity to properly monitor mining expeditions for environmental impact: The current draft regulations say any mining contract would need to cover a minimum area of 620 square miles to upward of 46,000 square miles, depending on the mined mineral.
ISA Secretary-General Michael Lodge acknowledged the enforcement concerns, writing last year that the organization has “neither ocean-going vessels nor deep-sea submersibles at its disposal” and that the ISA will need to “significantly upscale its regulatory capacity.”
Matt Gianni, a co-founder of the Deep Sea Conservation Coalition, questions whether the demand justifies the environmental cost. He points to a 2016 study from Australia’s University of Technology Sydney that shows the projected increase in minerals demand “does not require deep-sea mining activity.” And a 2020 report from the High Level Panel for a Sustainable Ocean Economy said scientific understanding of deep-sea ecosystems is “still in its infancy,” the impacts of seabed mining on marine life are “likely immense” and seabed mining conflicts with U.N. Sustainable Development Goals.
But mining companies smell opportunity — and profits. “Everybody I know wants a rulebook” from the ISA, said Samantha Smith, the head of sustainability at Global Sea Minerals Resources, a Belgian subsidiary that holds an exploration contract.
“We cannot get the metals we need for population growth, urbanization and clean energy without extracting minerals and you cannot extract minerals without any impact whatsoever,” Smith said. “An assessment of all the options at the surface is necessary and why going to the seafloor might make sense. You’re not removing people or trees, and there’s an opportunity to produce less waste and less CO2. That also doesn’t mean it should be a free-for-all.”
Saleem Ali, an energy and environment professor at the University of Delaware who studies extractive industries, said last year during a debate on seabed mining that climate change presents “very tough choices” with “suboptimal solutions.”
“We will end up having to make some trade-offs. We do that on a daily basis,” Ali said. “If deep sea mining is to happen, there must be offsetting with reference to terrestrial mining. The only cogent case to be made is that there needs to be some reduction on terrestrial mining.”
The issue is already creating a wedge. Google, BMW, Samsung SDI, AB Volvo Group and other companies have signed onto a World Wild Fund For Nature moratorium committing to not source any materials from the seabed. More than 600 marine scientists and policy experts worldwide signed onto a similar statement. And the European Parliament, along with Pacific nations like Fiji and Papua New Guinea, also support the moratorium. At home, Washington state and Oregon have banned deep-sea mining in state waters.
Brian Menell, the chair and CEO of TechMet, a company that invests in mining operations, said the companies that signed the moratorium “are playing to a Greenpeace media audience.”
“There’s no particular cost in ruling it out for the time being,” said Menell, who noted that TechMet has no plans to invest in seabed mining operations at this time. “There are a lot of unknowns in terms of the cost and environmental impact. They could change their mind in five years’ time.”
Still, the industry is seeing investor interest, said Renee Grogan, the chief sustainability officer for Impossible Mining, a new venture looking to use artificial intelligence and robots to detect and pick up only mineral-rich nodules on the seafloor that aren’t supporting life.
“The investment side of things has been easier than the customer side of things, which are the large vehicle manufacturers. There’s a lot of investor interest around delivering battery metals in a sustainable way that can give us a secure supply chain,” Grogan said. “The challenge is the perception that seabed mining can only be done with a dredging machine. That’s the perception we are challenging with our innovation.”
https://www.politico.com/news/2022/03/22/seabed-mining-regulations-00019005
In a speech to Tesla Gigafactory Berlin employees during the factory's opening ceremony, Elon Musk confirmed that they are exploring manganese as a cathode material. In order to scale EV batteries to the 300 terawatt-hours of annual production needed to achieve sustainable transportation, he said, alternatives to affordable LFP battery materials will be needed.
Elon Musk has been a proponent of using manganese as cathode material in electric vehicle batteries and he just reiterated his preferences during the Tesla Gigafactory Berlin opening ceremony. Asked about the potential of graphene as battery-making material while making a speech before the German Gigafactory employees, Elon Musk countered with the "I think there’s an interesting potential for manganese" reply instead. That's not the first time that Tesla's CEO has mentioned they are exploring manganese as an alternative to the current iron or phosphorus the company uses in the LFP batteries for its standard range vehicles.
According to Musk, the world will need no less than 300 terawatt-hours (TWh) of battery cell production at some point in order to completely switch from fossil fuels. Such scale can only be achieved with materials that are cheap and plentiful like the ones in LFP battery packs and, well, manganese. The recent stratospheric rise in the price of nickel induced by the Russian invasion of Ukraine only proved Tesla's CEO right on that count as the common nickel-cobalt-aluminum battery materials that go into extended range electric cars are anything but cheap and plentiful.
This is why Elon Musk wants to add manganese to the iron and phosphorus used to produce more affordable EV batteries in order to ultimately have a shot at achieving the hundreds of TWh/year production needed on the way to sustainable transportation. Tesla has already been using manganese in some of its Powerwall battery cells but at yesterday's Giga Berlin opening ceremony Elon Musk said that it can and should become a viable alternative to the common battery materials used now, since "at very large scale, we need tens, maybe hundreds of millions of tons ultimately. So the materials used to produce these batteries at a very large scale need to be common materials or you can’t scale."
Having transformed our way of life, rechargeable batteries are poised for exponential growth over the coming decade, notably due to the wider adoption of electric vehicles. An international expert panel proposes a combination of vision, innovation and practice for feasible pathways toward sustainable batteries.
The fast-growing global energy demand calls for an increase in renewables and nuclear power to replace fossil fuels, with the aim of reducing carbon footprints and addressing climate change. According to the US Energy Information Administration, renewable energy consumption will be close to the share of liquid fuels, levelling at ~250 quadrillion BTU in 2050. Although renewable energy sources, such as solar and wind energy, are preferable from an environmental perspective, they suffer from intermittent storage that cannot cater to a constant supply chain. Electrochemical energy storage devices — in particular lithium-ion batteries (LIBs) — have shown remarkable promise as carriers that can store energy and adjust power supply via peak shaving and valley filling. In view of the importance of LIBs, the Nobel Prize in Chemistry was awarded to John B. Goodenough, Stanley Whittingham and Akira Yoshino in 2019 for their pioneering contribution to LIBs2. Indeed, LIBs have revolutionized our lifestyle and their further developments could transform society towards a more sustainable future.
The global electric vehicle (EV) stock grew to 10 million in 2020, and 160 GWh LIBs were produced to power these electric cars. With deeper EV penetration, global lithium demand has reached a new record (345,000 metric tons of lithium carbonate equivalent in 2020). There could be serious shortages of lithium, often labelled as ‘white gold’, in the near future. In this sense, a re-examination of recycling strategies is essential, and recycling also presents an opportunity for batteries to reduce socio-economical risks in relation to non-domestic supply chains in each country. Clearly, it is indispensable to design, manufacture, use, dispose and recycle batteries in a sustainable way.
Battery R&D tends to fall into two categories: maximizing energy density for transportation, and minimizing battery cost for mobile and large-scale energy storage. Although significant progress has been made over the past three decades, it seems like the energy density of conventional LIB technologies is starting to reach an asymptotic limit. Partially supplementing current electrodes with alternative high-capacity materials is a popular approach for most battery manufacturers. More recently, the use of lithium metal as an anode has been revived. When coupled with solid-state electrolytes, this can potentially offer high storage density. On the cathode side, lithium cobalt oxide (LiCoO 2 ) continues to dominate the high-end portable electronic battery market because of its high energy density, while cobalt-reduced or even cobalt-free cathode chemistries, such as LiNi x Mn y Co z O 2 (NMC), LiNi x Co y Al z O 2 (NCA) and LiFePO 4 (LFP), are widely used in EVs. Novel cathode materials, such as sulfur and oxygen, have also been intensively investigated. However, they suffer from relatively shorter lifetimes and lower roundtrip energy efficiencies, although they show significantly higher theoretical specific capacity.
Compared to traction batteries, battery technologies for grid-scale energy storage would not prioritize energy density. Considering the extremely competitive market, beyond-lithium-ion technologies have received considerable attention. Among them, sodium-ion batteries are a potential alternative, owing to more abundant sodium resources and similar working mechanism to LIBs. In contrast, aqueous electrolyte-based rechargeable batteries, such as redox flow batteries, are much closer to entering the stationary energy storage market.
Conventional battery materials recycling strips the batteries down to their electrode and electrolyte components for reuse. Here, the nature of the electrolyte (liquid versus solid) and the associated interface with the electrodes define the ease of separation, which differs for a LIB versus a solid-state battery (SSB). Ceramic solid electrolytes based on metal oxide, sulfide or sulfide compounds are attractive for use in SSBs as they offer the potential to enable high energy densities by using pure lithium or alloys as the anode. However, a change in electrolytes will require alternative strategies in recycling. These are driven not only by a wider range of rare earth and transition metal ions in the solid electrolyte (for example, Li 7 La 3 Zr 2 O 12 , thio-LISICON (lithium superionic conductor), LIPON (lithium phosphorus oynitride) or Li-argyrodite) when compared to their liquid counterparts, but also by the manufacturing processes required to form a coherent interface and low interfacial resistances in case of solid–solid electrolyte–cathode interfaces. Recent reports discussed thermal budgets and pressure requirements that are needed for solid electrolyte separators to assure good bonding for fast lithium transfer across the solid–solid interfaces. Separating a liquid electrolyte from the cathode may appear as the natural and easier choice in terms of recycling. However, it is clear that when moving towards SSBs, any strategy that can lower the co-bonding temperature during manufacturing is an important parameter to tune — not only to lower the overall processing costs, but also to facilitate separation for recycling.
Safety forms an important dimension of battery sustainability. Accidents are unwanted where the batteries undergo thermal runaway, especially due to internal short circuits within the flammable organic electrolyte. Traditional fire-extinguishing agents, such as water or dry powders, cannot efficiently extinguish LIB fires. It is important to specifically consider and design fire-extinguishing agents and the corresponding intelligent systems to deploy them. Alternatively, non-flammable electrolytes, either liquid or solid, may be practical solutions to improve safety. For example, it has been shown that concentrated aqueous electrolytes can also have a wide potential window, where optimization of the electrode–electrolyte interfaces can play a critical role in enabling comparable energy densities to the-state-of-art LIBs. To avoid the high cost and potential toxicity associated with highly concentrated fluorinated lithium salts, development of a high-voltage aqueous electrolyte with low salt concentrations using low-cost and eco-friendly materials is a promising solution. For all-solid-state cells, the interfaces remain a significant challenge. Today, SSBs still suffer from resistive solid–solid contacts, undesirable side reactions at interfaces, and low power density and cycling performance. However, SSBs are showing fast improvement, with significant commercialization efforts ongoing9.
As the quantity of LIBs produced reaches thousands of gigawatt hours, the accumulation of end-of-life (EOL) batteries may become similar to that of electronic waste in early 2000s (ref. 10). Currently, LIBs are mainly produced in China, Korea and Japan. Will EOL batteries flow back to Asia? Who should take responsibility for EOL battery disposal? Consumers, battery manufacturers or vehicle manufacturers? Regarding EOL regulations, a battery trace system could be developed for every single cell from the beginning of manufacturing, considering that we already have big-data technology with integrated traceability enabled by the Internet of Things. In addition, it is important to build an EOL battery trade system, where entrepreneurs can profit from EOL batteries. It is also not clear yet whether EOL battery materials should be reused in a new battery, or whether alternative integration pathways in other goods may be a profitable and sustainable pathway for their reuse. For example, there exists a significant opportunity for repurposing battery packs and cells that have reached unacceptable levels of degradation for EV applications (for example, capacity and/or power fade) but may still work for applications where high energy or power densities are less critical, such as stationary storage. An international association should clearly be launched soon for global EOL battery disposal to achieve these goals.
Regarding recycling technologies, processing EOL battery materials will be more complicated and challenging than electronic waste, given the compound chemistries and energy costs related to separation. Another critical aspect unique to EOL batteries is the latent energy content if batteries enter the EOL materials stream without being fully discharged, with corresponding risks that arise during transportation and mechanical disassembly. For instance, some components, such as cobalt-based cathodes or organic electrolyte-related chemicals, are toxic — potentially generating harmful impact on the natural environment and human health, and therefore requiring special protocols. Following the previous analogy of electronic waste, it is conceivable that relevant streams of EOL batteries will be recycled in informal (artisanal) ways without any control of emissions or toxic exposure to workers. Therefore, it is important to ensure that the recovery of batteries and their recycling occur in authorized installations that identify, evaluate and properly manage emissions and wastes, as well as occupational health and safety hazards.
In this Comment, we share our considerations on important aspects of sustainability in relation to batteries. Our international expert panel (see Box 1) suggests that future ‘sustainable batteries’ need to be designed and manufactured in line with the principles of sustainability, considering every single component within the whole process chain and the required resources, including conscious choices for materials composition and mining origins. The composition and architecture of sustainable batteries must anticipate EOL, and allow for an easy and as complete as possible disassembly and materials extraction process, with low (additional) energy and materials input.
Box 1 Expert panel on the sustainability of batteries Tongji University and Nature Sustainability jointly convened an expert panel of 23 leading experts across the globe, covering different aspects of battery sustainability. The panel first met in April 2021. The panel reached an agreement that sustainability must be considered as an indispensable dimension for the development of batteries. The expert panel consisted of co-chairs Yunhui Huang (Tongji University), Jennifer L. M. Rupp (Massachusetts Institute of Technology and Technical University of Munich), Marcel Weil (Karlsruhe Institute of Technology) and Chengdu Liang (Zhejiang University), and panellists Christian Bauer (Paul Scherrer Institute), Simon Burkhardt (University of Giessen), Linda Ager-Wick Ellingsen (Institute of Transport Economics), Neil P. Dasgupta (University of Michigan), Linda L. Gaines (Argonne National Laboratory), Han Hao (Tsinghua University), Roland Hischier (Swiss Federal Laboratories for Materials Science and Technology), Liangbing Hu (University of Maryland), Jürgen Janek (University of Giessen), Hong Li (Institute of Physics, Chinese Academy of Sciences), Ju Li (Massachusetts Institute of Technology), Yangxing Li (Advanced Power), Yi-Chun Lu (Chinese University of Hong Kong), Wei Luo (Tongji University), Linda F. Nazar (University of Waterloo), Elsa A. Olivetti (Massachusetts Institute of Technology), Jens F. Peters (University of Alcalá), Jay F. Whitacre (Carnegie Mellon University) and Shengming Xu (Tsinghua University).
Environmental, economic and social sustainability considerations should be quantitatively assessed with life-cycle assessment (LCA), life-cycle costing (LCC) and social life-cycle assessment (S-LCA), respectively. There are numerous studies available for current LIB chemistries, but also for emerging battery systems including sodium- or magnesium-based chemistries. Generally, the results show that all life-cycle stages (raw materials provision, production, use, second use and recycling) are important and should be addressed together. In addition, rapid development of the sector requires frequent updates of these studies, considering the improvements that have been — and will foreseeably be — achieved in terms of performance and sustainability. Improved data availability, as well as production and technology improvements, is reflected in LCA studies, which have recently reported a trend of decreasing environmental impacts. Regarding the variety of battery chemistries available, a general outcome is that there is no single ‘silver bullet’ battery — that is, one that performs best in all applications and conditions under a life-cycle-based sustainability perspective. Rather, the optimal choice depends strongly on the specific requirements of the targeted application and also on the individual weighting that is applied to the various dimensions of sustainability.
Despite the considerable number of studies in this field, a major problem remains the limited availability of transparent industry-based data, and also the specific differences across individual manufacturing plants — for example, in terms of energy demand and origin14,15. Many existing works rely on secondary information from other publications and only a few actually use original primary data. This leads to error propagation and reduces the reliability and robustness of several of the existing studies. In addition, there is often a lack of transparency in many battery studies, which hinders the traceability of the results. Efforts are therefore needed from within the scientific community and industrial stakeholders to move towards transparent, open and comprehensive studies based on primary data, disclosing all data in a readily reusable format that future analyses can be based on. Only in this way can the results support scientifically sound and knowledge-based decision making, while keeping pace with the rapid technology development.
With massive deployment of EVs and energy storage systems looming, it is important to assure a sustainable and careful materials selection that is suitable for recycling, while also adopting high safety standards. The supply-chain risks need to be minimized through smart choices in the chemistry, and manufacturing decisions for cell and pack design should ensure opportunities for recycling and reuse. Meanwhile, we must improve and integrate all aspects of sustainability (that is, social, economic and environmental aspects) in battery assessment, and integrate them as key elements within a full circular economy. This motivates clear, world-wide policies that concern more sustainable battery production, use and disposal (in addition to the existing regulations and directed flows for electronic waste). It is also important for consumers to be able to make eco-conscious choices for their battery recycling strategies at the time of purchase. We believe that continuous development in battery technology and energy storage will bring exciting breakthroughs not only in the new electrode or electrolyte materials, but also in the next generation of battery systems.
Steel coils in a plant in Duisberg, Germany, produced using methods with low carbon dioxide intensity.Credit: Friedemann Vogel/EPA-EFE/Shutterstock
Cement and steel are essential ingredients of buildings, cars, dams, bridges and skyscrapers. But these industries are among the dirtiest on the planet. Production of cement creates 2.3 billion tonnes of carbon dioxide per year, and making iron and steel releases some 2.6 billion tonnes — or 6.5% and 7.0% of global CO 2 emissions, respectively
That’s in part owing to the large quantities in which these materials are used: concrete is the second-most-consumed product on the planet, after clean water. It’s also thanks to their carbon-intensive methods of production. The chemical reactions involved give off CO 2, as does burning fossil fuels to deliver the extreme temperatures required in the manufacturing processes.
Cleaner ways of making and using cement and steel are urgently needed. The world must reach net-zero carbon emissions by 2050, even as industrial demand is growing and energy prices are spiking. Infrastructure, technology transfer and mechanisms for reducing financial risks must be established to allow low-emissions heavy industry to flourish.
Here, we highlight nine priorities for research and action. Steel manufacturing processes need a rethink; cement’s biggest gains will require carbon capture and storage (CCS). Together, these steps could take steel close to being carbon neutral and cement to becoming a carbon sink.
Use the latest technologies
Ensuring that production plants are fitted with the best available technology offers immediate gains. Improving insulation of industrial plants can save 26% of the energy used; better boilers cut energy needs by up to 10%; and use of heat exchangers can decrease the power demands of the refining process by 25%. Old, inefficient plants are usually out-competed by more modern facilities, so industries become more efficient over time. However, gains diminish as industries mature and improvements become incremental. Today, the most efficient cement plants can squeeze only 0.04% of energy savings per year by upgrading technologies. More needs to be done.
Use less
Smaller quantities of steel and cement can be used for the same job. Today, the world produces 530 kilograms of cement and 240 kilograms of steel per person per year. Small but significant changes to building codes and education for architects, engineers and contractors could reduce demand for cement by up to 26% and for steel by 24%, according to the International Energy Agency. Many building codes rely on over-engineering for safety’s sake. That margin could be limited by using modern materials and computer modelling to whittle down designs to use only the necessary amount of resources. Alternative materials with a smaller carbon footprint for a given use, such as aluminium, might replace steel in some products, including cars. Professionals would have to shift their practices and re-train.
Reinvent steel production
Carbon is at the core of conventional steel production. Coke (derived from coal) fuels blast furnaces in which iron ores are chemically reduced to metallic iron at temperatures of up to 2,300 °C. Coke burns to produce carbon monoxide, which reduces the ore to iron and CO 2 . Molten iron is then refined into steel, usually in a coal-fired furnace, but sometimes (especially when recycling scrap) in an electric arc furnace (EAF). The process emits about 1,800 kilograms of CO 2 or more per tonne of steel.
Other substances can be used to reduce the ores. About 5% of the world’s steel is already made through ‘direct reduced iron’ (DRI) processes that don’t require coke and typically use hydrogen and CO (derived from methane or coal). By using methane-derived gas and renewable electricity to power an electric furnace, such steel plants emit about 700 kilograms of CO 2 per tonne of steel5 — 61% less than coke-based ones.
Better still, using only hydrogen for DRI should reduce CO 2 emissions to 50 kilograms or less per tonne of steel — a 97% reduction. Firms in Europe, China and Australia are piloting such plants, with several slated to open in 2025 or 2026. The challenge is that this process requires a lot of hydrogen.
Producing all steel this way would mean almost tripling global hydrogen production, from 60 to around 135 million tonnes annually. And most cheap hydrogen today comes from natural gas, which releases CO 2 . A greener option — splitting water with electrolysers — is around 2.5 times as expensive. Costs should come down as more plants are built.
Other options are worth pursuing. In 2004, the Ultralow-CO 2 Steelmaking Consortium — 48 companies and organizations in 15 European countries — evaluated the options. Tata Steel, based in Jamshedpur, India, built a pilot plant in 2010 in the Netherlands for one advanced steel-making process, still based on coal but simplified to make carbon capture easier. The falling price of green hydrogen — produced using renewable energy — is now luring Tata to hydrogen-based DRI.
One promising alternative to hydrogen is using electricity to reduce iron ore through electrolysis. This method is being explored by Boston Metal in Massachusetts, and Luxembourg-based Arcelor Mittal.
Reinvent cement
Production of ordinary Portland cement — the most common type of cement — begins with the calcination of limestone, which is heated to temperatures above 850 °C to form lime and CO 2 . The lime is combined with sand and clay in a 1,450 °C kiln to create clinker. A few other ingredients are mixed in to make cement. About 60% of the emissions from a top-quality plant come from the calcination reaction, and most of the rest from burnt fuel. In total, the process produces about 800 kilograms of CO 2 per tonne of cement in an average plant, and 600 kilograms in a best-in-class plant.
Cement can be made without limestone. Magnesium oxychloride cement (called sorel), for example, has been around since 1867, but it hasn’t been commercialized because it has a low water tolerance. Dozens of cement variants are under investigation. To use them in construction, however, building codes, designs and practices will have to be altered to account for these materials’ different strengths and properties. This will take more than a decade.
Limestone is the source of most of the carbon dioxide emissions from cement production.Credit: Kokouu/Getty
Another option is replacing some of the clinker with more sustainable materials. Common ones include blast-furnace slag and ash from coal-fired power stations. But those materials will become scarce when fossil fuels are phased out. Researchers are investigating other options, including slag from recycled iron made in EAFs and from DRI EAF steel processing.
One promising example is limestone calcined clay cement (LC3). With similar properties to ordinary Portland cement, it’s already close to being commercialized and would be easy to switch to. Up to half of the clinker in it can be replaced8. Some companies already include LC3 technology in their net-zero strategies, among them French company LafargeHolcim and Germany-based Heidelberg Cement.
Swap fuels
For steel, it is tempting to suggest replacing coal and coke with charcoal or other forms of biomass. But there are challenges. Growing biomass for energy can conflict with land needs for agriculture, and not all biomass harvests are sustainable. Wood charcoal is too weak (compared with coke) to support material layers in blast furnaces. Rethinking steel processing, as above, is a better solution.
For cement, however, municipal solid waste — or carefully sorted rubbish — can be used as an alternative fuel: high temperatures in the kiln incinerate toxic materials in the waste, and the ashes can be incorporated into clinker. Up to 57% of the Mexican company Cemex’s energy in cement plants in the United Kingdom is derived from these alternative fuels, and UK company Hanson’s alternative-fuel consumption is at 52%. This strategy should be encouraged, including by passing appropriate regulations at a national level.
Capture carbon
CCS — taking CO 2 and locking it away underground — will be essential to lowering cement-production emissions, and is important for steel, too.
CCS is relatively advanced in some other industries. The Norwegian state oil company Equinor has operated a CCS project since the late 1990s, burying around one million tonnes of CO 2 per year. But the technology is underused; just 0.1% of all global emissions are currently captured and stored. Only a few steel and concrete plants are trialling CCS. For example, one modern DRI steel plant in Abu Dhabi has used CCS since 2016. CCS must be scaled up rapidly.
One major issue is that the stream of CO 2 needs to be more than 99.9% pure to reduce costs for compressing and storing the gas. Typical steel- and cement-plant flues consist of about 30% CO 2 ; the rest is mainly nitrogen and steam. One option for the cement industry is to burn fuel in a mixture of oxygen and recycled flue gas, leaving a relatively pure stream of CO 2 . But this is challenging: it involves sealing a very hot, rotating kiln.
Another way to isolate CO 2 from the calcination process is to heat the limestone indirectly (through a wall) so that emissions from heating are separated from those from the limestone. The emissions from limestone are nearly pure and don’t require much further processing, reducing the cost of CCS. The LEILAC 1 and 2 projects (in Lixhe, Belgium, and Hanover, Germany, respectively) are trialling this; LEILAC 2 is capturing about 20% of a cement plant’s process emissions, around 100,000 tonnes per year.
Building heavy industries in clusters would allow heat, materials and infrastructure for making and storing hydrogen, as well as collecting and disposing of waste CO 2 , to be shared. Such clusters are being developed at Kalinborg, Denmark; Tyneside, UK; Rotterdam, the Netherlands; and Bergen, Norway.
Store CO 2 in concrete
Cement is turned into concrete by adding water, sand and stones. The water sets off reactions that harden the material and bind the aggregates. Adding CO 2 can make the cement stronger. If CO 2 comprises just 1.3% of the weight of concrete, the material’s hardness can increase by around 10%. That reduces the amount of cement needed in a structure — along with net emissions — by about 5%.
Optimizing carbon capture in concrete is an active area of research. Leaders such as CarbonCure in Dartmouth, Canada, are already injecting CO 2 in concrete at a large scale: it reports that it has delivered nearly 2 million truckloads of CarbonCure concrete, saving 132,000 tonnes of CO 2 .
Cement and concrete both absorb CO 2 from the air by converting calcium-based components back into limestone. The potential there is huge: in theory, roughly half of the process CO 2 emissions from cement manufacturing could be re-absorbed. But the materials would have to be ground up at the end of their lives to make the concrete particles smaller so that CO 2 can diffuse in better. That’s expensive — and it requires energy.
Because the amount of CO 2 that could be taken up by crushed concrete is uncertain, this is not yet included in emissions inventories from the United Nations Framework Convention on Climate Change. But the UK government is looking into it, in collaboration with the Mineral Products Association in London, and the Global Carbon Project has begun including it in its annual carbon budgets. We urge caution, to avoid disincentivizing CCS and more traceable means of reducing cement’s carbon footprint.
Recycle steel
Steel can be efficiently recycled using an EAF. One-quarter of steel production today is based on recycled scrap. Globally, recycled production is expected to double by 205011, reducing emissions by 20–25% from today (depending on how the electricity is produced).
However, it is not currently possible to recycle steel endlessly. ‘Tramp’ species — undesirable compounds (particularly copper) — build up. Their accrual can be slowed by better sorting scrap and by redesigning products so that copper wiring is easier to remove.
Subsidize changes
Together, the potential of these eight steps is vast (see ‘Decarbonizing a skyscraper’). But further economic hurdles must be overcome if low-carbon heavy industries are to reach megatonne-per-year scales of production.
Hydrogen-only DRI plants for steel and CCS facilities for cement exist only at pilot to early commercial stages. Scaling them up is expensive and risky. Low-carbon products lack competitive advantage and markets. Developing countries, where most construction is happening, need technology to be shared and implementation of mechanisms to lessen financial risks.
One step in the right direction is a small refund under the European Union Emissions Trading Scheme (ETS) for swapping fossil fuels with biomass or hydrogen, or for undertaking CCS. That’s not enough. Conditional, scaled government subsidies — similar to feed-in tariffs, which incentivize investment in wind and solar technologies — would be more effective.
As Western nations look for ways to reduce their reliance on Russian oil and gas, another aspect of the Ukraine crisis has received less attention: Most of the 32 countries that use nuclear power rely on Russia for some part of their nuclear fuel supply chain. Nuclear power is a critical part of many national electricity grids. European countries especially rely on nuclear power, including France, where it produces 69per cent of the nation's electricity supply, Ukraine (51per cent), Hungary (46per cent), Finland (34per cent), and Sweden (31per cent). In the U.S., nuclear reactors generate 20per cent of the nation's power. Many of these countries originally embraced nuclear power to minimize dependence on imported fossil fuels and, more recently, to reduce carbon emissions and improve air quality. The economic fallout from the war in Ukraine could disrupt access to fuel for the nuclear power industry. We believe that countering Russia's influence will require concerted efforts that balance energy security, climate mitigation, and a commitment to international law.
A global industry Around the world, 32 countries operate about 440 commercial nuclear power reactors that generate 10per cent of the world's electricity supply. The U.S. has the most operating reactors (93), followed by France (56) and China (53).
Many nations export nuclear fuel, materials, and services. The leading international suppliers are the U.S., Russia, Europe, and China. Several other countries play important roles, including Canada and South Korea. Producing nuclear fuel involves five steps: – Raw uranium ore, which usually contains less than 2per cent uranium, is mined from the ground. – The ore is milled to separate the uranium from other materials, yielding a powder called yellowcake. – Yellowcake is chemically converted to gaseous uranium hexafluoride. – Uranium hexafluoride is processed to increase its concentration of uranium-235, which can be split in reactors to produce large quantities of energy. U-235 only makes up 0.7per cent of natural uranium; enrichment for commercial reactor fuel increases its concentration, usually up to 5per cent. – Enriched uranium is fabricated into fuel rods for reactors.
Uranium conversion, enrichment, and fabrication are sophisticated technical processes that are handled at a small number of facilities around the world. Fuels for nuclear reactors are highly specialized and tied to specific reactor designs. Buying a power reactor from a supplier such as Rosatom, Russia's state nuclear company, or the French company Framatome, can lead to decadeslong supply dependencies. All of these factors make nuclear supply chains more complex, less competitive, and harder to shift rapidly than other energy types, such as oil and gas. And since key materials and technologies for civilian nuclear power can also be used to produce weapon-usable nuclear materials, international nuclear sales are subject to strict export controls and trade restrictions.
Russia as a nuclear supplier Compared to other mined commodities such as cobalt, world uranium resources is spread reasonably widely. Kazakhstan produces more than 40per cent of the global supply, followed by Canada (12.6per cent), Australia (12.1per cent), and Namibia (10 per cent). Russia is a minor player, producing around 5per cent, while the U.S. and Europe produce less than 1per cent. However, much of the milled uranium from Kazakhstan travel through Russia before it is exported to global markets. Other parts of the supply chain also route through Russia. Only a handful of facilities in the world convert milled uranium into uranium hexafluoride; Russia produced approximately one-third of the 2020 supply, much of it made with uranium from Kazakhstan. Russia also has 43 per cent of the global enrichment capacity, followed by Europe (about 33per cent), China (16per cent), and the U.S. (7per cent). There is some spare capacity in the U.S. and Europe, and China is expanding.
Country
Feeder Cattle: 2,046(93.2%) 2,087(92.5%) 1,479(91.1%)
Slaughter Cattle: 116(5.3%) 123(5.4%) 102(6.3%)
Replacement Cattle: 34(1.5%) 47(2.1%) 43(2.6%)
Compared to last week: Feeder steers 5.00 to 7.00 higher. Feeder heifers 1.00 to 4.00 higher. Steer calves mostly steady. Heifer calves 2.00 to 6.00 higher. Quality good to attractive with good demand. Slaughter cows unevenly steady. Slaughter bulls 2.00 higher, several high yielding bulls on offer with very good demand. A total of 150 cows and bulls sold with 77 percent going to packers. Supply included: 93% Feeder Cattle (57% Steers, 40% Heifers, 2% Bulls); 5% Slaughter Cattle (69% Cows, 31% Bulls); 2% Replacement Cattle (100% Bred Cows). Feeder cattle supply over 600 lbs was 66%.
https://www.swoknews.com/apache-livestock/article_02f74a10-7dba-5485-957f-a5c78cd125a6.html
By Dr. Mercola
In the UK, organic food sales have been falling since 2008. The featured commentary discusses whether organic is going “out of style,” or if people’s tastes and reasoning for going organic are simply changing. “Sales of organic products have been falling since the credit crunch first bit in late 2008. But thrift alone does not seem to be enough to explain what is now a medium-term trend, since Fairtrade, another ethical certification with a price premium, has not suffered the same reverse, with sales rising by an estimated 12 percent last year. What seems to be the case is that customers who used to use the organic label as a kind of proxy for good, sustainable produce now look to the specific virtues that most concern them: seasonality, locality, fair trade or animal welfare. Indeed, sometimes their other ethical concerns trump the desire for organics, such as when they choose home-grown peas over air-freighted organic alternatives…” The Guardian states. There are probably a number of reasons for this change, and it’s not necessarily a bad thing. For the past few years now, I’ve argued that buying locally grown foods may actually be an overall better choice than the strict focus on organic. In part because organic produce from overseas may or may not have been grown according to strict organic standards, so you could potentially be overpaying for something that isn’t really organic (not to mention the environmental damage caused by shipping food across the globe), and in part because many small farmers actually grow their food according to sustainable, organic principles even though they may not have received organic certification, which is a very costly process.
Are Organic Foods Safer or Healthier Than Conventional Alternatives?
Confounding the conversation are recent reports that organic foods are not nutritionally different from non-organic. A recent meta-analysis by Stanford University3 has received widespread media coverage, and with few exceptions, conventional media outlets have used it to cast doubt on the value of an organic diet. The New York Times, for example, declared “Stanford Scientists Cast Doubt on Advantages of Organic Meat and Produce,” and Fox News’ headline claimed “organic food may not be worth the money.” An editorial in The Los Angeles Times bravely bucked the trend, stating “Stanford’s research showing that organic produce probably isn’t any more nutritious than the conventional variety is mostly remarkable for what it omitted.” Still, you’ve had to be a reader of alternative media to get the real scoop on this study… In a nutshell, the meta-analysis, which looked at 240 reports comparing organically and conventionally grown food (including 17 human studies), DID find that organic foods ARE safer, and probably healthier than conventional foods—if you are of the conviction that ingesting fewer toxins is healthier and safer for you. While I believe organic foods grown in healthy soils can be more nutritious than their conventional counterparts grown in depleted soils with synthetic chemicals, a major benefit of organically grown foods really is the reduction in your toxic load. According to the authors: “…Two studies reported significantly lower urinary pesticide levels among children consuming organic versus conventional diets, but studies of biomarker and nutrient levels in serum, urine, breast milk, and semen in adults did not identify clinically meaningful differences. All estimates of differences in nutrient and contaminant levels in foods were highly heterogeneous except for the estimate for phosphorus; phosphorus levels were significantly higher than in conventional produce, although this difference is not clinically significant. The risk for contamination with detectable pesticide residues was lower among organic than conventional produce (risk difference, 30% [CI, -37% to -23%]), but differences in risk for exceeding maximum allowed limits were small. …the risk for isolating bacteria resistant to 3 or more antibiotics was higher in conventional than in organic chicken and pork (risk difference, 33% [CI, 21% to 45%])…
Many Studies Show Organic Foods are More Nutritious
So, will reducing your intake of pesticides have a beneficial impact on your health? Most likely, yes. Unfortunately, creative interpretation and linguistic gymnastics turned Stanford’s incriminating findings into an attack on organics… On the upside, health-conscious people everywhere are seeing right through it, and a number of independent news sources have issued thought-provoking rebuttals. For example, NewHope360 writes:8 “…Stanford researchers failed to review reports not written in English… and if the study consists of just comparing notes across a series of studies then the researchers did not meet their due diligence… My colleagues at newhope360 compiled their own review in a matter of minutes of articles that were easy to find and also written in English. But our findings were considerably different from Stanford’s. The Organic Center, reliant on donations and industry funding, is in the midst of conducting an actual study on organic vs. conventional vs. natural grain. Not yet complete, they have already determined organic grains are more nutritious. 9 And by ‘nutritious’ they do mean ‘more nutrient-rich.’
Conclusion: Healthy soil leads to higher levels of nutrients in crops. Even the Centers for Disease Control and Prevention conducted their own behavioral study that found higher risk of ADHD in children with higher levels of organophospates (pesticides).” 13
https://vervetimes.com/organic-foods-are-safer-and-healthier-than-conventional-true-or-false/
Now the planet is facing a deeper crisis: a shortage of food.A crucial portion of the world’s wheat, corn and barley is trapped in Russia and Ukraine because of the war, while an even larger portion of the world’s fertilizers is stuck in Russia and Belarus. The result is that global food and fertilizer prices are soaring.
Since the invasion last month, wheat prices have increased by 21%, barley by 33% and some fertilizers by 40%.The upheaval is compounded by major challenges that were already increasing prices and squeezing supplies, including the pandemic, shipping constraints, high energy costs and recent droughts, floods and fires. Now economists, aid organizations and government officials are warning of the repercussions: an increase in world hunger.The looming disaster is laying bare the consequences of a major war in the modern era of globalization. Prices for food, fertilizer, oil, gas and even metals like aluminum, nickel and palladium are all rising fast — and experts expect worse as the effects cascade.“Ukraine has only compounded a catastrophe on top of a catastrophe,” said David M. Beasley, executive director of the World Food Program, the U.N. agency that feeds 125 million people a day.
“There is no precedent even close to this since World War II .” Ukrainian farms are about to miss critical planting and harvesting seasons. European fertilizer plants are significantly cutting production because of high energy prices. Farmers from Brazil to Texas are cutting back on fertilizer, threatening the size of the next harvests.China, facing its worst wheat crop in decades after severe flooding, is planning to buy much more of the world’s dwindling supply. And India, which ordinarily exports a small amount of wheat, has already seen foreign demand more than triple compared with last year.Around the world, the result will be even-higher grocery bills.
In February, U.S. grocery prices were already up 8.6% over a year prior, the largest increase in 40 years, according to government data. Economists expect the war to further inflate those prices.For those living on the brink of food insecurity, the latest surge in prices could push many over the edge. After remaining mostly flat for five years, hunger rose by about 18% during the pandemic to between 720 million and 811 million people. Earlier this month, the United Nations said that the war’s impact on the global food market alone could cause an additional 7.6 million to 13.1 million people to go hungry.
The World Food Program’s costs have already increased by $71 million a month, enough to cut daily rations for 3.8 million people.“We’ll be taking food from the hungry to give to the starving,” Beasley said.Rising prices and hunger also present a potential new dimension to the world’s view of the war. Could they further fuel anger at Russia and calls for intervention? Or would frustration be targeted at the Western sanctions that are helping to trap food and fertilizer?While virtually every country will face higher prices, some places could struggle to find enough food at all.Armenia, Mongolia, Kazakhstan and Eritrea have imported virtually all of their wheat from Russia and Ukraine and must find new sources. But they are competing against much larger buyers, including Turkey, Egypt, Bangladesh and Iran, which have obtained more than 60% of their wheat from the two warring countries.
And all of them will be bidding on an even smaller supply because China, the world’s biggest producer and consumer of wheat, is expected to buy much more than usual on world markets this year. March 5, China revealed that severe flooding last year had delayed the planting of a third of the country’s wheat crop, and now the upcoming harvest looks bleak.“This year’s seedling situation can be said to be the worst in history,” said China’s agriculture minister, Tang Renjian.Rising food prices have long been a catalyst for social and political upheavals in poor African and Arab countries, and many subsidize staples like bread in efforts to avoid such problems. But their economies and budgets — already strained by the pandemic and high energy costs — are now at risk of buckling under the cost of food, economists said.Tunisia struggled to pay for some food imports before the war and now is trying to prevent an economic collapse. Inflation has already set off protests in Morocco and is helping stir renewed unrest and violent crackdowns in Sudan.“A lot of people think that this is just going to mean that their bagels are going to become more expensive.
And that’s absolutely true, but that’s not what this is about,” said Ben Isaacson, a longtime agriculture analyst with Scotiabank.Since the 1970s, North Africa and the Middle East have grappled with repeated uprisings.“What actually led to people going into the streets and protesting?” he said. “It starts from food shortages and from food price inflation.”Countries afflicted by protracted conflict, including Yemen, Syria, South Sudan and Ethiopia, are already facing severe hunger emergencies that experts fear could quickly worsen.
Over the past 120 years, a Beirut bakery has survived civil war, Lebanon’s financial crisis and the Covid-19 pandemic. Fighting in Ukraine, disrupting food and energy supplies world-wide, may soon put it out of business.
Zouhair Khafiyeh’s storefront is empty of the pastries and meat-stuffed pies he has sold for years, which helped put his children through college. The cost of a bag of flour on the black market has gone up more than 1000% since Russia’s Feb. 24 invasion. Mr. Khafiyeh has raised his prices by 50%, he said, and now bakes only when customers order and pay up front.
“We cannot continue like this," said Mr. Khafiyeh, 54 years old. He fears he may have to close his bakery within a month.
Russia’s invasion of Ukraine has spread pain across the developing world. It has spurred the biggest price shock in decades and choked imports of basic commodities, triggering shortages especially tough for poorer nations that were already far behind in their economic recovery from the pandemic.
In Kenya, bread prices recently jumped by 40% in some areas. In Indonesia, the government has imposed price controls on cooking oil. In Brazil, the state-owned energy-giant Petrobras said earlier this month it couldn’t hold off inflationary pressures and raised gasoline prices to distributors by 19%.
In Turkey, a sharp increase in the price of sunflower oil sparked panic buying. People climbed supermarket shelves and clambered over other shoppers to grab what remained. Street protesters in Iraq, angry over rising food prices, called themselves the “revolution of the starving."
Some 50 countries, mostly poorer nations, import 30% or more of their wheat supply from Russia and Ukraine. The two countries combined provide a third of global cereal exports and 52% of the sunflower oil export market, according to the United Nations’ Food and Agriculture Organization.
In Kenya, bread prices recently jumped by 40% in some areas. In Turkey, a sharp increase in the price of sunflower oil sparked panic buying.
“If this conflict continues, the impact will probably be more consequential than the coronavirus crisis," said Indermit Gill, a World Bank vice president, who oversees economic policy. “Lockdowns were a deliberate policy decision, which could be reversed. There are not so many easily reversible policy options with this."
By the end of 2022, economic output in most advanced economies will likely reach their pre-pandemic forecasts, he said. For developing nations, GDP will still be 4% below those forecasts by the end of 2023. With debt levels in developing countries at a 50-year high, price increases driven by the war in Ukraine could scare off investment in emerging markets, Mr. Gill said.
The Russian attack on Ukraine delivered the biggest disruption to global grain markets since a Soviet crop failure in 1973, according to Goldman Sachs, and it has the potential to deliver the biggest disruption to oil markets since the 1990 Iraqi invasion of Kuwait. The bank is forecasting oil to average $130 a barrel for the rest of the year, nearly double the $71 a barrel average in 2021, when global inflation took off.
Russia is the world’s second-largest exporter of crude oil behind Saudi Arabia, making up 12% of global supply, according to the Paris-based International Energy Agency. It is also the world’s largest exporter of natural gas and the biggest producer of fertilizer. Higher fertilizer costs mean farmers will likely use less, reducing harvest yields and pushing up food prices around the globe, but hitting hardest in countries that can least afford it.
‘Too much’
Like elsewhere around the globe, parts of Africa were already struggling with inflation before the war in Ukraine. In 2021, Uganda’s wheat import bill rose to $391 million, up 62% over the previous year.
In the capital city of Kampala, grocery store owner Everest Tagobya struggles to keep his business afloat. In recent months, he paid more for everything from pasta to vegetable oil to wheat. Since the war started, he said, the price of vegetable oil has doubled and a carton of wheat is up by more than 25%.
“I am finding it very hard to replenish stock since prices are going up every day," said Mr. Tagobya, 44, pointing to empty store shelves.
The Middle East and North Africa are particularly dependent on wheat from Ukraine and Russia. Egypt, the world’s largest importer of wheat, gets more than 70% of its wheat supplies from the two countries, as does Lebanon. For Turkey, it is over 80%. An increase in bread prices helped fuel the region’s 2011 Arab Spring uprisings.
In Egypt, the government said the Ukraine crisis would add about $1 billion to the cost of subsidizing bread, and it is seeking new suppliers. The government introduced price controls on unsubsidized bread to halt a sharp increase.
“Rising prices are scaring me," said Sara Ali, 38, a translator in Cairo." It’s affecting our basic commodities, not the luxuries I already cut back on."
Such inflation heightens the likelihood of popular unrest in Egypt, said Timothy Kaldas, an expert on Egyptian political economy with the Tahrir Institute for Middle East Policy, a nonpartisan think tank in Washington. Years of government austerity have already eroded the purchasing power of Egyptians, he said.
Lebanon has only a month of wheat supply, said Amin Salam, the economy minister. The country’s economic crisis has left almost a quarter of households uncertain about having enough to eat. “We are now reaching out to friendly nations to see how we can procure more wheat on good terms," he said.
In 2008, a spike in food prices caused riots in 48 countries. Since then, the burden of feeding needy populations has only grown, weighted by the pandemic and wars in Syria, Yemen, Ethiopia and elsewhere, said Arif Husain, chief economist at the World Food Program, or WFP, an arm of the United Nations.
In Ukraine, shortages of fuel, fertilizer and workers are curtailing the planting of corn and the early summer harvest of wheat, pointing to longer-term food shortages.
Higher costs are putting pressure on the WFP’s ability to feed people in danger of starvation, including more than 3 million in Ukraine. The war has added another $29 million to the program’s monthly food and fuel bills, said Mr. Husain. Since 2019, its food and fuel costs have gone up 44%, to an extra $852 million a year.
WFP said it reduced rations in recent days for refugees and others across East Africa and the Middle East because of rising prices and limited funds.
Somalia, which faces a crippling combination of drought, widespread militant violence and political stalemate, suffered a spike in near-starvation cases before Russia invaded Ukraine. Kismayo General Hospital, in southern Somalia, treated 207 children under the age of 5 in February for severe acute malnutrition with complications, double the number from a year earlier.
“In countries like Somalia that are extremely vulnerable because of the protracted armed conflicts and increasing impact of climate shocks, even a slight fluctuation in food prices could have a dramatic impact," said Alyona Synenko, Africa spokeswoman for the International Committee of the Red Cross. “It’s just going to be too much for the people."
Australian scientists have identified a novel combination of genetics that may help wheat survive in hot and dry conditions, thereby increasing yields and assisting farmers to adapt to climate change-induced heat and drought stress.
Wheat is the third-largest grain crop in the world, supplying about 20 percent of the total calories and protein in the human diet worldwide, notes the research by CSIRO, Australia’s national science agency, published in Nature Climate Change on March 7.
By-products of the milling process, such as wheat bran, are most commonly fed to horses. Wheat bran is the hard outer coating of the kernel, and is 12 percent digestible protein. It is highly palatable and is frequently used to add to increase phosphorus content and bulk to a diet, such as in a mash. Wheat middlings are fine particles of the wheat kernel obtained during the milling process. If wheat middlings are fed to horses, they must be mixed with a bulky feed.
The Australian researchers have identified three novel alternative dwarfing genes that enable wheat seeds to draw moisture stored twice as deep from the soil than current varieties.
Greg Rebetzke, co-author of the study and chief research scientist at CSIRO Agriculture and Food, said this meant that seeds could be sown earlier and deeper, up to 120mm, while keeping the plants short and allowing for very long coleoptile, which is the shoot that grows from the seed to the soil surface.
“A coleoptile is like a drinking straw that can push through dry and hard soil, allowing the germinating wheat leaves to emerge above the ground,” Rebetzke explains.
In many parts of Argentina, Australia, Bangladesh, Canada, China, India, Mexico, Pakistan, and the US as well as in the Middle East and North Africa, wheat crops rely only on rainfall.
“Long coleoptiles in future wheat varieties can help maintain or increase the yield in hotter and drier environments and provide growers assurance that they can sow deep and will reap a harvest,” Rebetzke says. “Even in irrigated fields, as global warming pushes soil temperatures to rise, we will need a long coleoptile for a short germination and emergence of the crop.”
The study estimates that new wheat varieties with longer coleoptiles, coupled with deep sowing, can increase yields by 18 to 20 percent under historical climate (1901–2020), with benefits projected under future global warming.
Zhigan Zhao, lead author and crop modeller at CSIRO, said that crop modelling enabled the team to integrate field data and understanding of physiology and genetics to predict the yield of the novel wheat varieties with long coleoptile across environments. “This has made it possible to put a dollar value on the benefits of the long coleoptile wheat,” he says.
The study estimates that wheat varieties with longer coleoptiles could increase farmers’ profits in Australia by $US1.6 billion annually on average.
Researchers say learnings from this study could be translated to other crops – rice, barley, oats and rapeseed – to improve the resilience and reliability of farming in future climates.
“Breeding companies are investigating the use of novel genes to breed new wheat varieties with longer coleoptiles in Australia and through collaborators in the US and parts of Europe,” Rebetzke says.
Devinder Sharma, a food policy analyst and an agricultural expert based in India, said the availability of soil moisture at the surface, and also at the root zone, would be critical for future food production.
“The temperature rise, we are already seeing, is increasingly leading to dryness of the soil surface. This will only worsen with climate change, thereby posing a serious problem for global food production.
“Developing a new wheat variety, incorporating the novel GAS (gibberellic-acid-sensitive) dwarfing gene, that takes advantage of soil moisture at the sub-surface and enables the plant to germinate when sown at a depth that is twice the normal practice has potential,” Sharma says.
“But whether the new genotypes can perform equally well in different soil types, and with temperature and rainfall variations, is something to be tried out.”
Reporting: Neena Bhandari, from SciDev.Net’s Asia and Pacific desk
https://www.horsetalk.co.nz/2022/03/24/wheat-beats-heat-scientists-drought-resistant-grain/
Two international mining companies have settled their long-running dispute with Pakistan in a deal that officials said will revive work on developing one of the world’s largest gold and copper deposits in the South Asia nation.
Canada-based Barrick Gold Corp. and Chile’s Antofagasta had suspended work on the Reko Diq mine in the impoverished southwestern Balochistan province in 2011 after Pakistan refused to grant them a license to develop the project, leading to a decade long legal battle.
Pakistani Prime Minister Imran Khan’s office said in a statement that under the new agreement signed with Barrick on Sunday, the nearly $11 billion penalty slapped against Pakistan by a World Bank arbitration court would be waived.
Barrick will invest nearly $10 billion in Balochistan and it will create more than 8,000 jobs, noted the statement issued after the signing ceremony in Islamabad. It added that about $1 billion of the investment would go into building roads, schools, hospitals and the creation of technical training institutes for mining in the sparsely populated Pakistani region.
"The new project company shall be owned 50% by Barrick Gold. The remaining 50% shareholding shall be owned by Pakistan, divided equally between (the) federal government and the provincial government of Balochistan," Khan’s office said.
Federal Minister of Energy Hammad Azhar later told a news conference that the landmark $10 billion investment “will represent the single largest investment” in Pakistan.
Khan said in a tweet the Reko Diq project “will potentially be the largest gold & copper mine in the world.” “It will liberate us from crippling debt & usher in a new era of development & prosperity,” he said.
Barrick said in a press release the deal would now grant the company a mining lease, exploration license and surface rights. It noted that the project “hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits.”
“This is a unique opportunity for substantial foreign investment in the Balochistan
province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come,” said Mark Bristow, the president and chief executive officer of the Toronto-based company, who led his delegation at Sunday’s signing ceremony in the Pakistani capital. He added that Reko Diq could be in production within five to six years.
Antofagasta announced separately that it had agreed to exit the project as its growth strategy was now focused on the production of copper and by-products in the Americas.
Barrick and Antofagasta jointly discovered the vast Reko Diq mineral deposits more than a decade ago at the foot of an extinct volcano in Balochistan, saying they had invested $220 million.
The largest, natural resources-rich Pakistani province sits at the country’s borders with Iran and Afghanistan.
In this article, we discuss 10 precious metal stocks to buy according to Ken Fisher. If you want to see more stocks in this selection, click 5 Precious Metals Stocks to Buy According to Ken Fisher.
Ken Fisher, the billionaire chief of Fisher Asset Management, is known for his belief in capitalism. Ken Fisher believes that demand and supply are the only determinants when it comes to pricing stocks. Ken Fisher advises investors to purchase securities for the long-term, and hold a portfolio of companies with solid growth prospects.
In the fourth quarter of 2021, the 13F portfolio of Fisher Asset Management was worth $178.5 billion, with a top ten holdings concentration of 31.58%. Investments are concentrated in the materials, information technology, industrials, healthcare, finance, communications, and energy sectors.
The securities filings for Q4 2021 reveal that the biggest buys of Ken Fisher were Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Microsoft Corporation (NASDAQ:MSFT), while his fund slashed stakes in Walmart Inc. (NYSE:WMT), The Walt Disney Company (NYSE:DIS), and Visa Inc. (NYSE:V).
The most notable stocks in Fisher Asset Management’s Q4 portfolio include Amazon.com, Inc. (NASDAQ:AMZN), PayPal Holdings, Inc. (NASDAQ:PYPL), and NVIDIA Corporation (NASDAQ:NVDA), among others discussed in detail.
Our Methodology
We used the fourth quarter portfolio of Ken Fisher for this analysis, selecting the precious metals stocks to buy according to the billionaire. We have mentioned the hedge fund sentiment around the holdings, as well as the available analyst ratings for the securities.
Precious Metals Stocks to Buy According to Ken Fisher
10. Century Aluminum Company (NASDAQ:CENX)
In addition to Amazon.com, Inc. (NASDAQ:AMZN), PayPal Holdings, Inc. (NASDAQ:PYPL), and NVIDIA Corporation (NASDAQ:NVDA), Century Aluminum Company (NASDAQ:CENX) is a notable holding in Ken Fisher’s Q4 portfolio.
9. Southern Copper Corporation (NYSE:SCCO)
Number of Hedge Fund Holders: 19
8. BHP Group Limited (NYSE:BHP)
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 22
6. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 25
https://www.insidermonkey.com/blog/10-precious-metals-stocks-to-buy-according-to-ken-fisher-1034447/
VANCOUVER, BC, March 22, 2022 /CNW/ - QuestEx Gold & Copper Ltd. (TSX-V: QEX) (OTCQX: QEXGF) ("QuestEx" or the "Company"), is pleased to announce the final round of 2021 drill results from the Inel gold prospect on its 100% owned, 312 square kilometre ("km"), road accessible KSP property in British Columbia's prolific Golden Triangle district.
Joe Mullin, QuestEx CEO comments: "Our 2021 drill program has continued to yield impressive results at the Inel target on the KSP property. These drill results from the final holes of our program combined with the earlier drill results from this and past seasons will contribute to an inaugural resource estimate on the Inel gold prospect later this Spring."
Results from the last 7 of 13 drill holes completed in 2021 at Inel (Figure 1) are infill resource expansion holes targeting higher gold ("Au") grades to the southeast on Inel Ridge, and peripheral expansion drilling to the north near the AK Adit. Final assays are now validated for inclusion within an anticipated inaugural National Instrument ("NI") 43-101 Mineral Resource Estimate that QuestEx expects to announce in Spring 2022. Inel Ridge is one of several domains characterized by locally high-grade gold, silver ("Ag") and zinc ("Zn") within broad intervals of repeating, quartz-carbonate-sulphide vein sets that occur as shear and extension arrays and have the potential to occupy large rock volumes. Drilling in 2021 at Inel Ridge consisted of 5 holes from 3 pads covering 350 metres ("m") along the ridge crest (Figure 2) to test a lower sedimentary sequence in the upright eastern limb of the Inel Basin Synform. Based on the results from 2021 drilling, drill intersections in 2017 and 2018, structural mapping at surface and 3D geological modelling, a significant sediment-hosted mineralized corridor is now recognized beneath Inel Ridge within the larger Inel prospect area that has seen limited drill testing.
Highlights of drilling on Inel Ridge include:
Table 1 Highlights of 2021 Drilling at Inel Ridge, Inel Gold Prospect, KSP Property
| Drill Hole | From | To | Length | Au | Ag | Zn | Cu | AuEq* |
| m | m | m | g/t | g/t | % | % | g/t | |
| INDDH21-160 | 241.00 | 271.50 | 30.50 | 0.81 | 4.7 | 0.050 | 0.093 | 1.06 |
| including | 252.00 | 254.07 | 2.07 | 9.52 | 5.2 | 0.026 | 0.070 | 9.72 |
| INDDH21-161 | 142.00 | 214.00 | 72.00 | 0.45 | 7.0 | 0.528 | 0.047 | 0.94 |
| including | 208.77 | 209.67 | 0.90 | 2.46 | 46.3 | 0.592 | 0.054 | 3.53 |
| INDDH21-162 | 127.00 | 217.00 | 90.00 | 1.92 | 6.1 | 0.116 | 0.039 | 2.14 |
| including | 174.00 | 175.50 | 1.50 | 23.70 | 13.8 | 0.183 | 0.119 | 24.19 |
| INDDH21-163 | 76.65 | 78.40 | 1.75 | 6.26 | 40.5 | 0.041 | 1.197 | 8.81 |
| and | 232.00 | 253.00 | 21.00 | 0.48 | 9.0 | 1.138 | 0.045 | 1.37 |
| including | 239.00 | 242.00 | 3.00 | 2.47 | 34.7 | 2.107 | 0.168 | 4.49 |
Inel Ridge
The ridge crest at Inel currently defines the south-eastern limit of Inel's global resource target area and has been tested historically with wide-spaced (50 to 100 m) drill holes and characterized by local high gold grades within broad intervals of elevated Au, Ag, Zn +/- Cu, lead ("Pb") and arsenic ("As"). Inel Ridge tracks the footwall of the steeply east dipping, north-northeast trending Big Rock Deformation Zone ("BRDZ"), an 8 kilometre ("km") long by up to 100 m wide brittle-ductile shear zone with an inferred dextral offset of approximately 600 m. Mineralization occurs as sulphide-rich quartz-carbonate extensional vein arrays (Figure 4) which, on Inel Ridge, are best developed within altered siliciclastic sediments below a mafic volcanic fragmental unit on the upright eastern limb of the north-northeast plunging, westerly verging Inel Synform. The strike of the BRDZ and the plunge direction of the Inel Synform are near parallel and drilling in 2021 was in a structurally complex area near the confluence of these two structural elements. A late set of gold bearing quartz-sericite-pyrite-chalcopyrite shear veins is recognized.
AK Adit North
Diamond drill hole INDDH21-168 was designed to test the northern limit of the Inel resource area immediately north of the AK Adit. The hole deviated slightly north into an interpreted west-northwest oriented faulted zone of predominantly siltstone cut by numerous monzonite and monzodiorite dykes. A 1.07 m interval of quartz-carbonate-sulphide veining at 191.42 m assayed 4.22 g/t Au, 11.2 g/t Ag and 0.72% Zn with increasing arsenic (As) geochemistry at the bottom of the hole suggesting untested exploration potential at depth.
Based on surface mapping and drilling to date, thrust faults and analogous property scale fold axial planes are sub-parallel to the BRDZ, all of which exhibit spatial association to mineralization and are important conduits for mineralizing fluids. As well, a component of stratigraphic control to mineralization is recognized.
Table 2 Select Highlights of Historical Drill Results at Inel Ridge, Inel Gold Prospect, KSP Property
| Drill Hole | From | To | Length | Au | Ag | Zn | Cu | AuEq* |
| m | m | m | g/t | g/t | % | % | g/t | |
| INDDH18-125 | 171.00 | 221.00 | 50.00 | 2.32 | 6.2 | 0.094 | 0.050 | 2.54 |
| including | 199.00 | 211.00 | 12.00 | 5.71 | 9.6 | 0.098 | 0.121 | 6.10 |
| INDDH17-055 | 102.00 | 175.00 | 73.00 | 1.71 | 5.4 | 0.300 | 0.024 | 2.00 |
| including | 104.25 | 111.00 | 6.75 | 4.61 | 14.0 | 1.476 | 0.045 | 5.77 |
| including | 135.00 | 143.00 | 8.00 | 4.32 | 4.5 | 0.133 | 0.030 | 4.51 |
| and | 190.50 | 219.00 | 28.50 | 5.03 | 13.8 | 0.289 | 0.024 | 5.43 |
| including | 191.85 | 194.50 | 2.65 | 31.59 | 91.3 | 1.275 | 0.018 | 33.62 |
| including | 209.00 | 217.00 | 8.00 | 5.00 | 13.6 | 0.367 | 0.038 | 5.47 |
Exploration Opportunities for Resource Expansion at Inel Ridge
Table 3: Full Table of Significant Results from INDDH21-159, 160, 161, 162, 163, 168 & 169
| Drill Hole | From | To | Length | Au | Ag | Zn | Cu | AuEq* |
| m | m | m | g/t | g/t | % | % | g/t | |
| INDDH21-159 | 108.00 | 110.00 | 2.00 | 1.13 | 1.1 | 1.160 | 0.019 | 1.88 |
| and | 226.30 | 228.20 | 1.90 | 3.67 | 72.9 | 1.344 | 0.088 | 5.61 |
| INDDH21-160 | 131.00 | 133.00 | 2.00 | 2.78 | 3.4 | 0.378 | 0.018 | 3.09 |
| and | 241.00 | 271.50 | 30.50 | 0.81 | 4.7 | 0.050 | 0.093 | 1.06 |
| including | 252.00 | 254.07 | 2.07 | 9.52 | 5.2 | 0.026 | 0.070 | 9.72 |
| INDDH21-161 | 36.00 | 50.00 | 14.00 | 1.05 | 10.1 | 0.721 | 0.072 | 1.74 |
| including | 45.75 | 48.00 | 2.25 | 1.22 | 18.8 | 1.020 | 0.097 | 2.25 |
| and | 142.00 | 214.00 | 72.00 | 0.45 | 7.0 | 0.528 | 0.047 | 0.94 |
| including | 191.00 | 191.83 | 0.83 | 1.53 | 35.9 | 4.810 | 0.255 | 5.36 |
| including | 203.00 | 205.00 | 2.00 | 1.38 | 17.2 | 1.140 | 0.030 | 2.35 |
| including | 208.77 | 209.67 | 0.90 | 2.46 | 46.3 | 0.592 | 0.054 | 3.53 |
| INDDH21-162 | 8.40 | 11.50 | 3.10 | 2.20 | 18.9 | 0.314 | 0.064 | 2.75 |
| and | 127.00 | 217.00 | 90.00 | 1.92 | 6.1 | 0.116 | 0.039 | 2.14 |
| including | 174.00 | 175.50 | 1.50 | 23.70 | 13.8 | 0.183 | 0.119 | 24.19 |
| including | 209.00 | 214.50 | 5.50 | 4.95 | 3.9 | 0.010 | 0.069 | 5.12 |
| INDDH21-163 | 76.65 | 78.40 | 1.75 | 6.26 | 40.5 | 0.041 | 1.197 | 8.81 |
| and | 232.00 | 253.00 | 21.00 | 0.48 | 9.0 | 1.138 | 0.045 | 1.37 |
| including | 239.00 | 242.00 | 3.00 | 2.47 | 34.7 | 2.107 | 0.168 | 4.49 |
| INDDH21-168 | 191.42 | 192.49 | 1.07 | 4.22 | 11.2 | 0.723 | 0.022 | 4.85 |
| INDDH21-169 | NSV | |||||||
A promising gas discovery revived interest in Buru Energy (ASX: BRU) earlier this week – delivering a 30% share-price rise in the latest example of investors returning to the politically incorrect oil and gas sector, in a move which iron ore billionaire Gina Rinehart successfully made late last year.
Though miles apart in terms of size the common thread connecting Buru (a minnow valued at $97 million) and Rinehart (with her personal $40 billion fortune), is strong demand for gas, a fuel which is seen as a halfway house on the road to a renewable energy future.
A growing gas shortage in eastern Australia, accompanied by rising prices, is what drew Rinehart into a partnership with Korea’s steel giant Posco in a joint $900 million takeover of Senex Energy.
That deal was settled at a time oil was selling for US$73 a barrel and showing signs of firming as global demand recovered from a two-year COVID-caused slowdown.
Since then, war in the Ukraine and sanctions on Russia have super-charged oil, which is now selling for around US$114/bbl, down from an early-March peak of US$127/bbl, which was a 14-year high.
There could be even higher prices to come as a global shortage of oil and gas worsens with one leading investment bank, Goldman Sachs, forecasting an oil price of US$175/bbl towards the end of the year and other analysts tipping a peak price of US$200/bbl.
What will happen if the oil price continues surging?
If those prediction of stunningly higher future prices are correct a number of developments can be expected, including:
a revival in oil and gas exploration and project development as mothballed projects are dusted off;
demand destruction as industry and households struggle to pay fuel bills;
a sharp increase in sales of electric cars even as makers struggle to keep pace with demand; and
higher prices for the family of battery metals such as lithium, nickel, copper and cobalt.
In time, as Bruce Apted from State Street Global Advisers pointed out earlier this week, the rally in oil and gas will fade as has always happened in the past with demand destruction butting head-first into increased production.
The challenge for investors is working out how long the current upward price move can last and while impossible to prove it is likely that government discouragement of oil and gas exploration and production could result in higher prices as some producers play catch up, while others direct capital into the long-term potential of renewables such as wind and solar.
Buru’s share-price rise followed the latest testing of its Rafael gas discovery in the desert country south of Derby in Western Australia, a region which the small company has had almost to itself after an exit of oil majors because of poor exploration results.
High quality gas discovery
The latest report from Buru said the gas encountered was high quality (low carbon dioxide), with indications of the gas column being larger than originally mapped.
Whether it is the discovery, which puts Buru on the radar screen of bigger oil and gas companies remains to be seen but it is the sort of find in a highly-regarded onshore location which will be attracting attention despite decades of past failure.
Renewed interest
Other small oil and gas companies are also starting to attract renewed interest, including Vintage Energy (ASX: VEN) which has risen from $0.08 to $0.12 (up 50%) over the past month as it prepares to spud the onshore Cervantes-1 well in the North Perth Basin on-trend from the producing Cliff Head, Jingemia and Hovea oilfields. Vintage also announced first sales from the Vali gasfield in South Australia’s Cooper basin.
Otto Energy (ASX: OEL), which is exploring in the southern US state of Louisiana, Cue Energy (ASX: CUE), Norwest Energy (ASX: NWE), Carnarvon Energy (ASX: CVN) and Central Petroleum (ASX: CTP) are also attracting increased interest as the oil price continues to rise.
Blue Energy (ASX: BLU) shares have risen from 4.2c at the start of the year to currently sit at 7.1c, the company has locked in domestic supply agreements and has a gas resource ready to develop in the Bowen Basin and Surat Basin.
Environmentalist’s nightmare
What’s happening in oil and gas is an environmentalist’s nightmare because it had been hoped that the world could be weaned off its fossil fuel habit in order to try and limit global warming.
War in Ukraine, accompanied by threats to stop buying Russian oil and gas, has upended a plan hatched at last year’s COP26 climate change conference in Glasgow to limit future oil and gas exploration. Even US President Joe Biden has changed his tune – calling for increased oil production.
Oil market
Small oil and gas companies have reacted modestly to changes in the oil market with the biggest winners at the top of the sector, led by Woodside Petroleum (ASX: WPL), which is up 41% to $32.15 since the start of the year, Santos (ASX: STO), which has risen 18% to $7.81, and Beach Energy (ASX: BPT), which is up 23% to $1.61.
The rest of the year could see prices continue to rise strongly, especially if an alarming forecast from the International Energy Agency is correct.
According to the IEA, the Paris-based energy think tank of western countries, the world is heading into the biggest oil and gas supply crisis in decades.
Global supply shock
The agency says what’s happened so far in energy markets is just a warm up for what’s to come, because sanctions on Russia are not yet fully in force, but will bite from next month when Russian supply could drop by as much as 3 million barrels a day – 3% of global production.
“A global oil supply shock is now plausible,” the IEA said, triggering lasting changes to energy markets, including a faster transition away from oil.
The IEA’s proposed plan to mitigate the damage of sky-high oil and gas prices includes a number of radical suggestions, some of which last surfaced in the 1970s oil shocks when Middle East oil producers embargoed exports.
Top of the IEA’s list is a worldwide 10 kilometre an hour reduction in highway speed limits, a three-day work from home regime, car free Sundays in cities, greater use of trains and limits on plane travel by business people.
The problem for energy consumers (and that means everyone) is that they can’t escape daily use of oil in some form, whereas the prize for investors is to ensure that they have exposure to oil as its surges higher, even if it means holding your nose, while trading in a material that does more harm than good.
Welcome back to the 1970s when the oil price jumped 10-fold in two years from US$4/bbl to US$40/bbl – which could be exactly what happens this year if oil hits US$200/bbl – up 10-times on the US$20/bbl at this time two years go.
History might not repeat, but it often rhymes, as Mark Twain famously said.
https://smallcaps.com.au/oil-and-gas-rush-speeds-up-prices-surge/
We have a 3-part episode today for our Friday and weekend. We first welcome Tony Greer of www.tgmacro.com to the podcast. Tony is a seasoned macroeconomic analyst and provides some great commentary on market action he is following in the resources space, including the gold v bitcoin saga, base metals on the rise and why he thinks now is the time to get in before investors are priced out. Paul West-Sells of Western Copper and Gold then joins us to give us an overall update into their Casino project after raising $28M. Is this a signal that Casino is turning a page into becoming a real mine?
Paul answers these questions along with some growing concerns after recent government decisions out of the Yukon Territory. We then welcome Roscan Gold CEO Nana Bompeh Sangmuah to the show for an introduction into the company and its Kandiole Property in Mali. Roscan is indeed exploring in the land of giants where the gold mining industry is concerned. We'd like to thank our Sponsors! Minera Alamos is an advanced stage exploration and development company with multiple low-cap-ex projects in Mexico. Minera Alamos is traded with the symbol MAI on the TSX-V and with MAIFF in the US OTC Markets. Read more about their development strategies at mineraalamos.com. Corvus Gold is an advanced gold-silver exploration and development company focused on the North Bullfrog and Mother Lode Projects in Nevada. T
he company has been named a Top Five TSX gold equity performer Four of the last Seven years & a multi time top 50 OTCQX performer. Corvus Gold trades on the Toronto Stock Exchange and the Nasdaq with the symbol KOR. Follow all the news form Corvus and its two-mine projects with fast-tracked potential via the company's website, corvusgold.com. Western Copper and Gold is focused on developing the world-class Casino project in Canada's Yukon Territory. The Casino project consists of an impressive 10 billion pounds of copper and 18 million ounces of gold in an overall resource. Western Copper and Gold trades on the TSX and the NYSE American with WRN. Be sure to follow the company via their website, www.westerncopperandgold.com. Rio2 is advancing the Fenix Gold Project in Chile, the largest undeveloped gold heap leach project in the Americas. Fenix consists of 5 million ounces in the measured and indicated resource category and 1.4 million ounces in the inferred resource category. With a robust PFS in place, Fenix is set up for fast-tracked construction and production. You can find a robust list of project and company information on their website, rio2.com.
Islamabad – Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) and the governments of Pakistan and Balochistan have reached agreement on a framework that provides for the reconstitution of the Reko Diq project in the country’s Balochistan province. The project, which was suspended in 2011 due to a dispute over the legality of its licensing process, hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits.
The reconstituted project will be held 50% by Barrick and 50% by Pakistan stakeholders, comprising a 10% free-carried, non-contributing share held by the government of Balochistan, an additional 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises. A separate agreement provides for Barrick’s partner Antofagasta PLC to be replaced in the project by the Pakistani parties.
Barrick will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period. The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan. If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce.
Barrick’s president and chief executive officer Mark Bristow hailed the agreement as an important step towards the development and operation of Reko Diq and a tribute to the decisions of all parties to work towards a mutually beneficial outcome in a spirit of partnership.
“Barrick has successfully partnered with host countries worldwide and our philosophy of sharing the economic benefits our mines generate equitably with core stakeholders is also evident in the ownership structure of the new Reko Diq. This is a unique opportunity for substantial foreign investment in the Balochistan province and will bring enormous direct and indirect benefits not only to this region but also to Pakistan for decades to come. In addition to local employment and skills development, local procurement, infrastructure upgrades and improved medical and education systems, Reko Diq could also be the springboard for further exploration and other mineral discoveries along the highly prospective Tethyan Metallogenic Belt,” he said.
On closing, Barrick will start a full update of the project’s 2010 feasibility and 2011 expansion prefeasibility studies, which envisaged a conventional truck-and-shovel open pit operation with comminution and flotation processing facilities producing a high-quality copper-gold concentrate. Bristow said that if all went according to plan, Reko Diq could be in production within five to six years.
The content in the post is the personal views of author and our website bestinau.net gives full credits and rights to the author. Thank you!
As automakers around the world set bold targets for vehicle electrification, many in the industry are looking to nickel – an integral component of most lithium ion batteries – as a major hurdle. While there’s enough nickel in the ground to support a major EV ramp up, there are not enough planned mining projects or processing facilities to make the type of high-grade nickel that’s needed for EV batteries. Meanwhile, the nickel content in battery cells is only increasing, according to Mark Beveridge at Benchmark Mineral Intelligence. That’s because more nickel means energy density. “We’re heading towards, you know, 90 percent of the cathode being nickel for certain specific cell types, “Beveridge said. Russia has a lot of high-grade nickel, and its invasion of Ukraine has sent prices soaring to record highs due to fears of supply disruptionseven causing the London Metal Exchange to suspend nickel trading for a week. Meanwhile, the US is short on domestic nickel resources. The Eagle Mine in Michigan is the nation’s only primary nickel mineand it’s expected to close in 2025. Enter the proposed Tamarack Mine in Minnesota, which is being developed by Talon Metals and mining giant Rio Tinto. Although it’s yet to go through the permitting process, Talon has already secured a supply deal with Tesla to get Tamarack nickel into EV batteries.
Talon Metals employees observe a core sample onsite at the company’s proposed nickel mine in Tamarack, Minnesota Talon Metals
Elsewhere though, the project pipeline for new, high-grade nickel mines has largely dried up, and communities often push back against proposals for new mining projects. The Tamarack mine is no exception. Paula Maccabee, a Minnesota lawyer serving as the Advocacy Director and Counsel for the nonprofit WaterLegacy, has questions. “How much nickel will be getting into our drinking water? Where will that toxic nickel go when an underground mine has gaps and fissures?”
Different types of nickel deposits
Currently, the majority of the world’s nickel is used in the stainless steel industry. Beveridge estimates that batteries make up slightly more than 10% of total demand, though that balance is expected to shift rapidly in the coming decades. “If we go forward 10 to 15 years, we’re actually looking to a future where the battery sector could provide more than 50 percent of the demand for nickel units by that time. “ But not all nickel is high quality enough for use in EV batteries – it needs to be so-called “class one” nickel, with at least 99.8% purity. No nickel is this pure naturally; it all needs to be refined. But the higher the grade of the original nickel deposit, the easier and less energy it takes to process it. The site of the proposed Tamarack mine is a high-grade nickel sulfide deposit. “You know, some of our grades we’ve seen up to 12 percent nickel, which globally is very high. That’s some of the highest grades I’ve ever seen in my career,” said Brian Goldner, Chief Exploration and Operations Officer at Talon. Nickel sulfides are typically found deep within the earth, and are extracted via underground mines. Currently, the US sources most of its nickel sulfides from Canada, Norway, Australia, and Finlandbut there are very few new sulfide mines in the works. Additional nickel could come from laterite, a lower-quality but more prevalent type of nickel ore that’s found near the earth’s surface and extracted via open-pit mining. Indonesia and the Philippines mine the most lateriteswhile Australia and Brazil also have large reserves.
https://lifesly.com/why-elon-musk-and-tesla-are-banking-on-a-minnesota-nickel-mine-bestinau/
While the world remains preoccupied with the geopolitical and humanitarian fallout of the Russian invasion of Ukraine, its economic consequences are increasingly a matter for concern. Although the two countries at war account for barely 2.5 per cent of the world’s population, it emerges that the damage to production within their boundaries and the suspension of their trading relationship with the rest of the world are threatening to create a crisis in multiple markets, not least in the markets for food and oil where shortages abound and prices are rising. This is a typical illustration of the fate of nations entangled in a globalised world economy.
But there is more that the war in Ukraine is showing up. Events in remote corners of the global economic system illustrate how centralised and financialised markets for goods and services have increased the fragility of contemporary capitalism. A telling example is the market for nickel and nickel futures. Nickel is a metal used in the production of stainless steel and has gained in importance because it is a crucial input in batteries that fuel the world’s booming electric vehicle industry. It is not normally the centre of attention in economic discussions. But matters changed on March 8, 2022, when the London Metal Exchange (LME), which describes itself as “the world centre for industrial metals pricing, hedging and trading”, suspended trade in nickel.
Some may say that the move should not be too much cause for concern. But the suspension was a rare and almost unprecedented event in the history of the LME’s nickel market, which provides the reference price for the metal for all those exposed to it along global value chains. The suspension was triggered by extraordinary price trends. In a single day, nickel prices doubled to exceed $100,000 a tonne, and the prices of nickel futures rose by 175 per cent over a two-day period. The trigger for the price explosion was the Ukraine war and sanctions that threatened to shut out Russia—which accounts for around 11 per cent of global nickel output—from world markets. But, as noted earlier, Russia and Ukraine seem to be important in multiple markets, such as wheat, oil and fertilizer. All of them have seen price increases, but none of a kind (as yet) that ended up in a decision to halt trading in the commodity. A lot more must have happened in the nickel market for things to reach such a pass. And indeed, it had.
Tsingshan role in price explosion
It emerges that one player’s extraordinary exposure to nickel, through its agents, was turning what should have been a price spike into a price explosion. That player is China’s Tsingshan Holding Group, the world’s biggest producer of nickel and stainless steel, led by Xiang Guangda, yet another Chinese tycoon with a rags-to-riches story. The group controls large nickel producing capacities in Indonesia that supply the metal to its stainless steel plants or to Chinese producers of electric vehicle batteries.
Xiang, being a metals tycoon, was obviously exposed to the market for metal futures, especially nickel futures. Futures are seen as sensible hedging instruments that help protect those exposed to markets for commodities from suffering losses if prices move in unexpected directions. For example, if production decisions are taken assuming that the price of nickel would rule at $40,000 a tonne, but the price falls to $35,000 a tonne by the time the product reaches the market, the supplier would suffer significant losses.
Also read: Capitalism recycled
So, paying a premium for a futures trade wherein some buyers are willing to commit in advance to pay $40,000 a tonne is a way of insuring against losses. If the price does not fall, you lose only the premium. If it does, you cut your losses and protect profits.
But futures markets are not populated only by hedgers engaged in production but also by speculators who, convinced of their expectations of how markets would move, place bets to reap profits from trading. A typical example of such a bet is a “short”. Traders who are convinced that the prices of a commodity will fall borrow that commodity to sell at today’s high price, with the plan to buy back at a lower price at a later date to return the commodity to the lender and close the deal. The spread between the selling and buying prices, after allowing for costs, delivers a profit. Even if you are not a nickel producer, it is a legitimate and potentially lucrative activity to engage in.
Xiang’s case was, of course, different. His group is a major producer of nickel and steel. That possibly convinced him that he had more knowledge and a better idea than most on how the markets would move. He believed that nickel prices would fall significantly, given the likely trends in demand and supply. That encouraged him to go beyond hedging. He chose to accumulate large short positions, financed with debt, placing bets that would allow him to benefit from that expected fall in price and reap huge profits. Some of those bets were not even in exchange-traded futures but in over-the-counter derivatives partly issued by banks.
But the Russian invasion of Ukraine tripped him up. Prices rose and, caught in a “short squeeze”, he was losing massively on those deals. The estimated losses totalled more than $8 billion in an extremely short span.
Also read: Capitalism, populism & crisis of liberalism
When something of that magnitude happens, brokers and creditors demand more “margin” money to cover those losses. If forced to make those payments, the speculator could face a liquidity crunch, running short of cash to pay up. Xiang would also have to consider buying the commodity—in this case nickel—before prices rose further, in order to deliver the physical metal against futures contracts and cut losses when closing deals. That also requires money. However, it also increases the demand for the physical commodity, both from the short seller and other steel and battery producers using the raw material, resulting in further price increases, since the commodity is in short supply.
That explains the explosion in nickel and nickel futures prices. It did not help that Tsingshan’s own production of nickel was not of the Class 1 type (99.8 per cent purity) needed for delivery against an LME contract. So, the group could not divert its own production to close the deals it had entered into.
LME halts trading
An event like this roils financial markets as well. In this instance, the LME had to halt trading and find ways of closing out a large proportion of the short positions to stabilise markets. However, some money managers were angry that the exchange, realising that some brokers would default on margin calls that the price spike entailed, cancelled around 5,000 trades that had been concluded when the price had risen but before the suspension of trading. This was clearly a decision that penalised those who would have profited from the trade to save the brokers who had entered into those deals voluntarily. Those brokers were members acting on behalf of buyers who wanted the physical commodity for production, while the speculators who gained were largely electronic traders making speculative bets.
The action may have prevented many defaults but it was a violation of market principles. But a spokesperson for the LME reportedly justified the action, stating: “In the interests of systemic stability and market integrity, we suspended the market as soon as we could and cancelled trades from the point at which the LME no longer believed that prices reflected the underlying physical market.” That position is unlikely to go unchallenged.
Also read: For collective fight against capitalism
The banks supporting Tsingshan’s speculation were hit as well. If they closed the group’s positions or insisted on margin calls, Tsingshan and Xiang could default. To prevent that, they had to roll over or extend more credit. Tsingshan reportedly owes billions of dollars to the likes of JPMorgan Chase, Standard Chartered and BNP Paribas, which had to negotiate a deal that allowed the group to postpone repayments and offered it more credit.
China Construction Bank also obliged with new credit lines and the Chinese government has reportedly advised banks to lend a helping hand. But uncertainty still haunts the market and those exposed to it.
These ripple effects of the invasion of Ukraine across the world’s economy and financial system point to how the transformation of capitalism in the last three decades and more has rendered it fragile. A shock can damage the world’s economic and financial system through multiple routes. Not only will the war in Ukraine have catastrophic military and humanitarian consequences if no resolution is found, its effects on inflation and on unexpected segments of a financialised world economy mired in speculation could precipitate another global economic crisis.
Wolfden Resources (TSXV: WLF) has received results from last year's drilling at the Big Silver project in Maine, U.S., where the company holds the mineral rights to a land package of over 800 acres in Washington county, close to the New Brunswick border.
The fall/winter program included a total of eight holes in some 1,750 metres across several different target types. Part of the objective was to determine the potential for expansion of the known mineralization at Big Silver to a depth of 400 metres, well beyond the historical work of 125 to 150 metres.
The drilling was highlighted by hole PB21-02, which returned 173.3 g/t silver-equivalent over 50.1 metres from 67.9 metres, including 220.32 g/t silver-equivalent over 18.9 metres and 278.62 g/t silver-equivalent over 6.4 metres, and including 393.52 g/t silver-equivalent over 6.4 metres.
"We are very encouraged by the grade and size implications of this silver-rich mineralization system and its coincidence with the recently defined soil and geophysics anomalies," Don Dudek, VP of exploration for Wolfden, commented.
"Our goal is to discover and delineate an underground resource of 20 million tonnes or more, which appears achievable with this type of mineralized system. The hydrothermal system appears to be very strong, well-endowed and both structurally and stratigraphy controlled."
The core of the Big Silver project is a 1,500-by-2,000-metre area of historic silver, zinc, lead, copper and gold mineralization, with historic drill intercepts including 530.2 g/t silver-equivalent over 15.2 metres and 14.63 g/t gold and 1.07% copper over 7.0 metres.
The high precious-metal polymetallic mineralization is hosted by sediments, mafic volcanics and hydrothermal breccias. Through drilling, soil sampling, and induced polarization and ground magnetic geophysical surveys, Wolfden has so far defined and expanded the footprint of the mineralized zones, with the new data providing prioritized target areas for future drilling.
Elsewhere in Maine, Wolfden is looking to advance its wholly owned Pickett Mountain project in Penobscot county, considered one of the highest-grade undeveloped polymetallic massive sulphide deposits in North America. In November, the company provided an updated resource for the project, totalling 2.7 million indicated tonnes averaging 8.91% zinc, 3.83% lead, 1.22% copper, 97.2 g/t silver and 0.8 g/t gold (17.72% zinc-equivalent).
Wolfden also has two nickel sulphide deposits in Manitoba, where an expansion drill program recently kicked off at its Rice Island nickel-copper-cobalt project.
More information is available at www.WolfdenResources.com.
SHANGHAI, Mar 21 (SMM) - The most-traded SHFE 2005 aluminium contract showed a v-shaped chart last week, opening at 21,880 yuan/mt on Monday, with the lowest and highest prices at 21,235 yuan/mt and 22,880 yuan/mt respectively before closing at 22,830 yuan/mt on Friday afternoon, up 795 yuan/mt or 3.61% on the week. LME aluminium opened at $3,497/mt last Monday and hit a low of $3,219.5/mt before trading at $3,445.5/mt as of CST 15 on Friday, down $54/mt or 1.5% on the week.
On the macro front, the US Federal Reserve decided to raise the target range of the federal funds rate by 25 basis points at its second interest rate meeting of the year on March 16, which is the first interest rate hike since the start of the interest rate cut cycle in July 2019. As the pace of medium and long-term interest rate hike is hawkish, the US stock market collapsed after the policy meeting while the US dollar index rose rapidly, weighing on base metals. On March 15, the National Bureau of Statistics released the Chinese economic data for January-February 2022, which topped market expectations and pointed to strong supply and demand. The investment picked up significantly, and the domestic demand recovered faster than expected.
From a fundamentals point of view, the operating aluminium capacity in China increased slightly due to production resumption in Yunnan and other regions, but the total output was still lower than in the same period last year. The COVID-19 in China spread on a wide scale and fast speed, causing disruptions to the domestic transportation. The pandemic has not yet triggered output reduction or suspension at the domestic aluminium smelters, but severely hindered the transportation of upstream and downstream enterprises, reducing arrivals across the consumption hubs. Aluminium consumption in the major markets remained stable, and the operating rates of aluminium extrusion, plate/sheet, strip and foil sectors continued to recover. However, the pandemic-induced logistics issues could potentially hurt the consumption. The sharp decline in aluminium prices attracted downstream buyers in the first half of the week, allowing the domestic aluminium ingot social inventory to enter the destocking cycle.
From a technical point of view, the most-traded SHFE aluminium contract may experience a slight correction before climbing again this week. The weekly CRB commodity index rebounded last week. The 5-day moving average of the SMMI climbed above the 10-day moving average last Monday, which is seen as a bullish sign for the SMMI this week. The bearish sentiment triggered by the US Fed’s interest rate hike has been digested by more than half, and the aluminium ingot social inventory in China fell rapidly, which may lift the spot aluminium prices this week, However, there is a high probability of a downward correction for the most-traded SHFE aluminium contract following three or five consecutive days of gains. The random forest & time series model predicts that the price range of the most-traded SHFE aluminium contract will be [21720, 22950] this week, and the extreme price range will be [21405, 23655]. The LSTM & time series model predicts that the range of SMM A00 aluminium average price will be [21780, 23300] this week, and the extreme range will be [21440, 23360].
The futures technical indicators suggest that the most-traded SHFE aluminium contract may fluctuate at highs this week. Based on the 4-hour K-line, SMM observed a total of 40 technical indicators, of which 16 were neutral, 18 were bullish, and 6 were bearish. Overall, the most-traded SHFE aluminium contract is likely build upward momentum this week. The MACD, DDI and DMA completed the golden cross last week; the LON long-term indicator also broke through the LONGMA.
As the US Fed's interest rate hike is in line with market expectations, market risk appetite is expected to pick up. So far, the outbreak of the pandemic has had limited impact on the production of producers in the domestic aluminium industry chain. The domestic aluminium ingot social inventory may continue to decline as slower transportation due to the pandemic will affect arrivals. Low aluminium inventories in China and overseas will support aluminium prices at highs in the short term. The most-traded SHFE aluminium contract and LME aluminium are likely to move between 21,800-23,500 yuan/mt and $3,350-3,600/mt respectively this week.
LONDON (BLOOMBERG) - Australia’s move to ban alumina exports to Russia has pushed up prices of the so-called everywhere metal.
Aluminium jumped as much as 4.8 per cent on the London Metal Exchange (LME) early on Monday (March 21) as Rio Tinto Group, operator of the Queensland Alumina joint venture with Russia’s aluminium giant United Co Rusal International, said it would comply with all of Canberra’s directions.
Australia supplies nearly 20 per cent of Russia’s alumina and its exports of aluminium ores, including bauxite, to Russia were prohibited on Sunday.
Supplies of the metal - used in everything from cans to airplane parts and window frames - were running low even before war in Europe threw global commodity markets into turmoil. This latest development threatens to add even more inflationary pressure to the global economy.
Australian Prime Minister Scott Morrison said that a ship due to dock this week to collect a load of alumina - the key ingredient used in making aluminium - bound for Russia would not deliver its cargo as he announced the ban on Sunday.
Russia is a key supplier of aluminium to markets including Turkey, China and Japan. The metal rose 4.4 per cent to US$3,529 a ton on the LME as at 10.43am in Singapore and is up around 26 per cent this year.
Rio reiterated that it was in the process of terminating its commercial relationships with Russian businesses following the country's invasion of Ukraine. Rusal holds a 20 per cent stake in the Queensland JV.
Rusal said in a statement that it was evaluating the impact of the ban. Rio plans to stop supplying bauxite to, and buying alumina from, Rusal's Aughinish plant in Ireland, sources familiar with the matter said earlier this month. The company's shares dropped as much as 8.9 per cent in Hong Kong on Monday following Australia's announcement.
While aluminium has not been targeted by global sanctions, Rusal - which needs bauxite and alumina to feed its plants - is facing disruption to its supply chains as companies pull back from doing business with Russia. The company has also slashed output from its Nikolaev alumina refinery in Ukraine due to logistical and transport challenges arising from the war.
Australia said the ban would apply to "all relevant shipments" to Russia, although it is unclear whether Rusal will be able sell alumina from its Queensland mine onto the market, and then buy the feedstock from alternative suppliers. If the Russian company is not able to do this, then prices will likely see more upward pressure.
"The spirit of the sanctions announced would probably suggest that Rusal won't be allowed to profit financially from alumina sales at all, but this is unclear in the current wording," Mr Gavin Wendt, senior resources analyst at consultancy Mine Life, said by e-mail.
BEIJING/HONG KONG : Aluminum Corp of China Ltd, known as Chalco, said on Tuesday its net income surged 564.6per cent in 2021 to log its best performance in 14 years, thanks to rising alumina and aluminium prices and higher production.
Average global alumina prices rose 22per cent last year, Chalco said, while Shanghai aluminium futures jumped more than 30per cent and LME three-month aluminium was up 42per cent.
That helped the Chinese aluminium giant earn net profit of 5.08 billion yuan (US$798.65 million) last year, it said in a filing to the Shanghai Stock Exchange, the highest since 2007, while revenue rose 45per cent year-on-year to 269.7 billion yuan.
The world's top producer of aluminium raw material alumina said its output of the feedstock rose 11.7per cent year-on-year in 2021 to 16.23 million tonnes.
Its aluminium production rose 4.6per cent to 3.86 million tonnes, gaining for the first time in three years.
That sent aluminium output at parent company Chinalco - which also controls Yunnan Aluminium - to around 6.16 million tonnes from 6.1 million tonnes in 2020.
China's nonferrous industry had weathered headwinds from the country's efforts to cut carbon emissions, with aluminium makers suffering a power crunch and forced to cut production.
Yunnan Aluminium said on Monday that the power restrictions had led the company to fail to meet its annual aluminium production targets, with output declining 4.4per cent to 2.3 million tonnes.
Chalco logged a net loss of 227.9 million yuan in the fourth quarter of 2021, compared with net income of 2.2 billion yuan in the third quarter.
The company said it had managed to ensure supply and adjust production to minimize impact from the power curbs and from the COVID-19 pandemic.
A jump in alumina prices since the second half of 2021, as well as higher aluminium prices due to global tight supply, had shored up the company's performance, it said.
In a separate filing on the Shanghai bourse, Chalco said it aims to issue debt financing tools worth up to 50 billion yuan in 2022, and to invest two billion yuan to set up an electrode material unit.
(US$1 = 6.3607 Chinese yuan renminbi)
(Reporting by Min Zhang in Beijing and Twinnie Siu in Hong Kong; Editing by Jan Harvey)
The price of aluminium soars, but it might not be time for investors to buy commodities.
Aluminium has become the latest commodity to gain a bump following the conflict in Ukraine. This comes after the Australian government put further sanctions on Russia refusing to export alumina and bauxites.
The 2 core components in aluminium are vital for production.
But Prime Minister Scott Morrison says a ship that arrived to collect Australian alumina has been sent back to Russia empty, citing fears its alumina could become part of weapons being used in the conflict in Ukraine.
"Late last week, it came to our attention that there was a ship that was due to dock in Australia this week to collect a load of alumina bound for Russia," the Prime Minister said on Sunday.
"That boat is not going to Russia with our alumina."
What does the PM's announcement mean for the market
Following on from the Prime Minster's stance, the price of iron ore has also reacted strongly overnight.
Australia is nearly 20% of Russia's supply of aluminium.
And Russia, like every other country, needs it as part of its modern-day economy.
With its use cases ranging from cans to planes, EVs and everything in between, cutting Russia's supply will have an impact on the country.
But the flow-on impacts continue across the world.
Russia, which supplies 6% of global aluminium, is facing massive sanctions. However, countries including Turkey, China and Japan still need the precious metal from Russia.
Adding to the pressure on aluminium's price is a separate announcement by the International Aluminium Institute (IAI), which is reporting that the global output of primary aluminium was 5.114 million tons in February, down about 2% year over year.
Combining these supply chain implications, 3-month aluminium on the London Metal Exchange (LME) climbed over 4% to $3,507 a tonne after hitting a peak since 10 March.
Good news for mining stocks
Unsurprisingly, those who buy mining and commodity shares saw the rising aluminium prices as a sign to buy.
Demand for the metal continues to soar, including from electric vehicles and solar manufacturers, while supply chain crunches continue, with investors seeing it as a time to buy.
Australia's largest 2 miners, Rio Tinto and BHP, were up 3.5% and 4.6% at the time of writing. While in the US, Century Aluminum and Alcoa both saw double-digit gains.
Impact for economies
As it currently stands, economies all over the world are looking to increase their supply of raw materials.
However, demand and supply are not matching.
As such, AMP Capital's chief economist Dr Shane Oliver said that Australia will see another mining boom.
"The Ukraine conflict, thanks to the disruption and threats to the supply of energy, industrial and agricultural commodities and increased demand for metal intensive defence goods, is providing a further boost to commodity prices and adds to the case that we have entered a new commodity super cycle," Dr Oliver said.
Freeport-McMoRan Inc (NYSE: FCX) shares have risen 3.57%, or $1.715 per share, as on 11:57:13 est today. Opening the day at $48.48, 6,090,268 shares of Freeport-McMoRan have exchanged hands and the stock has traded between $49.80 and $48.35.
Already the company has moved YTD 15.41%.
Freeport-McMoRan expects its next earnings on 2022-04-21.
About Freeport-McMoRan Inc
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX is one of the world's largest publicly traded copper producers. FCX's portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; and significant mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. By supplying responsibly produced copper, FCX is proud to be a positive contributor to the world well beyond its operational boundaries. Additional information about FCX is available on FCX's website at 'fcx.com.'
To get more information on Freeport-McMoRan Inc and to follow the company's latest updates, you can visit the company's profile page here: Freeport-McMoRan Inc's Profile. For more news on the financial markets be sure to visit Equities News. Also, don't forget to sign-up for the Daily Fix to receive the best stories to your inbox 5 days a week.
https://www.equities.com/news/midday-report-freeport-mcmoran-fcx-trades-higher-march-21
World refined copper output in December was 2.11 million tonnes, while consumption was 2.2 million tonnes. Production amounted to 24.5 million tonnes and 25.33 million tonnes of consumption for the year.
The ICSG said mine production grew by around 2.3% in 2021 but noted this compared to a low 2020 basis when rolling global lockdowns severely impacted the copper mining industry to stem the spread of covid-19. The average annual growth over 2019-2020 was only 0.3%.
Because of the lockdowns, production in Chile, the world’s largest copper mine producing country, was down by 1.9% in 2021, with concentrate production falling by 1.3% and SX-EW output declining by 3.6%, mainly at the Escondida mine. Chilean 2021 total production was 2.8% below that of 2019.
Output in Peru, the world’s second-largest copper producing country, increased by about 7% primarily since the Peruvian mining industry was one of the most severely impacted by a covid-19 related lockdown in 2020. Despite the recovery, 2021 production remained 6.5% below that of 2019.
Indonesian output increased by about 49% because of the continued ramp-up of underground production at the Grasberg mine. Substantial increases were also seen in the Democratic Republic of Congo (+12%), Panama (+61%) and China (+10%) due to additional output from new and expanded operations or improved operational levels.
The ICSG also commented that the Russian copper industry is mainly centred on three companies, Norilsk, UMMC and the Russian Copper Company. Russian copper mine output has increased by around 28% over the last five years, mainly due to the start-up of two new mines, and reached about 875,000 tonnes of copper in 2021, accounting for about 4% of the total world copper mine production.
According to the ICSG, there are currently no copper mines operating in Ukraine, and refined production and usage are estimated at 20,000 tonnes of metal per year.
This week, the London Metal Exchange said it had no immediate plans to ban Russian metals, including copper, from trading on its platform, despite calls from some members to do so.
A ban on Russian metal could lead to shortages and further price surges at a time of rising inflation worldwide.
The global copper market is already tight, with exchange stocks close to a 16-year low. Prices touched a record high of $10,845 a tonne last week and traded at $10,320 on March 18. The red metal last traded at $10,173 per tonne on March 22.
https://www.mining.com/copper-deficit-narrows-slightly-to-475000t-in-2021/
“The ban on Australian sales of alumina to Russia could see production of aluminum suffer,” ANZ said in a note. “Australian imports make up 20% of Russia’s total alumina imports. The threat of disruption across the rest of the base metals is also rising.”
The benchmark London Metal Exchange (LME) aluminum climbed 0.5% to $3,522.50 a tonne by 0246 GMT. Shanghai aluminum gained 0.1% to 23,050 yuan ($3,619.77) a tonne.
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SINGAPORE — London aluminum prices rose on Wednesday, recouping the previous session’s losses, as risks of supply shortages amid the heightened Russia-Ukraine conflict underpinned the market.
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AUSTRALIAN BAN: Aluminium prices found support after Australia banned the export to Russia of materials used to make the metal. Russia accounts for about 6% of global aluminum supply.
RUSSIA-UKRAINE WAR: Talks between Ukraine and Russia are confrontational but moving forward, President Volodymyr Zelenskiy said, as the West plans to announce more sanctions against the Kremlin amid a worsening humanitarian crisis.
PRODUCTION CUTS: Germany-based TRIMET became the latest smelter to cut aluminum output in Europe because of higher energy prices, which have spiked since Russia invaded Ukraine.
RECORD PRICES: Supply uncertainty had pushed aluminum to a record high of $4,073.50 on March 7.
PREMIUM: One global aluminum producer has offered Japanese buyers premiums of $195 per tonne for April-June primary metal shipments, up 10% from the current quarter, two sources directly involved in quarterly pricing talks said on Tuesday.
PROFITS: Aluminum Corp of China Ltd, known as Chalco, said on Tuesday its net income surged 564.6% in 2021 to log its best performance in 14 years, due to rising alumina and aluminum prices and higher production.
RUSSIAN METALS: The LME has no current plans to ban from its system metal from Russian producers, such as nickel and copper from Norilsk Nickel or aluminum from Rusal, it said on Tuesday, despite calls from some members to do so.
NICKEL SURPLUS: The global nickel market registered a surplus of 6,000 tonnes in January after a deficit last year, the International Nickel Study Group said.
COPPER: The LME copper rose 0.1% to $10,281.50 a tonne and Shanghai copper was little changed at 73,150 yuan a tonne.
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PRICES
Three month LME copper
Most active ShFE copper
Three month LME aluminum
Most active ShFE aluminum
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
ARBS ($1 = 6.3678 yuan) (Reporting by Naveen Thukral; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)
https://leaderpost.com/pmn/business-pmn/london-aluminum-prices-rebound-on-russian-supply-concerns
The London copper market was briefly shaken by the margin meltdown that triggered the March 8 suspension of the LME nickel market with a short-lived spike up to a new all-time high of $10,845 per tonne.
But since then LME three-month copper has done little more than tread water, last trading at $10,340 per tonne.
This is in part because the London copper contract was already subdued after its own bout of unruliness in October last year, when the LME intervened to limit acute time-spread tightness.
It is also because copper seems much less exposed to a disruption of Russian supply than other industrial metals such as nickel which has been rocked to the point of breakdown by Russia’s invasion of Ukraine.
But is it? Or is Doctor Copper in for an unwelcome surprise?
Sanguine about supply?
Russia is a big copper producer with refined production of around one million tonnes per year, representing about 4% of global production.
It is also a big exporter of both unwrought metal and copper wire but doesn’t have the same commanding position in Western supply chains as, say, in palladium, where Norilsk Nickel alone accounts for 45% of global production.
Moreover, much of what is exported ends up in China, which absorbs around 400,000 tonnes per year of Russian copper.
The assumption is that the rest of the world can live without Russian copper and that China will simply soak up what is displaced from Western markets.
It’s probably one reason why the LME’s Copper Committee, representing a broad spectrum of consumers, producers and merchants, felt able to vote for a ban on new deliveries of Russian copper to the exchange.
However, the LME executive has made it clear that it’s not in the business of pre-empting governments on imposing sanctions and has no plans to ban unilaterally any Russian metal.
Maybe it’s just as well, since not everyone is so sanguine about the consequences of what the Russian government terms its “special operation” in Ukraine.
Goldman Sachs argues that copper is “mispricing Russian supply risk”, the super-cycle bull keeping its elevated target of $12,000 per tonne over a 12-month time-frame. (“Copper Convergence Rally Begins”, March 3, 2022)
Russian exports – mind the gap
Russian copper export flows are more nuanced than they appear at first sight and last year’s figures are a poor starting point for analysis.
The country’s exports of unwrought refined copper totalled 463,000 tonnes in 2021, the lowest annual outflow since 2014, according to the International Trade Commission (ITC).
That reflected significantly lower output at Norilsk Nickel due to mine flooding and trade disruption resulting from a temporary 15% export tax between August and December.
It’s worth noting that January’s exports were a whopping 117,000 tonnes, compared with 35,500 tonnes in January 2021, which attests to the bulge effect in outbound flows around the tax hit.
Exports averaged around 700,000 tonnes in the 2018-2020 period, supplemented by 150,000 tonnes of copper wire, which is a better historical yardstick than last year’s low-ball count.
However, last year’s trade figures highlight a significant kink in the flow of Russian copper to China.
Russia counted 155,000 tonnes going out to China but China counted 403,000 tonnes of Russian metal coming in.
There was a similar gap in the 2020 trade figures, Russia exporting 276,000 tonnes to China and China importing 420,000 tonnes of Russian copper.
It’s clear that a significant amount of Russian copper being shipped to the Netherlands – the second largest destination after China – is being churned through either physical or LME trading systems before heading on a boat to Shanghai.
Although there is a direct rail link between Russia and China, currently used to transport copper concentrates, it has little spare capacity for refined metal, according to Goldman Sachs.
The majority of the country’s refined copper exports to China flow through the Black Sea or via European ports such as Rotterdam.
Both shipping routes are becoming increasingly problematic as self-sanctioning by logistics companies disrupts Russia’s sea-borne trade.
“Until the shipping constraints subside, these copper units are likely to be dislocated from the market,” according to Goldman, which adds that “this implies up to a 50-60kt per month reduction of copper supply to the ex-Russia refined market.”
Thin buffer
It’s questionable to what extent the global refined copper supply chain can handle that scale of disruption right now.
Global exchange stocks are low. There are currently 276,000 tonnes of copper sitting in LME, Shanghai Futures Exchange and CME warehouses.
Total inventory has risen by 85,800 tonnes so far this year but that’s down to the seasonal stock build in China around the lunar new year holidays. Compared with this time last year exchange inventory cover is down by 121,000 tonnes.
LME stocks have fallen by almost 9,000 tonnes since the start of the year and at 79,975 tonnes are equivalent to just over a day’s global usage.
Time-spreads are relaxed but that may have as much to do with the LME’s backwardation caps across all its main contracts as it has with copper’s own dynamics.
By any historical gauge LME inventory is close to depleted and highly vulnerable to any renewed panic buying such as seen in the run-up to last October’s squeeze.
Russian copper isn’t yet sanctioned and it won’t be banned by the LME, for now at least. And even if it were, there’s no doubt that it would find a ready home in China.
Eventually.
But getting it to China means transhipping it through Europe and that’s getting harder by the day.
A readjustment of Russian copper trade flows may not be nearly as smooth as Doctor Copper seems to be expecting.
https://www.mining.com/web/copper-may-be-too-relaxed-about-russian-supply-threat/
Shares of Hindalco Industries Limited are now quoting at ₹ 625.50 apiece as the share price increased by 2.5%. The stock has been up for the sixth straight session today. Hindalco Industries is a constituent of Nifty Metal which is up 1.71% at 6,509.30 points.
This stock has given multi-bagger returns of 581%, as it soared from ₹ 91.55 per share in March 2020 to the current market price. If an investor would have invested ₹1,00,000 in March 2020, the value of their investment would have been ₹6,81,000 today!
Until 17th March, aluminium prices on the London Metal Exchange increased. The Russia Ukraine conflict caused a surge in energy prices, which in turn increased the cost of production of aluminium, which is an energy-intensive metal. Further, the sanctions on Russia which is the second-largest exporter of metal is a reason to worry as it could affect the global supply chain, as per a JM Financial report.
Aluminium is used widely in various industries and rising oil prices could increase the cost. Indian producers of the metal, like Hindalco, are better placed in this scenario as it uses coal for production. 60% of Hindalco’s coal requirement is being sourced through Coal India Limited’s linkages or captive mines.
As per the report by JM Financial, “The outlook for Hindalco remains buoyant given
Novelis Inc. (Hindalco’s overseas subsidiary) – strong LME-scrap spreads continue
India aluminium continues to benefit from high realizations
enhanced coal security post addition of Meenakshi and Chakla coal mines and
strong free cash flow generation and focus on de-leveraging (short-term working capital requirements to increase) to contain net debt/EBITDA.”
Targets
Hindalco has remained a preferred stock in the aluminium space. Bank of America Securities has raised the target price of the company to ₹715 per share on 22nd March 2022.
Financials
Hindalco Industries Limited is a large-cap company that operates in the metals: non-ferrous sector. Its key revenue segments include Copper, copper products, aluminium and other operating revenue for FY21.
In the recent quarter, it reported a 43% increase in its consolidated total income from ₹ 35281.00 crores in Q3FY21 to ₹ 50453.00 Crores in Q3FY22. It reported a profit after tax of ₹3672.00 Crores in the December quarter this year.
As of 31 December 2021 the promoters hold a 34.64% stake in the company, DIIs own 21.16% and FIIs hold a 25.99% stake in the company.
LONDON, March 23 (Reuters) - Nickel prices jumped 15% to their upper limit and zinc and other industrial metals also climbed on Wednesday as disruptions from the Russia-Ukraine conflict and higher energy prices stoked concerns of shortages.
Metals prices extended gains after Russia said it would seek payment in roubles for gas sales from unfriendly countries, sending European gas prices soaring and fuelling worries about more smelter closures.
Benchmark nickel on the London Metal Exchange spiked by nearly $3,000 in the span of about 20 minutes and held the 15% gain at $32,380 a tonne by the time closing prices were set.
The LME has decided, however, that no official or formal closing price would be recorded for nickel when it hits its price limit.
"The nickel market is still very much trying to find its feet," Geordie Wilkes, head of research at broker Sucden Financial, said.
"You'd expect more volatility in the near term with low liquidity, low inventories, higher margins and uncertainty over the Ukraine conflict making this a very tricky trading environment."
Overall LME volumes were lower than usual as many investors stayed on the sidelines, traders said.
But nickel volumes of over 3,500 lots were largely in line with other major metals, suggesting the market was starting to return to normal after two weeks of chaos.
The world's top nickel trading venue endured a record price surge on March 8, a six-day trading suspension, and then a restart hit by technical glitches after it launched price limits for the first time.
In other metals, zinc surged 5.8% by 1710 GMT to a two-week high of $4,112.50 a tonne amid worries about further suspensions of smelters in Europe due to high power prices. Oil prices jumped 5% to above $121 a barrel as weather-related disruption to Russian and Kazakh crude exports via the Caspian Pipeline Consortium (CPC) pipeline added to worries over tight global supplies.
* Zambia's Mopani Copper Mines on Wednesday reported a second fatal accident in three days at the mine. Activity at the operation has been disrupted as a result.
* Germany-based TRIMET became the latest smelter to cut aluminium output in Europe because of higher energy prices.
* LME aluminium gained 4.4% to $3,660 a tonne, copper rose 1.6% to $10,428, lead advanced 4.4% to $2,375 and tin added 2.5% to $42,425.
* For the top stories in metals and other news, click or
($1 = 6.3714 yuan) (Reporting by Eric Onstad; editing by Barbara Lewis and Kirsten Donovan)
China has started exporting slab to Europe, Kallanish notes.
Like other Asian mills, Chinese suppliers are rushing to export to this market because it is lucrative. "Now everybody who can sell slab to Europe will just sell it," a Jakarta-based trader says.
Last week, a Chinese mill is heard to have sold a 40,000-tonne parcel of coil-making slab to Europe at $855/tonne fob China, and another two Chinese mills also concluded three 40,000t cargoes each at $860/t fob, regional trading sources report. The May-shipment cargoes were sold to Italy, they add. A Chinese trader estimates that freight is $140/t. A regional trader hears that the final price was $1,030/t cfr Italy.
The slab export prices achieved in Europe are merging with hot rolled coil, Chinese traders say. These Chinese mills’ re-rolling HRC prices are prevailing at $870-900/t fob China, depending on mill. A Hong Kong trader says the concluded slab prices are possible in Europe. "There is a kind of panic in Europe since the EU announced sanctions against Russian steel," he adds.
A Taipei trader says the recent slab offers to Taiwan have dried up. “It seems all sources of slab are heading to the EU as a priority market,” he comments. This is simply because regional slab import prices are lagging behind.
A Chinese trader says he only received bids at $860/t cfr last week when he offered at $900/t cfr Indonesia and Taiwan. A Malaysian mill is also offering slab at $900/t cfr Indonesia. Current export offers for Chinese slab are now at $865-870/t fob China, the Chinese trader observes.
Previously, an Indonesian mill is heard to have sold re-rolling slab at $1,050/t cfr Italy on 11 March (see Kallanish passim).
Anna Low Singapore
The UK has struck a deal with the US to remove tariffs on British steel exports, although trade experts warned a broader trade deal between the two countries remains far off.
The agreement was struck after UK’s international trade minister, Anne-Marie Trevelyan, met her counterpart, the US commerce secretary, Gina Raimondo, on Tuesday evening in Washington.
The deal ended months of tensions that have stood in the way of a broader bilateral trade agreement, but US trade representative Katherine Tai also dealt a blow to the hopes of the UK government, which wants to secure a broad free trade agreement (FTA) as a sign of success in its Brexit policy.
Speaking after meeting Trevelyan separately in Baltimore, Maryland, Tai described FTAs as “a very 20th-century” tool and it might not be worth “blood sweat and tears” to agree. “I just want to say we are finding in trade that one size does not fit all,” Tai said, according to Politico.
Experts said the US was unlikely to start trade negotiations until at least November after midterm elections, and it would use talks to forcefully assert foreign policy priorities.
The US-UK steel deal included a provision requiring Chinese-controlled companies in the UK to be audited annually to ensure they were not breaching restrictions on Chinese steel exports. In practice, the main target of the provision will be British Steel, owned by China’s Jingye.
David Henig, the UK director of the European Centre for International Political Economy, a thinktank, said the China provision suggested UK negotiators would face a tricky balancing act if broader talks were opened.
“The UK government is keen to sign up to things, but it could be quite dangerous things they sign up to,” he said. “[The US is] going to drive a very hard bargain on things like China.”
In a joint statement, Raimondo and Tai said the deal would allow the allies to focus on what they described as “China’s unfair trade practices”.
“It points to the direction of travel we’re heading in,” said Sam Lowe, the director of trade at Flint Global, a consultancy. “I suspect we’re going to see more of this type of thing to ensure countries play by the rules – or the rules as the US sees them.”
Nevertheless, the steel deal does remove a recurrent sticking point between the two countries. British steel and aluminium companies that export to the US have faced tariffs of 25% and 10% respectively on their goods since 2018, when they were brought in by the then president Donald Trump. The UK retaliated with equivalent levies on prominent American products such as Levi’s jeans, bourbon whiskey and Harley Davidson motorbikes.
The US section 232 tariffs were introduced under “national security” concerns and were part of Trump’s broader efforts to put pressure on trading partners.
The UK steel industry reacted with alarm when the US agreed a deal with the EU to remove the Trump-era tariffs on European steel at the end of 2021, leaving British businesses at a disadvantage for months.
The pact will also end Britain’s retaliatory tariffs on American goods, including Harley-Davidson motorcycles, bourbon whiskey, Levi Strauss blue jeans, and cigarettes.
Alasdair McDiarmid, operations director for the steelworkers’ union Community, welcomed the agreement, adding: “To protect jobs our steelmakers must compete on a level playing field, and it is vital the UK does not suffer a further competitive disadvantage with EU producers.
“The EU secured their deal with the US back in October, so a UK-US deal is well overdue, and it must be implemented without delay to prevent further damage to our industry.”
Global crude steel production dropped by 5.7 per cent in February compared with the same period a year ago, while it was lower by eight per cent month-on-month, data from World Steel Association (worldsteel) showed.
According to worldsteel February statistics, steel production from the 64 countries reporting to it was 142.7 million tonnes (mt) compared with 150.2 mt in February 2021 and 155 mt in January this year.
Yet again, China dragged the global output. China’s steel production in February was estimated at 75 mt compared with 83 mt a year ago and 81.7 mt a month ago. This is the eighth consecutive month that crude steel production in China has dropped. Crude steel production in February was lower than the output during December and January.
One reason for the decline in production could be the week-long holidays for the new Chinese lunar year. But there could be other reasons such as curbs due to the flareup of the Omicron variant of Covid-19.
This month, too, steel production could be affected as the Communist nation continued to announce curbs to control the spread of the pandemic, the worst in two years as the virus cases doubled. The Chinese steel output is also 10 per cent lower in the first two months of this year at 158 mt.
India’s rise continues
India’s steel production has been pegged at 10.1 mt, up 7.6 per cent a year ago. But the output was lower than 10.8 mt in January and 10.4 mt in December. For the first two months, the Indian steel production increased 6.6 per cent compared with the year-ago period to 20.9 mt.
Japan was the third-highest producer in February with its output estimated at 7.3 mt, though it is 2.3 per cent lower than the year-ago period. Compared with January too, the production is lower by 0.5 mt. During January-February, its production at 15.1 mt is 2.2 per cent lower than the year-ago period.
Steel production in the US increased by 1.4 mt to 6.4 mt in February, but it was lower than January’s 7.4 mt. January-February output has been estimated 0.6 per cent higher at 13.4 mt.
Russia’s output slips
Russia’s conflict with Ukraine has probably affected Moscow’s production, which is estimated to have dropped by 1.4 per cent to 5.8 mt. In January, its production was 6.6 mt and for the first two months, its output is up by one per cent at 12.4 mt.
South Korea’s production slipped by six per cent to 5.3 mt to compound its one per cent dip in January. For the year so far, it produced 11.2 mt, a 2.6 per cent drop.
Germany’s production picked up by 3.8 per cent in February compared with February 2021 at 3.2 mt. It was a turnaround from the 1.4 per cent decline in January. Overall output for January-February has been pegged at 6.5 mt, up 1.1 per cent.
Of the other producers, production in Turkey and Brazil continued to decline, while Iran’s output increased. The World Steel Association data is collected from 64 countries which make up 85 per cent of the total global output.
Almost every long-term investor has significant exposure to cyclical sectors and cyclical companies. Business cycles come and go, and with inflation running over six percent in many G-8 countries after the recent Russian invasion of Ukraine, most investors want exposure to both growth and inflation.
Most of the commodity sector boomed in 2021, and few companies benefited more from that upcycle than Rio Tinto (NYSE:RIO).
Rio Tinto sells aluminum, copper, iron ore, and other minerals. The company's specific commodity exposure is 71.6% iron ore, 11.4% aluminum, 10.3% copper, and 6.75% in other minerals.
2021 was a great year for Rio Tinto for several reasons. First, China spent massively and real estate, construction, and infrastructure projects, and the Chinese steel market boomed early in 2021, which was the main reason iron ore price was very high for most of 2021. About 98% iron ore is used for steel production. Copper prices also hit all-time highs in 2021, before falling significantly in the back half of the year as Chinese steel demand plummeted. China also makes up nearly 50% of global demand for copper.
China's steel production numbers fell significantly in the back half of 2021.
Mysteel Global
Iron ore prices fell significantly in the back half of 2021 as well, although prices have rebounded recently for a couple of different reasons.
Business Insider Australia
Iron Ore prices have also been very volatile, this mineral has been particularly volatile over the last 5 years.
Not surprisingly, Rio Tinto's stock has also been very volatile as well.
Data by YCharts
Even though Rio Tinto stock has risen significantly over the last twenty years, this stock has sold off over 70% twice in the last 15 years, and the stock sold off hard during the pandemic as well. The stock sold off nearly forty percent just recently during the pandemic.
Spot prices for iron ore are often very volatile, which is why companies such as Cleveland-Cliffs (CLF) have moved to exit this market. Even though spot prices in the iron ore market have recently rebounded after plummeting in the back half of last year, this recent move up in this market looks to be temporary for a number of reasons.
Concerns over iron ore supplies are not justified and the iron ore market should remain well supplied
First, the Russian invasion of Ukraine has not significantly impacted the iron ore markets, and concerns over Australian iron ore exports are likely overblown. Australia makes up nearly seventy percent of all iron ore exports to China. Russia and Ukraine combine to account for nearly 8% of the iron ore market, just 4% of the seaborne market. Ukraine is a much bigger exporter of iron ore than Russia. Ukraine exported 44.4 million metric tons of iron ore in 2021, Russia iron ore exports are typically no more than 500,000 a month. Russia does comprise around ten percent of the global steel market, and Russian steel exports are obviously down.
Concerns over the cyclone season in Australia as well as another Covid outbreak seem overblown as well. Australian iron ore exports have remained high, and even though the country has had a very heavy-handed approach to Covid, the concerns over an outbreak in Western Australia seem unfounded, and these issues have not significantly impacted iron exports. Western Australia continues to see a very low amount of new Covid cases. Australian iron ore exports in January were nearly 74 million tons, down from 80 million tons in December, but still up from November of last year.
Demand for iron ore should continue to fall as the real estate and construction industry slows
Second, the massive stimulus that China enacted during the pandemic is now slowing, and China is moving to shut down a number of steel mills ahead of several economic and social events so pollution rates will be lower. China ordered steel mills to lower production significantly ahead of the 2022 Winter Olympics to lower pollution levels, and many steel mills in China have already been told that many of the caps on production that were implemented in 2021 will be extended in 2022. China represents seventy percent of the seaborne iron ore market. Chinese steel production should rise this year from the lowest levels of 2021, but not to the highs seen in 2021.
The Chinese government is looking at moving towards growth stability after the economy grew at around 8% in 2021, but growth slowed in the third quarter of 2021 to 4.9%. Current forecasts are for China to grow at around 5.5% this year. Household debt levels in China are also at historic highs, with household debt in China at an alarming 60 percent to GDP ratio.
Slowing global growth should put additional pressure on iron ore prices
Third, there are signs of a wide economic slowdown globally. Consumer spending and industrial production indicators both have fallen in the United States. Consumer confidence levels in the US are at a low point, new business applications are down significantly in recent months, and there are signs that the housing market in the US is slowing as well, with housing inspectors across the country seeing a slowdown. Inflation levels remain at historic highs as well, with supply chain issues be exacerbated by the recent Russian invasion of Ukraine. Growth in China already slowed in the back half of 2021 as the country slowed stimulus efforts, and even though there are signs the world's second-largest economy is starting to change the country's zero-tolerance policy towards Covid, business and recreational travel in and out of China is still very difficult.
If iron prices continue to fall, Rio Tinto's stock will likely fall as well and the multiple should contract. This company grew earnings at nearly forty percent on a year-to-year basis last quarter, and the stock has doubled in just the last two years. The company's current operating margin of 46% and return rate on equity of 41.6% is also very high. Iron ore and copper prices were both at very high levels in 2021, even though the company trades at 7x forward earnings estimates, those estimates are likely to fall significantly if iron ore prices fall in the back half of the year.
The Chinese real estate sector represents nearly thirty percent of the country's GDP, and world's second-largest economy spent massively during the pandemic to maintain stable growth levels. Still, China doesn't want to repeat the mistakes of 2008, when the real estate and construction sector become grossly overbuilt and a real estate bubble occurred, and China seems willing to accept lower and more stable growth this year. Well, some concerns of short-term supply issues have impacted the iron ore market, Chinese steel production and demand for iron ore is likely to be down significantly this year, Ukraine and Russia do not make a significant amount of the seaborne iron ore market, and Australian iron ore export numbers continue to be strong.
Rio Tinto gets over 70% of the company's revenues from the iron ore market, and nearly 50% of iron ore demand for the seaborne market is from China. Chinese demand for iron was very high in 2021, and some supply was offline because of Covid and Covid-related restrictions. Today, China's steel production has fallen significantly from peak 2021 levels, the Chinese economy as a whole has slowed dramatically, new supplies in countries such as Australia have come online, and there are a number of key signs that point to a broader slowdown in the growth in the US as well.
Rio Tinto had very strong earnings last year as commodity prices were at near-record levels for much of 2021, and the stock has had a huge run just in the last 2 years, and the company's earnings and margins in 2021 are not likely sustainable. The iron ore market has been volatile over the last decade, and the iron ore market is likely to be oversupplied in the near term. If iron ore prices continue to fall over the next year as is likely, Rio Tinto will likely see significant margin compression as well as falling earnings.
U.S. coal miners are generally required to restore previously mined land to near its original state or to suit other beneficial purposes. Some coal miners are looking at such lands as opportunities for diversification into renewable energy.
Source: S&P Global Market Intelligence
U.S. coal miners are experimenting with greener business projects as long-term demand for the carbon-intensive fuel collapses around them.
Creative coal mining companies, flush with cash from a bump in coal prices in 2021, are insulating themselves against future decreased demand by building solar projects on land they hold or setting up carbon sequestration zones. Other companies are burning coal waste or finding new uses for coal that can feed the energy transition. One company, Hallador Energy Co., appears to be trying to have it both ways, promising to build a solar facility as soon as it retires a coal power plant it recently purchased.
With companies across the economy seeking to cut their carbon emissions while renewable power and natural gas power undercut coal power on price, the long-term trend has been toward lower coal consumption. As recently as 2014, the nation's coal companies mined about a billion tons of coal in a year, compared to an estimated 578 million tons in 2021 as the fuel was replaced by natural gas and renewable energy. Despite the uptick in demand in 2021, companies remain hesitant to invest in additional coal capacity.
"I think it's really just the longer we go, the more even the most resistant companies have to start thinking about a pivot," said Robert Godby, an energy economist and interim dean of the University of Wyoming College of Business. "I mean, how will they stay in business?"
U.S. coal generation accounted for 23% of the utility-scale electricity produced in the U.S. in 2021, down more than half from 52% in 1990. The U.S. Energy Information Administration forecasts coal's share of power generation will fall by a percentage point in both 2022 and 2023. Just a few years down the road in 2028, utilities have scheduled a record-high 23.3 GW of U.S. coal-fired capacity retirements, according to a recent analysis of S&P Global Market Intelligence data.
Coal goes green
On March 1, coal mining giant Peabody Energy Corp. outlined plans to pursue 3.3 GW of utility-scale solar capacity and 1.6 GW of battery storage capacity within five years through a joint venture with Riverstone Credit Partners and Summit Partners Credit Advisors LP. The developments are planned at the company's former mining sites in Indiana and Illinois and would be the largest solar and battery storage projects in either state.
The coal miner watched its prospects collapse in recent years. Peabody sold 249.8 million tons of coal in 2014, but seven years and a bankruptcy reorganization later, its coal sales volumes dropped 47.9% to 130.1 million tons in 2021.
"This is a company that has been a coal company its entire existence," said Shannon Anderson, a staff attorney and organizer with Wyoming conservation group Powder River Basin Resource Council. "That's a huge announcement. It's just a lot of solar. It looks like they're going all in, which is just fascinating."
The project, deemed R3 Renewables LLC, is developing six potential areas on or near former coal mining sites close to a grid injection point. In a survey of renewable power developers by LevelTen Energy in late 2021, 89% counted "interconnection timelines and costs" among the greatest barriers to deploying more solar energy.
Owning property with infrastructure already in place puts Peabody in a unique position for diversifying into cleaner energy.
"If you've got all the ingredients to make a cake, you might as well make a cake," Godby said.
Peabody did not respond to a request for comment for this story, but President and CEO Jim Grech said in a March 1 presentation that the company is developing a pipeline of projects to meet its emission reduction goals through existing assets and new technology, while embracing the world's transition to net-zero emissions.
Grech took the helm of the company in early 2021. Bruce Nilles, executive director of Climate Imperative, said the executive appears to be taking a "clear-eyed look" at Peabody's assets rather than focusing solely on its coal mining legacy.
"No one's going to protest about turning a coal mine into a solar farm," Nilles said. "The politics in Indiana are still tough. Having a large coal producer say, 'Now we're diversifying' is just enormously helpful for getting us out of this era of 'for coal' or against it."
Texas-based Natural Resource Partners LP is also exploring electricity generation potential using geothermal, solar and wind energy resources across its land portfolio.
The company recently started publicly talking about work to identify alternative revenue sources across its portfolio of minerals, timber and land. Most of the projects would require little to no capital investment from the partnership. In the fourth quarter of 2021, Natural Resource Partners closed a $14 million deal to sequester about 1 million tonnes of carbon dioxide in West Virginia forest land. More recently, Natural Resource Partners struck a deal to evaluate the potential development of a carbon dioxide sequestration project that could store over 300 million tonnes of CO2 underground in southwest Alabama.
Pennsylvania-based coal miner Consol Energy Inc. is also dabbling in power generation. The company is designing a 300-MW power plant equipped with carbon capture that would burn coal waste from its Pennsylvania mining complex. The project is backed by the U.S. Department of Energy, which selected the company to receive part of an $80 million grant.
"We feel we have an important role to play in continuing to provide a secure, stable and reliable source of energy that continues to facilitate expanded access to electricity and improve lives on a global scale," Consol wrote in an email.
Old coal, new uses
Other companies want to use coal in new ways. Ramaco Carbon LLC is developing a site to convert coal into products such as carbon fiber for automobile parts. Consol has a 25% equity interest in CFOAM LLC, a West Virginia company that produces carbon foam used in applications such as thermal insulation and fireproofing. The Pennsylvania coal producer said it is also working with other parties including Ohio University to explore "new, sustainable markets for U.S. coal."
American Resources Corp., which grew by buying up distressed coal properties, has also been developing a technology process chain to capture, process and purify rare earth elements that are essential to multiple applications including renewable energy and battery storage technology. Several of the larger, publicly traded U.S. coal companies, including Arch Resources Inc. and Alpha Metallurgical Resources Inc., were already shifting away from coal used in power generation to focus on mining metallurgical-grade coal used to make steel, to tie their visions of the future to rising demand for things such as wind turbines or electric vehicles.
Executives with Alliance Resource Partners LP, a large Tulsa-based coal producer, have said the company is assessing various non-fossil opportunities, but it has also expanded in recent years into oil and gas mineral interests in the Permian, Anadarko and Williston basins in the U.S.
Diversifying the portfolio
Indiana-based coal producer Hallador decided vertical integration would help it stave off financial problems, and it announced plans in February to acquire the Merom Generating Station in return for taking on millions of dollars in decommissioning costs and environmental responsibilities. The plant had been scheduled to retire in May 2023, but Hallador said the plant can secure demand for up to half of its coal production for "years to come." The deal includes a 3.5-year power purchase agreement with Hoosier Energy Rural Electric Cooperative Inc., the plant's seller.
"It's doubling down on coal," said Seth Feaster, an analyst at the Institute for Energy Economics and Financial Analysis. While the move offers Hallador some control over one of its customers, such plans would not likely be scalable to much of the industry, the analyst added.
The company had announced plans in June 2021 to develop up to 1,000 MW of renewable energy to replace the plant. In a statement accompanying the announcement, Hallador President and CEO Brent Bilsland said renewable energy "is the natural next step in the company's evolution."
Hallador's agreement to develop renewable energy remains in place but will not begin until the coal plant is retired. Hallador did not respond to a request for comment.
"There's a big, rising recognition starting to take hold that coal doesn't have a great future," Feaster said.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
Coal will help solve the European Union's current energy price squeeze, even while the Russia-Ukraine crisis is expected overall to speed up actions towards the energy transition, participants in a shipping panel at the FT Commodities Global Summit said March 23.
"The only commodity that can help solve the energy crisis in Europe in the short term is coal," said Sveinung Stohle, deputy CEO of Greek-based shipping company Angelicoussis Group. "Like it or not, coal will play a very important role."
CO2 emissions are set to hit a record high in 2022, growing 2.5% over 2021, despite greater focus on climate and the continuing impact of the COVID-19 pandemic, S&P Global Commodity Insights Analytics said in a bulletin distributed this week. This follows a rise in CO2 emissions already last year on higher coal usage and growing energy demand as economies recovered from the pandemic.
Stohle noted that while the iron ore dry bulk trade has remained relatively steady since Russia invaded Ukraine on Feb. 24, and should continue to do so, coal trade has increased. This is "definitely helping the (shipping) market," particularly as coal is now being shipped for longer distances, creating more freight miles per ton of coal, he said.
There is backfilling of Russia coal orders with coal coming from as far afield as Australia to Europe, he said.
Angelicoussis Group CEO Maria Angelicoussis said that coal has become a "swing factor" in freight markets, with trade patterns again shifting following China's ban on imports of coal from Australia in late 2020. The company won't lift Russian coal cargoes, she said.
Coal is needed to enable European power stations to reduce usage of gas from Russia, which will be phased out under new EU directives and sanctions.
"Europe's gas dependency is much, much higher than in most Asian economies," Stolhe said. "Gas represents at least 30-40% of total energy demand in most European countries, compared to possibly 6-7% in China, of which maybe half is LNG."
More coal will be needed in Europe until more LNG production comes on stream, while Asia will continue to burn coal or oil as necessary, he indicated.
China's seaborne coal demand is likely to increase in the near term as domestic buyers look to stock up ahead of summer and railway maintenance that is expected to hamper the supply chain in April, market sources told S&P Global Commodity Insights March 23.
Expectations of a rise in thermal coal demand come at a time when domestic production has been impacted by COVID-19-induced lockdowns and movement restrictions. More than 20 provinces and cities have imposed travel bans and lockdowns as the number of positive cases surged.
The price of Indonesian 4,200 kcal/kg GAR has risen to $108.05/mt FOB March 23 from $65.45/mt FOB on Jan. 3, S&P Global data showed.
In the coking coal market, Asia delivered prices to China weakened March 23 as China's domestic market softened amid a worsening COVID-19 situation, with major steelmaking region Tangshan in Hebei province entering a temporary lockdown late March 22. FOB prices also continued a downwards momentum.
Premium Low Vol was down $8.00/mt at $590/mt FOB Australia, and CFR China down $8.00/mt at $440/mt CFR China March 23, according to the Platts assessment from S&P Global Commodity Insights. However, prices remained close to recent peak levels.
Dry bulk outlook
Ghigo Ravano, co-CEO at independent brokerage IFCHOR, said that in the dry bulk market generally, uncertainties are high but fundamentals remain good with a growing orderbook which is "benign" to the sector as oversupply is not foreseen.
Ulrik Uhrenfeldt Andersen, CEO of shipper Golden Ocean Management, said he believes the capesize market is set for a relatively good year, although there are some markers that are not as positive as 12 months ago. "China has clearly been going down a gear with its steel production in the preparation for the Olympics... we saw warning shots fired in the real estate and construction sector with Evergrande and an increasing coal production in response to the energy crisis, although most of this may now be behind us and we're coming into a season that may be much more active," he said. Industrial activity statistics just published in China show the biggest rate of growth since June 2021, he added.
Decarbonization
Angelicoussis' CEO said that the shipping industry's decarbonization drive would be considerably aided by introduction of a global carbon tax which could create a level playing field in the sector. Regional carbon tax mechanisms "will make it very complicated, fragment things, will be hard to enforce and will skew trade. As shipowners we need to take a very long-term view, 15-20 years when we are designing future ships," she said.
New Delhi: National Mineral Development Corporation Ltd. (NMDC), Country’s largest Iron Ore producer, a CPSE under Ministry of Steel became the first company in the country to cross 40 million tonnes (MT) iron ore production in a year. From a production of 4 MTPA in the late 1960s to 40 million tonnes now, the growth trajectory of the largest iron ore producer of the country has been exceptional. Starting from 4 million tonnes in 1969-70, NMDC crossed
10 million tonnes in 1977-78, added another ten million by 2004-05, crossed 30 million tonnes within a decade and has now breached the 40 million mark.
Keeping pace with the constant surge in the domestic iron ore demand,the company has been rolling out ambitious expansion plans and capex outlay in pursuit of enhanced production. In recent times, NMDC has adopted cutting-edge technology and built a transformational digital infrastructure to overcome Covid induced slowdowns and the cyclical volatilities in the sector. Growing from scale to strength, the company has achieved the milestone of 40 million tonnes iron ore production on the back of steady fundamentals and a visionary workforce.
Congratulating the team on the historic achievement, Shri Sumit Deb, Chairman and Managing Director, NMDC said, “NMDC’s ground-breaking achievement of becoming the first iron ore mining company in India to cross 40 MT is an illustrious display of its ability to accept challenges despite all odds. The company’s perseverance and consistency has paid off and I congratulate the team for this historic accomplishment. I am confident that we will continue to cross many more milestones on our way to fulfil Nation’s vision of #AtmanirbharBharat. This achievement also shows that we are on the track to become a 100 MTPA company by 2030.”
It is pertinent to mention that the company has set a target of becoming a 100 MTPA company by 2030. The CPSE also plans to leverage their expertise in moving towards a multi-mineral outlook with coal, diamond, gold and other strategic minerals of national interest in their portfolio.
https://orissadiary.com/nmdc-creates-history-with-40-million-tonnes-mt-iron-ore-production/
Fighting is raging again on multiple fronts in Ukraine, with intense combat in the besieged port city of Mariupol — the site of some of the war’s greatest suffering
Fighting is raging on multiple fronts in Ukraine, with intense combat underway in the besieged port city of Mariupol — the site of some of the war’s greatest suffering. Ukrainian officials say forces there are battling the Russians over one of the biggest steel plants in Europe. One local police officer says the city has been “wiped off the face of the earth.”
Overnight, Ukrainian President Volodymyr Zelensky accused the Kremlin of deliberately creating “a humanitarian catastrophe,” but he also appealed for Russian President Vladimir Putin to meet with him directly for talks.
Here's the latest of all top developments on March 20:
Russian forces pushed deeper into Ukraine’s besieged and battered port city of Mariupol on Saturday, where heavy fighting shut down a major steel plant and local authorities pleaded for more Western help.
The fall of Mariupol, the scene of some of the war’s worst suffering, would mark a major battlefield advance for the Russians, who are largely bogged down outside major cities more than three weeks into the biggest land attack in Europe since World War II.
“Children, elderly people are dying. The city is destroyed and it is wiped off the face of the earth,” Mariupol police officer Michail Vershnin said from a rubble-strewn street in a video addressed to Western leaders that was authenticated by The Associated Press.
The city council of Ukraine’s Mariupol said Russian forces forcefully deported several thousand people from the besieged city last week, after Russia had spoken of “refugees” arriving from the strategic port.
“Over the past week, several thousand Mariupol residents were deported onto the Russian territory,” the council said in a statement on its Telegram channel late on Saturday.
“The occupiers illegally took people from the Livoberezhniy district and from the shelter in the sports club building, where more than a thousand people (mostly women and children) were hiding from the constant bombing.”
Reuters could not independently verify the claims.
Ukrainian troops were losing control of the key Azovstal steel plant, now damaged and heavily contested, according to an adviser to Ukraine’s interior minister.
“We have lost this economic giant. In fact, one of the largest metallurgical plants in Europe is actually being destroyed,” Vadym Denysenko said in televised remarks.
An adviser to Ukraine’s president said there was no military solution for Mariupol, saying the nearest forces able to assist were already struggling against Russian forces at least 100 kilometers (60 miles) away.
One of Europe 's biggest iron and steel works, Azovstal , has been badly damaged as Russian forces lay siege to the Ukrainian port city of Mariupol , officials said Sunday."One of the biggest metallurgic plants in #Europe destroyed. The economic losses for #Ukraine are huge. The environment is devastated," tweeted Ukrainian lawmaker Lesia Vasylenko.Vasylenko posted a video of explosions on an industrial site, with thick columns of grey and black smoke rising from the buildings.One of her colleagues, Serhiy Taruta, wrote on Facebook that Russian forces "had practically destroyed the factory"."We will return to the city, rebuild the enterprise and revive it," Azovstal's director general Enver Tskitishvili wrote on messaging app Telegram, without specifying the extent of the damage.He said that when the invasion began on February 24, the factory had taken measures to reduce the environmental damage in the event of being hit."Coke oven batteries no longer pose a danger to the lives of residents," he wrote. "We have also stopped the blast furnaces correctly."Azovstal is part of the Metinvest group, which is controlled by Ukraine's richest man, Rinat Akhmetov.Considered pro-Moscow before the war began, Akhmetov has since accused Russian troops of committing "crimes against humanity against Ukrainians".
BEIJING — Chinese ferrous futures drifted in a narrow range on Monday, as the recent COVID-19 outbreak dented peak seasonal demand while disrupting production and transportation as well.
“The pandemic outbreak in many regions has led to lower downstream demand, and logistics in some areas were disrupted,” analysts with SinoSteel Futures wrote in a note.
As the steel sector has entered the traditional peak season, the resurgent COVID cases could have a negative impact on consumption, they said.
The most-active steel rebar contract on the Shanghai Futures Exchange, for May delivery, dipped 0.02% to 4,923 yuan ($773.64) a tonne at close.
Hot-rolled coils, used in cars and home appliances, inched up 0.6% to 5,132 yuan per tonne. Shanghai stainless steel futures slipped 0.4% to 19,780 yuan a tonne.
Benchmark iron ore futures on the Dalian Commodity Exchange ended up 1% to 833 yuan a tonne. Spot 62% iron ore jumped $3.5 to $150 per tonne on Friday, according to SteelHome consultancy.
Coking coal futures on the Dalian bourse rose 1% to 3,019 yuan a tonne and coke prices faltered 0.6% to 3,603 yuan per tonne. ($1 = 6.3634 Chinese yuan renminbi) (Reporting by Min Zhang in Beijing and Enrico Dela Cruz in Manila; Editing by Subhranshu Sahu)
The Nifty Metals index is the top gainer among sectoral indices on the NSE so far in 2022, rising by 14%. The ongoing Russia-Ukraine conflict has driven up prices of metals such as steel, aluminium and nickel, and that reflects in the performance of the index.
Concerns over supply chain is a factor boosting prices, including that of steel. Ukraine and Russia are large contributors to the global steel supply chain, and production uncertainties and sanctions on the latter are causing distress. “Russia and Ukraine together produce about 100 million tonnes of steel annually and export about 37 million tonnes, which is 8-9% of global net trade," said analysts at Kotak Institutional Equities in a report on 16 March.
However, Indian steel companies are not likely to gain from the higher price environment as costs have risen exponentially, too. Prices of raw materials, such as coking coal and iron ore that are required to manufacture steel, are seeing a higher increase. In fact, analysts said spot spreads (revenue less costs) for domestic producers are down and should reflect in the financials with a lag.
Steel shines
For perspective, while there is a reasonable availability of iron ore in the domestic markets, India imports the lion’s share of its coking coal requirements. According to Kotak analysts, Russia is the third largest exporter of coking coal and this results in maximum supply risk. The average coking coal price this month (till 18 March) surged by 34% month-on-month, according to market intelligence platform CoalMint. Plus, NMDC Ltd, India’s key supplier of iron ore, has hiked prices thrice so far in 2022.
Indian producers had no choice but to resort to price hikes. Average domestic hot rolled coil (HRC) prices this month (till 16 March) increased by 10% from December 2021, according to SteelMint.
Despite the price hikes, HRC spreads declined materially by 24% in March vis-a-vis the February average, said Nomura Financial Advisory and Securities (India) Pvt. Ltd analysts in a report on 20 March.
“We note that the steel price hikes, so far, do not cover the expected increase in costs as per spot prices. However, given the 30-60 days of consumption lag, the recent surge in costs would hit companies in Q1FY23E whereas price hikes should result in stronger margins in Q4FY22E," said a Kotak report.
Against this backdrop, companies that have a lower dependence on imported coking coal stand to benefit.
“Among the steel producing companies, Jindal Steel and Power Ltd (JSPL), followed by Tata Steel Ltd, are relatively better positioned as a material portion of their coking coal requirement is sourced from their own mines. The import requirement is lower versus other companies such as JSW Steel Ltd," said Siddharth Gadekar, an analyst with Equirus Securities.
BEIJING — Prices for steelmaking ingredients on China’s Dalian Commodity Exchange dropped on Tuesday as the latest control measures due to the recent surge in COVID-19 cases hurt transportation and production levels at mills and also dampened demand.
As profit margins at steel mills are relatively low, GF Futures added there’s possibility for coke producers to cut prices.
The most-active coke futures on the Dalian bourse for May delivery were down 3.2% to 3,509 yuan ($551.63) a tonne at close. Coking coal prices dropped 3.1% to 2,922 yuan per tonne.
Benchmark iron ore futures on the Dalian exchange ended down 3.6% to 799 yuan a tonne.
Portside iron ore stocks in China had been falling for four straight weeks to 155.8 million tonnes, as of March 20, according to Mysteel.
However, Haitong analysts warned that policy risks are not eliminated yet as overall iron ore inventory still at high levels.
Steel prices on the Shanghai Futures Exchange were traded within a tight range. Steel rebar, used for construction materials, inched 0.2% lower to 4,918 yuan a tonne.
Hot-rolled coils, used in the manufacturing sector, rose 0.6% to 5,163 yuan per tonne.
Stainless steel prices for April delivery declined 1.1% to 19,810 yuan a tonne.
A cabinet meeting chaired by China’s Premier Li Keqiang said on Monday the country would maintain stable operation in the capital market and give around 1 trillion yuan in tax rebates to domestic small firms to shore up economy.
Chinese ferrous futures drifted in a narrow range on Monday, as the recent COVID-19 outbreak dented peak seasonal demand while disrupting production and transportation as well.
Mainland China reported 2,027 confirmed coronavirus cases for March 20, including 1,947 locally transmitted, the country’s health authority said.
Hebei, the country’s top steelmaking province, had 51 cases for Sunday, with two reported in the steel manufacturing hub of Tangshan.
The Tangshan government has implemented traffic control and suspended all public transportation to avoid further infections.
“The pandemic outbreak in many regions has led to lower downstream demand, and logistics in some areas were disrupted,” analysts with SinoSteel Futures wrote in a note.
As the steel sector has entered the traditional peak season, the resurgent COVID cases could have a negative impact on consumption, they said.
The most-active steel rebar contract on the Shanghai Futures Exchange SRBcv1, for May delivery, dipped 0.02% to 4,923 yuan ($773.64) a tonne at close.
Hot-rolled coils SHHCcv1, used in cars and home appliances, inched up 0.6% to 5,132 yuan per tonne. Shanghai stainless steel futures SHSScv1 slipped 0.4% to 19,780 yuan a tonne.
Benchmark iron ore futures DCIOcv1 on the Dalian Commodity Exchange ended up 1% to 833 yuan a tonne. Spot 62% iron ore SH-CCN-IRNOR62 jumped $3.5 to $150 per tonne on Friday, according to SteelHome consultancy.
Coking coal futures on the Dalian bourse DJMcv1rose 1% to 3,019 yuan a tonne and coke prices DCJc1 faltered 0.6% to 3,603 yuan per tonne.
Cleveland-Cliffs (NYSE:CLF - Get Rating) had its price objective boosted by equities research analysts at The Goldman Sachs Group from $27.00 to $31.00 in a report released on Tuesday, Benzinga reports. The firm currently has a "buy" rating on the mining company's stock. The Goldman Sachs Group's price objective points to a potential upside of 8.05% from the stock's previous close.
Several other analysts have also recently issued reports on the stock. Zacks Investment Research raised shares of Cleveland-Cliffs from a "hold" rating to a "strong-buy" rating and set a $25.00 price target on the stock in a research report on Tuesday, January 4th. Wolfe Research cut shares of Cleveland-Cliffs from an "outperform" rating to a "peer perform" rating and set a $23.00 price target for the company. in a research report on Tuesday, January 11th. Morgan Stanley upped their price objective on Cleveland-Cliffs from $22.50 to $23.50 and gave the stock an "equal weight" rating in a research report on Monday, November 29th. Finally, TheStreet lowered Cleveland-Cliffs from a "b-" rating to a "c+" rating in a report on Tuesday, March 1st. Four analysts have rated the stock with a hold rating, seven have given a buy rating and one has given a strong buy rating to the company. Based on data from MarketBeat, Cleveland-Cliffs currently has a consensus rating of "Buy" and a consensus price target of $27.37.
Fast growing company in fast-growing wellness market starting to draw attention
Cleveland-Cliffs stock opened at $28.69 on Tuesday. The company has a debt-to-equity ratio of 0.91, a quick ratio of 0.69 and a current ratio of 2.15. The firm has a 50 day moving average price of $21.39 and a 200 day moving average price of $21.57. Cleveland-Cliffs has a fifty-two week low of $14.01 and a fifty-two week high of $29.12. The company has a market capitalization of $15.07 billion, a PE ratio of 5.29 and a beta of 2.09.
Cleveland-Cliffs (NYSE:CLF - Get Rating) last posted its quarterly earnings data on Friday, February 11th. The mining company reported $1.78 earnings per share (EPS) for the quarter, missing the Thomson Reuters' consensus estimate of $2.03 by ($0.25). Cleveland-Cliffs had a net margin of 14.62% and a return on equity of 80.10%. The firm had revenue of $5.35 billion during the quarter, compared to analysts' expectations of $5.65 billion. During the same quarter in the prior year, the firm posted $0.24 EPS. Cleveland-Cliffs's quarterly revenue was up 137.0% compared to the same quarter last year. As a group, equities research analysts forecast that Cleveland-Cliffs will post 4.95 earnings per share for the current year.
A number of institutional investors and hedge funds have recently made changes to their positions in CLF. Assetmark Inc. acquired a new position in Cleveland-Cliffs in the third quarter valued at $26,000. Rational Advisors LLC purchased a new position in Cleveland-Cliffs during the 4th quarter worth approximately $26,000. UMB Bank N A MO purchased a new stake in Cleveland-Cliffs in the fourth quarter valued at approximately $26,000. Tyler Stone Wealth Management purchased a new stake in Cleveland-Cliffs in the fourth quarter valued at approximately $26,000. Finally, Ulland Investment Advisors LLC acquired a new stake in shares of Cleveland-Cliffs in the fourth quarter valued at approximately $33,000. 59.73% of the stock is owned by hedge funds and other institutional investors.
Cleveland-Cliffs Company Profile (Get Rating)
Cleveland-Cliffs is the largest flat-rolled steel company and the largest iron ore pellet producer in North America. The company is vertically integrated from mining through iron making, steelmaking, rolling, finishing and downstream with hot and cold stamping of steel parts and components. The company was formerly known as Cliffs Natural Resources Inc and changed its name to Cleveland-Cliffs Inc in August 2017.
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Iron ore hits wobbles as China sticks to zero Covid strategy amid cases in steel city
Global steel production falls 5.7% YoY in February to 142.7Mt
Battery metals stocks prop up resources sector led by Sayona Mining
Momentum behind iron ore prices has been moving as smoothly as Elaine Benes cutting a rug after Covid cases in China’s steel city prompted a slide in futures below US$150/t.
It came one day after positive economic chatter out of the Chinese Communist Party sent prices higher prompting big buying for commodities yesterday led by a 5% gain for the world’s largest miner BHP (ASX:BHP).
China is continuing to stick with its Covid Zero policy for now, largely out of step with the rest of the world.
After virus cases were reported in Tangshan, one of China’s largest steel producing hubs, that has lifted concerns more lockdowns and restrictions on production could be issued.
“Further lockdowns in China weighed on sentiment across the metal markets,” ANZ head of Australian economics David Plank said.
“Liang Wannian, China’s top virus expert, said the country should stick with its strict zero-COVID strategy.
“This follows the lockdown of Tangshan City, a steel hub in China’s northern Hebei province. This saw iron ore futures fall amid concerns it would impact steel output in the region.
“Logistical issues due to the restrictions on travel are also hurting supply chain across the country.”
China imports around 80% of our iron ore and accounts for almost 60% of global steel production.
According to data from the World Steel Association overnight, steel output fell 5.7% year on year in February to 142.7 million tonnes.
That was impacted by big year on year falls in China (down 10% to 75Mt), which was expected given its directives to reduce pollution during the Beijing Winter Olympics, Brazil and the CIS states including Russia and Ukraine.
On the flip side production in India, regarded as a future growth market for steel, was up 6.6% year on year across January and February to 20.9Mt.
Iron ore miners were generally weak with BHP down 1.52%, Rio Tinto (ASX:RIO) off 0.67%, Champion Iron (ASX:CIA) slipping 2.99%, Mount Gibson (ASX:MGX) down 1.79% and FMG (ASX:FMG) falling 0.21% in early trade.
(Reuters) – China’s top steelmaking city Tangshan implemented a temporary lockdown on Tuesday to avoid further cases of COVID-19 as infections surged, the local government said in a statement.
Residents should not leave their houses or buildings except for tests or emergencies pending further announcement, the government said.
Tangshan reported 15 confirmed locally transmitted cases from March 19-22, and 79 asymptomatic cases, while Hebei province, where Tangshan is located, had 331 confirmed cases and 2,454 asymptomatic cases as of March 22, data from the provincial health authority showed.
The city has halted public transportation since March 19 and implemented traffic controls on March 20.
China is maintaining a “dynamic clearance” approach which aims to cut COVID transmission as soon as possible using stringent measures such as short and targeted shutdowns and quick testing schemes where cases are found.
Tangshan produced 131.11 million tonnes of crude steel in 2021, accounting for nearly 13% of China’s total production, surpassing the world’s second-biggest steelmaker India, which made 118 million tonnes of the metal last year.
Prices for steelmaking ingredients fell during the night session on Tuesday after the lockdown notice was issued, with benchmark Dalian iron ore and coke both down around 3%, and coking coal prices fell nearly 4%. Those markets were range-bound on Wednesday.
(Reporting by Min Zhang and Twinnie Siu, Editing by Christian Schmollinger)
https://wtvbam.com/2022/03/22/chinese-steelmaking-hub-tangshan-enters-lockdown-as-covid-cases-rise/
Tokyo Steel raises product prices by up to 9% for April
Tokyo Steel Manufacturing Co Ltd, Japan’s top electric-arc furnace steelmaker, on Tuesday said it will raise steel product prices by up to 9% in April to reflect rising raw materials prices.
This is the second month in which the company will boost prices for its steel products, including its main H-shaped beams.
For April, prices for hot rolled coils will climb by 9% to 120,000 yen ($995) a tonne while H-shaped beams will go up by 6% to 121,000 yen a tonne.
“Prices of steel-making materials have surged on supply concerns due to the Ukraine crisis and overseas steel product prices are also on the rise,” Tokyo Steel said in a statement.
“We will raise our product prices to pass on soaring expenses including materials costs,” it added.
Tokyo Steel’s pricing is closely watched by Asian rivals such as South Korea’s Posco 005490.KS and Hyundai Steel 004020.KS, and China’s Baoshan Iron & Steel Co Ltd (Baosteel) 600019.SS.
Source: Reuters (Reporting by Yuka Obayashi; Editing by Kirsten Donovan)
https://www.hellenicshippingnews.com/tokyo-steel-raises-product-prices-by-up-to-9-for-april/
