Oil and gas stocks got absolutely crushed in 2020 as the global economy declined and demand for industrial and commercial energy plummeted. Oil and gas projects tend to be capital-intensive, long-term endeavors. It isn't necessarily easy to simply cancel a liquefied natural gas export terminal or massive offshore exploration and production project just because prices are down. Instead, most companies curtailed production as needed, slashed capital expenditures, and cut their dividends.
Entering 2021, many oil and gas stocks were very cheap. Those that kept their dividends began the year with dividend yields well above historic levels. For example, integrated majors ExxonMobil ( XOM 0.05% ) and Chevron ( CVX 0.09% ) entered 2021 with dividend yields of 8.4% and 6.1%, respectively. Upstream producer ConocoPhillips ( COP -0.03% ) started the year with a 4.2% yield. Midstream giant Kinder Morgan had a 7.6% yield. And downstream refinery and marketing company Valero ( VLO -0.52% ) entered 2021 with a 6.9% dividend yield.
Not only were the stock prices of these industry leaders down a lot over the last few years, but their dividend yields had ballooned to an annual return that became attractive for income investors and retirees.
Oil and gas prices then proceeded to reach seven-year highs in 2021 as a rebound in the broader economy paired with lower industry spending helped demand outpace supply, which is exactly the opposite of what happened in 2020.
Entering 2021, the energy sector stood out as a potentially market-beating sector. However, the issue is that the energy sector carries the least weight in the S&P 500, making up less than 3% of the sector. That means that the energy sector's 53.3% total return in 2021 contributed less than 2% of the S&P 500's 28.7% gain.
By contrast, the top 10 largest stocks by market cap make up nearly a third of the S&P 500. Instead of jumping in and out of hot stocks or hot sectors, folks are probably better off investing in companies they understand in a way that fits their risk appetite and helps them hit their long-term goals. For income investors and retirees, energy stocks remain an excellent choice since many companies have much higher yields than the average stock in the S&P 500 (which has just a 1.3% yield).
The energy sector may have a tough time staying hot in 2022 if the gap between supply and demand narrows.
A strong end to the year and accelerated prices in January have led to higher commodities forecasts, and metals such as copper, nickel and lithium are benefiting from “the red-hot EV market.”
In S&P Global’s State of the Market: Mining Q4-21 conference, Sean Decoff, senior analyst, metals and mining research at S&P Global Market Intelligence, said that in general, the industry is seeing positives. COVID-19 cases are dropping, many countries are completely scrapping restrictions and persistent inflation is benefiting commodity prices.
Iron ore, for example, had a volatile year. It reached record highs in the first half of 2021, but the prices essentially collapsed later in the year. In July, cracks appeared in the Chinese property market, additional supply came online and China restricted steel production due to the government’s pollution control measures.
When steel production in China peaked, the iron ore price started to drop, and by the end of the year steel production in the country came in three per cent lower, the first year-on-year decline since 2016. Prices evened out due to Chinese restocking and the expectation is that Chinese demand will be stronger in the March quarter.
“Due to the strong start this year and China’s policy easing announcements, we’ve revised our price forecast higher to about US$120 per tonne or US$119.30 per tonne, and this is up from US$105 per tonne, which we had last month,” said Decoff. “While an improvement, this is still about 25 per cent lower than last year’s average.”
Other metals, such as copper and nickel, benefited from the transition to green energy, renewables and electric vehicles (EVs). In February 2022, S&P Global reported that EVs and renewables accounted for six per cent of copper demand and batteries accounted for 10 per cent of nickel demand in 2021. EV sales in China, Europe and the U.S. also rose around 130 per cent to more than three million units in 2021.
According to the China Association of Automobile Manufacturers, China sold 450,000 new EV units in November 2021, an all-time high. That’s a 121 per cent year-on-year increase and 17.3 per cent higher than October.
In addition to increased demand for EVs, Decoff attributed a spike in copper prices at the beginning of the third quarter to supply concerns. Both MMG’s Las Bambas mine and the Antamina mine – owned through a joint venture between BHP, Glencore and Mitsubishi Corporation – in Peru faced disruptions after protestors blocked the roads. The fourth quarter saw an average cash price of $9,700 per tonne, 3.5 per cent higher than the third.
Nickel prices are also rising, driven by strong stainless steel production and high-value markets such as aerospace, oil and gas, and the EV market.
“When we talk about nickel lately, the bright story is, of course, EVs, but we have to remember that 70 per cent of demand still comes from stainless steel,” said Decoff. “And interestingly, in China, unlike regular steel, stainless steel production had a solid year-on-year increase despite the power cuts. And
further out, we don’t see this trend stopping any time soon.”
It should come as no surprise that EV sales are also impacting lithium prices, which increased about 164 per cent in 2021. Principal analyst, metals & mining research at S&P Global Market Intelligence, Kevin Murphy said he believes the majority of the increase is due to lithium iron phosphate (LFP) battery demand.
LFP batteries use lithium carbonate and not cobalt, which is more expensive and faces supply constraints. LFPs rose in popularity in China, representing about 10 per cent of all batteries in 2020 before jumping to 30 per cent in 2021.
The CIF North Asia lithium price hit US$20,000 per tonne by year-end and, as the price continues to rise, miners are accelerating projects to meet demand. For example, S&P Global estimates that the spodumene projects in Australia will increase capacity by 81.8 per cent.
Moving forward, Murphy said he believes that interest in LFPs has peaked and there will be more growth in nickel-intensive nickel-manganese-cobalt (NMC) batteries. Meanwhile, growth in cobalt-heavy NMCs are expected to dwindle.
Cobalt prices increased during 2021. However, almost 70 per cent of Cobalt comes from the Democratic Republic of Congo, and shipments typically go through South Africa, which has constrained ports due to COVID-19. Murphy expects this to be mostly resolved during 2022, which will “take a little bit of the steam out of the cobalt price.” As the plug-in electric vehicles (PEV) market increases, putting demand on cobalt, the price should trend back upwards.
“So looking at the actual PEV sales, 2021 was a record year despite the chip shortage that has been impacting electronics around the world,” said Murphy. “The bulk of this growth, not too surprisingly, is from China but also some from Europe. And looking forward, we do expect PEV sales to increase around 27 per cent on a compound annual growth rate from 2021 to 2026, again very heavily in China and Europe but also increasingly the U.S.”
Europe is taking a big gamble as it moves to ban Russian coal, potentially leaving itself vulnerable to shortages and rolling blackouts while the rest of the world contends with surging prices.
Russia is Europe’s top supplier of thermal coal, used to fuel power stations. As the European Union joins the U.S. to take a harder stance against Russian President Vladimir Putin’s war in Ukraine, the continent has plans to phase out Russian shipments. The problem is that there’s no clear alternative for that huge chunk of trade, and the result appears destined to lead to a domino effect that creates a mad global scramble for coal.
Prices are already soaring in a market that has been tight for months. European coal jumped 14% to a three-week high on Tuesday after news of the proposed ban, with futures doubling since the start of the year. The benchmark for Asian coal hit an all-time high in March, while U.S. coal topped $100 a ton last week for the first time in 13 years.
"The proposed sanction would be devastating to European coal imports,” said Fabian Ronningen, an analyst at Norwegian consultant Rystad Energy. "Some coal can be sourced from other markets, but in general, the global coal market is very tight as well.”
It’s not just that supplies are tight. There are also logistical complications when it comes to quickly pivoting to new suppliers. Russia’s proximity to Europe has long been one of its advantages in a market that depends on dayslong shipments of heavy cargoes. Now, European buyers will have to look elsewhere, stretching supply from countries as far away as South Africa, Australia and Indonesia, where quality varies.
"Russian coal is the closest, cheapest and in some markets like Germany the most suitable specification, in terms of heat content and sulphur” to power Europe’s stations, said Jake Horslen, an analyst at S&P Commodities Insights. An EU ban "would pose a significant challenge for the buyers that would need to seek out alternatives,” he said.
In the long term, prospects aren’t great for coal, the dirtiest fossil fuel. But right now, the market is booming as Europe deals with a crunch in natural gas supplies and fuel consumption surges in the pandemic recovery boom. Global carbon emissions from the power sector jumped to a record last year, partly driven by more coal burning, according to think tank Ember.
Ramping up coal production to meet demand has been challenging. The market has been hit by rail disruptions, COVID-19 outbreaks and even a temporary export ban from Indonesia, the world’s largest exporter.
"The disruption of Russian coal supply is just the latest in a wave of supply issues that have hounded the market since early last year,” Bank of America Corp. analysts wrote in a note this month.
Any sanctions on Russian coal will pressure Europe’s already strained supplies. Coal stored in Amsterdam, Rotterdam and Antwerp harbors remain at the lowest for the season in at least six years, according to weekly survey of stocks by Argus Media.
Europe buys two kinds of coal from Russia — thermal, the kind used by power plants, and metallurgical, used in steel-making. The Russian share of the EU’s imports of thermal coal is almost 70%, with Germany and Poland particularly reliant.
The continent has grown increasingly dependent on Russia as its own production declined. In 2020, Europe shipped in 57 million tons of thermal coal from Russia, the vast majority of imports, according to the International Energy Agency.
Hard coal reserves at German energy supplier Steag’s coal-fired power plant in Duisburg, Germany, on Tuesday. A new sanctions package prepared by the European Union against Russia is set to include oil and coal. | AFP-JIJI
German energy firm EnBW Energie Baden-Wuerttemberg AG said last month that it had begun to diversify its coal procurement to reduce dependency on Russia, and that a full switch would only be possible in the medium-term. The company, which relied on Russia for more than 80% of its coal last year, also said procuring the fuel in countries including Australia and South Africa would be more costly.
And while the U.S. has stepped in to help wean Europe off Russian gas, it’s unlikely to be able to do the same with coal. Miners have already sold most of their output under long-term contracts and aren’t able to increase production because they have been closing mines for years. Those issues have been exacerbated by a worker shortage and logistics challenges that make it tough to get more tons from the mines to the ports.
"There’s a lot of call for U.S. exports, but it’s hard to get it out of the country,” said Andrew Blumenfeld, data analytics director for market research company McCloskey.
Even before sanctions, European energy companies were already struggling to get their hands on Russian coal. Many banks were refusing to finance commodities trading, forcing some of the continent’s biggest utilities to buy coal in South Africa and Australia.
An increase in exports from countries like Indonesia "could help offset the lost tonnage from Russia,” the Bank of America analysts said, while warning that "it won‘t make up for the quality difference.
"With supply issues abounding, the market will have to balance through demand destruction,” the analysts said.
That’s easier said than done, especially given the larger problems for energy supplies in Europe that have reverberated across the world.
Tight markets for natural gas have created energy shortfalls at a time when wind and hydro have been unreliable in some regions. Europe and Asia have been hit the worst, with skyrocketing markets, blackouts in places like India, power shortages in China and the threat of outages in other countries. Energy prices have also soared in the U.S., though not to the same extremes.
Meanwhile, some analysts had cast a critical eye on some European countries’ reliance on Russia even before the current war in Ukraine. Germany, the Netherlands, Turkey and Poland combined received almost a quarter of all Russia’s coal exports in 2021, according to U.S. Energy Information Administration data.
About 10% of Germany’s electricity is generated by burning hard coal and, unlike neighboring France, the country has little nuclear power as a fallback option, with its last remaining plants going offline this year as part of a transition to more renewable energy. Still, Economy Minister Robert Habeck says Germany can rid itself of Russian coal before the end of the year.
The reliance on Russia for energy more broadly limits Europe’s ability to place sanctions on other fuels, according to Thierry Bros, a former energy analyst who’s now a professor at the Paris Institute of Political Studies.
"Because of Germany and Hungary’s too close relations with Russia, we are stuck in banning only coal, which is a good first step but far from enough,” Bros said.
https://www.japantimes.co.jp/news/2022/04/06/business/europe-russia-coal-energy/
April 2 (Reuters) - Australia formally signed a trade deal with India on Saturday as the two nations signalled an intention to forge closer trade ties.
The Australia-India Economic Cooperation and Trade Agreement was signed in a virtual ceremony by Trade Minister Dan Tehan and India's Minister of Commerce & Industry, Piyush Goyal.
Australia's Prime Minister Scott Morrison and India's Prime Minister Narendra Modi witnessed the virtual ceremony.
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Morrison is expected to call a general election within days, and has been eager to secure the trade deal before campaigning begins, having been in negotiations with India for a decade. read more
Speaking to reporters in Tasmania, Morrison said the agreement with the world's second most populous nation represented “one of the biggest economic doors there is to open in the world today”.
“These are never all or nothing deals as far as we're concerned, we see all of these as the next step and the next step and the next step,” he said, expressing both countries intention to build closer trade links.
Morrison’s government is seeking to diversify export markets and reduce Australia's dependence on its biggest trading partner China, after diplomatic spats led to Beijing sanctioning certain Australian products.
The deal with India removes tariffs on more than 85% of Australian goods exports to India, worth A$12.6 billion, rising to almost 91% over 10 years.
A crane unloads containers from a ship at the Port Botany Container terminal in Sydney, Australia July 6, 2017. REUTERS/David Gray
Tariffs will be scrapped on sheep meat, wool, copper, coal, alumina, fresh Australian rock lobster, and some critical minerals and non-ferrous metals to India.
It will see 96% of Indian goods imports enter Australia duty-free.
Both countries would continue to work towards a full free trade agreement, the federal government said on Friday.
After signing the deal, Minister of Commerce & Industry Goyal said India wanted to progress a full free trade agreement with Australia in an “accelerated manner”.
“Soon after this current agreement comes into force, we’ll get down to cracking the whip on the next stage to make this a comprehensive economic partnership,” he said.
Trade Minster Tehan said he was confident negotiations would advance even if the Morrison government was replaced at the upcoming national election.
Scott Morrison lags in the polls leading up to the general election due in May.
“I have very strong hope, no matter who fills our chairs going forward, we’ll be able to … build on this ground-breaking agreement,” he said.
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Reporting by Samuel McKeith; Editing by Simon Cameron-Moore
Our Standards: The Thomson Reuters Trust Principles.
by PROF.TISSA VITARANA
The decision taken by the leaders of the Eleven Party Alliance to request that the President to forms and Interim Government is an essential first step towards solving the present crisis facing Sri Lanka. This interim Government needs to have correct policies to meet a crisis of this enormous magnitude. The interim government should not follow the policies that have aggravated the global economic crisis to such a scale in Sri Lanka. The immediate problems facing the suffering people such as the high price of food and food shortages, the shortages of essential medicines, fuel, gas and electricity have to be given priority. As mentioned by me last week the shortage of dollars is the principle factor. I like to stress once again that we should delay the settlement of loans and interest due for the next five years through a Moratorium. As we had to pay US dollars 6 billion last year to settle our loans, such a course will probably save about 30 billion dollars. This would enable us to immediately obtain the above mentioned essentials that are the main cause of the suffering of the people. I stressed that this has been done by several countries faced with similar economic crises in the past and even the present. The main policy of the SLPP Government not to do this but to somehow other pay back the loans on time will not provide the dollars that we badly need. The required change of attitude will not discredit us to the extent that the SLPP Government fears because, as mentioned earlier, this has been done in the past and even the present.
The above course of action will relieve the suffering of the people and bring back the confidence in the President and the interim government. The alternative that is proposed by the SLPP Government, UNP and Samagi Jana Balawegaya (SJB) of turning to the International Monetary Fund (IMF) will only aggravate the problem. This is because the neoliberal policies that those parties favor were the main cause of the massive defeat of the Yahalapanaya Government. The IMF insists on the door being opened for the import of any goods and article from abroad, whether they be cheaper or more expensive than what we can produce. It was the massive importation of luxury and non-essential goods over a long period of time by several Governments, most of all the Yahapalanaya Government, that led to our Foreign Reserves dropping from the usual safe level of 7 to 8 billion US dollars to the present level of less than one billion US dollars that has aggravated the crisis to this massive level. The loss of our ability to purchase essential items like oil, gas, milk powder and flour will be overcome as soon as we turn to the Moratorium policy of settlement of loans for five years as mentioned above. Once the people’s needs are provided and the crisis overcome in this way there will be no need to tie up with the IMF. The latter course would mean that we have to get more loans and get further into debt. The problem of debt and interest repayment will continue to plague us. The correct policy of developing a national economy where we become self-supporting with regard to food and also develop value added industries (both small, medium and large) that was decided on by the SLPP Government, but not implemented, could also be done. Therefore it is essential that those in the Interim Government should not insist on the tie-up with the IMF and the resultant commitment to implement their policies.
Another very important step is that the Interim Government should properly revive the Cooperative Movement, both consumer and multipurpose. By ruining this the present major problem of high prices of food leading to hunger, starvation and malnutrition could be solve by eliminating the price rises which are due to the large number of middleman who profiteer at the expense of both the farmer and the consumer. This can be quickened by reviving the Marketing Department which can also directly purchase from the farmer and provide the consumer with food at a reasonable price, by only covering their expenses, without any profiteering as is done by private traders.
The next essential step that must also be taken is establishing value added industries (both SMEs and Large scale). The necessary science and technology funding should be provided, to do the required research. With a stable economy and a stable government it would be possible to attract foreign investment. In addition the Lanka Sama Samaja Party (LSSP) proposal of introducing the principle of a Solidarity Economy should be put into effect. This principle has been adopted by several countries in Europe and in the third world, as well as the USA. A classic outcome is that it has helped both public and private loss making institution to become profitable ones. A good example is what happened in Kerala, India. There when TATA’s refused to give a salary increase to the workers on the premise that they were running at a loss, like the private plantations in Sri Lanka, the Left-wing Government took back the land from TATA’s and gave the ownership for a period of 30 years to the employees. The outcome is that the plantations are now running at a big profit to the benefit of both the employees and the Kerala Government.
During the SLFP/LSSP/CP Coalition Government (1970-1975) when faced with an equally severe crisis Dr.N.M.Perera, the LSSP leader, who was the Minister of Finance, was able to increase the Forex Reserves from 1.5 billion US dollars to 3.2 billion dollars, thereby ensuring adequate dollars to meet the cost of essential imports. Further he balanced the budget and took away the burden from the poor people, by reducing indirect taxes, and making up for this by increasing the taxation of the rich. He raised the highest tax slab for the super-rich to 75%. It is a crime to raise the VAT tax as the SLPP Government has done now by 2%, while maintaining the upper limit of tax for the super-rich at 14%. NM encouraged investment in the manufacturing industry by maintaining a very low tax level and any rich person could also get that benefit by investing there.
The LSSP, as a member of the Eleven Party Alliance supports the above policies if we are not only to have an Interim Government that puts the country back on the correct track, but also describes the policies that should be pursued if we are to get out of this severe crises and rescue our country and our people from poverty and its consequences. We shall give the President our fullest support in the setting up and functioning of this Interim Government. We hope that once there is some degree of stability General Elections will be held and a new Government formed that will get us out of the crisis, build national unity, and lead to the development of our country.
http://island.lk/interim-government-to-meet-crises-needs-correct-policies/
French President Emmanuel Macron held his first big rally Saturday in his race for reelection, promising the French more "progress" and "solidarity" over the next five years, but his campaign has hit a speed bump.
It's been dubbed "the McKinsey Affair," named after an American consulting company hired to advise the French government on its COVID-19 vaccination campaign and other policies. A new French Senate report questions the government's use of private consultants and accuses McKinsey of tax dodging. The issue is energizing Macron's rivals and dogging him at campaign stops ahead of France's April 10 first-round presidential vote.
Macron, a centrist who has been in the forefront of diplomatic efforts to end the war in Ukraine, has a comfortable lead in polls so far over far-right leader Marine Le Pen and other challengers.
"We are here to make possible a project of progress, of independence, for the future, for our France," Macron told a crowd of about 30,000 at a stadium that usually hosts rugby matches. "I see difficulties to make ends meet, situations of insecurity ... and so much more to accomplish to turn back extremism."
Inflation, bonuses, pensions
Speaking to those who see "all their salary go into gasoline, bills, rent" as the war in Ukraine is driving up food and energy prices, Macron promised to let companies give a tax-free bonus to employees of up to 6,000 euros ($6,627) as soon as this summer.
He also promised to raise the minimum pension to 1,100 euros ($1,214) a month for those who have worked full time — up from about 700 euros now. The retirement age will need to be progressively raised from 62 to 65 to finance the plan, he said.
Supporters welcomed him, chanting "Macron, president!" "One, two, five more years!" and waved the French tricolor flag.
McKinsey
But for those trying to unseat Macron, the word "McKinsey" is becoming a rallying cry.
Critics describe the French government's 1 billion euros spent on consulting firms like McKinsey last year as privatization and Americanization of French politics and are demanding more transparency.
The French Senate, where opposition conservatives hold a majority, published a report last month investigating the government's use of private consulting firms. The report found that state spending on such contracts has doubled in the past three years despite mixed results, and warned they could pose conflicts of interest. Dozens of private companies are involved in the consulting, including giants like Ireland-based multinational Accenture and French group Capgemini.
Most damningly, the report says McKinsey hasn't paid corporate profit taxes in France since at least 2011, but instead used a system of "tax optimization" through its Delaware-based parent company.
McKinsey issued a statement saying it "respects French tax rules that apply to it" and defending its work in France.
McKinsey notably advised the French government on its COVID-19 vaccination campaign, which got off to a halting start but eventually became among the world's most comprehensive. Outside consultants have also advised Macron's government on housing reform, asylum policy and other measures.
Macron's defense
The Senate report found that such firms earn smaller revenues in France than in Britain or Germany, and noted that spending on outside consultants was higher under conservative former President Nicolas Sarkozy than under Macron.
Budget Minister Olivier Dussopt said the state money spent on consultants was about 0.3% of what the government spent on public servants' salaries last year and that McKinsey earned only a tiny fraction of it. He accused campaign rivals of inflating the affair to boost their own ratings.
The affair is hurting Macron nonetheless.
A former investment banker once accused of being "president of the rich," Macron saw his ratings surge when his government spent massively to protect workers and businesses early in the pandemic, vowing to do "whatever it takes" to cushion the blow. But his rivals say the McKinsey affair rekindles concerns that Macron and his government are beholden to private interests and out of touch with ordinary voters.
Everywhere Macron goes now, he's asked about it.
"The last few days, I heard a lot speaking about tax evasion, an American company," Macron said at Saturday's rally. "I want to remind those who show outrage that they used them (consulting firms)" in local government as well.
He also pointed to his government's fight to make sure corporations pay their fair share of taxes.
"The minimum tax in Europe, we fought for it, we did it," he said.
France is pushing for quick implementation in the 27-nation European Union of the minimum corporate tax of 15%, on which more than 130 countries agreed last October.
https://www.voanews.com/a/macron-holds-1st-big-rally-rivals-stir-up-mckinsey-affair-/6512669.html
Fast News
Ukraine says it has regained control of the Kiev region with Moscow's troops retreating from around the capital, as evidence emerges of possible civilian killings in the conflict — which is now in the 39th day.
Ukrainian troops are finding brutalised bodies and widespread destruction in the suburbs of Kiev, sparking new calls for a war crimes investigation and sanctions against Russia. (AP)
Sunday, April 3, 2022
Zelenskyy accuses Russian forces of committing 'genocide'
President Volodymyr Zelenskyy accused Russia of committing genocide and attempting to eliminate the "whole nation" of Ukraine, a day after the discovery of mass graves and apparently executed civilians near Kiev.
"This is genocide. The elimination of the whole nation and the people," Zelenskyy told the CBS programme Face the Nation, according to a transcript provided by the network.
"We are the citizens of Ukraine. We have more than 100 nationalities. This is about the destruction and extermination of all these nationalities," Zelenskyy said amid a chorus of international outrage over the behaviour of Russian troops in Ukraine.
Russian military denies killing civilians in Bucha
Russia's defence ministry said its forces did not kill civilians in Bucha, a town outside Ukraine's capital Kiev recently retaken by Ukrainian forces from Moscow's troops.
"During the time this settlement was under the control of Russian armed forces, not a single local resident suffered from any violent actions," the ministry said.
Photo and video of corpses strewn across the streets of Bucha were "another production of the Kiev regime for the Western media," it added.
US, NATO express shock over civilian killings in Ukraine
US and NATO leaders voiced shock and horror Sunday at new evidence of atrocities against civilians in Ukraine, and warned that Russian troop movements away from Kiev did not signal a withdrawal or end to the violence.
Evidence of possible civilian killings around Kiev has emerged as the Russian army has pulled back from the capital in the face of ferocious resistance from Ukrainian forces.
AFP reporters saw at least 20 bodies, all in civilian clothing, strewn across a single street in the town of Bucha on Friday. One had his hands tied behind his back with a white cloth, and his Ukrainian passport left open beside his body.
Over half a million people have returned to Ukraine: official
More than half a million people have returned to Ukraine since the start of Russia's offensive in February, the Ukrainian interior ministry said.
"During the past week, 144,000 people left Ukraine and 88,000 arrived. In total... around 537,000 of our compatriots have returned to Ukraine," the ministry said, citing data from the national border service.
US fully backs sending Ukraine weapons, aid
White House chief of staff Ron Klain says the US remains fully committed to providing a full range of economic and military support to Ukraine in its conflict with Russia, which he describes as “far from over.”
Klain credits Ukrainians for fighting off Russian troops in the northern part of Ukraine and says the US and its allies are sending weapons into the country “almost every single day.”
But he also tells ABC’s “This Week” that there are signs that Russian President Vladimir Putin is redeploying Russian troops to the eastern part of Ukraine.
Italy party chief wants Russia energy embargo
The head of Italy’s Democratic Party called for a full oil and gas embargo in reaction to images emerging of atrocities against civilians by Russian soldiers retreating from the Ukrainian capital, Kiev.
“How many #Buca before we move to a full oil and gas Russia embargo,” Enrico Letta wrote on Twitter Sunday. “Time is over.”
Italy gets 40 percent of its natural gas from Russia and officials have said it would take three years to make the transition to other sources.
Russian Defence Ministry on footage of dead bodies in Bucha:
- Denies claims by Kiev of mass murder of civilians by Russian troops
- All photographs and footage published by Ukraine are a "provocation" pic.twitter.com/2pemVPwHSG — TRT World Now (@TRTWorldNow) April 3, 2022
Russia pulls back from Ukraine's north
The Ukrainian military said Russian troops have completed their pullback from the country’s north.
The military’s General Staff said that Russian units have withdrawn from areas in the country’s north to neighbouring Belarus, which served as a staging ground for the Russian offensive.
The Ukrainian military said its airborne forces have taken full control of the town of Pripyat just outside the decommissioned Chernobyl nuclear power plant and the section of the border with Belarus. It posted a picture of the Ukrainian soldier putting up the country’s flag with a shelter containing the Chernobyl reactor that exploded in 1986 seen in the background.
Russia says it hits oil refinery, fuel depots near Ukraine's Odessa
The Russian armed forces hit an oil refinery and fuel depots near the port city of Odessa in southern Ukraine, the Russian Defence Ministry said.
"This morning, an oil refinery and three fuel and lubricants depots providing fuel to the Ukrainian army in the Nikolaev direction were destroyed near Odessa with high -precision sea and air-launched missiles," Igor Konashenkov, a Defence Ministry spokesperson, told journalists.
Blinken: Images of dead in Ukrainian town of Bucha a 'punch in gut'
US Secretary of State Antony Blinken said that the sight of multiple civilian bodies strewn along the streets of Bucha in Ukraine is "punch to the gut."
"You can't help but see these images as a punch to the gut," Blinken told CNN a day after horrific footage was widely aired of the town retaken from Russian forces.
"This is the reality of what's going on every single day as long as Russia's brutality against Ukraine continues," Blinken said.
Kremlin hopes peace negotiators can find a deal
Russia will achieve all of the aims of its "special military operation" in Ukraine and hopes that Moscow and Kiev can ultimately sign some sort of peace deal, the Kremlin said, Inferfax news agency reported.
HRW accuses Russian forces of ‘apparent war crimes’
A leading rights group said it had documented what it described as "apparent war crimes" committed by Russian military forces against civilians in Ukraine.
Human Rights Watch (HRW) issued a statement saying it had found "several cases of Russian military forces committing laws-of-war violations" in Russian-controlled regions such as Chernihiv, Kharkiv, and Kiev.
The statement, published in Warsaw, came one day after dead civilians were found lying scattered through the streets of the Ukrainian country town of Bucha, three days after the Russian army pulled back after a month-long occupation of the area 30 km (20 miles) northwest of Kiev.
Ukraine Mykolaiv Black Sea port hit in rocket attack- Interior Ministry
Several Russian rockets have hit Ukraine's Black Sea port of Mykolaiv, Anton Gerashchenko, an aide to the country's interior ministry, said.
Gerashchenko said in a social media post that local authorities had reported the attack.
Russian forces have attacked Ukraine's southern ports including Odessa, Mykolaiv and Mariupol as they try to cut Ukraine off from the Black Sea and establish a land corridor from Russia to Crimea, the peninsula Russia annexed in 2014.
Berlin condemns Bucha ‘war crime’, wants more Russia sanctions
Germany condemned the killings of civilians in the Ukrainian town of Bucha as a "terrible war crime" and called for fresh EU sanctions against Russia.
"This terrible war crime cannot go unanswered," Robert Habeck, vice chancellor and economy minister, told German newspaper Bild the day after the bodies of nearly 300 civilians were found in mass graves after Russian troops withdrew, local Ukrainian officials said.
"I think that a strengthening of sanctions is called for. That's what we are preparing with our EU partners," Habeck added.
Russia will ask for rouble payments for other goods - Kremlin
Russia will ask for rouble payments for other exports and the West's sanctions have accelerated the erosion of confidence in the US dollar and the euro, the Kremlin said.
"I have no doubt that it will in the future be extended to new groups of goods," Kremlin spokesman Dmitry Peskov said of Russia's demand for rouble payments for gas, the RIA news agency reported.
Ukrainians disturbed by images of bodies of civilians scattered along a street in Bucha city, but not surprised. Journalist Obaida Hitto reports pic.twitter.com/UTrioM1rVi — TRT World Now (@TRTWorldNow) April 3, 2022
Ukraine: Killing of civilians in Bucha a 'deliberate massacre'
The killing of civilians in the town of Bucha near Kiev was a "deliberate massacre", Foreign Minister Dmytro Kuleba has said, after the hasty retreat of Russian forces from the area.
"Bucha massacre was deliberate. Russians aim to eliminate as many Ukrainians as they can. We must stop them and kick them out. I demand new devastating G7 sanctions NOW," Kuleba wrote on Twitter.
In Bucha, the bodies of nearly 300 civilians were found in mass graves after Russian troops withdrew, local officials said.
UK: Alleged attacks on civilians must be probed
Allegations of attacks against civilians must be investigated as "war crimes", Britain's Foreign Secretary Liz Truss has said, adding that the UK would fully support any such move by the International Criminal Court.
"As Russian troops are forced into retreat, we are seeing increasing evidence of appalling acts by the invading forces in towns such as Irpin and Bucha," Truss said in a statement, referring to places near Kiev.
"Their indiscriminate attacks against innocent civilians during Russia's illegal and unjustified invasion of Ukraine must be investigated as war crimes."
EU chief vows more sanctions after 'atrocities' near Kiev
EU chief Charles Michel has pledged further sanctions on Moscow as he condemned "atrocities" carried out by Russian forces near Ukraine's capital.
"Shocked by haunting images of atrocities committed by Russian army in Kiev liberated region #BuchaMassacre," European Council head Michel tweeted. "EU is assisting Ukraine & NGO's in gathering of necessary evidence for pursuit in international courts."
Michel added that "further EU sanctions & support are on their way".
'Blasts heard' in Russian city of Belgorod near Ukraine border
Two blasts have been heard in the Russian city of Belgorod near the border with Ukraine, two witnesses have told Reuters news agency, days after Russian authorities accused Ukrainian forces of striking a fuel depot there.
The cause of Sunday's blasts was not immediately clear. A witness said the blasts were so powerful that they rattled the windows of her home. An official from the region said there had been a blast in Tomarovka village, but that no one was hurt.
The blasts come days after Russia's defence ministry said two Ukrainian helicopters struck a fuel depot in the city, some 35 kilometres from the border with Ukraine, after entering Russia at extremely low altitude in the early hours of Friday.
Ukraine says Russian forces have 'abducted' 11 mayors
Eleven local community leaders in Ukraine have been kidnapped by Russian forces, deputy prime minister Iryna Vereshchuk has said.
"Up to today, 11 heads of local communities in the regions of Kiev, Kherson, Kharkiv, Zaporizhzhia, Mykolaiv and Donetsk are in captivity," she said in a video message posted on her Telegram account.
"We are informing the International Committee of the Red Cross (ICRC), the UN, all possible organisations, just like for the other civilians who have disappeared."
Ukraine March grain exports fall sharply vs Feb
Ukrainian grain exports in March have been four times less than February levels, due to Russia's attacks, the economy ministry has said.
March grain shipments overseas included 1.1 million tonnes of corn, 309,000 tonnes of wheat, and 118,000 tonnes of sunoil, the ministry added.
Ukraine was the world's fourth-largest grain exporter in the 2020/21 season, according to International Grains Council data, with most of its commodities shipped out via the Black Sea.
But with the conflict raging along much of the coast, traders are being forced to transport more grain by rail.
Ukrainian forces encounter stunning scenes of death and destruction, as they have retaken the area surrounding Kiev pic.twitter.com/J2GKXntlxA — TRT World Now (@TRTWorldNow) April 3, 2022
Russian missiles strike oil plant in Odessa
The Russian military has said it struck an oil processing plant and fuel depots around the strategic Black Sea port of Odessa. No casualties were reported.
Russian Defence Ministry spokesperson Major general Igor Konashenkov said Russian ships and aircraft fired missiles on Sunday to strike the facilities, which he said were used to provide fuel to Ukrainian troops near Mykolaiv.
Konashenkov also said Russian strikes destroyed ammunition depots in Kostiantynivka and Khresyshche.
Governor: Ukraine Kremenchug refiner destroyed after attack
Ukraine's Kremenchug oil refinery has been completely destroyed after a Russian attack, Dmytro Lunin, governor of the Poltava region, has said on television.
"The fire at the refinery has been extinguished but the facility has been completely destroyed and can no longer function," Lunin said.
Russia: Peace talks not ready for leaders' meeting
Russia has said peace talks with Ukraine have not progressed enough for a leaders' meeting and that Moscow's position on the status of Crimea and Donbass remain unchanged.
Russian chief negotiator Vladimir Medinsky said Ukraine had agreed it would be neutral, not have nuclear weapons, not join a military bloc and refuse to host military bases.
On the questions of Crimea, which Russia annexed from Ukraine in 2014, and two Russian-backed rebel regions in Donbass that President Vladimir Putin recognised as independent in February, Medinsky indicated there had been no progress.
"The draft agreement is not ready for submission to a meeting at the top," he said on Telegram. "I repeat again and again: Russia's position on Crimea and Donbas remains UNCHANGED."
Evacuation attempts of people from Mariupol to continue
Work on evacuating people with the help of Red Cross from Mariupol will continue on Sunday with buses attempting to come close to the besieged city, Ukrainian Deputy Prime Minister Iryna Vereshchuk has said.
"Seven buses will try to get closer to Mariupol, accompanied by the International Committee of the Red Cross," Vereshchuk said in an online video posting.
There will be 17 buses prepared to evacuate people from Mariupol and Berdyansk, she said.
Lawmakers seek punishment for implementation of sanctions on Russian territory
Russian lawmakers will propose measures seeking punishment for the implementation of sanctions on Russia's territory, a senior lawmaker has said.
"My colleagues from the State Duma and I have finished the work and on Monday we will introduce amendments to the Criminal Code for the implementation of restrictive measures (sanctions) imposed by foreign states on the territory of the Russian Federation," Andrei Klishas wrote on his Telegram channel.
Klishas did not specify how Russia would identify or punish those who implemented sanctions.
Russia to export food to friendly countries in roubles or their currencies
Russia will only export food and crops to "friendly countries" in roubles or in their national currencies, RIA news agency has cited Dmitry Medvedev, deputy secretary of the country's Security Council, as saying.
Poland would like more US troops in Europe: Ruling party boss
Poland would welcome a 50 percent increase in the number of US troops in Europe, the leader of the country's ruling party has said, as Warsaw calls for tougher action against Moscow.
"Poland would be pleased if the Americans increased their presence in Europe from the current 100,000 soldiers up to 150,000 in the future due to Russia's increasing aggressiveness," Jaroslaw Kaczynski told German newspaper Welt am Sonntag.
"Of these, 75,000 soldiers should be stationed on the eastern flank; ie, on the border with Russia; 50,000 soldiers in the Baltic states and Poland," he said in the interview, which was also published on the website of Poland's ruling party Law and Justice.
Ukraine: Explosions rock Odessa
Air strikes have rocked Ukraine's strategic Black Sea port Odessa in the southwest. The blasts sent up at least three columns of black smoke. The attack comes as Russian forces appeared to be withdrawing from the country's north.
"Odessa was attacked from the air," Anton Herashchenko, adviser to the interior minister, wrote on his Telegram account. "Fires were reported...Some of the missiles were shot down by air defence." The historic city of around one million people is Ukraine's largest Black Sea port.
On Friday, Ukraine's President Volodymyr Zelenskyy warned Russia was consolidating and preparing "powerful strikes" in the south, joining a chorus of Western assessments that Moscow's troops were regrouping.
UK: Russia preventing Ukraine resupply by Black Sea
Russian naval forces have continued to blockade the Ukrainian coast on the Black Sea and Sea of Azov, preventing resupply by sea, British military intelligence has said.
Russia retains the capability to attempt an amphibious landing, but such an operation is likely to be increasingly high risk due to the time Ukrainian forces have had to prepare, the Ministry of Defence tweeted.
“Mines within the Black Sea pose a serious risk to maritime activity,” it said.
The report said the origin of the mines was unclear and disputed but that they were almost certainly the result of Russian naval activity in the area, demonstrating how its attacks on Ukraine is affecting neutral and civilian interests.
Lithuanian documentary film director feared dead
Lithuanian film director Mantas Kvedaravicius has been killed in Ukraine's Mariupol, where he had long documented the besieged port city, according to colleagues and a media report.
"Lithuanian documentary writer Mantas Kvedaravicius, was murdered today (Saturday) in Mariupol, with a camera in his hands, in this.... war of evil," Russian film director Vitaly Mansky said on Facebook.
Kvedaravicius was known for his conflict-zone documentary "Mariupolis". It is the portrait of a Ukrainian city under siege with a strong will to live. The strategic port is in the breakaway region of Donetsk, neighbouring Russia, where pro-Russian fighters have been fighting Ukraine since 2014.
The Red Cross is still trying to get people out of the nearly-obliterated Ukrainian city of Mariupol, but conditions are still dangerous pic.twitter.com/55qy3FqQfn — TRT World Now (@TRTWorldNow) April 3, 2022
Humanitarian corridor created in Mariupol — Russia
Moscow decided to open another humanitarian corridor in the Ukrainian city of Mariupol to evacuate civilians and foreign nationals at the request of Türkiye’s president, the Russian Defense Ministry has said.
Moscow will provide full assistance in the evacuation of civilians and foreign citizens in accordance with Recep Tayyip Erdogan's request to Russian President Vladimir Putin, said the ministry.
The statement said that on April 3 at 00:00 Moscow time, the humanitarian corridor from Mariupol to Berdyansk was opened and strict compliance with the "regime of silence" on the way of movement was guaranteed. The regime of silence is the name given to the cease-fire for a certain period in certain areas to evacuate civilians.
Poland accuses Berlin, Paris of being close to Moscow
Poland's deputy prime minister has accused France and Germany of being too close to Russia in an interview published on Sunday, as he condemned Berlin's behaviour towards Moscow before the Ukraine offensive.
"Germany, like France, has a strong bias in Moscow's favour," Jaroslaw Kaczynski, who is also the leader of the ruling Law and Justice (PiS) party, told German daily Die Welt in an interview.
Kaczynski saved his strongest words for Berlin. "Over the years, the German government did not want to see what Russia was doing under the leadership of (Russian President Vladimir) Putin and we see the result today," Kaczynski said.
Civilians found dead as Russia withdraws from Kiev
Civilians in Ukraine’s Bucha province, near the national capital of Kiev, were found dead with their hands tied, Mikhail Podolyak, an adviser to Ukrainian President Volodymyr Zelenskyy has said.
“Bucha, Kiev region. The bodies of people with tied hands, who were shot dead by Russian soldiers lie in the streets,” Podolyak wrote on Twitter.
“These people were not in the military. They had no weapons. They posed no threat. How many more such cases are happening right now in the occupied territories?” he added.
The ruble has regained nearly all its losses since Russia's incursions on Ukraine, despite heavy sanctions.
How is this possible? Taha Meli Arvas explains 'In Brief' pic.twitter.com/HARWp4xjU9 — TRT World (@trtworld) April 2, 2022
For live updates from Saturday (April 2), click here
Source: TRTWorld and agencies
https://www.trtworld.com/europe/live-blog-humanitarian-corridor-created-in-mariupol-russia-56033
The Ukraine crisis is not so far away that we can't recognise a chilling degree of similarity in China's moves that may result in a military base in the Solomon Islands, only 2000km from Australia. It worries me that Anthony Albanese is not willing to engage on foreign affairs. He appears to have no external policy. He is very keen to talk about climate change, but has no answer when asked about China. Just lately, have you heard anyone from Ukraine asking about their climate change policy? Like Australia, Ukraine has undeveloped riches. Many of Australia's discovered deposits are either not being mined, or are held up with environmental red tape.
Minerals mined here are rarely processed in Australia. Listening to The Greens, "Leave it in the ground!" cries, Australia may soon lapse into a government ban on mining minerals. Chinese industry needs Australia's minerals. If we don't mine our resources, we are inviting China to move in and develop our resources for themselves. So consider Albanese's obsession with Climate Change. If Australia restricts mining, as part of our emissions-reduction scheme, or we restrict mining with costly abatement schemes, might not we be under similar threat to that now being experienced by the citizens of Ukraine? Ukraine has a massive agricultural industry, number one in sunflower oil, and 16 per cent of the world's grains, for starters. But it's what's under the ground that has energised Putin. Ukraine has the world's largest iron ore deposits! And it's a major coal exporter. Ukraine has palladium, more precious than gold or platinum, needed for catalytic converters, and also for hydrogen fuel cells. Currently, palladium demand far outstrips supply. Russia dominates the market. But guess what? The Ukrainian shield has 22 rare-metal formations, including lithium, beryllium, zirconium, titanium and zircon. Ukraine's recoverable rare-metal resources are the biggest in Europe. Russia's attack on Ukraine halts half of the world's neon gas output for computer chips. "Some 45 per cent to 54 per cent of the world's semiconductor-grade neon, critical for the lasers used to make chips, comes from two Ukrainian companies, Ingas and Cryoin," Reuters reported.
Russia, therefore, hopes to gain control of the neon gas market, but, in the meantime, grossly disrupt already strained world computer chip production. Putin would love this one: it is estimated that over 90 per cent of U.S. semiconductor-grade neon supplies are imported from Ukraine, according to Wikipedia. So cutting Ukraine's neon supply hits critical US digital industries. Ukraine's natural gas is mostly imported from Russia. However, Ukraine has two major undeveloped shale gas deposits containing a total of 1.2 trillion cubic metres of gas which could not only supply its own gas, but be available for export to Europe, in competition with Russia. Russian gas is still being imported into Britain and the EU despite the trade blockades. The war in Ukraine has revealed the lies we are being told about renewables in the EU. The EU has paid more than $28billion for Russian oil and gas since the start of the invasion alone. Shell was developing Ukraine's Donetsk gas field, but quit in 2015. Donetsk is not far from destroyed Mariupol, and Crimea which Russia annexed in 2014. In peace proposals, Russia expects the Donetsk gas to come under Russian control. And by some sort of coincidence, Russia has just signed a major gas deal with China! Ukraine's second gas deposit is in the west of Ukraine near the town of Lviv, which means that after this conflict is over, that deposit could become operational. The EU is Ukraine's largest trading partner. So why hasn't Ukraine joined the EU? Surely Russia would not have attacked an EU country?
Ukraine took the first step by joining the Deep and Comprehensive Free Trade Area (DCFTA) in 2017. Like Ukraine, Australia is rich in minerals. If an incoming government decides not to mine our wealth, not supply our minerals to China, then we may find why China wants bases in the Solomons. Have you heard Anthony Albanese say what his China policy is? No, neither have I. But China will be watching closely, and soon could have its military very close by.
https://www.dailyadvertiser.com.au/story/7683081/will-they-be-coming-for-all-our-riches-too/?cs=9637
In a world driven by consumerism where the majority of products fail to be recycled, mining remains essential for providing resources to help economies grow and improve standards of living. However, is this causing us to dig ourselves a growing hole of environmental issues? We examine the biggest environmental problems caused by mining.
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The mining and processing of minerals provides us with the building blocks required to form much of the infrastructure needed to support modern societies. In 2020, the top 40 mining companies had together accumulated a total revenue of USD$544 billion, which was up 4% on the previous year. Whilst demand for some resources such as coal is falling, other resources such as copper are seeing increasing demand as new products and technologies require different materials. For example, a single lithium-ion electric vehicle battery pack (a type known as NMC111) uses around 16kg of lithium, 46kg of nickel, 46kg of cobalt and 43kg of manganese.
Chart showing the annual revenues accumulated by the top 40 mining companies from mining different materials. Source: PwC
However, the process of mining remains intense and invasive, and operations often leave large environmental impacts on the local surroundings as well as having wider implications for the environmental health of the planet.
Water Use in Mining
Mining and mineral processing operations often have high water footprints as many stages require the use of water. Examples include dust mitigation, removing soluble particles, sieving and separation processes, and in creating tailings dams for waste management. Although some stages, such as the separation of minerals, can reuse and recycle the water, other stages such as spraying to remove airborne dust will lead to pollution of the water, preventing water from being recycled. High water use in mining operations can lead to reduced access for local people to uncontaminated freshwater supplies and can result in a local area suffering from water stress.
However, compared to other industries, mining has a relatively small water usage and often a large fraction of the water used is saline so does not have much use in other industries or domestically. For example, the US has one of the highest rates of mineral production in the world after China and Australia; however, the water used for mining only makes up about 1% of the total national water use with 47% of this water being low quality saline water.
Chart showing water use from different sectors in the US in 2015. Source: USGS
Mining Pollution
There have been many documented instances of environmental pollution caused by mining operations, which are often caused by leakages of mining tailings. Mining tailings are the materials left behind after the economically valuable fraction of material has been extracted. These materials are often stored in large tailings dams to prevent environmental damage as tailings are often radioactive, toxic or acidic. Tailings consist of valuable substances used in the extraction process such as cyanide, mercury or arsenic; therefore, modern mining programmes often aim to remove these harmful but valuable chemicals to reuse for further mineral separation. In addition to improving efficiency and cutting costs, this minimises the risk of environmental damage by reducing the toxicity of the tailings.
As a result of strict international regulations, pollution caused by mining has been dramatically reduced; however, it is still an ongoing problem in many developing countries where illegal small-scale operations known as ‘artisanal mining’ occur. These low-tech, subsistence mining operations are often unsafe, and the poor management of sites leads to environmental pollution in the region. The problems associated with artisanal mining remain complex as it is difficult to identify and shut down all of these small operations. Furthermore, although artisanal mining can result in dangerous environmental pollution, it does help to alleviate the estimated 40 million people who participate in this industry from poverty.
Source: Wikimedia Commons
How Does Mining Impact the Land?
Another key environmental problem associated with mining projects is the land use change that occurs, not only from drilling and excavating open pit mines but also the changes that occur as result of the development of surrounding infrastructure. The latter can include camps to provide accommodation for the miners as well as the railways and roads needed to transport the mined materials. The infrastructure created by mining operations in remote, untouched landscapes can lead to improved access to these regions which may result in further human-caused disturbance to the local ecological systems.
The impact of mining operations on the surrounding land is also closely linked to the ecological setting of the mining sites. For example, the deforestation of primary forests caused by mining for iron ore in the tropical rainforests of Gabon is likely to leave more devastating and longer term ecological damage compared to mining iron ore in the deserts of northern Australia.
A village was set up to support 15,000 miners working in the ruby mine near Ambatondrazaka, Madagascar. Source: Pardieu et al. (2017).
However, compared to many other industries such as agriculture, mining uses relatively small pockets of land, and the future of mining could move to using techniques that are arguably even less invasive on the environment by using less land and emitting less pollution. Methods could include underground mining where ore is extracted below the surface with little waste and minimal ecological scarring of the Earth’s surface; phytomining where plants accumulate high concentrations of metals which can then be processed; or even asteroid mining where materials from asteroids could be harvested for their use on Earth.
Greenhouse Gas Emissions from Mining
It is also important to consider the impact of land use change in the context of greenhouse gas emissions. The destruction of vegetation and soils when land is cleared for mining results in the release of carbon dioxide and other greenhouse gases. Another important consideration relates to the quantity of greenhouse gases released per unit mass of mined material, as some less concentrated mineral deposits require proportionally higher energy usage. For example, mining a kilogram of diamond produces around 800,000 kg CO2e compared to a kilogram of a highly abundant mineral such as iron which produces only about 2 kg CO2e.
The creation of products from mined materials uses high amounts of energy throughout the different stages of the production chain and most of this energy is currently sourced from the burning of fossil fuels.
Diagram showing the life cycle of a product made from mined resources where each stage contributes towards the product’s total carbon footprint.
Reducing reliance on fossil fuels in the mining process by electrifying the technology and running it off a green energy grid is a key aim to allow mining to continue along a more sustainable path. Automation of many of the stages of mining is also another vital change that will not only improve safety but also increase efficiency and cut energy costs. However, it will remain difficult to swiftly transition the mining industry into becoming a net zero emitter, and with the short supply of many rare earth metals, it is crucial to reuse and recycle mined materials wherever possible.
Looking Ahead
Overall, when considering the environmental ramifications of mining, it is important to weigh up the social and environmental damages caused by extracting the minerals against the benefits gained from the use of the final product. As consumers, it is important that we are aware that our personal decisions to purchase new products containing finite mined materials are associated with high water use, land use, pollution, and the release of greenhouse gases.
Mining of further resources is required to support the growing global population and allow for the creation of green infrastructure and renewable energy generation. It is vital that governments and companies continue to innovate to create clean mining technologies with strict environmental regulations which will enable the mining industry to pave the way for a sustainable and hopeful future.
By Published by the Foreign Policy Research Institute
By June Teufel Dreyer*
(FPRI) — Alerted to their vulnerability on rare earths (REEs) when China threatened to withhold supplies to Japan in September 2010, industrialized countries began to be concerned with developing alternate sources. For Japan in particular, REEs are indispensable to the production of the catalytic converters of the automobile industry that is a mainstay of the Japanese economy. They are also components of high technology devices that include permanent magnets, rechargeable batteries, smart phones, digital cameras, light emitting-diode lights, clean energy, and fighter planes.
Although found in many places in the world outside of China—several African and Latin American countries, Canada, the western United States and Vietnam, among others—and not actually rare, the mining and refining processes of the seventeen entities that are classified as REEs had gradually been ceded to the People’s Republic of China (PRC). The process is highly labor intensive and generates significant pollution, especially since REEs are often found in conjunction with radioactive substances. China with its lower wages and more lax environmental laws proved an attractive alternative that companies there were eager to take advantage of.
What Can Be Done?
In the United States, existing concerns were magnified by China’s increasingly aggressive military posture, the pandemic-induced economic downturn that revealed U.S. dependence on the PRC for even face masks and personal protective equipment, and a commitment to combat climate change by transitioning from fossil-fueled cars to electric vehicles (EVs). In the waning days of the Trump administration, Congress passed a pandemic aid spending package that included over $800 million to fund research on rare earths and strategic minerals that advocates hoped would counteract Chinese dominance over the sector. In addition to providing incentives for research and development on REEs and scarce metals, the law requires the U.S. Geological Survey to forecast metals demand much as the Energy Department forecasts oil demand. Leaving no doubt as to the aim of this enhanced interest, a clause in the bill requires an annual report from the Director of National Intelligence on China’s overseas mining investments. The bill was hailed for its potential to refresh investment in renewable energy after the pandemic downturn, and as a “bipartisan win and a watershed policy for a U.S. mine-to-magnet supply chain.”
Funding does not always translate into results but, as evidenced by numerous reports in mining industry publications, the grants definitely incentivized research. Among other achievements, University of West Virginia scientists working under a National Energy Technology Laboratory grant announced a breakthrough on the partial recovery of REEs from Appalachian coal resources, and Wayne State University researchers unveiled a new process for extracting REEs from fly ash.
Fears that the Biden administration, with its greater commitment to environmental protection, would be less concerned with critical mineral supplies proved largely unfounded. In February 2021, Executive Order 14017 directed the secretaries of Commerce, Energy, and Defense to submit reports within 100 days identifying risks in the supply chain for critical minerals and other identified strategic materials including rare earth elements, as determined by the Secretary of Defense, and policy recommendations to address the risks.
The weighty hundred day report, released in June, found inter alia that surging domestic production of REEs and critical metals had not kept pace with the rapid expansion of the Chinese economy, leading to an equally substantial increase in China’s net import reliance for strategic and critical materials. Increased demand for cobalt, copper, lithium, platinum group metals and REEs and other materials resulted in stepped up Chinese efforts to capture the entire value chain for such technologies as permanent magnets, batteries, and semiconductors.
On the anniversary of EO 14017’s announcement, a surprisingly brief fact sheet reported progress to date.
Mountain Pass (MP) Materials, which had prior to its bankruptcy been the last U.S. REE production facility, was awarded $35 million to separate and process heavy REEs at its California plant in what was to become an end-to-end domestic permanent magnet supply chain. MP is to invest another $700 million and create more than 350 jobs in the magnet supply chain by 2024. If successful, said the fact sheet, this would reduce China’s current 87 percent of the global permanent magnet market. However, the announcement did not say by how much or by when, nor did it mention that the consortium that rescued Mountain Pass from bankruptcy included China’s Shenghe Resources Holding Company as a partner holding exclusive sales rights and entitled to a share of the profits.
Berkshire Hathaway will break ground on a new demonstration facility in Imperial County, California to test the viability of its sustainable lithium extraction process from geothermal brine, this being part of a multibillion-dollar investment in sustainable lithium production over the next five years. Along with South America’s “lithium triangle” of Argentina, Bolivia, and Chile, Imperial Valley contains some of the largest deposits of lithium in the world. If successful, the venture could achieve commercial scale production of battery grade lithium hydroxide and lithium carbonate by 2026.
Redwood Materials is discussing a pilot project in partnership with Ford and Volvo for collection and recycling of battery grade lithium hydroxide and carbonate by 2026. Redwood has also established a joint venture with Ford to build a recycling facility in Tennessee and its intention to begin construction on a new cathode manufacturing facility in Nevada in 2022. The fact sheet did not mention that Volvo is owned by China’s Geely Holding Group.
Funded by the Bipartisan Infrastructure Law (BIL), a $140 million demonstration project will recover REEs and critical minerals from coal ash and other mine waste. An added attraction is that the processing is expected to create jobs in an Appalachia already suffering from efforts to shut down the coal industry that has long undergirded its historically fragile economy. The BIL also allocates $3 billion for investment in refining battery materials such as lithium, cobalt, nickel, and graphite, and battery recycling facilities.
Welcome as these developments are, note that they involve the future tense. Bringing the projects into production will take an estimated ten to fifteen years under best-case scenarios. Scenarios are not, however, best-case. Although the White House fact sheet described its cooperation with partners and allies as “laser focus[ed]” on boosting strong labor, environmental and environmental justice, community engagement, and tribal consultation standards” doing so is apt to be a difficult and protracted process. As just one case in point, resistance to Lithium Americas’ plans to develop a facility in the northern Nevada desert area of Thacker Pass has energized a collection of environmental activists, local Paiute-Shoshone and Winnemucca tribes, ranchers, and concerned residents. Joined by four regional environmental nonprofits in other areas, the diverse coalition has filed suit against the Department of the Interior, bolstering their case with Environmental Protection Agency predictions that toxic water with high levels of uranium, mercury, arsenic, and more than a dozen other contaminants could seep into groundwater from the tailings and other waste of the mine. Native Americans consider the area a sacred space that contains irreplaceable artefacts that are integral to their cultures. The area is as well the home of the pronghorn antelope and the greater sage grouse, the latter on the verge of being listed as a threatened species. Moreover, despite its name, Lithium Americas’ majority stakeholder is China’s Ganfeng Lithium, the world’s largest producer of the element. On the basis of this and other evidence, critics argue that clean energy is therefore not clean and that electric cars, among other forms of allegedly clean energy, are contaminating the environment. In the words of one activist, “instead of the Gulf Oil Spill, we have the bulldozing of an increasingly rare desert habitat…to save the planet we have to stop destroying [it].”
Chinese Actions
Meanwhile, China has been active in consolidating its position in rare earths and scarce metals. In January 2021 it promulgated draft regulations on the administration of rare earths described as having the stated aim of promoting the high quality development of the industry, stabilizing the market, and safeguard[ing] national interests and industrial security.” While these are certainly laudable goals, the state-run Global Times also described the new regulations as a “deterrent,” a “bargaining chip,” and a “tool of reprisal” against the United States. In December, Beijing announced the merger of three state-owned rare earth mining companies—Aluminum Corporation of China, China Minmetals, and the Ganzhou Rare Earth Group— into an entity that controls nearly 70 percent of the PRC’s output of key metals. The efficiency advantages of the merger are unobjectionable, though Chinese media also described the company less reassuringly as “an aircraft carrier.” And London’s Financial Times reported that Chinese government officials had been inquiring how badly companies in the US and Europe, including defense contractors, would be affected if China restricted rare earth exports during a bilateral dispute—would it, for example, have trouble making F-35 fighter jets if China were to ban exports? This prompted Hu Xijian, the fiery then-editor of Beijing’s Global Times to accuse the Financial Times of “hyping the confrontational atmosphere between China and the U.S., which is welcomed by some Western media outlets.” His words, however, gave little comfort to those who hoped for a resolution of the confrontation: “No matter how much lethality the ‘rare-earth war’ can pose, the power is in China’s hands…this is also a prerequisite to strike back when necessary at foreign companies which harm China’s national interests.” Hu closed by saying that, although cooperation benefits both and confrontation services neither, “if China is severely hurt, its powerful revenge will be inevitable.”
Hu is correct about power being in China’s hands. Yet the PRC is not without problems in its quest for dominance of REE and scarce metal supplies. In March 2021, Greenland voters turned out of office a party that had favored a controversial Chinese-backed REE mining venture, with opposition to the mine being the major factor in the election. With copper prices at an all-time high, Peru’s Las Bambas mine, which generates 2 percent of world copper production, was shut down in March 2022 by protests against ecological deterioration caused by the Chinese-owned MMG Corporation. As for cobalt, where prices are also at record highs, a Congolese court recently stripped China Molybdenum from control of its Tenke Fungurume mine after charges that it evaded millions of dollars in royalty payments. Investigations have expanded to include several other Chinese mining companies. Procurement of nickel, where demand has outstripped supply because of the increasing popularity of EVs, has run into problems as well. Also in March the London Metal Exchange was shut down when Tingshan Holding Group, the world’s leading producer of nickel and stainless steel, failed to meet a margin call, causing prices to soar to a record of more than $10,000 a ton. According to Nikkei, Japan’s leading economic daily, state-owned China Construction Bank is having troubling finding dollars to pay for nickel financing. None of these problems are unsolvable: Greenlanders could return the pro-mining party to power in the next election; MMG can take steps to assuage the concerns of neighbors of the Las Bambas mine about pollution. The Congolese government may simply be seeking a renegotiation of the terms of the contract it originally signed. And China Construction Bank can be expected to reach an agreement to cover the liability of a disastrous short sell bid by Tingshan’s head. But at the same time, they should caution against views of the inevitability of China’s rise toward global supply chain supremacy.
Conclusion
A start has been made toward establishing U.S. domestic supply chains in conjunction with allies and partners, but there is far to go: in 2021, a press release from the Energy Department’s Office of Fossil Energy stated that the U.S. currently imports 80 percent of its REEs directly from China with the remaining portions indirectly sourced from China through other countries. It is completely dependent on imports for 14 out of 35 critical minerals. Most recently, Chinese companies are reportedly already active in pursuit of Afghanistan’s mineral resources. China has denied any intention to weaponize rare earth exports—unless national security interests are at stake. Since opinions on what constitute national security interests will differ, and Beijing of course will be the judge, this is not reassuring.
Unless the U.S. can find an acceptable happy medium between our growing needs for REEs and scarce metals on the one hand and environmental concerns on the other, we will continue to be hostage to the temperature of Sino-American relations. Some attention to the folly of establishing domestic supply chains independent of China while allowing Chinese companies like Ganfeng and Shenghe to participate in them would also be useful.
The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.
*About the author: June Teufel Dreyer, a Senior Fellow in the Asia Program at the Foreign Policy Research Institute, is Professor of Political Science at the University of Miami, Coral Gables, Florida.
Source: This article was published by FPRI
The government is planning certain modifications in the PLI Scheme for speciality steel and has extended the last day to submit the applications by about a month till April 30, a senior government official has said.
On July 22 last year, the Union Cabinet chaired by Prime Minister Narendra Modi had approved a Rs 6,322-crore PLI scheme to boost the production of speciality steel in India.
The move is expected to attract an additional investment of about Rs 40,000 crore and generate 5.25 lakh job opportunities.
March 29, 2022, was the last date to submit the applications for investors looking to invest under the scheme, which has been extended to April 30, the official in the Ministry of Steel told PTI.
There will be certain additions in the modified scheme, which are underway, he said.
Explaining the rationale behind the move, he said the step has been taken on the request of steelmakers, who had raised certain concerns over the scheme.
"We are working on a uniform incentive on the production of speciality steel. More grades, especially those used in the defence sector, will be added to the scheme. Cap on production is also one area we are looking at," he said on the possible changes in the modified scheme.
In the initial scheme, five categories of speciality steel -- coated/plated steel products, high strength/wear-resistant steel, speciality rails, alloy steel products, steel wires and electrical steel -- were included.
Industries like automobiles, electrical, defence and pipes are consumers of these grades of steel.
Earlier, speaking with PTI, Minister of State for Steel Faggan Singh Kulaste had said he was confident of a huge number of domestic and internal players coming forward to avail the benefits of the scheme and invest in India to produce speciality steel.
Kulaste had also said that increasing per-capita steel consumption and the production of special steel, as well as enhancing raw material security, will remain the key focus areas of the government in 2022.
The government aims to save Rs 33,000-crore foreign exchange (forex) that goes out of India annually in exchange for the import of speciality steel.
The strong seasonal tailwinds that blow during the first half of April have helped the ASX200 add 20 pts (0.27%) today to 7513, as it looks to make it four straight weeks of gains.
Concerns that Russian war crimes and possible new sanctions on Russia might lead to a Monday morning sell-off eased as crude oil futures opened below $100 p/b and U.S equity futures re-opened little change from Friday’s close.
Nonetheless, the geopolitical disaster in Europe was again the driver as investors sought to increase exposure to Materials and Energy stocks, fuelling the ASX200’s irrepressible march towards all-time highs.
The Materials sector added 1% led higher by a 3% rally in Fortescue Metals (FMG) to $21.70. Mineral Resources (MIN) added 3.43% to $56.46. BHP Group (BHP) added 0.13% to $52.46 and Rio Tinto (Rio) lifted by 0.27% to $120.66.
Utilities also made good gains as AGL(AGL) added 2.82% to $8.03, Origin Energy added 0.63% to $6.43 as did energy stocks. Woodside Petroleum (WPL) added 1.04% to $33.02. Santos (STO) added 0.25% to $7.92 while Beach Energy (BPT) added 0.32% to $1.57.
Key IT stocks have made gains as yields marked time ahead of tomorrow’s RBA meeting.
As the RBA is expected to again leave the cash rate unchanged at 0.1%, the real focus will be on any hawkish language that indicates the RBA is moving closer to hiking interest rates for the first time since 2010.
Zip Co (Z1P) added 6.46% to $1.56. Sezzle (SZL) added 5.62% to $1.41, Xero (XRO) added 2.30% to $103.36 and Seek (SEK) gained 1.07% to $29.20. Afterpay owner Block (SQ2) shed 0.15% to $180.23, Appen (APX) closed flat at $6.88, while Life 360 (360) lost 1.57% to $5.65.
The big banks ended lower. Westpac (WBC) fell 0.17% to $23.91. ANZ fell 0.22% to $27.12. Commonwealth Bank (CBA) lost 077% to $103.72, while National Australia Bank (NAB) lost 0.80% to $32.07.
Healthcare names were mostly higher on the day. Cochlear added 1.08% to $225.44. BioTech giant CSL added 0.53% to $267.79, while Ramsay Health Care (RHC) lost 0.16% to $64.35.
Lithium miners made substantial gains. Liontown Resources (LTR) surged 9% to $2.12, Allkem (AKE) lifted by 7.34% to $13.31. Pilbara added 5.54% to $3.62, while Iluka (ILU) shares popped by 6.08% to $12.22 after it received a A$1.25b Federal loan to build a rare earths refinery in WA.
In M&A news, Pendal (PDL) are currently up close to 20% at $31.99 after a A$2.4m bid from rival funds manager Perpetual (PPT).
The AUDUSD is trading higher at .7515, again eyeing the .7555 high of October 2021.
https://www.cityindex.co.uk/market-analysis/asx200-afternoon-wrap-4th-of-april-2022/
Aussie shares were set to open higher for the first time in three sessions following a positive finish in the US as investors weighed a jobs miss and a recession indicator.
ASX futures rallied 19 points or 0.25 per cent. The S&P/ASX 200 broke its longest winning run of the year with back-to-back losses at the end of last week.
Iron ore prices surged to eight-month highs on Friday, lifting BHP and Rio Tinto in overseas trade. Crude oil, gold and copper retreated.
Wall Street
US stocks ended a choppy session with a late up-swing as energy prices retreated and investors bet softer-than-expected employment data was still strong enough to maintain the economic recovery.
The S&P 500 climbed 15 points or 0.34 per cent on the first session of the new quarter. The Dow Jones Industrial Average swung to a gain of 140 points or 0.4 per cent after being down more than 100 points. The Nasdaq Composite added 41 points or 0.29 per cent.
Investors took their time to warm to news the economy created 431,000 new jobs last month. The result was below the Dow Jones estimate of 490,000, but not by enough to ring alarm bells. The jobless rate fell to a two-year low at 3.6 per cent.
A recession signal from the bond market indicated the report was unlikely to stop the Federal Reserve raising rates sharply this year. The two-year treasury yield traded above the ten-year yield, an inversion of the usual relationship. The last inversion occurred in 2019, shortly before the pandemic pushed the global economy into recession.
When an inversion of the yield curve occurs “there has been a better than two-thirds chance of a recession at some point in the next year and a greater than 98% chance of a recession at some point in the next two years,” investment group Bespoke said.
CME’s FedWatch tool indicated the odds on a 50-basis points increase in rates at next month’s meeting stood at 73.3 per cent. Chicago Fed President Charles Evans said there was no major risk in 50-basis-point increases to get rates back to neutral from record-low settings.
Bank stocks wobbled as the yield inversion depressed lending margins. Citigroup shed 2 per cent, Bank of America 0.78 per cent and JPMorgan Chase 0.74 per cent.
Defensive stocks led after other economic reports also came in weaker than economists expected. Construction spending and manufacturing data both missed targets.
Australian outlook
The March rally looks set to resume despite an unconvincing late rally in the US. A surge in iron ore should keep the market-leading miners moving higher (more below).
A breakneck March rally on the S&P/ASX 200 finally showed signs of fatigue at the end of last week, but damage was minimal. The benchmark eased 21 points or around 0.3 per cent across Thursday and Friday, a mere blip in the 500+ point rally since March 8.
This market has strong momentum and could test all-time highs this month (historically, the strongest month of the year in the US). For that to happen, the heavyweight mining and financial sectors need to maintain their momentum.
Lithium and other battery-material providers were last week’s biggest winners on the ASX. Novonix put on 16.1 per cent, AVZ Minerals 14 per cent, Allkem 12.6 per cent and Mineral Resources 12.1 per cent.
The US materials sector rallied 1.13 per cent on Friday, with BHP and Rio Tinto both recording gains. The NYSE Arca Gold Bugs Index of US gold miners firmed 3.11 per cent during a general trend into defensive assets. Energy stocks shook off a modest downturn in crude, rising 0.85 per cent.
Real estate, utilities and consumer staples were the best performers with gains of 1.25 – 2 per cent. Financials, industrials and tech stocks weakened.
The outlook for rates both here and overseas dominates the economic calendar this week. The Reserve Bank meets tomorrow. While no change to policy settings is expected, investors would welcome any indication of when Australia will join other banks in raising rates. Markets are currently pricing in a 200-basis point increase by year-end.
Also this week: March job ads (11.30 am today); monthly construction data, weekly consumer confidence (Tuesday); and trade and services sector updates (Thursday).
Wall Street has the minutes from the last Federal Reserve meeting on tap on Wednesday night. Also this week: services PMI (Tuesday); and unemployment claims (Thursday).
The domestic corporate calendar will be light until quarterlies start to flow later in the month. The week ahead includes AGMs for Scentre Group on Thursday and OZ Minerals on Friday. Dividend payments will continue to hit bank accounts.
IPOs: tentative signs this week of a thaw in the freeze on new listings. The ASX records seven potential debutants in the week ahead. Recent form suggests not all will get off the starting blocks, but even half getting away would be an improvement.
Top End Energy is listed to launch at 1 pm AEST. The company pitches itself as a low-carbon explorer targeting natural gas, hydrogen and helium in the Top End of Australia.
The rest of the week’s IPOs currently look like this: Microba Life Sciences (Tuesday); Sarytogan Graphite (Wednesday); Lord Resources (Thursday); and Noble Helium, Osmond Resources and Finder Energy (Friday).
The dollar climbed 0.21 per cent this morning to 74.94 US cents.
Commodities
Iron ore surged on Friday as steel mills restocked and weak Chinese factory data sharpened expectations for government stimulus. The spot price for ore landed in China soared US$9.14 or 6.1 per cent to US$159.98 a tonne.
The most-traded contract on the Dalian Commodity Exchange rose 3.5 per cent to 926 yuan. Data last week showed China’s factory activity slowed at the fastest pace since the height of the pandemic amid Covid lockdowns.
“The Chinese economy appears to have stumbled in March, as the spike in domestic COVID cases adds a downside risk to near-term domestic activity, along with rising uncertainty on the external sector amid global geopolitical risks,” JPMorgan economists wrote.
BHP‘s US-traded depositary receipts gained 2.65 per cent. The miner’s UK listing added 2.27 per cent. Rio Tinto tacked on 2.84 per cent in the US and 2.37 per cent in the UK.
Oil ended its worst week in almost two years with another downleg. Brent crude settled 32 US cents or 0.3 per cent lower at US$104.39 a barrel.
The global benchmark shed 11.1 per cent last week after the White House authorised the release of a million barrels of oil per day from US stockpiles for the next six months. However, prices were still up 6.9 per cent for the month and 39 per cent for the quarter.
Gold faded to a weekly loss as treasury yields climbed after the US jobs report. Metal for June delivery settled US$30.30 or 1.6 per cent lower at US$1,923.70 an ounce. The decline sealed a weekly loss of 1 per cent.
Nickel rallied after the London Metal Exchange suspended delivery of some Russian-produced metals into the exchange’s warehouses. Benchmark nickel on the LME climbed 3.5 per cent to US$33,217 a tonne. Zinc gained 4.1 per cent, tin 4.5 per cent and lead 1.2 per cent. Copper eased 0.2 per cent and aluminium 1.3 per cent.
https://themarketherald.com.au/asx-today-rally-to-resume-as-iron-ore-flies-higher-2022-04-04/
Semiconductor manufacturing, test, and inspection equipment startups did well in March. Investors funded a wide variety of equipment companies, including test equipment, materials handling, and those that make parts and components. In the manufacturing space, several companies developing manufacturing execution systems received funding, as well as a startup trying to prevent counterfeit parts from making it through the board assembly process.
Other areas that were hot last month include autonomous driving and ADAS. Three companies exceeded the $100 million mark, with one massive $400 million raise for a robotaxi company that helped the segment near $1 billion in funding.
While the total funding amount for battery companies wasn’t quite as impressive, the variety was. This month’s report features seventeen battery startups. While there is plenty of representation for lithium-ion, some of the startups are trying out new and unique chemistries, such as sodium-ion, radioisotopes, and even forest materials.
Plus, big funding for RISC-V, improved switches, and photonic AI in this look at 132 companies that collectively raised around $3 billion in March 2022.
Semi & design
SiFive raised $175.0M in a Series F round led by Coatue Management, joined by Intel Capital, Ibex Investors, and Khaira Capital. The company provides RISC-V-based processor cores, accelerators, and SoC IP for domain-specific architectures. Product families include standard, pre-defined cores that can be used as the basis for custom processor configuration; high-performance, area-optimized application processors; and high-performance control processor with scalable vector compute resources for AI/ML. The funding, which gives the company a valuation of over $2.5B, will be used to substantially accelerate the development of its RISC-V products, future roadmap, and ecosystem, as well as for hiring. Based in San Mateo, California, USA, it was founded in 2015 and has raised over $350M.
EDA and networking company Corigine, also known as Xinqiyuan, raised over CNY 100.0M (~$15.7M) in strategic financing from the National Integrated Circuit Industry Fund’s Beyond Moore Fund and Yuntai Capital. In the networking space, Corigine has developed a data processing unit (DPU) that it uses in its SmartNIC cards for handling specialized networking functions as well as a TCAM targeted for routers and switches. In the EDA space, it provides an FPGA-based prototyping platform for early software development, system validation, and regression testing. It scales up to 32 FPGAs. In addition, the startup recently debuted a PCIe card for desktop FPGA prototyping. The company also offers USB 3.2 and USB 2.0 controller IP. Funds will be used for development of its next-generation DPU and commercialization of current products. Founded in 2015, it is based in Santa Clara, California, and Shanghai, China.
GPU startup Deep Stream Micro, also known as Siroywe and Shenliuwei Intelligent Technology, raised nearly CNY 100.0M (~$15.7M) in pre-Series A funding from Xingwang Investment. Deep Stream Micro is developing high-performance GPU chips, with several lines planned for applications such as rendering, image processing, VR, AI, data centers, and edge. It expects its first product, focused on graphics processing, to be taped out in 2023. Founded in 2021, it is based in Shenzhen, China.
ZenosIC, also known as Zhuanxin Semiconductor, raised nearly CNY 100.0M (~$15.7M) in angel investment from Gaorong Capital and Hua Capital. The startup is developing high-performance programmable network chips. Funds will be used for R&D and hiring. Based in Nanjing, China, it was founded in 2021.
Jingxin Microelectronics Technology raised CNY 50.0M (~$7.9M) in pre-Series A funding from SDIC Unity Capital, Landstone Capital, Tianjin Venture Capital, and TEDA Haihe. The startup is developing high-speed switching chips and PCIe to SRIO bridges for communications. Based in Tianjin, China, it was founded in 2020.
Wireless IC startup SPARK Microsystems raised CAD $7.1M (~$5.6M) in funding from Sustainable Development Technology Canada. A fabless company, SPARK Microsystems specializes in ultra-wideband (UWB) wireless transceiver ICs for short-range wireless connectivity applications such as gaming peripherals and AR/VR headsets, smart home devices, and IoT sensors. “The accelerating proliferation of IoT sensors and personal connected devices requires a new approach to wireless connectivity that maximizes energy efficiency and reduces environmental impact, while simultaneously providing a huge leap forward in throughput and latency performance,” said Fares Mubarak, CEO, SPARK Microsystems. “This new funding and the previous SDTC funding in 2017 acknowledges SPARK’s steadfast commitment to sustainability and sets the stage for our world class team based in Quebec, Canada, to develop innovative solutions for future battery-less devices powered by energy harvesting technologies.” Founded in 2016, it is based in Quebec, Canada.
AI hardware
Luminous Computing raised $105.0M in a Series A round, with participation from Gigafund, Bill Gates, 8090 Partners, Neo, Third Kind Venture Capital, Alumni Ventures Group, Strawberry Creek Ventures, Horsley Bridge, Modern Venture Partners, and others. Luminous is using silicon photonics to build data links it says will break bottlenecks in data movement in AI supercomputers. “Most people who build hardware assume that in order to improve performance, you have to trade off against programmability and cost-efficiency, or just go to a higher-density silicon node. By introducing silicon photonics technology at the heart of computer architecture, we’re not only able to drastically improve performance and scalability, but we’re also able to make it much easier to build huge AI models,” said Marcus Gomez, CEO and co-founder of Luminous. Funds will be used in doubling the size of the engineering team, building out custom chips and software, and gearing up for commercial-scale production. Founded in 2018, it is based in Mountain View, California, USA.
Syntiant raised $55.0M in venture funding from Renesas Electronics, Millennium Technology Value Partners, Mirae Asset Capital, Microsoft’s M12, Robert Bosch Venture Capital, Atlantic Bridge Capital, Alpha Edison, and others. Syntiant provides always-on AI voice and sensor solutions for edge devices in the form of its microwatt-power Neural Decision Processors (NDPs) and an edge-optimized data platform and training pipeline. “We are at a pivotal point of our company’s growth and development, having shipped more than 20 million of our Neural Decision Processors as global market demand for edge AI rises among device manufacturers,” said Kurt Busch, CEO at Syntiant. “We have built a strong customer pipeline that represents the leading suppliers, from earbuds to automobiles and most everything in between. This new round of funding will help us expedite full production deployments among more than 50 current customer engagements, as our technology continues to make edge AI accessible to any battery-powered device.” The startup anticipates introducing its third-generation architecture next year. Based in Irvine, California, USA, and founded in 2017, it has raised over $100M.
Quadric raised $21.0M in Series B investment led by Denso’s NSITEXE, joined by MegaChips and existing investors Leawood Venture Capital, Pear VC, Uncork Capital, and Cota Capital. Quadric develops architectures, processor chips, development boards, and software for on-device AI at the network edge. It says its scalable and configurable solution can handle both neural backbones and classical dynamic data-parallel algorithms in a unified architecture, rather than relying on a combination of CPU and NPU. “The market is saturated with rigid accelerators. Our product fills the void with a fully programmable multi-kernel processing architecture,” said Veerbhan Kheterpal, co-founder and CEO of Quadric. Funds will be used to release the next version of its processor architecture, improve SDK performance, and roll out IP products for integration in SoCs. Samples of second-generation silicon products will be available at the end of this year. Based in Burlingame, California, USA, it was founded in 2016.
Reconfigurable AI chip startup Tsing Micro, also known as Qingwei Intelligent Technology, raised “several hundred million yuan” (CNY 100.0M is ~$15.7M) in Series B funding led by ProCapital, joined by SenseTime Investment, Prime Pacific Capital, Beijing Integrated Circuit Cutting-Edge Chip Fund, and existing investors SL Capital and ZY Capital. Tsing Micro is developing AI chips for a variety of applications using what it calls a Coarse-Grained Reconfigurable Architecture (CGRA). “Its data-driven spatial domain computing and dynamic programmable characteristics have subversive application potential in the scene of high-performance computing, high concurrency, and multitasking represented by artificial intelligence,” said Xu Chenhao, executive partner of ProCapital. It has launched a line of chips for wearable devices and another for edge computing. It plans to bring its architecture to data center chips this year. Founded in 2018 based on work from the reconfigurable computing team of Tsinghua University, it is based in Beijing, China.
EDA
BTD Technology, also known as Bioncore Technology, drew nearly CNY 100.0M (~$15.7M) in angel funding led by Innoangel Fund and joined by Fosun Capital, Shanghai Lingang Innovation Center, and Oriza Holdings. BTD Technology provides several EDA tools, including a high-speed RF circuit simulator and a platform for mixed-signal signoff, advanced packaging design, and multi-physics simulation. It recently agreed to establish an open API with two other Chinese EDA companies, Lixin Software Technology and Semisight, to promote interoperability. Based in Shenzhen, China, it was founded in 2020.
Semisight, also known as Xinsi Information Technology, drew “tens of millions of yuan” (CNY 10.0M is ~$1.6M) in angel financing led by Hui Capital and joined by Plum Ventures. Semisight offers logic simulation and logic synthesis EDA tools. A core component of its tools is functional safety and reliability, with companies that develop automotive, medical, and aerospace chips a target for its products. Its SSIM logic simulation tool has received IEC61508 T2 and ISO26262 TCL3 certification. Semisight next plans to expand to mixed-signal circuit simulation. Founded in 2020, it is based in Shanghai, China.
Manufacturing
Paragraf drew $60.0M in Series B funding led by New Science Ventures, joined by Parkwalk Advisors, Amadeus Capital Partners, IQ Capital, Molten Ventures, and new investors British Patient Capital and In-Q-Tel. Paragraf developed a process for depositing single-atom thick, two-dimensional materials, including graphene, directly onto silicon, silicon carbide, sapphire, gallium nitride, and other semiconductor-compatible substrates. The process is contamination-free, scalable, and compatible with existing electronic device manufacturing production processes, according to the startup, and has applications in sensor, energy harvesting, and semiconductor markets. Using its technology, it has produced graphene Hall effect sensors for measuring magnetic fields for both ambient conditions and cryogenic temperatures. Founded in 2015 as a spin out from Cambridge University, it is based in Somersham, UK.
Xinxiang Technology raised “several hundred million yuan” (CNY 100.0M is ~$15.7M) in a Series A+ round led by Bohai Industrial Investment Fund Management, joined by Guolian Xinchuang, South China Venture Capital, Fangdao Fund, and existing shareholders Sequoia Capital, Hillhouse Capital, and Walden International. Xinxiang Technology provides computer-integrated manufacturing (CIM) systems for semiconductor factories, including manufacturing execution systems (MES), equipment automation platforms (EAP), and real-time multiprocessor systems (RTS). It also offers customized CIM solutions, including software, hardware, and on-site implementation. Funds will be used for R&D, hiring, and developing products for front-end wafer and advanced packaging markets. Based in Wuxi, China, it was founded in 2018.
BSG Technology drew nearly CNY 100.0M (~$15.7M) in Series A financing led by Xiaomi. BSG Technology provides manufacturing operations management (MOM) and supply chain collaboration solutions, including manufacturing execution system (MES), quality management system (QMS), maintenance and repair operations system (MRO), advanced planning and scheduling (APS), and product lifecycle management (PLM). It offers solutions for a wide range of manufacturing industries, including electronics assembly. Founded in 2012, it is based in Wuhan, China.
Cybord raised $4.0M in seed funding led by IL Ventures, joined by NextLeap Ventures and Israel Innovation Authority. Cybord aims to prevent the use of counterfeit electronic components with its AI and big data software that inspects, qualifies, and tracks each component and electronic board during the board assembly process. “The need to acquire components in the free market and not only from well-established suppliers increases manufacturers’ exposure and vulnerability to significant quality issues. These issues can have direct, sudden, and costly effects on their ability to produce quality products,” said Zeev Efrat, CEO at Cybord. Funding will be used for R&D, product development, and expanding into additional verticals such as telecom, automotive, defense, and healthcare. Founded in 2019, it is based in Herzliya, Israel.
Omniply Technology received a CAD $2.0M (~$1.6M) grant from Sustainable Development Technology Canada. Omniply has developed a delamination technology that facilitates the separation of flexible circuits from their rigid carrier without compromising device performance. The startup says it is compatible with current manufacturing infrastructure. Spun out of Stanford and Purdue University in 2018, it is based in Montreal, Canada.
Eyelit received growth investment from Banneker Partners. Eyelit provides manufacturing execution systems (MES), quality management systems (QMS), and factory automation solutions for aerospace & defense, battery technology, electronics, medical device, semiconductor, and solar industries. “The next wave of solutions will focus on industry Internet of Things,” said Salil Jain, CEO of Eyelit. “We have built Eyelit to be a versatile platform that enables disparate systems to easily exchange timely information, ultimately providing proactive insight to adverse manufacturing situations. Using the information collected, Eyelit’s event manager and graphical scenario manager allow companies to sense and automatically respond, preventing expensive operations disruption.” Founded in 1997, it is based in Mississauga, Canada.
Jiepei Technology raised an undisclosed amount of Series B++ funding led by Shangtang Guoxiang Capital. The company manufactures PCBs, SMTs, and components and provides prototyping and assembly services through several brands, including AllPCB. At the same time, it announced a merger with PCB manufacturer Jieduobang Technology, which owns the brands PCBWAY and PCBGOGO. Based in Hangzhou, China, Jiepei was founded in 2015.
Middle-end-of-line foundry SJ Semiconductor fully closed its $300.0M Series C round, originally reported last October. The funding comes from Walden CEL, CCB PE, CCB Trust, Country Garden Venture Capital, Huatai International Private Equity, and GP Capital, with participation from existing investors Oriza Rivertown, CCIC Capital, and Oriza Hua Capital. SJSemi is a 300mm MEOL foundry that specializes in advanced bumping, 3D multi-die integration technology, and wafer-level packaging, including for DRAM. In February, the company broke ground on its J2B fab for its 3D multi-die packaging project. After completion of the J2B, SJSemi will have a monthly capacity of 120K wafer-level packaging and 20K 3D multi-die integration packaging. Based in Jiangyin, China, it has raised $630M since its founding in 2014.
BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking for alternative sources for parts.
For more than a year, the global auto industry has struggled with a disastrous shortage of computer chips and other vital parts that have shrunk production, slowed deliveries, and sent prices for new and used cars soaring beyond reach for millions of consumers.
Now, a new factor - Russia’s war against Ukraine - has thrown up yet another obstacle. Critically important electrical wiring, made in Ukraine, is suddenly out of reach. With buyer demand high, materials scarce, and the war causing new disruptions, vehicle prices are expected to head even higher well into next year.
The war’s damage to the auto industry has emerged first in Europe. But US production will likely suffer eventually, too, if Russian exports of metals - from palladium for catalytic converters to nickel for electric vehicle batteries - are cut off.
"You only need to miss one part not to be able to make a car," said Mark Wakefield, co-leader of consulting firm Alix Partners’ global automotive unit.
"Any bump in the road becomes either a disruption of production or a vastly unplanned-for cost increase".
Supply chain crisis
Supply problems have bedevilled automakers since the pandemic erupted two years ago, at times shuttering factories and causing vehicle shortages.
The robust recovery that followed the recession caused demand for autos to vastly outstrip supply - a mismatch that sent prices for new and used vehicles skyrocketing well beyond overall high inflation.
In the United States, the average price of a new vehicle is up 13 per cent in the past year, to $45,596 (€41,314), according to Edmunds.com.
Average used prices have surged far more: They’re up 29 per cent to $29,646 (€26,861) as of February.
Before the war, S&P Global Mobility had predicted that global automakers would build 84 million vehicles this year and 91 million next year - by comparison, they built 94 million in 2018.
Now it’s forecasting fewer than 82 million in 2022 and 88 million next year.
Priced out of the auto market
Mark Fulthorpe, an executive director for S&P, is among analysts who think the availability of new vehicles in North America and Europe will remain severely tight - and prices high - well into 2023.
Compounding the problem, buyers who are priced out of the new-vehicle market will intensify the demand for used autos and keep those prices elevated, too - prohibitively so for many households.
Those who have the inclination to buy a new vehicle, they’ll be prepared to pay top dollar. Mark Fulthorpe S&P Global Mobility
Eventually, high inflation across the economy - for food, gasoline, rent, and other necessities - will likely leave a vast number of ordinary buyers unable to afford a new or used vehicle.
Demand would then wane. And so, eventually, would prices.
"Until inflationary pressures start to really erode consumer and business capabilities," Fulthorpe said, "it’s probably going to mean that those who have the inclination to buy a new vehicle, they’ll be prepared to pay top dollar".
One factor behind the dimming outlook for production is the shuttering of auto plants in Russia. Last week, French automaker Renault, one of the last automakers that have continued to build in Russia, said it would suspend production in Moscow.
Model Y electric vehicles stand on a conveyor belt at the opening of the Tesla factory in Berlin Brandenburg in Gruenheide, Germany, Tuesday, March 22, 2022. Patrick Pleul/Pool via AP
Wiring supply from Ukraine hampered
The transformation of Ukraine into an embattled war zone has hurt, too. Wells Fargo estimates that 10 per cent to 15 per cent of crucial wiring harnesses that supply vehicle production in the vast European Union were made in Ukraine.
In the past decade, automakers and parts companies invested in Ukrainian factories to limit costs and gain proximity to European plants.
The wiring shortage has slowed factories in Germany, Poland, the Czech Republic, and elsewhere, leading S&P to slash its forecast for worldwide auto production by 2.6 million vehicles for both this year and next.
The shortages could reduce exports of German vehicles to the United States and elsewhere.
Wiring harnesses are bundles of wires and connectors that are unique to each model; they can't be easily re-sourced to another parts maker.
Despite the war, harness makers like Aptiv and Leoni have managed to reopen factories sporadically in Western Ukraine. Still, Joseph Massaro, Aptiv’s chief financial officer, acknowledged that Ukraine "is not open for any type of normal commercial activity".
Aptiv, based in Dublin, is trying to shift production to Poland, Romania, Serbia, and possibly Morocco. But the process will take up to six weeks, leaving some automakers short of parts during that time.
"Long-term," Massaro told analysts, "we’ll have to assess if and when it makes sense to go back to Ukraine".
BMW is trying to coordinate with its Ukrainian suppliers and is casting a wider net for parts. So are Mercedes and Volkswagen.
Mercedes stars, are on display at the Daimler-Benz factory in Sindelfingen, southern Germany, Feb. 1, 2011. AP Photo/dapd/ Michael Latz,file
Yet finding alternative supplies may be next to impossible.
Most parts plants are operating close to capacity, so a new workspace would have to be built. Companies would need months to hire more people and add work shifts.
"The training process to bring up to speed a new workforce - it’s not an overnight thing," Fulthorpe said.
Neon, platinum, and palladium affected
Fulthorpe said he foresees a further tightening supply of materials from both Ukraine and Russia. Ukraine is the world’s largest exporter of neon, a gas used in lasers that etch circuits onto computer chips.
Most chip makers have a six-month supply; late in the year, they could run short. That would worsen the chip shortage, which before the war had been delaying production even more than automakers expected.
Likewise, Russia is a key supplier of raw materials such as platinum and palladium, used in pollution-reducing catalytic converters. Russia also produces 10 per cent of the world’s nickel, an essential ingredient in EV batteries.
Mineral supplies from Russia haven’t been shut off yet. Recycling might help ease the shortage. Other countries may increase production. And some manufacturers have stockpiled the metals.
But Russia also is a big aluminium producer, and a source of pig iron, which is used to make steel.
Nearly 70 per cent of US pig iron imports come from Russia and Ukraine, Alix Partners says, so steelmakers will need to switch to production from Brazil or use alternative materials.
In the meantime, steel prices have rocketed up from $900 (€816) a ton a few weeks ago to $1,500 (€1,360) now.
Supply chain 'hangovers'
So far, negotiations toward a cease-fire in Ukraine have gone nowhere, and the fighting has raged on. A new virus surge in China could cut into parts supplies, too. Industry analysts say they have no clear idea when parts, raw materials, and auto production will flow normally.
Even if a deal is negotiated to suspend fighting, sanctions against Russian exports would remain intact until after a final agreement had been reached. Even then, supplies wouldn’t start flowing normally. Fulthorpe said there would be "further hangovers because of disruption that will take place in the widespread supply chains".
Wakefield noted, too, that because of intense pent-up demand for vehicles across the world, even if automakers restore full production, the process of building enough vehicles will be a protracted one.
When might the world produce an ample enough supply of cars and trucks to meet demand and keep prices down? Wakefield doesn’t profess to know.
"We’re in a raising-price environment, a (production)-constrained environment," he said. "That’s a weird thing for the auto industry".
April 4 (Reuters) - London copper fell on Monday as the dollar strengthened and U.S. jobs data raised expectations of aggressive increases to U.S. interest rates, with sentiment also dented by lingering concerns over demand in top consumer China.
Three-month copper on the London Metal Exchange (LME) was down 0.5% at $10,305 a tonne at 0715 GMT.
Trading was sluggish, with Chinese financial markets were closed for a public holiday, but traders kept a wary eye on the country's COVID-19 lockdowns and their impact on economic output and overall demand.
The lockdown in China "has already led to a slowdown in the domestic movement of base metals, (and) as a result, production cuts at metal fabricators have also been implemented," ANZ commodity strategists said in a note.
Zinc and aluminium prices, however, were supported by fears of supply shortages owing to the Russia-Ukraine conflict.
DOLLAR: The U.S. dollar made a firm start to the week as Treasury yields rose with expectations of rapid U.S. rate hikes. A strong dollar makes greenback-denominated metals more expensive to buyers using other currencies.
MORE SANCTIONS: Ukrainian authorities were investigating possible war crimes by Russia after finding hundreds of bodies strewn around towns near Kyiv. Germany said the West would agree to impose more sanctions on Moscow in the coming days.
PRICES: Aluminium rose 1% to $3,484 a tonne and zinc was up 0.8% at $4,371.50 while nickel shed 0.8% to $32,950, lead dipped 0.4% to $2,439 and tin slipped 0.6% to $44,500. (Reporting by Enrico Dela Cruz in Manila Editing by Sherry Jacob-Phillips and David Goodman)
The Global Antenna Tuning Switch Market from 2022 to 2028 study by MarketandResearch.biz provides a detailed market assessment for the forecast period. The study offers business clients a comprehensive analysis of the global Antenna Tuning Switch market, including market trends, market size, current value, and market expansion. This research includes a detailed forecast of the corporation’s long run. The study depicts the market situation and forecasts the nuances of the critical zones through a logical demonstration of market segments, key producers, and end-client organizations.
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The vital regions covered in the report are:
North America (United States, Canada and Mexico)
Europe (Germany, France, United Kingdom, Russia, Italy, and Rest of Europe)
Asia-Pacific (China, Japan, Korea, India, Southeast Asia, and Australia)
South America (Brazil, Argentina, Colombia, and Rest of South America)
Middle East & Africa (Saudi Arabia, UAE, Egypt, South Africa, and Rest of Middle East & Africa)
Market segment by type, the product can be split into
Dual Band Antenna Tuning Switches
Triple Band Antenna Tuning Switches
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Telecom
Consumer Electronics
Automotive
Others
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CST Computer Simulation Technology GmbH
Johanson Technology
Qorvo, Inc.
ABACOM Technologies
TDK Electronics AG
YAGEO Corporation
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Skyworks Solutions, Inc
Murata Manufacturing
Infineon Technologies AG
Qorvo
Shanghai CanaanTek
Cavendish Kinetics
OKI Electric Industry
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JAKARTA, April 5 (The Milelion/ANN): Travel to Bali (and Indonesia in general) is set to get a whole lot simpler, with the government announcing plans to scrap the on-arrival PCR test, as well as the visa requirement for Asean nationals.
On-arrival testing will only be required for travellers who fail a temperature screening exercise, although pre-departure testing will be retained for now.
It’s currently unclear as to when exactly these new rules will go into effect, but I’m checking with my sources in Indonesia and will update this article as soon as it’s clear.
A duty free shop belonging the the Dufry group in a departure lounge at Denpassar international airport in Bali. - Reuters
Indonesia scraps on-arrival PCR tests
International arrivals are currently required to take a PCR test on arrival in Indonesia, and isolate until a negative result is received.
In the grand scheme of things, the test isn’t that expensive. The Indonesian government caps the price at IDR 275,000 (S$26), which means it’s even cheaper than some antigen tests in Singapore!
The real issue is the isolation required after the test. To Indonesia’s credit, the wait times (at least in Bali, where I’m writing this article from) are very modest. I waited less than two hours for my on-arrival PCR test result to come back, and from what I understand that’s the norm.
In any case, the on-arrival PCR test will be scrapped going forward, and only required for travellers with a temperature greater than 37.5°C. It means that visitors will have freedom from the moment they land, and after all, every minute of vacation time is precious.
More importantly, it also helps deal with the niggling “what happens if I test positive on arrival?” question.
Travellers whose on-arrival PCR test comes back positive are currently sent to designated isolation hotels, even if they can show proof of a past infection. This means that “shedders” may be out of luck- a poorly-defined process that no doubt caused a lot of anxiety.
Travellers will still be required to take a pre-departure PCR test, which must be done within 48 hours prior to departure. For a list of the cheapest places in Singapore to do a pre-departure PCR test, refer to the article below.
No more visa requirement for Asean nationals
Currently nationals of 40-plus countries are currently eligible to receive a visa-on-arrival at Bali Airport. They are Argentina, Australia, Belgium, Brazil, Brunei, Cambodia, Canada, China, Denmark, Finland, France, Germany, Hungary, India, Italy, Japan, Laos, Malaysia, Mexico, Myanmar, Netherlands, New Zealand, Norway, Philippines, Poland, Qatar, Saudi Arabia, Seychelles, Singapore, South Africa
South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, UAE, UK, USA and Vietnam.
A visa-on-arrival costs IDR 500,000 (S$47), but the thing is: this fee didn’t exist for Asean nationals prior to Covid. Before the pandemic, Singaporeans and other ASEAN travellers could enter Indonesia without any cost.
That’s set to become the norm again, based on reports from Indonesia.
Tourists from other countries will still be required to pay the visa-on-arrival fee. Any traveller carrying an APEC Business Travel Card with “IDN” on the back will be exempt from all visa requirements.
Foreign tourists carrying their luggage walk as they arrive at the I Gusti Ngurah Rai International Airport, as the local government kicks off the first day of the 'quarantine free' trial, amid the coronavirus disease (Covid-19) pandemic, in Bali, Indonesia, March 7, 2022. - Reuters
Travel process to Bali
When the latest requirements come into effect, here’s what travellers to Bali will need to do.
* Fully vaccinated with any approved vaccine (exemption for children aged under 18)
* Booster not required
* Setup PeduliLindungi app (Android | iOS), and verify vaccination status
* Take PCR test 48h before flight (regardless of age)
* Complete e-HAC in PeduliLindungi app within 24h before arrival
* Purchase travel insurance with min. US$25K COVID-19 medical coverage
* Complete e-CD form within 2 days before arrival
* Book hotel for entire duration of trip
* Arrange on-arrival transport (optional)
* Pay for visa-on-arrival (or obtain B211A visit visa beforehand; not required for APEC cardholders or ASEAN nationals)
As mentioned, the cost savings won’t be significant, thanks to Indonesia’s regulated PCR test prices. However, the time savings could be substantial, with less time spent completing on-arrival formalities at the airport and waiting for on-arrival test results to come back.
Conclusion
Indonesia plans to scrap its on-arrival PCR test requirement, as well as visa fees for ASEAN travellers. Pre-departure test requirements remain for now, but it’s still a significant improvement from the status quo.
Once again, it’s unclear as to when exactly these new rules will go into effect. It’s a safe bet that those travelling next week will benefit, but if you’re flying in the next few days you may still be subject to the existing rules.
In any case, both the visa-on-arrival and on-arrival test can be paid for at Bali Airport, so it won’t affect your pre-departure preparations. - The Milelion/ANN
‘Guy on Rocks’ is a Stockhead series looking at the significant happenings of the resources market each week. Former geologist and experienced stockbroker Guy Le Page, director, and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.
Market Ructions: Russia Central Bank sells gold
Russia has been steadily accumulating gold over the last 10 years (figure 1) which now provides a US$133 billion lifeline and some short-term relief given it has around US$300 billion of foreign reserves that remain frozen as of mid-March 2022.
More recently, the Russian Central Bank sold 1 tonne of the yellow metal while at the same time offering to purchase gold at 5,000 Roubles (approximately US$58/gram) or 10% below the LME spot price.
While the LME has banned the trading of Russian gold there are plenty of other avenues to trade the metal.
Sky News recently reported that the Russian troops had introduced the Rouble into parts of south-eastern Ukraine.
That was timely given the local populace was also running short on toilet paper.
A range of Russian forex controls and inflows from US$ denominated energy sales has seen a recent rebound in the Rouble (figure 2).
Gold has put on around 6% in CY 2022 driven by fears of inflation and the Ukraine war after a dismal 2021, gold’s worst year since 2015.
Other precious metals such as platinum (off 1.6% to US$985/ounce) and palladium (down 1.7% to US$2,208/ounce) followed gold down last week.
While we have been witnessing extreme volatility in LME nickel prices, particularly after Tsingshan’s short positioned (150,000 tonnes) emerged a few weeks ago, this has not been reflected in other nickel prices such as and nickel sulphate-figure 3 (batteries) and nickel pig iron (figure 4) mostly destined for stainless steel, with sizeable discounts the order of the day.
Given much of nickel in sulphate is derived from nickel briquettes (with additional conversion costs up to US$1,500/tonne), these price disparities are unlikely to last.
In the case of NPI this is the largest discount, according to Macquarie, which has ever been observed.
In response to this volatility, and concerns over longer term supply security, end users such as Tesla who are heavily dependent on nickel in their EVs (average of 45kg/EV vehicle) have moved to secure long term supply deals with producers such as Vale.
Rho Motion (EV Seminar in London on 29/3/2022) are projecting that EV sales will rise by 64% YoY to 10.6m up from 6.6m in CY 2021 and 3.3m vehicles in 2020.
Trading at the LME, which imposed a maximum trading limit of 8% then 15% per day, is yet to “normalise” following the resumption of trading on March 16 (figure 5).
Difficulties in determining the closing settlement price (CSP) at the end of the day’s trade is making it challenging for nickel suppliers and nickel sulphate producers that rely on the CSP for physical settlement.
The same goes for scrap which relies on CSP for price determination.
The disparity between LME and downstream prices is set to continue for the short term at least. A significant risk could be a trend towards lithium-ion or LFP batteries if the nickel market remains in disarray.
Elsewhere, spodumene prices moved 1% higher last week (figure 6) to US$2,810/t, with technical and battery grade lithium carbonate prices remaining unchanged around $74,000/t) and US$78,000/t respectively.
Copper, which has put on 20% this calendar year, closed at US$4.62/lb and remains in strong contango (5 cents) for three-month delivery.
Zinc has put on 50% to US$1.83/lb (due to smelter difficulties) while aluminium and nickel up 100% YoY.
The wild card remains oil that closed the week at US$99.55/bbl (off 1.5%) after Uncle Joe announced a 1M BOPD release (a total of 186 MBBLS) which should see the US down to 19 days (down from 32 days) of oil supply after six months.
So, in the absence of OPEC increasing production, oil prices are likely to remain elevated (and volatile) for the foreseeable future.
Uranium (figure 7) remained flat after hitting US$60/lb last month.
The US imports 16% of its uranium and 20% of its enriched uranium from Russia. With no existing enrichment facilities in the US this is an interdependency that the US could currently do without.
New Ideas
There has been a lot happening over the last two weeks while I have been holed up in Adelaide with the coronavirus.
Fortunately, I have used the time wisely and watched some quality movies including Snowtown and Bad Boy Bubby to reacquaint myself with the culture here.
Our new man in the White House, Andrew Forrest (first man in WA to walk on water), appears to have sold Uncle Joe on his hydrogen vision securing a meeting ahead of Scott Morrison, who despite notching up over 1,000 hours of reaching for the heavens at his church, has been forced to wait in line.
The manoeuvring in the uranium space has started in earnest with uranium explorer Deep Yellow (ASX:DYL) agreeing to merge (subject to inter alia shareholder approval in July 2022) with Vimy Resources (ASX:VMY) (figure 8) receiving 0.294 DYL shares for every VIM share they hold.
The merger will see a $680m million company with a combined JORC resource inventory of 389 million pounds U 3 O 8 (14,963 t U).
Two advanced projects including the proposed 3.5m pounds per annum Mulga Rock Project (290km north-east of Kalgoorlie in WA) and the Tumas Project (Namibia) where a DFS is due for completion late 2022, will form the backbone of the merged group.
Permitting and developing uranium projects has significant challenges so no doubt the John Borshoff-led company will be turning its attention to getting the approval process at Mulga Rock back on track with the previous Government approval running out in late 2021.
The Stockhead faithful would have been delighted to see our mid-July 2020 pick Tempest Resources (ASX:TEM) (figure 9) which has been relatively quiet ever since.
The only news reports I had received about the Company since that article was that MD Don Smith had been spotted walking his dog around West Perth in the middle of the day.
Not ideal for a struggling junior but probably not the worst thing going on at lunch time in West Perth…
The stock soared however with the announcement that WARDH72 at the 100% owned Meleya Project (Figure 9, Yalgoo region WA) has intersected copper sulphide intermittently mineralisation (figure 11) throughout the entire 709.1 metres including:
8 metres of interbedded semi-massive base metal/magnetite from
18 metres downhole;
18 metres downhole; 10 metres of copper bearing semi-massive sulphides within a 20 metre of disseminated sulphides from 422 metres downhole; and
18 metres of copper bearing disseminated and stringer veins within a broader ~100 metre
disseminated sulphide and strongly potassic altered intrusives zone from 610 metres to end of hole.
The market seemed to like the announcement with the stock rising from around 2.4 cents hitting 21 cents late last week on some serious volume.
A report on a second drill hole is imminent.
The geology comprises a mixture of the Yalgoo Greenstone Belt and the Golden Grove Formation (hosting the Golden Grove Deposit).
A little hard to say from the pictures of the core (figure 12) however we are all hopeful this may represent another Golden Grove (29 Metals Limited, ASX: 29M)) which comprises Proven and Probable Reserves of 12.37Mt @ 1.9% Cu, 4.4% Zn, 30g/t Ag, 0.30% Pb and 0.80g/t Au (ASX Announcement 31 March 2022) and delivered an EBITDA of $254m for CY 2021.
TEM currently has a market capitalisation of around $72 million based on the last traded price of 18 cents per share.
Results are due out in the June 2022 Quarter however I anticipate any decent drill holes will warrant another release.
No doubt from here there will be some good trading opportunities with the inevitable lag time between assays with the laboratories at full stretch.
Whether this and the follow up hole carries any grade remains to be seen, however it all bodes well longer term for the Meleya project.
At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting, and corporate advisory roles.
He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada, and the United States. The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.
The UK blue-chip index extended its gains towards the close as energy stocks rose ahead of the UK government's new energy security strategy later this week
FTSE 100 up 55 points
Energy stocks lead the gainers
Service sector firms see price hikes
4:50pm: FTSE closes higher while Europe lags
Defensive energy stocks pushed the FTSE 100 higher by the close, with London's blue-chip index extending its gains, adding 55 points or 0.72% to 7,614.
While markets in Europe had a slightly softer tone after it was announced that the EU was proposing a mandatory phaseout of Russian coal imports, CMC Markets UK chief market analyst Michael Hewson said the FTSE's outperformance came ahead of the UK government's new energy security strategy later this week, with SSE shares hitting a new record high, while National Grid and United Utilities shares also moved higher.
"It is becoming ever clearer that Russia is likely to become increasingly more isolated as sanctions get tightened and widened further, with the prospect that inflationary pressure in the global economy will remain more persistent in the coming months," Hewson said.
On Wall Street by London’s close, the Dow Jones Industrial Average was 57 points, or 0.16% lower at 34,865, while the broader S&P index shed 0.5% and the tech-laden Nasdaq Composite fell 1.68% as traders awaited the publication of the latest Federal Reserve minutes.
3.52pm: UK market outperforms Europe
Leading UK shares are outperforming their European peers, helped by a rise in energy companies ahead of the government's new strategy for the sector to be published on Thursday.
The FTSE 100 is up 17.4 points or 0.23% at 7576.32, but Germany's Dax is down 1.1% and France's Cac is off 1.84% as Europe imposes further measures against Russia.
Among the energy companies, National Grid PLC (LSE:NG.) is the biggest riser in the leading index, up 3.46%, while SSE PLC (LSE:SSE) has added 2.71%.
Water companies are also benefiting from their status as havens in times of uncertainty, with United Utilities Group PLC (LSE:UU.) up 2.88% and Severn Trent PLC (LSE:SVT) ahead by 2.13%.
Airtel Africa PLC (LSE:AAF) is the biggest faller, down 4.72% amid uncertainty about the financial impact of a directive from the Nigerian government to telecoms operators in the country.
Customers were told to link their National Identification Numbers with SIM registrations by yesterday to maintain a full service, and Airtel said it had collated the information for 73% of its active customers accounting for 79% of its revenues from the country.
There is a final opportunity for customers to comply with the ruling, but Airtel Africa said: "The impact on the business in terms of customer numbers and revenues is uncertain. However, our experience of adopting similar procedures in other countries suggests that SIM consolidation is likely to occur in response to implementation, potentially reducing any financial impact."
3.17pm: Cautious start for US markets
US shares started muted and mixed as the cautious market mood continues and traders await the publication of Federal Reserve minutes on Wednesday.
The Dow Jones added around 58 at 34,980, while the S&P 500 added around a point to stand at 4,583.
The tech heavy Nasdaq dropped around 39 points at 14,449.
The minutes from the last US central bank policy meeting will be closely pored over to see if there are any clues as to the trajectory of interest rate rises and the chances of the US going into a recession.
Back in the UK, the FTSE 100 is now up 16.01 points or 0.21% at 7574.93.
1.27pm: Inflation jumped to 7.7% across OECD area
Year-on-year inflation in the OECD area rose to 7.7% in February 2022, compared with 7.2% in January 2022, and just 1.7% in February 2021, reaching its highest rate since December 1990.
The OECD said the increase reflected in part a surge in inflation in Turkey, which jumped from 48.7% in January to 54.4% in February.
Even excluding Turkey, inflation in the OECD area rose to 6.3%, up from 5.8% in January 2022.
As will be no surprise to anyone, energy and food prices were the biggest factor. Excluding both, year-on-year inflation in the OECD area increased to 5.5%, from 5.1% in January 2022.
In March the UK consumer price index rose to 6.2% and is on course to reach some 8% later this year.
12.04pm: Russia's economy weakens
Russia's economy is coming under pressure from sanctions and Western companies withdrawing their business, according to the latest snapshot from S&P Global.
According to its latest survey, the country's composite PMI - which includes manufacturing and services - dropped from 52.1 in February to 38.1 last month, signalling contraction.
Meanwhile the US government has put more pressure on the country by preventing Russia from making debt payments of US$600mln in dollars through US banks.
11.45am: Weaker opening expected on Wall Street
US stocks were seen opening modestly lower on Tuesday as oil prices resumed gains on expectations of fresh sanctions on Russian exports as hostilities in Ukraine continue.
Reports of atrocities committed by Russia in Ukraine are adding to overall market nervousness. Reaction from the West will be closely watched as further sanctions will likely drive inflationary pressures at a time when commodity prices are already at elevated levels.
Futures for the Dow Jones Industrial Average dipped 0.2%, while those for the S&P 500 were down 0.2%, and contracts for the tech-heavy Nasdaq-100 were also 0.2% lower.
“EU leaders will reportedly meet tomorrow, and the additional sanctions could include more action on Russian oligarchs, more exports restrictions, an eventual port ban on Russian ships, and a potential ban on Russian energy exports,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“If leaving the Russians without Big Macs, Starbucks coffees, or Nike shoes hasn’t been effective in discouraging Putin from ending the war in Ukraine, banning the Russian energy imports should make a difference, yet it would also mean a severe energy crunch in Europe, and a big hit to economic growth.
“But, not everyone is scared. Lithuania has become the first European country to announce a total ban on Russian gas imports, and the possibility of other nations joining Lithuania in banning Russian oil and gas gives a boost to oil bulls,” she added.
Benchmark oil prices futures were higher, shrugging off some of the falls seen last week in the wake of news that the US will release up to 1 million barrels of oil a day from its vast reserves. Brent crude futures were up 1.1% to $108.69 a barrel, while WTI crude futures were 1.1% higher at $104.42 a barrel.
On Wednesday, the Federal Reserve’s minutes from its March meeting at which interest rates rose for the first time since 2018, will be in focus. Investors will be looking out for signs that interest rates in the world’s biggest economy are about to rise rapidly, with bond markets pricing in a 50 basis-point increase at the next rate-setting meeting in early May.
Elsewhere, shares in Twitter were up around 3% in premarket deals, having risen 27% on Monday following news that Elon Musk has taken a 9.2% stake in the company.
Plus: Bosnian extradited from Canada, Kyrgyz gold mine deal, Russian journalist’s treason trial, and more.
The Big Story: Zelenskiy to Address Security Council Today Amid Reports of Russian Atrocities
What happened: Russian Foreign Minister Sergei Lavrov has labeled as “fake” reports of civilian massacres discovered after Russian forces retreated from occupied areas in Ukraine, CBS reports. Lavrov said yesterday that the widespread reports of atrocities committed in areas under Russian occupation were instead a provocation against Russia, and he called for an urgent meeting of the UN Security Council “because we see such provocations as a direct threat to international peace and security.”
https://tol.org/client/article/kremlin-calls-massacres-in-ukraine-fake-and-a-hoax.html
SP Angel . Morning View . Wednesday 06 04 22
Climbing Covid cases in China weigh on growth outlook
US – Sovereign bond yields continue to climb ahead of March Fed meeting minutes and hawkish comments by Fed governors.
10y yields climbed to 2.6% as markets expect the Fed to aggressively raise interest rates this year.
US consumer price inflation runs at a 40-year high while further escalation in the Russia/Ukraine war add to concerns over energy and other commodities inflation.
China – Services sector output dropped sharply amid the nation’s worst Covid outbreak since the start of the pandemic.
Both latest private manufacturing and services sectors PMIs pulled back in March with the latter sliding the most.
A separate report on spending over the just-ended Qingming festival break, a traditional Chinese holiday when people visit the tombs of their ancestors, point to weak data for April as well, Bloomberg reports.
Visits to funeral and cemetery service organizations we down 74%yoy.
Tourism revenue over the three-national holiday that ended yesterday was down 61% on the level reached during the same period in 2019.
Caixin Services PMI: 42.0 v 50.2 in February and 49.7 est.
Caixin Composite PMI: 43.9 v 50.1 in February
Germany – Factory orders slide more than expected in February marking the first drop in four months and reflecting a slowdown in overseas markets as well as the onset of the Russia/Ukraine war.
Factory Orders (%mom): -2.2 v 2.3 (revised from 1.8) in January and -0.3 est.
Factory Orders (%yoy): 2.9 v 8.2 (revised from 7.3) in January and 5.4 est.
Polyus controller Said Kerimov to be added to EU sanctions list
Commodity Sentiment Remains Bullish
Commodities continue to run hot because they are in a global short supply. As the world watches oil, nickel, copper, and wheat prices skyrocket, exasperated by the War with Russia-Ukraine, commodities are becoming an excellent hedge against the Fed’s hiking cycle. According to Seeking Alpha News, CBOE Global Markets’ Q1 options volume hit a record for its second consecutive quarter. Earlier this year, oil jumped above 130/barrel, gold rallied to a high of $2,070 an ounce, and post-pandemic global supply chain disruptions are getting worse on the heels of the Russia-Ukraine conflict, and inflation is prompting investors to consider commodities from energy to agricultural to diversify portfolios and capitalize on rising costs.
Commodity Sentiment (Seeking Alpha ETF Performance)
As evidenced by the Bloomberg visual below, 19 out of 28 raw materials are trading in backwardation, something not seen since 1997. We’re experiencing many commodity futures in backwardation (the current price of a commodity is higher than its price in the futures market), which highlights the short supply, resulting in higher prices.
Commodity Shortages Everywhere (Bloomberg)
Record-high commodity prices began the first quarter of 2022 with a bang, offering three-digit price increases, the most significant price increases in over a decade. As I wrote in You Name It, We’re Out of It, shortages in energy, agricultural products, and metals are key drivers of the rising prices. If you’ve not yet capitalized, do not fear the price action over the last year, as history has shown commodities outperform when the Federal Reserve is on the warpath. In fact, according to MUFG Research chart below, commodities have outperformed all major asset classes since 1972, following the last nine fed hikes.
Commodities Outperform All Major Asset Classes Since 1972 (Bloomberg, MUFG Research)
The Fed is tightening monetary policy and raising interest rates because inflation has gotten away from them. Going forward, what’s crucial to monitor is the pace at which the Fed raises rates. If they get too aggressive, they could ultimately crater or stifle demand, triggering a recession. For now, as long as demand exceeds supplies, commodities are an excellent hedge against inflation, and we have five stocks for you to consider for your portfolio.
5 Top Commodity Stocks for 2022
For those unfamiliar with potash, it is a potassium-rich salt mined from seabeds, used primarily in fertilizers to support crop yields and enhance water preservation. Potash resulted when ancient inland seas evaporated millions of years ago. Its uses include fracturing fluids for oil and gas and various chemical products like pool salts, detergents, and ice melt. Together with its subsidiaries, Intrepid Potash, Inc. (IPI) engages in the extraction and production of potash globally. The stock has been trending upward with a +84% YTD increase, and over the last year, it’s seen a near 150% share price jump. IPI’s overall Valuation grade is A- and indicates this stock is trading at a discount, with current P/E ratios of 4.42x, nearly 75% below its sector peers.
IPI Factor Grades (Seeking Alpha Premium)
As we take a closer look at IPI’s collective factor grades, momentum is stellar, and we believe the stock overall is bullish.
IPI Momentum Grade
Intrepid has done well over the last five years, as its share price grows. The company has improved its financial situation by increasing its top and bottom lines, and as evidenced by the momentum grades, the company is steadily increasing its quarterly price performance.
IPI Momentum Grade (Seeking Alpha Premium)
When reviewing the above figures and IPI relative to its peers, we have a lot to be excited about. IPI is currently ranked #1 in its industry and sector. Intrepid is growing with a favorable outlook, zero debt on its balance sheet, and a $35M share buyback announcement, so let’s explore the growth and profitability numbers. Author of Deep Value Returns, Michael Wiggins De Oliverira, highlights in his article Intrepid Potash: Why I'm Buying This Stock, “The business is in a greatly improved shape, with no debt on its balance sheet and Intrepid's free cash flow in 2021 jumped to $60 million compared to $14 million in 2020.”
IPI Growth & Profitability
Despite IPI going through a rough patch from 2016 to 2017, where its share price dropped from $6.91 to $1.09, and the firm contemplated bankruptcy, the stock rebounded and is currently on a tear, in line with oil, gas, and other commodities. After coming to terms on a $35M revolving credit agreement and removing bankruptcy concerns, IPI could focus on the future, which is paying off handsomely, as it is currently trading at over $80/share.
IPI Growth Grade (Seeking Alpha Premium)
“In 2020, the sales price per ton of IPI potash was $250. As of only two weeks ago, Canpotex agreed to sell potash to India and China at $590 per ton,” writes Seeking Alpha Contributor Jason Wong. Additionally, Intrepid announced paying off all outstanding debt in Q3 of 2021 and had $26M cash on hand. Currently, IPI has $79M Cash From Operations and an overall Profitability Grade of A and a solid B+ Growth Grade. With year-over-year revenue growth at 48.39%, forward operating cash flow growth at 153.87%, and a growing balance sheet, it's no wonder company executives anticipate an increase in sales and growth throughout 2022. “With a strong balance sheet in a growing cash position, we announced in our earnings release a $35 million share repurchase program…We expect our first quarter 2022 net realized price for Trio will increase between $440 and $450 per ton, and we are currently booking sales for second-quarter shipments at the increased price level, which is approximately $215, moreover last year,” said Bob Jornayvaz, Intrepid Co-Founder & CEO during the Q4 2021 Earnings Call. Agricultural commodities and fertilizers are big benefactors of the current market environment, but metals and mining companies are also reaping the benefits.
2. Alpha Metallurgical Resources, Inc. ( NYSE: AMR
U.S. mining company Alpha Metallurgical Resources Inc. (AMR) produces, processes, and sells coal. Despite its share price tumbling 11% Monday among other material losers, there’s no news to consider this a concern. The stock’s short-term momentum may be pausing on the back of its record move. We consider it a strong buy at even more of a discount!
AMR Valuation (Seeking Alpha Premium)
AMR is currently trading more than 85% below the sector with a forward P/E ratio of 1.92x. We believe now is a great time to buy this stock, ranking #1 in its industry out of 26 at a price under $125/share and a strong growth and profitability outlook. EV/Sales and EV/EBIT numbers are strong, and Alpha’s overall B Valuation grade is solid.
AMR Growth & Profitability
Alpha Metallurgical Resources’ earnings have been strong over the last couple of quarters, and Q4 turned up significant figures, including an EPS of $13.45, beating by $2.01. YoY Revenue of $828.22M, beat by more than 155%. Intending to eliminate long-term debt, the company paid down $200M, bringing its current debt level to $300M.
AMR Growth Grade (Seeking Alpha Premium)
Profitability also remains solid with its overall B+ grade. As the war in Ukraine persists, coal prices are on the rise according to SA News, jumping above $100/ton for the first time in more than a decade. AMR is capitalizing and continues its growth trajectory and profitability.
AMR Profitability (Seeking Alpha Premium)
Current EBITDA Margins are solid at 23.53%. As the company continues to pay down debt, we should see the Cash from Operations of $174.94M steadily increase. As evidenced by the figures above, the company's growth remains strong and strengthened by the current need for more coal. "Given the continued strength of the current coal markets and faster than expected pace, which we've been able to dramatically reduce our debt, and legacy liabilities, we are also pleased to announce a shareholder return program. Our Board of Directors has approved a $150 million share repurchase program that will allow us to buy back our stock in the open market," said David Stetson, AMR Chairman & CEO.
AMR Momentum
AMR Momentum Grade (Seeking Alpha Premium)
AMR’s long-term outlook appears strong given the company’s momentum and performance over the past year. It’s clear from the last three months to one year that shares of AMR have increased quarter-over-quarter significantly, gaining 847.82% over the previous year. Short-term price is an excellent indicator of investor interest in the stock, and when compared to the industry, AMR is a top company.
3. Teck Resources Limited ( NYSE: TECK
Diversified metals and mining company Teck Resources Ltd. (TECK) explores and produces natural resources worldwide and operates through steelmaking coal, copper, zinc, energy, and corporate segments. The company has had tremendous growth year-over-year and the stock has a very solid valuation framework. Teck Resources also holds a tremendous amount of cash at $3.75 billion and has decided to round up its cash position by selling a small mill to Bunker Hill Mining (OTCQB:BHLL). “Bunker Hill Mining reached an agreement with Teck Resources' for satisfying the remaining purchase price for the Pend Oreille Mill… Under the agreement, a total purchase price of $2.75M is to be paid to Teck in cash or $3M in cash and shares; non-refundable deposit of $500K was paid earlier towards the purchase price.”
TECK should have a strong outlook, given its exclusive option to acquire 100% of the mine's production of zinc and lead concentrate over five years. "With the Trail Smelter as the natural home for Bunker Hill's future concentrate production, we are excited to lay the groundwork for a potential long-term offtake relationship and broader strategic partnership with Teck," commented Bunker Hill CEO Sam Ash.
TECK Growth and Profitability
Growth prospects for this stock have already proven strong, as evidenced by the below growth grades and quarterly results that produced EPS of $1.98 beating by $0.11, Forward Revenue Growth is at 25.72%, and YoY EBIT Growth is substantially above the sector at 1,837.45%.
TECK Growth Grade (Seeking Alpha Premium)
With its strength in numbers, analysts within the last 90 days have given the stock 21 FY1 Up Revisions and zero down, leading to an A+ Revisions Grade. Commodity prices remain high, so TECK is reaping the benefits by selling 76,000 tons of copper, 5.9M tons of metallurgical coal, and approximately 2.2M barrels of bitumen in Q3 of 2021. As commodity prices continue to skyrocket with high demand persisting, TECK is an ideal stock pick whose gross profit margins and whopping $3.75B Cash on Hand should quickly grow.
TECK Profitability Grade (Seeking Alpha Premium)
“With $6+ in earnings per share being projected for fiscal 2022, we see TECK's return on equity growing at a swift pace over the next few years. Currently, TECK's ROE comes in at just over 4.3% over a trailing twelve-month average…TECK's bullish technicals are certainly being backed up by the fundamentals,” writes Seeking Alpha Contributor Individual Trader, and I agree, and is why at its B valuation, this stock comes as a steal.
TECK Valuation
Trading substantially below its sector with a forward P/E ratio of 5.56x, -59% difference from the sector, and a price point below $40/share, you can’t go wrong given the current path of commodities.
TECK Valuation Grade (Seeking Alpha Premium)
Copper and steel are resources for the future, and TECK Resources is one stock that is doubling down on production, by way of smart partnerships like Bunker Hill which will help drive growth well into the future. Another such company is Mosaic. In addition to its current price, YTD, the stock is +34%, its one-year +94%, and over five years, it has seen more than a 68% share price increase.
4. The Mosaic Company ( NYSE: MOS
Similar to our stock pick Intrepid (IPI) above, The Mosaic Company (MOS), through its subsidiaries, markets and produces potash crop nutrients globally, a mix of crop nutrients and animal feed ingredients for industrial use. Like some of the other stock picks we’ve discussed today, MOS is on a tear shattering records in the fertilizer industry. Because fertilizers are in short supply due to Russia’s invasion of Ukraine and reduction in supply volumes due to labor strikes in Canada, North American fertilizers producers like Mosaic are capitalizing. A Seeking Alpha report highlights that “‘Russia is a major, major exporter across all of the major fertilizers... losing Russian exports is a very big deal,’ says Josh Linville of StoneX Group, noting that the country accounts for 14% of urea, as much as 31% of UAN, 10% of phosphate, and nearly 20% of the global operating potash capacity.”
Despite Mosaic’s D+ Valuation grade, the stock has excellent momentum and is trading under $70/share with stellar short-term price performance. Looking at the A+ Momentum grade below, this stock is a top stock in its respective sector, gradually outperforming its peers on a quarterly price-performance basis.
MOS Momentum (Seeking Alpha Premium)
Given the stock is strongly bullish, investors should continue to pay higher prices for MOS shares as it continues to trend higher. As we look to MOS’ future, let’s dive into the growth and profitability prospects.
MOS Growth and Profitability
Agricultural prices are at multi-year highs. Given the strong demand for crops and shortages stemming from geopolitical issues in Europe, stocks like MOS will advance. It is a leading producer of potash and phosphate fertilizers desired by the growing demand for fertilizers that can boost yields.
MOS Growth Grade (Seeking Alpha Premium)
Mosaic displays strong growth and profitability grades. Year-over-year revenue growth is strong at 42.34% compared to 24.15% for the sector. EBIT Growth for the same period is stellar and significantly trumps its median peers.
MOS Profitability Grade (Seeking Alpha Premium)
As we look at MOS’ cash from operations and underlying profitability margins relative to the sector, higher demand for potash should increase profitability figures. Namely, as some of the top five countries account for more than 75% of potash production, China and India’s potash lags significantly. To secure food supplies, potash prices specifically for those nations have risen drastically and should persist at those levels for some time, prompting U.S. producers like Mosaic to profit handsomely.
Emphasizing its excellent financial performance, during the Q4 Earnings Call, Mosaic President and CEO Joc O’Rourke said, “For Mosaic Fertilizantes, we expect the business to continue reflecting the favorable market backdrop and our transformation efforts in 2022. Sustained grower demand and improved market positioning should continue to drive results.” We agree, and as we transition from fertilizers and agricultural chemicals, there is one last chemical company worth adding to a portfolio.
LSB Industries, Inc. (LXU) is a nitrogen-based fertilizer company that manufactures, markets, and sells chemical products like ammonia and fertilizer blends for corn and other crops. Although the stock has a D+ valuation, the overarching fundamentals we look for in addition to valuation like growth, EPS revisions, profitability, and momentum are strong.
LXU Momentum
With the increasing demand for chemicals and fertilizers that offer higher crop yields, and lower carbon, while meeting the needs of this volatile market, stocks like LXU continue to expand, with no sign of slowing. “North American growth in organic fertilizer is one of the biggest opportunities for agricultural purposes and is expected to grow at a CAGR of over 13% from 2022 thru 2027,” writes Seeking Alpha Contributor, EnigmaDude.
LXU Momentum (Seeking Alpha Premium)
Sanctions against Russia are putting pressure on companies with the supplies to produce, thus LXU’s momentum in the short-term should continue to experience an uptick. LXU’s YTD share price is up 105% and, at its current trajectory, is showcasing that this stock pick could help grow your portfolio in addition to crops! Let’s check out some of its growth and profitability metrics.
LXU Growth and Profitability
Year-to-date commodity performance is astounding, as showcased by the below chart. MUFG Commodities Weekly writes, “A core rationale as to why commodities perform well during hiking cycles is that the root cause of the inflation that the Fed is endeavoring to tackle is created by strong and rising physical goods demand rather than cost push supply economics.”
Runaway Commodities YTD Performance (Bloomberg, MUFG Research)
The continued surge in commodities is why I believe these assets are excellent short-term hedges against rising inflation and are fundamentally sound.
LXU Growth Grade (Seeking Alpha Premium)
LXU revisions are strong (A+) following Q4 results and an EPS of $0.47, beating by $0.19. Year-over-year revenue growth has been solid at 58.33% and EBITDA growth for the same period is 209.17%. Profitability metrics, while average (overall C- grade), should improve given the charts and outlook for this sector. Record high fertilizer prices pose opportunistic as companies are pushing off these prices to consumers, which should increase profit margins. With agricultural products representing more than 50% of LXU’s net sales and gross profits, this commodity stock pick and some of the others are growth-oriented and excellent choices in this challenging investing environment, trending upward and capitalizing on global trends.
Conclusion
War, fear, supply chain issues, inflation, and the threat of a tightening monetary policy are creating market volatility. Inflation at a 40-year high shadows the economic environment, and commodity resources are in short supply. Over the last few weeks, some commodity stocks have experienced enhanced volatility. Zooming out of the trading patterns of the previous few weeks, since 1972, history has shown commodity stocks fair well when the Federal Reserve is on a campaign of interest rate hikes. There is increased speculation that the Fed may take rates up too much and potentially set up an environment for a recession in 2023 or 2024.
According to Seeking Alpha Contributor BlackRock, on average, since 1997, commodities have historically outperformed the S&P 500 in the first 12 months after the beginning of a rate hiking cycle. BlackRock's key takeaways are that "commodity indexes have rallied amid heightened geopolitical uncertainty and structural supply shortages… commodities have historically shown resiliency in rising rate environments and can help investors hedge against rising inflation and diversify portfolios." The stocks I am recommending, IPI, AMR, TECK, MOS, and LXU, are Strong Buys based on our quant ratings, growing earnings, and solid profitability. They are defensive in the current inflationary environment, and the inherent nature of their businesses allows them to pass on rising costs to their customers.
Our investment research tools help to ensure you're furnished with the best resources to make informed investment decisions. Consider Top 5 Energy Stocks To Buy in this uncertain and inflationary environment. You can also use Seeking Alpha's 'Ratings Screener' tool to help you achieve diversification into desired sectors you like, including commodities. Click the links above to get started.
https://seekingalpha.com/article/4499967-best-commodity-stocks-to-invest-in
SP Angel . Morning View . Thursday 07 04 22China may announce new stimulus measures as early as next week
As Joe Biden moved to open US strategic oil reserves, his two biggest oil-producing allies have kept their tanks firmly shut. The UAE and Saudi Arabia continue to rebuff the US president as he attempts to counter soaring oil prices prompted by Russia’s invasion of Ukraine. And both countries have been unusually frank about their refusal to step in.
The five-week-old war is bringing tensions to a head in several parts of the world, but perhaps nowhere is a regional order more under strain than the Middle East, where two of America’s biggest allies are now seriously questioning the foundations of their relationship.
The Saudi and Emirati refusal to bail Biden out – or even to take his calls – has pushed relations between the Gulf states and Washington to an unprecedented low. The extraordinary flow of Russian wealth to Dubai, just as the US and Europe try to strangle Putin’s economy, has inflamed things further.
Add to that the still-sputtering talks between Washington and Tehran, which could see sanctions reprieves in return for Iran returning to the Obama-era nuclear deal, and there are clear signs of a faltering friendship – with the potential to rewrite the geopolitics of the region.
Usually opaque and often inscrutable, officials in Abu Dhabi and Riyadh have in recent weeks been uncharacteristically blunt to visiting diplomats about the nature of their grievances, and how far they are prepared to take them. One western diplomat told the Guardian that a Saudi counterpart had said: “This is the end of the road for us and Biden, but maybe the US also.”
Prominent Saudi and Emirati commentators shared the same sentiments. The former al-Arabiya editor-in-chief, Mohammed al-Yahya chose the previously unlikely forum of the Jerusalem Post to publish his views on the standoff.
“The Saudi-US relationship is in the throes of a crisis,” he wrote. “I am increasingly disturbed by the unreality of the American discussion about the subject, which often fails to acknowledge just how deep and serious the rift has grown.
“A more realistic discussion should focus on one word: divorce. When Barack Obama negotiated the nuclear deal with Iran, we Saudis understood him to be seeking the breakup of a 70-year marriage.
“How could we not? After all, the flaws in the deal are well known. It paves a path for Iran to a nuclear bomb. It fills the war chest of Iran’s Islamic Revolutionary Guard Corps, which has spread militias across the Arab world armed with precision-guided munitions to maim and kill people who formerly looked to America to help guarantee their safety.
“Why should America’s regional allies help Washington contain Russia in Europe when Washington is strengthening Russia and Iran in the Middle East?”
Al-Yahya contrasted Washington’s demands with Beijing’s no-strings diplomacy, saying: “While American policy is beset by baffling contradictions, Chinese policy is simple and straightforward. Beijing is offering Riyadh a simple deal: sell us your oil and choose whatever military equipment you want from our catalogue; in return, help us to stabilise global energy markets.
“In other words, the Chinese are offering what increasingly appears modelled on the American-Saudi deal that stabilised the Middle East for 70 years.”
In recent months, Brett McGurk, the White House coordinator for the Middle East, has been a frequent visitor to Riyadh, trying to calibrate a relationship that soured soon after Biden’s inauguration, when he refused to speak to Saudi Arabia’s de facto leader, Mohammed bin Salman.
That stance set the tone for the standoff that has followed. And both Prince Mohammed and his counterpart in the UAE, Mohamed bin Zayed, remain deeply wary of the administration’s determination to push through the nuclear deal, which would give Iran comprehensive sanctions relief in return for abandoning the capacity to build a nuclear weapon.
A perceived lack of support from Washington for the Saudi-led campaign against Houthis in Yemen has added to the angst. And so too has an approach of an administration that Riyadh and Abu Dhabi believe is willing to sacrifice allies for idealism. The naked transactional diplomacy of Donald Trump was a formula more familiar to both, and had been readily deployed by China, to whom each is looking towards for closer trade, energy and even security ties.
Professor Abdulkhaleq Abdulla, a noted scholar in political science, described the crisis with Washington as the worst in “50 years”.
He laid a litany of gripes at the doors of the White House, which he said had built up particularly during the Biden administration.
Writing in the Lebanese daily Annahar, he said: “The UAE’s relationship with the US partner is at stake, at a crossroads. It is certain that the task of fixing the misunderstanding falls on the shoulders of the Biden administration, which may be on the verge of losing a regional partner that is increasingly self-confident and has an increasing regional and global presence.
“The UAE has invested a lot in its relations with Washington. We allocated the bulk of our investments of huge sovereign wealth funds in the American markets, excluding Asian and European markets, and had wanted to increase trade with Washington.”
Abdulla said the UAE felt snubbed by Washington not signing a deal to supply new F-35 fighter jets.It was also angered by Biden’s distance following a deadly Houthi drone and rocket strike on Abu Dhabi.
“What made matters worse was the Biden administration’s objection to sovereign Emirati decisions, such as receiving Bashar al-Assad … and putting pressure on Abu Dhabi to increase its oil production outside the context of the Opec agreement.
“All this comes at a time when America is no longer the only superpower in the world, which prompted the UAE and other countries to diversify partners.”
https://www.theguardian.com/us-news/2022/apr/03/us-relations-saudi-arabia-uae-oil-crisis
The ship, Beijing Spirit, had apparently lost the buyer for its oil. It removed “Philadelphia” as its listed destination, according to the global maritime data provider MarineTraffic, and listed its new destination as “For Orders”, which indicates that the oil on board is for sale.
A tanker loaded with one million barrels of Russian oil set sail from Murmansk this month, headed for Philadelphia. Then, in the middle of the Atlantic, it did an abrupt U-turn.
The tanker then veered back towards Europe before spending several days bouncing round the Mediterranean, “presumably hoping to offload in more ‘friendly’ territory”, said John van Schaik, an oil-industry expert at the energy information company Energy Intelligence.
The meandering journey offers a glimpse into the tumult that has roiled the trade in oil, Russia’s most lucrative export, as the US, Canada, Britain and Australia move to ban imports of Russian oil because of Russia’s invasion of Ukraine.
Overall, more than 20 tankers that have departed from Russian ports since the invasion — together carrying almost 8.5 million barrels of oil — now list their status as “For Orders” or “Drifting”, which indicates a lack of destination, according to the Russian Tanker Tracking Group, an initiative led by the Ukraine government to observe Russian oil sales. Other tankers now list final destinations like “ZZZ.”
Van Schaik said it was uncommon to see so many tankers sailing under “for orders” status, and it likely had to do with the US ban on Russian imports combined with self-sanctioning among oil companies. (Tankers sometimes do change destinations or are turned back if there is a mishap at the accepting refinery, for example.)
It’s not always possible to know where the oil will end up, he said, but traders could quietly sell it to refiners that cared less about their reputation than about price.
“Once you put the crude somewhere in a tank on land, it is anonymous,” MVan Schail said. “You blend it with some other crude, load it on another tanker and sell it as European Sour Blend and nobody knows its origin was Russia.” At the same time, at least seven tankers are still sailing towards the US to offload their shipments before the US ban on Russian oil takes full effect on April 21.
The US imports only a small fraction of its oil from Russia, but nevertheless fuel prices in America have been soaring in part because of the uncertainty over global supplies caused by the invasion.
Some countries, like India, Singapore and Turkey, have sharply increased their receipts of Russian oil in the weeks since the invasion, according to a separate tally by a Ukraine-led effort to investigate the companies and countries that continue to buy and sell Russian oil and gas.
New York Times News Service
https://www.telegraphindia.com/world/tanker-with-russian-oil-loses-buyer/cid/1858837
SIR – The plans to cover an area “the size of Exmoor” with solar panels are just another example of woolly-headed government thinking on energy.
At least 10 years ago, the building industry had the ability to fit solar panels on to new-build homes, but it hasn’t happened. No government in the last 20 years has had the guts to commit itself to nuclear power, as the French have. Neither have our leaders prioritised energy security by continuing to invest in North Sea oil.
Fracking is a contentious issue – but instead of putting some investment behind it while the industry worked on solving potential problems, developing different methods and reassuring the general public that it can be done safely, governments have taken the easy option and walked away.
Now the “plan” is to carpet the countryside with on-shore turbines and solar panels. This will remove acres of valuable farmland that could be used for food production, meaning we will have to import even more at a time when transport fuel prices are going through the roof.
Paul Braithwaite
London SE6
SIR – Britain’s largest steel companies, Tata Steel and British Steel, are reported to have stopped importing Russian metallurgical coal.
That the Government has encouraged this while stalling a new, almost oven-ready coking coal mine at Whitehaven in Cumbria is ridiculous.
It’s time that over-sensitive environmental objectors stopped blocking the recovery of critical energy resources.
A T Patrick
Bourton-on-the-Water, Gloucestershire
SIR – Since the 2008 Planning Act was introduced, the Planning Inspectorate has examined more than 100 nationally significant infrastructure projects.
The Act was designed to give communities a say in projects that had a direct impact on them. However, implementation of the Act has resulted in significant delays to the decision-making process as real and imaginary objections are considered by government inspectors.
This has become particularly burdensome with the urgent need to find additional energy sources following Russia’s invasion of Ukraine. Now is the time for ministers to consider taking emergency powers to allow quicker decisions on solar, nuclear and fracking planning applications.
This doesn’t remove the need for inspections but does require a pragmatic approach to permissions that affect our long-term energy requirements at this critical time.
Group Captain Alan Ferguson (retd)
Ipswich, Suffolk
SIR – Terry Crocker (Letters, March 27) asks whether it is more economical to boil a kettle using electricity or gas.
He may be pleased to know that gas is far cheaper. Unlike the large quantity required for central heating and hot-water cylinders, the amount used when cooking on a hob is minuscule.
I discovered this a few summers ago, when I switched off the boiler from May to September (using solar panels for hot water). I cooked every day and boiled countless kettles on the hob, yet the gas meter digits hardly moved. My electric kettle has become redundant.
Penny Ann McKeon
Henfield, West Sussex
Keep up the sanctions
SIR – To end sanctions against Russia if Vladimir Putin withdraws from Ukraine, as suggested by Liz Truss, would be a clear sign of Western weakness.
The invasion of a sovereign country, resulting in the murder of thousands of civilians, must be punished. The West needs to enforce sanctions until Russia is no longer a threat.
J A Crooks
Newtownards, Co Down
SIR – The war in Ukraine can be expected to continue for some time. No Ukrainian I know is willing to consider conceding one inch of the Donbas now.
What President Biden said, although considered bad form, was right. Mr Putin must be removed from power – and before any sanctions are lifted.
As soon as this happens, we should lift sanctions immediately to avoid the circumstances that led to the Second World War. However, I worry that Europe will not be willing to maintain sanctions for long enough.
If Mr Putin does succeed in his war, he will eventually move on to other countries. That would herald much longer-term economic turmoil. He cannot be allowed to remain in charge.
David Clarke
Athens, Greece
SIR – In our small Welsh town, over 30 families have applied to the Home Office to sponsor a Ukrainian family.
Despite waiting for more than 14 days, no one has yet received notice that visas have been approved for any Ukrainians to find safety in our homes.
Surely we should adopt the approach of EU countries that don’t force Ukrainians to go through onerous checks, and simply ask for passports.
Is the Home Office deliberately trying to limit the number of people we welcome – or is it simply incompetent?
R A Collings
Presteigne, Radnorshire
As most of you know, the global oil market has been turned upside-down by Putin's decision to invade Ukraine and the resulting economic sanctions placed on Russia by the U.S. and its Democratic allies. While the price of WTI crude had a sharp pull-back last week (see chart below) as a result of the Biden Administration's decision to release 1 million bpd for 180 days from the U.S. Strategic Petroleum Reserve, WTI is still near $100/bbl and that is ~2.5x the generally considered break-even point for most domestic shale production (~$40/bbl). That means low-cost producer EOG Resources (NYSE:EOG) is going to have plenty of free-cash-flow this year to reward its shareholders through both its base and, increasingly, its variable quarterly dividend. Meantime, the relatively recent Dorado discovery has excellent long-term potential.
WTI Crude Weekly Price Chart (CNBC)
Investment Thesis
As mentioned earlier, EOG has a two-tiered dividend policy: a regular, or "base", quarterly regular (currently $0.75/share) and a special, or "variable" dividend, which was $1/share in Q1.
Given the current macro-environment, the upside for EOG shareholders is clearly with the special dividend. Note that the $1/share distribution in Q1 was based primarily on oil prices and free-cash-flow generated in the latter half of 2021. During Q4 of last year, WTI averaged an estimated $77.44/bbl. However, during Q1 of this year, WTI averaged an estimated $93.33/bbl, or more than $25/bbl higher than Q4. Considering EOG has reported it is FCF positive when WTI>$32/bbl (see page 6 of this presentation), to say that EOG is generating tons of FCF at current pricing is an understatement. That, of course, bodes well for large special dividends throughout 2022 and perhaps another significant boost in the base dividend as well.
To put this into perspective, EOG generated $5.5 billion of FCF in FY2021 when WTI averaged $68/bbl. The result - given the shareholder friendly nature of the EOG management team - was that the company doubled the base dividend and returned $2.7 billion to shareholders (~50% of total FCF) through both the base and special dividends.
If WTI averages anywhere close to the current price ($100/bbl) for the remainder of 2022, EOG could easily return an estimated $7-$8/share (or more) in total dividends to shareholders this year. At Friday's close of $120.33, the midpoint of that estimate ($7.50) equates to a yield of 6%+.
The Dorado Discovery
EOG's Dorado Discovery (EOG Q1 Supplemental Presentation)
Meantime, EOG hasn't been standing still and in late 2020 announced the discovery of a large dry-gas play in South Texas it calls Dorado. Most of you know that one reason EOG has been so successful over the years is because it has been predominately an oil & NGLs (i.e. liquids) focused company and was relatively immune from the crash in the price of natural gas. However, as can be seen by the graphic above, EOG not only believes that Dorado is a potentially massive 21 TCF resource, but that its breakeven price would be only $1.22/Mcfe - significantly less than either the Haynesville or Marcellus plays. That led EOG CEO Ezra Yacob to say the following on the Q1 conference call:
And it's one reason we're very excited about our Dorado prospect. We think it competes in North America is basically the lowest cost of supply, especially because of its geographic location, close to so many marketing centers, including the Gulf Coast. So we're very excited and very fortunate to have it.
EOG has already established a dominant leasehold in the Dorado play (160,000 net acres) and says it holds 1,250 premium drilling locations. In 2022, EOG plans to roughly double activity on a yoy basis - running two rigs and a goal of 30 net well completions. It's not difficult to see a future wherein EOG is a major natural gas supplier to Gulf Coast LNG export terminals (much of which could go to Europe).
Risks
The typical risks apply to an oil producer like EOG: massive geopolitical uncertainties with respect to Putin's war-of-choice in Ukraine and the resulting sanctions on Russia by the U.S. and its Democratic allies. Higher oil prices can put downward pressure on the global economy and could, at some point, result in oil demand destruction and falling oil prices. However, for EOG's stock and the price of oil, as we have already seen, those risks obviously have upside potential as well.
EOG could potentially drill-thru its "premium" shale drilling inventory in 10-15 years. That being the case, EOG will need to either make some new discoveries or enter the M&A market ... something it hasn't participated much in over the years (preferring to primarily add resources by buying new acreage leaseholds on its own).
Meantime, EOG's balance sheet is pristine - ending FY2021 with almost as much cash ($5.2 billion) as long-term debt ($5.6 billion). The company currently trades with a forward P/E of only 9x.
A Word On The False Narrative About Shale Oil
Meantime, my followers know that another risk is the risk of what I have been calling the "new era of energy abundance". A word about that, if you don't mind.
After watching all the shale oil companies' CEOs over the past decade market shale as a "short-cycle" resource that can rather easily and economically be ramped up (or down) due to market conditions, it give me a chuckle to see them (and many politicians and media "experts" ...) now claim it is no longer "short-cycle" and would take "at least a year" to significantly increase production. That is simply false. A shale well can be drilled and completed and brought onto existing pipelines in a matter of weeks, two months at the most. That's just a fact. Are there supply-chain issues as a result of the covid-19 crash? Sure. But one thing any energy investor knows is that any problem in the oil patch can be solved with money. And God knows there is a ton of money in the oil patch today.
I also am amazed that these energy company CEOs at the recent CERA conference were also complaining about a "lack of capital". That is also very interesting to me also considering nearly all the major shale operators already have A-rated balance sheets, generated tens of billions of FCF last year (at much lower prices...), and are obviously generating tons of FCF at current prices. There is certainly no "lack of capital" in the domestic shale patch right now. For example, EOG peer ConocoPhillips (COP) generated $10.4 billion in FCF last year. Chevron (CVX), another major Permian producer, generated $21.1 billion in FCF for FY2021. You're going to tell me these companies can't afford to put another rig to work in the Permian Basin?
It's also rather funny (other than the destruction of billions of shareholder capital ...) that some of these same companies weren't complaining about a "lack of capital" during the idiotic "drill baby drill" mantra of the recent past that saw them growing production as fast as possible into an already over-supplied market at O&G prices less than half of what they are today.
Meantime, the other false narrative is that somehow Biden, the "greenies", or "regulations" are keeping shale oil companies from increasing drilling and putting new rigs to work tomorrow morning in the Permian Basin. Nothing could be further from the truth. First of all, ~80% of shale production comes from private land. Second of all, Biden's lease regulations on Federal lands were delayed by the courts. Meantime, major shale oil players have literally thousands of Federal drilling permits that are going unused.
Bottom line: don't kid yourself, the only reason U.S. oil production isn't growing is because these energy companies choose not to. That being the case, investors need to be careful about buying into the false narratives being thrown about. Shale oil wells are still "short-cycle", these companies have tens of billions of bbls of proven shale reserves (even at $40/bbl, let alone $100/bbl !), they have tons of capital, and there are existing pipelines to bring that oil to market straight away. So, we still live in an "era of energy abundance", and it pains me to see the US oil industry not respond to a war-time situation and put the screws to Putin for what he has done in Ukraine (not to mention middle-class Americans who are getting hammered at the pump and by inflation in general) and the existential threat that the world's worst autocrats pose to free Democracies. That said, the artificial constraints on US shale oil production growth means higher oil prices, and that is extremely bullish for EOG (and others), at least over the short-term.
Summary & Conclusion
EOG is arguably one of the best operators in the U.S. shale patch. It is also very shareholder friendly and could very easily pay out a $7.50/share in total dividends to shareholders this year (6%+ yield). In addition, if US shale oil production doesn't respond faster (and it doesn't look like the CEOs want to do so ...), despite the 1 million bpd release from the SPR for 180 days, that's only ~1/3 of the estimated reduction in Russian oil exports (3 million bpd). As a result, before all is said and done with Putin in Ukraine, we could easily see WTI hit $150/bbl this year. And that means not only will EOG shareholders be on the receiving end of excellent dividends, but they could also see a significant increase in the price of the stock as well - leading to total returns that are likely to blow away the S&P 500.
I'll end with a 10-year chart of EOG's stock and note the cyclical nature of the up-and-down cycles and that it is still below the price it had achieved back in 2018:
https://seekingalpha.com/article/4499465-eog-resources-oil-income-natural-gas-kicker
(Bloomberg) --
Most Read from Bloomberg
Ukraine asked the International Criminal Court to gather evidence of alleged war crimes by Russian soldiers in towns near Kyiv, notably Bucha. Graphic images triggered a push in Europe for new sanctions. Germany, France and Italy were among those condemning the actions. In response, Kremlin spokesman Dmitry Peskov said many of the images were faked.
The strategic Black Sea city of Odesa was rocked by a series of explosions early Sunday; Russia’s defense ministry said it targeted an oil refinery and fuel depots. Transnistria, a pro-Russian enclave in neighboring Moldova, on Saturday denied Ukraine’s claim that Moscow’s forces are redeploying in its territory to prepare for an assault on the Odesa region from the northwest.
Moscow’s chief negotiator said Russia and Ukraine will resume talks by video on Monday; Kyiv hasn’t confirmed the discussions.
(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)
Key Developments
Europe Warns Russia Faces New Sanctions for ‘War Crimes’
Russian Bondholders Remain on Alert Even as Payments Flow
Russian Ships Switch Flags at Record Rate Due to Sanctions Scrutiny
A Hundred Firms Pull $45 Billion of Deals Since War in Ukraine
Oil Prices Don’t Fully Reflect Russian Supply Risks, Says Vitol
All times CET:
Ruble Rebound Won’t Last, Blinken Says (7 p.m.)
U.S. Secretary of State Antony Blinken said the ruble’s rebound, fueled by “a lot of manipulation” by Russian authorities, is unsustainable.
Backed by severe capital controls imposed by Russia’s central bank, the ruble has rebounded from a March 7 low against the dollar to 85.42 rubles on Friday, almost matching the exchange rate on Feb. 24 when Russia began the war.
Story continues
“That’s not sustainable,” Biden said on NBC’s “Meet the Press” on Sunday. “So I think you’re going to see that change.”
EU Should Discuss Russia Oil Ban: German Official (6:00 p.m.)
German Defense Minister Christine Lambrecht said the European Union should discuss a ban on Russian natural gas imports. Asked twice in an ARD television interview whether the response to reported Russian atrocities should include an end to gas shipments, Lambrecht said EU ministers “have to discuss precisely that.”
She cautioned that the EU’s response is strongest when all member countries take a coordinated approach to punitive measures. The EU has been divided over cutting off Russian energy imports.
Italian Party Chief Calls for Full Russian Energy Embargo (5:00 p.m.)
Democratic Party leader Enrico Letta, whose party is part of Italy’s governing coalition and leads in voter preference polls, called for a “full oil and gas” embargo against Russia.
Italy is trying to reduce dependency on Russian gas imports, which accounted for 38% of its gas consumption last year.
Russia Dismisses ‘Staged’ War Crimes Accusations (4:16 p.m.)
Kremlin spokesman Dmitry Peskov dismissed Ukrainian claims of war crimes having been committed by Russian troops in towns near Kyiv.
“It’s clear to the naked eye that there are a lot of fakes and staged shots,” Peskov said by text message when asked to comment on images released by Ukrainian officials of dead civilians in towns recently vacated by Russian soldiers.
Russia’s defense ministry denied involvement in any murders of civilians in Bucha, calling the accusations “provocations.” It said Russian troops left the town on March 30 and “not a single local resident suffered from any violent action” during their presence there, an accused Ukrainian officials of “staging” photos and videos of dead bodies.
European Leaders Respond to Graphic Imagery From Ukraine (4:07 p.m.)
Officials across Europe condemned Russia as graphic images emerged of dead civilians in Ukrainian towns recently under Moscow’s control.
French President Emmanuel Macron called the images “unbearable,” and said the Russian authorities “will have to answer for these crimes.” Prime Minister Mario Draghi said Italy “condemns these horrors with absolute firmness,” and his foreign minister Luigi Di Maio decried “cruelty, death, horror.”
Earlier, European Council president Charles Michel tweeted that “further EU sanctions & support are on the way,” and Foreign Secretary Liz Truss said the U.K. would “fully support any investigations by the International Criminal Court” on possible crimes in Ukraine.
U.S. Stops Short of Genocide Label (3:45 p.m.)
U.S. Secretary of State Antony Blinken called images of alleged Russian atrocities against civilians in the Kyiv region a “punch to the gut,” but stopped short of labeling them genocide.
The U.S. already has been helping document war crimes since the Russian invasion, he said on CNN. “The most important thing is we can’t become numb to this,” he said. “This is the reality of what’s going on every single day, as long as Russia’s brutality against Ukraine continues.”
Separately, White House Chief of Staff Ron Klain said the U.S. will continue to send weapons and support to Ukraine. While it appears Ukrainian forces are winning the war around Kyiv, the conflict “sadly is far from over” as Russian forces redeploy, Klain said on ABC.
Germany’s Scholz Demands Investigation Into Bucha (3:14 p.m.)
Chancellor Olaf Scholz demanded access for organizations like the International Red Cross to document what happened in the Ukrainian town of Bucha, and said the perpetrators and their superiors must be brought to justice.
Scholz reiterated a call for Russia to agree to a cease-fire and end its military action. “This is a terrible, a senseless and an unjustifiable war that is causing a great deal of suffering and is of no use to anyone,” Scholz said in a statement. “It has to stop.”
Separately, Annalena Baerbock, German foreign minister, said the actions revealed at Bucha “must have an impact on the fifth package of sanctions. And we will support Ukraine even more in its defense.”
U.N. Estimates 1,417 Civilian Deaths in Ukraine (2:53 p.m.)
The UN High Commissioner for Human Rights estimated civilian deaths in Ukraine at 1,417 through April 2, with another 2,038 injured. Among those killed were a total of 121 children. The actual figures are likely to be considerably higher, the UNHCR said.
Most of the casualties were caused by the use of explosive weapons with a wide impact area, including shelling from heavy artillery and multiple launch rocket systems, and missile and air strikes, the agency said.
President Volodymyr Zelenskiy renewed charges that Russia is committing genocide in Ukraine, telling CBS News in the U.S. that the country’s citizens were “being destroyed and exterminated. And this is happening in the Europe of the 21st century.”
Ukraine Calls for ICC to Send ‘War Crimes’ Mission (2:09 p.m.)
Ukraine wants the International Criminal Court to send a mission to investigate “war crimes” committed by Russian troops against civilians uncovered in Bucha and other formerly occupied towns near Kyiv, said Foreign Minister Dmytro Kuleba.
“We are still collecting bodies, uncovering graves, but the count is already in hundreds,” he told the U.K’s Times Radio on Sunday. “Dead bodies are just all across the streets.”
Separately, Kuleba again called for a full oil and gas embargo of Russia by Group of Seven nations, and for ports to be closed to all Russian vessels and goods.
Europe Warns of New Sanctions Over Russian ‘War Crimes’ (1:03 p.m.)
Some European Union governments are pushing for the bloc to quickly impose new sanctions in response to reports that Russian troops executed unarmed civilians in Ukrainian towns, said to diplomats familiar with the discussions.
The European Commission was already honing measures that would mostly focus on closing loopholes, strengthening existing actions and expanding the list of sanctioned individuals.
Some countries argue there’s now a trigger for fresh penalties to be put in place with speed, according to a diplomat familiar with the discussions. There’s not yet consensus on all the details for a new package, or when to implement it.
What Are War Crimes? Could Putin Face Prosecution?: QuickTake
Oil Hasn’t Priced in Enough Supply Risk, Vitol Says (12:41 p.m.)
Oil prices don’t fully reflect the risk of disruptions to Russian exports, according to the world’s biggest independent crude trader.
While Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February, it sunk 13% last week to about $104.
“Oil feels cheaper than most would’ve predicted,” Mike Muller, Vitol Group’s head of Asia, said Sunday.
Azerbaijan to Boost Gas Exports to Italy (10:56 a.m.)
Azerbaijan will increase gas exports to Italy to 9.5 billion cubic meters this year from 7 billion cubic meters following a weekend visit by Italian Foreign Minister Luigi di Maio to Baku, Corriere della Sera reported.
Higher energy prices and declining sentiment are weighing heavily on Italy’s economy. The business lobby Confindustria estimates that gross domestic product will grow 1.9% this year, or as low as 0.3% if the war continues for the whole year and oil and gas prices remain at present levels.
Humanitarian Corridors Open in Donbas, Deputy Premier Says (10:17 a.m.)
Fighting and shelling continues in Ukraine’s eastern Donetsk and Luhansk regions, yet humanitarian corridors are open on Sunday to try to bring civilians to safety, Deputy Prime Minister Iryna Vereshchuk said. Buses will attempt to move closer from Berdyansk to the besieged city of Mariupol, she said.
Ukraine’s General Staff said it’s regained full control of the region around Kyiv, while the Chernihiv region is gradually being freed of Russian forces. Civilian casualties have been reported during shelling in the occupied Kherson region, it said.
Over 10 million Ukrainians have fled their homes, either moving internally or leaving the country. Some 2.46 million people have crossed into Poland since Feb. 24, Polish border authorities said. Another 23,800 travelers were admitted on Saturday, and 4,300 early Sunday.
Ukrainian Officials ‘Held Hostage,’ Deputy Premier Says (9:37 a.m.)
Russian troops are holding 11 Ukrainian local government leaders hostage in occupied territories, Deputy Prime Minister Iryna Vereshchuk said in a video statement from the presidential office in Kyiv. Olha Sukhenko, a representative of Motyzhyn village west of Kyiv, had been killed, she said.
Ukraine is continuing negotiations with Russia to release civilians as a part of a prisoner exchange, Vereshchuk said.
Russian Army Accused of War Crimes in Occupied Areas (9:17 a.m.)
Bodies of civilians who’d been shot by Russian forces and had their hands tied were found in the streets of Bucha, a town in the Kyiv region, after Ukraine recaptured it, Mykhailo Podolyak, an adviser to Ukrainian President Volodymyr Zelenskiy, said on Twitter. Russia hasn’t commented on the accusation so far.
Human Rights Watch said in a statement that it has documented cases of apparent Russian military war crimes against civilians in occupied areas of Chernihiv, Kharkiv and Kyiv, including a case of repeated rape and summary executions between Feb. 27 and March 14.
The Biden administration on March 23 made a formal determination that Russian troops had committed war crimes. At the time Secretary of State Antony Blinken said the U.S. had seen “credible reports of indiscriminate attacks and attacks deliberately targeting civilians, as well as other atrocities.” President Joe Biden has said he considers Vladimir Putin a war criminal.
Russia Says Remote Talks to Resume Monday (8:31 a.m.)
Russian chief negotiator Vladimir Medinsky said Ukraine is becoming “more realistic” about adopting a neutral and nuclear-free status, though a draft treaty between the two sides isn’t ready for submission to a leaders’ summit, Interfax reported.
Russian and Ukrainian negotiators will resume remote talks on Monday, he said, adding that Moscow’s position on Crimea and the Donbas remains unchanged. Ukraine hasn’t confirmed the talks.
Odesa Targeted by Russian Missiles (8:15 a.m.)
Odesa city council deputy Petro Obuhov said a missile strike targeted infrastructure during a two-hour air raid alert from 4:30 a.m. local time. Russia’s defense ministry said it hit an oil refinery and fuel depots with missiles fired from ships and planes. Thick black smoke billowed near the city after the sounds of bombs falling was heard. No casualties were reported.
Russian troops continued withdrawing from northern Ukraine into Belarus and Russia, and were planting mines along their routes and in some towns and villages, according to the General Staff of the Ukrainian armed forces.
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https://finance.yahoo.com/news/ukraine-russia-says-talks-kyiv-064850403.html
Lithuania has stopped all Russian gas imports, becoming the first country in the European Union to do so.
The country’s gas transmission system has been operating without Russian gas imports since the start of the month, the Lithuanian Energy Ministry stated on April 2.
Minister of Energy Dainius Kreivys said that Lithuania is the first EU country among those supplied by Russian state-owned gas giant Gazprom to gain independence from Russian gas supplies. He said the move “is the result of a multi-year coherent energy policy and timely infrastructure decisions.”
The shift is a response to “Russia’s energy blackmail in Europe and the war in Ukraine,” the energy ministry said. Russia recently demanded to receive payment for gas shipped to Europe in rubles, the official currency of Russia.
The demand is now “meaningless, as Lithuania no longer orders Russian gas and no longer plans to pay for it,” the ministry stated.
Lithuanian President Gitanas Nauseda encouraged other EU countries to do the same.
“From this month on—no more Russian gas in Lithuania. Years ago, my country made decisions that today allow us with no pain to break energy ties with the aggressor,” he wrote on Twitter. “If we can do it, the rest of Europe can do it too!”
Lithuania also previously announced it would not allow any Russian LNG imports due to Russia’s invasion of Ukraine.
The former Soviet state’s LNG terminal, called “Independence,” was inaugurated in 2014 to end a Russian gas supply monopoly, which then-president Dalia Grybauskaite called an “existential threat” to the country.
Lithuania is, however, not ending the transit of Russian gas to the Kaliningrad exclave of the Russian Soviet Federative Socialist Republic to its south west. Lithuania’s gas grid website showed on Saturday evening roughly the same amount of gas entering from Russian-ally Belarus as was being exported to Kaliningrad.
Russian President Vladimir Putin announced on March 31 that he signed a decree requiring “unfriendly” foreign buyers of Russian gas to pay in rubles starting April 1, threatening to halt contracts if the payments weren’t made in the required currency.
A number of European countries rely heavily on Russian gas and oil. A potential halt in Russian gas exports to those countries could cause a significant energy crisis.
The Group of Seven of advanced countries—the United States, France, Germany, United Kingdom, Canada, Italy, and Japan—has so far refused to meet Russia’s demand to pay for gas in rubles. Germany and Austria have already started making preparations to deal with a possible gas crisis, activating emergency plans to deal with any disruptions.
Jack Phillips and Reuters contributed to this report.
From The Epoch Times
https://mb.ntd.com/lithuania-ceases-all-russian-gas-imports_760821.html
Russia says it will not supply gas to Europe for free as it works out methods for accepting payments for its gas exports in roubles but G7 countries have refused the demand.
At a meeting of European Union leaders on Friday, no common position emerged on Russia's demand last week that "unfriendly" countries must pay in roubles, not euros, for its gas after the United States and European allies teamed up on a series of sanctions aimed at Russia.
Concerns over security of supply were enhanced after the demand, with companies and EU members scrambling to understand the ramifications.
Watch the latest News on Channel 7 or stream for free on 7plus >>
The Russian central bank, the government and Gazprom, which accounts for 40 per cent of European gas imports, should present their proposals for rouble gas payments to President Vladimir Putin by March 31.
"We are not going to supply gas for free, this is clear," Kremlin spokesman Dmitry Peskov told a conference call.
"In our situation, this is hardly possible and appropriate to engage in charity (with European customers)."
Russia will take decisions in due course should European countries refuse to pay in the Russian currency, he added.
Meanwhile, energy ministers from the G7 industrialised countries rejected the rouble payment demands, Germany economy and climate protection minister Robert Habeck said after talks with his counterparts.
"All G7 ministers have agreed that this is a unilateral and clear breach of existing contracts," he told reporters after a virtual conference with G7 energy ministers.
The ministers "underlined once again that the concluded contracts are valid and the companies should and must respect them... payment in roubles is unacceptable, and we call on the companies concerned not to comply with Putin's demand," he said.
The EU aims to cut its dependency on Russian gas by two-thirds this year and end Russian fossil fuel imports by 2027.
Russian gas exports to the EU were about 155 billion cubic metres (bcm) last year.
On Friday, the United States said it will work to supply 15 bcm of liquefied natural gas (LNG) to the EU this year.
US LNG plants are producing at full capacity and analysts say most of any additional US gas sent to Europe would have to come from exports that would have gone elsewhere.
Germany's Habeck said if Russia stops gas deliveries "we are prepared for all scenarios and not only since yesterday".
Russian gas deliveries to Europe on three main pipeline routes were stable on Monday morning, with the Yamal-Europe pipeline continuing to flow eastwards from Germany into Poland, operator data showed.
Russia's Gazprom said it that it was continuing to supply natural gas to Europe via Ukraine in line with requests from European consumers.
https://7news.com.au/news/conflict/g7-rejects-demand-to-pay-roubles-for-gas-c-6239660
BAGHDAD: Iraq exported $11.07 billion of oil last month, the highest level for half a century, as crude prices soared amid shortfall fears following Russia's invasion of Ukraine, the oil ministry said.
The second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), Iraq exported "100,563,999 barrels for revenues of $11.07 billion, the highest revenue since 1972", the ministry said.
The figures published late Friday are preliminary data but final data "generally does not vary" much, a ministry official said, speaking on condition of anonymity.
In February, oil revenues reached an eight-year high of $8.5 billion dollars, with daily exports of 3.3 million barrels of oil.
Oil exports account for more than 90% of Iraq's income.
Crude prices spiked over fears of a major supply shortfall after Moscow invaded Ukraine on February 24. Russia is the world's second biggest exporter of oil after Saudi Arabia.
On Thursday, the OPEC group of oil producing countries and its Russia-led allies agreed on another modest oil output increase, ignoring Western pressure to significantly boost production as the Ukraine conflict has rocked prices.
The 13 members of the Saudi-led OPEC and 10 countries spearheaded by Russia -- a group known as OPEC+ -- backed an increase of 432,000 barrels per day in May, marginally higher than in previous months.
- 'Two-edged sword' -
The United States has urged OPEC+ to boost production as high energy prices have contributed to soaring inflation across the world, which has threatened to severely derail the recovery from the Covid pandemic.
While OPEC refused to budge, Washington said it would tap its strategic stockpile by a record amount in a bid to cool soaring prices.
The international benchmark contract, Brent North Sea crude, flirted with a record high in early March as it soared to almost $140 per barrel, but has retreated since then.
On Friday, oil was around $100 a barrel.
Oil revenues are critical for Iraq's government, with the country mired in a financial crisis and needing funds to rebuild infrastructure after decades of devastating war.
Iraq, with a population of some 41 million people, is also grappling with a major energy crisis and suffers regular power cuts.
Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet its energy needs.
Neighbouring Iran currently provides a third of Iraq's gas and electricity needs, but supplies are regularly cut or reduced, aggravating daily load shedding.
"Overall, a windfall in oil revenues is positive for Iraq," said Yesar al-Maleki, an analyst at Middle East Economic Survey.
"But is a two-edged sword, since it may dampen government efforts to implement economic reforms needed to diversify it's sources of income beyond oil."
Many ordinary Iraqis are frustrated that they see little impact of the higher oil revenues trickle down to them, in a country where nearly a third live below the poverty line, according to the UN.
"With the new parliament bringing a more populist flavour of MPs, it is expected that this windfall will lead to greater calls by politicians and the public alike to increase public sector wages and employment," Maleki added.
https://www.thenews.com.pk/latest/946859-iraq-oil-exports-1107-bn-in-march-highest-for-50-years
US President Joe Biden said Thursday that he'll be releasing 1 million barrels of oil a day from the US' Strategic Petroleum Reserve over the next six months. According to the White House, the unprecedented withdrawal could lower gasoline prices between 10 to 35 cents a gallon in the coming weeks.
After record highs in early March, the cost of gas has continued to dip. The average price at the pump on Friday was about $4.22 a gallon on Friday, according to AAA, 2 cents lower than it was a week prior. But even that's well above the $3.62 average just a month ago.
And as demand increases with warmer weather, more price hikes are likely across the US.
Here's what you need to know about gasoline prices, including how they're affected by the Strategic Petroleum Reserve, the Ukraine crisis and other factors.
What's the Strategic Petroleum Reserve?
Managed by the Department of Energy, it's the nation's emergency oil stockpile. The reserve was established by President Gerald Ford after the 1973 oil crisis, when OPEC nations placed an embargo on the US because of its support for Israel.
At their peak in 2009, the Strategic Petroleum Reserves held more than 720 million barrels in four massive underground caverns in Texas and Louisiana along the Gulf of Mexico.
Robert Nickelsberg/Liaison
Biden released 50 million barrels in November 2021 and then the United States and other members of the International Energy Agency released 60 million barrels of oil from their reserves in early March.
On Thursday, Biden announced the US would release another 180 million barrels over the next six months to offset higher prices and limited supply. That'll bring the stockpile down to less than 390 million barrels, its lowest level in four decades.
But insiders say it won't move the needle much: Mike Sommers, CEO of industry trade organization the American Petroleum Institute, said the withdrawal "is far from a long-term solution."
"It will lower the oil price a little and encourage more demand," Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources, told The New York Times. "But it is still a Band-Aid on a significant shortfall of supply."
What else is the government doing to lower gas prices?
The White House is also pressuring US oil companies to increase drilling and production. In Thursday's announcement, the administration criticized energy concerns for "sitting on" more than 12 million acres of federal land and 9,000 approved production permits.
Biden said he'd like companies to face fines if they leave wells leased from public lands unused.
There's also the option of getting energy products from other sources. The US has been working at improving relations with Venezuela, which has been banned from selling oil to the US since 2018, and is negotiating another nuclear nonproliferation treaty with Iran, which would bring Iranian oil back onto the market.
Separately, Connecticut, Maryland and Georgia have suspended state gas taxes to help consumers, and at least 20 other states are considering similar moves. A bill in Congress would pause the federal fuel tax, though it faces stiff competition.
Will gas start rising again?
Fuel prices hit a record high of $4.33 on March 11 and have tapered down since then. But they're still $1.35 more than they were a year ago.
California continues to lead the nation at nearly $5.88 per gallon, with Nevada and Hawaii having crossed the $5 threshold, as well.
Getty Images
Analysts say drivers should expect another uptick as companies switch to summer blends of gasoline. In the warmer-weather months, gasoline is reformulated to prevent excessive evaporation. More expensive to refine and distribute, these summer blends can cost 25 to 75 cents more than winter blends.
The Environmental Protection Agency requires stations to sell 100% summer-blend gasoline through Sept. 15. That, along with the war in Ukraine, more people returning to the office and other ongoing factors, will impact everything from trucking costs to Uber prices.
What's made gas so expensive?
The price of gas is inextricably linked to the cost of crude oil, which it's refined from. Every $10 increase in the cost of a barrel of crude adds almost a quarter to the price of a gallon at the pump.
As part of ongoing sanctions over the invasion of Ukraine, Biden announced a ban on Russian oil imports. Even though the US doesn't import much crude from Russia, oil is traded on a global market. Any ripple affects prices all over the world.
Zeng Hui/Getty Images
The US Energy Information Administration predicts Brent crude oil, the international benchmark, will stay above $100 for the remainder of 2022.
But Troy Vincent, senior market analyst at energy analysis firm DTN, says the situation in Ukraine isn't the sole cause of inflated fuel prices.
Demand for gas plummeted during the pandemic, causing oil producers to put the brakes on production. Even though demand is nearing pre-pandemic levels, OPEC nations, US oil companies and other producers are still gun-shy about increasing production.
"We've had a supply-and-demand imbalance for a while," Vincent said. "And it will remain, regardless of whether this conflict goes away," he said.
How can consumers save at the gas station?
There's not much we can do to change the price of gas, but drivers can cut down on unessential trips and shop around for the best price, even crossing state lines if it's not inconvenient.
Apps like Gas Guru scan for the best gas prices in your region. Others, like FuelLog, track your car's gas mileage and can help determine if it's getting decent fuel economy. In addition, many gas station chains have loyalty programs, and credit cards have rewards programs that give cash back for gas purchases.
DTN's Vincent advises against hoarding gas or other extreme measures but encourages budgeting more for gas. High energy prices have been a major contributor to inflation for a while, he said, and won't be going away immediately.
"When the cost of crude rises, prices at the pump tend to reflect it very quickly," he said. "But gas prices tend to linger higher longer even when crude falls."
https://www.cnet.com/personal-finance/strategic-petroleum-reserve-help-lower-gas-prices/
More than 100 people have been arrested as climate change protesters continued to block UK oil terminals as part of a campaign to disrupt the fossil fuel industry.
Supporters of Just Stop Oil began the action in the early hours of Friday morning at refineries near London, Birmingham and Southampton by climbing on to tankers and gluing themselves to roads.
The activists continued to disrupt oil terminals on Saturday morning and said they had gained access to further sites.
Essex police said officers arrested a total of 83 people after protests in the Thurrock district.
The force said 63 were arrested on Friday following protests in Oliver Road, Grays, London Road, Purfleet, and Askew Farm Lane, Grays. Another 20 people were arrested on Saturday in Oliver Road and Stoneness Road, Grays.
Police said they were arrested on suspicion of a variety of offences. Officers are continuing to engage with protesters in Oliver Road, Stoneness Road and London Road.
Assistant chief constable Rachel Nolan said: “Our officers are continuing to work in exceptionally challenging circumstances with a view to bringing these protests to a safe and swift conclusion. I would like to thank businesses, local drivers and workers for their continued patience while we carry out our work.”
The group announced on social media that they had blocked Navigator terminals in Essex, posting photos of protesters in hi-vis jackets on top of a tanker and others blocking a road with a banner reading “Just Stop Oil”.
They said protesters had blocked access to the Titan Truck Park and revealed a secret underground network of tunnels leading to the site. The development means the main and emergency access roads to the critical oil terminals are closed.
“We need the government to stop funding new oil projects and we need it now! Our only means of highlighting this issue is mass civil resistance,” they said in a post on Instagram.
BREAKING
The morning brings new blocks! Photo above from navigator terminal this morning.
Want to get involved? Daily zoom calls happening from today. Click the link in our bio to find out more.#JustStopOil #Endfossilfuels pic.twitter.com/VTAlGi0mCJ — JustStopOil (@JustStop_Oil) April 2, 2022
The group is demanding the government end the expansion of new oil and gas projects. Just Stop Oil said this week’s campaign was part of a transition from using tactics of civil disobedience to exercising civil resistance.
Explaining what this shift would look like, one supporter told the Guardian last month that it would mean “stopping pointing out what the government should or shouldn’t be doing [and instead] actively stopping government doing what they shouldn’t be”.
The campaign, which has involved protesters being glued to roads, suspended on bamboo tripods, and locked on to oil drums and each other, is taking place in defiance of a temporary high court injunction banning protests outside oil terminals.
Outside Kingsbury and on roads leading to the site, posters said: “Temporary high court injunction in force. Blocking, slowing down, obstructing or interfering with traffic on to this road as part of protest activity by Just Stop Oil, Extinction Rebellion, Insulate Britain movements and other connected movements is strictly prohibited. Failure to comply with the injunction may lead to imprisonment.”
As a result of the blockades, the oil pipeline distribution network ExxonMobil UK closed down three of its terminals. Police from at least five forces were deployed to deal with the protests, making arrests for offences including aggravated trespass, criminal damage and obstructing the highway.
The Metropolitan police arrested 14 activists who broke into a facility at Bedfont Road in Staines, Surrey, and West Midlands police arrested six people at a terminal in Tyburn, Birmingham.
Police said arrests were made for offences including aggravated trespass, criminal damage and obstructing the highway.
TEHRAN - Iran’s crude steel production increased by 11.8 percent in the first two months of 2022 when the production by the world’s top 64 steelmakers declined by 5.5 percent, according to the World Steel Association (WSA)’s latest report.
Iran was ranked first among the world’s top steel producers in terms of production growth, followed by India, Germany, Russia, and the United States, IRNA reported, citing the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).
Based on the report, Iran produced 5.3 million tons of crude steel during the mentioned two months.
According to IMIDRO’s estimations, the country’s crude steel production in February stood at 2.5 million tons which was also 3.7 percent higher than the same month in 2021.
Meanwhile, WSA stated that crude steel production by the world’s top 64 producers fell 5.5 percent to stand at 299.4 billion tons in the first two months of 2022.
During the mentioned period, China’s production declined by 10 percent, Brazil experienced negative growth of 5.8 percent, Turkey’s output declined by 5.7 percent, South Korea registered a negative 2.6 percent growth and Japan a negative 2.4 percent rise in steel production.
China, the world's largest steel producer, produced 158 million tons of steel in the first two months of 2022, while the U.S. steel production reached 13.4 million tons, and Japan produced 15.1 million tons, India 20.9 million tons, South Korea 11.2 million tons, Germany 6.5 million tons, Turkey 6.1 million tons, Brazil 5.6 million tons and Russia produced 12.4 million tons of crude steel.
According to the World Steel Association, similar to the past two years, Iran has maintained its 10th place among the world’s top steel producers, after countries like China, India, Japan, and Russia.
The Iranian Steel industry has been constantly developing over the past years against all the pressures and obstacles created by external factors like the U.S. sanctions and the coronavirus outbreak that has severely affected the performance of the world’s top producers.
EF/MA
Asian refiners cheered US President Joe Biden's decision to release 1 million b/d of oil from the US' strategic petroleum reserves as the release may lead to more light sweet US crude exports to the Far East, while spot crude price differentials across the globe could fall should US refineries cut back on feedstock imports.
Previous SPR releases from the US, as well as other top Asian oil consuming nations, were miniscule in terms of market impact as the volumes released were less than a few days of Asia's total spot cargo purchases, but refiners and crude traders across Asia said this grand scale US SPR release could make a difference in the market.
The Biden administration committed March 31 to selling an unprecedented 1 million b/d from US emergency oil stockpile from May through October.
Refiners at major Asian US crude importers, including South Korea, India, Taiwan and Thailand, indicated that they would closely monitor whether additional US supplies would be available for international buyers.
Feedstock managers at these Asian refiners said although the SPR releases aim to serve primarily US domestic end-users, oil majors and trading companies in the North American market may have accumulated surplus light sweet crude barrels that they could push to the Far Eastern market.
As the SPR progressively feeds into the US' domestic refinery systems, South Korean refiners are expecting to see more light sweet crude and condensate supplies from the Permian basin and Eagle Ford shale to find their way into international markets, according to Korea Petroleum Association based in Seoul.
South Korea, the US' biggest crude customer in East Asia, is especially keen to take as many cargoes from the US as possible as they continue to favor competitive US barrels in times of surging benchmark oil prices.
South Korean refiners paid on average $90.11/b for shipments of US crude in February, lower than $92.07/b paid for Saudi grades, latest data from state-run Korea National Oil Corp. showed.
Meanwhile, Taiwanese end-users said they are also keen to take any surplus US export barrels if and when available.
"US refinery systems prefer heavier crudes anyway so [we] expect strong bidding for such grades from the SPR [by US end-users and traders] and increased availability of surplus lighter crudes for international trades," a feedstock manager at a Taiwanese refiner said.
Recently, Taiwan's biggest refiner CPC purchased 2 million barrels of WTI Midland crude for June delivery from Vitol at a premium of $4.50/b to Platts May Dated Brent crude assessments on a CFR Taiwan basis, according to trading sources based in Singapore with close knowledge of the deal.
Meanwhile, feedstock traders in Thailand indicated that Southeast Asia's second biggest economy has been, on average, sourcing for around 1 million barrels/month of crude from the US over the past year and the country hopes to double imports.
Thai end-users would closely track international trading firms accumulating extra US barrels during SPR releases, while state-run refiner PTT aims to take full advantage of its rapidly expanding trading network in North America, refining industry sources and traders based in Bangkok told S&P Global Commodity Insights.
Since second quarter 2021, PTT has officially operated the office of PTT International Trading USA Inc. in Houston. The establishment of PTT's US office will allow it to complete the expansion of its trading business in major trading hubs all over the world, strengthening PTT's mission to create Thailand's energy security, it added.
Cooling spot price differentials
The 180 million barrels of US SPR release could also help cool the spot premiums of various South American, African and Middle Eastern crude grades that Asian end-users regularly purchase, according to feedstock traders at Chinese and Indian refiners.
Chinese crude traders said they were hoping to see West African and South American crude price differentials fall should US refiners in the East Coast and the Gulf of Mexico trim their crude imports as the SPR releases cover a certain portion of their feedstock requirements.
"Price differentials for sweet crudes have been surging everywhere ... hopefully the SPR release would lead to less requirements for imported feedstock for the US end-users and help cool the spot premiums," a sweet crude trading desk source at PetroChina said.
In addition, Indian refiners said they were hoping to see less demand for Iraq's Basrah crude from US end-users once the SPR releases kick off.
A trading source at India's state-run refiner Bharat Petroleum Corp. Ltd told S&P Global that Iraq's Basrah supply for Asia has been tight and price differentials have been climbing as the US sought to take more Iraqi barrels to make up for its cutback in Russian crude.
"Hopefully the SPR releases would help ease the US buyers' demand for Iraqi crude and give some breathing space for Asian buyers," the BPCL trading sources said.
For Asian buyers, Iraq's State Oil Marketing Organization set the OSP differential for April-loading Basrah Medium crude at a premium of $3.50/b to the average of Platts Oman/Dubai assessments in that month, up from $1.30/b in March.
Oil futures edged lower on Wednesday following a surprising rise in U.S. crude stocks and after news that large consuming nations would also release oil from reserves in conjunction with the United States to counter supply worries.
Member states of the International Energy Agency (IEA) will release 120 million barrels from strategic reserves, including 60 million from the United States, according to two sources familiar with the matter. That U.S. 60 million commitment is part of Washington's plans to release a million barrels a day for the next six months for a rough total of 180 million barrels.
Brent crude futures were down 1.84% at $104.68 per barrel. U.S. crude fell 2.2% to trade at $99.73 per barrel.
Crude markets have been through weeks of volatility, with prices surging on supply concerns after Russia's invasion of Ukraine and subsequent sanctions on Moscow by the United States and its allies.
Lately the market has been pulling back following reserve releases along with expectations that demand in China will slip as a resurgent pandemic has prompted lockdowns of cities including Shanghai.
U.S. crude stocks rose by 2.4 million barrels in the latest week, the U.S. Energy Information Administration said, while analysts had expected a drawdown. Output also rose, hitting 11.8 million barrels a day, most since late 2021, and output is expected to continue rising. The United States also released nearly 4 million barrels from its strategic reserve in the week.
"The SPR release was huge which does raise confidence that they can move a lot out of the reserve on a weekly basis," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
The United States and its allies on Wednesday prepared new sanctions on Moscow over civilian killings in northern Ukraine, which President Volodymyr Zelenskiy described as "war crimes." Russia denied targeting civilians.
"These concerns have no doubt fed into the oil price trending higher, with volatility expected to continue as the geopolitical situation unfolds," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Proposed EU sanctions, which the bloc's 27 member states must approve, would ban buying Russian coal and prevent Russian ships from entering EU ports.
The head of the EU's executive Ursula von der Leyen said the bloc was working on additional sanctions, including on oil imports.
Britain also urged G7 and NATO nations to agree a timetable to phase out oil and gas imports from Russia.
Demand worries also mounted after authorities in top oil importer China extended a lockdown in Shanghai to cover all of the financial centre's 26 million people.
https://www.cnbc.com/2022/04/06/oil-markets-russia-sanctions-demand-concerns.html
Shell is the lead partner in the LNG Canada project, which began construction in Kitimat, B.C., in 2018.Courtesy of LNG Canada
Shell PLC SHEL-N is studying the feasibility of a major expansion for the LNG Canada joint venture in British Columbia, citing a surge in global demand for liquefied natural gas and the need for reliable new supplies.
Europe has been scrambling to reduce its dependence on natural gas from Russia since the invasion of Ukraine nearly six weeks ago, and countries in Asia want cleaner alternatives to coal.
“It raises the urgency for more LNG supply because Europe and the world desperately needs it,” Wael Sawan, the head of Shell’s integrated gas and renewables division, said in an interview. “There is a lot of capacity that has to be built up to be able to meet the growing LNG demand.”
LNG Canada is conducting a cost-benefit analysis for phase two to potentially use lower-carbon hydroelectricity from BC Hydro to power motors for supercooling natural gas into liquid form, he said.
Shell estimates global demand for LNG will surpass 700 million tonnes a year by 2040, up almost 90 per cent from last year.
Shell is the lead partner in the LNG Canada project, which began construction in Kitimat, B.C., in 2018. The project is a breakthrough in Canada because it is the only one of the 24 LNG export applications in the country that is under construction.
The first phase of the Kitimat terminal is expected to cost $18-billion, with the export facility slated to start shipping LNG to Asia in 2025. The terminal will be equipped with turbines powered by natural gas in the liquefaction process, and initial goal is to export 14 million tonnes a year of LNG.
If the second phase is built, the export capacity would double to 28 million tonnes a year of LNG.
“In our mind, we always wanted to be able to have that option to go into phase two,” said Mr. Sawan, who visited Vancouver last week to attend the Globe Forum 2022 conference on sustainable business. “Now we need to be able to make sure that it makes sense on paper before we make that investment commitment.”
Peter Zebedee makes surprise exit as LNG Canada CEO; to join Suncor Energy as a vice-president
Canada to boost energy exports to U.S. to aid in supply crisis triggered by Russia’s war in Ukraine
LNG Canada’s exports to Asia would indirectly help Europe because that frees up supplies of the fuel in Qatar and elsewhere in the world to be rerouted to Europe.
Canada was the world’s sixth-largest producer of natural gas in 2020, according to industry analysts. LNG Canada would be the country’s first LNG export terminal. Seven facilities are already exporting from the United States.
While the B.C. government supports LNG Canada’s first phase, the province is encouraging any new LNG proposals to consider electric-drive technology to convert natural gas into liquid form, in an effort to meet provincial targets for reducing greenhouse gas emissions.
There isn’t sufficient infrastructure today to provide hydroelectric power for electric-drive technology at the Kitimat site, although Mr. Sawan said the possibilities will be explored. “None of these are insurmountable challenges,” he said.
Environmental groups are criticizing global efforts to increase LNG supplies because of Russia’s war on Ukraine. “Corporate polluters are brazenly seizing on this crisis to secure decades of dependence on dirty energy,” said Food & Water Watch, a U.S.-based non-governmental organization.
But Mr. Sawan said that for the most part, LNG that Shell is shipping to China and India from its other operations is helping to reduce overall emissions by displacing thermal coal for electricity generation.
Susannah Pierce, Shell Canada president and country chair, said LNG Canada will produce fuel at a lower carbon intensity than other large-scale terminals operating in the world.
“The energy transition is not simple. It’s complex, and we have a dependence right now on natural gas and oil that can’t be eliminated overnight,” she said. “So it has to be a very thoughtful approach.”
LNG Canada’s first phase would operate at 0.15 carbon-dioxide equivalent tonnes for each tonne of LNG produced, which is a level below British Columbia’s limit for “emissions intensity” of 0.16 CO2 equivalent tonnes.
Shell PLC has set a target to have net-zero emissions at its energy businesses worldwide by 2050.
The LNG Canada terminal was designed as a two-phase project. “We broke it out because you want to make a first investment and then consider a second,” Ms. Pierce said.
The B.C. megaproject lost its chief executive officer as it entered the peak construction period of phase one, when Peter Zebedee stepped down last month.
Mr. Zebedee, who was seconded from Shell to LNG Canada, will join Suncor Energy Inc. next week as executive vice-president of mining and upgrading.
His replacement will likely come from Shell. “Typically within any joint venture agreement, you have specific roles that are provided to specific companies, and in this case, we expect that this role would come from Shell,” Ms. Pierce said.
More than 60 per cent of the LNG Canada project and the associated pipeline, Coastal GasLink, are complete. Coastal GasLink is being built to transport natural gas from northeastern B.C. to Kitimat.
The pipeline has been the target of vocal opposition from a group of Wet’suwet’en Nation hereditary chiefs and their supporters, who say Coastal GasLink does not have the consent of those hereditary leaders.
Denita McKnight, LNG Canada’s vice-president of corporate relations, said a final investment decision for phase two will take various factors into account such as competitiveness, affordability and carbon intensity.
No deadline has been set yet for Shell and the four other co-owners of LNG Canada to decide whether to approve the massive expansion.
The federal and B.C. governments are welcoming the prospect of electric-drive technology for the proposed second phase at the Kitimat site.
Last week, Ottawa released its blueprint for sector-by-sector reductions in greenhouse gas emissions, aiming for 40 per cent below 2005 levels by 2030.
“I think it’s clear that it would be very difficult to see how phase two with liquefaction by natural gas is going to fit within British Columbia’s climate plan and certainly would create challenges for Canada’s climate plan,” federal Natural Resources Minister Jonathan Wilkinson said.
B.C. Energy Minister Bruce Ralston said the provincial government expects LNG proponents to live up to climate commitments. “The fact that LNG Canada is eager to move forward is a strong indication that companies see B.C. as a secure jurisdiction to invest in,” Mr. Ralston said.
Mr. Sawan cautioned that navigating through regulators and clearing other hurdles has been time-consuming and complex in the past.
“It hasn’t always been a symphony and we need to be able to move it much more in harmony than I think it has been in recent history,” he said.
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Price-sensitive Asian buyers are already shying away from the spot market and may turn to coal and oil products instead of LNG.
Europe’s determination to wean itself off Russian gas means there will be high demand for LNG for years to come, which could have an impact on Asian energy markets.
Asia is the world’s largest LNG market, but demand growth in the region is slowing as competition from Europe for cargoes heats up.
Asian demand for LNG is being hampered by sky-high prices of LNG cargoes due to intensifying competition from Europe, which is working around the clock to reduce its dependence on Russian pipeline gas supply.
Europe is now the top destination of record-high U.S. LNG exports, while price-sensitive developing economies in the Asia Pacific are steering clear of the spot market and switching to coal and oil products as the price of LNG is unsustainable for them.
The European resolve to cut reliance on Russian energy, starting with gas, will keep LNG demand and spot prices elevated for years to come, analysts say. This, in turn, will slow the growth of Asia’s LNG imports compared to estimates from before the Russian war in Ukraine.
Europe Becomes Top LNG Destination Market
Europe’s natural gas and power crisis at the end of 2021 had already made the continent the preferred choice of spot LNG cargoes, months before Putin invaded Ukraine and upended global energy flows. Dozens of tankers with liquefied natural gas from the United States were heading to Europe in December 2021, where the gas and energy crisis had pushed regional LNG prices way above the Asian LNG benchmark and 14 times higher than the U.S. Henry Hub price. At least another ten LNG cargoes were diverted from Asia to Europe.
The top five countries of destination for U.S. LNG exports in January 2022, a month before the Russian invasion of Ukraine, were the UK, France, Spain, and Turkey, followed at a distant fifth by South Korea, the U.S. Department of Energy said in its latest LNG Monthly in mid-March with data for January.
U.S. LNG exports hit an all-time high record in January, per EIA data, and the largest share of those exports headed to Europe.
Then in February, Putin’s war in Ukraine made Europe rethink its gas dependence on Russia and prompted the European Union to seek independence from Russian fossil fuels “well before 2030, starting with gas.” Diversification of gas supply, with a hike in LNG imports, is a key near-term pillar of that plan.
At the end of last month, the EU and the United States signed a pact under which America will boost LNG supply to Europe to help it replace at least part of Russian pipeline gas supply.
“The extra 50 bcm/year offered by the US would only cover about a third of the 155 bcm/year of imports from Russia that EU leaders want to replace. But in the context of a larger European strategy to find alternative supplies of gas, both pipeline and LNG, and to curb demand, US exports could make a significant contribution,” Ed Crooks, Vice-Chair, Americas, at Wood Mackenzie, says.
Asian Demand Growth Stalls As Prices Spike
For the short and medium-term, European LNG demand is set to be strong, keeping global spot prices elevated and drawing cargoes to Europe at the expense of Asia. Growth in LNG demand has shifted in recent months to Europe from Asia.
Asia is still the largest market for LNG imports, but its purchases in the first quarter of 2022 fell by 10 percent compared to the same quarter of 2021, per data from WoodMac cited by The Wall Street Journal. Major markets such as China, Japan, and India saw LNG imports dropping by 11 percent, 14 percent, and 25 percent, respectively. Asian power generators have been switching to coal from gas, while some industries in India have turned to naphtha or furnace oil instead of the costly natural gas, Wood Mackenzie’s vice president Valery Chow told the Journal.
In a report last month, WoodMac said: “Tightness and uncertainty in the European gas market are driving record-high volumes of LNG to the region, while demand in the rest of the world is slowing down in response to high prices.”
Related: U.S. Drilling Activity Has Risen 60% In One Year
LNG demand in the Asia Pacific region is expected to drop this year, with Chinese demand forecast to remain flat, while growth in Southeast Asian demand will not be high enough to offset the declines in Japanese and Korean imports, according to the energy consultancy.
“Non-APAC imports growth is concentrated in Europe,” Wood Mackenzie said.
The European drive for replacing Russian gas as soon as possible will keep demand growth in Europe high and spot prices elevated through the middle of this decade, analysts and industry players say.
“Europe’s farewell to Russian gas will be a long goodbye; it will take most of the decade for the continent to wean itself from those supplies, which now account for more than 40 percent of its gas imports,” analysts at the European think tank Bruegel wrote in an op-ed in The New York Times last month.
At the same time, price-sensitive buyers in Asia are likely to continue shying away from spot LNG purchases, expecting high prices through 2025.
“The LNG market has been evolving in an unfavorable manner for buyers as the supplies are forecast to be tight during the 2021-2025 period while demand is picking up after the pandemic,” PV Gas, the state firm of Vietnam, said last month, as carried by Reuters.
“This will lead to a strong price rising trend over the next years with no signs of easing in the short term,” says PV Gas.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Alongside new commitments to renewable energy, British Prime Minister Boris Johnson recently announced that he wants nuclear power to provide 25 per cent of the country’s electricity by 2050.
The development of a new generation of nuclear power will ensure its rapid expansion, he says, as a “clean, reliable and safe energy source”.
So what is driving the UK’s push for nuclear?
Nuclear energy plays an important part in the UK’s plans to ensure energy independence - particularly from Russian natural gas, according to a Dept. for Business, Energy and Industrial Strategy spokesperson.
“In light of high global gas prices and Russia’s illegal invasion of Ukraine, we need to ensure Britain’s future energy supply is bolstered by reliable, affordable power that is generated in this country,” they say.
“New nuclear will not only provide this, but will also create high-quality jobs and drive economic growth.”
To meet its target of 'net zero' by 2050, Britain urgently needs to move away from fossil fuels.
And many climate scientists and international organisations argue that a global shift towards nuclear power is essential to tackle the climate emergency and meet increasing energy demands.
In contrast to fossil fuels, a nuclear plant does not directly release carbon in its operation. It is also unaffected by external climatic factors, such as cold snaps or very light winds, therefore creating a reliable energy output.
Boris Johnson at the Russia Ukraine War Summit. Henry Nicholls/AP
Adrian Bull, BNFL chair in Nuclear Energy Systems at The University of Manchester’s Dalton Nuclear Institute is a firm supporter of nuclear.
"Reaching Net Zero UK emissions by 2050 will be a huge challenge, and we’ll need every form of low carbon generation we can muster. Nuclear – the only proven and practical way of delivering vast quantities of low carbon power 24/7 in the UK – must have a role to play alongside wind, solar, tidal and other renewable options,” he tells Euronews Green.
“The role of advanced reactors providing heat for hydrogen and other uses, as well as electricity, is also vitally important. The steps being taken now would have been better a decade or more ago, but we can still reach Net Zero if we move fast!"
Currently, 16 per cent of the UK’s electricity is generated from its six nuclear power reactors, but by the end of this decade only one will still be producing power.
Therefore, plans to pursue the expansion of the country’s nuclear energy sector are a huge turnaround for the industry.
But nuclear energy is a divisive issue
Although described by the United Nations’ International Atomic Energy Agency as among “the safest and most secure facilities in the world”, Chernobyl, Windscale, Three Mile Island and Fukushima have shown that malfunctions can be catastrophic.
Radioactive materials can persist for many thousands of years and, when released into the environment, contaminate everything from the air, water and soil, humans, animals and plants.
35 years after the nuclear disaster at Chernobyl, and just outside the 30 mile radius exclusion zone, high levels of radioactivity are still found in grain, meat, dairy products and many trees. Traces of radiation have also been found 200 miles from the exclusion site, which may remain uninhabitable for years to come.
High level radioactive waste is produced in a facility’s day-to-day operations can remain hazardous for thousands of years.
Even in the absence of any accident, high level radioactive waste is produced in a facility’s day-to-day operations which can remain hazardous for thousands of years.
Nearly 350,000 tonnes is in temporary storage around the world, with some canisters already showing signs of deterioration.
An abandoned Ferris wheel stands in the park in the ghost town of Pripyat, Ukraine, close to the Chernobyl nuclear plant. AP Photo
Which countries have succeeded at disposing of nuclear waste safely?
The UK, like many other countries, favours “deep geological disposal” as the preferred solution for final disposal of the most radioactive waste but, as yet, has not found a community willing to host the £12bn (€14.1bn) facility.
So far only Finland has managed to implement this plan, creating around 100 nuclear waste disposal tunnels at depths of over 400 metres, to keep the waste isolated for the required 100,000 years. But, according to former Director of Research for the Geological Survey of Finland, Matti Saarnisto, freezing temperatures during the next ice age could lead to damage of this storage facility.
Nuclear reactors require huge amounts of water, so are built on the coast or near lakes. Dr Paul Dorfman, head of the UK’s Nuclear Consulting Group, says this has given rise to new risks.
Nuclear reactors require huge amounts of water, so are built on the coast or near lakes. This has given rise to new risks.
"With extreme weather events today becoming the norm in the future, existing risk mitigation measures become increasingly obsolete. The corollary to this analysis is that present and planned UK coastal nuclear installations will be at significant risk,” says Dr Dorfman.
“Nuclear’s lower-carbon electricity unique selling point, sits in the context of the much larger picture – that UK coastal nuclear will be one of the first, and most significant, casualties to ramping climate impact. UK nuclear is quite literally on the front-line of climate change – and not in a good way.”
But the Nuclear Industry Association UK, claims that “no industry generates higher quality, more skilled and more secure jobs than the nuclear industry”.
More than 60,000 people across the country are employed in the civil nuclear sector, operating current power stations, decommissioning old ones and building new ones.
Decommissioning is an extremely complex, lengthy, and costly process. The Nuclear Decommissioning Authority estimates it will cost British taxpayers over £130bn (€153.5bn) to decommission its civil nuclear sites and take around 120 years before these old sites are clean enough to be released for unrestricted use.
In the case of Sellafield and Dounreay, extensive contamination means this will never be possible.
What is the role of renewables in the UK?
Although nuclear power is often touted as the best way to tackle climate change, scientists like Dr Dorfman don’t believe that to be true.
He thinks the energy transition can and will take place using renewables like solar, wind and waves alone.
Due to technological advances, renewables are now a reliable energy source, even in times of low power input. Several countries, including Iceland and Norway, are already producing more than 90 per cent using these, and global renewable electricity capacity is forecast to increase dramatically by 2026.
This is equivalent to the current global power capacity of fossil fuels and nuclear combined.
Critics also claim time and costs involved with nuclear make it unviable. It can take up to 10-15 years plus, from planning to construction, and we need to act now, to prevent a climate emergency.
Renewables cost one fifth of new nuclear to build.
Renewables cost one fifth of new nuclear to build - since 2009, costs for utility-scale solar have dropped by 90 per cent, and wind by 70 per cent, while nuclear has increased by over 30 per cent.
Wind farm in the UK. Canva
Amory Lovins, energy expert and adviser to major firms and governments in more than 65 countries, sums this up when he says, “If climate’s a problem, we need to invest judiciously, not indiscriminately, to get the most solution per dollar, the most solution per year.
“Otherwise, we’re making things worse.”
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There are renewed calls for a shift away from fossil fuels as the UN prepares to release a major report on what the world needs to do to tackle climate change.
The latest report from UN science body the Intergovernmental Panel on Climate Change (IPCC) sets out solutions needed to curb global warming, including cutting fossil fuel emissions with technology such as renewables.
The report, due out on Monday, will set out measures to cut emissions from the energy sector, agriculture and land, cities, buildings, industry and transport.
It is also expected to emphasise the role of consumer behaviour and look at ways to take carbon dioxide out of the atmosphere, including through activities such as planting trees as well as new technology.
It comes as soaring energy prices and supply pressures, worsened by Russia’s invasion of Ukraine, have prompted renewed debate over security of supplies, and whether to accelerate climate action or exploit more oil and gas resources.
(PA Graphics)
In the UK, the fossil fuel industry and some MPs have urged a restart to controversial fracking or more extraction from North Sea oil and gas, but there have also been widespread calls for insulating homes, more renewables and weaning the country off gas in response to the crisis.
The Government is set to unveil its new energy security strategy this week, with expectations it will set out plans to boost new nuclear power capacity, solar and offshore wind.
But there appears to have been debate within Government over the role of onshore wind, although it is cheap and popular with the public, and any efforts to boost domestic oil and gas production in the strategy will prove controversial with campaigners.
The new UN report is the third instalment of the sixth assessment report, an overarching analysis of the world’s scientific knowledge on climate change.
The assessments take place every six or seven years, with the individual instalments released over a period of months.
Our fossil fuel dependence is funding Putin's war and soaring gas prices are hurting millions of households Charlie Kronick, Greenpeace UK
Each climate report from the IPCC is published after its summary is approved line by line in a process involving representatives of 195 governments and scientists – with the latest report’s approval meeting running well past its Friday scheduled finish time.
The first part of the assessment, which looked at the physical basis of climate change, which was released August 2021, found humans are unequivocally driving global warming, with the effects already being felt.
It was labelled a “code red for humanity” by UN secretary-general Antonio Guterres.
When the second report was released in February, detailing the impacts of rising temperatures and options – and limits – to adapting to them, Mr Guterres described it as “an atlas of human suffering and a damning indictment of failed climate leadership”.
It found climate change has led to increasing heat and heatwaves, rising sea levels, floods, wildfires, and drought, causing death, food and water scarcity, and migration.
On Monday 4 April, #IPCC is scheduled to present its next #ClimateReport, #ClimateChange 2022: Mitigation of Climate Change, the third part of the Sixth Assessment Report. Find out more ➡️ https://t.co/pTKCtS6ASR pic.twitter.com/eBfEtipJb0 — IPCC (@IPCC_CH) March 29, 2022
Ahead of the latest report’s publication, Greenpeace UK senior climate adviser Charlie Kronick said: “Our fossil fuel dependence is funding Putin’s war and soaring gas prices are hurting millions of households.
“We already have good reasons to move away from oil and gas and invest in insulation and heat pumps to cut energy wastage from our homes.”
“But on Monday, the world’s leading climate scientists will remind us of the other major reason we must do so: to stop the climate disaster threatening everything we hold dear.”
Sam Hall, director of the Conservative Environment Network, which includes dozens of Tory MPs, said: “The case for reducing fossil fuel consumption across the economy has only got stronger.
“Fossil fuels are now much more expensive than they were; getting off them therefore helps with the cost of living. There’s now also the additional national security imperative, to eliminate Russian fossil fuels imports.”
He said the goals of energy security, cost of living and cutting emissions to net-zero to tackle climate change all pull in the same direction.
(PA Graphics)
“The answer remains the same in all cases: clean energy deployment, reducing fossil fuel consumption, and improving energy efficiency.”
Gareth Redmond-King, international lead at the Energy and Climate Intelligence Unit, said the third report from the IPCC sets out solutions to the crisis it had already highlighted.
“It sets out, in some detail, how we respond to the alarm and avoid the apocalyptic future we know we’re heading for if we don’t act.
“It is clear that the solutions are cheaper than the impacts – that acting to tackle the climate crisis is cheaper than not acting.
“It is now down to political leaders – particularly G20 leaders, as the largest economies and biggest emitters – to choose how bad we let things get.”
European commissioner for energy Kadri Simson and members of European governments will gather in Budapest to attend a conference organised by the Brussels-based gas lobby agency Gas Infrastructure Europe (GIE) on Friday (8 April).
The EU has put forward plans to slash dependency on Russian gas imports by two-thirds before the end of the year and to fully decouple from Russian imports by 2030 at the latest.
Student or retired? Then this plan is for you.
This involves accelerated investments in renewables and energy efficiency, but also an increase of 60 billion cubic metres (bcm) of gas imports from non-Russian suppliers by the end of this year, which will need to come from all over the world.
The endeavour has created political momentum for the expansion of gas import capacity in Europe, and the GIE and gas industry representatives are now lobbying for new pipelines and LNG (liquified natural gas) transmission facilities.
And with evidence of war crimes by Russian forces pressure on EU leaders to sanction Russian fossil fuels and gas and find alternatives is mounting.
A flurry of new gas projects
In a new report by Global Energy Monitor (GEM), an NGO based in San Fransisco, published on Tuesday (5 April), researchers show that since the beginning of the war, 15 additional gas import and transmission projects have been proposed across Europe adding a further 70 bcm/per year.
Countries that have announced new projects include Estonia, Germany, Greece, Italy and the Netherlands.
"There seems to be little coordination between member states," Greig Aitken, lead author of the study, told EUobserver, adding that Europe's gas problems lie in a lack of global supply, not a lack of infrastructure or import capacity.
Even before the Russian invasion started, Europe already had "overcapacity problems." Many gas projects in Europe were already cancelled, postponed indefinitely or had trouble finding financial support.
In January 2022, the US withdrew its diplomatic support for the proposed €6bn East Med Gas Pipeline, a 1,900-kilometre long pipeline connecting Israel to Cyprus and Greece, citing "financial viability" as one of the reasons for the decision.
But growing uncertainty has led to a flurry of moribund gas projects being resurrected.
All current plans put together amount to a capacity increase of an additional 160.2 bcm/yr, with investments amounting up to €26.4bn, GEM data shows.
Not all of these will be built, but major investments are already underway. A total of 16 pipeline projects are currently under construction, worth €6.5bn.
Expansion at this scale is incompatible with EU climate targets, which require EU gas consumption to decrease by 32 to 37 percent before 2030. In its latest climate report published on Monday, the UN Intergovernmental Panel on Climate Change's (IPCC) also concluded that no new oil, coal and gas infrastructure should be built.
And there is a risk that many of the new gas projects currently discussed will become stranded assets
"Many gas projects need to run 20 years to earn their money back," Clark Derry, an expert at the US-based Institute for Energy Economics and Financial Analysis, said.
Given the rapid decline of fossil fuel use, "significant investment in new oil and gas pipelines are not needed," the International Energy Agency, an intergovernmental body based in Paris, concluded in a May 2021 report.
Accelerating renewable energy and encouraging energy saving and energy efficiency is a more effective, cheaper and environmentally less destructive answer to the bloc's energy security needs, Ember, a think tank based in the UK, also concluded in a March study.
"The EU can stop using Russian gas as early as 2025 without building new fossil gas infrastructure," Raphael Hanoteaux, an expert at global energy think tank E3G, said.
Gazprom subsidiaries
On Thursday last week, Global Witness, a British think-tank published a report showing that GIE has long resisted calls to end EU dependency on Russian gas.
And while other European companies have cut ties and business relationships with Russian companies, GIE still represented the interests of Astora and Gazprom Germania — two subsidiaries wholly owned by Gazprom, a Kremlin-controlled oil- and gas company.
In an unexpected move, Gazprom on Friday announced that it had terminated its 'participation' in Gazprom Germania and Astora which respectively supply and store 40 percent and 25 percent of Germany's gas.
Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies in the UK told Reuters on Monday she did not expect any impact on Russian gas deliveries.
But signalling growing unease of Russian influence on its energy system, Germany has now placed the Gazprom subsidiary under temporary state control, German minister for energy minister Robert Habeck said on Monday.
"The government is doing what is necessary to ensure security of supplies in Germany, and that includes not exposing energy infrastructure in Germany to arbitrary decisions by the Kremlin," Habeck said.
―――― Canada’s federal budget includes at least one investment C $ 2 1 billion ($ 1.6 billion) for strategies to accelerate production and processing of important things minerals Necessary for electric vehicles (necessary for electric vehiclesEV) Battery supply chain, two senior government sources said.
Justin Trudeau’s Government, Will be released That budget on thursdayWill Invest in Strengthen the extraction of important processes mineralS containing nickel, lithium, cobalt, magnesium, said sources familiar with matter However, he was not allowed to speak on record.
The investment could last for more than a year, but sources declined to comment on the time frame.
Last month, Canada announced financial support to build two facilities to manufacture battery materials for electric vehicles and one battery giga factory. mineral Extraction or purification.
In a recent telephone interview with Reuters, Natural Resources Minister Jonathan Wilkinson said, “There are some specific projects we are currently considering and working on.”
All potential projects, whether extraction or processing, need to be significantly accelerated, which is important. mineral The strategy is about. “
Canada’s Treasury has refused to confirm whether the investment is included in the budget presented by the House of Commons Finance Minister Chrystia Freeland.
“Canada has a lot of valuable critics mineral With deposits, and proper investment, this sector can create thousands of new good jobs, grow our economy and make Canada an important part of growing global importance. mineralIndustry. ” Adrian Vopcious, a spokesman for Freeland, said.
According to one source, there is “a lot of lively discussions” between the Government of Canada and businesses, “about the need to accelerate and expand the production of raw materials used in EV batteries.”
Canada, Home to the large mining sector Established a multi-billion dollar fund to invest in green technology, all of the EV supply chain to protect the future of Ontario’s manufacturing center, where the world is aiming to reduce carbon emissions I’m trying to attract companies involved in the level.
Ontario is geographically close to US-based automakers in Michigan and Ohio, as well as General Motors Co. GM.NFord Motor Co., Ltd. FN And Stellantis NV STLA.MI Announced all plans to build an electric vehicle at a factory in a Canadian province.
mineral S from mining waste
Since opening a new mine can take years (more than a decade), Wilkinson said some of the projects under consideration “include taillings from existing mines and are important from there. Can be extracted. “ minerals. “
“We see salt water, oil sands, Tailings ponds, and everything else,” he said.
Brendan Marshall, vice president of economics and northern affairs at the Canadian Mining Association, said this type of project needs research.
“Research and development is required” to develop technology that can identify and separate important things mineral■ “From the flow of general waste,” Marshall said.
Canada’s critical mineral The strategy will focus, among other things, on driving research, innovation and exploration, one source said.
GM said on Monday that it has invested C $ 2 billion in two plants, including one that produces electric vehicles. Commercial use in Canada.Last month GM said that Was affiliated With Korean POSCO Chemical 005490.KS Build a facility to make battery materials In Quebec..
Scott Bell, president and managing director of GM Canada, said last month that he would use Canada’s abundant nickel and other raw materials to produce cathode active materials.n provinces of canadaWithout detailed explanation.
“These companies need these important companies. mineralSince we have it, we need to start actively strengthening the necessary mining and processing. “
Ask mineralThe World Bank estimates that the amount required for batteries such as lithium and cobalt could increase by almost 500% by 2050.Currently, Asia, especially China, dominates important global production and processing. minerals, rare earths and rare earths used in the manufacture of EVs.
Constantine Karayannopoulos, President and Chief Executive Officer of Neo PPerformance Materials Co., Ltd.NEO.TOrare Earth A rare metal processing company based in Toronto said Canada and North America have a lot to catch up with.
“We are behind China, collectively behind the eight-ball in the west,” Karajan Nopros said in a telephone interview. “China dominates this space … we need a lot of money (to build the supply chain) because we are playing catch up.. “
The EU is planning to replace Russian gas with LNG imports, coal, and even fuel oil, with a relatively small amount of the gas to be replaced by wind and solar.
The soaring prices of key metals and the length of time it takes to implement renewable energy projects have meant Europe is turning to fossil fuels to solve its energy crisis.
Germany is preparing for gas rationing. France’s power grid operator is asking consumers to use less electricity. In the UK, protests are breaking out over the latest electricity price hike that plunged millions of households into what one local think tank called fuel stress. Europe has a serious energy problem.
The problem dates back years and points to a persistent complacency on the part of European governments that whatever happens, there will always be gas from Russia. After all, even during the Cold War Russia pumped billions of cubic meters of gas to European countries. Now, things are different, and it’s not just because of the war in Ukraine.
Europe has been enthusiastically trying to reduce its dependence on all fossil fuels, not just Russian gas, for a few years now. The EU recently boasted that in 2022 renewable energy sources accounted for 37.5 percent of gross electricity consumption, with wind and hydro constituting two-thirds of the total renewable energy output. Why, then, one wonders, would Germany have to brace for gas rationing and France ask its citizens to consume less electricity? Now that has a bit to do with the war in Ukraine. The war seems to have whipped EU governments - and Downing Street - into a frenzy seeking to distance themselves from Russia in every possible way, up to and including cutting Russian gas imports.
Russian President Vladimir Putin’s demand for payment in rubles for the gas Russia supplies seems to have only increased the desire of European governments to ditch the gas, and the three Baltic states already announced they’d stopped buying Russian gas from April 1. For now, they are using gas from storage. For later, there’s either LNG arriving at the Klaipeda terminal in Lithuania or an interconnector with Poland. Lithuania is calling on the rest of the EU to follow its example. Interestingly, the Baltics do not appear to have replaced their gas dependence with wind and solar dependence.
The same is true for the rest of the European Union, too. Earlier this year, Bloomberg reported that renewables across the EU were “crowding out” natural gas. The report cited a study by environmentalist think tank Ember, whose lead author said
“These are moments and paradigm shifts when governments and businesses start taking this much more seriously. The alternatives are available, they are cheaper, and they are likely to get even cheaper and more competitive. Renewables are now an opportunity, not a cost,” Charles Moore explained.
So why the struggle for gas now? Why not really step up the construction of new wind parks and solar farms, and show Putin what Europeans are made of? This is one of the most awkward questions of current times, its answer necessarily includes references to the price of copper, steel, polysilicon, and pretty much every metal and mineral commodity. In addition to that, building these facilities takes time, more time than, for instance, switching to LNG (if you have import terminals) or coal.
Indeed, in a recently released plan to reduce the consumption of Russian gas - and oil and coal, too - the European Commission bet heavily not on wind and solar but on more gas and coal.
Related: America Is Finally Taking The Battery Metal Shortage Seriously
According to a breakdown of the plan, published by German Die Welt, the EU will seek to replace 50 billion cubic meters of annual Russian gas consumption with LNG from other sources and another 10 billion cubic meters with pipeline gas from other sources. That’s a total of 60 billion cubic meters out of the annual consumption of 155 billion cubic meters of Russian gas. Another 20 billion cubic meters, according to the plan, could be replaced by using more coal, per Industry and Internal Market Commissioner Thierry Breton.
This is the same Europe that has been calling for and working towards the end of coal. It is the same Europe that planned to shut down all of its coal power plants before 2030 in order to meet the Paris Agreement emission reduction targets. This same Europe is also betting on replacing natural gas with fuel oil to replace another 10 billion cubic meters of Russian gas.
In total, the European Commission seems to be planning to replace more than half of its Russian gas consumption with other fossil fuels. In comparison, wind and solar power are expected to contribute some 22.5 billion cubic meters in replaced Russian gas, with 10 billion cubic meters from wind and 12.5 billion cubic meters from solar. That’s not a whole lot for a region that is set on becoming the greenest on the planet in short order.
It seems, then, that the reality of energy supply and consumption is reasserting itself as the EU finds itself in a gas pickle. If its plan involves so much more consumption of fossil fuels, then fossil fuels must be easier - and quicker - to come by and, just maybe, cheaper, than wind and solar. Otherwise, why pick them over renewables?
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
https://oilprice.com/Energy/Energy-General/Why-Renewables-Cant-Solve-Europes-Energy-Crisis.html
CLS researcher Toby Bond uses x-rays to help engineer powerful electric vehicle batteries with longer lifetimes. His research, published in The Journal of the Electrochemical Society, shows how the charge/discharge cycles of batteries cause physical damage eventually leading to reduced energy storage. This new work points to a link between cracks that form in the battery material and depletion of vital liquids that carry charge.
Bond uses the BMIT facility at the Canadian Light Source at the University of Saskatchewan to produce detailed CT scans of the inside of batteries. Working with Dr. Jeff Dahn at Dalhousie University, he specializes in batteries for electric vehicles, where the research imperative is to pack in as much energy as possible into a lightweight device.
“A big drawback to packing in more energy is that generally, the more energy you pack in, the faster the battery will degrade,” says Bond.
In lithium-ion batteries, this is because charging physically forces lithium ions between other atoms in the electrode material, pushing them apart. Adding more charge causes more growth in the materials, which shrink back down when the lithium ions leave. Over many cycles of this growing and shrinking, micro-cracks begin to form in the material, slowly reducing its ability to hold a charge.
CLS CT scans also reveal that electrolyte liquids inside the battery are sucked into the expanded pore space created by microcracked positive electrode materials.
“It can eventually cause the materials in the battery to crumble from the inside out. If it gets bad enough, it can cause parts of the battery to actually peel off inside itself,” says Bond. “And if it causes large-scale damage inside the battery, that can become a safety issue as well.”
Studying this problem, and how effective coatings and other treatments are in stopping it, has been important in the field for a long time. Traditionally, the cracks forming in a battery have been studied by taking the battery apart and looking at individual particles under an electron microscope. This destroys the battery, so it doesn’t allow researchers to preserve the larger structure and see what other effects this cracking might have on the rest of the battery.
By using x-ray imaging at the CLS, Bond says researchers can study these effects in context, and see how cracking causes changes in the rest of the battery. In this study, the researchers discovered that as micro-cracking in the battery got worse, liquids in the cell were sucked up into the extra space between the cracks, which may not leave enough liquid to go around.
“This is the first time anyone's been able to capture all of these effects happening together in a working battery,” says Bond. “This depletion of liquid electrolyte can cause serious problems, since any part of the battery that doesn’t get enough liquid would essentially stop working.”
In this study, Bond and colleagues studied batteries that had been continuously charged and discharged to different levels over years, alongside otherwise-identical batteries that had not been used at all. The 3D x-ray scans they collected using BMIT’s bright, focused light allowed them to see precisely how different materials were affected by use, both at the microscopic scale and throughout the entire battery.
A practical takeaway? The team found that draining the battery a small amount caused less deterioration than discharging the battery all the way. This is likely because a smaller change in charge causes less physical strain on the battery electrode materials over time. This effect is important to understand for new applications such as long-haul transport, electric aircraft, and using parked electric vehicles to store and deliver energy into the electrical grid. These scenarios often require using more of the battery’s full capacity before being recharged.
“As we start replacing more and more combustion-driven vehicles with electric vehicles, it’s really important to understand how batteries will behave under different conditions,” Says Bond. “It’s very exciting to work on these problems, and we really need tools like synchrotrons to understand the fine details of what’s going on inside the battery when we try out new approaches.”
Reference: Bond T, Gauthier R, Eldesoky A, Harlow J, Dahn JR. In Situ Imaging of Electrode Thickness Growth and Electrolyte Depletion in Single-Crystal vs Polycrystalline LiNixMnyCozO2/Graphite Pouch Cells using Multi-Scale Computed Tomography. J Electrochem Soc. 2022;169(2):020501. doi:10.1149/1945-7111/ac4b83
In recent months, a string of carmakers and electric vehicle battery producers have announced their intentions to build facilities in the United States. Manufacturers from across the world are throwing around billions of dollars of investments into EV battery technology, too.
Meanwhile, US President Joe Biden has invoked the Defense Production Act, a Cold War-era provision to help increase the domestic availability of raw materials like lithium and graphite to boost battery manufacturing and reduce dependence on foreign supply chains. “We need to end our long-term reliance on China and other countries for inputs that will power the future,” he said.
Also Read: US-based Triton Electric Vehicle to set up commercial EV plant in Gujarat
As promising as all this is, it’s unlikely to move the needle. The US has waited far too long to ramp up and prioritise the core of any electric vehicle strategy: batteries and how to charge them. For starters, factories won’t be up and running for a while, so they won’t be churning out power packs anytime soon. Capital isn’t being directed in a focused way, either. Even with Biden kicking off a top-down, Beijing-style industrial policy, China is likely to stay well ahead in the battery race.
It’s also down to poor timing and planning. The hype around EVs has been present for a while. That’s pushed up demand and consumer awareness (think of all those EV advertisements during Super Bowl.) Yet, only last June did the US release a blueprint for battery supply chain build-out to ‘help guide investments’. Upstarts have been trying to crack the right technologies for a while now, and manufactures have been talking up big changes to auto-making for cleaner vehicles.
Also Read: Maruti takes first steps in EVs as Suzuki Motor to invest Rs 10,440 crore in Gujarat
What’s worse, as US carmakers get desperate to make good on promises of investing billions of dollars in green cars to meet emissions regulation targets, they’re pressuring their Korean battery partners for technology. Ironically, it’s a tactic often associated with China’s technology dominance goals, but it is also indicative of the lacklustre progress on development of viable and scalable powerpack options.
China, on the other hand, continues to hurtle toward making batteries for most electric vehicles in the world. It has cornered 60 percent of battery production. Despite a faltering COVID-19 policy and supply chain delays, it’s been filling the growing gap between demand and supply.
Tesla Inc. was able to churn out cars, export them across the world, and open its Europe gigafactory because of a Chinese battery partnership and wide-scale manufacturing. Other carmakers have turned to Chinese suppliers of parts and raw materials for energy storage. One of the world’s largest car companies, Volkswagen AG, recently signed agreements with Zhejiang Huayou Cobalt Co. and Tsingshan Holding Group to ensure supply of nickel and cobalt for 160 gigawatt hours of batteries. Meanwhile, Contemporary Amperex Technology Ltd. is scouting out sites across North America for a $5 billion plant.
It isn’t just about scale and China’s manufacturing heft, though. The world largest battery maker, CATL, has been working on a third generation battery with cell-to-pack technology that’s almost 13 percent more efficient than Tesla’s much-awaited 4680 battery in terms of space utilisation, according to Daiwa Securities Co. analysts. The company is also developing key thermal control technology, an important safety feature to ensure fires don’t spread in the latest types of powerpacks which are prone to combustion. If the US can’t lead on a key area of innovation now, it’s hard to say how the future for EVs will play out there.
Also Read: Tata Motors all set to launch a new electric SUV
The woes of the EV ecosystem have been compounded by a market imbalance and high raw material prices. That means it will only be harder to gather supplies and make affordable batteries. Chinese officials, though, have already started talking about more collaboration across their supply chain to ensure manufacturing isn’t hit. The US isn’t quite there yet when it comes to addressing this big — and likely prolonged — barrier because it doesn’t even have a robust supply chain.
What options does the US have now? Recreating everything from scratch may leave it further behind. Acknowledging that circumventing China won’t be an option in the near future would be a good place to start. Channelling funds toward manufacturing and focusing on battery tech startups that are close to large-scale production could ensure a more streamlined approach for funding.
In addition, facilitating greater production from the few — and small — existing mines in the US may help integrate them into future manufacturing plans. Meanwhile, ensuring it can get a reliable supply of battery metals from its northern neighbour Canada — a current favourite for many manufacturers — would also help.
When it comes to electric vehicles and batteries, the US will have to move beyond flaunting billions of dollars of investments and ambitious plans if it really wants to get ahead.
https://www.moneycontrol.com/news/opinion/the-us-is-losing-the-ev-battery-race-8323091.html
Lithium has become a strategically important mineral given its growing usage in today’s advanced technologies that are powered by lithium-ion batteries, including electric vehicles.
Oliver Kazunga-Senior Business Reporter
PREMIER African Minerals Limited, which owns a lithium and tantalum operation in Matabeleland South Province, has completed an agreement with investors to raise £12 million (US$15,7m) the firm needs to finance a Definitive Feasibility Study (DFS) for the project.
The London Stock Exchange listed resource group is developing the Zulu Lithium and Tantalum project in the Insiza District of Matabeleland South.
Lithium has become a strategically important mineral given its growing usage in today’s advanced technologies that are powered by lithium-ion batteries, including electric vehicles.
In a statement, Premier announced the completion of the subscription agreement by Suzhou TA&A, a China-based company principally engaged in the research, development, production and sale of anti-static ultra-clean products
“The company is pleased to confirm the completion of the subscription agreement by Suzhou TA&A Ultra Clean Technology Company Ltd, (Suzhou TA&A) to raise £12 million before expenses at an issue price of 0,4 pence per new ordinary share for the ongoing Definitive Feasibility Study (DFS) at Zulu,” said the resource group.
Recently, Premier received a £1,2 million non-refundable deposit by Suzhou as part of their conditional agreement.
The group’s chief executive officer George Roach said: “I reiterate my welcome to our new shareholders and to Dr Lou Wei, and express my appreciation for the confidence in Premier and Zulu.
“Premier has already taken steps to expedite issues associated with resource definition needed to complete mine optimisation and test work and we will continue to accelerate all aspects of the DFS underway.”
The subscription fully funds the completion of DFS that is underway at Zulu.
Moreso, the subscription affords Suzhou additional rights such as the right to negotiate their future involvement and/or investment in support of the project.
Among other expectations, Suzhou is also expected to be actively involved in the development of the DFS for the Zulu project.
Premier is an emerging tungsten producer from the RHA Tungsten Mine, which is also advancing the sizable Zulu Lithium and Tantalum Project in Zimbabwe.
In addition, the Company has an interest in MN Holdings Limited, the owner and operator of the Otjozondu Manganese Mining Project in Namibia.
The company holds a significant stake in Circum Minerals Limited, the owners of the Danakil Potash Project in Ethiopia, which has the potential to be a world-class asset.
Premier has a long history of project discovery, acquisition and development across Africa.
Under the US$12 billion mining roadmap by 2023, lithium is one of the minerals expected to the envisaged mining economy contributing US$500 million.
The figure is expected to rapidly increase beyond 2023 as more lithium mines come on board and existing mines ramp up production.
Zimbabwe is among major lithium producers that may draw significant benefits from the firming global global prices and high demand for the precious mineral due to expected imminent supply deficit.
The country is the world’s fifth largest producer of lithium with only Bikita Minerals and the Arcadia Lithium project in Goromonzi, which started producing recently.
https://www.herald.co.zw/uk-firm-seeks-us16m-for-zim-lithium-mine/
According to Mining Technology’s analysis of GlobalData’s mines and projects database, India and the USA are thought to have the greatest overall amount of mining equipment deployed at various locations. At least some of this equipment is thought to be electrified.
By contrast, Panama leads the world when it comes to electrified equipment, followed by Zambia, Sweden, and Namibia.
Our analysis also shows that countries with the largest equipment portfolios have the smallest proportion of electrified vehicles.
Many of the countries with the greatest amount of mining equipment, such as India, the USA, Australia, Indonesia, and South Africa, may therefore provide considerable investment opportunities for companies in a position to electrify mining operations at scale.
Electrified mining equipment typically consists of a variety of models which are either battery-powered, cable-tethered, or utilise overhead trolley-lines. The latter are particularly prevalent in open-pit mines requiring the use of large surface trucks. Research by GlobalData suggests that these electric trolley-trucks can already deliver savings of up to 50% with respect to fuel consumption and costs, however battery technology for such vehicles is still in its infancy.
Underground electrification
According to our analysis of GlobalData’s data, surface mines dominate the industry, although dedicated underground ventures still take a significant market share.
Prior to the ongoing Russian invasion, Ukraine led the world with the highest proportion of underground mining projects, however their mining sector is clearly beset by considerable uncertainty going forward.
Further analysis of GlobalData’s electric mining equipment database shows electrification is split across mine types, with trolley-line and cable-tethered equipment dominating surface mining, and battery technology coming to the fore in an underground context.
According to a report by the University of Adelaide in Australia, and Universidad de Concepcion in Chile, Electrifying underground mines can lead to significant benefits. They cite a study showing how electrified equipment may offer potential energy savings of “40% in ventilation and 30% in cooling”, resulting in lower operating costs. Additionally, worker safety and well-being can be enhanced via reduced “risk of flashover and electrocution” and the elimination of diesel particulate matter (DPM).
Normet are one of the companies offering BEVs designed to excel in underground environments. Their SmartDrive® technology is based on a modular BEV architecture which is “designed to optimize energy consumption and performance” with “zero local emissions”.
Mark Ryan, Normet’s Vice President of Equipment Offering and R&D, told Mining Technology about the realities of underground mines and tunnels serviced by machines running on diesel engines.
“In a tunnel environment think of something that would be running in excess of 100 degrees constantly beside you – and you’re in that environment for hours and hours… listening to the engine, getting the heat from that engine, the exhaust gas is also hot coming out, heating up the air, it can be pretty miserable actually.”
According to Ryan, miners have said that Normet’s SmartDrive® technology has a positive impact on their well-being, leading to reduced fatigue levels. The combination of reduced heat, noise, and DPMs has reportedly made workers “feel better at the end of the day.”
“I think that it’s only when you’re down there working and you see the difference, you hear the difference, you taste the difference. Being able to do the same job with a battery – it just really changes the game for the person in that environment.”
Diesel health hazards
A study by the Sustainable Minerals Institute at The University of Queensland (Australia), and The Norman B. Keevil Institute of Mining Engineering at The University of British Columbia (Canada), highlighted the well attested risks of DPM on human health. The authors point out that although up to “40% of an underground mine’s energy outlay” goes on ventilation, such systems are not able to sufficiently reduce diesel particulates to a safe level.
They cite an article written for ABC news Australia which hammered home the grave implications of long-term exposure to diesel nano-particles even in well-ventilated mines. According to the underlying report referenced by ABC, underground miners working near diesel engines can be exposed to over 100 times “normal environmental concentrations” of nano diesel particulate matter (nDPM). These particles are thought to have significant health implications going “beyond the human lungs”, which “diffuse into the blood stream” leading to a cavalcade of calamitous illnesses. Known effects include cancer, “short term irritation”, “headaches”, “smoking-like cardio-respiratory responses” and “systemic inflammation”. From a cold economic vantage point, the resultant effects of such long-term health problems in the mining workforce may have a profound effect on mine safety and productivity.
A contrasting case study cited by the Sustainable Minerals Institute report about Newmont Goldcorp’s Borden mine in Canada claimed that considerable benefits had already been reaped from its electrified equipment portfolio. These included improved safety, reduced greenhouse gas emissions and ventilation costs, “reduced megawatt hours of 33,000 per year”, and a significant uptick in staff well-being. Workers reportedly said that despite needing to adapt to new technologies, they would not want to go back to working in “traditional” underground mines alongside diesel engines.
Beyond the potential fiscal benefits of electrified mining equipment, Normet’s Mark Ryan stressed the importance of considering the human impact of adopting BEVs as opposed to persisting with diesel-powered engines underground:
“If we forget about the sales pitch for a moment, it’s about those people and their quality of life down there with this technology.”
Challenges and opportunities
Most mines across the globe do not benefit from significant amounts of electrified equipment, and there is a notable lack of such technology in countries with the largest mining portfolios. This may present a substantial opportunity for the future of mining electrification, as the market is still relatively nascent and ripe for investment. Yet considerable challenges remain when it comes to weaning the industry off diesel in favour of BEVs, particularly in surface mining where battery technology remains at the prototype stage.
Alongside technological challenges mining is facing a growing skills gap and pressure to decarbonise across the board, the latter of which relies on access to renewable energy sources which are not always readily available. According to Ryan:
“In certain parts of the world mining activities in general are obstructed by the lack of energy. The demand doesn’t meet the supply.”
This makes switching to electrified equipment in some contexts far less feasible which, coupled with industry hesitancy around the risk-reward ratio of adopting new technologies, poses a considerable hurdle for the sector ton the road to net zero. Yet as the Sustainable Minerals Institute report concludes, acquiring mineral deposits from deeper and more remote environments may make it harder for companies to stay competitive unless they evolve and take the risks required to innovate.
Ryan echoed this sentiment saying that though companies may be naturally cautious, continuing industry success stories twinned with bigger mining and tunnelling challenges may help to drive change.
Mining firms may need to take a long-term view balancing how they play their part in planetary sustainability, worker safety, and their own longevity and viability in an increasingly competitive marketplace. For those who do, the overall benefits may significantly outstrip any initial costs.
POSCO Chemical CEO Min Kyung-zoon speaks during the groundbreaking ceremony for the company's high-nickel cathode materials factory in Pohang, North Gyeongsang Province, Thursday. Courtesy of POSCO Chemical
By Park Jae-hyuk
POSCO Chemical started construction on a high-nickel cathode material factory in Pohang, North Gyeongsang Province, Thursday, two weeks after POSCO Group broke ground for its lithium plant in Argentina.
The chemical firm said that the new factory's construction is part of its efforts to grow into an eco-friendly materials manufacturer and to increase investments in POSCO's hometown of Pohang, where POSCO Chemical completed the construction of Korea's first synthetic graphite anode plant in 2021.
According to the company, 290 billion won ($238 million) has been invested in its new factory which will begin producing 30,000 tons of cathode materials annually from 2024.
It plans to make additional investments to increase the factory's annual production capacity to 60,000 tons by 2025 ― an amount that can be used to equip batteries in 600,000 high-performance electric vehicles (EVs).
POSCO Chemical expects the new factory to play a key role in the company taking the initiative in next-generation materials, given that the factory will produce cathode materials with nickel, cobalt, manganese and aluminum, which can enhance the stability and mileage of EVs.
Once the factory starts operations, POSCO Chemical will be ready for the rising demand for cathode materials for high-performance EVs, by producing up to 160,000 tons of cathode materials annually through its manufacturing facilities in Pohang, as well as in Gwangyang, South Jeolla Province, and Gumi, North Gyeongsang Province.
It also seeks to produce a combined 115,000 tons of cathode materials annually in North America, China, Europe and Indonesia, which are considered the largest markets for EVs.
"We have been able to construct our value chain for the EV battery business, by securing lithium and nickel from POSCO Group," POSCO Chemical CEO Min Kyung-zoon said during the groundbreaking ceremony. "The new cathode materials factory in Pohang will be the center of the battery materials industry."
POSCO Chemical said the ceremony was attended by around 100 participants, including North Gyeongsang Province Governor Lee Cheol-woo, Pohang Mayor Lee Kang-deok and lawmakers representing Pohang residents.
POSCO Group Chairman Choi Jeong-woo did not pay a visit, although he had been expected to meet with the Pohang mayor at the event and discuss the planned relocation of the group's holding firm to the port city from Seoul.
https://www.koreatimes.co.kr/www/tech/2022/04/419_326928.html?gonw
Willis, TX , April 06, 2022 (GLOBE NEWSWIRE) -- Many have tried to predict the future of alternative energy in America. However, claims that wind, solar, or other forms of renewable energy could replace fossil fuels fall ludicrously short. A realistic, and yet critically informed and innovative approach is needed that takes full, rational stock of the facts. The way for America to regain its role as a global energy leader is through hydropower. Hydropower is emerging as the only feasible solution that would provide outcomes of scale, competitive pricing, and actual environmental sustainability towards the elements of the Earth and humanity. Our bet is on a global innovator such as Diamond Infrastructure Development, Inc. to deliver this breakthrough promise of real renewable energy for generations to come.
The Farce of Wind and Solar “Renewables”
A quick look at data shows that currently, hydrocarbons supply over 60% of world energy, and since 1995 total world energy production has nearly doubled (~95%). Fossil fuels supply by far the majority of energy usage, with the 29% remaining renewable energy being broken down into 6% wind, 17% hydropower, 3% solar, and 3% others.
As we know, gas prices continue to rise every day. As The Guardian notes, a prolonged war with Russia’s invasion of Ukraine would take prices above the all-time high, adding to inflation and the cost-of-living crisis already underway. Although Russia is not America’s top fossil fuel supplier, this unrest affects the interconnected global supply commodities market. “There’s been a de-facto ban on Russian oil since the invasion began, with most of the country’s supply sitting unsold. So, investors are essentially pricing oil as if Russia’s supply isn’t available at all. And again, less supply = higher prices.”
Though fossil fuels will continue to be the leading energy source globally even as prices rise, renewable sources are simply not cutting it as an alternative. As many journalists and energy and technology experts have noted, wind and solar energy are not feasible on any large scale, and have a lasting harmful environmental impact on the planet.
As the widely regarded academic report, “Renewable Energy: Too Little, Too Late?” of Monash University states, “RE [Renewable Energy] sources can be divided into two groups: those that are continuously available, and those that are only intermittently available. RE is often popularly seen as the reverse of fossil fuels: it is available in unlimited supply and has no negative environmental impacts. [But] much of the good press RE gets is because of its very limited use compared with total energy…Large-scale RE is not without its own serious environmental problems; [and] RE will take many decades to provide the quantities of primary energy that a ‘business-as-usual’ world demands. In fact, it may never be able to provide this amount.”
Marginal Efficiencies
In reality, solar and wind facilities suffer from a very high capacity cost per megawatt, low reliability, and deficient capacity factors, which result in what the industry states as low avoided emissions and low avoided energy cost per dollar invested. In other words, the actual price point for implementing these technologies is more expensive and burdens taxpayers, let alone producing the product (i.e., its supply chain) creates a much greater carbon footprint than its deployment and ongoing operations, but it still all belongs to the product. This seems to get lost during the conversation of “cleaner” energy alternatives.
Take wind turbines. Wind turbines have a low efficiency rate and produce little or no power around 60% of the time and to date, have no means of decomposing. When taking account of such low capacity factors, it can be seen that onshore wind farms need over 247,000 acres of land to produce the equivalent of a typical 3 GW power plant operating continuously. However, the space claim above does not include the space required for storing 70% of the electricity production for when the wind doesn’t blow.
The materials used for making the turbine blades and other components are not yet totally recyclable. Therefore, when they get disposed of, they produce a large amount of carbon emissions for the process of cutting, crushing, grinding, and trucking to landfills, as necessary to reduce the volume as much as possible to economize landfill utilization, again adding to the overall carbon footprint.
researchers estimate the U.S. will have more than 720,000 tons of blade material to dispose of over the next 20 years, a figure that doesn’t include newer, taller higher-capacity versions. Photo by Christina Stella/Harvest Public Media.
Most solar panels used today have efficiencies between 15% and 20% and leach toxic chemicals as they age, while they are being regularly cleaned with large amounts of fresh water, again all adding to their overall carbon footprint. They also offer the disadvantage of open space required to produce energy. It takes over 120,000 acres of land to produce the equivalent of a typical 3 GW power plant operating continuously, as used in the above example. Advanced solar cells only have an efficiency of 25%, while household solar cells are at 19% efficiency.
For either onshore wind, or solar power, such large tracts of land, where natural resources exist in commercial quantity in conjunction with proximity to load centers, “are not”, widely available.
Compensating for Deficiencies
In Mark P. Mills extensive report, “The New Energy Economy: An Exercise in Magical Thinking,” states, “Cost models for wind and solar assume, respectively, 41 percent and 29 percent capacity factors (i.e., how often they produce electricity). Real-world data reveal as much as ten percentage points less for both. That translates into $3 million less energy produced than assumed over a 20-year life of a 2-MW $3 million wind turbine.”
The costs of deficiencies of the machine and resources, as noted above, are only a portion of the added costs in using these technologies. “In order to compensate for episodic wind/solar output, U.S. utilities are using oil- and gas-burning reciprocating engines (big cruise-ship-like diesels); three times as many have been added to the grid since 2000 as in the 50 years prior to that.” This application of fossil-fired electricity generation is in the category of “peak-shaving” power plants which are far more costly to operate than using the conventional full-scale/full-time baseload power plants. These added costs can drive increases that exceed 50% of the normal rates.
Dependence on Subsidies
Government subsidies and incentives are hiding these actual added costs incurred by the use of wind turbines. In China, the world’s largest producer of wind and solar energy, in order to pay the subsidies for these renewable energy projects, there is now a total debt of $42 billion and growing.
In the US, according to Congressional Budget Office testimony in 2016, an estimated $10.9 billion in tax preferences was directed toward renewable energy.
The proposed Build Back Better Framework debated in the US Congress provides for $320 billion in Clean Energy Expanded Tax Credits over 10 years. Some members of Congress requested to review the score from the Congressional Budget Office (CBO) and when the score was released on November 18, 2021, it was seen that the bill would increase the budget deficit by $367 billion over ten years.
So, China’s claim of being the world’s largest producer of wind will be answered by the US taking the title of the having the world’s largest wind power induced debt. And no, those solar panels being offered “for free” in the media advertisements are not free at all. They are paid for using your tax dollars, whether you actually allow them to be installed on your home or not.
Environmental, Geopolitical, and Social Impact
But even more alarming, are the rare earth materials necessary in the creation of these energy sources, from batteries to wind turbines and solar panels. A battery-centric grid and car world means mining gigatons more of the earth to access lithium, copper, nickel, graphite, rare earths, cobalt, etc. — and using millions of tons of oil and coal both in mining and to fabricate metals and concrete. It takes the energy equivalent of 100 barrels of oil to fabricate a quantity of batteries that can store the energy equivalent of a single barrel of oil.
As the LA Times reports in their article “The Hidden Costs of China’s Rare Earth Supply Chain,” “Rare earth is a group of 17 elements, sometimes found in minerals containing uranium, that are critical to high-tech products including smartphones, wind turbines, electric cars and military equipment such as missile systems.” They are called “rare” not because they are necessarily hard to find, but because the extraction process is expensive and toxic.
Laborers work at the site of a rare-earth mine in Jiangxi province, China. Photo by Jie Zhao / Corbis via Getty Images.
Rare earth elements are considered “strategic resources” because they interact directly with business and governments’ policy interventions (Science Direct). China accounted for about 71% of the world’s rare-earth output in 2019, and supplied 80% of U.S. rare-earth imports from 2014 to 2017, according to the U.S. Geological Survey. Experts believe illegal mines in China are providing more through the black market.
Chinese import of REE compounds and concentrates, Source: UNComtrade database 2018.
“China dominates global battery production with its grid 70 percent coal-fueled: EVs using Chinese batteries will create more carbon dioxide than saved by replacing oil-burning engines. Many proposals for new solar technologies call for rare materials, which alone could limit extensive commercialization.”
As numerous reports in the past decade have concluded, there are severe human rights issues and abuses relating to rare earth mining sites. Cobalt, a key rare earth component, has been the subject of investigations by Amnesty International and many others. More than 70% of the world’s cobalt is produced in the Democratic Republic of the Congo (DRC) and 15 to 30 percent of the Congolese cobalt is produced by artisanal and small-scale mining (ASM.) “Child labor, fatal accidents, and violent clashes between artisanal miners and security personnel of large mining firms are recurrent.”
Top Left: Digger Sidiki Mayamba, left, puts on his shoes in the room he shares with wife Ivette Mujombo Tshatela and their 2-year-old son, Harold Muhiya Mwehu, in Kolwezi, Congo, in June. Top Right: “Creuseurs,” or diggers, work in the mine at Kawama. The cobalt that is extracted is sold to a Chinese company, Congo DongFang Mining. Bottom Left: A man pushes a bicycle laden with charcoal, which is used for cooking and heating, past Musompo, a mineral market outside Kolwezi. Bottom Right: A boy carries a bag used to transport cobalt-laden dirt and rock at the Musompo market. Photos by The Washington Post.
There is now a total dependency on China’s supply chain in that raw materials are not made available, buyers must buy the physical component (batteries, magnets, etc.) that has already been processed in China. “Few other countries are willing to copy China’s low-cost, high-pollution version of rare-earth processing,” reports LA Times.
What is the Future of Energy in America?
To secure the future of energy in America, we must reclaim our place as a global leader in innovation and address the plethora of issues outlined above. The future of energy in America must not rely on inhumane mining benefitting China’s economy and geopolitical control, let alone polluting our world. This Future must not create soaring debt in order to subsidize systems that simply do not supply adequate energy. The future of energy in America will mean leading the charge for a new global movement that is truly sustainable, replicable, and would offer a wave of new jobs and a robust new energy economy. The future of energy lies in innovation and diversity, such as tapping abundant hydropower found in current, tidal, and wave energy. Where global wave energy is the most abundant and untapped resource to date.
True Sustainability of Scale: Hydropower
Hydropower is by far the largest source of renewable electricity and the third-largest after coal and gas. In 2021, hydroelectricity accounted for about 6.3% of total U.S. utility-scale electricity generation and 31.5% of total utility-scale renewable electricity generation.
Electricity generation From Hydro 1950–2020. Source U.S. Energy Information Administration
Hydropower can come in the form of Ocean energy: tidal energy (which can be either captured by barrages built across bays, or by turbines placed in tidal currents), wave energy capture devices, or ocean thermal energy conversion (OTEC) systems.
The earth’s surface is 70% water, so hydropower’s potential for supplying the world’s need for renewable energy is tremendous. Present hydropower technology has barely scratched the surface of what is possible. Wave energy is one of the most durable, impactful, and consistent forms of energy available on this planet, and its use is largely untapped by humans. In fact, US Federal Space-Exploration spending outpaces Federal Ocean spending by more than 100-to-1 in terms of dollars spent exploring outer space (2021 Federal Budget was $23.3B) versus exploring the ocean ($231.5M in 2021) and its capabilities. This allocation is spread across Ocean, Coastal and Great Lakes Research. The funding dedicated to Innovative Research and Technology was funded at only $17.8M. So, of the total ocean-related annual federal spend, only 8% goes to research and development. Compared with the Space Program, this is a factor of over 1300-to-1. The excruciating lack of investment in understanding the energy of our oceans, let alone with what’s beneath our waters, with the backdrop of astronomical annual spending on space programs, not to mention wind and solar power subsidies, is beyond mind-boggling.
So, if our own government is not taking leadership in developing the opportunities our sovereign seas have to offer, then who is leading the charge in commercially viable ocean energy-based hydropower systems? The answer is the private sector aligned with non-profit organizations aimed at solving water and energy issues along with reducing the carbon emissions problem. Private companies and organizations willing to invest in the future of our children through clean energy technologies that are truly sustainable and recyclable systems.
We spoke with Georg Engelmann, President, and CEO of Diamond Infrastructure Development, Inc., and Kenneth W. Welch Jr., groundbreaking Inventor and Founder of Global Oceanic Designs, Inc. and SeaDog Systems, Inc., world-class competitors in the alternative energy industry who are taking their infrastructure and energy technologies to commercial scale.
Mr. Welch, with his companies, has invested $3 to $5 million annually amounting to 10’s of millions over last two decades in the ideation, realization, modeling, testing, and demonstration of their wave energy technology, which was more recently independently assessed by Diamond Infrastructure Development, Inc. as a third-party evaluation, citing the companies’ technologies as economically feasible and ready for commercialization.
Now, partnering with the “Henosis Foundation”, a non-profit aimed at solving hunger, access to reliable and safe drinking water, and the elimination of poverty, sees a future in conjunction with Diamond Infrastructure Development, Inc. and their vision for global energy and water.
Working together toward the deployment of the Global Oceanic and SeaDog Systems energy technology suite, which provides a truly clean, recyclable, cold, grid-scale wave energy-driven hydropower system that works on the same order of economic and fiscal efficiency as hydroelectric dams, without the dam, the numerous environmental impacts of dams, or the disastrous consequences caused by large-scale dam failure.
The SeaDog Wave Pump is the centerpiece of SeaDog Systems, Inc.’s sustainable infrastructure technologies. It is a revolutionary wave-driven pump powered by the natural motions of waves and swells. SeaDog Wave pumps will use the up and down movement of the waves to power their enormous pumps. These pumps will then produce pressurized water that can be used for hundreds of applications, including to turn turbines that will produce electricity.
SeaDog’s wave pump design, as a carousel tower, can be easily deployed as an Omni-directional, 24 piston wave converter. It will cost per kW installed, ranging from $4,800 to $7,500, and will have an impressive 50+ years of service life. SeaDog Wave Carousels can produce over 100 times more energy per acre than wind turbines and with more than double the service life, making them more stable and cost-efficient.
The Wave Energy Converter Carousel can convert offshore wind turbine towers into a more cost-effective and sustainable grid-scale offshore energy farm. It does not take away and consume land and is non-destructive to ocean life. It avoids the many harmful impacts and associated costs detailed above in other so-called RE systems.
With capacity factor superiority and higher energy output than a wind turbine, as well as cheaper cost of infrastructure, maintenance, and greater longevity, along with its network architecture, will not have a need for costly peaking plants or energy storage systems.
A Seadog Wave Energy Converter Carousel generates more energy than all other systems per given footprint. Making the SeaDog Wave Energy Converter a game-changer in wave energy development, designed to deal with the harshest of offshore environments. A truly disruptive technology on the leading edge of alternative energy breakthroughs.
“After our thorough research and along with our in-depth studies, it has become apparent that a program targeting the U.S. Atlantic Seaboard (the Wide-Open Wild West Ocean Frontier of the United States), it’s states, cities and towns would create the perfect first-model of alternative energy transformation across the wave energy sector providing for a positive impact on the U.S. Green Movement. The SeaDog Wave Energy Carousel, a nearshore wave energy system supporting shore-based desalination and hydroelectric power production, along with its offshore / shoreline network architecture, is the way forward.” Stated Mr. Welch Jr.
Mr. Engelmann added, “Our company has a suite of clean and sustainable energy technologies that will enable positive thrust and a differentiating position in the pumping of high-pressure seawater systems to impact the energy and desalination production markets globally.”
These high-pressure pumping systems can provide volumes of dedicated flows to a network of hydroelectric power plants onshore, or offshore, desalination systems on or offshore while providing a brine mixing discharge system neutralizing the toxic effects generated by such systems without the carbon footprint of today’s current programs.”
Their present efforts are focused on a blended program of energy and freshwater as a combined alternative energy sector, specifically targeting offshore wave energy in conjunction with seawater desalination and hydroelectric power and other related applications and services required in flourishing what they describe as a “Green World Movement,” offering additional grid-scale export energy for the local community at affordable pricing.
The power of America comes from boldly embracing new ideas and leading the charge for a better tomorrow. It’s time that leaders and stakeholders pay attention to the facts and invest in a system that will move our economy, people, and planet in a positive direction of growth and innovation through “Dam-free Hydropower” while stepping away from the control and deficit systems being presented currently in the alternative energy sector.
‘Retrofitting has cut our energy bills by 90 per cent’
Meet the Hertfordshire couple who ditched gas, super-insulated their home — and installed a £1,500 cat flap
April 8 2022, The Times
Jonathan and Emma Dixon’s Hertfordshire home was built in 1964 before anyone had heard of having solar panels or ground-source heat pumps. Now it is only the third certified retrofit home in the UK that generates more energy than it uses. It is so energy efficient it costs almost nothing to run, needs no heating upstairs and has walls half a metre thick.
“We didn’t buy this house to do this scale of project; we thought we would put in triple-glazed windows but weren’t sure what else,” says Jonathan, 45, a software engineer. “But reducing our carbon footprint was always a goal.”
The couple moved to Harpenden from south London to get away from the city and chose to live in the four-bedroom detached house for a while before deciding how to renovate. “It was a probate sale and there hadn’t been much done to it since it was built, so we knew we were going to have to spend a lot to upgrade it,” Jonathan says.
The big question wasn’t what colour to paint the living room walls or what kitchen to buy, but whether or not to insulate under the ground floor. “This would be the only chance to do that,” says Jonathan, who employed Heather McNeill at the local architecture company A D Practice, which had just been certified by Passivhaus, the international design standard for cutting energy use. “Once we’d decided to do that, which meant digging up the whole floor and replacing it with a highly insulated slab with underfloor heating inside the screed, we thought we might as well go the whole hog.”
The whole hog meant removing large sections of the external walls, which were non-structural curtain walls, and replacing them with highly insulated timber-framed sections, which were clad in Siberian larch, sourced from the French Alps. The remaining walls were filled with cavity insulation and externally insulated with wood-fibre board, while the inside of the house was lined with an airtight plywood skin to Passivhaus standards. These layers of insulation have made the walls half a metre thick, which, together with the insulated floor and roof, has drastically reduced the house’s energy needs.
The house is also gas-free, using an air-source heat pump and harnessing solar energy with an entire roof pitch of solar panels. “We’re in a conservation area so having the whole roof pitch covered in panels helped with getting planning permission because they’re less noticeable. It just looks like a glass roof,” Jonathan says. An MVHR (mechanical ventilation with heat recovery) system provides fresh, filtered air.
The insulation has the extra benefit of soundproofing, so you can’t hear road noise or the railway line nearby. “I’m a light sleeper, so the quiet at night really helps,” Jonathan says. “And because the house is airtight we don’t get dust or spiders either.”
The Dixons extended the house at the rear to create a spacious kitchen/diner, with a big picture window on to the garden and two large skylights that open automatically at night to cool the house in hot weather. Emma, 44, a data analyst, hated the original gloomy hallway, so they took out the ceiling to create an atrium extending into the loft with another large skylight flooding light downwards, and installed a dramatic curved staircase. This meant reducing the size of one of the bedrooms slightly, and it is now used as a workspace for Emma, with the only other layout changes the addition of an en suite to their bedroom and the conversion of the downstairs cloakroom into a wetroom.
“When we got the build quotes in we considered knocking the house down and building from scratch,” Jonathan says. “But it would have taken longer to start the whole process again and a total rebuild would have meant more embodied carbon.”
The project took a year to build, from January 2020 to February 2021 — three months longer than planned because of delays due to Covid. They have now been back in the house a full year so know they are consuming just a tenth of the energy they were before. “We have so much floor insulation we only need a very low level of underfloor heating, which is programmed to come on for just four hours at night when it’s cheapest,” Jonathan says. “In fact we don’t need any heating from late March until November.”
Because warm air rises the house doesn’t need any heating at all upstairs, which is always one or two degrees warmer than downstairs. “We do have electric underfloor heating mats in the bathroom and en suite, but that’s it,” Jonathan adds.
The Dixons bought the house for £900,000 and spent about £300,000 on the retrofit, including £10,000 to dig out and reinstate the floor, £35,000 for the insulation and £30,000 for the fenestration, including an airtight electronic cat flap at £1,500. “Before we started this project an eco house might have had a lower resale value than a standard house because people didn’t want anything unusual,” Jonathan says. “Now it’s the opposite. The standard appreciation on this house since we bought it would make it £1.3 million, but because of the retrofit it has been valued at £1.6 million. Estate agents have been asked if there are any houses like ours on the market.”
How it adds up
Bought: £900,000
Spent: £300,000
Valued at: £1.6 million
Heating bill before: £770 a year
Heating bill now: £90 a year
Profit from selling excess solar back to the grid: £255
https://www.thetimes.co.uk/article/retrofitting-has-cut-our-energy-bills-by-90-per-cent-sr26brjsc
The United States is facing some serious challenges. The disruptions of the COVID pandemic are now merging with sanctions on Russia to produce significant supply chain shortages. Making this doubly problematic is the nation’s heavy reliance on imports, particularly from China.
Import dependence has long posed a strategic vulnerability for the U.S.—particularly when it comes to the “rare earth” metals that make many advanced technologies possible. However, the Biden administration is considering use of the Defense Production Act to spur domestic mining of these key minerals. Doing so could help America ramp up its advanced manufacturing capacity.
As renewable energy technologies—including electric vehicles (EVs), solar panels, and lithium-ion batteries—take center stage, demand for rare earth metals is climbing. Unfortunately, the United States relies almost entirely on imports of rare earths. And roughly 80 percent of the world's supplies come from China. Until the 1980s, the U.S. actually led the world in rare earth mining. But a short-sighted shift toward imports allowed America’s domestic mining capacity to wither away. The result is Beijing’s current stranglehold on supplies of these important resources.
Congress and the administration have recently taken a number of steps to address this vulnerability. For example, the Department of Energy is researching new methods of processing rare earths. And Congress is looking to expand domestic high-tech manufacturing through a legislative package based on the America Competes Act.
However, critical minerals sit at the very center of the picture—since they’re the building blocks necessary for every aspect of advanced manufacturing. And so, the Biden administration’s use of the Defense Production Act should focus on shortening the timeline involved in mining and processing of rare earth metals—and swiftly making them available to America’s manufacturers.
That sounds good. But the hold-up has long been the arduously slow bureaucratic process involved in federal approval of new mining operations. It currently takes up to a decade for mining operators to gain the necessary permits to launch a new mining operation. In contrast, Canada and Australia approve mining operations in a mere two to three years—and all while following the same strict environmental standards as the United States.
Despite this emphasis on a safe environment, America continues to depend on toxic mining in China. China’s mine operators have callously created a vast series of poisonous lakes and toxic dump sites while rapidly and profitably exploiting rare earth deposits.
Such wanton environmental destruction is doubly frustrating to companies operating in the U.S., since they adhere to some of the most stringent environmental protections in the world. For example, NASDAQ-listed The Metals Company (TMC) has demonstrated the feasibility of deep-sea, critical mineral extraction. TMC has explored the planet’s largest-known deposit of battery-grade metals, the Clarion Clipperton Zone of the Pacific Ocean. TMC has successfully processed key battery metals, including nickel and copper, from deep-sea nodules in a manner that generates little processing waste.
As the Biden administration contemplates the Defense Production Act in order to advance its renewable energy agenda, there needs to be a focus on funding for companies that can get to work now. That means expediting mine permit applications and reducing logistical barriers. Significantly, many companies simply can't mine due to costly reclamation bonds. If President Biden wants to incentivize domestic rare earth and critical mineral production and processing, he should consider meaningful assistance for companies capable of meeting this critical national security need.
Mining minerals and rare earths is only the first step, however. The administration must also address the entire supply chain, including refining and processing. And even the manufacture of high-tech products—particularly EVs and their batteries—will take time to return to the U.S. in a meaningful quantity. But even if the domestic market is currently small, there’s significant growth potential—which can help to drive future job creation in these important industries.
The United States can regain its leadership in high-tech manufacturing—and do so while also protecting the environment. President Biden should use the Defense Production Act to jump-start safe, domestic mining of critical minerals and rare earth metals. It’s an urgent priority for America’s renewable energy future.
Aaron Ringel, a former Assistant Secretary of State for Global Public Affairs, is Vice President for International Policy and Advocacy at the Coalition for a Prosperous America (CPA).
https://www.realclearenergy.org/articles/2022/04/05/end_us_dependence_on_mining_in_china_825505.html
As the weather turns milder and we start putting spring beans and peas in the ground, it’s worth reflecting on why we export most of the pulse crop we produce in the UK, or simply feed them to livestock.
Pulses are certainly a good break crop that offer a solid return and are well suited to the changeable British climate.
Their nitrogen-fixing and soil fertility-enhancing properties get the next crop off to the best possible start.
See also: Farmers join forces to grow high-yield low-cost spring beans
About the author Daniel Kindred is the lead Adas scientist of the Bean Yield Enhancement Network. Here he sets out why more effort is needed to develop a home market for human consumption.
They also bring a raft of environmental benefits, including reducing the requirement for artificial nitrogen for following crops. This means emissions from nitrogen fertilisers of nitrous oxide – a greenhouse gas almost 300 times more potent than carbon dioxide – are reduced, and there are substantial cost savings to be made on nitrogen fertilisers.
Expand human consumption market
But we also need a larger human consumption market for our pulses. A significant proportion of British beans are exported. In fact, we are the biggest producers and exporters of fava beans in Europe.
Exports for human consumption is predominantly aimed at North Africa and the Arab crescent – regions that are already competitively supplied by European and Australian production.
The British domestic market is mostly limited to animal feed and aquaculture.
However, with an ever-increasing demand for plant-based foods in Britain’s growing vegan market, the human consumption of British-grown pulses – either whole or processed as ingredients – as a replacement for foreign-grown and environmentally damaging soya has vast potential.
Consumption of British-grown beans is yet to go mainstream. This is in part because the British market for home-grown pulses been stunted by a lack of R&D investment. Such investment is desperately needed.
In both the UK and worldwide, R&D efforts in pulses is vastly less than in cereals and oilseed rape. Issues around a reduced market for legumes are in part a direct result of this narrow focus on other crop areas.
Genetic research
Beans have also been the subject of very limited research into genetic or agronomic improvement which, if undertaken, would improve yield stability and increase end quality.
Our own research at the Bean Yield Enhancement Network has shown that, last year, one in 10 bean crops yielded more than 7t/ha, and that potassium inputs appeared to set the high-yielders apart.
However, sustained increase in demand for pulses for human consumption can only properly be achieved by a shift of focus and realignment, including additional investment in R&D effort by bodies including UK Research and Innovation, Innovate UK and Defra.
It is true that there has been a real underlying interest in fava beans in the food supply chain. It also needs to be recognised that supply chains are complicated.
But if significant investments from industry are to be forthcoming, processors need to be assured of supply when commitments are made.
https://www.fwi.co.uk/news/opinion-more-rd-needed-for-beans-to-reach-full-potential
Farmers in the Ottawa area say they're facing a pricey planting season this year as the cost of fertilizer has nearly doubled.
Mel Foster is one of the farmers that owns Foster Family Farms in North Gower, and said he got some grim news when he spoke to his suppliers late last fall about the price of fertilizer for the 2022 growing season.
"Whatever amount we spent last year, they say it's going up one hundred per cent," Foster recalled. "If we spent $100,000 last year, we'll spend $200,000 this year."
The price hike can be attributed to factors that include supply chain issues, production disruptions due to bad weather in the United States and China's decision to curtail exports to meet their own demands, said Canada Fertilizer executive vice-president Clyde Graham.
Then there's the "deeply concerning" invasion of Ukraine, which Graham said has also led to sanctions against Russian fertilizer exports.
While western Canada is a net exporter of potash and nitrogen fertilizer, Ontario, Quebec, and the Atlantic provinces import these products from Russia, Graham said, as it's been more cost effective in the past. But with a 35 per cent tariff on some imports, it's not looking so appealing right now, he said.
Diesel also on the rise
Adding to the list of expenses is the rising cost of diesel, which has also been affected by the sanctions, said Keith Currie, vice-president of the Canadian Farmers Association.
Given most farm vehicles are diesel-powered, production costs are expected to rise significantly this season, Currie said.
Most farmers have their prices locked in by the market, he added, and unless they sell directly to consumers they can't hike how much they charge to recoup the costs they're incurring.
"If McDonald's has a problem with having a fuel surcharge from the trucking companies passed onto them, they'll put another nickel on each hamburger to offset that cost," Currie said.
"We don't have that luxury. Our prices are already set."
A potash mine in Saskatchewan. While western Canada is a net exporter of fertilizer, Ontario and Quebec farmers often source their fertilizer from Russia — but that may now change. (Guy Quenneville/CBC)
As for Foster, who does sell directly to consumers, he's currently focused on the spring weather, crossing his fingers for timely rains and hoping for a better crop than last year when the region was hit by a severe late spring frost.
Foster said he'd like to keep the prices of their fruits and vegetables stable, but predicts they'll see a slight increase. Along with fertilizer and diesel, his labour costs are also on the upswing, as minimum wage increased earlier this year.
"With fertilizer, the fuel prices, and labour prices going up – those are our three main costs. I would think we'd have to definitely raise [our prices] if labour goes up again," he said.
"We're [also] weather dependent. It's a huge gamble there. I don't go to the casino, but I think I get enough gambling here on the farm."
https://www.cbc.ca/news/canada/ottawa/russian-sanctions-increase-fertilizer-costs-1.6406573
Complete the form below and we will email you a PDF version of "Faster Flash Droughts Globally Are Bad News for Crops"
Just like flash floods, flash droughts come on fast — drying out soil in a matter of days to weeks. These events can wipe out crops and cause huge economic losses. And according to scientists, the speed at which they dry out the landscape has increased.
Researchers at The University of Texas at Austin, The Hong Kong Polytechnic University and Texas Tech University found that although the number of flash droughts has remained stable during the past two decades, more of them are coming on faster. Globally, the flash droughts that come on the fastest — sending areas into drought conditions within just five days — have increased by about 3%-19%. And in places that are especially prone to flash droughts — such as South Asia, Southeast Asia and central North America — that increase is about 22%-59%.
Rising global temperatures are probably behind the faster onset, said co-author and UT Jackson School Professor Zong-Liang Yang, who added that the study’s results underscore the importance of understanding flash droughts and preparing for their effects.
“Every year, we are seeing record-breaking warming episodes, and that is a good precursor to these flash droughts,” he said. “The hope and purpose [of this research] is to minimize the detrimental effects.”
The research was published in Nature Communications. The study was led by doctoral student Yamin Qing and Professor Shuo Wang, both of The Hong Kong Polytechnic University.
Flash droughts are relatively new to science, with the advancement of remote sensing technology during the past couple of decades helping reveal instances of soil rapidly drying out. This serves as the telltale sign of the onset of a flash drought and can make drought conditions appear seemingly out of the blue.
As the name suggests, flash droughts are short lived, usually lasting only a few weeks or months. But when they occur during critical growing periods, they can cause disasters. For example, in the summer of 2012, a flash drought in the central United States caused the corn crop to wither, leading to an estimated $35.7 billion in losses.
In this study, the scientists analyzed global hydroclimate data sets that use satellite soil moisture measurements to capture a global picture of flash drought and how it has changed during the past 21 years. The data showed that about 34%-46% of flash droughts came on in about five days. The rest emerge within a month, with more than 70% developing in half a month or less.
When they examined the droughts over time, they noticed the flash droughts happening more quickly.
The study also revealed the importance of humidity and variable weather patterns, with flash droughts becoming more likely when there’s a shift from humid to arid conditions. That makes regions that undergo seasonal swings in humidity — such as Southeast Asia, the Amazon Basin, and the East Coast and Gulf Coast of the United States — flash drought hot spots.
“We should pay close attention to the vulnerable regions with a high probability of concurrent soil drought and atmospheric aridity,” said Wang.
Mark Svoboda, the director of the National Drought Mitigation Center and originator of the term “flash drought,” said the advancement in drought-detecting technology and modeling tools — such as those used in this study — has led to growing awareness of the influence and impact of flash droughts. He said the next big step is translating this knowledge into on-the-ground planning.
“You can go back and watch that drought evolve in 2012 and then compare it to how that tool did,” said Svoboda, who was not part of the study. “We really have the stage well set to do a better job of tracking these droughts.”
The study was funded by the National Natural Science Foundation of China and the Hong Kong Research Grants Council.
Reference: Qing Y, Wang S, Ancell BC, Yang Z. Accelerating flash droughts induced by the joint influence of soil moisture depletion and atmospheric aridity. Nat Commun. 2022;13:1139. doi: Qing Y, Wang S, Ancell BC, Yang Z. Accelerating flash droughts induced by the joint influence of soil moisture depletion and atmospheric aridity.. 2022;13:1139. doi: 10.1038/s41467-022-28752-4
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.
Country
Feeder Cattle: 8,000(100.0%) 8,426(100.0%) 6,800(100.0%)
***Add Mid session*** Compared to last week: Feeder steers and heifers steady to 3.00 lower. Steer and heifer calves 6.00 - 10.00 lower. Quality plain to average. Demand moderate to good. Supply included: 100% Feeder Cattle (56% Steers, 42% Heifers, 2% Bulls, 1% Dairy Heifers). Feeder cattle supply over 600 lbs was 62%.
FEEDER CATTLE
STEERS - Medium and Large 1 (Per Cwt / Actual Wt)
Head;Wt Range;Avg Wt;Price Range;Avg Price
11;262;262;217.00;217.00
20;339;339;215.00;215.00
29;372-388;375;207.00-210.00;208.86
10;355;355;237.00;237.00;Fancy
73;409-448;433;200.00-217.00;209.00
56;459-497;487;198.00-215.00;201.82
28;455-466;458;216.00-219.00;216.76;ThinFleshed
https://www.swoknews.com/oklahoma-livestock/article_c9970e7c-da65-500f-8685-797e37e22929.html
Issued 11 December 2020
Please note that the values presented in this report are based on preliminary data. They will change when the final data are processed, but will not be replaced on these pages
National Drought Highlights
Detailed Drought Overview
The very active atmospheric circulation over North America during November 2020 consisted of several shortwave troughs and closed lows moving through the jet stream flow. These Pacific weather systems penetrated an upper-level ridge over the West early in the month. The shortwave troughs and closed lows interacted with the ridge in a complicated dance which shifted the longwave trough/ridge pattern back and forth across the CONUS as the month wore on. When averaged across the month, the highly meridional day-to-day fluctuations averaged each other out, essentially flattening the upper-level jet stream pattern into a zonal pattern with high pressure anomalies dominating. Surface lows and fronts moving in the flow were mostly Pacific fronts with milder air and an occasional Canadian front with colder air. The Pacific fronts brought precipitation to parts of the West, but upper-level ridging inhibited much of the precipitation with only a few areas having above-normal precipitation for the month. Some of the fronts and surface lows tapped Gulf of Mexico moisture to give parts of the central Plains and Midwest above-normal precipitation, and some drew in Gulf and Atlantic moisture to spread above-normal precipitation across Florida to the Mid-Atlantic coast. Tropical Storm Eta contributed to the precipitation in the Southeast at mid-month. But with high pressure anomalies dominating, most of the CONUS averaged warmer and drier than normal.
During the winter half of the year, evapotranspiration (ET) decreases as sun angle lowers, temperatures cool, and vegetation largely goes dormant. But the potential for increased ET (especially the evaporation part) can still happen if temperatures are much above normal (and above freezing), the ground hasn't frozen yet, and relative humidities are low (colder air can hold less water vapor). During November 2020, above-normal temperatures and below-normal relative humidities contributed to above-normal potential evaporation (PE) (as seen by such indices as the EDDI), especially across the Southwest, central Plains, Midwest, and Northeast. The high PE exacerbated drought conditions for the areas that had below-normal precipitation (as seen, for example, by the Palmer Z Index and SPEI). The high PE and low precipitation further dried soils (as seen in satellite observations of soil moisture [SMOS; SPoRT LIS 0-10 cm depth, 0-40 cm depth, 0-100 cm depth, 0-200 cm depth, RSM; NASA GRACE surface soil moisture and root zone soil moisture], field reports [USDA NASS reports], and models [VIC, CPC, NLDAS, and Leaky Bucket]) and stressed vegetation (VegDRI, QuickDRI, VHI, NESDIS stressed and healthy vegetation). This was especially true across the West and Plains, but also (in some indicators) parts of the Midwest and Northeast. Many of the streams and groundwater levels (GRACE satellite estimates, USGS observations) were low in these areas. Western mountain snowpack was low, especially in the Southwest and southern to central Rockies (SNOTEL SWE [Snow Water Equivalent] values for stations and basinwide), and reservoirs were low in these areas as well as Oregon. Dozens of large wildfires continued to burn across the West, with large wildfires developing during the last half of the month in the Plains and Appalachians (wildfire maps for November 1, 6, 11, 19, 27, 30); nearly 8.9 million acres have burned nationwide so far this year, about 2.3 million more than the ten-year average, according to a November 27 National Interagency Coordination Center report. Reports received from the CoCoRaHS Condition Monitoring Resource (for November 3-9, 10-16, 17-23, and 24-30) included dry wells, crop and livestock issues (reduced pasture, less water), and fires as major concerns.
As a result of these conditions, drought or abnormal dryness expanded or intensified across much of the Southwest and Plains and parts of the Midwest and Southeast. Drought or abnormal dryness contracted in parts of the Northwest and Northeast, Hawaii, and other parts of the Midwest. Drought expansion exceeded contraction with the USDM-based national moderate-to-exceptional drought footprint across the CONUS rising from 45.1 percent at the end of October to 48.0 percent at the end of November (from 37.9 percent to 40.2 percent for the 50 States and Puerto Rico). According to the Palmer Drought Index, which goes back to the beginning of the 20th century, about 37.7 percent of the CONUS was in moderate to extreme drought at the end of November, a slight increase compared to the end of October.
D0-D4 D1-D4 D2-D4 D3-D4 D4
Drought conditions at the end of November, as depicted on the December 1, 2020 USDM map, included the following core drought and abnormally dry areas:
Palmer Drought Index
The Palmer drought indices measure the balance between moisture demand (evapotranspiration driven by temperature) and moisture supply (precipitation). The Palmer Z Index depicts moisture conditions for the current month, while the Palmer Hydrological Drought Index (PHDI) and Palmer Drought Severity Index (PDSI) depict the current month's cumulative moisture conditions integrated over the last several months. While both the PDSI and PHDI indices show long-term moisture conditions, the PDSI depicts meteorological drought while the PHDI depicts hydrological drought. The PDSI map may show less severe and extensive drought (as well as wet spell conditions) in some parts of the country than the PHDI map because the meteorological conditions that produce drought and wet spell conditions are not as long-lasting as the hydrological impacts.
Used together, the Palmer Z Index and PHDI maps show that short-term drought occurred across much of the Southwest to Great Plains, Lower Mississippi to Tennessee Valleys, Northeast, and parts of the Midwest, expanding and intensifying long-term dry conditions in the West and Northeast, and contracting long-term wet conditions in parts of the Midwest and South to Southeast (PHDI maps for November compared to October). Short-term wet conditions in southern Florida and the Mid-Atlantic introduced, expanded or intensified long-term wet conditions in those regions.
Standardized Precipitation Index
The Standardized Precipitation Index (SPI) measures moisture supply. The SPI maps here show the spatial extent of anomalously wet and dry areas at time scales ranging from 1 month to 24 months.
The SPI maps illustrate how moisture conditions have varied considerably through time and space over the last two years. Dry conditions are evident across large parts of the West (except the Northwest) at the 1- to 12-month time scales and the southern to central Rockies at 24 months. Parts of the Pacific Northwest are dry at 3 to 24 months. Much of the central to northern Plains are dry at 1 to 12 months. Much of the southern Plains is dry at 1 to 2 months, and the southern High Plains (west Texas) to central High Plains (eastern Colorado and eastern Wyoming) are dry at the 2 to 24-month time scales. Southern Texas is dry at the 2- and 24-month time scales. Much of Iowa (especially western Iowa) is dry at 3 to 12 months. Parts of the southern Great Lakes are dry at 1 and 3-12 months. Much of the Northeast is dry at 6-9 months and parts are dry at 1, 3, and 12 months. The Mid-Atlantic and southern Florida regions are wet at all time scales; most of the country east of the Rockies is wet at 24 months; wet conditions dominate the Great Lakes and Lower Mississippi Valley to Gulf of Mexico and Mid-Atlantic coasts at 6 to 12 months.
Standardized Precipitation Evapotranspiration Index
The SPI measures water supply (precipitation), while the SPEI (Standardized Precipitation Evapotranspiration Index) measures the combination of water supply (precipitation) and water demand (evapotranspiration as computed from temperature). Warmer temperatures tend to increase evapotranspiration, which generally makes droughts more intense.
November 2020 continued a trend of very warm temperatures across much of the CONUS. The November warmth, combined with record heat from the spring through summer, gave several states a record hot September-November and June-November. California had a record warm September-November and June-November. Other states having a record warm June-November include Nevada, New Mexico, and Arizona. These and other states had record warmth during other time periods in 2020 as well. Precipitation for September-November, June-November, January-November, December-November, and other time periods in 2020 was below normal to record dry in these areas.
The combination of hot and dry conditions resulted in a much more severe SPEI than SPI in parts of the West for November, October-November (SPEI vs. SPI), September-November (SPEI vs. SPI), June-November (SPEI vs. SPI), March-November (SPEI vs. SPI), January-November (SPEI vs. SPI), December-November (SPEI vs. SPI), and other time periods in 2020.
For some states and time periods, the record dryness and heat resulted in a record dry SPI as well as SPEI, with the SPEI value much drier than the SPI value. For other states or time periods, the SPI was not record dry but the record heat made the SPEI a record.
The December 2019-November 2020 SPEI for New Mexico tied with December 1955-November 1956 as record driest.
The combination of extreme to record heat and extreme to record dryness, resulting in record dry SPEI values, was a contributing factor to the rapid development and spread of exceptional drought on the USDM this year.
Regionally, the West has had record warmth and near-record dryness during several time periods this summer. The regional PHDI for November 2020 (-4.94) has reached a level comparable to November 2002 (-5.04) and is approaching the record dry November value in 1977 (-5.81) — these are the only two Novembers with a drier PHDI. December-November temperatures across the West have shown a significant warming trend since the 1980s. Overall precipitation for December-November shows large multi-year swings from wet to dry, but no significant long-term trend. The increasing temperature trend, however, means more evapotranspiration is occurring than before and this makes the dry spells, when they happen, result in increasingly more intense droughts.
The persistent warmer-than-normal temperatures for most of the last nine years across the West has made the SPEI more extreme than the SPI for those dry areas in the West at the longer time scales (SPEI maps for last 12, 24, 36, 48, 60, 72 months) (SPI maps for last 12, 24, 36, 48, 60, 72 months).
Regional Discussion
Hawaii
November 2020 was mostly drier than normal over Hawaii, with a few wetter-than-normal areas for November and October-November. Drier-than-normal conditions dominated over the last 3 to 8 months. A mixed anomaly pattern returned at the 9- to 24-month time scales, where dry conditions were more often found on windward sides of the islands and wetter-than-normal conditions on the lee sides. Wet conditions dominated at 36 months with a mixed anomaly pattern at longer time scales (last 1, 2, 3, 4, 5, 6, 8, 9, 11, 12, 24, 36, 48, 60 months) (climate engine model percent of normal precipitation map for the last month). Above-normal monthly streamflow dominated on many islands. A Drought Information Statement issued by the National Weather Service in Honolulu in mid-November indicated that poor vegetative health, agricultural and hydrological drought impacts were being experienced. One issued in early December noted that enhanced trade wind rainfall during the second half of November brought drought relief and improving streamflow, especially to the windward slopes of the Big Island and Maui County. Drought and abnormal dryness contracted across much of Hawaii. The statewide moderate to extreme drought area shrank from 71.8 percent at the end of October to 22.6 percent by the end of November.
Alaska
November 2020 was near to drier than normal in the Southeast Interior and Northeast Gulf sections of Alaska, and wetter than normal across the rest of the state. Dryness was widespread across the interior and panhandle sections at the 2-month time scale, and especially notable in the south central coastal, southeast interior, and panhandle sections at the 3-month time scale, and continued widespread at the 4- to 5-month time scales. The western and southern coastal areas were drier than normal and the interior and southern panhandle sections wetter than normal at the 6- to 9-month time scales. Drier-than-normal conditions were limited to the southern coastal, Aleutian, and northwest sections at 11 to 12 months, and from the Aleutians to panhandle at longer time scales (low elevation station precipitation anomaly maps for the last 1, 2, 3, 4, 5, 6, 8, 9, 11, 12, 24, 36, 48, 60 months) (high elevation SNOTEL station precipitation maps for last 1, 2, and 12 months, and SNOTEL basin maps for the last 2 months) (gridded precipitation percentile maps for the last 1, 3, and 11 months) (climate division precipitation rank maps for the last 1, 3, 6, 11, 12 months) (Leaky Bucket model precipitation percentile map). November was warmer than normal across the western and northern portions of the state and cooler than normal over the panhandle and southeast interior sections. By 3 months, warmer-than-normal temperatures spread across most of Alaska with near to cooler-than-normal temperatures in the panhandle, and this pattern persisted to the last 6 months. Warmer-than-normal conditions retreated to the west coast at the 11- to 12-month time scale with cooler-than-normal temperatures extending from the panhandle to the interior portions (low elevation station temperature maps for the last 1, 2, 3, 4, 11, 12 months) (gridded temperature percentile maps for the last 1, 3, and 11 months) (climate division temperature rank maps for the last 1, 3, 6, 11, 12 months) (Leaky Bucket model temperature percentile map). End-of-November snow pack was below normal in some areas and above normal in other areas. Modeled soil moisture showed drier-than-normal conditions in southern coastal, western coastal, and northeastern areas, while streamflow was mostly near to above normal. Moderate drought disappeared in November but abnormal dryness persisted in the northwest and south central coastal areas. Abnormal dryness continued across 11.1 percent of the state on the December 1st USDM map.
Puerto Rico and U.S. Virgin Islands
November 2020 was drier than normal across northern portions of Puerto Rico (PR) (especially in the north central to northwest sections) and across St. Croix in the U.S. Virgin Islands (USVI); the month was wetter than normal across the rest of PR and the USVI. Drier-than-normal conditions dominated PR by 3 months, but wetter-than-normal conditions returned at the 5- to 6-month time scales, while the USVI pattern continued at wetter than normal in the north and drier than normal in the south. By the 8-month time scale, it was drier than normal across the USVI and eastern PR and, by 9 months, wetter than normal over central to western portions of PR. Wetter-than-normal conditions dominated most of PR by the 11- to 12-month time scale while the USVI continued drier than normal. It was mostly drier than normal across the USVI and PR at the 24 and 36 months, but wetter than normal at longer time scales (radar-based precipitation anomaly estimates for the last 1, 2, 3, 6, 11, 12 months) (low elevation station precipitation maps for the last 1, 2, 3, 4, 5, 6, 8, 9, 11, 12, 24, 36, 48, 60 months). (climate engine model percent of normal precipitation map for November).
Root zone analyses indicated that soil conditions continued dry along the immediate southwest and northwest coasts of PR. There were some low streams in western PR but most streams were near to above normal. Abnormal dryness dotted PR on the December 1st USDM map where short-term precipitation and streamflow were low, while on the USVI USDM map, St. Croix was abnormally dry and St. Thomas and St. John continued free of drought and abnormal dryness.
CONUS State Precipitation Ranks
November 2020 was drier than normal across much of the CONUS, but especially in the Southwest, northern Plains, and southern Plains to Tennessee Valley. Seventeen states in the West, Plains, South, Midwest, and Northeast had a precipitation rank in the driest third of the 126-year historical record for November, including North Dakota which ranked eleventh driest.
September-November was also drier than normal across much of the CONUS, but especially in the Southwest and northern Plains where record dryness occurred. Fifteen states in the West, Plains, and Northeast had a precipitation rank in the driest third of the historical record, including seven in the top ten driest category — Arizona and Utah (both of which were driest on record), California and North Dakota (both third driest), Nevada (fifth driest), and Colorado and Nebraska (both ninth driest).
A similar precipitation anomaly pattern could be seen for June-November — parts of the Midwest to Northeast were drier than normal, but the driest areas were much of the Plains and especially West where record dryness was evident. Twenty-one states in these regions had a precipitation rank in the driest third of the historical record, including seven in the top ten driest category — Arizona, California, Nevada, and Utah (all of which were driest on record); New Mexico (second driest); Colorado (fifth driest); and Nebraska (ninth driest).
January-November had a similar precipitation anomaly pattern with drier than normal conditions across the West, Plains, and Northeast, and record dryness in parts of the West and High Plains. Twenty states had a precipitation rank in the driest third of the historical record, including eight in the top ten driest category — Utah (driest on record); California, Nevada, and Colorado (third driest); Arizona and New Mexico (both fourth driest); Wyoming (fifth driest); and North Dakota (tenth driest).
The precipitation anomaly patterns for December 2019-November 2020 and January-November were very similar — drier than normal across the West, Plains, and Northeast, with record dryness in parts of the West. Sixteen states had a precipitation rank in the driest third of the historical record, including seven in the top ten driest category — Utah (driest on record); Colorado (third driest); New Mexico and Wyoming (both fourth driest); Nevada and Arizona (both sixth driest); and North Dakota (tenth driest).
Agricultural Belts
During November 2020, the Primary Hard Red Winter Wheat agricultural belt was mostly drier and warmer than normal, with a wetter-than-normal streak in the middle. The month ranked as the 53rd driest and fourth warmest November, regionwide, in the 1895-2020 record.
October marks the beginning of the growing season for the Primary Hard Red Winter Wheat belt. October-November 2020 was mostly drier and warmer than normal. The period ranked as the 36th driest and 37th warmest October-November, regionwide, in the 1895-2020 record.
As of December 1, drought affected approximately 47 percent of spring wheat production, 39 percent of winter wheat production, 47 percent of cattle inventory, 36 percent of corn production, 40 percent of hay acreage, and 29 percent of soybean production. Except for winter wheat, these were all increases compared to the end of October.
As reported by the USDA, at the end of November, topsoil moisture was short or very short (dry or very dry) across 50 percent or more of California (75 percent), Utah (81 percent), New Mexico (82 percent), Colorado (83 percent), Wyoming (69 percent), Montana (54 percent), North Dakota (69 percent), South Dakota (53 percent), Nebraska (65 percent), Kansas (51 percent), Texas (61 percent), and New Hampshire 79 percent). Subsoil moisture was short or very short across 80 percent of California, 82 percent of Colorado, 63 percent of Idaho, 53 percent of Iowa, 58 percent of Kansas, 60 percent of Montana, 71 percent of Nebraska, 50 percent of Nevada, 87 percent of New Hampshire, 89 percent of New Mexico, 65 percent of North Dakota, 50 percent of Oklahoma, 66 percent of Oregon, 50 percent of Rhode Island, 61 percent of South Dakota, 63 percent of Texas, 72 percent of Utah, and 79 percent of Wyoming. A fifth or more of winter wheat was in poor to very poor condition in Colorado (38 percent), Texas (34 percent), Nebraska (26 percent), Kansas (22 percent), and Oregon (20 percent). Nationwide, 38 percent of the topsoil and 43 percent of the subsoil were short or very short of moisture, and 18 percent of the winter wheat crop was in poor to very poor condition. These national figures were the same or less than a month ago. The integrated U.S. Winter Wheat Condition Index was at its lowest point for this time of year since the 2012 drought.
U.S.-Affiliated Pacific Islands
The NOAA National Weather Service (NWS) offices, the Pacific ENSO Applications Climate Center (PEAC), and partners provided reports on conditions across the Pacific Islands.
In the U.S. Affiliated Pacific Islands (USAPI) (maps — Federated States of Micronesia [FSM], Northern Mariana Islands, Marshall Islands [RMI], Republic of Palau, American Samoa, basinwide), November 2020 was drier-than-normal in the southern FSM (Kapingamarangi), Palau, and Saipan. It was near to wetter than normal at Pago Pago (American Samoa) and in the RMI, Guam, and the rest of the FSM.
Monthly precipitation amounts were below the monthly minimum needed to meet most water needs (4 inches in the Marianas and Pago Pago, and 8 inches elsewhere) at Kapingamarangi (in southern FSM), due mostly to the ongoing La Niña. November precipitation was above the monthly minimums at the rest of the USAPI stations in Micronesia and American Samoa. The 4- and 8-inch thresholds are important because, if monthly precipitation falls below the threshold, then water shortages or drought become a concern.
The tropical Pacific climatology can experience extremes in precipitation, from very low precipitation during the dry season to very high precipitation during the wet season. This can result in monthly normal precipitation values that are well above the monthly minimum needed to meet most water needs. This was the case during November 2020. The monthly precipitation was enough to end or stay out of drought, but still was below normal because the normals were so high. This happened at Koror (November 2020 precipitation 9.97 inches, November monthly normal mean 11.90 inches) and Saipan (November 2020 precipitation 4.95 inches, November monthly normal mean 5.92 inches).
Even with above-normal precipitation for October and November across Micronesia and for September in eastern Micronesia, many stations were still drier than normal for the last 11 and 12 months.
As measured by percent of normal precipitation, Kapingamarangi and Saipan were drier than normal in the short term (November and the last 3 months [September-November 2020] ) and long term (year to date [January-November] and last 12 months [ December 2019-November 2020]). Koror was near normal for the last 3 months but drier than normal for the other 3 time periods. Chuuk, Guam, Lukonor, and Yap were wetter than normal in the short term and drier than normal in the long term. Kosrae, Kwajalein, Majuro, Pago Pago, and Pohnpei were near to wetter than normal at all 4 time scales.
Based on percent of normal average (instead of normal median values), in the Marianas Islands, precipitation during the last four months was generally wetter than normal at southern stations and drier than normal at northern stations (Saipan). It continued drier than normal in the north with a mixed precipitation anomaly pattern in the south at the 5- to 11-month time scales. Drier-than-normal conditions dominated at longer time scales (percent of normal precipitation maps for the last 1, 2, 3, 4, 5, 6, 8, 9, 11, 12, 24, 36, 48, 60 months). In the Marshall Islands, wetter-than-normal conditions dominated at most time scales, with some dryness in the southwest (percent of normal precipitation maps for the last 1, 2, 3, 4, 5, 6, 8, 9, 11, 12, 24, 36, 48, 60 months).
According to the November 30th USDM produced for the USAPI, exceptional (D4) drought continued at Kapingamarangi (southern FSM). The rest of the stations in Micronesia, and Tutuila in American Samoa, were free of drought and abnormal dryness. The National Weather Service office in Guam issued three Drought Information Statements for the drought in November (on November 13, 19, and 26) discussing the conditions in the USAPI. Severe drought impacts continued during November in the southern FSM. As noted in the November 26 Drought Information Statement: A task force was recently sent down to Kapingamarangi to (1) bring supplies and (2) assess the conditions. The task force reported taro patches and coconuts were half damaged while banana and breadfruit were fully damaged. It was determined the local water supply was unsafe to drink and saltwater had infiltrated the wells. Residents, especially the elderly, were afflicted with gastrointestinal illness and skin sores. It was estimated that the current food and water supply would last about three to four weeks. Morale amongst the residents was still moderate to high.
The last one to 12 months have been especially dry at some of the islands in Micronesia (based on monthly and seasonal precipitation ranks) and the last 5 to 12 months have been dry at others. November 2020 was the fifth driest November in a 32-year record at Kapingamarangi. The eight time periods from December-November through July-November were the driest on record at the station, August-November and September-November were the second driest, and October-November was fourth driest. Saipan had the second or third driest December-November through May-November, and fourth driest June-November through August-November. Lukonor had the seventh driest December-November. Nukuoro ranked seventh driest for August-November and eighth driest for July-November (out of 37 years of data). Pingelap ranked ninth driest for August-November (35 years). Woleai had the eight driest January-November and ninth driest December-November (25 years). Jaluit had the fourth driest June-November, sixth driest May-November, and seventh driest July-November (36 or 37 years).
The following analysis of historical data for the USAPI stations in the Global Historical Climatology Network-Daily (GHCN-D) dataset, augmented with fill-in data from the 1981-2010 Normals, helps put the current data into historical perspective by computing ranks based on the period of record. The table below lists the precipitation ranks for November 2020, June-November 2020 (last 6 months), and December 2019-November 2020 (the last 12 months). Some stations have a long period of record and their dataset is fairly complete, while other stations have a shorter period of record and the dataset has some missing data.
November 2020 USAPI Precipitation Ranks (1 = driest) Station November 2020 Jun-Nov 2020 Dec 2019-Nov 2020 Period of Record Rank Years Rank Years Rank Years Ailinglapalap 26 37 36 36 28 34 1981-2020 Chuuk 46 70 32 69 22 69 1951-2020 Fananu 8 8 3 5 -- 2 2003-2020 Guam 42 64 15 64 13 63 1957-2020 Jaluit 14 37 4 36 9 34 1981-2020 Kapingamarangi 5 32 1 19 1 18 1962-2020 Koror 31 70 32 68 30 68 1951-2020 Kosrae 51 53 32 40 22 33 1954-2020 Kwajalein 47 69 38 69 32 68 1952-2020 Lukonor 19 37 13 24 7 24 1981-2020 Majuro 45 67 53 67 52 66 1954-2020 Mili 24 37 32 35 33 33 1981-2020 Nukuoro 10 37 12 36 15 35 1981-2020 Pago Pago 47 55 55 55 54 54 1966-2020 Pingelap 28 36 9 35 -- 32 1981-2020 Pohnpei 67 70 33 69 36 69 1951-2020 Saipan 16 40 4 40 2 31 1981-2020 Ulithi 37 38 11 36 13 33 1981-2020 Utirik -- 18 -- 8 -- 4 1985-2020 Woleai 32 37 14 28 9 25 1968-2020 Wotje 32 36 33 35 30 32 1981-2020 Yap 66 70 40 69 15 69 1951-2020
SPI values for seven time periods for Pacific Islands, computed by the Honolulu NWS office.
NOAA Regional Climate Centers
More information, provided by the NOAA Regional Climate Centers and others, can be found below.
Southeast
As noted by the Southeast Regional Climate Center, temperatures were well above average across much of the Southeast region during November and precipitation was highly variable with numerous wet and dry extremes recorded. The driest locations were found across portions of Alabama, northwestern and southwestern Georgia, the Florida Panhandle, western North Carolina, southwestern Virginia, and north-central Puerto Rico. Monthly precipitation totals ranged from 50 to 25 percent of normal in these areas. Arecibo Observatory, PR (1980-2020) and Wise 1 SE, VA (1955-2020) observed their second and third driest November on record, with only 2.06 and 1.25 inches (52 and 32 mm) of precipitation, respectively. In contrast, the wettest locations were found across much of the Carolinas, Virginia, and the Florida Peninsula, as well as portions of central Georgia, Puerto Rico, and the U.S. Virgin Islands.
Drought conditions (D1 and greater) were not observed across the Southeast region during November. However, abnormally dry (D0) conditions expanded across portions of Georgia and southern Alabama during the month. In addition, two small pockets of abnormally dry conditions developed in central Puerto Rico by the end of the month. Periods of warm, dry weather during November allowed farmers in Alabama, Georgia, South Carolina, and the Florida Panhandle to harvest their cotton, peanut, and soybean crops. Some farmers in central Georgia continued to find boll rot on their cotton crop, which was caused by excessive rainfall during autumn. Row crop harvesting and cover crop planting were hindered in areas that received above-average precipitation, but the abundant rainfall was beneficial for the growth of winter grazing.
South
As explained by the Southern Regional Climate Center, November temperatures were above normal across the Southern region and precipitation values were primarily below normal. The region as a whole experienced its ninth warmest and 21st driest November on record. Parts of eastern, central, and western Tennessee, northern Mississippi, northern Louisiana, eastern, southern, central, and western Oklahoma, northern, eastern, central, southern, and western Texas, and most of Arkansas received 50 percent or less of normal precipitation. Parts of western Tennessee, northern Mississippi, southwestern Arkansas, northwestern Louisiana, central and western Oklahoma, and northern, eastern, southern, and western Texas received 25 percent or less of normal precipitation, while parts of western and southern Texas received 5 percent or less of normal precipitation. In contrast, parts of southwestern Mississippi, southeastern Louisiana, and southern Texas received 110 percent or more of normal precipitation.
At the end of November, drought conditions deteriorated considerably across the Southern region. Exceptional drought conditions expanded and persisted across western and northwestern Texas, with new areas developing in southern Texas. Extreme drought conditions persisted across parts of Oklahoma and Texas, with new areas developing or expanding across western and southern Texas. However, extreme drought conditions improved slightly across western Oklahoma and northern Texas. Severe drought classifications expanded across western Oklahoma as well as northern, western, southern, central, and eastern Texas. Moderate drought classifications expanded or developed across southern Oklahoma, central and southwestern Arkansas, northwestern Mississippi, northwestern Louisiana, and much of Texas. However, parts of northern and western Oklahoma as well as northwestern Arkansas saw improvement, with moderate drought conditions shrinking or even being removed. There was an increase in the overall area experiencing abnormally dry conditions, with conditions developing or expanding across central, southern, and western Arkansas, northern and southern Mississippi, western Tennessee, southeastern and northwestern Louisiana, southeastern and central Oklahoma, and north-central Texas. There was slight improvement across northern Oklahoma and southeastern Mississippi as abnormally dry conditions contracted or were eliminated.
Midwest
As described by the Midwest Regional Climate Center, November 2020 temperatures were warm across the Midwest (ranking seventh warmest for November) and regional precipitation averaged 2.17 inches (55 mm) which was 0.60 inch (15 mm) below normal. The vast majority of the region had between 50 and 150 percent of normal precipitation for the month. Only a small area in northwestern Missouri topped 150 percent of normal. Only northwestern Minnesota and parts of southern Missouri and Kentucky had less than 50 percent of normal. Most of the region had alternating swaths of slightly above or below normal precipitation. Fall precipitation totals ranged from less than 50 percent of normal in northwestern Minnesota to just over 150 percent of normal along the Mississippi River on the Iowa-Wisconsin border. Precipitation totals averaged 8.30 inches (211 mm) for September through November which was 0.93 inch (24 mm) below normal.
The decreased demand for water and well-placed precipitation led to slight decreases in drought coverage observed in the Midwest during November according to the USDM. The most prominent areas that improved were in southwestern Missouri, where drought and abnormal dryness was eliminated, and parts of western Iowa. However, extreme drought remained mostly unchanged in northwestern Iowa. Meanwhile, abnormally dry conditions and scattered moderate drought were introduced across most of Minnesota as drier conditions set in. In total, around one third of the region was either abnormally dry or in drought, with around 10 percent of the region in drought.
Drier weather across the region helped harvest activities wrap up in November. Corn and soybean harvests were ahead of the 5-year average through the first week of November, and neared completion by the third week of November according to USDA NASS. Significant progress was made across Missouri, where the soybean harvest was at 60 percent harvested at the beginning of November before nearing completion by the November 15th update. Corn and soybean harvests were above 90 percent by November 15th except for Kentucky soybeans. Of note, Wisconsin and Michigan neared completion almost a full week ahead of average due to favorable harvest weather.
Northeast
As explained by the Northeast Regional Climate Center, the Northeast had its ninth warmest November on record but the month was drier than normal with the region seeing 3.04 inches (77.22 mm) of precipitation, 79 percent of normal. Eight of the 12 Northeast states wrapped up November on the dry side of normal, with precipitation for all states ranging from 63 percent of normal in New Hampshire to 166 percent of normal in Delaware, its eighth wettest November on record. Autumn was also drier than normal in the Northeast, with the region seeing 9.88 inches (250.95 mm) of precipitation, 85 percent of normal. Nine states received below-normal precipitation, with amounts for precipitation for all states ranging from 77 percent of normal in New Hampshire to 140 percent of normal in Delaware, its eighth wettest autumn on record.
The USDM released on November 5 showed 37 percent of the Northeast in an extreme, severe, or moderate drought and 24 percent as abnormally dry. Conditions generally improved in the region during the month. For instance, severe drought eased everywhere except southeastern New Hampshire and coastal Maine and moderate drought eased in a large portion of New England. However, extreme drought lingered in southeastern New Hampshire. The USDM released on December 3 showed 21 percent of the Northeast in an extreme, severe, or moderate drought and 33 percent as abnormally dry. Drought and abnormally dry conditions continued to have impacts. During November, streamflow and groundwater levels were below normal in some drought areas. Water restrictions remained in place for numerous locations in Massachusetts and several locations in Connecticut, Rhode Island, and Pennsylvania. As of December 2, 164 community water systems, eight municipalities, and some private well users in New Hampshire had restrictions in place. Since the start of dry conditions this spring, New Hampshire officials estimated at least 1,000 wells have gone dry, while Maine officials noted about 278 wells had gone dry. Drought conditions may have contributed to the collapse of an embankment and section of railroad track, which were located near a pond with unusually low water levels, in East Sandwich, Massachusetts. Reports of drought-related crop losses continued to come in. A farm on Martha's Vineyard in Massachusetts lost around 60 percent of its pumpkin crop due in part to drought conditions and deer. Christmas trees in Rhode Island were impacted by the drought, with one farm losing 90 percent of its saplings and another farm noting some mature trees dropping more than 50 percent of their needles. At another Rhode Island Christmas tree farm, drought-stressed trees turned yellow and hundreds of saplings were a loss, causing the farm not to open for the upcoming holiday season. The hay crop has been reduced by up to 75 percent in New Hampshire. The potato crop in northern Maine is expected to be reduced by at least 20 percent.
High Plains
As summarized by the High Plains Regional Climate Center, November was warm and dry across much of the High Plains, resulting in below-normal snowfall and the expansion and intensification of drought conditions in many areas. The majority of the region entered the winter season with depleted soil moisture, with over 50 percent of topsoil and subsoil moisture rated as short to very short in all six High Plains states, according to the December 1st USDA Weekly Weather and Crop Bulletin. As soils freeze, what little moisture is available will be locked in place until spring, which is very concerning for spring planting. Drought impacts were evident throughout the region. Winter wheat was not faring well, with 38 percent of the crop in poor to very poor condition in Colorado, followed by 26 percent in Nebraska and 22 percent in Kansas. The continuation of drought conditions through the growing season resulted in poor pasture conditions in Colorado and Wyoming, which led producers to give supplemental feed to livestock this fall. Alfalfa and silage production were down in North Dakota as well. Given the lack of snow in November, the opening of the Aspen Highlands Ski Resort in Colorado was delayed, and competitive snowmobile events in North Dakota were canceled.
Persistent dryness throughout the region continued into November. For the majority of the High Plains, precipitation was less than 50 percent of normal. The only areas that received above-normal precipitation were pockets of western Wyoming and central Colorado, as well as eastern Nebraska and northeastern and central Kansas where precipitation exceeded 200 percent of normal. There were quite a few locations that ranked among the top 10 driest Novembers on record, including Casper, Wyoming and Laramie, Wyoming, which both tied for their driest (Casper period of record 1939-2020, Laramie period of record 1948-2020). Fall precipitation was abysmal across the region, contributing to the expansion and intensification of drought conditions. Grand Forks, ND, Casper, WY, and Laramie, WY had their driest falls on record, with Laramie receiving a paltry 0.11 inch (3 mm) of precipitation, which was only 4 percent of normal. Other locations ranking among the top 10 driest falls included Rawlins, WY (5th driest); Goodland, KS (5th driest); Chadron, NE (7th driest); Colorado Springs, CO (7th driest); and Williston, ND (9th driest).
Both improvements and degradations in drought conditions occurred throughout the High Plains in November. According to the USDM, the area experiencing drought (D1-D4) increased from approximately 71 percent to 76 percent over the course of the month. However, the area experiencing abnormal dryness and drought (D0-D4) actually decreased from about 98 percent to 96 percent. Drought conditions worsened across northern and central Kansas, as well as southwestern Nebraska, due to persistent dryness in these areas. Extreme drought (D3) spread across northwestern portions of Kansas and southwestern Nebraska, while severe drought (D2) and moderate drought (D1) developed in northern and central Kansas and southeastern Nebraska. D2 also spread eastward into north-central North Dakota. Conditions worsened in western Colorado as well, with exceptional drought (D4) extending further into southwestern and northern areas of the state. Meanwhile, beneficial precipitation improved conditions in a few areas of the High Plains. Heavy rains, fueled in part by Gulf moisture in place from Hurricane Zeta, fell across southern Kansas at the end of October, leading to the removal of D1 and D0. Moderate to heavy precipitation eased drought conditions in eastern Nebraska, as areas of D2 were improved to D1. Beneficial precipitation also helped improve conditions in the western High Plains, including localized areas of western Wyoming and south-central Colorado.
West
As described by the Western Regional Climate Center, the storm track continued the trend from October of favoring the northern half of the West with areas of above normal precipitation and near-normal temperatures. The wettest locations relative to normal were in Oregon east of the Cascades and northern Montana. Dryness, above normal temperatures, and further drought expansion persisted in the southern tier of the West with little-to-no precipitation for southern California, southern Nevada, Arizona, and New Mexico. Wildfire concerns will continue into December for places that saw a lack of soaking rains, especially southern California.
A record shattering dry streak continues for Las Vegas, Nevada where no precipitation occurred (normal for the month is 0.36 in or 9.1 mm). At the end of November, the record for consecutive days with no measurable precipitation stands at 227 at the Las Vegas airport which is far greater than the previous record of 150 days ending July 21, 1959. There have been 18 other Novembers since 1948 with zero precipitation at Las Vegas. The dryness extended south into Arizona with Phoenix receiving zero precipitation (normal is 0.65 in or 16.5 mm) which has occurred 16 other times since 1933. Dryness was accompanied by well above-normal temperatures in Arizona and New Mexico.
For many places throughout the West the climatological start of snow accumulation in the mountains typically begins in November. At the end of November, the Cascades of Washington and Oregon, the mountains in eastern Oregon, parts of the Northern Sierra Nevada, and northern Montana all had above normal snow water equivalent (SWE). The southern Sierra Nevada and Utah were well below normal SWE. It is early in the snow season and recovery to above normal SWE can happen relatively quickly in December if the storm track shifts further south.
Drought conditions were still very present in the West at the end of November. Based on the USDM, over 75% of the area in the West was in at least moderate drought (D1) with 22% of the area in exceptional drought (D4). Exceptional drought is present in Nevada, Utah, Arizona, and New Mexico. The combination of below-normal precipitation, above-normal temperatures, and lack of snowpack led to expansion of drought in California, Nevada, Arizona, New Mexico and Utah. Improvements were found in the Pacific Northwest and northern Rockies with drought removal in parts of Washington and Montana.
In Alaska, temperatures were well above normal for the North Slope and western coastal areas with near normal to slightly below normal temperatures for the rest of the state. Precipitation was above normal in the south-central region, western Alaska, the North Slope, and southeast Alaska, with some areas of below normal precipitation in the Interior. For the Interior, both Tanana and Northway received no precipitation; this has happened four other times since 1902 at Tanana and had never occurred before this year at Northway since records began in 1942.
For Hawaii, the islands of Maui, Molokai, Lanai, and Oahu all saw below normal precipitation. Honolulu logged 0.16 in (4.1 mm; 7% of normal) making it the 6th driest November since records began in 1940. Kahului recorded 0.25 in (6.35 mm; 11% of normal) of rainfall coming in at the 12th driest on record and had its warmest November on record at 79.3 deg F (26.3 deg C), +3.3 deg F (+1.9 deg C) above normal. At the end of November 23% of the area of Hawaii was in drought with 3% in extreme drought.
Additional Resources
https://www.ncei.noaa.gov/access/monitoring/monthly-report/drought/202011
Highlights:
Visual observations on approximately 1,245 metres of drilling completed across 5 holes
The targeted B14 gold-bearing shear zone has been intercepted in all holes drilled to date ranging from 12 to 31 metres in thickness
Initial assays have been delivered to the lab, with weekly batches expected over the remainder of the program
March 29, 2022 – TheNewswire - London, Ontario – Goldseek Resources Inc. (CSE:GSK) (FSE:4KG) ("Goldseek" or the "Company") is pleased to announce an update from its 4,000-metre drill program currently underway at Beschefer, which kicked off in mid-February. The Company is finished drilling the Central Shallow & Deep Zones and is now drilling the East Zone. The Beschefer Project is located approximately 30 kilometres southwest of Wallbridge Mining Company Limited's ("Wallbridge") Fenelon Gold Project. On March 3rd, 2021, the Company entered into an option agreement on the Beschefer Project to earn 100% over 4 years from Wallbridge (see news release dated March 3, 2021).
All holes have intersected the B14 gold-bearing shear zone between 150 and 250 metres deep using varied spacing between historical holes and newly drilled targets. The objective sought by this program is to validate high-grade intervals obtained historically, infill drilling on the gold zones and target the expansion of the modelled lenses.
Goldseek's President & CEO Jon Deluce states, "We are excited to be hitting the targeted mineralization in all holes, which is a testament to the continuity of the gold system. The accumulation of consistent results observed combined with the success of our 2021 program supports our view of the project being at a near-resource stage.
Samples have started going into the lab, and first batches will be released in April. Drilling will be finished shortly, and upon release of results, we will finalize plans for a follow-up summer drill program."
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VIDEO: GOLDSEEK CEO Update
Visual Intercept Highlights:
The B14 gold-bearing shear zone intercepted by holes BE-22-15, 18A, 19, 20 and 28 is a 12 to 31 metre thick moderately dipping ductile shear zone and associated faults. The interpretation indicates a dip of 30 to 60 degrees to the southeast. The structure is known to host strong alteration and disseminated pyrite mineralization. These holes intercepted the targeted structure between 150 and 250 metres vertical depth. For this program, our secondary goal is to review the hanging wall for volcanic sequence geological elements associated with a copper mineralized system.
The alteration and mineralized system are multi-phased and vary from hole to hole, taking the form of a heterogenous banding affected by late-tectonic fracturing and brecciation. Generally, shearing evidence coincides with a strong chlorite and carbonate alteration. Sericite, ankerite and pervasive feldspathization occurs at the core of the structure split in metric lenses interlayered with chlorite-sericite intervals.
The sulfide mineralization is composed of a different generation of pyrite in association with secondary magnetite and local chalcopyrite. The volume of pyrite varies continuously over the structures, anywhere between 3% and 10% locally, correlated with the shear deformation.
The following observations were made as indications of the B14 gold zone, but they are by no means correlated with gold grades at this stage. The holes are summarized following a north-east progression:
BE-22-15: Observations show this hole corresponds to the transition going westward within an intrusive environment. In the hanging wall of the gold zone, a porphyritic diorite affected by fracturing, quartz-sericite alteration and quartz-filled stockwork was cut from surface down to 220 metres(m), while the B14 structure was observed over 16.2m, from 257.8 to 274m.
BE-22-18A: A strongly sericite altered sequence of intermediate and felsic volcanic was encountered, hosting local copper sulfide stringers and veins over metric intervals. The B14 structure was intercepted over 31 metres from 190 to 221.25m, generally pyritized, locally affected by strong tectonic brecciation hosting finely crystallized pyrite.
BE-22-28: The B14 structure was observed over 12.5 metres. Inside this zone, a strong albite - carbonate - sericite alteration associated with tectonic brecciation and pyritization was observed over approximately five metres toward the footwall.
BE-22-19 & BE-22-20: This sequence covered a dip length going from 100 to 150 metres vertical on the section limiting the Central Shallow Zone to the northeast. These holes test the gold grade improvement potential around BE-21-04 and extend the mineralization to the east. The B14 structure was intersected with thicknesses of 24.1m and 11.8m, respectively.
March 2022, Central Shallow Zone, B14 Structure Description DDH From_m To_m Width_m Observations BE-21-15 52.4 219.2 166.8 Hanging wall: porphyritic diorite crosscut by felsic dikes and quartz veins in stockwork, locally affected by quartz-sericite alteration over a few metres with traces of pyrite. 257.8 274 16.2 1% pyrite disseminated in the foliation over the complete interval Heterogenous chlorite-carbonate alteration. Iron oxide rich: magnetite stringers with hematite replacement bands. BE-21-18 119 126 7 Hanging wall: 5 to 10% chalcopyrite in quartz-chlorite stringer. Hosted in strong sericite alteration observed over a length of 50 metres. 190.0 221.25 31.25 1 to 3% pyrite, disseminated over the complete interval Strong sericite-feldspar-carbonate pervasive and brecciated alteration over 7 metres, from 204 to 211m. BE-21-19 183.5 207.6 24.1 1 to 10% pyrite locally, disseminated and stringers over 19.7 metres, associated with magnetite including an interval of strong brecciated sericite – carbonate alteration over 6.7m BE-21-20 166.2 178.0 11.8 Weakly pyritized from 169.6m with traces of chalcopyrite and magnetite, including 10% pyrite over 3.65 metres in a strong carbonate-albite matrix. BE-21-28 212 224.5 12.5 1 to 5% pyrite, finely disseminated over a continuous interval of 5 metres from 217 to 222m. Hosted in a strongly altered tectonic breccia with albite-carbonate-sericite.
About the Beschefer Project:
Advanced gold exploration project with significant near-term resource potential
Located in a favourable orogenic gold setting 45 km northeast of the Casa Berardi Mine and 30 km southwest of Wallbridge's Fenelon Gold Project.
Highlights of the best intersections include 4.92 g/t gold over 28.65 metres in hole BE-21-02 (including 11.39 g/t over 9.1m), 55.63 g/t gold over 5.57 metres in hole BE13-038 (including 224 g/t over 1.23m ; 13.95 g/t over 0.68m and 13.70 g/t over 0.73m), 13.07 g/t gold over 8.75 metres in hole B12-014 (including 58.5 g/t over 1.5m), 3.56 g/t gold over 28.4 metres in hole B14-006 (including 7.42 g/t over 5.5m), and 10.28 g/t gold over 8.00 metres in hole B14-35 (including 86.74 g/t over 0.60m). True width in these sections vary between 89% and 99% of the intercepted width.
The mineralization shows high-grade gold-bearing structures hosted in a lower grade envelope, highlighting the regional potential along the already defined shear zones on the Property.
Qualified Person
This press release was prepared by Martin Demers, P.Geo,ogq No 770, who is a qualified person as defined under National Instrument 43-101, and who has ensured the execution of this program and reviewed and approved the technical information provided in this news release.
About Goldseek Resources Inc.
Goldseek Resources Inc. is a Canadian exploration company with a portfolio of assets in Ontario and Quebec, Canada. By identifying six projects in world-class mining locations, Goldseek is poised to deliver shareholder value through rigorous exploration and development on these properties. Our mission is to find the next major discovery in the mining camps of Urban Barry, Quevillon, Val D'Or, and Detour Gold Trend in Quebec and Hemlo in Ontario.
ON BEHALF OF THE BOARD
Jonathon Deluce
Chief Executive Officer
Telephone: 226-271-5170
The Q4 Earnings Season for the Gold Miners Index (GDX) is nearly over, and many producers are busy reporting their year-end Reserve & Resource estimates. One of the first companies to report was Coeur Mining (NYSE:CDE), and it was a satisfactory year for reserve replacement. This was based on the company nearly replacing gold reserves, offset by declining silver reserves and silver reserve grades. However, while the report was satisfactory, I continue to see Coeur as a sector laggard. So, while dips to $4.29 should present buying opportunities from a trading standpoint, I believe there are far better ways to play the sector.
Coeur Mining - Nevada Operations (Company Presentation)
Coeur Mining released its FY2021 Reserve & Resource update earlier this year, reporting total mineral reserves of ~3.08 million ounces of gold, ~238 million ounces of silver, ~296 million pounds of zinc, and ~193 million pounds of lead. This translated to a slight increase in gold reserves on a year-over-year basis (FY2020: ~3.12 million ounces), but silver reserves fell sharply, down from ~259.5 million ounces to ~238.2 million ounces. Unfortunately, it was combined with a slight decline in silver grades to 0.50 ounces per ton. Let's take a closer look at the report below:
Coeur Mining - Proven & Probable Reserves (Company Filings, Author's Chart)
As shown in the chart above, Coeur Mining has made progress in replacing its reserve net of depletion over the past few years, with gold reserves climbing from ~2.5 million ounces in 2016 and ~2.8 million ounces in 2018 to ~3.08 million ounces currently. Meanwhile, silver reserves increased by ~153 million ounces in 2016 to ~238 million ounces in 2021, an increase of more than 55%. However, we did see declines on a year-over-year basis in both categories, and while reserves are growing, grades are not keeping up.
Coeur - Proven & Probable Reserve Grades (Company Filings, Author's Chart)
This is evidenced by the fact that grades have slid from 0.009 ounces per ton of gold and 0.61 ounces per ton of silver in FY2016 to 0.007 ounces per ton of gold and 0.50 ounces per ton of silver in 2021. I would not call this a huge deal since we're seeing a trend in declining grades for most producers, and it's partially due to the divestment of the high-grade San Bartolome Project in Bolivia. However, at the company's two key assets, Rochester and Palmarejo, it's quite clear that we're seeing a steady trend in declining grades even if reserves are being replaced.
This trend of declining grades is the most evident at Rochester, where gold grades have dipped to 0.003 ounces per ton (0.004 ounces per ton in 2016), while silver grades have slid from 0.48 to 0.39 ounces per ton of silver. Meanwhile, at Palmarejo, silver grades have held up and remained mostly in line with 2016 levels, though gold grades have slipped. As of year-end 2021, gold grades are sitting at 0.066 ounces per ton, a more than 15% decline from 2016 levels (0.08 ounces per ton of gold).
Rochester, Wharf, Kensington
Looking at the individual mines below, we can see that Coeur reported a slight decline in reserves and measured & indicated resources at Rochester (green bars). This was evidenced by reserves dipping to ~1.08 million ounces of gold and ~161.2 million ounces of silver, comparing unfavorably to ~1.22 million ounces of gold and ~185.5 million ounces of silver last year. The company noted that this was related to a higher cut-off grade applied at Rochester due to expectations of increased operating costs. The good news is that Rochester still has a 13-year mine life based on reserves, even if reserves did decline.
Rochester, Wharf, Kensington - Gold Reserves & Resources (Company Filings, Author's Chart)
Moving to Kensington, reserves slid again at Kensington, declining to a paltry ~260,000 ounces of gold. This translates to barely two years of mine life at the FY2022 production rate of ~115,000 ounces and doesn't inspire a ton of confidence long-term for this asset. The good news is that measured & indicated resources increased and come in at higher grades, so it's possible we could see some resource conversion to extend the mine life here at this ~110,000-ounce per annum asset. As it stands, Kensington has nearly 1 million ounces of gold at 0.238 ounces per ton backing up its reserve base, though these resources use a lower cut-off grade of 0.116 - 0.164 ounces per ton (reserve base: 0.143 - 0.201 ounces per ton).
Finally, at the company's smallest Wharf Mine in South Dakota, reserves increased to ~850,000 ounces, supporting a 10-year mine life assuming an 80,000-ounce per annum production rate. This is good news for this asset, which wasn't able to replace deletion in 2020. Given the company's ~$40 million exploration budget in 2022, I imagine adding ounces at Kensington will be a focus. The company also noted that it would target higher-grade zones at West Rochester and continue with its aggressive drilling program at Silvertip. While Silvertip remains a longer-term opportunity, the recent increase in zinc prices is certainly a positive for the project, given its large zinc reserve base (~296 million pounds).
Palmarejo
Moving south to Mexico, Palmarejo saw an increase in gold reserves to ~880,000 ounces and an increase in silver reserves to 62.4 million ounces. This was a positive development given that this is a crucial asset for the company with much lower costs than Coeur's other operations. It's also worth noting that measured & indicated gold and silver ounces also increased year-over-year, with the mine's silver base now sitting at ~136 million ounces in the proven/probable and measured/indicated categories, translating to an 8+ year mine life.
Palmarejo -- Silver & Gold Reserves & Resources (Company Filings, Author's Chart)
Costs Applicable To Sales Guidance - Coeur (Company Filings)
The only negative worth reporting at Palmarejo is that while resources have been increasing, the company has struggled to replace ounces at similar grades. This is evidenced by the chart below, which shows that grades have slid from 5.34 ounces per ton of silver in 2018 to 3.92 ounces per ton of silver this year. Meanwhile, gold grades have dipped from 0.074 ounces per ton three years ago to 0.056 ounces per ton in the same period.
Palmarejo - Reserve/Resource Grades (Company Filings, Author's Chart)
The decline in grades at Palmarejo is not a huge deal for Coeur, and this continues to be a very profitable asset for the company. However, with inflationary pressures and grades declining, we are seeing an increase in costs at the asset, with costs set to increase sharply on a year-over-year basis to $800/oz gold and $14.00/oz silver at the mid-point. These costs are still well below the company's average cost profile. Still, it doesn't help to see its lowest-cost asset seeing a meaningful increase in costs on a year-over-year basis, given that this is the one asset helping Coeur to have a respectable cost profile currently.
Summary
Overall, Coeur has done a satisfactory job replacing reserves to date, and certainly a much better job than it has when it comes to managing share dilution and growing production per share. However, it is worth pointing out that higher metals price assumptions have helped to grow the reserve base. This is based on the company's gold price assumption sitting at $1,400/oz, above the industry average, and its silver price assumption moving to $20.00/oz, up from $17.00/oz last year. These are much less conservative figures than $1,250/oz gold and $17.50/oz silver in FY2016.
Peer Group - Gold Price Used To Calculate Reserves (Company Filings, Author's Chart)
Conversely, companies like Agnico Eagle (AEM) have increased their reserve base over a 5-year period (2021 vs. 2016) from ~19.9 million ounces of gold to ~25.7 million ounces of gold and at slightly higher grades (2.37 grams per tonne vs. 2.31 grams per tonne). This has been achieved despite only a slight increase in the company's gold price assumption ($1,250/oz vs. $1,150/oz) and maintaining a gold price assumption below the industry average. Most importantly, Agnico has achieved this growth in reserves with minimal share dilution, while Coeur has had one of the worst track records of share dilution sector-wide.
Agnico Eagle vs. Coeur Mining Shares Outstanding (FASTGraphs.com)
Technical Picture
Looking at the chart below, we can see that Coeur Mining recently bounced off short-term support at $4.15, but the stock has a lower resistance level at $5.20. Given that the stock is currently trading near the middle of this trading range at $4.66, the reward/risk ratio is balanced, with $0.51 in potential downside to support and $0.54 in potential upside to resistance. When buying small-cap sector laggards, I prefer a minimum 6 to 1 reward/risk ratio to justify entering new positions, which is not the case currently. Instead, the reward/risk ratio based on the expected trading range sits at 1.06 to 1.0.
CDE Daily Chart (TC2000.com)
For Coeur Mining to become attractive from a trading standpoint, the stock would need to decline below US$4.30, where it would have $0.90 in potential upside to resistance and $0.15 in potential downside to support. This doesn't mean that the stock can't go higher, but with the potential for additional share dilution and given Coeur's poor track record of production growth per share, I think there are far better bets elsewhere in the sector. So, if I did want to buy the stock from a trading standpoint, I would be looking to enter new positions at or below $4.29.
Coeur Mining - Shares Outstanding Per Gold-Equivalent Ounce Produced (Company Filings, Author's Chart)
While Coeur had a satisfactory year from a reserve replacement standpoint, it continues to have a relatively weak balance sheet compared to peers, which could lead to additional share dilution in the next 12 months. I don't see this as a deal-breaker. Still, with many other producers busy returning capital to shareholders (buybacks/dividends), I am much less interested in producers where share dilution could be on the table and those companies that are generating limited free cash flow at current metals prices.
Coeur Mining - Annual Free Cash Flow (Company Filings)
While the culprit for the dip in free cash flow is mostly related to the Rochester Expansion, this combination of potential share dilution and limited free cash flow generation means that Coeur could continue to underperform its peer group. This is not ideal, and certainly not for patient shareholders that are still waiting to see a return to 2016 prices. To summarize, I continue to see far more attractive bets elsewhere in the sector, but if I wanted to own Coeur as a trading vehicle, I would be looking to buy at US$4.29 or lower.
https://seekingalpha.com/article/4499524-coeur-mining-stock-satisfactory-reserve-replacement-2021
Coquitlam, British Columbia, Apr 04, 2022 (Newsfile Corp via COMTEX) -- Coquitlam, British Columbia--(Newsfile Corp. - April 4, 2022) - Canada Silver Cobalt Works Inc. (TSXV: CCW) (OTCQB: CCWOF) (FSE: 4T9B) (the "Company" or "Canada Silver Cobalt") is pleased to provide an update on exploration activity at its Graal nickel-copper-cobalt discovery in the Lac St-Jean region of Quebec, including the most recent assays results from drill hole NRC-22-24 which intersected 13.1 meters of combined massive sulphides within a 30-meter zone of disseminated and massive sulphides in a new area located 5 km from the previously reported discovery of massive sulphides.
"The results coming in from the labs for the drill program at Graal continue to be exciting for our geological team. Almost every drill hole has encountered disseminated to massive sulphides with strong nickel, copper and cobalt mineralization. We intend to continue to explore further to determine the full size of this nickel-copper cobalt deposit as it appears to have the potential to become an important supplier of battery metals for the EV market," stated Matt Halliday, P.Geo., President, COO and VP Exploration.
The drilling campaign with 7,772m drilled so far has been paused to allow reception of pending assay data, bore-hole EM data, and the completion of the SQUID Ground Geophysical Survey. The geophysical survey aims to more accurately pinpoint and outline the geophysical conductors as well as identify areas where significant thicknesses are located.
The Company previously reported a major discovery of massive sulphides with high-grade nickel, copper and cobalt mineralization along with platinum and palladium in the northwest corner of the property where an airborne geophysical survey had indicated a sizeable gravity anomaly. The first three drill results reported in this location (NRC-21-02-03-04) showed segments up to 2.08% nickel and 3.75% copper. (See news release March 3, 2022.) More assays are pending.
In addition, about 5 km to the southeast, the Company also drilled hole NRC-22-24 in a spot that had not yet been drilled along the 6 km conductor continuity where a previous ground geological survey had indicated a gravity anomaly (see Figure 5 map below).
This drill hole (NRC-22-24) intersected 13.1 meters of combined massive sulphides within 30 meters of disseminated and massive sulphides between 121.5 - 152.1 meters downhole. Drill hole NRC-22-24 was drilled at an azimuth of 115 degrees, dip of -55 degrees, and is located at UTM 386142E, 5521057N. The other pending assay results will be released once received and validated.
See Table 1 below for assay data, Figures 2 & 3 for core photos, Figure 4 for a cross section of the drill hole and Figure 5 for a map of Graal property).
These latest assay results support the previously estimated potential target along the 6 km conductor continuity of near-surface tonnage of 30 to 60 million tonnes at a grade range of 0.60% to 0.80% nickel and 0.30% to 0.50% copper with 0.10% to 0.15% cobalt. This estimation does not take into account any potential at depth which is currently being explored.
Please note that the quantity and grade of this potential target calculation is conceptual in nature, and there has been insufficient exploration to define a mineral resource. It is uncertain if further exploration will result in the target being delineated as a mineral resource. The potential target primary evaluation is a calculation of the length multiplied by the thickness of intersection by the density of 3.3 to 4.0 t/m3 multiplied by the depth extension of 150 to 250m based on historical drill holes.
In addition to the holes drilled by Canada Silver Cobalt, there are historical intersections including hole 1279-00-10 drilled by Mines d'or Virginia Inc. in June 2000 approximately 200m south of NRC-22-24. This intersection is not part of the gravity anomaly, yet it still returned 1.15% Ni, 0.56% Cu and 0.15% Co over 4.5 meters (Source :GM 58815) which suggests the mineralization may be larger than the geophysical anomaly itself.
Table 1: Key sample and assay details for drill hole NRC-22-24
| HOLE ID | From (m) | To (m) | Length (m) | Ni (%) | Cu (%) | Co (%) | % NiEq (1) |
| NRC-22-24 | 121.50 | 152.10 | 30.60 | 0.39 | 0.40 | 0.05 | 0.63 |
| NRC-22-24 | 121.50 | 129.20 | 7.70 | 0.61 | 0.34 | 0.07 | 0.89 |
| Including | 121.50 | 122.50 | 1.00 | 1.30 | 0.24 | 0.13 | 1.69 |
| Including | 122.50 | 123.50 | 1.00 | 1.35 | 1.16 | 0.14 | 2.05 |
| NRC-22-24 | 142.80 | 152.10 | 9.30 | 0.72 | 0.86 | 0.09 | 1.20 |
| Including | 142.80 | 143.70 | 0.90 | 1.26 | 0.10 | 0.11 | 1.56 |
| Including | 145.60 | 146.00 | 0.40 | 0.21 | 2.32 | 0.04 | 1.01 |
| Including | 146.00 | 146.90 | 0.90 | 1.17 | 0.21 | 0.12 | 1.53 |
| Including | 148.20 | 148.90 | 0.70 | 1.01 | 3.31 | 0.13 | 2.33 |
| Including | 149.40 | 150.00 | 0.60 | 1.02 | 3.40 | 0.12 | 2.35 |
| Including | 150.00 | 151.00 | 1.00 | 1.27 | 0.92 | 0.16 | 1.94 |
| Including | 151.00 | 152.10 | 1.10 | 1.16 | 0.89 | 0.16 | 1.82 |
In addition, the technical team has noted other intervals with disseminated to massive sulfides that have assays pending. These intercepts include but not limited to:
In addition to diamond drilling, bore-hole EM geophysics surveys was completed on several of the holes that intersected nickel and copper sulfides. The team is awaiting both the data and the geophysical report. The EM survey should assist in targeting the most prospective anomaly within a 100-meter radius from the existing holes. The mineralization remains open in all directions and at depth. The next phase of drilling in 2022 will focus on the areas identified by the SQUID survey. The drill program is currently being managed by Laurentia Exploration in association with GoldMinds Geoservices Inc.
April 6, 2022 – TheNewswire - Spruce Ridge Resources Ltd. (TSXV:SHL) (OTC:SRCGF) (“Spruce Ridge” or the “Company”) is pleased to announce gold assay results for all core samples from its 2021 diamond drilling program on the South Pond “B” gold zone, on its wholly-owned Great Burnt property in Central Newfoundland. The results feature wide intervals of gold, including: 51.00 metres averaging 1.69 grams of gold per tonne (g/t Au) in hole SP21-01, 15.00 metres of 2.36 g/t Au (including 4.00 metres of 5.29 g/t Au) in SP21-03, 21.20 metres of 1.75 g/t Au in SP21-08, 17.60 metres of 1.34 g/t Au in SP21-11 and 21.00 metres of 2.06 g/t Au in SP21-14. The lengths quoted are core lengths; true widths are estimated to be approximately 70% of core lengths.
The following table lists all drill intercepts over 1 gram of gold per tonne from the 2021 drill program.
| GOLD ASSAY RESULTS FROM 2021 DRILLING SOUTH POND "B" GOLD ZONE | |||||
| Hole No. | Inclination | From (m) | To (m) | Core Length | Au g/t |
| SP21-01 | -50° | 11.00 | 62.00 | 51.00 | 1.69 |
| includes | 19.00 | 62.00 | 43.00 | 1.82 | |
| which includes | 50.00 | 61.00 | 11.00 | 3.19 | |
| and | 11.00 | 14.00 | 3.00 | 2.07 | |
| SP21-02 | -60° | no results >0.54 g/t | |||
| SP21-03 | -50° | 12.00 | 13.00 | 1.00 | 2.11 |
| and | 19.00 | 22.00 | 3.00 | 2.92 | |
| and | 53.00 | 68.00 | 15.00 | 2.36 | |
| includes | 54.00 | 58.00 | 4.00 | 5.29 | |
| which includes | 57.00 | 58.00 | 1.00 | 11.33 | |
| SP21-04 | -60° | 48.00 | 52.00 | 4.00 | 1.84 |
| SP21-05 | -50° | 6.00 | 8.00 | 2.00 | 1.90 |
| and | 11.00 | 12.30 | 1.30 | 2.19 | |
| and | 98.00 | 99.00 | 1.00 | 1.51 | |
| SP21-06 | -65° | 13.00 | 14.85 | 1.85 | 1.08 |
| SP21-07 | -50° | 14.00 | 15.00 | 1.00 | 1.27 |
| SP21-08 | -50° | 65.80 | 87.00 | 21.20 | 1.75 |
| includes | 65.80 | 81.00 | 15.20 | 2.20 | |
| includes | 65.80 | 76.00 | 10.20 | 2.82 | |
| SP21-09 | -65° | no significant assays | |||
| SP21-10 | -50° | 10.00 | 11.00 | 1.00 | 1.04 |
| SP21-11 | -50° | 22.00 | 24.00 | 2.00 | 1.29 |
| and | 33.00 | 34.00 | 1.00 | 1.44 | |
| and | 46.40 | 64.00 | 17.60 | 1.34 | |
| includes | 46.40 | 49.75 | 3.35 | 2.15 | |
| and includes | 53.70 | 57.90 | 4.20 | 2.48 | |
| SP21-12 | -65° | 97.80 | 99.00 | 1.20 | 3.69 |
| and | 112.00 | 113.00 | 1.00 | 2.31 | |
| SP21-13 | -50° | 95.00 | 99.00 | 4.00 | 1.43 |
| and | 105.00 | 106.00 | 1.00 | 1.24 | |
| SP21-14 | -50° | 74.00 | 95.00 | 21.00 | 2.06 |
| SP21-15 | -65° | no significant assays | |||
| SP21-16 | -50° | 32.00 | 42.00 | 10.00 | 1.72 |
| SP21-17 | -75° | no significant assays | |||
| SP21-18 | -60° | no assays >0.82 g/t Au | |||
The South Pond “B” gold zone was discovered by BP minerals in 1987 while following up a soil geochemical anomaly, 9 kilometres north of the Great Burnt copper deposit. BP drilled it in 1987 and 1989. And Celtic Minerals also drilled four holes on it in 2001. It comprises two 500-metre long lenses of mineralization separated by a 200 metre stretch that gave no significant results in the BP drilling. Spruce Ridge’s 2021 drill program consisted of 3,047 metres in 19 holes, of which 18 tested the northern lens of the South Pond “B” zone.
Mineralization is hosted in bedded chert and silicified tuffs, with up to 25% of pyrrhotite, minor pyrite and chalcopyrite. ICP analyses, including copper, have not been received to date. The deposit is believed to be volcanogenic in origin. It is on strike with and contiguous to the South Pond “A” copper-gold zone, which has been cited by previous workers as a volcanogenic massive sulphide (VMS) deposit.
John A. Ryan, CEO stated “We find these results very encouraging. No mineral resource estimate has been made on the south Pond “B” gold zone, but the grades and widths from this program suggest that it could be a satellite operation to the Great Burnt copper deposit, for which we recently received a positive PEA. South Pond “B” clearly has the potential to add a significant number of gold ounces to the resource.”
Qualified Person and Technical Report
Colin Bowdidge, Ph.D., P.Geo. (ON and NL), Qualified Person as defined in NI43-101, has reviewed and approved the technical information in this news release. Mr. Bowdidge is a director and VP Exploration of Spruce Ridge
About Spruce Ridge Resources Ltd.
Spruce Ridge holds a 100% interest in 26,640 hectares in Central Newfoundland, including:
In addition to its mineral assets, Spruce Ridge acquired leases with petroleum and natural gas rights, plus shut-in oil and gas wells, pipelines, and facilities, in the Unity area of southwestern Saskatchewan and is in the process of putting these assets back into production.
Spruce Ridge currently holds 5,594,955 shares of Canada Nickel Company Inc. and 10,000,000 shares of Noble Mineral Exploration Inc.
TORONTO, April 06, 2022 (GLOBE NEWSWIRE) -- Xanadu Mines Ltd (ASX: XAM, TSX: XAM) (Xanadu, XAM or the Company) is pleased to announce the release of the Scoping Study (Study) for its flagship Kharmagtai Copper-Gold Project, based on an updated 2021 Mineral Resource Estimate, located in the South Gobi region of Mongolia. The Xanadu Board has endorsed this Study, and subject to funding, has approved progression to the Pre-Feasibility (PFS) Stage.
This Study confirms the potential of Kharmagtai as a globally significant, long life, low cost, low risk future copper-gold mine. It is based on conventional, low risk open pit mining and sulphide flotation, with low environmental, social and governance (ESG) risk, and supported by nearby rail, road and power links providing the potential for rapid development. Kharmagtai is well positioned to help fill the looming copper global supply gap driven by growing demand for an increasingly electrified economy.
Highlights
Presented in 100% Terms (Xanadu share 76.5%)
Confirms Kharmagtai as a potential world class, low cost, long life mine
Estimated 20% IRR (range 16-25%), US$630 million NPV @ 8% (range US$ 405-850 million) and 4 year payback (range 4-7 years) over 30 year mine life
Projected production ranges from 30-50ktpa copper and 5-110kozpa gold production during the first five years
First quartile all-in sustaining (C1) costs of US$1.02/lb Cu for first five years, net of by-product credits
Conventional, low technical complexity open pit and process plant with low 0.9:1 strip ratio for first five years
Located in sparsely populated, flat terrain, with nearby established rail, power and water links
Pre-Feasibility Study expected to commence in Q3 CY2022 and complete in Q4 of CY2023
Robust study outcomes, led by high quality advisory team
Xanadu’s Executive Chairman and Managing Director, Mr Colin Moorhead, said “This Scoping Study is the result of years of hard work by the Xanadu team lead by Andrew Stewart, and confirms Kharmagtai as a world class copper asset, located in a region of the South Gobi which hosts several significant deposits, including those at Rio Tinto’s Oyu Tolgoi mine. The future development of Kharmagtai into a long life, low cost, mine will provide significant value to our shareholders and multi-generation employment and economic opportunity for our stakeholders in Mongolia. The plain truth is that as the global economy decarbonises, the supply of copper cannot meet forecast demand. Development of large scale porphyry copper deposits will be urgently required, and with its competitive time to production and relatively low ESG risk, Kharmagtai is well positioned to move forward quickly. We are proud to demonstrate such a strong Project at Kharmagtai and are excited to move forward with its next stage of development.”
Gold miners start March reporting season off strong with Gold Road and Gascoyne both posting stronger production
US Fed sees more rate rises to come in March minutes, but gold holds steady with inflation on the rise
Gina Rinehart confirms bet on high grade iron ore with magnetite mine buy
Gold miners suffered an earning’s season most probably would have like to forget in February, as labour shortages, Covid, cost pressures, sliding profits and falling dividend yields were the order of the day.
But many claimed they were looking at stronger second halves and the first set of results out of the sector is looking more positive than the tail end of 2021.
Gold Road Resources (ASX:GOR) says it remains on track to deliver a ramp up in production over 2022 at the Gruyere gold mine it half-owns with Gold Fields, saying it’s had no material impact from Covid-19 since WA’s outbreak began.
It’s a very different note to that struck by Westgold Resources (ASX:WGX), which last month said it had lost over 5,000 man-hours across its workforce resulting in a 3-4% hit to production in March.
Gruyere delivered 71,135oz of gold on a 100% basis in the March quarter, compared to 67,813oz in the December quarter, with two scheduled shutdowns of SAG and ball mill relines now completed.
Gold Road says the mine is on track to hit annual guidance of 300,000-340,000oz in 2022, 150,000-170,000oz attributable to the ASX listed gold producer.
The firm, which recently announced a $308 million scrip deal to buy DGO Gold (ASX:DGO) and claim its 14.4% stake in Hemi gold project owner De Grey Mining (ASX:DEG), says it has $139.9m in the bank and no debt after gold sales of 35,080oz at $2434/oz.
Also debt free for the first time since 2017 is Gascoyne Resources (ASX:GCY), which said today it produced a record 21,319oz of gold in the March quarter.
The company, which was the subject of a strange three cornered corporate takeover stoush between it, Westgold and the junior Gascoyne eventually merged with Firefly Resources, has $41.2m in the bank after paying $10m to repay its convertible note facility on March 31.
“We are continuing to take deliberate and meaningful steps towards becoming a more financially independent, consistently cash-positive gold producer. Our multi-faceted strategy to simplify our financial structure and increase the head-grade at Dalgaranga is starting to bear fruit, as evidenced in these outstanding March quarter results,” Gascoyne MD Simon Lawson said.
“Our debt-free status gives us greater financial flexibility, our unhedged position allows us to benefit from current strong gold pricing, and our mining team is fully engaged in delivering the right rocks to our
efficient and well-maintained +2.5Mtpa process plant.”
Gold Road Resources (ASX:GOR) and Gascoyne Resources (ASX:GCY) share price today:
More rate hikes coming but gold holds steady
The minutes of the March US Fed meeting are out and gold producers will have breathed a sigh of relief there were no hawkish surprises from their contents.
The Fed held off on a 50bps rise, preferring a 25bps rise due to the Russian invasion of Ukraine.
More 50bps rate rises could be coming later in the year, but inflation is also moving ahead at pace, delivering a relatively neutral environment for gold prices.
“Gold was relatively stable, as prospects of higher inflation offset concerns of more aggressive rate hikes,” ANZ’s Catherine Birch said in a note.
Gold was up 0.2% to US$1925.32/oz overnight ($2563/oz in Australian terms).
ANZ is one of many institutions that has turned bullish on gold in recent times due to the growing geopolitical risk and economic uncertainty arising out of the war in Ukraine.
Hancock moves deeper into magnetite with Mt Bevan deal
Shares in juniors iron ore-cum-gold plays Legacy Iron Ore (ASX:LCY) and Hawthorn Resources (ASX:HAW) surged today after Gina Rinehart’s Hancock Prospecting finalised its agreement to take a 30% stake in the Mt Bevan iron ore project in WA’s Yilgarn region.
Australia’s richest person has made her fortune off the Pilbara’s vast hematite iron ore resources in WA’s north through her share in Rio Tinto’s Hope Downs project and more notably the privately owned Roy Hill mine, a dividend which powered Hancock to the country’s richest private profit ever in 2020-21.
But the tide is turning in steelmaking and higher grade products like magnetite concentrates (which are processed into super premium products from lower grade in situ resources) will find greater favour because they can be used in lower emissions steel tech like direct reduced iron.
Hancock will pay $9m for a 30% interest and can increase that to 51% by fully funding a PFS.
She is not the only major sniffing around the Yilgarn in WA’s south to develop a magnetite operation. Mineral Resources (ASX:MIN), which operates the lower grade Koolyanobbing mine, is researching a potential magnetite development in the Yilgarn.
Meanwhile, Macarthur Minerals (ASX:MIO) released a feasibility last month into the development of its Lake Giles Iron Project.
Up in the Pilbara, fellow billionaire Andrew Forrest has also committed to expanding its high grade production, with Fortescue Metals Group (ASX:FMG) planning to open the US$3.5 billion 22Mtpa Iron Bridge magnetite mine in the December quarter.
TheNewswire - March 29, 2022 - Renforth Resources Inc. RFR RFR RFHRF (FSE:9RR) ("Renforth" or the "Company") is pleased to inform shareholders of the assay results from the 1,203m drilled in 7 holes within the 275m strike length of the stripped area at Victoria West, one of several mineralized areas within our >300 km2 Surimeau District Property in NW Quebec. SUR-21-28 was drilled for 234m at a dip of -80 as an undercut of SUR-21-26 and SUR-21-27 in the western end of the stripped area, between two historic trenches now within the stripped area. SUR-21-28 assayed 3.46% Ni and 491 ppm Co over 1.5m between 196.5 and 198m down the hole as presented in the table below, within a broad mineralized zone of 170.55m, between 40.9 and 211.45m down the hole which averaged 0.16% Ni and 100.2 ppm Co. Within this broad zone of mineralization there are higher grade sub-zones, as seen in this and other holes drilled in the December program, in this case the zone between 187.5 and 199.5m down the hole, a length of 12m, averaged 0.54% Ni and 138.7 ppm Co, encapsulating the 3.46% Nickel value. Renforth's current interpretation of the mineralization seen at Victoria West is that there are higher grade bands of mineralization within the extent of the mineralized magnetic ultramafic body. The exceptional 3.49% Ni value points to the high grade potential present at Victoria West, which has only seen 5,626m of drilling by Renforth over 2.2km of strike within the known 6km strike length of Victoria West, in the western end of a 20km long magnetic feature also mineralized at its eastern end.
"I am very happy with these results, they support our interest in Surimeau, an interest which only continues to grow. We will soon drill again as we work to define not "whether" there are battery metals within the 6km km long Victoria West area, but instead, answer the question of just how well endowed with battery metals this "hiding in plain sight" discovery really is. We will also be prospecting, following up on the presence of lithium and REEs documented at Surimeau. I expect this property will continue to deliver excitement to Renforth's shareholders for the foreseeable future" states Nicole Brewster, President and CEO of Renforth.
December 2021 Assay Results
Presented below are the assay results for the 7 holes drilled in December. These are colour coded in order to show, in green, the broader, lower grade mineralized intervals. Within these the contained higher grade zones are given, those above an average of 0.2% Ni are in red.
| DDH | From m | To m | Length m | Ni% | Co ppm | Cu% | Zn% | |
| SUR-21-23 | 21 | 72.65 | 51.65 | 0.17 | 152 | |||
| SUR-21-23 | incl. | 30 | 64 | 34 | 0.2 | 180.1 | ||
| SUR-21-23 | incl. | 47.04 | 56 | 8.6 | 0.24 | 197.2 | ||
| SUR-21-23 | incl. | 59.75 | 61.5 | 1.75 | 220.28 | 3.06 | ||
| SUR-21-23 | 74.7 | 75.4 | 0.7 | 143 | 1.54 | |||
| SUR-21-23 | 94.1 | 96 | 1.9 | 0.22 | 197.1 | |||
| SUR-21-23 | 96 | 96.45 | 0.45 | 797 | 0.17 | |||
| SUR-21-23 | 111.5 | 113.2 | 1.7 | 0.18 | 148 | |||
| SUR-21-23 | 122.65 | 123.35 | 0.7 | 162 | 1.5 | |||
| SUR-21-24 | 22.5 | 23 | 0.5 | 98.2 | 1.8 | |||
| SUR-21-24 | 25.25 | 25.5 | 0.25 | 0.51 | ||||
| SUR-21-24 | 25.5 | 62 | 36.5 | 0.16 | 143.31 | |||
| SUR-21-24 | incl. | 27 | 36 | 9 | 0.21 | 162.17 | ||
| SUR-21-24 | incl. | 40.5 | 42.95 | 2.45 | 0.2 | 174.7 | ||
| SUR-21-24 | incl. | 42.95 | 44.05 | 1.1 | 1.24 | |||
| SUR-21-24 | incl. | 45.05 | 45.55 | 0.5 | 1.13 | |||
| SUR-21-24 | incl. | 45.05 | 48.7 | 3.65 | 0.24 | 218.9 | ||
| SUR-21-24 | incl. | 48.7 | 51.7 | 3 | 2.8 | |||
| SUR-21-24 | incl. | 52.4 | 53.1 | 3.65 | 0.21 | 154 | ||
| SUR-21-24 | 64.35 | 67 | 2.65 | 0.17 | 131.1 | |||
| SUR-21-24 | 68.5 | 69.8 | 1.3 | 0.175 | 124 | |||
| SUR-21-24 | 70.8 | 71.5 | 0.7 | 0.16 | 173 | |||
| SUR-21-24 | 82.6 | 84.65 | 2.05 | 0.25 | 191.9 | |||
| SUR-21-25 | 6.5 | 20.5 | 14 | 0.15 | 94.5 | |||
| SUR-21-25 | incl. | 8.5 | 16 | 7.5 | 0.17 | 98.8 | ||
| SUR-21-25 | 28 | 103.6 | 75.6 | 0.16 | 123.5 | |||
| SUR-21-25 | incl. | 38 | 39 | 1 | 0.19 | 152 | ||
| SUR-21-25 | incl. | 42.5 | 43.65 | 1.15 | 0.21 | 163 | ||
| SUR-21-25 | incl. | 57 | 58.4 | 1.4 | 0.24 | 144 | ||
| SUR-21-25 | incl. | 61 | 63 | 2 | 0.22 | 174.35 | ||
| SUR-21-25 | incl. | 71.5 | 81.35 | 9.85 | 0.21 | 160.65 | ||
| SUR-21-25 | incl. | 88 | 88.8 | 0.8 | 0.2 | 153 | ||
| SUR-21-25 | incl. | 92.5 | 93.15 | 0.65 | 0.22 | 191 | ||
| SUR-21-25 | incl. | 99 | 102.1 | 3.1 | 0.21 | |||
| SUR-21-25 | 158.7 | 160 | 1.3 | 0.2 | 154 | |||
| SUR-21-25 | 169.3 | 170.25 | 0.95 | 0.18 | 148 | |||
| SUR-21-25 | 171.45 | 172.3 | 0.85 | 161 | 1.96 | |||
| SUR-21-25 | 173.3 | 174.1 | 0.8 | 128 | 1.8 | |||
| SUR-21-25 | 178.2 | 180.2 | 2 | 94.7 | 0.8 | |||
| SUR-21-26 | 2.8 | 61 | 58.2 | 0.17 | 116.4 | |||
| SUR-21-26 | incl. | 37.5 | 57.45 | 19.95 | 0.24 | 152.3 | ||
| SUR-21-26 | incl. | 51 | 55.4 | 4.4 | 0.3 | 176.3 | ||
| SUR-21-26 | 65.35 | 67.2 | 1.85 | 98.72 | 1.9 | |||
| SUR-21-26 | 90.5 | 96 | 5.5 | 0.15 | 83.5 | |||
| SUR-21-26 | 107.15 | 109.2 | 2.05 | 0.19 | 131.3 | |||
| SUR-21-26 | 122.5 | 124.55 | 2.05 | 84.77 | 0.27 | |||
| SUR-21-27 | 15.4 | 16.3 | 0.9 | 0.16 | 150 | |||
| SUR-21-27 | 30 | 34.5 | 4.5 | 0.17 | 150.7 | |||
| SUR-21-27 | incl. | 31.5 | 33 | 1.5 | 0.19 | 163.5 | ||
| SUR-21-27 | 44 | 73.5 | 29.5 | 0.18 | 159.3 | |||
| SUR-21-27 | incl | 55.5 | 73.5 | 18 | 0.2 | 151.2 | ||
| SUR-21-27 | or | 55.5 | 65.25 | 9.75 | 0.235 | 172.5 | ||
| SUR-21-27 | and incl. | 70 | 72.5 | 2.5 | 0.23 | 167.6 | ||
| SUR-21-27 | 91.5 | 93 | 1.5 | 0.15 | 108 | |||
| SUR-21-27 | 97.5 | 99 | 1.5 | 0.16 | 103 | |||
| SUR-21-27 | 109 | 112 | 3 | 0.16 | 105.5 | |||
| SUR-21-28 | 31.5 | 36 | 4.5 | 0.18 | 155.6 | |||
| SUR-21-28 | 40.9 | 211.45 | 170.55 | 0.16 | 100.2 | |||
| SUR-21-28 | incl. | 61.5 | 77.35 | 15.85 | 0.2 | 133.6 | ||
| SUR-21-28 | which incl. | 70.6 | 72.6 | 2 | 0.34 | 214.5 | ||
| SUR-21-28 | also incl. | 153 | 153.8 | 0.8 | 0.19 | 134 | ||
| SUR-21-28 | and incl. | 187.5 | 199.5 | 12 | 0.54 | 138.7 | ||
| SUR-21-28 | or | 195 | 202.5 | 7.5 | 0.8 | 174.5 | ||
| SUR-21-28 | which incl. | 196.5 | 198 | 1.5 | 3.46 | 491 | 0.1 | |
| SUR-21-29 | 25.65 | 30 | 4.35 | 0.16 | 99.2 | |||
| SUR-21-29 | 55 | 90.2 | 35.2 | 0.185 | 149.2 | |||
| SUR-21-29 | incl. | 55 | 58.25 | 3.25 | 0.2 | 177 | ||
| SUR-21-29 | incl. | 65.5 | 69.1 | 3.6 | 0.2 | 169.25 | ||
| SUR-21-29 | incl. | 71.55 | 74.5 | 2.95 | 0.19 | 140.3 | ||
| SUR-21-29 | incl. | 75.5 | 88.65 | 13.15 | 0.225 | 176.15 | ||
| SUR-21-29 | which incl. | 82 | 84 | 2 | 0.32 | 213.5 | ||
| SUR-21-29 | 183 | 185.95 | 2.95 | 0.15 | 104.6 |
*Assay results are as measured in the core box. Not true width, true widths are not currently known
Technical disclosure in this press release has been reviewed and approved by Francis R. Newton P.Geo (OGQ#2129), a "qualified person" pursuant to NI 43-101.
For further information please contact:
Renforth Resources Inc.
Nicole Brewster
President and Chief Executive Officer
C:416-818-1393
E: nicole@renforthresources.com
#Unit 1B – 955 Brock Road, Pickering ON L1W 2X9
Follow Renforth on Facebook, LinkedIn and Instagram!
About Renforth
Renforth wholly owns the ~260 km2 Surimeau District Property, which hosts numerous areas of polymetallic and gold mineralization, each with various levels of exploration, as well as a significant amount of unexplored ground. Victoria West has been drilled over a strike length of 2.2km, within a 5km long mineralized structure, proving nickel, copper, zinc and cobalt mineralization, in the western end of a 20km magnetic anomaly. The Huston target, during initial reconnaissance, resulted in a grab sample grading 1.9% Ni, 1.38% Cu, 1170 ppm Co and 4 g/t Ag. In addition to this the Lalonde, Surimeau and Colonie Targets are all polymetallic mineralized occurrences which, along with various gold showings, comprise the areas of potential of this NSR free property.
In addition to the Surimeau District battery metals property Renforth wholly owns the Parbec Gold deposit, a surface gold deposit contiguous to the Canadian Malartic Mine property in Malartic, Quebec. In 2020/21 Renforth completed 15,569m of drilling which successfully twinned certain historic holes, filled in gaps in the resource model with newly discovered gold mineralization and extended mineralization deeper. Based upon the success of this significant drill program the Company considers the spring 2020 MRE, with a resource estimate of 104,000 indicated ounces of gold at a grade of 1.78 g/t Au and 177,000 inferred ounces of gold at a grade of 1.78 g/t Au to be out of date. With the new data gained Renforth will undertake to complete the first ever structural study of the mineralization at Parbec, as well as additional total metallic assay work in order to better contextualize the nugget effect on the gold mineralization.
Renforth also holds the Malartic West property, the site of a copper/silver discovery, and Nixon-Bartleman, west of Timmins Ontario, with gold present on surface over a strike length of ~500m.
Aluminium Bahrain B.S.C. (Alba) and Emirates Global Aluminium PJSC (EGA) have signed a Memorandum of Understanding on technology cooperation between the two firms this week.
Details of the MoU were sparse, but the document evidently contemplates to find ways for the two companies to work towards increasing production at Alba’s Line 6 smelter and to use other technology developed by Alba to bump up EGA’s current nameplate capacity.
Alba’s Chairman of the Board Shaikh Daij bin Salman bin Daij Al Khalifa said in a press release that his firm is excited about the new partnership.
“This MoU cements our technology partnership with EGA, our partner of choice. We are pleased with the performance of EGA’s DX+ Ultra technology at Potline 6 and keen to work with EGA to further improve our Potline performance. We are also excited to explore other opportunities to deploy EGA technological expertise at our smelter for the potential brownfield expansion of Potline 7, in another close cooperation between our two nations – the Kingdom of Bahrain and United Arab Emirates.”
“This agreement is in line with the directives of the UAE’s wise leadership to further deepen the brotherly relations between our two countries,” continued EGA’s vice chair Saeed Mohammed Al Tayer. “Aluminium Bahrain was EGA’s first technology customer, in a landmark for the development of a knowledge-based economy in the UAE. EGA looks forward to continuing to apply its technology expertise on a commercial basis to support their production ambitions. EGA’s goal is to be the technology supplier of choice in the Aluminium industry, with technology as a growing revenue stream for EGA as well as delivering competitive advantage for the company’s own operations.”
By Marco Aquino
LIMA (Reuters) – Peru, the world’s no. 2 copper producer, will target “excess profits” that mining firms have gained from soaring global metals prices for extra taxation, the country’s economy minister told Reuters.
While President Pedro Castillo came to power last July pledging to increase taxes on the powerful mining sector, the current plan is far less ambitious than initial promises of sharp tax hikes that met fierce resistance from the industry and a divided Congress.
“The focus is on the surplus profits,” Oscar Graham, the country’s minister of economy and finance, said in an interview in Lima late on Friday, adding that the government was looking at an “adjustment” to taxes.
Copper prices are currently trading at near record levels around $10,000 per tonne in the wake of Russia’s invasion of Ukraine.
“The margins (of the adjustment) are being evaluated,” he said, but added it was important that the sector did not lose competitiveness and that mining investment was not discouraged.
Graham said Peru needed better distribution of mining wealth to communities to quell mining protests that have rocked the sector and stalled production at key mines such as MMG Ltd’s Las Bambas and Southern Copper’s Cuajone mine.
“We have to look at the issue of the efficient use of resources provided by mining, otherwise we will have recurrent conflicts in the country,” he said.
INFLATION
Graham also said Peru faced risk from any “prolongation” of the war in Ukraine, with domestic prices having risen at their fastest pace in a quarter of a century in March.
“We are net importers of oil and corn, which form the chain of inputs that most affect the family basket,” he said, adding that the government was evaluating doubling the budget for social programs to mitigate inflation for the most vulnerable.
Graham said projections of economic growth this year of between 3.5% and 4.0% were unchanged, but he did not rule out a revision given the global crisis.
To rebuild investor confidence that has been dented by economic issues and political turmoil, Graham said he would present to Congress a plan to cut the deficit to 1% of gross domestic product (GDP) by 2026.
The deficit was cut to 2.6% last year from 8.9% in 2020.
“This is very important to provide certainty, especially to international rating agencies and investors,” he said.
In mid-March, ratings agency Standard & Poor’s cut its rating for Peru, citing political uncertainty. President Castillo survived an impeachment vote in late March, the second time lawmakers have tried to remove him.
(Reporting by Marco Aquino; Editing by Adam Jourdan and Edwina Gibbs)
Furious investors and traders. Evaporating liquidity. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a 250% price spike and while trading has resumed, the market remains all but paralyzed.
As the crisis plays out, accusations are already beginning to fly. Investors are preparing lawsuits; the LME and its regulator, the Financial Conduct Authority, are likely to run investigations. It's far from clear that any party broke any rules -- it may be that the rules just weren't fit for purpose.
Getting to the bottom of who did what, when, and why, could take months or years. In the meantime, here's a rundown of the key players in the great nickel short squeeze.
• The Shorts: Big Shot (and friends). At the center of the crisis is entrepreneur Xiang Guangda, whose Tsingshan Holding Group Co. is the world's biggest nickel and stainless steel company. The tycoon known as "Big Shot" in Chinese commodity circles had built a giant short position in LME nickel in a bet that increasing supply from his company would drive down prices. When nickel rose rapidly after Russia's invasion of Ukraine, Tsingshan struggled to pay its margin calls, setting the stage for a short squeeze.
There's nothing unusual or inappropriate about miners using derivatives contracts to lock in the price of their future production. But Xiang's position was unusually large, equivalent at its peak to roughly one in eight of all the contracts outstanding in the LME nickel contract.
And Tsingshan has a history of aggressive trading. In 2019, it was on the other side of a short squeeze: it withdrew large amounts of nickel inventories from LME warehouses, causing prices to leap more than 50% in a few months. The LME opened a review into trading activity, but took no further action.
This time, Xiang also had company - Bloomberg has reported that several other Chinese firms amassed short positions as his allies. And Tsingshan sold its nickel products in a way that meant traders and buyers would have their own large short positions on the LME, magnifying the pain across the market when prices spiked.
• The Longs: VW, Glencore, hedge funds. While Xiang stands out as the big short, there's no single trader or investor on the other end that gets the credit (or blame) for driving prices higher. But several market participants held sizable long positions that contributed to the rally.
Volkswagen has one of the largest long positions in the market, at the equivalent of over 100,000 tons, according to a person familiar with the matter. The position is spread over nine years of forward contracts as a hedge against raw-material costs -- nickel is a key ingredient in electric-vehicle batteries.
Trader and miner Glencore is another large long-position holder and has at times controlled more than half of the available inventories in LME warehouses. The company's overall position in LME nickel is short-- it uses the exchange to protect against price risk on the metal it ships around the world. But it bought LME stocks to deliver the nickel from the exchange warehouses to its customers after a surge in freight costs made shipping metal from Asia to Europe and the U.S. much more expensive, according to a person familiar with the matter.
Then there are the hedge funds, drawn to nickel as a bet on the EV revolution and more recently on worries about interruptions to Russian supplies. Collectively, investment funds lifted their bullish bets on nickel to the highest on record on Feb. 18, the week before Russia's invasion of Ukraine. Their net position was equivalent to about 250,000 tons of nickel, although most of the increase came before this year.
• The Banks: JPMorgan and the rest. In the run up to the squeeze, the scale of Xiang's exposure was obscured by the fact that he spread his nickel short position across about 10 banks and brokers. What's more, while he held about 30,000 tons of his short position directly on the LME, that was less than a fifth of its total size of over 150,000 tons. The vast majority was held in bilateral derivative deals, known as "over-the-counter" positions, with banks led by JPMorgan Chase, and including BNP Paribas, Standard Chartered and United Overseas Bank.
JPMorgan's leading role means that the U.S. lender arguably had better insight into Tsingshan's market-roiling position than the LME did: about 50,000 tons of the short position was held via OTC bets with JPMorgan, Bloomberg has reported.
The bank has had a close relationship with Tsingshan for years. When Tsingshan's trading squeezed the LME nickel market in 2019, JPMorgan was among the banks that helped finance the Chinese company's nickel purchases. It made about $100 million trading nickel that year -- a blowout performance for what is usually a niche trading book.
• The London Metal Exchange. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. First it allowed the market to reopen even after a 66% price surge on March 7 led one of Tsingshan's brokers to miss a margin call payment (the LME gave it more time to pay). Then -- after seven hours of increasingly wild trading -- it suspended nickel and retroactively canceled all the transactions that took place on the morning of March 8 as prices doubled.
The LME has said that if it had allowed the trades to stand, several brokerages central to the metals ecosystem would have failed. Many in the industry believe the exchange made the right call. Nonetheless, the effect of the decision was a bailout of Tsingshan and its banks to the tune of several billion dollars.
But it is the LME's earlier lack of action in allowing trading to restart unfettered on March 8 that has elicited the most unanimous disapproval. What's more, the LME wasn't aware of the scale and potentially systemic nature of Tsingshan's position until the day it blew up. Yet the short squeeze in nickel had been the talk of the market for several weeks already: Bloomberg reported in mid-February that Xiang was the focus of a squeeze on the LME.
Since reopening two weeks ago, the nickel market has yet to reach an equilibrium. Prices spent several consecutive days locked at the maximum daily limits and, while trading has now resumed to some degree, a dramatic collapse in volumes means the market remains effectively paralyzed. Fewer than 500 contracts had been traded on the LME's electronic platform by midday in London at mid week last week.
• The regulators. The FCA, the LME's regulator, tends to leave most of the big decisions and the policing of market abuse to the exchange. Some commentators have called for limits to prevent any single trader playing an outsized role in the market, although in reality such restrictions already exist -- they're just extremely permissive. The allowance for a single trader's position in LME nickel contracts is well over twice the size of Tsingshan's position. In fact, it's more nickel than has ever been held in LME warehouses.
The last major enforcement action taken by the FCA (or its predecessors) against a company over its activities on the LME was more than two decades ago, in the wake of the Sumitomo copper scandal.
"Given our role in supervising the LME, we have been, and will continue to be, taking a very close interest in how it is managing and responding to the issues," the FCA said in a statement Tuesday.
Regulators have publicly admitted they're in the dark about commodity markets. When the Bank of England's Financial Policy Committee met earlier in March, it noted that it was important to assess potential contagion between commodity market volatility and the financial system more broadly. But, according to a published summary of the discussion, "the assessment of risks was made more difficult by the relative opacity of commodity derivatives markets."
-- Information for this article was contributed by Alfred Cang, Mark Burton, William Shaw and Monica Raymunt of Bloomberg News.
Using thin sheets of a trimetallic nitride as catalysts in zinc-air batteries increases the batteries’ energy density and allows them to be shaped into flexible fibers (Nano Lett. 2020, DOI: 10.1021/acs.nanolett.0c00717). Made of three common metals—nickel, iron, and manganese—the new material could be an alternative to expensive precious-metal catalysts. Guoxiu Wang of the University of Technology Sydney, Fengxia Geng of Soochow University, and colleagues made the material by allowing a monolayer of NiFeMn hydroxide to self-assemble on a sheet of titanium carbide (Ti3C2). They then annealed the material in an ammonia atmosphere, which transformed the hydroxide to a nitride. The researchers used the material to make a Zn-air battery, which showed an energy density of 693 Wh/kg, compared with about 550 Wh/kg for typical Zn-air batteries. Fiber-shaped Zn-air batteries made with the catalyst showed equally good performance when twisted or bent.
"We are proud to be the first open pit mine to commission electric trolley assist haulage in North America," stated Gil Clausen, Copper Mountain's President and CEO. "We have been assessing numerous innovative technologies that will reduce our carbon load. Through electrification and capacity increases, we are targeting to reduce our carbon intensity by 50 to 70% in the next five to seven years. We are also actively testing and researching renewable diesel, hydrogen, battery, and fuel-cell technology to power our haulage units to achieve our goal of net-zero carbon emissions by 2035."
"This project stemmed from our goal to reduce our carbon emissions and make a meaningful change, while improving our costs and productivity," said Don Strickland, EVP – Sustainability for Copper Mountain Mining Corporation. "Diesel fuel for our 240t haul trucks is the largest source of GHG emissions at the mine and diesel cost is between our second and third largest cost item for the site. With clean hydro-electricity available in BC, the best way to achieve both the GHG and cost reduction objectives was to consider trolley assist technology when acquiring new trucks. Electric powered haul trucks will now travel up our haulage ramps at twice the speed, one tenth of the energy cost, and near zero GHG emissions."
A video of the first commissioned trolley assist haul truck, passing a diesel-only truck, can be seen here.
For more information about Copper Mountain's ESG initiatives, such as the Company's progressive reclamation program, its collaboration with BC Ministry of Energy, Mines and Low Carbon Innovation and IBM on Mines Digital Trust and its new recycling solution for haul truck tires with Kal Tire, please visit the Company's website: https://cumtn.com/esg/overview/. In addition, the Company will be publishing its inaugural sustainability report this year.
About Copper Mountain Mining Corporation
Copper Mountain's flagship asset is the 75% owned Copper Mountain Mine located in southern British Columbia near the town of Princeton. The Copper Mountain Mine currently produces approximately 100 million pounds of copper equivalent per year. Copper Mountain also has the 100% owned development-stage Eva Copper Project, which is expected to add approximately 100 million pounds of copper annually, in Queensland, Australia and an extensive 2,100 km2 highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange under the symbol "CMMC" and Australian Stock Exchange under the symbol "C6C".
Additional information is available on the Company's web page at www.CuMtn.com.
On behalf of the Board of
COPPER MOUNTAIN MINING CORPORATION
"Gil Clausen"
Gil Clausen, P.Eng.
President and Chief Executive Officer
Website: www.CuMtn.com
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements and forward-looking information (together, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified by the use of terminology such as "plans", "expects", "estimates", "intends", "anticipates", "believes" or variations of such words, or statements that certain actions, events or results "may", "could", "would", "might", "occur" or "be achieved". In this document, certain forward-looking statements are identified, including the Company's goal of net zero carbon emissions by 2035 and anticipated production at the Copper Mountain Mine. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance and opportunities to differ materially from those implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include the risks set out in Copper Mountain's public documents, including in each management discussion and analysis, filed on SEDAR at www.sedar.com. Although Copper Mountain believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by applicable law, Copper Mountain disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE Copper Mountain Mining Corporation
The Defense Production Act of 1950 was modeled after FDR's WWII "War Powers Act". Congress amends and reauthorizes the law continually with the current version set to expire in 2025. In a nutshell, it gives the president broad powers to:
Direct private companies to prioritize orders from the federal government. The president can 'allocate materials, services, and facilities' for national defense purposes, and take actions to restrict hoarding of needed supplies. To bolster domestic production, the president may also offer loans or loan guarantees to companies, subject to an appropriation by Congress; make purchases or purchase commitments; and install equipment in government or private factories.
On March 31st, under his Executive Order, President Biden invoked the Defense Production Act to reduce our reliance on China, Russia, and other countries for critical metals used in electric vehicles. In relieving supply-chain pressures, this move opens avenues for our transition away from fossil fuels and toward cleaner, less environmentally harmful, renewable energies. As I understand it, the order does not accelerate the licensing/permitting process, but I suspect this may change, through legislation, given the urgency of our needs.
US Nickel Mining
One of these metals is nickel that finds its major use in stainless steel, but it is also critical for the energy density/storage capacity of lithium-ion batteries essential to EV range and performance. Pathetically, the United States, at half of one percent of global output, does not rank in the top-10 of nickel producing countries even though significant deposits are known to exist here.
More specifically, Minnesota, my home state, is known to contain some of the largest nickel deposits in the United States, described as "world-class". Both veins are in environmentally sensitive locales including one that abuts the Boundary Waters Canoe Area Wilderness (BWCAW) covering over a million acres of which 190,000 acres are water flowing through 1,100 lakes and hundreds of miles of rivers and streams. In other words, in addition to be recreationally important, the area is a primary watershed.
After receiving our permit from the Tofte Ranger Station, my son and I used 'put in' to at Hog Creek to canoe/portage down to Perent Lake in the BWCAW to camp and fish. There were no end to the walleyes, and we had the best of times before working our way back upstream to go home. The BWCAW is one of those primeval treasures wherein, within a half-a-mile or so, one forgets civilization to find peace in the clear water and old-growth woods. Before the days of GPS, without a map and compass, one could get quite lost in there.
Mines are well known to need water and to return it, often polluted, to nature. In the 1970's, federal judge Miles Lord fined, before shutting down, Reserve Mining for dumping 47 tons of waste rock into Lake Superior every minute; Minnesotans do not abide environmental abuse for the sake of corporate greed. The two proposed nickel mines now under the hot lights include:
Twin Metals , a subsidiary of Chilean conglomerate Antofagasta controlled by billionaire Andrónico Luksic. This operation is just south of Ely, Minnesota that had a long history in iron ore mining but where no active mines have existed for 50 years. It is in the Superior National Forest right on the edge of the BWCAW. Environmentalists are hell bent to shut down the project.
, a subsidiary of Chilean conglomerate Antofagasta controlled by billionaire Andrónico Luksic. This operation is just south of Ely, Minnesota that had a long history in iron ore mining but where no active mines have existed for 50 years. It is in the Superior National Forest right on the edge of the BWCAW. Environmentalists are hell bent to shut down the project. PolyMet (PLM), majority owned by Glencore (OTCPK:GLCNF) (OTCPK:GLNCY), of Marc Rich infamy. This copper-nickel mine is better known because its shares trade on the NYSE. The site is farther away from the BWCAW but abuts the Superior National Forest. It would repurpose facilities once associated with the Mesabi Range that for 150 years provided the bulk of the iron ore to the US steel industry. The Sierra Club is among others fighting PolyMet.
Talon Metals
Enter Talon Metals (OTCPK:TLOFF). Mind you, this mining company is not without its warts beginning with the spread of their offices between the British Virgin Islands (Tortola, yes, go figure), Canada (Ontario), and the US (Minnesota and Washington DC). Like its Minnesota brethren, it is an early-stage extractor with all the incumbent exploratory, regulatory, and financial risks (more on the latter in a minute).
However, Talon has two things going for it the first being its location away from the Superior National Forest, BWCAW, and Great Lakes. Draw two lines, one straight north from St. Paul and the other due west from Duluth, and where they intersect you will find Talon's Tamarack mine near their namesake town, population 91. Secondly, it has two important commercial partnerships in Rio Tinto (RIO) the world's #2 mining company behind BHP (BHP), and Tesla (TSLA) that has already entered into an agreement for its first US nickel supply with Talon. Among other things that also interest me in Talon:
Their board and management are rich with talent from major mining countries and companies.
Talon has recently discovered "numerous high-grade nickel copper" intercepts outside the main resource area at Tamarack.
They represent on their home page that there is cobalt, another strategic metal not mined in the US, in their Tamarack mine.
Out of their successful capital campaign, Talon has paid an early partner to reduce their rights to royalty payments going forward.
With funding and technical support from the Department of Energy, the company is exploring the possibility of using their mine for carbon sequestration.
In other words, Talon Metals has tangibly mobilized key stakeholders necessary for the success of their project that is continues to grow in its promise.
Meanwhile, however, investors need to get their heads around this startup's thin financials - no revenue, losing money, negative operating cash flow, but with a balance sheet including good liquidity, negligible debt, and well capitalized. And, if that doesn't curl your hair, get this - all four analysts that cover TLOFF, have it as a "buy" with a target price of whopping $1.05 representing a 60% premium over its heart-stopping price of 66 cents per share. Here are snapshot financials as carried by SA (under the circumstances, time series data are worthless):
2021 Revenues $0.0 Net Income ($5.5M) Op. Cash Flow ($2.5M) Cash & Eq. $25.1M Cur. Assets $25.5M Cur. Liabs. $2.4M Current Ratio 10.6x Total Liabs. $3.6M Equity $122.0M Liabs. to Eq. 0.03x
Most people are appropriately cautious and have neither the appetite - nor the place - to invest in companies like Talon. When I do, it is against the assumption that we could 'lose it all'. Still, we went forward on February 28th and March 1st based on my beliefs about the strategic imperative of such industries. These convictions did not arise spontaneously for me. Indeed, about a year ago, SA published an article of mine entitled, "Rethinking The Defense Industry"; it was about rare earth metal mining companies in which we are also invested and have done handsomely. I concluded that piece by saying:
All said, the traditional definition of "military defense" is timeworn. It no longer aligns with global realities. Our countries, and we investors, need to start thinking more broadly about what it takes to defend our competitive advantage meaning our industries, companies, and jobs.
My prediction about Talon has played out so far, we're up 22% in a month to the very day that President Biden weighed in on the topic by invoking the Defense Production Act covering nickel mining. For us, so far, knock on wood, TLOFF has delivered alpha against all indexes.
Data by YCharts
As with any miner, the juggernauts for Talon are the environmentalists (groups we have supported in the past financially). That said, we have come to a point wherein the costs on continuing to pollute our world at the levels we have with fossil fuels is unacceptable. We must address the situation including with the mining of metals we need to reduce our dependency on hydrocarbons. It is time to appropriately put aside idealism for realism that will protect areas sensitive environmentally while exploiting natural resources in other areas for the greater good.
Finally, in closing and on a personal note, provided together we can do it respectfully, nothing would please me more than to see mining return to Minnesota. My state's northern economy suffered greatly when the miners exhausted iron ore and taconite was no longer worth the effort. Fewer and fewer people remember how important the Mesabi was to the protracted industrial revolution and US manufacturing. To see Minnesota nickel become as important to the renewable revolution would be very satisfying, indeed.
https://seekingalpha.com/article/4499608-talon-metals-and-the-defense-production-act
Halifax, Nova Scotia--(Newsfile Corp. - April 4, 2022) - EDM Resources Inc. (TSXV: EDM) ("EDM" or the "Company") announces that it is in advanced exclusive discussions to obtain debt financing and enter into an offtake agreement sufficient to put EDM's Scotia Mine into commercial production in Q4 of 2023.
EDM's President and CEO, Mr. Mark Haywood, stated: "We are very pleased with our progress to date in selecting a potential transaction partner for the financing of the Scotia Mine and advancing our discussions of the terms of potential financing and offtake agreements. While we do not have a binding agreement as of yet, we are confident that upon the satisfactory completion of mine site due diligence by the prospective counterparty and following further negotiations, we will be in a position to announce that we have secured the financing we need move the Scotia Mine forward to production."
EDM will provide an update on the status of the negotiations and any agreements reached respecting the finance and offtake at or prior to the end of April 2022.
About EDM Resources Inc.
EDM is a Canadian exploration and mining company that has full ownership of the Scotia Mine and related facilities near Halifax, Nova Scotia. EDM also holds several prospective exploration licenses near its Scotia Mine and in the surrounding regions of Nova Scotia.
The Company's common shares are traded on the TSX Venture Exchange under the symbol "EDM". For more information, please contact:
Mark Haywood - President & Chief Executive Officer
Robert Suttie - Chief Financial Officer
Simion Candrea - Vice President, Corporate Development
Head Office: Purdy's Wharf, 1959 Upper Water Street, Suite 1301, Nova Scotia, B3J 3N2, Canada
Telephone: +1 (902) 482 4481
Facsimile: +1 (902) 422 2388
Email & Web: This email address is being protected from spambots. You need JavaScript enabled to view it. & www.EDMresources.com
The Company's corporate filings and technical reports can be viewed on the Company's SEDAR profile at www.sedar.com. Further information on EDM is also available on Facebook at http://www.facebook.com/EDMresources.inc Twitter at http://www.twitter.com/EDMresources and LinkedIn at http://www.linkedin.com/company/EDMresources.
LIMA: Peru, the world’s number two copper producer, will target “excess profits” that mining firms have gained from soaring global metals prices for extra taxation, the country’s economy minister says.
While President Pedro Castillo came to power last July pledging to increase taxes on the powerful mining sector, the current plan is far less ambitious than initial promises of sharp tax hikes that met fierce resistance from the industry and a divided Congress.
“The focus is on the surplus profits,” Oscar Graham, the country’s minister of economy and finance, said in an interview in Lima late on Friday.
He added that the government was looking at an “adjustment” to taxes.
Copper prices are currently trading at near record levels around US$10,000 (RM42,000) per tonne in the wake of Russia’s invasion of Ukraine.
“The margins (of the adjustment) are being evaluated,” he said, but added it was important that the sector did not lose competitiveness and that mining investment was not discouraged.
Graham said Peru needed better distribution of mining wealth to communities to quell mining protests that have rocked the sector and stalled production at key mines such as MMG Ltd’s Las Bambas and Southern Copper’s Cuajone mine.
“We have to look at the issue of the efficient use of resources provided by mining, otherwise we will have recurrent conflicts in the country,” he said.
Graham also said Peru faced risk from any “prolongation” of the war in Ukraine, with domestic prices having risen at their fastest pace in a quarter of a century in March.
“We are net importers of oil and corn, which form the chain of inputs that most affect the family basket,” he said. — Reuters
https://www.thestar.com.my/business/business-news/2022/04/04/peru-targets-copper-price-windfall
Trading volumes were low, with Chinese financial markets closed for a public holiday until Wednesday.
“Zinc stocks are already very low,” said ING analyst Wenyu Yao. “There’s not much of a buffer.”
Benchmark zinc on the LME was up 2% at $4,423.50 a tonne by 1038 GMT. The metal used to galvanize steel is up about 25% this year after rising 28% in 2021 and touching a record high last month.
LONDON — Zinc prices rose on Monday as a rapid fall in the amount of metal available in the London Metal Exchange (LME) warehouse system added to fears of supply shortages.
STOCKS: On-warrant inventories of zinc in LME-registered warehouses fell to 78,125 tonnes, the lowest since May 2020 and down from about 130,000 tonnes in mid-March.
SUPPLY: High energy prices have forced some zinc smelters in Europe to curtail production and Russia’s demand for payment for gas in roubles has raised fears of supply shortages or still higher prices.
UKRAINE: Germany said the West would agree to impose more sanctions on Russia in the coming days as nations around the world expressed outrage over civilian deaths in Ukraine.
CHINA: COVID-19 lockdowns could curb metals demand in China, but traders are hopeful of stimulus to support economic growth.
Analysts at ANZ said China’s coronavirus outbreak “has already led to a slowdown in the domestic movement of base metals” and, as a result, production cuts at metal fabricators.
REVIEW: The LME said it would limit daily price moves to 15% for all its metals and commission an independent review into chaos in the nickel market last month.
British financial regulators said they would also review the LME’s handling of the nickel market last month.
PRICES: LME copper was down 0.4% at $10,312 a tonne, aluminum rose 1% to $3,486, nickel added 0.9% to $33,520, lead fell 0.7% to $2,432 and tin was down 1.4% at $44,155.
(Reporting by Peter Hobson Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)
https://financialpost.com/pmn/business-pmn/falling-stockpiles-push-zinc-prices-higher
“With potentially further sanctions on Russia, there’s some concern that we may have further disruption of commodity supply chains,” said Ilya Spivak, a currency strategist at DailyFX.
Three-month copper on the London Metal Exchange was up 0.8% at $10,553.50 a tonne, as of 0647 GMT, after a 1.1% gain in the previous session.
London copper rose on Tuesday to its highest in nearly a week, as a drop in output from top producer Chile and the potential for more sanctions on Russia raised risks of supply shortages.
The United States and Europe were planning new sanctions to punish Moscow over civilian killings in Ukraine, and President Volodymyr Zelenskiy warned more deaths were likely to be uncovered in areas seized from Russian invaders.
Chile’s copper production fell 7.5% in February to 394,700 tonnes, the State Chilean Copper Commission (Cochilco) said in a report on Monday.
“Chile is sort of the premier copper destination and if we have a disruption in alternative supply like Russia with sanctions, that of course feeds onto itself,” Spivak added.
Trading was thin on Tuesday, with markets in top metals consumer China still closed for a public holiday.
The major Chinese financial center of Shanghai extended restrictions on transportation on Tuesday after a day of intensive city-wide testing saw new cases surge to more than 13,000, with no end to the lockdown yet in sight.
Meanwhile, the U.S. dollar held firm near one-week high on talks of more sanctions against Moscow, making greenback-denominated metals more expensive to buyers using other currencies.
STOCKS: Asian stocks rose to their highest in more than a month on Tuesday, underpinned by a broad recovery on Wall Street.
LME PRICES: Aluminium rose 0.6% to $3,466 a tonne, zinc eased 0.3% to $4,329.75, lead edged 0.2% higher to $2,417, and tin lost 1.1% to $43,665.
(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich, Uttaresh.V and Subhranshu Sahu)
https://financialpost.com/pmn/business-pmn/lme-copper-hits-near-one-week-peak-on-supply-concerns-2
Vancouver, British Columbia, April 05, 2022 (GLOBE NEWSWIRE) -- Universal Copper Ltd. ("Universal Copper" or the "Company") (TSX Venture: UNV) (Frankfurt: 3TA2) is pleased to announce the follow up program to the successful fall 2021 drilling program has commenced at the Company’s flagship Poplar Copper Project ("Poplar"), located southwest of Houston, B.C.
The 2021 program encountered significant copper intersections including:
“We have been eagerly waiting to start drilling again at Poplar since the conclusion of the 2021 fall program was completed in early November,” commented Universal Copper’s CEO and President Clive Massey, “with the exceptional drill results released in January and March heightening the anticipation. We will be following up on the 21-PC-135 intersection where recent re-interpretation of the historic drilling suggests mineralization plunges to the northeast.”
The Company is planning approximately 2,000 metres in 4 holes to expand the 21-PC-135 mineralization and confirm its northeast plunge. After this Phase is completed and results have been interpreted in the context of the conclusions and recommendations of the Vector Geological Solutions Inc. (“Vector”) targeted re-logging program, the Company plans to undertake an early summer follow-up program.
Drilling is again being conducted by Apex Diamond Drilling Ltd. of Smithers, B.C. Rugged Edge Holdings will handle camp and logistics, while Waldo Sciences Inc. will handle core logging, sampling, and QA/QC protocols. Analysis will be completed by ALS Minerals (“ALS”) at its ISO/IEC 17025:2005 accredited North Vancouver laboratory.
*CuEq – copper equivalents are based on the following: copper (US$9,972.10 per tonne), gold (US$1,816.60 per ounce), silver (US$22.90 per ounce) and molybdenum (US$41,836.39 per tonne)
About Poplar
The 61,600-hectare Poplar Project hosts a current undiluted indicated mineral resource of 152.3 million tonnes grading 0.32 per cent copper, 0.009 per cent molybdenum, 0.09 gram per tonne gold and 2.58 g/t silver and an undiluted inferred mineral resource of 139.3 million tonnes grading 0.29 per cent copper, 0.005 per cent molybdenum, 0.07 g/t gold and 4.95 g/t silver. The mineral resource estimate has a cut-off grade of 0.20% copper. Universal Copper cautions investors mineral resources, which are not mineral reserves, do not have demonstrated economic viability.
Poplar lies in an historic mining region, located 35km from the Huckleberry Mine and 42km from Equity Silver Mine, where low snowfalls will allow year-round work. The road accessible property is bisected by a 138 Kva Hydroelectric line and lies 88km from Houston and 400km from the deep-water port at Prince Rupert by rail.
https://finance.yahoo.com/news/universal-copper-commences-spring-2022-100000904.html
Here are the biggest small cap resources winners in early trade, Tuesday April 5.
Following a resource upgrade, SVM’s ‘Kasiya’ project in Malawi is now the largest rutile deposit (18Mt) and second largest graphite deposit (23Mt) ever discovered.
That 18Mt contained rutile puts Kasiya miles ahead of its closest competitors. Just check this out:
Rutile is the rarest, highest grade and most valuable source of titanium.
Meanwhile, each electric vehicle requires ~55kg of flake graphite to make the battery anode.
Both markets have strong outlooks.
The deposit grade is also high at 1.64% RutEq, SVM says.
A 2021 project scoping study – the first proper look at the economics of building a mine – will now be updated to examine the impact of higher grades, increased production volumes, and increased mine-life.
It is targeted for completion in Q2 this year. A more advanced prefeasibility study is targeted for completion in early 2023.
“It is a remarkable achievement by our team to have made the largest natural rutile discovery ever in just two years since initial identification,” SVM managing director Dr Julian Stephens says.
“The JORC MRE of this scale and grade is clearly highly strategic, Tier 1 and of global significance in a market where natural rutile is in extreme supply deficit.
“The step-change in scale will now allow us to examine potentially higher-grade throughput, increased production levels and a longer mine life in the upcoming Scoping Study update.
“The company is targeting a large-scale, low carbon-footprint and environmentally sustainable natural rutile and graphite operation which will also positively impact the environmental footprint of titanium pigment and other industries and provide a significant contribution to the economy of Malawi.”
The $311m market cap stock is up 33% year-to-date. It had $3.7m in the bank at the end of December.
Sovereign Metals share price chart
FG1 hit the boards last year with a focus on underexplored northeast Tassie, where the company believes there are ‘Fosterville-style’ gold deposits to be found.
Its main game is the ‘Golden Ridge’ and ‘Portland’ projects, where drilling is ongoing.
In early 2022, it picked up some gold-lithium project tenements in WA, which were the focus of a company presso released today.
The 1232sqkm lithium-gold portfolio is near the world class Pilgangoora, Wodgina, Mt Holland and Mt Cattlin lithium deposits.
‘Mt Dove’ in the Pilbara includes multiple gold-lithium targets located just 11km from the 6.8Moz Hemi gold project and along strike from Kairos’ Kangan gold-lithium target.
On ground exploration to commence at Mt Dove in May/June 2022, FG1 says.
FG1 also has plans to further increase the size and quality of its lithium-gold portfolio in 2022.
The $12.5m market cap stock is up 33% year-to-date. It had $6.9m in the bank at the end of December.
Flynn Gold share price chart
(Up on no news)
The newly listed stock is focused on lithium, rare earths, gold, and base metals in the mineral rich Lachlan Fold Belt of NSW.
The company is taking a “multi-commodity, multi-deposit style approach to exploration” at the flagship ‘Bateman’ project, MMC chief exec Clinton Carey says, starting with the important — but relatively boring – early stage stuff.
In late March it said that over 2,700 portable XRF readings at Batemans had shown widespread anomalous rare earths.
While XRF technology is not as reliable as lab assays in reflecting the amount of contained mineralisation, it is still a respectable indicator.
The results show anomalous rare earth results extend along major structures over multiple strike lengths “generating a mineralised target area greater than 4km and up to 800m wide”, MMC says.
Assay results are pending and anticipated shortly.
The $6.2m market cap stock is up ~20% year-to-date. It had ~$4.3m in the bank at the end of December.
Mitre Mining share price chart
(Up on no news)
This quiet tiddler is drilling to grow the 38,000t copper, 535t cobalt ‘Tollu Copper Vein’ deposit, part of the ‘West Musgrave’ project in WA.
Tollu hosts “a giant swarm of hydrothermal copper rich veins” in a mineralised system covering a +5sqkm area, ~40km from OZ Minerals’ (ASX:OZL) world-class Nebo-Babel nickel-copper deposit.
A conceptual (theoretical, not real yet) exploration target suggests up to 627,000t of copper may be present, the company says.
RDS says deeper RC drilling program at priority targets will kick off in the first half of 2022.
“Timing for this drilling is subject to Redstone securing a suitable RC drill rig that can accommodate deeper drilling and the necessary personnel,” it said January 31.
The $9m market cap stock is up 20% year-to-date. It had ~$2m in the bank at the end of December.
Redstone Resources share price chart
(Up on no news)
This iron ore-nickel-cobalt explorer/project developer has been largely MIA in 2022.
In February last year, ADY signed a deal to hopefully commercialise its Mariposa iron ore project in Chile.
Under the contract, Chinese company Hainan fully funds mining and construction “with all capital contributions, security, legal costs, risks and potential losses borne by Hainan solely”.
The deal covers the first 2 million tonnes of iron ore. Admiralty will get a ‘laddered’ royalty rate up to 7 per cent per tonne of iron ore produced if the price stays above US$90/t.
In its Dec quarterly the company said it was “now progressing to settling a final Joint Venture Agreement between the Company and Hainan”.
Start of construction was pencilled in for end of May 2022.
“The Company notes that delays in settling the Joint Venture Agreement and enabling commencement of activities at Mariposa were largely due to COVID-19 related travel disruption, particularly given Hainan’s operations team have previously been unable to apply for visas to enter Chile, however this process is now underway,” it says.
The 420m market cap stock is up 80% year-to-date. It had $1.7m in the bank at the end of December.
Admiralty Resources share price chart
https://stockhead.com.au/resources/resources-top-5-a-rutile-graphite-monster-emerges/
Atalaya Mining Plc has announced a new mineral resource estimate, prepared in accordance with CIM guidelines and disclosure requirements of NI 43-101, for its 100% owned Proyecto Masa Valverde (PMV) deposits.
PMV is located in the Iberian Pyrite Belt of southern Spain approximately 28 km to the south of Atalaya’s 15 million tpy processing plant at Proyecto Riotinto. PMV consists of two deposits, Masa Valverde and Majadales, which are 1 km apart. Majadales was initially discovered by Atalaya’s exploration team in 2019.
Highlights:
Significant increase in tonnage and contained copper, silver and gold vs prior estimate Increases of 42%, 33%, 26%, and 34%, respectively at the Masa Valverde deposit.
Masa Valverde Initial Indicated Mineral Resource: 16.9 million t at 0.66% Cu, 1.55% Zn, 0.65% Pb, 27 g/t Ag, and 0.55 g/t Au (1.51% CuEq). Containing an estimated 112 kt Cu, 262 kt Zn, 110 kt Pb, 14.7 Moz Ag, 0.3 Moz Au.
Masa Valverde Inferred Mineral Resource: 73.4 million t at 0.61% Cu, 1.24% Zn, 0.61% Pb, 30 g/t Ag, and 0.62 g/t Au (1.37% CuEq). Containing an estimated 448 kt Cu, 911 kt Zn, 448 kt Pb, 70.8 Moz Ag, 1.5 Moz Au.
Two copper-rich zones (10.2 million t indicated and 48.1 million t inferred) could deliver higher grade material for processing at the existing Proyecto Riotinto plant with minimal modifications.
Majadales initial inferred mineral resource: 3.1 million t at 0.94% Cu, 3.08% Zn, 1.43% Pb, 54 g/t Ag and 0.32 g/t Au (2.55% CuEq).
A preliminary economic assessment (PEA) on PMV is expected to be completed in H2 2022, with a focus on scenarios that would leverage the existing plant at Proyecto Riotinto and access the orebodies via a single ramp.
Permitting process continues, with submission of an exploitation concession application.
Continued potential for further resource expansion, with compelling targets already identified via recent detailed ground geophysical survey.
Alberto Lavandeira, CEO, comments:
“The current resource definition drilling programme that began in May 2021 has successfully expanded the mineral resource base and has also upgraded a portion to the indicated category.
“We remain excited about the continued exploration potential at PMV, given the many anomalies our exploration team has identified. We hope to make further discoveries, building on our success in discovering the Majadales deposit, which is shallower and higher grade than Masa Valverde and thus may play a key role in optimising future development scenarios.
“At the Masa Valverde deposit, the significant increase in tonnage above cut-off, the sub-horizontal geometry and the defined continuity of the main mineralised zones will allow us to evaluate larger scale, more efficient and lower operating cost underground mining methods. These scenarios will be evaluated in the upcoming PEA, which is expected to focus on development scenarios that leverage our nearby Proyecto Riotinto processing plant, where copper-rich material from PMV could potentially be treated with minimal plant modifications, highlighting the opportunity to develop another project with low capital intensity.”
China is stepping up exports of aluminium to fill a widening supply gap in Western markets.
The country shipped out 26,378 tonnes of primary aluminium in February, the highest monthly total since 2010. Imports collapsed over the first two months of the year, with the result that China turned a net exporter in February for the first time since November 2019.
This is a significant shift in trade patterns. China sucked in massive amounts of primary metal over 2020 and 2021 as domestic production struggled to match demand.
The pendulum is now moving in the opposite direction as high power prices curtail European production, sending both the London Metal Exchange (LME) price CMAL3 and physical premiums soaring.
The Western supply crunch is also incentivising an accelerating export flow of Chinese semi-manufactured products to Western markets.
Such “semis” exports have historically been the cause of much grief in the global aluminium sector, with Western countries imposing a raft of anti-dumping duties to protect domestic markets.
Right now though, the rest of the world may need China’s metal in whatever form it can get.
CHINA FLIPS TO NET EXPORTER OF PRIMARY METAL
China hasn’t exported much unwrought aluminium since the 2006 imposition of a 15% export tax.
The world’s largest producer of the metal didn’t need to import much either until 2020, when domestic production started stalling as power-hungry smelters curtailed output to meet Beijing’s energy efficiency targets.
China soaked up 1.065 million tonnes of primary aluminium from the rest of the world in 2020 and another 1.580 million last year.
That boom has come to an abrupt end. Imports in January and February slumped to 57,000 tonnes from 245,000 tonnes in the same period of 2021. February’s tally of 18,343 tonnes was the lowest since May 2020.
As LME prices have risen faster than those on the Shanghai Futures Exchange, the arbitrage has switched against imports and in favour of exports.
Those of primary metal still have to overcome the export tax headwind and it’s possible that outbound flows are coming from bonded warehouses sitting outside China’s tax regime.
Two shipments accounted for most of February’s exports – 5,000 tonnes to Italy and 20,100 tonnes to Montenegro.
The Balkan country might seem an unlikely destination for Chinese metal, but its only smelter – KAP – wound down primary production at the end of last year due to high power prices.
It is likely using imported metal to feed its product manufacturing lines which are still operating.
PRODUCT EXPORTS ACCELERATE
The widening export-friendly arbitrage is stimulating more shipments of Chinese aluminium products, which not only escape the tax on primary metal but come with a VAT rebate.
Semis exports fell in both 2019 and 2020, partly because China’s own demand was robust and partly because of the growing number of tariff barriers erected by other countries.
That trend reversed sharply last year, when product shipments rose by 18%, and has accelerated this year with exports surging by 21% year-on-year in January and February.
Because of the tax rebate, aluminium is much more likely to flow out of China in this form than as unwrought primary metal.
Researchers at AZ Global consultancy for example estimate that Chinese exporters of plate and strip can currently achieve margins of around $1,000 per tonne by shipping through the arbitrage window.
The likelihood is that semis exports are going to continue growing over the course of the year.
CHINA PRODUCTION RECOVERY
China’s aluminium sector seems to be collectively recovering from its power problems as the government eases back on its quarterly energy efficiency targets.
The country’s annualised output grew by 1.8 million tonnes in January and February, according to the International Aluminium Institute (IAI), and more is on the way.
AZ Global estimates 15 Chinese smelters with collective capacity of 1.2 million tonnes started lifting output in March, with a likely 16% boost to production.
This smelter resurgence however is going to hit the domestic market just at the wrong time, as COVID-19 lock downs cramp demand.
Such Chinese supply-demand mismatches have in the past been resolved by higher semis export flows, and there’s no reason to think this year is going to be any different.
Backlash from other countries however may be conspicuous by its absence this time around, given mounting supply chain problems outside of China.
WESTERN OUTPUT SLIDING
While China’s aluminium production is recovering, that in the rest of the world is falling.
European smelters were already struggling with soaring energy costs before Russia’s invasion of Ukraine. Power prices have since risen further, with Germany’s Trimet the latest to confirm it is reducing production further at one of its sites.
West European production fell by almost 10% in the first two months of this year, and annualised run-rates slipped below 3.0 million tonnes for the first time ever in February.
There is also a very big question mark over Russian supply, a key component of Europe’s supply chain.
Rusal, the country’s giant aluminium operator, is not directly sanctioned but is facing a growing number of secondary sanctions such as a ban on Australian exports of the alumina needed to run its smelters.
That compounds the company’s raw materials headaches after the closure of its Ukrainian alumina refinery, and there are signs its internal supply chains have backed up all the way to its bauxite operations in Guinea.
The IAI figures show Eastern European aluminium production holding steady over the first two months of the year, but for how long is the big unknown.
Equally uncertain is the status of Russian aluminium as a tradeable commodity given the growing number of companies which are exiting their Russian business after the country’s “special military operation” in Ukraine.
European physical premiums are still rising, that for duty-paid aluminium currently at an all-time high of $555 per tonne over LME cash.
U.S. premiums are also on a tear as buyers are forced to compete with Europe for imports.
Both markets need more aluminium. China, it seems, is going to supply it.
The opinions expressed here are those of the author, a columnist for Reuters.
Source: Reuters (Editing by Jan Harvey)
https://www.hellenicshippingnews.com/china-lifts-aluminium-exports-as-western-production-slides/
United Kingdom: Last month, 13 copper-industry representatives at the London Metal Exchange were asked whether Russian metal should be blocked from its warehouses. Ten of them said “yes.” But when advisory groups for nickel and aluminum discussed the same question, the general consensus was “no.”
The LME, which is the ultimate decision-maker, says it won’t take action that goes beyond government sanctions — which, so far, have left most of the metals industry untouched.
But the behind-closed-doors discussions reflect a wider angst over whether to keep buying from Russia, as the industry weighs the stigma from the war against its own commercial interests — and the fact that vital metals like aluminum and copper were in short supply even before the invasion of Ukraine.
For now, Russian metal is largely still flowing to the world’s factories and building sites. Many traders and fabricators who buy from Russian companies are tied in to pre-existing purchase deals that can extend over years. And commodities merchants have a well-earned reputation as buyers and financiers of last resort when others have long backed away.
Still, a growing number in the industry say they won’t take on new Russian business, and some are actively working to disentangle themselves. That’s making it ever-harder for Russia’s metals producers to sell whatever output is not already contracted, and may ultimately force them to cut production if there’s no change by the time long-term deals come to an end.
For the LME, the risk is that material mined in Russia starts piling up in its warehouses because it has nowhere else to go, creating dangerous dislocations at the nexus of the global metals trade.
“We see from our customer base there is hardly any interest to buy Russian metal if they can avoid it — and they can,” said Roland Harings, chief executive officer of copper giant Aurubis AG, which is represented on the LME copper committee. If the metal flows to the LME instead, “then you have this phantom stock which has an influence on the market because it shows high stock levels but nobody wants it.”
The question of what happens to Russia’s metal exports is of vast consequence to global markets — it’s a key supplier of palladium, nickel, aluminum, steel and copper. Prices for all of those metals set new all-time highs in March, although steel is the only one to be the direct target of sanctions so far.
Aurubis, Europe’s largest copper smelter, is “trying to get out” of its contracts for Russian supplies, and is in favor of sanctions against metals, Harings said in an interview last week. “I believe in the end whatever money we pay will end up in the wrong pockets,” he said.
Norwegian aluminum company Norsk Hydro ASA said it was taking the minimum possible under its contracts with Russian companies and was aiming to reduce that further.
There are still buyers for now — even in Europe. Russian metals producers like MMC Norilsk Nickel PJSC and United Co. Rusal International PJSC tend to sell on annual or multi-annual deals to big industrial groups, and for the most part these contracts are still being fulfilled, according to people familiar with the matter.
Traders like Glencore Plc, which has a deal to buy aluminum from Rusal until at least 2024, and Trafigura Group, which has a long-standing relationship with Nornickel, are also fulfilling contracts in Russia.
Still, there are big challenges. Most container shipping lines have stopped calling at Russian ports. Precious metals like gold and palladium are typically sent to Switzerland or London by plane — but most flights out of Russia are now grounded.
And few new deals are happening. Glencore, which has been one of the largest traders of Russian commodities since the days when founder Marc Rich struck agreements with the Soviet Union, announced last week it would do no new business in Russia.
Traders say it’s nearly impossible to find banks willing to finance new purchases of Russian metals, even in China, the world’s biggest metals consumer.
That’s where the debate over the LME comes in.
Producers generally prefer to sell their metal to end users, but delivering onto the exchange is also an option. Buyers on the LME don’t know whose metal they will receive until the contracts expire.
Those arguing for a ban on Russian metal say there’s a risk that the country’s producers could dump large volumes of metal into LME warehouses to raise cash quickly. If it became clear that LME stocks were dominated by Russian metal that no one wants, the exchange’s contracts could be priced differently from the rest of the global market.
Already, Trafigura has been delivering Russian copper to LME warehouses in Asia in recent days after failing to sell it in China, Bloomberg reported.
The two copper committee members who voted against a ban — representatives of China’s Minmetals and IXM, a trading house owned by China Molybdenum Co. — argued that it wasn’t the LME’s place to impose sanctions, and that doing so would disrupt an already febrile market. A third, from French cable maker Nexans SA, abstained, according to people familiar with the matter.
The LME committees only have an advisory role. But the exchange is also wrestling with the issue: Chief Executive Matthew Chamberlain told Bloomberg TV the LME wanted to make sure it “can’t be part of financing any type of atrocity,” and was in talks with governments.
The LME has said it will not impose restrictions on Russian metal that go beyond government sanctions. Still, any move by the U.S., U.K. or EU to target Russian metal flows would probably lead the exchange to block new deliveries.
On Friday, the LME made the largely symbolic decision to ban deliveries of newly exported Russian aluminum, copper and lead from its warehouses in the U.K., in response to a new import duty imposed by the U.K. government.
“The western world is going to have to work out ways of using less Russian metal,” said Duncan Hobbs, research director at metals trader Concord Resources Ltd. “We will see some redistribution of trade flows as a result of what has happened, even if the fighting stops tomorrow.” –Bloomberg
Also read: Sri Lanka names new finance minister, after President Rajapaksa’s brother quits post
Europe’s ambitious timetable for building its way out of a dependence on Russian energy faces potential delays and billions of euros in extra costs as the war in Ukraine makes steel, copper and aluminum scarce and more expensive.
A rush to replace Russian fossil fuels is prompting the continent to focus on shoring up flows of liquefied natural gas (LNG) in the near term and increasing generation from renewable sources by 2030. Germany pledges to build two LNG terminals, France wants to resume talks with Spain about a connecting pipeline, and the UK seeks more homegrown wind, solar and nuclear power.
Yet prices for the necessary materials keep heading in one direction. Steel, copper and aluminum each touched records in the past 12 months, and the spikes threaten to slow such undertakings as the EU’s blueprint to almost triple wind and solar capacity this decade - a colossal investment that could require about 52 million tons of steel alone.
“This war has an impact, of course, on all those companies, including us, that are on the doorstep of making quite large-sized investments,” said Fred van Beers, chief executive officer of SIF Holding, which makes steel platforms for wind turbines. “It’s putting our business case upside down,” he said.
Nord Stream 2 pipeline
Before the invasion, Russian gas was relatively cheap, easy to transport and in ample supply. Those factors, plus the anticipated opening of the Nord Stream 2 pipeline to Germany, helped persuade Europe to reduce its own production.
The EU imported about 155 billion cubic meters of gas from Russia last year, according to the International Energy Agency. In the aftermath of war, the EU wants to cut dependency by two-thirds this year.
About 30 billion cubic meters can be replaced by other suppliers, with the difference made up by renewables, nuclear and changes in consumption, the IEA said. For the EU, the price for the infrastructure may be as much as 20% higher than before the war started, said Grant Sporre, an analyst at Bloomberg Intelligence. The European Commission’s transition plan involves installing 290 gigawatts of wind and 250GW of solar. The bill just for the steel amounts to €65bn at current market prices.
Russia and Ukraine are among the biggest exporters of steel slabs used in building turbines and gas pipelines. While alternative sources are possible, costs for those are 50% higher than normal, according to Rysted Energy. Compounding the problem is China’s decision to lock down its steelmaking hub of Tangshan in an effort to control a Covid-19 outbreak.
Copper is another vital ingredient, with high conductivity that’s ideal for internal wiring and external cables. Europe requires about 7.7 million tons to meet its 2030 target, and this year’s rally adds about €6.9bn to the price tag, according to Bank of America.
Then there’s the aluminum needed for solar panels, turbines, and the grids they connect with. Europe has a critical shortage because production dropped after soaring power costs reduced smelting profits.
Refined aluminum
Russia is the largest producer outside China, with its refined aluminum accounting for about 5% of global production. Prices rocketed to a record in March. The risk that Russia’s shipments could be throttled by potential sanctions helped fuel those increases.
“The world might have to get by without Russian supplies,” Andrew Forrest, chairman and founder of Fortescue Group Metals, said. “It is certainly doable, but there’ll be an adjustment period,” he said.
More grids will be needed to deliver huge amounts of renewable generation to where the electricity is needed.
But it’s not just about clean infrastructure. LNG is getting a boost with Germany’s plans for two new terminals as soon as this year and the Netherlands securing a floating storage and regasification unit in March. Italy and Estonia are pushing to swiftly set up theirs, too.
The UK and France are plotting a vast expansion of nuclear power. About 230,000 tons of steel reinforcement will be used in building Electricite de France’s Hinkley Point C in southwest England, and plans are being rolled out for other reactors.
“Everyone is talking about accelerating the energy transition, and everyone will need the same materials,” said Julian Kettle, senior vice president for metals and mining at Wood Mackenzie.
https://www.irishexaminer.com/business/economy/arid-40843286.html
ST. JOHN’S, Newfoundland and Labrador, April 06, 2022--(BUSINESS WIRE)--Altius Minerals Corporation (ALS:TSX) (ATUSF: OTCQX) ("Altius" or the "Corporation") is pleased to update its Project Generation ("PG") business activities and its public junior equities portfolio. The market value of equities in the portfolio at March 31, 2022 was $67.3 million, compared to $55.5 million at December 31, 2021. New investments for the quarter exceeded equity sales for a net cost of $1,400,000.
The primary driver of the increase in portfolio valuation in the quarter was due to receipt of payment shares from three different public issuers related to projects sold by Altius as described below.
8,000,000 common shares, being 16.8% of newly listed Labrador Uranium Inc. (LUR:CSE), for sale of the Corporation’s Labrador uranium projects in late 2021 - https://consolidateduranium.com/news-releases/consolidated-uranium-announces-proposed-spin-out-of-labrador-uranium-inc-creating-a-new-labrador-focused-uranium-explorer-and/. Labrador Uranium began trading on March 3rd, 2022, is well-capitalized from an $8 million private placement in November 2021 and intends to commence drill testing of top priority targets, including the Notakwanon uranium project, during the summer of 2022. Altius retains a 2% gross overriding royalty on its vended claims.
13,427,507 common shares, being 19.9% of newly listed High Tide Resources Inc. (HRTC:CSE), ("High Tide") for the sale of the Corporation’s Labrador West (Goethite Bay) iron ore project in 2019 - http://avidiangold.com/wp-content/uploads/2019/08/Avidian-PR-HT-Aquires-Goethite-Bay-Project-v13-FINAL.pdf. High Tide commenced trading on February 25th, 2022 and plans to release a maiden resource and commence a PEA level study within the next 12 months. Altius retains a 2.75% gross sales royalty on the Labrador West project.
18,836,523 common shares in Technology Minerals Plc. (TM1:LON) ("Technology Minerals") for the sale of the Corporation’s interest in the Metastur copper-cobalt-nickel project joint venture in Austurias, Spain in late 2021 – https://www.londonstockexchange.com/news-article/TM1/exploration-update-on-the-asturmet-project/15365584. Technology Minerals commenced trading on the London Exchange in November 2021. Altius retains a 1.5% net smelter return ("NSR") royalty on all concessions comprising the Metastur property.
Story continues
An updated list of the public equity holdings has been posted to the Altius website at http://altiusminerals.com/projects/junior-equities.
Portfolio and Project Highlights
Altius increased its equity ownership in Orogen Royalties Inc. (OGN:TSV-V) ("Orogen") during the quarter to 29,315,015 common shares or 16.45% of the issued and outstanding shares of Orogen before considering an additional 7,115,546 share purchase warrants priced at $0.40 per warrant that it holds. Orogen realized first revenue from its Ermitaño gold project royalty in Mexico that is operated by First Majestic Silver Corp. while also announcing a new gold discovery from the project at a target referred to as Luna https://www.orogenroyalties.com/news/orogen-receives-first-royalty-payment-from-the-ermitano-deposit.
Orogen also holds a 1% NSR royalty covering the Silicon project located near Beatty, Nevada which is operated by AngloGold Ashanti ("AGA"). As well, Altius directly holds a 1.5% NSR royalty covering the project. During the quarter AGA announced a maiden inferred resource of 3.37 million ounces of gold for the Central-Silicon gold discovery while also continuing to advance other discoveries within the project and royalty areas. For further information please refer to the Altius news release of February 22, 2022 - https://altiusminerals.com/storage/press-releases/2022-2-24-discoveries-update-final--1645710289.pdf.
Adventus Mining Corp. (ADZN:TSXV) ("Adventus") announced that it has entered into a US$235.5 million project finance package with Wheaton Precious Metals Corp. and Trafigura Pte Ltd for its Curipamba project in Ecuador - https://www.adventusmining.com/news/122583. The package consists of US$180 million in precious metal stream financing from Wheaton and a US$55 million loan and offtake agreement with Trafigura. Adventus also completed a $33.5 million equity financing during the quarter that will be used to support pre-construction costs for the El Domo mine at Curipamba, an initial drill program at the Santiago Project, and for general corporate purposes and working capital. In addition to its large equity holding in Adventus, which it added to during the quarter, Altius holds a 2% NSR royalty covering the Curipamba project.
Gungnir Resources Inc. (GUG:TSX-V) ("Gungnir"). During the quarter Altius acquired 6.25 million units of Gungnir at a price of 12 cents per unit, for a total investment of $750,000. Gungnir is primarily focused on exploration of a collection of discovery-stage nickel sulphide projects in Sweden.
In addition to the equity investment Altius paid $250,000 for options to acquire GSR royalties covering two of Gungnir’s projects as described in the following news release - http://www.gungnirresources.com/news/2022/gungnir-resources-announces-1-million-strategic-investment-from-altius-minerals-including-equity-financing-and-royalty-option-on-nickel-assets.
Wolfden Resources Inc. (WLF:TSX-V). In February, Altius completed an additional $1 million royalty investment to expand its ownership of timber rights held by Wolfden at Picket Mountain, Maine. Wolfden intends to use the proceeds to fund advancement of its permitting process at the project.
Qualified Person
Lawrence Winter, Ph.D., P.Geo., Vice‐President of Exploration for Altius, a Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects, is responsible for the scientific and technical data presented herein and has reviewed, prepared and approved this release.
About Altius
Altius’s strategy is to create per share growth through a diversified portfolio of royalty assets that relate to long life, high margin operations. This strategy further provides shareholders with exposures that are well aligned with sustainability-related global growth trends including the electricity generation transition from fossil fuel to renewables, transportation electrification, reduced emissions from steelmaking and increasing agricultural yield requirements. These macro-trends each hold the potential to cause increased demand for many of Altius’s commodity exposures including copper, renewable based electricity, several key battery metals (lithium, nickel and cobalt), clean iron ore, and potash. In addition, Altius runs a successful Project Generation business that originates mineral projects for sale to developers in exchange for equity positions and royalties. Altius has 41,175,595 common shares issued and outstanding that are listed on Canada’s Toronto Stock Exchange. It is included in each of the S&P/TSX Small Cap, the S&P/TSX Global Mining, and the S&P/TSX Canadian Dividend Aristocrats indices.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220405006238/en/
Contacts
Chad Wells
Email: Cwells@altiusminerals.com
Tel: 1.877.576.2209
Flora Wood
Email: Fwood@altiusminerals.com
Tel: 1.877.576.2209
Direct: +1(416)346.9020
https://finance.yahoo.com/news/altius-provides-1st-quarter-2022-115500781.html
Treatment charges for spot copper concentrate in China could continue to rise in the second quarter amid easing supply and as smelters in China show a stronger preference for super clean concentrates in the spot market, market participants said.
Supply of complex copper concentrates — which have high levels of impurities like arsenic and fluorine — increased in Q1 due to production boosts at Indonesia’s Grasberg and Serbia’s Timok mines.
These concentrates need to blended with other concentrates to lower deleterious content in order to meet import regulations by Chinese customs — and as a result of the increase in complex concentrate supply, have seen greater availability in the market.
Offers for clean concentrate also increased in the spot market in Q1 due to unexpected maintenance at major Chinese smelter Yanggu Xiangguang Copper in March.
The S&P Global Commodity Insights daily clean copper concentrate treatment charge reached a one-year high March 31 of $79.20/mt CIF China — up 33% from Dec. 31, 2021 — and is expected to continue rising into Q2 as supply eases. A higher TC translates into a lower price for the concentrate.
A road blockade at the Las Bambas mine in Peru was lifted in March, and production at Ivanhoe Mine’s Kamoa-Kakula site in the Democratic Republic of Congo is scheduled to ramp up in Q2. Meanwhile, shipments initially bound for Yanggu Xiangguang will be diverted into the spot market instead.
Smelters were more intent than traders to conclude purchases in the spot market in Q1, as the spread between what the two groups of buyers were willing to pay narrowed.
Traders typically pay a lower TC than smelters, but have been more reluctant to take on physical positions since early Q1 amid an increasing number of prompt shipments and a rising TC.
As the Clean Copper Concentrate Producer-Trader TC differential sank to minus $1.60/mt on March 24 — the lowest since the assessment was launched on Dec. 1, 2021 — producers showed greater preference in selling directly to smelters instead.
Logistical disruptions both within and outside of China have led to a rise in in-transit concentrate inventories, although this has not dampened smelter demand for material in the short term.
Shipment delays from Las Bambas in Peru and Escondida in Chile, as well as labor shortages impacting the loading of US material, posed challenges in Q1. These were exacerbated by stringent pandemic controls upon arrival in China, which caused waiting periods for discharging at ports along the Yangtze River to be extended by 3-5 days on top of the usual 10 days before customs clearance.
“[The measures] led to higher-than-usual in-transit inventory levels, which smelters were not able to immediately use,” a source at a smelter in eastern China said, explaining their continued buying of spot material despite being well-stocked.
Meanwhile, Indonesian supply to southeastern Europe via the Black Sea has been disrupted by Russia’s invasion of Ukraine, and market participants expect the material to be diverted to Asian consumers if the conflict dragged on, tipping the scales toward greater supply.
Demand rises for super clean concentrate
Amid the greater availability of blended concentrates and rising copper and gold prices, smelters have also shown a greater preference for clean concentrates with gold content lower than 1 gram and copper content of 22%-25%.
“Considering the cost of removing impurities and the difficulties in blending when buying non-standard concentrates, it makes greater sense to just buy clean concentrates,” a second smelter in eastern China said.
As an indication of how the market’s preference for clean concentrates has impacted price, the spread between clean material and Antamina B, which has high bismuth and zinc, widened to a $10/mt TC in March from $5/mt TC in January.
Outlook mixed for imported cathode premiums
Opposing forces are expected to cloud the outlook for currently elevated copper cathode prices, including lower Chinese domestic output and weaker demand due to pandemic measures in pursuit of what the Chinese government has called a dynamic Covid Zero strategy.
On one hand, cathode supply has tightened in China as Yanggu Xiangguang has stopped production and Chinese smelters started to export cathodes.
On the other, coronavirus outbreaks across parts of China have caused transportation costs to rise and dampened cathode demand and transaction volumes.
In addition, many Chinese traders have shied away from buying Russian cathode using the dollar even as China has not imposed sanctions against Russian entities, as Chinese banks have complied with Western sanctions and have not been issuing dollar-denominated letters of credit for Russian material.
While Western sanctions have so far left Russian cathode untouched – targeting mainly Russian banks and other commodities – those transacted in Chinese yuan have been observed without discounts.
Inflows of Russian cathodes to China in February and a slow recovery of premiums for imports after the Lunar New Year have put pressure on premiums, as has tepid demand from the construction sector, slower manufacturing during the Winter Olympics and pandemic controls across China.
The domestic glut has caused Chinese copper prices to lag the overseas market, and import losses widened to a record Yuan 3,000/mt ($470/mt) March 4 as three-month copper prices on the LME soared past $10,500/mt.
Chinese copper cathode import premiums were assessed at $20/mt March 7, the lowest since June 21, 2021.
Record high losses on paper have driven traders to divert incoming shipments into bonded warehouses, where goods can be exported to LME warehouses or sold in the domestic market later when prices improve.
Source: https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/metals/040422-trade-review-copper-tcrcs-seen-rising-in-q2-as-supply-eases
https://www.hellenicshippingnews.com/copper-tc-rcs-seen-rising-in-q2-as-supply-eases/
LONDON, April 5 (Reuters) - The good news for the London Metal Exchange (LME) is that its nickel contract is trading again after last month's chaotic suspension.
Average daily nickel volumes inevitably dropped sharply in March relative to February but were only 2% below those of March last year, which is not bad considering the six-day trading halt and subsequent stop-start return. read more
The bad news for the LME is that most of the trading appears to have been a mass rush for the exit door. Nickel market open interest has plunged to levels last seen in 2013.
The stampede has been equally dramatic in China, where market open interest on the Shanghai Futures Exchange nickel contract is the lowest since April 2015, which was only the second month of trading after its launch.
Nickel prices are still strong and big short positions hang over the market. Rapidly dwindling participation risks opening up a liquidity vacuum and a volatility trap.
Nickel's wildness makes it a special case, but high prices are causing a broader risk retreat from the industrial metals sector as even the biggest players struggle to cope with the cost of financing positions.
Indeed, Goldman Sachs warns that multiple parts of the commodities complex are in danger of falling into a self-perpetuating volatility trap.
LME and Shanghai Futures Exchange market open interest vs LME price
MIND THE TRAP
As defined by Goldman Sachs, the global nickel market is already there.
"A lack of risk capital lowers market participation, driving down liquidity and exacerbating volatility, and further discouraging potential lenders and investors, reinforcing lower participation and higher volatility," is how the bank describes a volatility trap. ("A financially constrained physical market", April 3, 2022)
There are obvious reasons for traders to wind down their risk exposure to nickel. Take your pick from the LME's cancellation of trades, eye-watering margins or the prospect of enhanced regulatory scrutiny, both in London and China.
But it begs the question of what the exodus means for price and trading in the days and weeks ahead. LME three-month nickel is around $33,500 per tonne, almost $10,000 above where it was at the start of March.
The outsized short positions accumulated by Chinese nickel and stainless producer Tsingshan are subject to stand-still agreements but they are still there. read more
The resolution of this positioning tension is going to be harder in a low-liquidity market-place.
You can start to see why the LME has brought in price limits and why it feels it can count on "broad support for retaining the daily price limits for the foreseeable future so as to (...) minimise the potential for disorderly price moves".
Those price move caps have been rolled out across all the exchange's deliverable contracts, which attests to the broader dangers.
Open interest on both the LME's aluminium and zinc contracts has also fallen sharply following the nickel crisis.
This is in part a spill-over effect as positions were liquidated to meet nickel margin calls. But both aluminium and zinc are becoming more difficult to trade in their own right because of the supply-chain stresses emanating from the Ukraine crisis that have lifted prices and volatility. read more
The only major LME metal not to have seen a sharp reduction in open interest is copper.
But Doctor Copper has its own story of risk aversion to tell.
LME market open interest for aluminium, copper, nickel and zinc
LONG CONVICTION, SHORT POSITIONING
The LME's copper contract was already in special measures after turning wild in October last year.
Open interest fell over the ensuing three months, dipping to a decade low in January, which is why there was little immediate reaction to the nickel debacle.
However, LME copper market open interest has been sliding since 2013, albeit with some sharp fluctuations around the first pandemic hit in 2020.
CME copper open interest has also been trending lower since 2017. Speculative flows on the investor-friendly U.S. exchange have been conspicuous by their absence even as the price has rallied to all-time highs above $10,000 per tonne.
Copper is typical of a market "long on conviction but short on position," according to Goldman Sachs.
The bank notes that while the S&P GSCI commodities index has risen by 125% since October 2020, investment in the Bloomberg Commodities Exchange is up by only 7% on a price-adjusted basis over the same period.
The contrast with the China-centric bull market at the end of the 2000s is stark. Back then fund money poured into the complex, both directly and via passive long-only index funds.
However, too many investors bought in near the top of the cycle only to watch metals prices grind inexorably lower over the first half of 2010s.
Since when commodities have largely dropped off the investment community's radar, which has constrained the flow of risk capital into the sector.
So too has the withdrawal of many banks from the commodities finance and trading space over the last 10 years.
Just as metal producers have failed to invest in new production capacity to meet fast-rising demand from energy transition trends, the financial community has failed to invest in the capacity to trade the resulting higher prices.
CME copper contract price and market open interest
SYSTEMIC RISK
It's not just Goldman Sachs worrying about what it calls the "deeper mismatch between financial and physical market risk".
Bank of England Governor Andrew Bailey assesses wild commodity markets as the area of greatest fragility in terms of stresses on the financial system.
"We can't take resilience, in particular in that part of the market, for granted," Bailey told a March 28 event held by the Bruegel think tank in Brussels. read more
Bailey said the cost of doing commodity business will inevitably reflect the heightened price volatility and change in risk for everything from aluminium to gas to wheat.
"We have to watch very closely to ensure that the step change in the cost of risk doesn't cause a market failure," Bailey said.
It may be too late for nickel.
SHANGHAI, Apr 6 (SMM) - After two great leaps, LME nickel has little liquidity last week. The daily traded volume was maintained at 1,000 lots to 2,000 lots. LME nickel prices fluctuated between $31,700/mt to $33,600/mt slightly. At present, the Russia-Ukraine conflict has not eased, and the probability that it will affect commodity prices beyond expectations still exists. In China, deteriorating domestic pandemic has prolonged the transport and delivery of spot pure nickel. For nickel sulphate, battery-grade nickel sulphate was in great discounts over nickel briquette. Nonetheless, the discounts may narrow after low-priced goods were consumed. To sum up, nickel prices will still deviate from the fundamentals.
Nickel Sulphate: Quotes of battery-grade nickel sulphate were 45,500-48,000 yuan/mt as of last Friday, the average price decreased 1,250 yuan/mt from a week earlier. With the relative stability of nickel prices, the market inquiry and offer were heated last week. However, the quotes of nickel salt enterprises still varied due to the combined influence of cost, capital and inventory. According to the comprehensive understanding of upstream and downstream, the quotation range varied. The quotation of salt plants was concentrated at 46,000-49,000 yuan/mt, and a few quotations were still higher than 50,000 yuan/mt due to cost problems. Besides, some quotations were lower than 45,000 yuan/mt due to financial problems. However, the acceptable price downstream was generally below 46,000 yuan/mt. Although there are still some differences in the prices between the two parties, the transaction ability gets improved. Last week, the mainstream precursor manufacturers began to purchase, and the low[1]priced supply has been taken. It is expected that last week, based on the stable nickel prices, the upstream salt plant will hold firm to the prices due to the decrease in capital pressure. Traded prices of nickel sulphate are expected to move between 45,500-48,000 yuan/mt, but the mainstream traded price will come close to the upper range.
Pure nickel: After two great leaps, LME nickel has little liquidity last week. The daily traded volume was maintained at 1,000 lots to 2,000 lots. LME nickel prices fluctuated between $31,700/mt to $33,600/mt slightly. At present, the Russia-Ukraine conflict has not eased, and the probability that it will affect commodity prices beyond expectations still exists. In the spot market, due to the tense pandemic, SHFE nickel prices were slightly pulled back, so there was trading of Jinchuan nickel and NORNICKEL nickel last week. However, due to the pandemic, the delivery reservation system in some warehouses and the tight transportation capacity led to buyers' difficulties in picking up goods. In terms of nickel briquette, the import loss continued last week, and the scarcity of supply remained unchanged. What’s more, the prices were high, so there was no purchasing for the time being, and there was almost no transaction for nickel briquette. To sum up, the tense pandemic and the SHFE nickel's significant deviation from fundamentals have led to the weak supply and demand in the spot market. Under this background, the call for nickel prices to return to fundamentals is strong.
NPI: The SMM average price of 8-12% high-grade NPI stood at 1,635 yuan/mtu (ex-works, including tax) on Friday April 1, flat from a week earlier. The average price of Indonesia NPI stood at 1,662.5 yuan/mtu, 15 yuan/mtu higher than a week earlier. There were only a few transactions in the market last week, and the price range was quite great. The prices of Indonesia NPI with higher grade were obviously higher compared with the domestic NPI prices. Overall, the NPI prices remained high and congested with signs of rising. On the supply side, although the prices of nickel ore and auxiliary materials stopped rising in the past week, the current prices still brought high costs to NPI plants, hence they held firm to their quotations. In addition, the transport cost also rose amid resurging COVID-19 pandemic across many places in China. NPI prices have been relatively high. Pure nickel prices fluctuated at a high level, which also supported the prices of NPI, and their price difference was still big. On the demand side, though stainless steel mills still had some profit, they were cautious about high-priced raw material prices, and chose to delay their demand to contain cost risks. The price gap between acceptable prices of upstream and downstream was relatively huge, and the transaction was subdued. In addition, due to issues like the price sand supply of FENI and pure nickel, steel mills adjusted the structure of raw materials, and the demand for Indonesia NPI with higher grade was better, and the prices rose as well. Prices of mainstream NPI are expected to move between 1,610-1,680 yuan/mtu (ex-works, including tax) last week.
Stainless steel: Due to the impact of the pandemic in multiple places in China last week, the transportation was greatly affected, with logistics and delivery being disrupted. The Dongfang Steel City market in Wuxi was closed last week due to the pandemic, while other places could still operate normally at the beginning of the week. However, due to the escalation of pandemic control measures starting from Thursday, a number of places in Wuxi were locked down, and traders were generally quarantined at home. The stainless steel market was basically at a standstill. Some traders could still take orders as usual, but fabrication and transportation have been severely restricted, and there is no deadline for delivery. Meanwhile, transportation in Shandong, Foshan and other places are all affected by the pandemic, which restricted most downstream processing activities. To sum up, the spot transaction in the stainless steel market was bleak last week, and the prices were basically stable. Prices of 304 cold-rolled coils moved between 20,500-20,700 yuan/mt Wuxi, and 304 hot-rolled coils between 19,700-19,900 yuan/mt as of Friday April 1. Also due to the pandemic control in Wuxi that restricted local transportation, some sources of goods were sent to Foshan instead. The inventory in Foshan increased by nearly 50,000 mt at the end of March compared with the middle of the month. As such, the prices of stainless steel in Foshan were under pressure. The price difference between Wuxi and Foshan currently stands at 400-500 yuan/mt. The subsequent recovery of the stainless steel market still depends on the progress of the pandemic.
https://news.metal.com/newscontent/101796709/Nickel-Prices-Are-Likely-to-Remain-High/
Blackstone Minerals has delivered nickel-cobalt sulphides from its Ban Phuc mine in Vietnam to consultant, ALS in Perth, as part of a trial of its Ta Khoa nickel refinery pilot program. The company has a plan to become a globally significant producer of high purity NCM811 nickel precursor products for the lithium-ion battery industry and it is building an integrated mining, ore processing and downstream refinery business in Vietnam.
Blackstone recently completed disseminated nickel-cobalt ore extraction from underground at Ban Phuc, restarted the nickel concentrator and processed 1400 tonne of ore to produce sulphide floatation product for the refinery trials. The company also delivered third party sourced sulphide product to ensure the refinery is able to accept feedstock from various sources.
NCM811 is a type of nickel-rich layered cathode material that can be used in lithium batteries using an 8:1:1 ratio of nickel, cobalt and manganese. This type of battery is considered the next generation because of its high energy density and low cost.
NCM 811 attracts a strong premium to metal prices and is valued at 120-140 per cent of the nickel metal price according to the company.
Blackstone will centre its mining and nickel concentrating activities at Ban Phuc in northern Vietnam, approximately 160 kilometres west of Hanoi, where its resource currently sits at 123m tonne grading 0.37 per cent nickel for 452kt of contained nickel plus other credits. The proposed location of the refinery producing high purity NCM811 products has now been narrowed down to one of two sites in Vietnam.
The delivery of 24.5t of samples to ALS for the TKR, or “Ta Khoa” refinery trials required the company to undertake 541m of underground development before mining of 2088t of disseminated nickel sulphide ore. Blackstone had to restart the Ban Phuc nickel concentrator to process 1400t of the ore producing 7.5t of Ban Phuc sulphide floatation product for the trials.
The Ban Phuc nickel concentrator was restarted by Blackstone in January 2022 and is rated at 450kt per annum. The plant has been on care and maintenance since 2016 and recommissioning works were undertaken by Ban Phuc operating and maintenance staff, many of whom had operated the plant in 2013-2016.
Blackstone said it took “great confidence” in the plant’s suitability for treating regional massive sulphide vein ore bodies after the successful recommissioning and operation of the crushing circuit and concentrator. The company has massive nickel sulphide ore at the Ban Chang and King Snake deposits and it now believes the Ban Phuc nickel concentrator can process these and other similar orebodies.
Delivery of 10t of sulphide flotation products and 1t of cobalt hydroxide from Trafigura and 6t of sulphide flotation products from other third-party sources was made to ALS as well as the Ban Phuc product. Ta Khoa Refinery is being designed to have a refining capacity of 400kt per annum and the flexibility to process feedstock provided from the Ban Phuc concentrator and third-party sources.
Blackstone is committed to sustainable mining and its development plans to recommence full commercial scale operations in Vietnam. As we progress further into pilot plant testing and feasibility studies, we will continue to advance our engagement and collaboration with potential partners and customers for our vertically integrated development strategy.
Blackstone said the pilot program will replicate the full scale TKR flowsheet to confirm preliminary test work and provide data on the expected operation conditions of the continuous plant. Evaluation of the pilot plant data will see the company move to finalise the TKR design.
It is not often that a company plans to bring a new mine, nickel concentrator and refinery into production. Blackstone have gone one step further by planning value adding of the nickel metal production into NCM811 lithium-ion battery precursor products designed specifically for the regional Asian market.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
SHANGHAI, April 6(SMM) -
Futures: On April 1, LME lead opened at $2,407.5/mt and closed at $2,411/mt, up 0.79%. LME lead traded normally during Qingming holiday, moving rangebound above the moving average. The rising of US dollar index also put pressure on non-ferrous metals. LME lead lacked of upward momentum, closing at $2,403.5/mt on April 5, up 0.23%. Shanghai Futures Exchange was closed on April 4 and 5 for the Qingming holiday and opened on April 6.
Spot Fundamentals: In spot market, spot discounts widened in main source of supply and freight rates rose differently. But downstream sourced nearby, leading to the reduction in warehouses of the major consumption areas. At the beginning of last week, the market transactions were very active with inquiries of downstream, then the transactions gradually turned moderate near the weekend. More traders purchased cautiously due to the high prices. The discounts of primary lead smelters expanded to 150-200 yuan/mt with the rise in lead prices last week. Then the discounts of smelters narrowed slightly as the lead prices fell on April 1. The discount in the market was 30-0 yuan/mt against the 2204 contract with narrow premiums in some areas. The trading was relatively active in the middle of this week. Bulk orders were amid scarce transactions after the prices of lead continued to rise. For secondary lead, some smelters were willing to sell goods as the prices of lead rose. The discount gradually expanded to 425-325 yuan/mt. The impact of the pandemic on the production and transport of secondary refined lead has improved slightly, with downstream purchasing on demand or waiting for lead prices to decline. The market remained quiet. In terms of inventory, social inventories of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin stood at 99,400 mt, a decrease of 6,700 mt from March 25 and 3,000 mt from March 28 as of April 1.
Lead price forecast: On the macro level, market expectations for the Federal Reserve to raise interest rate increased as the US economic data turned better. While Russia and Ukraine conflicts increased needs of US dollar for hedging, the US dollar index has risen in recent days. After the Federal Reserve announced that raising 50 basis points of interest rate was a choice that must be considered in the evening of April 5, the US dollar index pulled up again, putting pressure on the rising of non-ferrous metals. On the supply side, some of the mines in Inner Mongolia and Tibet were gradually resuming their underground operations, and the arrivals of imported concentrates eased the tight supply of lead concentrates in the market. The pandemic continued to affect the regional supply of lead ingots and cross-provincial transportation. The smelters were active in shipping before the Qingming Festival holiday, with primary lead and secondary lead maintaining a large discount on shipments. Downstream consumption gradually entered the off-season with promotions to destocking. Lead prices may have limited growing space. It is expected that spot lead will decrease by 0-50 yuan/mt from April 1.
ARTICLE
11 Trends and predictions
11.1 What changes have there been to the mining landscape in your jurisdiction in the last five years?
The income tax rate was last amended in 2018 and the mineral royalty provisions were amended in 2018 and 2020.
In addition, for the 2022 charge year, the government has reduced the standard corporate income tax rate from 35% to 30% in order to mitigate the effects of the COVID-19 pandemic on businesses.
To further stimulate and promote investment in Zambia, the government has reintroduced tax incentives from the 2022 charge year for corporations that set up their operations in multi-facility economic zones (MFEZs) or industrial parks. In particular, where an entity sets up its operations in an MFEZ or industrial park, it will be subject to a zero corporate income tax rate for 10 years from the first year of commencement of operations in the MFEZ or industrial park on profits made on exports. In the 11th, 12th and 13th years, only 50% of the entity's profits will be taxed at the standard corporate income tax rate in the particular charge years; and in the 14th and 15th years, only 75% of profits will be subject to corporate income tax at the standard corporate income tax rate.
With respect to the mining industry specifically, with effect from 1 January 2022, the government has made mineral royalties a deductible expense for the purposes of corporate income tax assessment.
11.2 How would you describe the current mining landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
Following the change in government which occurred in August 2021, the new government is planning a number of reforms to the mining sector in an effort to promote investment to the benefit of the country, while still having regard to the environmental impact of mining and the need to protect the environment. In line with the ministerial statement on the new government's position and strategy for the mining sector, which was presented by the minister of mines on 6 October 2021 in the National Assembly, the following key reforms have been outlined:
The new government plans to introduce changes that will promote greater transparency in the mining sector, and to end the confusion and environmental destruction associated with illegal mining activities.
The new government has been consulting with key stakeholders to review the mining tax policy framework in order to design and develop a fiscal tax regime for the sector that is stable, predictable and competitive, to ensure sustained investment in the sector. The aim is to attract both local and foreign investment in mining and ultimately scale up mineral production in the country.
The new government plans to enhance monitoring and oversight mechanisms and technologies to reliably ascertain the volume and content of mining output for taxation purposes.
The new government is aware that Zambia has abundant mineral resources that can help in achieving its economic transformation. One notable mineral which the government stated can accelerate this transformation is gold. In this regard, the government is developing a legal framework to ensure that mining and trading of gold benefits the local communities in which it takes place.
The new government intends to promote skills development in the processing of gemstones and industrial minerals through centres such as the Gemstone Processing and Lapidary Training Centre in Ndola.
The new government is encouraging exploration activities around the country in order to identify possible greenfield mines that could lead to increased production in the mining sector.
Finally, the new government plans to promote small-scale mining, which is key to improving the livelihoods of local communities, as it has closer links to local economies, generates more local jobs and supports the retention of earnings within the country.
Further, in the 2022 Budget Address by the minister of finance delivered to the National Assembly on 29 October 2021, in addition to those measures outlined above by the minister of mines, the following reforms were outlined:
In a bid to benefit from the expected copper boom, the new government plans to ramp up production. Essentially, the new government will facilitate an increase in copper output from the current 800,000 metric tonnes to over 3 million metric tonnes within a decade. This means that existing mines will be required to produce more, while new mines must be opened.
The new government intends to promote diversification and value addition not only to copper, but also to gemstones, manganese and other high-value minerals such as gold.
The income tax rate was last amended in 2018 and the mineral royalty provisions were amended in 2018 and 2020.
In addition, for the 2022 charge year, the government has reduced the standard corporate income tax rate from 35% to 30% in order to mitigate the effects of the COVID-19 pandemic on businesses.
To further stimulate and promote investment in Zambia, the government has reintroduced tax incentives from the 2022 charge year for corporations that set up their operations in multi-facility economic zones (MFEZs) or industrial parks. In particular, where an entity sets up its operations in an MFEZ or industrial park, it will be subject to a zero corporate income tax rate for 10 years from the first year of commencement of operations in the MFEZ or industrial park on profits made on exports. In the 11th, 12th and 13th years, only 50% of the entity's profits will be taxed at the standard corporate income tax rate in the particular charge years; and in the 14th and 15th years, only 75% of profits will be subject to corporate income tax at the standard corporate income tax rate.
12 Tips and traps
12.1 What are your top tips for mining operators in your jurisdiction and what potential sticking points would you highlight?
Tips: As in many jurisdictions, the mining industry in Zambia faces many significant challenges. In addition, as global populations and economies grow, demand for minerals is increasing. As a result, mineral extraction and processing are becoming increasingly difficult, and the depletion of the earth's resources and the impact on fragile environments are growing social concerns.
Therefore, in conducting mining activities in Zambia, mining operators should be innovative and willing to invest in mining technology and qualified human resources to ensure that improved and more efficient processes are used to meet the social demands and new opportunities created by growing populations. New technologies and tools on the hardware, transportation and equipment sides can yield significant advantages for industry players – even more so when they are operated by competent and well-trained professionals.
In addition, in carrying out mining operations, sustainable mining practices should be adopted which ensure the longevity of the mineral resources and mitigate the negative impact on the environment. This can be achieved by investing in technological innovations which reduce fuel consumption, emissions, waste and water use in mining operations.
In order to ensure that the technologies in which mining operators have invested remain in good working order, it is important to conduct regular maintenance, including proper lubrication, adequate cleaning and immediate repairs as required. In addition, the tasks of operating and maintaining these machines should be assigned to properly trained individuals.
Success in the mining industry also depends on compliance with all provisions of law, as the regulators may have leeway to interfere with the mining operations of non-compliant operators.
Sticking points: Fluctuations in the price of copper and the instability of the kwacha tend to pose issues for investors, especially in the mining sector.
The mining sector is categorised by high taxes, in terms of both corporate income tax and mineral royalties payable to the revenue authority. While investors are entitled to certain tax incentives, this is only in limited circumstances.
In addition, the instability and unpredictability of the Zambian legal regime create a threat of uncertainty for investors.
https://www.mondaq.com/energy-and-natural-resources/1180938/mining-comparative-guide
Zinc posted the highest close since 2006 on Monday as declining inventories show supply strains, while a renewed spike in European power prices piles further pressure on smelters.
Zinc smelters have won a significant expansion in treatment fees after reductions in capacity across Europe and the U.S. throttled refined-metal output and helped lift costs to record highs. Korea Zinc Co. and, Glencore Plc consented to yearly zinc concentrate supply contracts with miner Teck Resources Ltd. that remember a 45% expansion for treatment charges to $230 per ton, as indicated by individuals familiar with the matter. Teck, Glencore and Korea Zinc all declined to remark. The sharp jump underlines the imbalance between relatively resilient mine supply and smelting controls that have created shortages of the finished metal.
“Mine supply has been pretty robust and is showing signs of improvement,” Geordie Wilkes, head of research at Sucden Financial, said by phone from London. “It’s the smelter bottlenecks that have been causing the problem, and this is further confirmation that that’s where the pressure is.”
The negotiations over smelter fees were complicated by lower zinc prices in China, said Ryan Cochrane, head of research at metal concentrate trading platform Open Mineral.
“You’ve got a really bimodal world for zinc and what’s driven this negative arbitrage is tightness in Europe and the U.S. markets against comparatively very very weak demand in China, with more refined metal there,” Cochrane said. Spot cargoes could be sold at treatment charges of $250 per ton, he said.
Glencore and Trafigura Group — two of the world’s largest producers of zinc metal — announced cutbacks last year as surging power costs undermined the viability of their smelting operations even as prices soared.
Higher processing fees will offer some relief. The Teck contracts also include a newly reinstated clause that will give plants exposure to the recent surge in zinc prices. These so-called escalators will kick in when prices are above $3,800 a ton, effectively raising treatment charges by 5%.
Written out of annual contracts in 2018 as miners sought to maximize their profits, the reinstatement of escalators is another sign that the balance of power is shifting back toward smelters.
“If you can’t make money as a smelter in this kind of environment, it’s very difficult,” said Cochrane. Meanwhile, record zinc prices have encouraged mining companies to boost output. Mine supply grew by 4.5% in 2021, according to the International Lead and Zinc Study Group.
Zinc slipped 1.7% to settle at $4,296.50 a metric ton on the London Metal Exchange at 5:51 p.m. local time. The metal hit a record intraday high of $4,896 on March 8 during frenzied LME trading that led the bourse to suspend activity in the nickel market. Copper was down 0.1% to $10,455 a ton. Investors are weighing the risk that China’s Covid-19 omicron outbreak will hit supply harder than demand.
SHANGHAI, Apr 7 (SMM) - On the supply side, due to the continuous impact of the pandemic, refined nickel manufacturers slightly reduced the production in March. Meanwhile, the refined nickel supply remained tight because of the import loss. As the transportation problem has not been solved yet due to lingering domestic pandemic, the spot trade of refined nickel was mainly the transferring of ownership. In terms of NPI, the prices remained at the high level, and the mainstream acceptable prices of upstream and downstream were still quite diverse. On the demand side, the current high refined nickel prices and the shortage of nickel briquette supply sustained the high prices of nickel sulphate. There were still differences in acceptable prices between upstream and downstream, and nickel sulphate manufacturers were less interest in the procurements of raw materials. In terms of stainless steel, the logistics and delivery was continuously restricted in Wuxi as the spot market was locked down because of the pandemic. The supply and demand across upstream and downstream sectors were both weak.
Refined nickel: as the recent futures prices deviated from the spot supply and demand to a large extent, SMM has suspended the premium/discount quotation of 1# Jinchuan nickel, 1# imported nickel and nickel briquette. According to the actual investigation, SMM maintains the quotation for 1# refined nickel, 1# Jinchuan nickel and 1# imported nickel. This circular complies with IOSCO standards. Yesterday, Jinchuan nickel was quoted at 219300-220800 yuan/mt, with an average price of 220050 yuan/mt, 2950 yuan/mt lower than last Friday. NORNICKEL nickel quoted 219500-220500 yuan/mt, and the average price was 3000 yuan/mt lower than last Friday. Nickel briquette quoted 216800-218300 yuan/mt, with an average price of 217550 yuan/mt, 2950 yuan/mt lower than last Friday. At present, the trade mode was mainly transferring of ownsership as the transportation problem had not been solved due to the pandemic in Shanghai. Jinchuan and NORNICKEL nickel saw little deal today. Secondly, the futures prices have not returned to the fundamentals yet, so that the downstream was cautious about procurements. In terms of nickel briquette, the shortage of market supply remained unchanged due to the long-term import loss, amid the unrestored in-house dissolution of nickel briquette, so that the manufacturer's procurement willingness was not strong.
NPI: on April 6, the average price of SMM high-grade NPI was 1635 yuan/mtu (ex-works, including tax), which was flat compared with the average price of the previous trading day. Domestic steel mills in north China contributed some transactions of NPI yesterday with the price of 1625-1630 yuan/mtu (including tax, delivery to the factory). At present, the nickel price is still at a high level, and the quotation of NPI is quite different. The upstream and downstream are still in intense wresting regarding the acceptable prices. From the perspective of supply and demand, under the tight supply of ferronickel and refined nickel, high-grade NPI had obvious advantages to make up for the consumption, which also led to obvious price difference. In the short term, the prices of NPI are expected to maintain at this level.
Stainless steel: the SS stainless steel contract rose slightly, and tested 20600 yuanmt at noon. In Wuxi stainless steel spot market, logistics and delivery was still restricted as many places like East Steel City and Jiangsu Nan Fang were still locked down and people worked from home. However, some traders who can work at present said that the transportation was quite restricted within Wuxi, and it was impossible to deliver outside the province. 304 cold-rolled coil was reported as 20600-20800 yuan/mt, and 304 hot-rolled coil was reported as 19800-20000 yuan/mt; SS 2205 contract (10:30 am, Beijing time) was 20425 yuan/mt, Wuxi stainless steel spot was in premium of 345-545 yuan/mt. (deburred edge = burr edge + 170 yuan/mt).
https://news.metal.com/newscontent/101798874/nickel-spot-market-remains-weak-amid-high-nickel-prices
By James Brooks | Associated Press
LULEA, Sweden — For hundreds of years, raging blast furnaces — fed with coking coal — have forged steel used in cars, railways, bridges and skyscrapers.
But the puffs of coal-fired smoke are a big source of carbon dioxide, the heat-trapping gas that’s driving climate change.
According to the World Steel Association, every metric ton of steel produced in 2020 emitted almost twice that much carbon dioxide (1.8 tons) into the atmosphere. Total direct emissions from making steel were about 2.6 billion tons in 2020, representing around 7% of global CO2 emissions.
In Sweden, a single company, steel giant SSAB, accounts for about 10% of the country’s emissions due to the furnaces it operates at mills like the one in the northern town of Lulea.
But not far away, a high-tech pilot plant is seeking to significantly reduce the carbon emissions involved in steel production by switching some of that process away from burning coking coal to burning hydrogen that itself was produced with renewable energy.
HYBRIT — or Hydrogen Breakthrough Ironmaking Technology — is a joint venture between SSAB, mining company LKAB and Swedish state-owned power firm Vattenfall launched in 2016.
“The cost of renewable energy, fossil-free energy, had come down dramatically and at the same time, you had a rising awareness and the Paris Agreement” in 2015 to reduce global emissions, said Mikael Nordlander, Vattenfall’s head of industry decarbonization.
“We realized that we might have a chance now to outcompete the direct use of fossil fuels in industry with this electricity coming from fossil-free sources,” he added.
Last year, the plant made its first commercial delivery. European carmakers that have committed to dramatically reducing their emissions need cleaner steel. Chinese-owned Volvo Group became the first carmaker to partner with HYBRIT. Head of procurement Kerstin Enochsson said steel is a “major contributor” to their cars’ carbon footprint, between 20 and 35%.
“Tackling only the tailpipe emissions by being an electric company is not enough. We need to focus on the car itself, as well,” she said.
Demand from other companies, including Volkswagen, is also sending a signal that there is demand for green steel. Steelmakers in Europe have announced plans to scale up production of steel made without coal.
The HYBRIT process aims to replace the coking coal that’s traditionally used for ore-based steel making with hydrogen and renewable electricity.
It begins with brown-tinged iron ore pellets that react with the hydrogen gas and are reduced to ball-shaped “sponge iron,” which takes it name due to pores left behind following the removal of oxygen. This is then melted in an electric furnace.
If the hydrogen is made using renewable energy, too, the process produces no CO2.
“We get iron, and then we get water vapor instead,” said SSAB’s chief technology officer Martin Pei. “Water vapor can be condensed, recirculated, reused in the process.
“We really solve the root cause of carbon dioxide emissions from steel making,” he said.
https://www.mercurynews.com/2022/04/04/green-steel-heating-up-in-swedens-frozen-north
Turkey to ‘increase its share’ in EU steel imports
ISTANBUL - Demirören News Agency
The European Union’s ban on steel exports from Russia and Belarus will pave the way for an increase in Turkish steel exports, according to a prominent figure in the sector, who forecasts that there will be an increase in Turkey’s steel exports to the United States and many countries due to the supply shortage in the EU.
“The EU’s quota regulation has increased the steel export share of many countries,” said Elif Tulay, the board chairman of Ekol Iron and Steel.
“For the next two months, Russia’s 600,000 thousand tons of quota for many products such as hot-rolled coil and rebar, and 80,000 thousand tons of Belarus’ quota have been distributed to other countries. This quota arrangement will be extremely positive for the Turkish steel industry,” she added.
Steel exports to the EU will increase, and the supply shortage experienced there will also cause problems in the EU’s exports to the U.S., according to Tulay.
“Thus, I predict that there will be an increase in Turkey’s steel exports to the U.S. and many countries,” she said.
“Entering different markets and establishing commercial relations will provide us with long-term investments.”
Last year, Turkey was the world’s eighth-largest crude steel producer after China, India, Japan, the United States, Russia, South Korea, and Germany.
Turkey’s total crude steel production increased by 12.7 percent to hit an all-time high of 40.4 million tons last year. Turkey was followed by Brazil, Iran, and Italy, with their respective crude steel production volumes.
Turkish steel exports rose 20 percent to a record 19.9 million tons in 2021, according to data from the Turkish Steel Producers’ Association (TÇÜD).
Steel exports revenue was up 93 percent to $16.5 billion in 2021.
Steel imports, meanwhile, rose 23 percent in 2021 to 15.4 million tons, with the cost of imports up 86 percent to $14.4 billion.
The combined share of the United States and the European Union in Turkey’s overall steel exports declined from 40 percent in 2020 to 34 percent last year due to protection measures in those regions, TÇÜD Secretary-General Veysel Yayan said on Feb. 3.
https://www.hurriyetdailynews.com/turkey-to-increase-its-share-in-eu-steel-imports-172764
The Colorado Court of Appeals has affirmed a judge’s ruling that the Colowyo surface coal mine northeast of Meeker needs only a minor air pollution permit for a roughly 2,000-acre expansion at the mine.
A three-judge appeals court panel has unanimously stood by the ruling by 14th Judicial District Chief Judge Michael O’Hara III. He upheld the state Air Pollution Control Division’s determination that it need consider fugitive emissions only from a coal preparation and processing plant, or “coal crusher,” in determining what permit is required.
The Center for Biological Diversity and Sierra Club contend that fugitive emissions from the entire mine expansion need to be taken into account. Fugitive emissions are ones not coming from a single source like a smokestack.
The seaborne metallurgical coal market is entering the second quarter with bearish clouds forming after a roller coaster Q1 in which Russia's invasion of Ukraine further compounded global supply tightness.
Benchmark premium low-volatile hard coking coal prices hit a fresh record high of $670.50/mt FOB Australia March 9 before ending Q1 at $515/mt, while PLV CFR China surged 31% over the quarter to $443.25/mt.
Market participants anticipate that high prices could lead to a global supply response and demand rationing in Q2, and that more price pressure could be expected as the Australia's cyclone season winds down in April.
However, major uncertainties remain as geopolitical tensions continue to develop, while the recent resurgence of COVID-19 in China could impact the Q2 performance of Chinese ferrous markets at a time when steel prices typically rise due to seasonal factors.
Q1 spot transaction volume recovers
S&P Global Commodity Insights recorded approximately 2.1 million mt of spot transactions for metallurgical coal, comprising premium, second-tier, semi-hard and semi-soft coking coal and pulverized coal injection coal used for steelmaking in Q1, 10% higher than the 1.9 million mt reported for Q4 2021.
Spot market liquidity has been lower since 2021 than in previous years as a result of global supply disruptions and a broader shift toward long-term contracts. Adding to the supply tightness has been the Russia-Ukraine war, which removed some Russian met coal from global trade in Q1.
However, market participants see further increased liquidity in Q2, with more cargo loadings expected. In China, depleting port stocks, along with still resilient domestic met coal prices, could translate into higher demand for seaborne material. Based on China customs data, most of the 8 million mt of Australian met coal stranded by China's unofficial import ban in October 2020 had cleared customs and been imported by March, leaving very little spot availability at the portside.
Do you think met coal prices will ease in Q2?#tradereview#metals#steel — S&P Global Commodity Insights Metals (@SPGCIMetals) April 5, 2022
War causing shift in trade flows
Russian exports account for about 10% of the global met coal trade by volume. Since the Russian invasion of Ukraine on Feb. 24, the market has seen European and Asian steelmakers scrambling for Australian spot supply to replace Russian material, in particular pulverized coal injection or PCI coal, which has traditionally been sourced from Russia.
Meanwhile, buyers from China and India have been buying spot Russian material at discounted prices relative to that of Australia. Some Indian and Chinese market sources told S&P Global that they were exploring the feasibility of using the Chinese yuan or Indian rupee as the settlement currency for trades in future.
Separately, the window for Chinese coals to be exported has gradually opened up due to the price rally in international markets. At the end of March, international prices for premium hard grades were $150/mt higher than domestic China prices, allowing Chinese materials to be exported much more competitively.
However, market sources noted that the actual exportable volume could be limited by the country's export quotas. Based on official Chinese data, only 91,532 mt of coking coal was exported in 2021, down sharply from 940,340 mt in 2020.
More pressure looms in Q2
The high price environment in Q1 prompted steel mills globally to raise steel prices to partially pass on raw material costs. Hot-rolled coil prices, which typically move in a similar direction to the seaborne met coke price, have increased across Germany, India and the US by 41%, 15% and 45% respectively since Feb. 20, S&P Global data as of March 31 showed.
However, seaborne met coal prices fell from $670.50/mt on March 14 to $515/mt on March 31, a sharp fall of $155.50/mt in just two weeks. There were signs of demand rationing observed when prices were at record highs in early March, with some end-users heard to be reselling cargoes from long-term contracts in the spot market.
Some market participants argue that downward pressure could take hold as supply tightness continues to ease into Q2. The total number of March-April loading Australian spot PHCC transactions was 150% above January-February loadings.
Other sources said that falling outside markets, including thermal coal, could also place additional pressure on weaker grades of met coal, especially PCI and semisoft coking coal, in Q2.
"It feels bearish overall, but there are still major uncertainties for the Q2 outlook, especially with the development of geopolitical tensions, the COVID-19 controls in China and whether Australian miners would bump supply to meet production guidance toward the end of their financial year [on June 30]," an international trader source said.
A spate of deadly coal mining accidents to start the year is raising the specter of output-dampening safety checks in China just as global supply is tightening.
Authorities in the coal hub of Yulin this week ordered a mine to be shut after discovering its license had expired and finding safety hazards on site, according to a notice from the city’s energy bureau posted on WeChat by industry publication Thermal Coal Today. Yulin is the center of mining activity in Shaanxi province, China’s third-biggest producing region.
The shutdown follows an escalation of deadly accidents to start this year after the government pressured mines to boost output to stave off an energy shortage. Twenty-nine miners died in accidents in January and February, nearly double the total from the same period last year, China’s National Mine Safety Administration said in a report this week. Fourteen died in one accident alone after a roof collapse in Guizhou province.
Mine safety has been in the spotlight recently as the Communist Party, which celebrated its centenary last year, burnishes its credentials as the protector of blue-collar workers. A crackdown on unsafe mining practices and harsher penalties last year were in part blamed for a reduction in mine output that led to shortages that caused widespread power curtailments in September and October.
Accidents in January-February
(1) The overall situation of the accident
From January to February, there were 25 accidents and 40 deaths in mines across the country, a year-on-year decrease of 22 and 31, or 46.8% and 43.7% respectively. Among them, there was 1 major accident and 14 people, the number of accidents was the same year-on-year, and the number of people increased by 3 people, an increase of 27.3%; there was no major accident, and there were 3 cases and 15 people decreased year-on-year.
The 25 accidents involved 15 provinces (autonomous regions). The total number of accidents is ranked in descending order: 2 and 15 in Guizhou, 3 and 4 in Yunnan, 3 and 3 in Gansu, 2 and 3 in Hubei; 2 and 3 in Henan, Inner Mongolia, Anhui and Guangxi, respectively. 2 persons; 1 case and 1 person each in Shanxi, Liaoning, Shandong, Sichuan, Shaanxi, Ningxia, and Xinjiang.
(2) Coal mine accidents
A total of 15 accidents and 29 deaths occurred, an increase of 2 and 14 over the same period of last year, an increase of 15.4% and 93.3% respectively. Among them, there were 1 major accident and 14 people, an increase of 1 and 14 people, both increased by 100%; no major accident occurred, and a year-on-year decrease of 1 or 3 people.
The 15 accidents involved 11 provinces (autonomous regions). The total number of accidents is ranked in descending order: 2 and 15 in Guizhou, 2 and 2 in Gansu, Henan, and Inner Mongolia, 1 and 2 in Yunnan, and 1 in Shanxi, Shandong, Sichuan, Shaanxi, Ningxia, and Xinjiang. up, 1 person.
Premium Hard Coking Coal prices have dropped over US$70/t in two days
PHCC FOB Dalrymple Bay Coal Terminal is still fetching US$421/t, four times what it was this time last year
European Commission mulls suspension of Russian coal imports as war in Ukraine continues
What’s happened to met coal?
Premium hard coking coal, the top of the line steelmaking coal companies like BHP (ASX:BHP) produce out of Queensland soared to ~US$670/t in mid-March.
That came off the back of concerns about Russian supplies following its invasion of Ukraine.
But prices have come crashing back to, well not Earth, but somewhere closer to our stratosphere as buyers have retreated in recent days.
PHCC FOB Dalrymple Bay Coal Terminal, the top quality Australian coal product, have dipped by over US$70/t in the past two days.
According to Fastmarkets MB prices tumbled US$40.37 to US$421.25/t.
That’s around four times what they fetched 12 months ago, so Australian producers won’t be too unhappy right now.
EU looks to restrict Russian coal exports
The dip in both met coal and thermal coal prices over the past fortnight may be an indication as well that Russian supply has not been restricted as much as anxious market participants expected.
That could become more fully realised amid reports the European Commission plans to impose a total ban on coal from Russia.
EC President Ursula von der Leyen announced on Tuesday the EC planned the ban to cut a 4 billion Euro per year revenue stream from Russia, which supplied 19.3% of the EU’s coal imports in 2020.
The escalation of sanctions comes amid claims and reports of war crimes in Ukraine committed by Russian soldiers.
Could this light a fire under coal prices again? It’s hard to say.
Australian coal cargos are so heavily booked in Asia it will likely have little impact on trade flows from the world’s largest coking coal exporter.
Commbank metals and mining analyst Vivek Dhar said India and China could take Russian coal displaced by the ban, while OECD countries will struggle to replace it given a lack of supply increases elsewhere.
In thermal coal markets they will likely have to look to Colombia, South Africa and the USA, which could put on 10Mt, 11Mt and 3.6Mt of extra capacity in 2022 respectively. Russia posts around 90Mtpa of energy coal to Europe, Japan and South Korea.
That said, Dhar is sceptical the new ban will lead to massive price increases like we saw last month.
“Australian thermal coal and coking coal prices suggest that shortage concerns peaked in early to mid‑March. Premium coking coal prices and thermal coal futures have already declined ~42% and ~36% from their peaks respectively,” he said.
“We doubt prices will return to these highs even if the EU formalises their ban on Russian coal imports later this week.
“That’s because the recent peak in coal prices were likely pricing in a more severe reduction in Russian coal exports a few weeks ago.”
The European Commission will propose to EU nations on Tuesday sweeping new sanctions against Russia, including banning imports of coal, an EU source told Reuters.
This comes at a time of uncertainty about future gas deliveries from Russia to the European Union later this month after the Kremlin’s demand that buyers start paying Russian gas giant Gazprom in roubles.
Several EU countries are heavily reliant on Russian coal imports, as well as gas, and have increased coal imports from Russia in recent months due to the spiralling cost of gas.
HOW MUCH COAL DOES THE EU GET FROM RUSSIA?
The EU depends on Russia for around 45% of its coal imports, 45% of its gas imports and around 25% of its oil imports, according to the European Commission website.
The EU imports almost 70% of its thermal coal from Russia, which is used in power and heat generation, according to Brussels-based thinktank Bruegel. Russian metallurgical coal, used in iron and steel making, accounts for between 20% and 30% of the EU’s coal imports.
Germany, Poland and the Netherlands are Europe’s biggest consumers of Russian coal.
HAS EU COAL CONSUMPTION DECLINED?
The consumption and domestic production of so-called hard coal, mainly used for heating and with the highest carbon content, in the EU has been declining over the past few years, due to more stringent targets for combating pollution and global warming.
Coal is the highest CO2-emitting fossil fuel.
But that has also meant that coal imports have increased to more than 60% of domestic consumption, raising questions about the availability of hard coal for the EU in case of a major disruption, such as an energy embargo on Russia, Bruegel said.
Russia has played a major role in filling the gap between the EU’s consumption of hard coal and domestic production, with EU hard coal imports from Russia rising from 8 million tonnes (7% of total EU imports) in 1990 to 43 million tonnes (54% of total EU imports) in 2020, according to Bruegel.
WHY WOULD AN EU BAN ON COAL MATTER?
Due to very high gas prices, many EU countries have been switching to coal from gas since the middle of last year. Russian coal merchants have proved to be the winners as European buyers, nervous a feared Russian invasion of Ukraine could lead to disrupted gas supplies, stocked up on the fuel.
There is concern that Russian gas supplies will stop during April due to EU governments’ refusal to give into President Vladimir Putin’s demands for payments in roubles. Germany is among some countries which have already said they could increase coal use to replace Russian gas.
If Russian coal imports are banned, several European countries could face even more severe energy crunches when heating demand increases next winter, as well as higher bills for consumers and industry, which are already struggling.
WHERE ELSE CAN THE EU GET COAL FROM?
Globally, the main exporters of coal are Indonesia, Australia, Russia, Colombia, South Africa and the United States.
Germany in Jan-Oct 2021 received 53% of its coal from Russia, followed by 17% from the United States, 13% from Australia, 5% from Colombia and smaller shares from Canada, Poland, South Africa and the Czech Republic.
Poland imports around 20% of its thermal coal, mostly from Russia. Last week, the Polish government said it would ban those imports from this month or next. Australia, South Africa and Canada are listed by the government as suppliers that could replace Russian coal imports to Poland.
“In principle, shipments from countries that have reduced exports to the EU are still largely available to substitute for Russian coal,” said analysts at Bruegel.
The chairman of the Association of Coal Importers in Germany said earlier this year: “In a few months, hard coal imports from Russia can be completely replaced by other countries. In particular from the USA, Colombia and South Africa but also from Australia, Mozambique and Indonesia.”
Consultancy Wood Mackenzie, however, has said there is limited global supply availability to substitute high-grade coal from Russia.
Like the scramble for gas on the global market to replace Russian supplies, the EU would also be competing with the world’s biggest consumer China and other Asian markets for coal.
Although it is still more expensive to burn gas to produce power than coal, thermal and metallurgical coal prices have reached all-time highs this year.
The front-month physical thermal coal price for European delivery reached a record high of $507/tonne on March 8 and last traded at $273/tonne on April 4.
Analysts at investment bank UBS expect thermal and metallurgical coal prices to stay elevated for 1-2 years due to tight global power supplies and risks for Russian supply.
Source: Reuters (Reporting by Nina Chestney; additional reporting by Vera Eckert in Frankfurt and Marek Strzelecki in Warsaw; editing by Susan Fenton)
https://www.hellenicshippingnews.com/why-an-eu-ban-on-russian-coal-matters/
The European Commission has proposed that it would ban buying Russian coal as part of new sanctions on Moscow in response to apparent war crimes by Russian forces in the Ukrainian town of Bucha. An embargo on coal from Russia, the E.U.'s biggest coal supplier accounting for about 45 per cent of total imports, could inflict further pain on the 27-member bloc already reeling from severe energy shortages and high oil and gas prices.
Several E.U. countries have been importing more coal from Russia in recent months as they seek ways to bring down power generation costs following an unprecedented rise in gas prices. Coal, the dirtiest fossil fuel, is much cheaper for power generation.
How reliant is the E.U. on Russia for coal?
With E.U. countries drastically cutting down their production and consumption of highly polluting coal to fight climate change, their reliance on imported coal, especially from Russia, has increased significantly over the past two decades. Russia, the world's third-largest coal exporter behind Indonesia and Australia, accounts for 45 per cent of total E.U. coal imports. When it comes to thermal coal, which is used to generate electricity and heat, that figure stands at 70 per cent, according to Brussels-based think tank Bruegel. Russian metallurgical coal, used to make iron and steel, makes up about 20-30 per cent of the E.U.'s coal imports.
Russia's share of the E.U.'s imports of hard coal, an aggregate of anthracite and bituminous coal which has the highest carbon content, increased to more than half in 2020 from less than 10 per cent in 1990. Germany, Poland, Italy and the Netherlands are among those most reliant on Russian coal, which accounts for more than 65 per cent of total imports in each of those countries.
How quickly can the E.U. wean itself off Russian coal?
The German association of coal importers (VdKi) has said hard coal imports from Russia to Germany can be substituted in a matter of months. It named the U.S., Colombia, South Africa and Australia among the countries most likely to fill the gap. "There is a well-functioning world market. There are sufficient quantities available," Alexander Bethe, chairman of the board of VdKi said in a statement. "Germany imported about 18 million tons of hard coal from Russia last year. That is only about two per cent of the total world trade."
Shunning Russian coal could be much easier and cheaper than replacing Russian natural gas as unlike gas, coal doesn't need to be liquified for transportation or doesn't require an extensive network of pipelines. "It was only Russia's aggressive push in the past decade for market share in the E.U. that pushed out other suppliers," analysts at Bruegel wrote in a blog. "In principle, shipments from countries that have reduced exports to the E.U. are still largely available to substitute for Russian coal."
The analysts also suggested that the shortfall could be bridged by boosting domestic production in the event of an emergency. They called on policymakers to assess whether a temporary relaxation of environmental rules would be needed to allow the use of more easily available coal types. Rystad Energy analysts, however, have said coal consumers "will struggle to source additional coal from alternative producers because the supply-demand balance of the international seaborne thermal coal is extremely tight."
How would the coal embargo impact the E.U. economy?
Increased demand from the E.U. will further drive up global coal prices, which would mean even higher energy bills for households and companies. This could push up inflation which is already at its highest level since the bloc's inception. Energy shortages could worsen next winter when demand for heating rises.
Despite efforts to curb the use of coal to generate electricity, the highly polluting fossil fuel continues to account for around 15 per cent of Europe's electricity mix. "Higher coal demand, lower coal supply and more complex logistics will increase the cost of coal imports and might lead to temporary local disruptions," Bruegel analysts said. "However, stopping imports of Russian coal would appear not to cause dramatic supply disruptions on aggregate."
Where does Germany stand on phasing out Russian coal?
Germany has signaled it would support a ban on Russian coal, with Economy Minister Robert Habeck saying the country would become independent of coal from Russia by autumn this year. Berlin, which is trying to swiftly rid itself of Russian energy, has been reluctant to sanction Russian fossil fuels, warning that such a move could have a severe impact on its people and economy.
As atrocities carried out by Russian forces in Ukraine come to the fore, Germany seems to be more willing to hurt Russian fossil fuel exports, the country's biggest source of revenue, despite the economic costs. German Foreign Minister Annalena Baerbock said on April 5 the E.U. was working on a plan to completely cut ties with Russian fossil fuels, starting with coal.
Jindal Steel and Power Limited (JSPL) is all set to set to build the world’s largest and greenest steel plant in Odisha. The company has bagged the Utkal B1 & B2 coal block in Odisha’s Angul-Talcher coal belt. JSPL Chairman Naveen Jindal said the company will make the world’s largest single-location steel manufacturing complex at Angul by 2030.
The Angul-Talcher coal belt has about 347 million tons of geological reserves. The new belt combined with the coal reserve of Utkal C will provide JSP with sufficient reserves of coal to enhance the company’s capacity for green steel making.
ALSO READ | Odisha presents Rs 2 lakh crore budget for 2022-23
Naveen Jindal took to Twitter to celebrate the news and said it happened on the 17th death anniversary of JSPL founder OP Jindal. Naveen said the new acquisition “will help us to translate the shared dream of OP Jindal and legendary leader Biju Patnaik to reality and bring prosperity to Odisha through value addition of natural resources and industrialisation.”
He added in a tweet, “Odisha is our karmabhoomi [land where one works] and we are firmly committed to its overall development. Aligning with Hon’ble Chief Minister Shri Naveen Patnaik ji’s vision of Industry-led holistic prosperity, we will make the world’s largest single-location steelmaking complex at Angul, Odisha by 2030.”
Odisha is our karmabhoomi & we are firmly committed to its overall development.
Aligning with
Hon’ble CM @Naveen_Odisha ji’s vision of Industry led holistic prosperity, we will make world’s largest single location steelmaking complex at Angul, Odisha by 2030. @CMO_Odisha — Naveen Jindal (@MPNaveenJindal) April 1, 2022
The capacity expansion is expected to increase JSPL’s investment in Odisha to more than Rs 1,25,000 crore from the existing Rs 45,000 crore. This will lead to an increase in economic activities and employment opportunities in the state.
Notably, the High-Level Clearance Authority of Odisha, headed by chief minister Naveen Patnaik, had approved JSP’s proposal to expand the capacity of its steel plant to 25.2 million tonnes per annum (MTPA) at Angul by 2030. This would become the world’s largest and greenest single-location steel plant, thus putting Odisha’s USP on the global steel map.
ALSO READ | Odisha's Similipal Reserve Forest in grip of 'man-made' wildfire; five arrested
The coal gasification route, which is recommended for its environment-friendly technology, would help in the production of steel using indigenous coal. The coal gasification technology can also help India to overcome its shortage of fossil fuel.
JSP is the first steelmaker in the world to build coal gasification to produce steel using clean coal technologies.
British homes will still be heated by energy from Russian coal until the end of the year, The Mail on Sunday can reveal.
More than a month after the invasion of Ukraine, two of the biggest power stations in England are still burning coal imported from Russia.
EDF's West Burton A, in Nottinghamshire, expects to use up its existing stocks in the next few months before it stops generating at the end of September.
Stockpile: More than a month after the invasion of Ukraine, two of the biggest power stations in England are still burning coal imported from Russia
Uniper's plant in Ratcliffe-on-Soar, also in Nottinghamshire, will continue to use Russian coal until the end of the year. The station is due to close in September 2024.
MPs have called for a ban on Russian coal in Britain. Large steel makers, including Tata and British Steel, have already halted its use.
It is understood that France's EDF bought the Russian coal in 2021. The fuel is used only as a back-up at peak times when the country's energy needs cannot be met from other sources, such as wind and solar power.
The firm began decommissioning half of the West Burton A plant last summer and the shutdown of the remainder will begin in October.
Germany's Uniper said it had decided not to extend existing Russian coal supply contracts and it expects to have completed a 'diversification strategy' away from Russian coal by the end of the year. The country had been its largest supplier.
The British energy industry is attempting to move away from polluting fossil fuels, including coal, and switch towards renewable energy.
Russia is the world's sixth biggest coal producer, behind countries including China and the United States. It exports more than half, with a third of that bound for Europe, according to the US Energy Information Administration.
Introduction
It's time to talk about one of the most tricky investments on the market: coal. Coal was declared dead prior to the pandemic due to its impact on the environment. Yet, after the pandemic, something changed. Governments started to push harder for net-zero, energy demand came back roaring, and Putin started to reduce natural gas exports to Europe in the second half of 2021 (prior to the war). The result is a global surge in oil, natural gas, and coal. After all, "dirty" coal has not only paved the road for our "Western" prosperity, but it is still a cheap alternative that's currently being used as natural gas in Europe is skyrocketing. Especially the war in Ukraine is making things worse as countries are considering boycotting natural gas. The impact would be devastating as I will explain in this article covering US coal giant Arch Resources (NYSE:ARCH). What used to be Arch Coal has a massive metallurgical coal footprint in Europe, which has done wonders to the stock price. In this article, I invite you to read my thoughts on the matter using geopolitical and macro developments that show that Arch has more upside potential despite ongoing risks.
Allow me to elaborate.
Coal Is Back
I always highlight this, but I'm not biased. I'm not generally speaking a fan of coal energy. I like that utilities in the US (I have covered a lot) are slowly moving away from coal to renewables, nuclear, and natural gas. However, the keyword here is "slowly". If there's one thing I dislike more than anything else, it's rising energy prices because we're creating our own supply issues.
Coal is the backbone of western wealth. It helped fuel the American industrial revolution. The same happened in Europe and it's now happening in Asia.
The map below shows that during these booming times, the biggest cities in the US were mainly industrial. Back then, West Virginia had a much better reputation as it was the home of quality and affordable coal.
VOX.com
Now, we're creating our own problems as the transition from coal and oil to renewables is going too fast.
In my daily newsletter on Intelligence Quarterly, I included a few comments on the global coal industry that apply here as well:
The surge in natural gas prices has caused countries to switch to cheaper, but polluting coal supply: Another unintended consequence of Europe's energy crisis has reared its ugly head halfway across the world, in the mountains of northern Pakistan. After a key supplier of liquefied natural gas cancelled deliveries, the country has found themselves unable to pay the very high spot price that LNG currently commands. To cover the shortfall, Pakistan's energy-hungry industries have turned to coal, and Afghan coal specifically. Exports from its northern neighbor have shot up from nothing last summer to 500,000 tons a month now. That Europe's gas crunch is driving up demand for coal is evident from looking at how dramatically price points for major coal exporters have increased. South African coal skyrocketed to a high of about $400 a ton following the invasion: it's normally between $50-100. The widely-used Australian Newcastle coal benchmark hit similar highs to South Africa, and is trading far above its pre-invasion peak. Herein lies a big problem that Russia's invasion of Ukraine presents. Diversifying away from Russian gas as quickly as possible, without enough increased gas production, renewables use, or energy demand reduction to replace it, will drive global LNG prices up. For European gas consumers, this will be bad enough: firms could have to shut, and poorer households will struggle financially without government assistance.
Even Germany is now coming out saying that it needs to extend the planned coal phase-out. Merkel initially wanted a coal exit by 2038. The new coalition moved that target to 2030. Now, they are figuring out that this isn't possible.
Germany on Wednesday declared an "early warning" of a possible gas supply emergency, a sign of concern about possible disruption or stoppage of natural gas flows from Russia. "Our phones are ringing off the hook," said Erik Passow, who builds furnaces and fireplaces, adding that supply shortages were also making it difficult to keep up with orders. "People want security, because freezing isn't fun." - Source: Zawya
The graph below shows Newcastle coal futures (Australia-based), which I like to use as a benchmark for coal in general as well as Dutch TTF natural gas futures (orange), which is a good benchmark for European natural gas prices. Right now, both are well off their highs, but still at unsustainable levels that require alternatives like coal.
TradingView
So, what does this mean for Arch?
Arch Resources Is Back As Well
Prior to the pandemic, Arch traded close to $90 per share. The stock plummeted to less than $30 as the world's economic hotspots shut down. Since then, the stock has rebounded to currently more than $130. The top was closer to $160 last month.
FINVIZ
Arch has a $2.1 billion market cap. Based in St. Louis, Missouri, Arch is a leader in the metallurgical coal industry. Unlike thermal coal, metallurgical coal is used in the production of steel.
In this case, Arch produces roughly 11% of the total annual US metallurgical coal supply, which was estimated to be close to 65 million tons in 2021. The company sold its product to six North American customers and exported it to 24 customers overseas in 15 countries last year. All of the company's metallurgical coal is produced in the state of West Virginia. Thermal coal is produced in Wyoming and Colorado.
Arch Resources (via. SEC 10-K)
This year and going forward, Arch aims to generate 80% of its EBITDA from metallurgical coal. Note that thermal coal volumes are higher, but due to lower margins the impact from metallurgical coal is higher.
With regard to the aforementioned coal exports, the company ships roughly half of its volumes to Europe and the other half to Asia. Just 10% of metallurgical volumes remain in North America or go to Brazil. I like that stat as this makes the company an important player in satisfying coal demand in Europe and Asia, where prices are rising faster than in the US because of energy price differentials.
Arch Resources
Moreover, the company supplies roughly 30% of the world's high-vol A coking coal, which is high-quality input for steel producers.
Like its energy peers in oil, Arch benefits from subdued supply on a bigger scale. Australia, for example, saw coking coal exports drop by 17 million tons in 2021 compared to pre-pandemic 2019. In the US, production fell from 74.7 million tons in 2019 to 64.5 million tons in 2021. Canadian coking coal exports were down to 26.3 million tons from 34.9 million tons in 2019.
In 2026, the company expects roughly 58 million metric tons of shortages based on an increase of 25 million tons of export demand and a depletion rate of 2% at existing mines, reducing supply by 33 million tons. This is, of course, an estimate, but the fact that underinvestments are a problem makes this very plausible. After all, in times of "net-zero", there's not a lot of available financing.
Arch Resources
So, what does this mean in terms of valuation?
Valuation
Expectations are tricky for a number of reasons. One of them is that coal prices are volatile. That's a fact in general. However, now it's made worse due to geopolitical issues. If Europe boycotts Russian natural gas and oil, coal prices are set to explode higher - from already elevated levels. If Russia suddenly pulls out of Ukraine, prices will plummet. Both of these things are longshots in the mid-term, but they are risks - both to the upside and downside.
Based on current estimates, Arch is expected to do close to $1.3 billion in EBITDA. Pre-pandemic, the company did not make it above $440 million. The problem is that it's hard to pick a number for the valuation. After all, both EBITDA and free cash flow are highly dependent on the price of coal. Free cash flow is also a big driver of net debt.
TIKR.com
Going into this year, the company had $240 million in net debt. Pension and related liabilities were $75 million. Adding this to the $2.1 billion market cap gives us an enterprise value of $2.4 billion. That's just 1.9x this year's expected EBITDA. Adding to that, the company could use its free cash flow to push net debt to $830 million in net CASH. In that case, the valuation moves towards 1x EBITDA.
If that number were sustainable, I would slap a 400% price target on this stock and call it a day. However, this is based on current coal prices. If coal and natural gas remain this high on a long-term basis, the economic damage would be so severe that it would destroy demand.
Data by YCharts
In this case, I'm using $600 million in longer-term EBITDA. This is doable if prices remain elevated, but not too high. It prices in a supply/demand imbalance, but not the destruction of demand.
Using these numbers, we get a multiple of 4.0x using 2021 net debt. In this case, I think it's fair to say that net debt will be erased. I'm going to use zero in net debt to give us a margin of error. This would give us a 3.5x multiple.
While a longer-term bull market can easily cause the stock to double, I'm applying a more moderate 30-40% upside target over the next 6-12 months. Again, it could happen 2 months from now if things escalate in Ukraine.
With that being said, please do not go overweight coal. There is no need to own coal stocks in the first place. It's only something for people who trade with an above-average tolerance for risk.
And again, if coal remains sky-high, I see demand-related headwinds on the horizon. For example, the European steel industry is currently trying to become "net-zero" as well. While it's hard to tell, I expect that European steel becomes less competitive globally with more power to US and Asian steel producers. That would hurt ARCH a bit.
However, right now, it's all about margins. That's where ARCH shines.
Takeaway
Arch Resources is a fascinating stock. Its business model is very straightforward as it sells met and thermal coal to domestic and international customers. Right now, the company benefits from a growing supply/demand imbalance as countries around the globe move from natural gas to coal to deal with skyrocketing prices.
In this case, it's more than offsetting lower steel production due to supply chain issues.
Even on a long-term basis, we're dealing with tailwinds as coal is seeing significant underinvestment due to climate measures while demand is expected to remain high.
However, I do not recommend Arch coal as a long-term investment. It is way too volatile and risky. It's mainly a margin play at this point. We also cannot underestimate the bigger risks tied to the war in Ukraine. Big headlines move coal stocks and related.
If you're interested in buying coal, please keep your position very limited. I'm seeing close to 40% upside on a mid-term basis. However, this could be much higher if natural gas prices continue their uptrend and/or remain high going into next year. If that were the case, the valuation would change.
(Dis)agree? Let me know in the comments!
https://seekingalpha.com/article/4499832-arch-resources-war-and-climate-measures-boost-coal
More than 200,000 victims of Brazil’s worst environmental disaster are seeking compensation in a UK court this week, in one of the largest group claims in English legal history.
The claimants, including representatives of Krenak indigenous communities, are fighting to get compensation for the devastation caused by the Mariana dam disaster in November 2015. The £5bn lawsuit is against the Anglo-Australian mining company BHP.
When the Fundão tailings dam burst, it released 40m cubic metres of toxic mining waste, killing 19 people and affecting the lives of hundreds of thousands more. The brown, polluted sludge spilled down the River Doce in the Brazilian state of Minas Gerais, flowing for 400 miles (670km) into the Atlantic Ocean. Thousands were made homeless and livelihoods centred on the river were destroyed.
This week’s court case is the culmination of a three-and-a-half year legal fight in the UK, with lawyers from the London-based international law firm PGMBM representing hundreds of thousands of individuals as well as 530 businesses, 150 members of indigenous communities, 25 municipalities and six religious organisations.
PGMBM filed the lawsuit in 2018, and last July won the right to reopen the case after an earlier ruling denied jurisdiction for English courts to hear it.
Bento Rodrigues after the Mariana dam burst. ‘Much of what the companies have taken from our people is irrecoverable,’ says one of the local Krenaks. Photograph: Douglas Magno/AFP/Getty
A representative of the Krenak indigenous communities in London said yesterday: “Every time that I remember what my family and my community has gone through, every time that I revisit the river, I become angry.
“These times are a time of great struggle for my people, and I have made it my purpose to help us achieve fair compensation. Alas, I understand that no matter how hard we fight, much of what the companies have taken from our people is irrecoverable. For it to have been suggested by the defendants that my community is receiving full redress in Brazil makes me even angrier.”
Tom Goodhead, managing partner of PGMBM, said: “BHP is a multinational that generates huge profits in the regions where it operates, and it is only right that the company … is held directly accountable at its headquarters. The days of huge corporations doing what they want in countries on the other side of the world and getting away with it are over.
In Brazil, BHP, along with the Brazilian iron-ore mining company Vale, and Samarco, the joint venture company responsible for managing the Fundão tailings dam, established the Renova Foundation to mitigate the environmental consequences of the collapse and to provide compensation for individuals and some small businesses for loss and damages. By November 2021, Renova had spent more than 19.6bn Brazilian reals (£2.6bn) on environmental and economic reparations and rehabilitation projects, including R$7.78bn in compensation and financial aid to 359,000 people, according to the company.
BHP had not responded to a request for comment at the time of publication.
The hearing is due to continue until Friday and will be heard by three senior court of appeal judges. It is being streamed on London’s court of appeal YouTube channel.
Find more age of extinction coverage here, and follow biodiversity reporters Phoebe Weston and Patrick Greenfield on Twitter for all the latest news and features
Disruptions from Russia’s invasion of Ukraine and signs of new stimulus spending from the Chinese government are sending iron ore prices higher.
The Fortescue Metals Group Ltd (ASX: FMG) share price isn’t flying higher alongside the rising iron price.
Iron ore jumped another 1% overnight to reach US$160 per tonne.
However, the Fortescue share price is down 0.1% at time of writing even as the S&P/ASX 200 Index (ASX: XJO) charges 0.6% higher.
Fortescue shares closed yesterday at $21.70 and are currently trading for $21.69.
What’s happening in the markets?
Iron ore is still a fair way off its July 2021 highs of US$218 per tonne. But the industrial metal has charged higher from the US$120 per tonne it was trading for on 1 January this year.
Part of the price rise is due to the increasing likelihood that China, the world’s biggest importer of iron ore, looks set to get a boost from government spending meant to stimulate the Chinese economy.
Russia’s invasion of Ukraine has also put pressure on iron ore and steel markets. Russia and Ukraine together are responsible for some 4% of the world’s annual iron ore production.
Why isn’t the Fortescue share price responding today?
So, with iron ore prices rising again, why isn’t the Fortescue share price responding today?
Part of that answer lies in the 26% gains Fortescue shares have posted since 15 March, when iron ore was trading for US$145 per tonne.
The other reason the Fortescue share price is lagging today lies with the risk-on moves in the global and local markets that’s seeing investors snapping up high-growth tech shares.
Yesterday, overnight Aussie time, the tech-heavy Nasdaq gained 1.9%.
Down under today, materials are the worst performing sector, with the S&P/ASX 200 Materials Index (ASX: XMJ) down 0.28%. As for ASX tech shares, the S&P/ASX All Technology Index (ASX: XTX) is up 2.7% at time of writing.
Long-term investors shouldn’t be fretting about the slight dip in the Fortescue share price today though. If you’d bought shares five years ago, you’d be sitting on gains of 255%.
The surge in raw material prices prompted major to increase prices in April after two successive months of hikes.
The country’s largest producer, JSW Steel, and ArcelorMittal Nippon India (AM/NS India) and Jindal Steel & Power (JSPL), among the top private sector steelmakers, have increased prices of hot rolled coil (HRC) – a benchmark for flat steel – by Rs 4,000-5,000 a tonne.
and JSPL which are into long products have increased rebar prices by Rs 2,250-3,000 a tonne, respectively.
Data from SteelMint shows that the price of HRC after the increase stands at Rs 79,000-79,500 a tonne for and AM/NS India ex-Mumbai. Revised JSW rebar prices are at Rs 73,000-73,500 a tonne ex-Mumbai and JSPL rebar at Rs 76,000-76,500 a tonne ex-Delhi. According to a SteelMint analyst, list prices have surpassed previous highs.
director (commercial & marketing), Jayant Acharya, said that the company had increased prices by 3-5 per cent across long and flat products but it was only partly covering the cost impact.
“The coking coal that we bought in April 2022 will go into April-May production. So May-June are likely to be peak in terms of cost of production,” he explained.
Raw material prices had been on the rise, but since Russia waged war on Ukraine, prices surged.
“Cost push from the raw material side is a concern and we are hoping that it will correct down. It has started correcting to some extent and it is likely to correct further over the next couple of months. That will bring the cost of steel down. But till the time there is an increase of cost in the system, which we will have to see how to navigate, some of the costs will have to be passed on,” Acharya added.
Coking coal prices that had gone up to $670 a tonne have come off its highs in the past few weeks. However, industry sources pointed out prices were still high compared to a year back. Moreover, other raw material prices continued to be at high levels. Also, iron ore, the other key input material, was on an uptrend. NMDC also increased prices in April by up to Rs 200 a tonne.
Steel prices started increasing from February and scaled to record levels. In the last one month, flat steel prices have increased by Rs 10,000 a tonne, said some producers. However, there could be some relief for MSMEs.
“We will continue to support MSMEs through a differential mechanism,” said Acharya.
Ranjan Dhar, chief marketing officer, ArcelorMittal Nippon Steel India (AM/NS India), said, “We have a tie-up with National Small Industries Corporation for delivering products for MSMEs at a preferential price. We are open to strengthening this further basis the need of MSME.”
This report is part of the S&P Global Commodity Insights' Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, metallurgical coal, copper, alumina, and steel and scrap. We also explore what the next few months could bring, from supply and demand shifts, to new arbitrages, and to quality spread fluctuations.
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China's iron ore import losses will continue to act as a counterweight to global price strength in the second quarter, after steepening in Q1 as seaborne prices were stoked by expansionary Chinese fiscal and monetary policies while portside prices in the country lagged due to lackluster physical steel demand.
The 62% Fe iron ore index, or IODEX, rose 32% in Q1 to reach $158.30/dmt March 31 as positive policy signals in China buoyed expectations of strong demand recovery for steel and iron ore. Meanwhile, iron ore supply in Q1 turned weaker seasonally, particularly in Brazil due to a wetter-than-usual monsoon season and after Russia's invasion of Ukraine further tightened supply.
However, demand concerns in China interrupted the price rally in February and March due to heightened market supervision and COVID-19 lockdowns -- concerns that could resurface in Q2.
Spot liquidity dries up
Widening import losses between the seaborne and China portside markets suppressed seaborne buying interest in Q1 as Chinese buyers searched instead for cheaper alternatives at the ports.
S&P Global Commodity Insights observed that Rio Tinto and Vale dialed back spot supply in Q1, while BHP's spot availability remained stable. Market sources said that instead of selling spot Pilbara Blend Fines or PBF, Rio Tinto sold between one to three strip PBF contracts in the second half of March at premiums of 20-45 cents/dmt to the monthly average of the IODEX for the respective shipment months.
The secondary market, which sees deals not involving mining companies, also saw subdued liquidity in January and February. However, in March, seaborne demand for PBF, the most liquidly traded iron ore brand, showed signs of recovery, firstly in the secondary market and later in the primary market as well, as steel production in China restarted as winter production curbs eased and low inventories at Chinese mills ignited restocking hopes.
While the wide import losses could be the main driver of reduced spot sales by some miners, S&P Global Commodity Insights' cFlow trade-flow analytics software showed that Vale and Rio Tinto shipped noticeably lower volumes in Q1 than in the previous quarter and in Q1 2021. Market sources said this could be due to the wetter Brazilian monsoon season, which impeded Vale, and possible delays in the commissioning and ramp-up of new mines in Australia by Rio Tinto.
Preference for floating price cargoes
Heightened seaborne price uncertainty due to the divergence between seaborne and portside prices in Q1 saw buyers and sellers increasingly preferring cargoes to be priced on a floating basis to avoid taking outright positions due to the potential price downside.
For iron ore brands equally commonly priced on a fixed and floating basis in the spot market, BHP and Vale sold more on a floating basis in Q1, while Rio Tinto sold spot PBF 100% on a fixed-price basis. However, most of Rio Tinto's spot PBF cargoes were sold in January, before the import losses widened.
U-turn in direct feed premiums
Winter environmental controls in China and expectations of European demand due to supply disruptions caused by the Russia-Ukraine war lifted direct feed premiums in Q1. Hopes of higher Chinese steel margins on the back of expansionary fiscal and monetary policies also provided support to direct feed premiums in the first half of Q1.
However, as Chinese steel margins were subsequently weighed down by the muted steel demand recovery and European demand also underwhelmed, direct feed premiums came under pressure in March.
S&P Global Commodity Insights observed more spot lump supply from the miners collectively in Q1, mainly due to BHP supplying 0.41 million mt, or 128%, more Newman Blend Lump and 0.25 million mt, or 13%, more Newman Blend Lump Unscreened in Q1 than in Q4 2021, while spot supply of Pilbara Blend Lump from Rio Tinto shrank by a further 0.14 million mt or 67% quarter on quarter.
Producers and traders transacted more pellet cargoes on an FOB basis in Q1, with the intention of selling into Europe following Russia's invasion of Ukraine. However, the preference for lower-alumina pellets by European mills made a large portion of Indian pellets undesirable for consumption. Hence, the rise in pellet cargoes sold on an FOB India basis was relatively muted. S&P Global Commodity Insights also observed a dwindling number of Indian pellet cargoes sold on a CFR China basis, as Chinese end-users shied away from direct feeds, including pellets, once sintering restrictions were relaxed after the winter heating season.
Pressure on direct feed premiums is expected to continue to mount in Q2. In addition to seasonally lower demand, lump supply from BHP may continue to increase due to the ongoing ramp-up of the South Flank mine -- which the company describes as Australia's largest new iron ore mine in more than 50 years -- that is expected to raise BHP's overall lump ratio in supply from 25% to 30%-33%.
BEIJING, April 7 (Reuters) - China's steel rebar and hot-rolled coils futures dropped on Thursday, as downstream demand remained sluggish amid the fresh wave of COVID-19 cases while weaker iron ore prices also weighed on sentiment.
Steel consumption in March and April, the traditional peak season, has been sluggish this year as the pandemic disrupted industrial activities.
Apparent demand of five main steel products, including rebar, wire rod, hot-rolled coils and others, fell 3% this week from the week earlier, according to Reuters calculation based on production and inventory data released by Mysteel consultancy.
The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) and official data released last week showed manufacturing activities had contracted in March.
A regular state council meeting chaired by Premier Li Keqiang said on Wednesday the government would flexibly use multiple monetary policies in a timely way to support the real economy.
The most-traded steel rebar futures, used as construction material, on the Shanghai Futures Exchange SRBcv1 for October delivery fell 1.2% to 5,070 yuan ($797.16) a tonne at close.
Hot-rolled coils SHHCcv1, used in cars and home appliances, slipped 1% to 5,228 yuan per tonne. The country's auto industry association expected China's auto sales to plunge 11% in March on an annual basis.
Stainless steel futures on the Shanghai bourse SHSScv1, for May delivery, dipped 0.8% to 20,365 yuan a tonne.
Steel prices were also tracking falling raw material futures prices on the Dalian Commodity Exchange.
Benchmark iron ore futures DCIOcv1, for September delivery, declined as much as 3.9% to 892 yuan a tonne, retreating from an over 4% jump in the previous session. The ended down 3% at 900 yuan per tonne.
Spot 62% iron ore for delivery to China was unchanged for the third straight session and stood at $159.5 a tonne on Wednesday.
Other steelmaking ingredients were mixed, with Dalian coking coal prices DJMcv1 faltering 0.4% to 3,200 yuan a tonne while coke futures DCJcv1 edging 0.4% higher to 4,050 yuan per tonne.
MANILA: Benchmark iron ore futures from Dalian and Singapore rebounded from two-week lows on Wednesday, buoyed by hopes of a pickup in demand as favorable weather in top steelmaker China should encourage plants to ramp up production increase.
But the fallout from China’s soaring COVID-19 cases and the Russia-Ukraine conflict stayed on the hearts of traders, keeping optimism at bay.
The top-traded iron ore with May delivery on China’s Dalian commodity exchange rose 0.8% to 770.50 yuan (US$121.19) a tonne by 0253 GMT, after hitting 782 yuan earlier.
On the Singapore Stock Exchange, the front month’s April contract rose 4.2% to $143.45 a tonne after six consecutive losing sessions.
Other steel ingredients also rebounded from two-week lows, with Dalian coking coal gaining 1.1% while coke was up 0.1%.
“With the conclusion of the national ‘Two Sessions’ and the Paralympic Winter Games and the end of the heating season, steel mills in the northern region are expected to resume production,” analysts at Sinosteel Futures said in a statement.
Mild steel rebar on the Shanghai Futures Exchange also rebounded 0.9% from two-week lows and hot-rolled coils rose 0.5%.
Shanghai stainless steel rose 1.5%, rising for a third day amid firmer nickel raw material prices.
China said on Tuesday it had seen increasingly positive changes in its economic output, supported by better-than-expected economic data, but the impact of the recent COVID resurgence needed to be monitored.
“Our main concern at this stage is that COVID cases will be found in the port of Zhoushan, which will lead to further supply disruptions to world trade,” ING analysts said, referring to one of the world’s largest ports.
Amid Tuesday’s selloff in China’s iron futures markets, the spot iron ore price fell to a two-week low of $141.50 a ton, SteelHome advisory data showed.
