Indian markets were bleeding in red during Monday's early trade due to weakening in global markets as concerns over the Russian invasion of Ukraine fuels panic profit booking and crude oil reaching a multi-year high. A broad-based sell-off was witnessed across indices on exchanges BSE and NSE with Sensex diving to near 56,600-level and Nifty 50 even reaching near 16,900-level.\Except for heavyweight TCS, bears took control of all stocks listed on BSE Sensex. The performance also comes after major Q3 earnings like ONGC and India's factory output that has clocked to a 10-month low. Further, investors now await India's CPI inflation data for January month which will be announced later today.
At around 9.59 am, Sensex was trading at 57,010.01 nosediving by 1142.91 points or 1.97%. The index has touched an intraday low of 56,612.07.Nifty 50 performed at 17,038.15 lower by 336.60 points or 1.94%. The benchmark has clocked the day's low of 16,916.55.On the broader markets, on BSE, Midcap and Smallcap dipped by nearly 510 points and 700 points respectively. Sensex Next 50 slipped over 990 points. In terms of sectoral indices, on BSE, the Bankex was the worst hit with a drop of nearly 1,230 points with Consumer Durables following by plummeting 1,003 points. The Metal and Auto index dropped over 605 points and 630 points. Meanwhile, the FMCG, Industrial and Finance index shed between 2-3%.
The IT index unlike its counterparts held a steady grip amid broader bearish markets as heavyweight TCS outperformed the markets.Except for TCS, all stocks listed on Sensex was under selling pressure. TCS jumped over 2.5% after the board fixed the record date for its Rs18,000cr buyback programme.Bears on Sensex were HDFC and Tata Steel dived nearly 3.7% each, while SBI, IndusInd Bank and ICICI Bank plunged over 3% each. Stocks like M&M, Ultratech Cement, Bharti Airtel, Kotak Bank, Bajaj Finserv, Maruti Suzuki, HDFC Bank, Dr Reddy's Lab, L&T, Bajaj Finance and Axis Bank fell between 2-3%.Other stocks like ITC, NTPC, HUL, Power Grid, Titan, RIL, Nestle, Wipro, Asian Paint and Tech Mahindra tumbled between 1-2%.Stocks Coal India, Eicher Motors, Grasim Industries, SpiceJet, Adani Enterprises, Adani Wilmar, Rossari Biotech, AGS Transact Technologies, Bharat Dynamics, Natco Pharma and NBCC (India) were in focus ahead of their Q3 earnings.India's IIP has touched a 10-month low in December 2021.
IIP or factory output stood at 0.4% in the month under review on the back of contraction in manufacturing, capital goods and consumer durables output. Also, the unfavourable base effect dragged the output as well. On the global front, Asian markets slipped with BSE Sensex taking the most beating. Japan's Nikkei 225 dropped over 2.1%, while Hong Kong's Hang Seng and South Korea's KOSPI index shed 1.25% and 1.7%. China's Shanghai Composite index dipped over 0.6%.Also, other markets in Asia were weak except for the Australian S&P index which traded well in the green on positive data. Chinese stocks may see contrarian buying as data from manufacturing shows growth momentum returning.Globally, markets mood has been soured due to tensions escalating in Russia and Ukraine. It is being known that an estimated 100,000 troops of Russia have buildup along Ukraine's border. Although, Moscow denies plans to invade Ukraine, however, the major economies opt for a diplomatic push to bring a solution.
Russian President Vladimir Putin earlier stated that the US failed to meet his demands. In the latest development, German Chancellor Olaf Scholz will be travelling to both countries for diplomatic talks. The German Chancellor will visit Ukraine later today and Russia on Tuesday. Also, countries like the US, UK and Germany have asked their citizens to leave Ukraine as soon as possible further sending a dampening appetite for equities.Apart from the Russia and Ukraine tension, investors were also nerve-wracked about rising inflation and aggressive interest rate hikes by US Fed, while a decline in Eastern Europe could intensify price pressure fears if energy supplies are impacted on the Russian front.Last week on Friday, on Wall Street, US markets were in a free fall for another day as geopolitical tension with Ukraine/Russia added to weakness in sentiment. Dow Jones falls another 500 points 2nd day running while Nasdaq falls 394 points or 2.8%. Bond yields close near 1.93% while US$ hits 96 as oil climbs to 7-year highs.
Emirates Global Aluminium PJSC (EGA) will soon begin construction on a plant to convert bauxite residue to usable soil, the first such on Earth.
The pilot plant is the product of five years of research and development between EGA and the University of Queensland’s School of Agriculture and Food Sciences. The process developed will take toxic bauxite residue generated in the alumina refining process and converts it to safe and usable soil, dubbed “Turba,” which is the Arabic word for soil, within only a few hours.
The UAE has long imported significant amounts of soil due to the arid climate and lack of naturally-occurring usable soil in the region. The reuse of bauxite residue not only solves the problem of the product’s toxicity, it also artificially produces a product that takes natural processes many centuries, and it cuts greenhouse gas emissions generated by the transport of soil from Europe.
Abdulnasser Bin Kalban, Chief Executive Officer of Emirates Global Aluminium, said in a press release that the new process has several advantages for a variety of stakeholders in the region and the industry.
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“The productive use of bauxite residue has been a global challenge since the dawn of the aluminium industry more than a century ago. We believe that our Turba process is a breakthrough, and our pilot plant will enable us to learn how to apply it on a large-scale. This and other potential solutions we are developing hold out the prospect of an end to new bauxite residue storage this decade, whilst creating products useful in the UAE.”
EGA will soon break ground on the plant at Al Taweelah in Abu Dhabi. The firm expects the plant to go into operation at some point next year.
Based in Abu Dhabi, United Arab Emirates, Emirates Global Aluminium is an aluminium conglomerate created by the merger between Dubai Aluminium (DUBAL) and Emirates Aluminium (EMAL) in 2013. EGA had an estimated enterprise value of US$15 billion at the time the merger took place. The firm is owned equally by Mubadala Development Company of Abu Dhabi and Investment Corporation of Dubai. Emirates Global Aluminium holds interests in bauxite/alumina and primary aluminium smelting.
What if Russia cuts off gas to Europe? Three scenarios Frank Umbach
Europe is ill-prepared for a large-scale disruption of Russian gas supplies, making it vulnerable to arm-twisting in the event of a conflict in Ukraine.
If Russia were to turn off the gas taps to Europe, it would put significant pressure on many countries’ economies, especially during winter. © Getty Images
In a nutshell Russia has already slowed gas supplies to Europe
LNG imports would not make up for a lack of Russian pipeline gas
A large-scale cutoff of gas would hobble the European economy
Since last summer, Europe has been in the midst of a natural gas supply crisis – a bind that an escalating Russia-Ukraine crisis only makes worse.
It is normal for Russia to provide more gas to Europe than is contractually obligated, especially when prices and demand are high. Yet even though European gas consumption increased by about 5.5 percent and prices hit record highs, Russia refrained from pumping any extra gas into the continent. European countries typically use this extra gas to fill their storage facilities during the summer. Russian President Vladimir Putin himself has repeatedly put pressure on Europe, especially Germany, to quickly approve the Nord Stream 2 pipeline project (which bypasses Ukraine), and to sign new long-term gas delivery contracts as preconditions for supplying additional gas to Europe.
The move seemed part and parcel of Moscow’s hybrid war against the West (the European Union in particular) and Ukraine. If the Kremlin does decide to invade Ukraine, triggering sanctions by the EU and United States, it could retaliate by cutting gas supplies – potentially by crippling amounts.
Weaponizing gas exports
Natural gas accounts for about 20 percent of Europe’s primary energy consumption, as well as 20 percent of its electricity generation. It is also used for heating and industrial processes. Russia is Europe’s largest gas supplier, delivering an estimated 168 billion cubic meters (bcm) to the continent (including Turkey) in 2021, short of its own projections of 183 bcm. In the last months of 2021, Russia delivered only 19 bcm through Ukraine – less than half of the agreed 40 bcm capacity, during a time when deliveries should have been increasing due to the onset of winter. Some worry that in a wider conflict between Ukraine and Russia, these deliveries could be severely disrupted, potentially for months or years.
Facts & Figures Gazprom’s monthly gas exports to Europe Despite higher prices and higher demand, Russia’s gas exports to Europe remain well below pre-pandemic levels, and even lower than they were in 2020. © GIS by macpixxel
A resurgence of global gas demand and bottlenecked supplies are the original causes of high energy prices in Europe, but President Putin’s insistence on refilling Russian storage sites last September before sending any natural gas to Europe has not helped matters any. Though the Kremlin denies it, many in Europe see the move as extortion aimed at twisting Germany’s arm on Nord Stream 2
Despite record high prices, Russia’s gas exports to Europe in 2021 remained lower than they were in 2019. Europe’s gas storage facilities became depleted during the winter months, their levels falling to historic lows, and may run empty by March or April.
Despite record high prices, Russia’s gas exports to Europe in 2021 remained lower than they were in 2019.
Moscow’s decision to limit gas supplies to Europe through Ukraine (and Belarus) added to European market turbulence and helped keep gas prices high. Critically, Russia does not need completion of Nord Stream 2 – which still awaits the approval of the German regulators and then the European Commission – to increase its gas supplies to Europe. Plenty can come through existing pipes. Russia pumped some 104.2 bcm through Ukraine to Europe in 2011, and as much as 89.6 bcm in 2019.
Aside from Nord Stream 2 approval, Moscow wants European gas companies to sign more long-term delivery contracts, binding them to Russian supplies at fixed prices for 10-20 years. In contrast, those firms prefer signing flexible, short-term spot contracts, which have usually been cheaper in recent years. By the end of 2020, spot contracts accounted for 87 percent of all gas delivery contracts in Europe.
× Facts & Figures Russian gas transit volumes via Ukraine to Europe, 2009-2021 Russia has significantly curtailed the flow of gas through Ukraine over the past two years. © GIS by macpixxel
Moscow’s argument that Gazprom needed to replenish Russia’s gas storage facilities before increasing supplies to Europe was undermined when it turned out that they were nearly full by October 20, holding 69 bcm out of a total 72.6 bcm. In the fourth quarter of 2021, Russian gas supplies to Europe were 25 percent lower than in the same period of 2020. By the end of January 2022, European gas storage levels had fallen to below 40 percent of their capacity. At the time, Fatih Birol, executive director of the International Energy Agency, criticized Russia for exacerbating Europe’s gas crisis, accusing Moscow of restricting the gas it could send to Europe by at least a third.
Dependence increasing
Since the EU introduced its “Third Energy Package” in 2009, the bloc has taken numerous measures to enhance its gas supply security. It has expanded its liquefied natural gas (LNG) import capacity to 237 bcm per year, including 29 large-scale gas import and regasification facilities, new gas interconnectors between EU member states, and the completion of the TANAP-TAP pipeline network to import gas from Azerbaijan.
The EU’s options to make up for a gas shortfall are limited.
All of this has improved the EU’s gas security, leading some governments and experts to believe that the issue is now closed. If the Kremlin were to deliberately disrupt gas supplies, the thinking goes, the EU would simply import more LNG, which could be distributed throughout the entire European gas market. As a result, Germany increased its reliance on Russian pipeline imports from 42 percent in 2010 to 55 percent in 2021. The EU’s gas dependence overall has been increasing rapidly as well – including Russian LNG supplies, the bloc went from receiving nearly 44 percent of its gas from Russia in 2020 to 53 percent in the fourth quarter of 2021.
The idea that Europe could compensate for a disruption in Russian supplies was based on the assumption that a buyer’s market would remain in place, with suppliers scrambling to win over customers. However, lower gas production due to the pandemic and China’s rapid economic recovery since autumn 2020 has shifted the supply and demand balance toward a seller’s market, with global gas shortages and rocketing prices.
Scenario 1: Ukraine supplies disrupted
If a war breaks out and the gas that the EU currently receives from Ukraine is cut off, the bloc would have limited options to make up for the shortfall. The Netherlands is a major gas producer, but in 2018 the Dutch government decided it would halt all production by the end of 2022. In January, Berlin asked it to deliver an additional 1.1 bcm, even though it had previously blocked a new Dutch offshore gas project that would have bordered Germany. For now, the Netherlands is obliging, but its phaseout is still on track.
Other alternative supplies are also problematic. Norway, Europe’s second-largest gas supplier, has increased its deliveries, but would be unable to make up for a significant disruption. In December it suffered an unplanned outage at a key gas field, restricting shipments.
An introduction to international order
While each state exercises its own and respects the other’s right to sovereignty, they are not inherently equal. Some states wield greater power and influence, while other states merely react and try to develop their economic and political might. But it is sufficient to say that international affairs are predominantly a struggle for power amongst states. The purpose of this essay is to evaluate contemporary international order and assess how emerging power equations alter the ‘balance of power’. Before doing so we must first define ‘balance of power’ and determine the current international order.
Balance of Power
Following WW2 international order was majorly divided into two camps based on ideological differences- the North Atlantic Treaty (NATO) led by the United States (US), and the Warsaw pact led by the Union of Soviet Socialist Republics (USSR). This is in line with the Realist’s theory on ‘balance of power’, where States continuously seek to increase their own capabilities while undermining the capabilities of others. This perpetuates a system of international anarchy, where no singular state can become the global ruler. Realism was designed to explain the endless repetition of behavior and was therefore unable to predict the collapse of the USSR. The fall of the Berlin Wall in 1989 signaled the triumph of Western liberal democracy over Eastern socialism- with Fukuyama believing that humanity had reached the culmination of its ideological evolution. As the sole surviving superpower, the US established a new world order- one who’s residuals we still experience to this day.
Power-transition theory
In 1958 Organski (1958) introduced the concept of ‘Power transition’, in which the international status quo is determined by a dominant country. International order is established- through the setting up of rules that guide economic trade, diplomatic and political communications, and military interactions. According to this theory international order is established by a powerful nation which imposes trade relations onto lesser states. This is done to extrapolate benefits in the forms of economic power, security, and prestige. Over time these relations are stabilized not only between lesser states and the dominant nation but also amongst one another- with habits and patterns for trade, diplomacy and war becoming established. Power in this system is measured by internal growth, with the relative power of states changing over time. Thus, if a country achieves a ‘power parity’ with the dominant state, it can challenge the dominant state for control over the ‘status quo’ of the international system.
Since the dissolution of the USSR, the US has become the dominant country that Organski once wrote about and by having the largest economy and the world’s strongest military the US has had the most influential voice in the international arena. This period under US hegemony has seen the avoidance of any major global conflict and can be viewed as an extension of the ‘long peace’ that was experienced during the Cold War. The next section will analyze emerging threats to current world order.
Emerging threats to this ‘long peace’
In 2014, Russia annexed the Crimean Peninsula from Ukraine citing the highly controversial ‘Crimean status referendum’ and the disputed doctrine of protection of nationals abroad as reasons for interference and moving their troops into Crimea. Yet in reality, the reason for the annexation is the strategic importance of Sevastopol as a warmwater base which allows for Russia to project its naval power across the Black Sea.
Russia was once at the helm of the USSR and therefore wishes to regain its status as a superpower. However, it’s actions in Crimea have soured relations, to the worst extent possible, with the West who have resultantly imposed several economic sanctions upon them.[9] Unfortunately, this has had the dual effect of pushing Russia closer onto China, as Russia finds its access to Western markets denied- which has resulted in the increasing trend of arms sales from Russia to China. This relationship between the two giants is troubling for the US and for most of the Western World.
Similarly, Iran is another county which has experienced a very tense and complicated relationship with the US. This began in 1953 when the CIA launched ‘Operation Ajax’ in collaboration with the British to oust democratically elected Prime Minister Mohammad Mossadegh and planted the Shah of Iran as a puppet ruler that they could control. This kept Iran in the US’s back pocket for 25 years until the 1979 revolution toppled the Shah. This brought to the forefront an anti-American theocracy that has been at grips with the US ever since. In 2002, it was internationally revealed that Iran had been developing their nuclear capabilities in a clandestine nuclear facility which resulted in the imposition of deep-economic sanctions under the Bush-administration. It was only in 2015 after an extensive diplomatic outreach- facilitated by the EU, that an Iran nuclear deal was established.
President Trump, however, withdrew from the US-Iran nuclear deal in May 2018 and imposed economic sanctions on Iran and on the 28th of December Trump ordered the use of a drone strike to take out General Soleimani, who was the chief-military strategist and the right-hand man of Ali Khamenei. This led to the tensest period in US-Iran relations and the whole world held their breath as they waited to see if this would escalate to an all-out war between the two nations. Fortunately, it did not escalate to anything beyond retaliatory ballistic missile attacks with no reported casualties. Regardless, the situation remains jittery but with the election of President Biden it is hopeful that US-Iran relations will transfigure into one that is more pacific.
The problem of China
The People’s Republic of China (PRC) opted for an isolationist policy- first growing inwards under the leadership of Mao Zedong- before slowly opening its economy to foreign investment in ‘Special Economic Zones’ during the late 1970s. Since then, and within 35 years, China grew into the world’s largest manufacturing powerhouse, producing nearly 50% of the world’s major industrial goods, while simultaneously and steadily growing into the world’s second largest economy behind the US.
Out of all the countries mentioned so far, China is the closest to reaching a power parity with the US, slowly amassing the wealth and influence necessary for doing so. China has slowly begun to challenge the general prerogative that the US experiences within the current international system, this becoming increasingly evident through initiatives such as the establishment of the ‘Asian Development Bank’ to counter the influence of the World Bank,[20] the establishment of the ‘Belt and Road Initiative’ to expand their political and economic influence,[21] and by providing cheap infrastructure as a means of extending influence to developing African nations. Similarly, it’s recent aggressive expansionist policies in the Indo-Pacific and the establishment of military bases in the ‘String of Pearls’ project are all symptoms of China’s burgeoning audaciousness. What’s left to assess is what this change in power equations means for the international system?
Change in power equations
Since all states function on the Westphalian model of sovereignty, the pursuit of power is the common denominator to which all foreign policy can be reduced. The battle for global dominance and influence may be fought between the incumbent and the challenger but every other nation will act and align in a manner that preserves their national interest. To talk about each nation’s foreign policy would too cumbersome a task, therefore, in a bid to maintain focus this paper will focus on two emerging power camps- ‘The Quadrilateral Security Dialogue’ and the ‘Group of Friends in Defense of the Charter of the United Nations’.
The Quadrilateral Security Dialogue (Quad)
The Quadrilateral Security Dialogue was an informal dialogue first proposed by PM Shinzo Abe of Japan in 2007, who was troubled by China’s increasing assertiveness. The other participants were Australia, India and the US and these strategic dialogues were accompanied by naval exercises that were dubbed as ‘Exercise MALABAR’. However, its effectiveness was blunted when Australia withdrew from the Quad, under PM Kevin Rudd.
Each of the nations has a point of contention with the Peoples’ Republic of China. For the US, China represents a new threat in a world where it has largely reigned supreme. Meanwhile, Japan and China share an enmity that is drenched in a shared history of repeated conflict- the Sino-Japanese wars, the issue of the Nanking massacre, and disputes over the East China sea. Australia, on the other hand, saw its relationship with China deteriorate after growing increasingly vocal about Human Rights Violations committed against the Uyghurs in Xinjiang, which further exacerbated when Australia supported an international inquiry into China’s handling of the coronavirus. This resulted in a trade war with tariffs being imposed and certain commodities being banned by China, which was particularly detrimental to Australia since China is Australia’s largest trading partner, and purchases a third of all its exports.
Finally, despite the Indo-Sino wars of the 1960s and a brief standoff during 1987 the relations between India and China witnessed a period of cool down, until the Galwang Valley incident of 2020. This incident transformed into a skirmish between Indian and Chinese troops and led to casualties on both sides.[30] This led to a heightening of tensions and an exacerbation of relations between both nations. These events coupled with an increase in aggression in the Indo-Pacific led to the resurgence of Quad, which was initiated by India inviting Australia to join the trilateral naval military exercises conducted in the Malabar alongside itself, Japan and the US. This joint-naval exercises translated into a virtual Quad Summit amongst the leaders of the four democracies and culminated in a number of resolutions such as the Quad Vaccine Partnership, the Quad Climate Working Group, and the Quad Critical and Emerging Technology Working Group. While not explicitly mentioning China as the reason for the group’s revival, the Quad has as its objective a “free and open Indo-Pacific”- the exact antithesis of what Beijing desires.
It is important to note, however, that the Quad is not an Asian-NATO- as India heavily opposes such an assertion- with External Affairs Minister S. Jaishankar asserting that India has never had a “NATO mentality” and formalizing such an alliance would mean relinquishing a certain degree of national-autonomy] While the Quad still lacks a formal military agreement, the common will to cooperate threatens China, as the Quad could evolve into a stronger and more formal alliance if China continues its regional assertiveness. This is a clear threat, and in a bid to rebalance the scales of power China has been looking to forge closer ties with nations not on good terms with the Western Bloc.
Group of Friends in Defense of the Charter of the United Nations
Citing the preservation of the UN Charter as their official motive, China, Iran, North Korea, Russia, and other nations have petitioned for the formulation of a new coalition titled as the ‘Group of Friends in Defense of the Charter of the United Nations (GOF, for short). The official reason may be to defend the UN Charter by opposing the use or threat of force and unilateral sanctions but the question to be asked is why propose this now?
The use of force has been illegal for almost a century now, yet states contravene this principle whenever they see fit (US in Afghanistan), which shows that this isn’t some newly occurring phenomenon. Secondly, China, if anything else, has been using the threat of force as of late- tightening its grip on Hong Kong, engaging in an armed confrontation over borders in India, and additionally has been escalating tension with a host of its neighbors such as Australia, Japan, Philippines, and Vietnam. China and Russia are therefore in direct contradiction to the position they stand. Furthermore, the member states that seek to defend the UN Charter, ironically, are the same ones who violate human rights and fundamental freedoms within their own countries, thereby already breaching the UN Charter. It can therefore be inferred that the true motives for the formation of this coalition are not to protect the UN Charter but to counter the growing influence of newly emerging alliances such as the Quad and pre-existing ones like the NATO.
Conclusion
What we are witnessing is a reversion to an era of power blocs, nascent as may be, led by the predominant powers- the US and the PRC who compete for global influence. These power blocs are not yet formalized in nature so it may be a bit presumptuous to assert that this is a new Cold War. Still, we are certainly steering away from an era dominated solely by US foreign policy and into an age of multilateralism as more and more countries act out of self-national interest. There are lots of interesting developments presently occurring that require further elaborating- such as the Build Back Better World (B3W) initiative, the question of whether negotiations with Iran can result in a new nuclear deal, and whether the influence of the European Union will diminish in the light of Brexit. Hopefully these can be brushed upon in future papers. However, it is evidently clear that the US and the PRC are presently the two most influential countries and that the policies they extend will shape International Relations in the years to come!
Overview
This BIMCO COVID 19 weekly report for the week ending 11 February covers the International Maritime Organization (IMO), Argentina, Canada, Cuba, Israel, Maldives, NAMMA and the latest from the World Health Organization (WHO).
Every week, BIMCO summarises measures imposed by governments for sea transport, including for crew change, as well as updates from United Nations bodies such as the IMO, WHO and International Labour Organization (ILO).
1. IMO
The below circulars represent the latest information to-date from the IMO.
Addendum no. 35/rev. 9 and rev.10 issued on 1 and 10 February 2022 respectively provides consolidated lists of the IMO members that have so far notified IMO on their designation of seafarers as key workers. The latest list is shown below with the addition of Maldives and Peru:
Addendum no.42 to IMO circular no. 4204 “Coronavirus (COVID-19)” issued on 17 September 2021 relating to joint IMO/ILO statement on upholding medical assistance obligations to seafarers and accelerating seafarer vaccination programmes.
Addendum no. 43 to IMO circular no 4204 “Coronavirus (COVID-19)” issued on 1 November 2021 offering a list of global ports offering vaccinations for seafarers.
2. Government States
Argentina
The following extensions approved as advised by the Argentinian Ministry of Transport to the IMO via an IMO circular letter no. 4287/Add.8:
Titles and Certificates which expiration date was between 1 January 1 and 31 December 2020 extended till March 31, 2022.
Titles and Certificates of seafaring personnel in the overseas with an expiration date in the year 2021 and in the year 2022, extended for one year from date of expiration.
Titles and certificates of the overseas area with an expiration date between 1 January and 30 June 2022 inclusive – extension of 6 months from expiration date.
Canada
Extension automatically granted for 2 months without any application to the validity of marine medical certificate, that would have otherwise expired on or after 1 February 2022 but before 1 April 2022.
Cuba
Extension of validity of seafarers’ certificates including medical certificates and endorsements has been granted from 1 February to 30 April 2022. Full details are available in the IMO circular letter no. 4249/Add.4.
Israel
The Israeli Ministry of Transport announced that all Certificates of Competency, Certificates of Proficiency and documentary evidences issued by them to seafarers with the expiration date between 1/6/21 and 176/22 would be considered valid until 31 December 2022. Source: IMO circular letter no. 4505 dated 2 February 2022.
Maldives
Revised Guidelines on Quarantine/ Isolation Duration issued by the Health Protection Agency effective 13 January 2022.
Effective 27 November 2021, ships arriving or transiting 14 days prior from the following ports of South Africa, Botswana, Zimbabwe, Namibia, Eswatini and Mozambique and ships who have transited via Lesotho will not be allowed to enter ( ref: Marine circular INT-02/2021).
3. World Health Organization (WHO)
On 21 January 2022, WHO issued an updated global technical brief and priority action required for Member states to enhance readiness for Omicron ( B.1.1.529), of which WHO has given an overview. The overall risk related to the new variant of concern Omicron remains very high for a number of reasons (eg significant growth advantage over Delta leading to rapid spread in the community) and continuing to result in significant increases in hospitalisation as well as posing overwhelming demands on health care systems in most countries. The rise is also due to evidence indicating immune evasion causing the quick spread of Omicron and research efforts are ongoing to better understand Omicron’s escape potential against vaccine- and infection induced immunity. A risk-based approach to adjust international travel measures in a timely manner is recommended and efforts to accelerate COVID-19 vaccination coverage as rapidly as possible should continue. See WHO advice for international traffic in relation to the SARS-CoV-2 Omicron variant for additional
4. IMO Crew Change – National Focal Point for Crew Change and Repatriation of Seafarers
According to GISIS today, the list of countries (48) informing the IMO of their national focal point of contact for crew change and repatriation of seafarers are: Antigua and Barbuda, Australia, the Bahamas, Bangladesh, Belgium, Brazil, Canada, the Cook Islands, Cyprus, Dominica, Ecuador ( new) Finland, France, Georgia, Germany, Ghana, Greece, India, Indonesia, Ireland, Israel, Italy, Jamaica, Libya , the Marshall Islands, Mexico, Montenegro, Morocco ( new) Myanmar, New Zealand, Panama, Peru, the Philippines, Poland, Portugal, Saint Kitts and Nevis, Singapore , Slovenia, Spain, Sri Lanka, Sweden,Thailand , Tunisia, Turkey, the United Arab Emirates, the United Kingdom and Vanuatu.
5. Others
The North American Maritime Ministry Association ( NAMMA) issued a survey report dated 10 February done by its members on the state of seafarers’ welfare at their ports in North America, in particular on shore leave, vaccination services for seafarers and other necessary services provided.
6. BIMCO
BIMCO General COVID-19 Links
BIMCO is continuously monitoring COVID-19 restrictions and its impact on the shipping industry in particular on crew changes. Below are some of the type of information currently being provided by BIMCO :
Source: BIMCO
https://www.hellenicshippingnews.com/bimco-covid-19-weekly-report-dated-11-february-2022/
Context:
Prospect of military action by Russia for the world:
The problem:
What's the price?
What is the geopolitical tension?
The Russia-Ukraine conflict:
The fallout:
Why it is a Catch 22:
Middle East angle:
Other reasons for rising oil prices
What does this mean for India?
So, when will diesel and petrol prices rise?
With inputs from Bloomberg
NEW DELHI: Oil prices on Monday jumped to an eight-year high after the US warned that Russian President Vladimir Putin could order an invasion of Ukraine imminently. The invasion could trigger sanctions from US and Europe and disrupt energy exports from the world's third-largest oil producer. Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday. National Security adviser Jake Sullivan has urged Americans to leave Ukraine within the next 48 hours.The prospect of military action by one of the world’s largest oil exporters raised the chances of further supply disruption as oil producers are already falling behind rising demand. Petroleum inventories around the world are dwindling. Demand for oil has outpaced production as economies rebound from the worst of the pandemic. Since Russia supplies much oil and gas to the rest of the world, supply could be cut off if tensions escalate to the point of an invasion.
Global oil demand has picked up to levels seen before the pandemic, which producers are struggling to meet. And with members of the oil cartel OPEC+ routinely falling short of their rising monthly production target, one cannot afford any more disruptions to the world's oil supply.Brent crude futures was at $95.56 a barrel by 0235 GMT, up $1.12, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014."If ... troop movement happens, Brent crude won't have any trouble rallying above the $100 level," OANDA analyst Edward Moya said in a note.Russia is preparing for an attack on Ukraine, and global markets are in turmoil due to supply chain disruptions as fallout.Russia has over 130,000 troops massed near Ukraine, which is not part of the Atlantic military alliance, and the US - while keeping open the diplomatic channels that have so far failed to ease the crisis - has repeatedly said an invasion is imminent. Moscow has 'officially' denied that it plans to invade neighboring Ukraine, but apart from soldiers, it has moved tanks, missiles, and even fresh blood supplies to the border. Russia is demanding that Ukraine never be permitted to become a member of the NATO military alliance, and has also said it wants the organization to roll back its presence in Eastern Europe." Russia is the largest non-open supplier of crude and gas to the world.
Any war can possibly mean Russians declare "force majeure" on their oil contracts with their buyer clients. Insurance costs are likely to go up on tankers, pushing prices higher," said Vijay Bhambwani, Head of Research,Behavioural Technical Analysis at Equitymaster.Russia exports about 5 million barrels a day of crude. About 60% of Russia’s oil exports go to Europe, and another 30% go to China.Russia is not only one of the world's largest oil producers but it is also the largest exporter of wheat. Ukraine and Russia together account for nearly 29 percent of the global wheat export market. Apart from this, Russia is also a major exporter of aluminium, palladium, nickel, steel, wood fertilisers. If the country withholds supply of potash, food prices could soar as crop yields would drop, resulting in more inflation. Moreover, any action by Russia could is almost certainly likely to trigger economic sanctions form the US. and its European allies. That could lead to oil and gas shortages around the world and, most likely, higher energy prices. It will also raise the prices of these other commodities as Russia can trigger shortages and/or create a glut in the commodities markets. If these basic commodity prices rise, it means corporate raw material costs will go up and profits will take a hit."Any disruptions to oil flows from Russia in a context of low spare capacity in other regions could easily send oil prices to $120," Natasha Kaneva, JPMorgan's head of global commodities strategy, wrote in the report last week.Oil and natural gas prices are already too high in the United States and Europe."On several occasions in 2021, US President Joe Biden lobbied OPEC to increase output in order to ease surging fuel costs. The optics of doing that while supporting sanctions that would directly choke off oil supply and push up prices are awkward to say the least. So, leaders face a Catch-22: Oil sanctions severe enough to hurt Russia would also cause economic misery at home, whereas sanctions mild enough to be tolerable for voters would probably have no effect. While sanctions in some form are likely, we expect Western leaders to steer clear of Russian crude exports," writes Dave Meat, CFA, director of research, energy and utilities, for Morningstar.
Goldman Sachs too doesn't see a significant impact as sanctions-driven disruption would be “mutually-assured destruction” as “it’s not in the interest of anybody to stop the flows of energy through Ukraine."While the White House has said no punishment is off the table, Europe’s dependence on Russia for energy make them vulnerable given Russia’s history of threatening to cut off gas supplies to its neighbors, which could potentially undermine the West’s ability to execute coordinated sanctions.There is also the risk that Russian President Vladimir Putin could retaliate by weaponizing exports of oil and natural gas. Higher natural gas prices would further drive up oil demand as factories and power plants switch to oil instead."Russians are using natural gas like a bargaining chip by denying gas to Europe via the Yamal pipeline. This is forcing consumers like power producers to burn oil instead of gas to generate electricity. That's driving oil prices higher," said Bhambwini. Key oil-producing countries have also not really increased crude oil supplies despite rising demand. OPEC+ had agreed to sharp cuts in supply in 2020 owing to Covid-induced travel restrictions, but the organisation has been slow to boost production since. The alliance has come under increasing pressure from oil-consuming countries to to boost supply, as demand has proved stronger than expected but the cartel’s supply lagged behind its targets by 900,000 barrels a day in January, against a shortfall of 790,000 barrels a day in December."The bloc’s prolonged underperformance has effectively taken 300 million barrels, or 800,000 bpd, off the market since the start of 2021," the IEA said in its latest report. The UAE and Saudi Arabia are the two oil producers with the most spare production capacity but the supply shortfall could deepen if OPEC+ continues to struggle to raise output. The IEA has called on both Saudi Arabia and the UAE to pump more barrels to help pacify the market."If the persistent gap between OPEC+ output and its target levels continues, supply tensions will rise, increasing the likelihood of more volatility and upward pressure on price.."But these risks, which have broad economic implications, could be reduced if producers in the Middle East with spare capacity were to compensate for those running out," the IEA said.
According to IEA, global oil supply is expected to rise by 6.3 million barrels a day in 2022 if OPEC+’s pandemic-era supply constraints are fully unwound as planned. Global supply rose by 560,000 barrels a day in January to 98.7 million barrels, with oil producers outside the alliance contributing the lion’s share.These include consumption being strong despite the spread of the Omicron variant of the coronavirus. Add to that more supply constraints like drone attacks on oil facilities in UAE, a major oil producer, outage on a major oil pipeline linking Saudi Arabia and Turkey as well as spare capacity dwindling with insufficient investment in new production."Saudi Arabia has claimed irrefutable evidence against Houthi rebels based out of Hodeidah and Salif ports in Yemen. Houthis have been firing missiles and launching drone attacks on Saudis and UAE from there. Saudi air force is expected to start bombing raids on these two towns soon, said Bhambwani.According to a report by Bank of Baroda even though the US can sell from its strategic petroleum reserve, its supply is limited as crude inventories may have fallen to 593 million barrels. If prices increase globally to beyond $100 a barrel, Indians need to brace for a huge spike in petrol and diesel prices in March, after the state polls as India imports more than 80 per cent of the oil requirement. Data from Crisil Research shows that YTD import of oil (in USD) bill data (April-December 2021) is higher by 109% given nearly 85% increase in oil prices to $72.8 per barrel between April – Dec 2021, compared with $39.3 per barrel between April-December 2020." The rise in the price of crude has a direct impact on Indian fuel prices because India imports 85% of crude oil requirements. Currently India is holding election in 5 states and that is the reason why prices are not increasing but once it is over we may see a big increase in the fuel prices The rise in fuel prices will also having a direct impact on inflation as transportation cost increases the prices across all daily needs," said Kshitij Puruhit, Lead commodities and currency expert at CapitalVia Global Research.
When oil price rises, so does inflation, as one has to shell out more for fuel. Major global central banks like US Federal Reserve and Bank of England have already begun tightening their monetary policies and the Reserve Bank of India is also expected to raise rates in the current year. According to a report by Bank of Baroda, a 10 per cent increase in crude oil will lead to an increase in the Wholesale Price Index (WPI) in India by nearly 0.9 per cent. The report predicts that increasing oil price may even result in a rate of inflation based on WPI at 12 per cent and 6 per cent for FY22 and FY23, respectively."
Once the polling is over, we can see the fuel prices moving up because in the past also state level elections have resulted in a freeze on the retail prices but as soon as the polling is over, prices start getting revised and retail prices starts adjusting to the international prices," Dr Sunil Kumar Sinha, Principal Economist & Director Public Finance, India Ratings & Research told Economic Times in an interview."In terms of prices of petrol and diesel, despite increase in oil prices, petrol and diesel prices have remained stable since December 2021 given the lowering of taxes. In fiscal 2022, petrol and diesel prices are estimated to be higher by 18-20% on-year, given an increase in oil prices. Retail price increase remains a monitorable as crude oil prices are also projected to decline from current highs of over $90 per barrel from second quarter of the calender year assuming lowering of geopolitical risk," said Hetal Gandhi, Director, CRISIL Research." Crude prices could spike up to $100 a barrel, triggering inflation in India and worsening global inflation. Moreover, this price rise could lead to steeper rate hikes in the US, which might trouble emerging markets like India. Also, the Indian budget has assumed an oil price of $65 in its budget projection, and if oil prices rise, there will be a need for government subsidies," said Sonam Srivastava, Founder at Wright Research, SEBI Registered Investment Advisor.A surge in crude oil prices could also increase India’s expenditure, which will adversely affecting India’s fiscal deficit - the difference between the government’s total revenue and total expenditure.
Fiscal deficit indicates the amount of money the government has to borrow to meet its expenses. A rise in fiscal deficit could negatively affect the economy as well as markets. The Rise in crude oil prices will cause the rupee to depreciate further. "The rupee is expected to depreciate further today, due to rising crude oil prices and stronger dollar. Additionally, risk aversion in the global markets may strengthen the dollar further.” said ICICI Direct in its report. ATF prices rise: Jet fuel rose to record levels across the country at the beginning of February following a steep 8.5 per cent hike necessitated due to a spike in international oil prices. ATF price was hiked by Rs 6,743.25 per kilolitre or 8.5 per cent to Rs 86,038.16 per kl in the national capital, according to a price notification of state-owned fuel retailers. So, any further hike in international crude means high fuel prices will become a bigger concern for airlines amidst pandemic-induced weak demand.
SINGAPORE (Reuters) – Oil prices hit their highest levels in more than seven years on Monday amid fears that a possible Russian invasion of Ukraine could lead to U.S. and European sanctions that would disrupt exports from the world’s biggest producer in an already tight market. .
Brent crude futures were at $95.61 a barrel by 0506 GMT, up $1.17, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014. US West Texas Intermediate crude rose $1.41, or 1.5%, to $94.51. A barrel, it is hovering near the session high of $94.94, the highest since September 2014.
Comments from the United States about an imminent attack by Russia on Ukraine have shaken global financial markets.
The United States said on Sunday that Russia could invade Ukraine at any time and could create a sudden pretext for an attack. Read more
“If the movement of forces occurs, then Brent crude will have no problem rising above the $100 level,” Edward Moya, an analyst at Oanda, said in a note.
“Oil prices will remain very volatile and sensitive to increased updates regarding the situation in Ukraine.”
The tensions come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, struggle to raise production despite monthly pledges to raise output by 400,000 barrels per day until March.
The International Energy Agency said the gap between OPEC+ production and its target widened to 900,000 bpd in January, while JPMorgan said the gap for OPEC alone was 1.2 million bpd. Read more
“We are noticing signs of tension across the group: seven members of OPEC-10 failed to meet quota increases for the month with the largest deficits shown by Iraq,” JPMorgan analysts said in a note on Feb. 11.
The bank added that the super-cycle is in full swing with “oil prices likely to exceed $125 per barrel as the excess capacity risk premium increases.”
Excess supplies are limited and demand for oil has outpaced production growth, said CMC Markets analyst Tina Teng, as economies bounced back from the worst of the coronavirus pandemic.
“It won’t take long for prices to go higher, although world leaders are rushing to help defuse the rising tension,” she added.
Investors are also watching talks between the United States and Iran to revive the 2015 nuclear deal.
But a senior Iranian security official said on Monday that progress in the talks had become “more difficult”. Read more
Baker Hughes Energy Services said on Friday that strong oil prices in the United States are encouraging energy companies to increase production as it added the most oil rigs in four years last week. Read more
Chinese state-owned corporation Zijin Mining Group Ltd. has acquired the Canadian mining company Neo Lithium for $960 million. Neo Lithium is developing a lithium mine in South America, which could prove to be a significant strategic asset due to the growing demand for lithium.
“Prior to the takeover, Neo Lithium was working to establish itself as a key player in the global battery metals sector by developing one of the world’s largest lithium brine projects [in] Argentina,” wrote Resource World. “Neo Lithium’s 100 percent-owned Tres Quebradas (3Q) Project is a unique high-grade lithium brine lake and salar complex, situated in Catamarca, a region known as Latin America’s ‘Lithium Triangle.’ It is estimated to contain enough reserves to produce battery-grade lithium for 50 years.”
The mine in Argentina promises to be profitable. “A key feature of the project is an unusually low level of impurities that should allow Neo Lithium to develop a project that will rank much lower on the cost curve than other comparable operations,” Resource World explained.
Lithium demand is projected to triple over the next five years due to many Western governments passing regulations that will force auto manufactures to pivot to electric vehicles. The metal is also used in batteries for electronic devices and in the production of iron, steel, aluminum and heat-resistant glass and ceramics. Since the beginning of 2021, lithium prices have increased 280 percent.
Currently, China dominates control of global lithium reserves. “More than 80 percent of the world’s raw lithium is mined in Australia, Chile and China,” wrote cnbc. “And China controls more than half of the world’s lithium processing and refining and has three-fourths of the lithium-ion battery megafactories in the world, according to the International Energy Agency.” It is clear China has been positioning itself to have a monopoly on the electric vehicle, battery supply chain.
Lithium is not a rare resource, with 96.2 million tons of identified reserves. The top three reserves are in Bolivia, Argentina and Chile. The United States is fourth, with 8.2 million tons, but only has one lithium mine in operation in Nevada. China has the sixth-largest reserve, at 5.4 million tons, and it also controls 80 percent of the raw lithium processing in the world market.
The acquisition of Neo Lithium by the Chinese government further solidifies China’s hold on the global market and continues to make the Western world subservient to Chinese manufacturing through aggressive green energy policies. The Chinese company Contemporary Amperex Technology Ltd. supplies electric car batteries to Tesla, Daimler and Toyota.
Following Canada’s election in September 2021, the Liberal government has set the goal for all new passenger vehicles to be electric by 2035. They are also promising more than $1 billion to install new charging stations, update infrastructure, and give people incentives to buy electric cars.
The Canadian government allowed the Chinese-owned company to acquire Neo Lithium without doing a formal security review on the impacts of national security. “Liberal industry minister François-Philippe Champagne said that the federal government had initially looked over the project and had no qualms with it,” True North reported. “‘This transaction was absolutely reviewed to make sure there was no security risk,’ Champagne said.”
Why would Justin Trudeau’s government allow China to purchase a profitable, strategic resource while pursuing policies that make Canada’s economy uniquely dependent on China? Trudeau’s world vision has Canada revolving around China.
When Trudeau first ran for leadership of the Liberal Party in 2012, his platform focused on Canada attaching itself to China, as Terry Glavin from the National Post explained: “Trudeau joined the race for the party leadership and invested his credibility in a big idea: China is the future. … Beijing’s promise of a win-win relationship would unlock untold riches for Canada’s middle class. The power would not shift westward, but would rather entrench itself in the Liberal Party’s bastions within the Montreal-Ottawa-Toronto triangle.” Nine years into Trudeau’s leadership, this is exactly what has happened.
There are deep ties between the Liberal Party, the Canadian political elite, and the Canada-China Business Council based in Montreal. The Trudeau family has deep personal connections with the Communist Chinese, as Trudeau admitted in 2013. His father, Pierre Trudeau, was instrumental in legitimizing Mao’s Communist China, even praising it in a book he wrote on his visit to the country.
“There’s a level of admiration I actually have for China,” Justin Trudeau said in 2013. “Their basic dictatorship is actually allowing them to turn their economy around on a dime.” Not only is Trudeau chasing Chinese money, but there is an ideological alignment.
The Canada-China Business Council (ccbc) was founded by Paul Desmarais, the wealthy Quebec businessman who owns Power Corp., in 1978. Desmarais once commented that Mao was one of four historical figures he admired the most. The ccbc’s founding members include the Chinese state-owned company citic, Power Corp., bmo Financial Group, Bombardier, snc-Lavalin, Barrick Gold Corp., Export Development Canada, Manulife Financial and Sun Life Financial. All of these groups are or were based in Montreal. Trudeau illegally shielded snc-Lavalin from fraud charges and awarded it a multimillion-dollar contract during the pandemic to make hospital beds that were never used.
Interestingly, bmo invested in the Canadian pharmaceutical company AbCellera, which became the most valuable biotech company in Canadian history after winning many contracts to develop covid-19 treatments. “In 2018, AbCellera got us$30.6 million from darpa to lead one of four research groups aimed at developing antibody treatments for pandemics,” Globe and Mail reported. “Antibodies can temporarily immunize people and help fight the virus in an infected person. AbCellera also received $4.8 million from the Bill and Melinda Gates Foundation and $175.6 million from the Canadian government to build antibody therapies for pandemics.” However, Canadians can’t buy stocks in AbCellera, only foreigners. The company revenue surged by 1,908 percent during the pandemic.
Four former prime ministers—Pierre Trudeau, Brian Mulroney, Jean Chrétien and Paul Martin—all have ties to the ccbc. “Jean Chrétien … led several ‘Team Canada’ missions to China and played a critical role in rehabilitating the regime in the boardrooms of the world after its slaughter of students and pro-democracy activists in Tiananmen Square in 1989,” wrote Glavin. “Chrétien’s son-in-law, Andre Desmarais, is honorary chairman of the Canada-China Business Council.” (To learn more about the ccbc and its ties to Power Corp. and the Liberal party, please read our Trumpet article on the subject.)
Justin Trudeau has promoted and empowered former ccbc members and Chinese businesses. “Trudeau appointed Peter Harder, head of the ccbc, to lead his transition team,” Glavin explained. “Trudeau later saw to it that Harder was given the Liberals’ top seat in the Senate.” Immigration Minister John McCallum took $73,000 in free trips in China and was later replaced by Dominic Barton, who helped Trudeau win party leadership in 2013.
McKinsey & Company, which formerly employed Barton, was deeply involved with China. “McKinsey had advised a company involved in the construction of illegal islands in the South China Sea, and drew unwanted attention to itself by holding a corporate retreat in Xinjiang within walking distance of a Uyghur concentration camp,” Glavin wrote.
The Trudeau government also tried making a partnership with the Chinese Army, invested $1 billion in the Asia Infrastructure Bank run by China, and happily worked with Huawei in telecommunications infrastructure around Ottawa. It also allowed China to buy $1 billion in a network of retirement homes, and to acquire Nosat International, which supplies the United States military with satellites. Finally, two Chinese billionaires made generous donations to the Pierre Elliott Trudeau Foundation. bmo is a principal partner of the Trudeau Foundation.
It has been proved that the Communist Chinese government helped Trudeau win the September 2021 election by targeting Conservatives in 13 electoral districts. Clearly having Trudeau as leader of Canada benefits China.
The network of Chinese influence is firmly entrenched in the Canadian elite. The decision to allow China to tighten its grip on strategic lithium supplies is just another step forward in fulfilling the vision of a China-Canada union. This is not just an economic relationship but an ideological one. Trumpet executive editor Stephen Flurry wrote in “Wake Up to the Threat From China”:
Many, many of these elites are only concerned with money. But some are concerned with ideology too—and they find socialism and communism attractive. … God repeatedly warned Israel against forsaking His law and looking to foreigners for prosperity, protection and guidance. Isaiah 2:6, for example, says that God “hast forsaken thy people the house of Jacob, because they be replenished from the east, and are soothsayers like the Philistines, and they please themselves in the children of strangers.” America has committed the same sin. Rather than trusting God to bless and defend them, our people have recognized and traded with Communist dictatorships and even invited Communist professors from China and other nations to teach generations of young Americans and Britons. This has corrupted our youth, sapped our economy, and fatally weakened our nation.
Canada is part of the end-time nations of Israel, as explained by the late Herbert W. Armstrong in The United States and Britain in Prophecy. Bible prophecy warns that because of our national sins our leaders will weakly surrender to Gentile powers. “China has a game plan. There is nothing inherently sinister about that,” Trudeau said in 2012. The truth is, however: There is something sinister and dangerous about it. China wants to rule the world and seeks to destroy any opposition. This is leading to the worst time in human history, but that is quickly followed by the most hopeful and inspiring moment in human history, the return of Jesus Christ. To learn more, read “After the English-Speaking Nations Fall—What Next?”
https://www.thetrumpet.com/25213-trudeau-allows-china-to-acquire-canadian-lithium-mine
Industry trends to watch in electric cars 2022 (Part 1)
Industry experts are optimistic that electric cars 2022 will continue to rise. Therefore, carmakers are trying everything to secure battery stock, including leaning toward lithium-iron-phosphate (LFP) batteries and diversifying battery suppliers.
1. Electric vehicle sales to increase in 2022, more EV fleets to come
According to S&P, battery and plug-in hybrid EVs represented about 4.4% of global car sales in 2020. The proportion will likely increase to 7 to 10% in 2022 and keep growing in the next few years.
Based on BloombergNEF data reported by Axios, global passenger EV sales are projected to reach over 10.5 million in 2022, about 4 million more than 2021 sales.
Governments and automakers worldwide have revealed their goals for EV adoption, which would significantly benefit the sale. An Electric Power Research Institute (EPRI) analysis showed the US market would see at least 100 EV models in 2022, a 61% growth from the previous year. More electric SUVs and pickup trucks available would boost adoptions.
Meanwhile, analysts said China would see an increase from 48% to 60% in global EV ownership by 2030.
"China's large domestic market, raw materials access, and favorable government policies mean it will continue to dominate the EV landscape and won't be as disadvantaged by the lithium shortage," Amrit Dhami, a thematic analyst at GlobalData, said in the company's press release.
In addition, electric fleets will become more common in 2022 with EV's lower maintenance and fuel cost. According to an InsideEVs' report, fleet electrification can help businesses pay less than nearly 40% for maintenance and only half for fuel.
Electric fleet cars would also significantly cut down carbon footprints, a shared goal for every business nowadays.
In 2019, Ceres, a US-based nonprofit advocating for sustainability, launched the Corporate Electric Vehicle Alliance to make EVs accessible to companies and cost-competitive with internal combustion engine models. According to the nonprofit's survey in 2021, the alliance members, including Amazon, Best Buy and DGL, plan to purchase 330,000 EVs over the next five years. Sedans would account for more than three-quarters of planned light-duty vehicle procurements.
Additionally, the United States Post Office (USPS) announced in early February that it plans to place an initial order of 5,000 EVs and electrify 70% of the fleet within a decade, according to the agency's press release. USPS owns the country's largest federal fleet.
2. LFP battery to bounce back, sparking competition between China and South Korea
While invented decades ago, LFP batteries grew popular among automakers such as Tesla, Volkswagen and Ford. The iron-based battery is less expensive than its Nickel-Cobalt-Aluminum (NCA) or Nickel-Manganese-Cobalt (NMC) counterparts, which possess higher energy density.
Last year, Elon Musk of Tesla said on Twitter that the product experience is roughly equivalent between LFP and nickel-cobalt-based batteries. According to The Wall Street Journal, Tesla first used LFP batteries for Model 3 made in China in 2020 and has announced that they will place the batteries in all standard-range cars.
With battery giants such as CATL and BYD, China dominates over 90% of the LFP market. Its production volume has reached another record level. Figures from the China Automotive Battery Research Institute showed the country's LFP production was 125.4 GWH in 2021, three times more than the previous year.
To break up China's dominance, South Korean battery makers have started developing LFP batteries. Recently, LG Energy Solution and SK On both confirmed their effort in diversifying chemistries.
According to The Korea Times, Yoon Hyung-jo, SK On's head of planning, told investors earlier this year that the company is developing LFP batteries with high energy density and fast charging speed.
The increasing adoption of LFP batteries would bring EV prices down and speed up the vehicle's mass production around the world.
DIGITIMES Asia is launching a new EV Channel on Feb 16, covering developments in the automotive industry. Readers can also subscribe to our free EV Weekly newsletter.
3. Solid-state battery development under significant effort
Carmakers and battery producers will continue to research and develop reliable solid-state battery cells in 2022. Unlike conventional lithium-ion cells with a liquid-based electrolyte, solid-state batteries use a solid electrolyte mostly made from polymer, ceramic or glass. They are lighter and less flammable. Moreover, they can potentially speed up the charging process.
The Renault-Nissan-Mitsubishi Alliance announced the 2030 common roadmap at the end of January with a note that Nissan will lead innovations in all-solid-state battery technology (ASSB) that will benefit all alliance members.
According to a press release, the alliance targets mid-2028 for ASSB mass production. It aims to bring costs down to $65 per kWh to realize cost parity with ICE vehicles and facilitate the shift to EVs.
Toyota said in 2021 that they will spend roughly $9 billion on building EV battery plants in the next decade, according to The Wall Street Journal. It will invest $4.5 billion in battery research.
The world's largest automaker has been developing solid-state batteries for years and still needs to cross hurdles such as increasing the cell's lifespan, the WSJ report said.
The global electric car fleet is expanding rapidly. While Tesla still dominates the electric vehicle (EV) market since launching its first car in 2008, other carmakers are quickly turning their fleets electric too.
General Motors has announced it will invest $35bn in electric and autonomous vehicle product development until 2025 and that it will phase out petrol and diesel cars by 2035. Volkswagen wants half of its vehicle sales to be electric by 2030 and nearly 100% electric sales by 2040. Audi will launch fully electric models only from 2026 and aims for all car sales to be electric by 2030.
A truck carries lithium carbonate at a lithium mine in the Atacama Desert, Chile. (Photo by Cristobal Olivares/Bloomberg via Getty Images)
The transition to EVs is an important step in the move to a net-zero future. According to the IEA, more than 60% of passenger car sales must be EVs by 2030 for the world to be on track to net-zero greenhouse gas emissions by 2050. That is 18 times more EV sales than in 2020. By mid-century, all cars should be running on batteries or fuel cells.
Progress is under way. While total car sales dropped by 16% in 2020 due to the pandemic, the sales of battery electric and fuel cell vehicles increased by 29% compared with the year before. In 2021, sales of electric cars reached 6.6 million, more than double the sales from the year before.
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Norway is ahead of other countries in the EV race. In 2021, 93% of new car registrations in the country were either all-electric battery vehicles or hybrids. Other markets have big ambitions. China wants 70% of passenger vehicles electrified by 2025 and 100% by 2035. The UK wants to phase out petrol and diesel vehicle sales by 2030, and all sales to be electric by 2035. Nine EU member states support the European Commission’s proposal to phase-out the sale of new petrol and diesel vehicles across the continent by 2035.
However, with the transition from fossil fuels to electricity comes challenges, especially in the EV supply chain. Several car manufacturers had to halt EV production in the last few months because of problems with the supply of microchips. In November 2021, Volkswagen halted production for a week at two German factories, and in February 2022, Ford suspended production at three assembly plants in the US and Mexico.
A new supply chain vulnerability index
A supply chain vulnerability assessment for battery EVs, using a methodology developed by Energy Monitor's parent company GlobalData, shows the countries with the biggest EV sales are also the countries with some of the biggest supply chain vulnerabilities, the exception being China. In the graphic below, the trade balance of the components and raw materials going into EV batteries has been indexed. The countries with the highest trade surplus have the highest scores, while the countries with the highest trade deficit get the lowest scores.
While Germany and the US have the second and third-largest EV sales, these countries also have some of the most vulnerable supply chains and are heavily reliant on imports in terms of EV batteries and raw materials, according to the GlobalData analysis. The other countries in the top ten of most registrations, including France and the UK, also score low on the vulnerability index.
The exception is China. The country had almost 1.2 million EV sales in 2020 and 3.4 million sales in 2021, while also dominating the market for EV batteries and materials. China has more than 70% of global EV battery production capacity and was responsible for $16.9bn in exports in 2020, according to GlobalData.
Lithium will grow the most
The EV industry’s rapid scale-up means demand for the commodities that go into batteries and vehicles is also expected to grow.
EVs can use different battery types. Most EV batteries are lithium-ion (Li-ion) batteries, however. The minerals needed for these can differ based on the chemistry of the cathodes, but lithium, cobalt, nickel, graphite and manganese are considered the key materials.
The challenge for the mineral sector lies in keeping up with this demand.
“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” said Fatih Birol, executive director of the IEA in a special report on the role of critical minerals in clean energy transitions.
According to Birol, governments must act now to reduce the risks of price volatility and supply disruptions.
“Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly – and therefore hamper international efforts to tackle climate change,” he said.
Total critical mineral demand for EVs in 2020 was 0.4 million tonnes. Based on its Sustainable Development Scenario, the IEA predicts this demand to grow almost 30 times, to 11.8 million tonnes in 2050. Lithium is expected to see the biggest growth, followed by nickel and graphite.
The issue with meeting the demand does not lie in a shortage of reserves. According to the latest figures from the US Geological Survey, 89 million tonnes of lithium resources have been identified. On land alone, 25 million tonnes of cobalt resources and at least 300 million tonnes of nickel have been identified. Large reserves of resources of the two minerals have been found on the ocean floors as well.
Instead, the difficulty lies in creating new operational mines to produce useable minerals from those reserves. Moving a mining project from the discovery to the operational phase takes 16.5 years on average, according to the IEA. Growing environmental concerns and the lack of local support can delay or halt a project. In Portugal,(estimated to have Europe’s largest lithium reserves), locals are fighting new mining projects, leading to the shutdown of a lithium mining project in Montalegre.
The IEA's special report states it is unlikely the required mineral demand will be met based on today’s supply and investment plans. While some minerals are expected to have a surplus soon, the IEA predicts that in the mid to long term, demand will surpass expected supply from existing mining projects. Investments in new projects are needed to meet the growth in demand.
Reducing imports
Another challenge for the future supply chain is that many of the minerals essential for EVs are produced in only a handful of countries. More than half of the mineral supplies needed for EV batteries come from their top three producers.
In 2020, Australia was responsible for 48% of global lithium production. For graphite, China is the world’s main supplier, with nearly 79% of global production originating from the country. In 2020, the Democratic Republic of the Congo (DRC) supplied 69% of global cobalt.
The increasing demand for minerals has led to warnings about an increase in battery cost. The pack prices of Li-ion batteries hit an all-time low in 2021 of $132 per kilowatt-hour (kWh), due to better technology and economies of scale in production. A decade ago, the Li-ion pack prices were still more than $1,200/kWh. However, research company BloombergNEF’s annual battery price survey predicts costs could rise in 2022 due to rising commodity prices.
The IEA warns of the significant potential impact of raw material costs in the long term. “A doubling of lithium or nickel prices would induce a 6% increase in battery costs. If lithium and nickel prices were to double at the same time, this would offset all the anticipated unit cost reductions associated with a doubling of battery production capacity.”
Improving the security of supply of these minerals and reducing dependence on other countries is already a priority for many governments. In late 2020, the EU added lithium to its List of Critical Raw Materials, which contains a total of 30.
Maroš Šefčovič, a Commission vice-president, said at the time that Europe will need up to 18 times more lithium by 2030 and up to 60 times more by 2050 for EV batteries and energy storage. Currently, the EU supplies only 1% of its own demand for battery raw materials.
“We cannot allow to replace current reliance on fossil fuels with dependency on critical raw materials,” said Šefčovič in September 2020. “This has been magnified by the coronavirus disruptions in our strategic value chains. We will therefore build a strong alliance to collectively shift from high dependency to diversified, sustainable and socially responsible sourcing, circularity and innovation.”
Meanwhile, US President Joe Biden has rolled out an ambitious Build Back Better Act that includes the goal for half of new cars sold in the country in 2030 to be zero emissions. However, the same administration does not seem to be acting to secure a stable supply chain to achieve those goals.
Just last week, the government cancelled the leases of Twin Metals Minnesota to mine for cobalt, nickel and copper. Currently, there is only one operating mine in the US that produces nickel, and even though the country has large reserves of lithium, there is only one big operating lithium mining project, the Silver Peak Mine in Nevada.
Shortening supply chains
With the growing concerns about supply chains, carmakers themselves have started looking for solutions to secure EV production.
US manufacturer General Motors has developed a battery that needs 70% less cobalt. Other manufacturers are also exploring cobalt-light or free batteries, both due to the rising price of the mineral and humanitarian issues in the DRC. Human rights organisations, such as Amnesty International, have expressed their concerns about humanitarian issues in the DRC's cobalt mining industry, including weak regulation, human rights violations and pollution.
Tesla has shortened the supply chain by making deals with mining companies. The carmaker signed a deal with Talon Metals for nickel supplies in the US and with Australia-based Syrah Recourses for a supply of graphite. Other companies are initiating collaborations with battery-makers. Ford has announced plans to open battery factories in the US in collaboration with battery manufacturer SK Innovation. In Europe, Volvo and Northvolt have teamed up to build a joint battery manufacturing plant in Sweden.
“Our new battery plant will support our ambition to have a fully climate-neutral manufacturing network and secure a supply of high-quality batteries for years to come,” said Javier Varela, head of engineering and operations at Volvo, of the collaboration in a press statement.
“Through our partnership with Northvolt, we will also benefit greatly from an end-to-end battery value chain, from raw material to complete car, ensuring optimal integration in our cars.”
https://www.energymonitor.ai/sectors/transport/booming-ev-sales-challenge-mineral-supply-chains
“This product contains independently certified organic cotton grown without chemical pesticides, chemical fertilisers and genetically modified seeds,” the product description reads.
With the fashion industry trumpeting its sustainability commitments, those labels are both a means of value signalling and a lure to consumers willing to pay more to act better.
There’s only one problem: Much of the “organic cotton” that makes it to store shelves may not actually be organic at all.
The largest single producer of the world’s organic cotton supply is India, which accounts for half of the organic cotton sold globally, and where the organic cotton movement appears to be booming. According to Textile Exchange, a leading organic proponent, organic cotton production in India alone grew 48% in the last year, despite the pandemic.
However, much of this growth is fake, say Indians who source, process and grow organic cotton.
At the heart of the problem is an opaque certification system rife with opportunities for fraud. Consumers are assured of “organic” material by brands, which rely on official stamps of approval from external organisations. Those in turn rely on reports from opaque local inspection agencies that base their conclusions on a single planned yearly inspection (in the case of the facilities) or a few random visits (for farms).
In recent months, the credibility of these inspection agencies has been destroyed. In November, the European Union voted to no longer accept Indian organic exports certified by the main companies responsible for organic cotton: Control Union, EcoCert and OneCert. And in January, the international agency that provides accreditation to organic inspection agencies, IOAS, withdrew OneCert’s ability to inspect and certify cotton processors for these labels.
Crispin Argento, founder and managing director of the Sourcery, a small consulting firm that helps brands source organic cotton, has spent the past year hunting down organic cotton with his team only to see suppliers disappear when they start asking for proof of authenticity. He estimates between one half and four-fifths of what is being sold as organic cotton from India is not genuine. And almost the entire supply chain is implicated in what he calls a game of “smoke and mirrors.”
For at least a decade, in reports and at conferences convened by agitated large brands and the network of nongovernmental organisations that serve them, the organic cotton industry in India has been described as in “crisis,” but the problems have been kept largely out of the public eye.
NGO workers worry exposure would lead to the total collapse of the industry and harm the small subset of farmers who are, in fact, growing organically. They also fear the wrath of Prime Minister Narendra Modi’s government, which has come down hard on those who dare to criticise the country. Others are profiting handsomely from the certification system.
When confronted with the allegations of fraud, many fashion brands and their sourcing partners that use Indian organic cotton admitted that the system wasn’t perfect but affirmed their commitment to organic cotton and said any problems that existed were located outside their own supply chains.
A spokesperson for PVH, the owner of Tommy Hilfiger, wrote in an emailed statement that organic cotton was one of a variety of sustainable materials they had committed to sourcing and noted, “We know that rigorous standards and reliable verification processes are critical for sourcing sustainable materials.” Michael Kors and Urban Outfitters did not respond to emails requesting comment on their organic cotton sourcing.
At least one brand has decided it no longer wants to look the other way, however. Though organic cotton used to be a centrepiece of its commitments, the womenswear brand Eileen Fisher now has a page on its website describing why it is moving away from certified organic cotton, the better to address what the brand calls “an uncomfortable fact.”
“The ‘organic’ cotton that’s sold each year far exceeds the amount that is actually grown,” it says.
The two main links in the long supply chain between farmers and shoppers are Western organisations that provide organic cotton labels, and local inspection offices.
The gold-standard organic cotton label comes from a German company, Global Organic Textile Standard, or GOTS. Founded in 2006 to harmonise the various other organic labels circulating at the time, it provides the basis for the other main organic cotton label: Textile Exchange’s Organic Cotton Standard. Funded by brands such as Adidas, Patagonia and H&M, both GOTS and Textile Exchange rely on consumers and brands believing in the uplifting story of organic cotton.
In India as well as other cotton-producing countries, GOTS and Textile Exchange certification starts at the gin, where the cotton fibre is separated from the seed. A paper transaction certificate is issued each time the cotton is sold along the supply chain: from the gin to a certified spinner, where the fibres become thread; to a certified mill, where the threads become fabric; and on until it lands in the form of a shirt or sheet set in a store near you.
But neither GOTS nor Textile Exchange perform inspections themselves. Instead, they use the local offices of international inspection businesses, including OneCert, EcoCert and the behemoth Control Union, which certifies more than 100 programs in 70 countries, to verify claims.
These businesses are paid by the very ginners, spinners and farmers they are supposed to be policing. They produce a paper certificate, which is sent to GOTS and Textile Exchange, who pass on the paper to clothing manufacturers, who pass it on to brands.
The discovery of new metal and mineral resources is necessary to supply raw materials for emerging technologies.
These technologies are required to meet the expectations of billions of people and the demand for higher living standards.
The geological conditions of Africa and Europe suggest that these critical metals and minerals maybe found in these regions, but their discovery will require non-destructive, high-resolution and deep exploration techniques.
To this end, a consortium of South African Partners – Wits University, Gold Fields Ltd, University of Venda, and counterparts in Europe including Uppsala University (Sweden), Polito University (Italy), Sercel (France), Geological Survey of Sweden (Sweden), and Nordic Iron Ore AB (Sweden) will leverage their expertise to develop new seismic, electromagnetic and magnetic methods for deep exploration targeting. These methodologies boast unprecedented penetration, sensitivity, and resolution.
The project, titled FUTURE: Fiber-optic sensing and UAV-platform techniques for innovative mineral exploration commences in April 2022 and will span approximately two years.
It is anticipated that the FUTURE project will advance high-resolution imaging and modelling of the host rock and any mineralisation between tunnels and the surface, and in the down-dip direction.
The project has a total budget of R21-million and will be funded by the Department of Science and Innovation (DSI – South Africa), Vinnova (Sweden), Ministry of Universities and Research (Italy), and National Agency for Research (France) via ERA-NET Confund on Raw Materials (ERA-MIN).
Project leader and director of the Wits Seismic Research Centre Professor Musa Manzi says the FUTURE project seeks to develop innovative, environmentally friendly and cost-effective technologies for deep exploration, primarily in the challenging mine environment.
Professor Alireza Malehmir from Uppsala University says the planned work will employ fiber-optic sensing technologies and UAV-based magnetic and electromagnetic surveys for high-definition target generations and subsurface imaging.
The project team includes researchers from universities, geological survey, equipment manufacturers, and mining companies on two continents and will support the exchange of knowledge and experiences across zones.
Exploration sites
Blötberget in the Ludvika Mines in Sweden is one of the two target sites given the wealth of information available from earlier studies. The mine is known for its iron-oxide deposits – a combination of minerals from which metallic iron can be extracted for various uses. There is a high demand for iron-ore products from maturing economies including Europe, Japan, China, Africa, and now increasingly in the Middle East and India. Higher Iron ore grades are required in improving auto markets, construction, and other demanding types of specialised infrastructure. Technology is increasingly demanding sophisticated forms of steel.
The second site is South Deep Mine which falls under Gold Fields in South Africa, where mining at depth requires improved understanding of potential resources at depth and their host rock structures. South Deep mine is one of the deepest (> 2.5 km mining depths) and largest gold-producing mines in the world. Given the deep nature of the mining operation and the prevailing rock stress fields, the mine is geological complex and subjected to comparatively high levels of mining-induced earthquakes. The site is ideal because the project may improve the life of the mine by mapping the mineralisation between the surface and tunnels, as well as protect miners working underground by mapping zones of weaknesses that are important for mine planning and safety.
“We envisage that innovative technologies that will be used at South Deep would make a good case study on how one can maximize the value of the mining infrastructure – such as tunnels and boreholes –using geophysics for mineral exploration, especially at deep mines in South Africa, and future deep mines in Europe,” says Manzi.
As human endeavours and discoveries soar, gold will continue to be valued for its uses in electronics and computers, phones, medicine, aerospace, etc.
Several field surveys are planned as well as new prototypes and solutions to make these types of surveys cost-effective in hard rock settings. The project will also involve a major training and educational component to capacitate masters and PhD students.
Source: Wits
https://yiba.co.za/wits-in-multi-country-high-tech-mineral-exploration-partnership/
LONDON, Feb 14 (Reuters) - Aluminium and nickel prices climbed towards multi-year highs on Monday on escalating fears that reduced supplies from Russia would exacerbate existing shortages of both industrial metals.
A Russian invasion of Ukraine could mean sanctions against Russian companies such as Norilsk Nickel (GMKN.MM), which supplies about 10% of the world's nickel, and Rusal , which accounts for about 5% of global aluminium supply. read more
Russia has repeatedly denied it is preparing to invade Ukraine.
Benchmark aluminium on the London Metal Exchange (LME) was up 2.4% at $3,212 a tonne by 1702 GMT, retreating from an earlier high of $3,241 after Russian Foreign Minister Sergei Lavrov urged President Vladimir Putin to allow more time for diplomacy on the Ukraine crisis. read more
"There's a risk of sanctions on Russia; people are trying to stock up on aluminium and nickel," one metals trader said.
Aluminium prices hit $3,333 a tonne last week, close to the record high of $3,380.15 hit in July 2008.
Nickel gained 0.6% to $23,190 a tonne, also ceding some early gains. It touched $24,435 a tonne in January for its highest since August 2011.
STOCKS: Shortages can be seen in dwindling inventories in LME-registered warehouses.
Aluminium stocks at 868,950 tonnes have more than halved since March last year. Cancelled warrants -- metal earmarked for delivery -- at 30% suggest THAT more aluminium will be delivered out over coming days and weeks.
Nickel inventories at 84,894 tonnes have dropped by 67% since April last year, while cancelled warrants stand at 50%.
SPREADS: Worries about supplies on the LME market have seen cash aluminium and nickel trade at a premium over the three-month contracts for some time.
SHANGHAI: Norilsk Nickel's cathode is deliverable against the nickel contract traded on the Shanghai Futures Exchange (ShFE). The contract , too, has rallied in recent days.
DOLLAR: Prices of copper used by investors as a gauge of economic health was up 0.5% at $9,908 a tonne.
Worries about demand in top consumer China and a stronger U.S. currency are weighing on copper. A stronger dollar makes metals priced in the currency more expensive for buyers with other currencies.
OTHER METALS: Zinc slipped 1.2% to $3,581 a tonne, lead rose 0.5% to $2,290 and tin was flat at $43,549.
https://www.reuters.com/markets/europe/london-copper-prices-gain-inflation-jitters-mount-2022-02-14/
SHANGHAI, Feb 14 (SMM) - The market has expected the Fed to raise the interest rate by 25-50 basis points in March. At the same time, the Fed Board of Governors will hold a closed-door meeting to review and determine the lending ratio and discount rate this week. The US Senate Banking Committee will vote on Powell's nomination of Fed chairman as well as the nominations of four Fed officials. The determination of Fed officials will also direct the future market policies to a certain extent.
The tight power supply and high costs in Europe affected the metals production, which drove up the LME lead prices and made up for the losses during the CNY holiday. The power supply in Europe will remain short this week, while the LME lead stocks will change little coupled with expected China’s exports of lead ingots to Europe. LME lead may test $2,300/mt, but the monetary policies are likely to weigh on the prices. LME lead is expected to trade between $2,200-2,300/mt this week.
The SHFE lead was dragged down significantly by LME lead and hit the break-even point early last week, and then rebounded. The lead ingot inventory increased as expected after the CNY holiday. The enterprises from the lead industry chain kept resuming the production last week, and SMM will monitor inventory change of lead ingots. The 3% value-added tax (VAT) will be levied on the lead-acid battery scrap starting from March, which may increase the costs and tighten the supply of standard battery scrap. Hence the SHFE lead may move upward. The most traded SHFE lead contract is expected to trade between 14,950-15,550 yuan/mt this week.
The spot prices are expected to move between 15,000-15,300 yuan/mt this week. The primary lead smelters were resuming the production as expected last week, and some smelters had a certain amount of inventory, who shipped for the small orders at discounts. The large-sized secondary lead smelters general had higher inventories after the CNY holiday, and the medium and small-sized smelters were also resuming the production. The secondary lead smelters mainly shipped the goods at discounts. The downstream enterprises were coming back to work as well, and the production is expected to recover further this week as more workers will return to the factories. However, the end consumption was not strong, and the downstream users purchased lead ingots cautiously. The downstream restocking demand is expected to grow this week.
https://news.metal.com/newscontent/101748718/rising-supply-and-demand-may-boost-lead-prices
PESHAWAR – Despite facing looming security threats in Pakistan, China has taken a 15-year extension of its leasing rights on a gold and copper mine project in restive Balochistan province, an area that saw militant terrorist attacks on army bases in recent days.
A 15-year extension of the lease between Saindak Metals Limited (SML) of Pakistan and the Metrological Construction Company of China (MCC) for the Saindak Copper-Gold Project was cleared by the cabinet on February 9.
The lease contract had been valid until October 31, 2022, but it now expires in 2037.
Although China has long expressed its frustration at the lack of security there for Chinese workers, Beijing has not cut back its economic involvement in Pakistan.
Nor has it called back Chinese staff involved in various projects and joint ventures in Pakistan after militant groups carried out attacks on businesses and Chinese nationals.
Those attacks include the Dasu hydropower plant last year, in which nine Chinese engineers were killed in Pakistan’s northwestern Kohistan region.
Despite the rising security threats, China continues to add staff to both the China-Pakistan Economic Corridor (CPEC) and non-CPEC projects, according to sources familiar with the situation.
A survey carried out in November 2017 by the ministry of planning revealed that the CPEC has raised the number of Chinese nationals in Pakistan from 20,000 in 2013 to 60,000 in 2017.
Independent business groups who spoke with Asia Times about their estimates put the present figure at 400,000. Asia Times could not independently confirm that figure.
Similarly, Fortune Global 500 – a body that publishes rankings of the top 500 companies worldwide – said in its latest report that more than half the 143 Chinese companies on its list have operations in Pakistan.
Pakistan provides a vital link for Chinese goods. Map: WikiCommons
Rich mineral deposits
Analysts believe China has its eye on the vast mineral potential of Pakistan’s Balochistan province. The companies, they note, have stayed put despite renewed anti-China sentiment in the restive region.
Ayesha Siddiqa, a Pakistani political scientist, commentator and author who serves as a research associate at the SOAS South Asia Institute, told Asia Times there were two main reasons for China’s staying power amid growing militant hostility.
“Firstly, because Balochistan is rich in mineral deposits and Beijing needs Balochistan’s resources including gold, copper, iron, silver, lead, zinc, barite and chromite for its industrial use, and secondly, Beijing has a geopolitical interest in Balochistan where it already built a strategic seaport in Gwadar,” she said
Siddiqa said Pakistan had little or no expertise in the mining sector, which left the government dependent on the Chinese as well as Australian mining firms. “The Chinese got a major share in the profit with relatively little investments in the minefields,” she added.
She said Pakistan’s senior-level military circles, which are in direct contact with Beijing, had assured the Chinese leadership many times that the army was capable of defending their interests in the country.
Pakistan’s army has formed a Special Security Division (SSD) to take on security-related threats to Chinese nationals, she added.
Other analysts said last week’s twin attacks on military bases in Balochistan province by the Balochistan Liberation Army (BLA) insurgent group – and its warning to Beijing – have again exposed the vulnerability of Pakistan’s security apparatus.
The banned separatist group issued a press statement last week warning Beijing that there would be consequences if it did not stop funding projects in Balochistan. The BLA said that if China continued to support Pakistani forces and did not withdraw its nationals from Balochistan, the BLA would intensify attacks on Chinese nationals and projects.
Instead of focusing on the precision and sophistication of the terrorist operations, Pakistan’s authorities keep blaming India and Afghanistan for supposedly cosseting and supporting militant groups.
“Such claims by the Pakistan army are counter-productive and would make the Chinese even more cautious of their investments in Pakistan. However, they would not roll back the projects in which they had major stakes,” an official at the ministry of mineral and natural resources told Asia Times on condition of anonymity.
Heavy security
Saindak is 660 kilometers from Balochistan’s capital city Quetta and 30 kilometers from the Pakistan-Iran border of Taftan. Security forces heavily guard the villages around the Saindak mining project.
From Taftan to Saindak, more than 20 checkpoints were built and even the mountains in Saindak are surrounded by Frontier Corps (FC) troops. The soldiers, posted in and around the Saindak minefield, do not allow anyone, including journalists, to approach the project.
The Saindak mine was estimated to have ore reserves of 412 million tons, containing on average 0.5 grams of gold per ton and 1.5 grams of silver per ton.
According to official estimates, the project can produce 15,800 tons of blister copper annually, containing 1.5 tons of gold and 2.8 tons of silver. However, no detailed examination of the deposits has been done by any international laboratory to ascertain the exact ratio of copper and gold in the minerals extracted from the mines.
On February 9, the government approved revised terms for the Saindak Gold and Copper Mine Project. It shows that the profit share of the SML has been increased from 50% to 53%, royalties to the Balochistan government increased from 5% to 6.5%, and social support to the provincial government has been revised from 5% to 6.5%.
In addition, the venture will donate 10 million rupees (US$57,471) for scholarships to students in Chaghi.
In contrast with the claims of the Chinese company that it upgraded schools and health services and provided scholarships to students in the area, local people say that most of those people employed by the company are non-Baloch.
Locals claim the government and the Chinese company seem reluctant to fund social development initiatives in the area to alleviate the abject poverty of one of Balochistan’s most impoverished districts, despite its rich gold and copper deposits.
The revenues from the mines have gone to the federal and provincial governments since 2002, when MCC took charge of the Saindak project. But 20 years later and with Chinese investment, the hoped-for trickle-down effects are still not apparent.
https://asiatimes.com/2022/02/china-to-soldier-on-in-pakistan-despite-attacks/
China's iron ore futures slumped on Monday, after last week's rally that sent the steelmaking ingredient to its highest in more than five months, as traders worried about warnings from the country's regulators against recent unusual price moves.
Apart from the warnings, China's Dalian Commodity Exchange has announced an increase in the transaction fee for iron ore futures contracts for February to May deliveries in an apparent move to cool down the rally.
The most-traded Dalian iron ore for May delivery fell as much as 8.6% to 761.50 yuan ($119.73) a tonne, its weakest since Jan. 27.
On the Singapore Exchange, the front-month March contract shed as much as 3.6% to $144.45 a tonne.
Iron ore fundamentals
China's state planner, the National Development and Reform Commission (NDRC), on Friday said teams would be dispatched to the commodity exchange and major ports to look into iron ore inventories and trading in spot and futures markets.
It also warned information providers against fabricating prices amid a rapid rise over the past five weeks.
The 18% surge in Dalian iron ore prices last month followed predictions by analysts and traders about Chinese demand picking up when steel production restrictions are lifted after the Beijing Winter Olympics this month, as well as supported by economic stimulus measures.
Spot prices in China have rallied more than 20% this year, trading above $150 a tonne.
Warnings by major miners of labour shortages in Australia had added fuel to the price rally.
"We are entering what might be an incredibly volatile period for iron ore, given that the bull narrative is pushing the market higher while it is intermittently pegged back by Chinese government rhetoric," said Atilla Widnell, managing director at Navigate Commodities in Singapore.
Rebar and hot-rolled coil on the Shanghai Futures Exchange both dropped 2.3%, but stainless steel advanced 2.9%.
Dalian coking coal gained 0.7% and coke climbed 0.5%.
The 2021 half-year profits of Fortescue, an iron ore mining company, are expected to fall by around a third, while the half-year profit growth of its more diversified and larger rivals, Rio Tinto and BHP, is expected to be reduced.
Iron ore prices were halved from the record highs reached in the December half as China’s measures to reduce emissions and slowing construction activity in the housing sector were Debts have dampened demand, and analysts believe they will stay away from last year’s peak for some time.
BHP, which ditched its dual-listing structure in favor of a main Sydney listing, is expected to report a 53% rise in profits, compared to a whopping 185% gain in the June half-year, when prices reached a record.
BHP “may provide a new net debt (non-oil) target range, or a new capital management strategy to distribute BHP’s large franchise balance,” Morgan Stanley analysts wrote last week.
They also felt that Fortescue’s investments in its green power unit could lead to a more conservative interim dividend.
GRAPH – BHP and Fortescue first half net profit
Rio Tinto’s second-half profit growth will slow to 23.5%, consensus estimates, after rising more than 150% in the first six months of 2021.
Nonetheless, the world’s largest iron ore producer is expected to post record annual profit, thanks to record first-half profits and a more diversified product mix.
GRAPH – Rio Tinto half-year net profit
WORK AND CULTURE
Investors will also closely monitor issues that could affect the company’s results and reputation.
An acute labor shortage in Australia has been a challenge for months. The mining trio has already warned of the consequences of this labor shortage, as Rio and BHP have been forced to reduce their annual production forecasts.
“We need to keep an eye out for potential disruption in the Pilbara, as COVID cases are unfortunately on the rise in the region. The labor shortage in Western Australia is also an issue, in part due to border closures. related to COVID,” warns Jefferies.
However, with the country due to reopen its borders to all vaccinated visa holders next week, any signal to ease pressure on the workforce will be welcomed.
Workplace behavior across the industry is also a focus of concern for investors after an 85-page report released by Rio described a culture of bullying, harassment and racism.
