Question 1
August 1, 2021
BIG IDEA | ‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook. According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’
‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook.’
‘The new model appears to place common prosperity, as President Xi Jinping has put it, ahead of helter-skelter growth.’
‘ The messaging in the months running up to the Party's July 1 centenary was also unequivocal, analysts say.’
‘According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’
‘ "Over the past 20 years, Chinese authorities could turn a blind eye to some illegal business practices, tax evasion or wrongdoings, because the economy enjoyed robust growth," said Ming Liao, founding partner of Beijing-based private equity firm Prospect Avenue Capital.’
‘Housing, medical and education costs were the "three big mountains" suffocating Chinese families and crowding out their consumption, said Yuan Yuwei of Olympus Hedge Fund Investments.’
‘As the Party prepares for a 20th national congress, which will decide if Xi remains its general secretary for an unprecedented third term, analysts think he will press on with his pillars for reform, one of which is a thriving middle class.’
Question 2 - Green agenda
Boris Johnson’s green agenda has been plunged into chaos amid fears that the costs of reaching “net zero” could cripple working class families in newly-won Tory seats.
A Treasury review of the costs of reducing net greenhouse gas emissions to zero by 2050 has been delayed since the spring. There are concerns the analysis highlights that the poorest households will be hit the hardest by the ambition, which will involve policies such as stripping out gas boilers and switching to electric or hydrogen cars.
Rishi Sunak, the Chancellor, is said to be increasingly concerned about a looming crisis over the cost of living for British households, as the country faces the triple threat of rocketing energy bills, the potential for rising prices as a result of inflation, and an as-yet unspecified suite of policies to enable the country to meet the net zero target.
The Treasury review has been held back amid fears that the analysis will lead MPs and the public to the conclusion that Mr Johnson’s net zero strategy would be politically toxic in the Red Wall seats won by the Conservatives in December 2019.
OPINION: Two Western states act to control methane
Tim Lydon of Writers on the Range: 'Methane rules today could produce swift returns on climate.'
New Mexico, the third-ranking U.S. oil producer, has moved to curtail methane pollution from the oil and gas industry, moving it closer to neighboring Colorado's leadership.
Methane is a dangerous greenhouse gas that contributes to climate change and also damages human health.
With the United States among the world's top methane polluters, and the Biden administration promising tighter nationwide rules, these two Western states set a bar for other states to follow.
For decades, the oil and gas industry has freely discharged the colorless pollutant from tens of thousands of wells as a cost-savings measure. Then this March, New Mexico banned the wasteful venting and flaring of natural gas, which is comprised almost entirely of methane. New Mexico is only the third state, after Colorado and Alaska, to ban the practice.
This May, New Mexico also proposed a final rule to staunch leaking of methane from across the state's oil and gas supply chain, which includes part of the mammoth Permian Basin it shares with Texas.
The leaking occurs at well pads, pipelines, compressors, storage facilities and more. It's a system-wide problem that generates methane plumes large enough to detect from space.
The proposed rule on leaking, now up for public comment, improves on a December draft that offered broad loopholes. When it's made final, it will require regular inspection and repair of leaky equipment, which today goes largely unmitigated as yet another industry cost-savings measure.
The state effort means New Mexico is catching up with Colorado.
In 2014, Colorado became the first state to regulate methane and has twice strengthened its original rule. Colorado has also modernized its oil and gas regulatory agency's mission so that it includes safeguarding public health. And it is reworking oil and gas bonding requirements so taxpayers don't get burdened with plugging leaky "orphan wells" abandoned by producers.
Colorado's rules were a model for the first national methane regulations, implemented under President Barack Obama in 2016. Unfortunately, the Trump administration dismantled those rules.
Controlling methane is a climate imperative. Because the gas has 80 times the heat-trapping potential of carbon dioxide, it's a potent driver of climate change. NASA says it has fueled a whopping 25% of the human-caused global warming that today increasingly jeopardizes Western water, agriculture and recreation.
Research also shows that methane is entering the atmosphere from sources such as wetlands or thawing permafrost. In the latter, warming tied to methane begets more methane. It is the ominous type of feedback loop that global warming alarmists have warned us about for decades.
But the good news is that methane only survives in the atmosphere for about 10 years, unlike the centuries-long lifespan of carbon dioxide. Consequently, methane rules today could produce swift returns on climate as the world grapples with the harder problem of carbon dioxide.
But methane and associated pollutants also contribute to harmful ground-level ozone, which is linked to premature birth, respiratory sickness and other illnesses. New Mexico Gov. Michelle Lujan Grisham made this part of her campaign for regulation, pointing out that poor air quality disproportionately harms poor communities.
That concern helped build support from indigenous and other groups, outweighing fears that new regulations would detract from drilling royalties, which provide over a third of New Mexico's revenue for education, health and other services.
Part of the New Mexico governor's strategy in winning support for methane control was focusing on fiscal accountability. Venting, flaring and leaking — all monumentally wasteful practices — send an estimated $43 million in potential state revenue into New Mexico's thin air every year.
At the national level, President Joe Biden campaigned on restoring federal methane regulations rolled back under former President Donald Trump. Biden issued executive orders on his first day in office that set a September goal for proposing a new strategy. Crafting new federal rules are expected to take years, but New Mexico and Colorado now offer strong examples. By applying rules to both new and existing oil and gas infrastructure, they exceed the original Obama regulations, which only addressed new permits.
Today, Western states, along with heavy oil producers Texas and North Dakota, offer only a patchwork of tax incentives and voluntary targets. Limited rules, however, often tilt in industry's favor.
Now, with fossil fuel production ramping back up and global temperatures rising, New Mexico and Colorado show that tougher regulations are the way to go.
Tim Lydon is a contributor to Writers on the Range, writersontherange.org, a nonprofit dedicated to spurring lively conversation about the West. He writes from Alaska.
Equities in Canada’s largest centre posted solid gains on Tuesday as commodity-linked sectors recovered from steep losses, although investors remained on edge due to rising COVID-19 cases across the globe.
The TSX Composite index buzzed 72.92 points higher to begin the session at 20,510.34
The Canadian dollar poked higher 0.05 cents to 79.57 cents U.S.
National Bank of Canada ups the price target on Hardwoods Distribution to $60.50 from $57.00. Hardwoods shares picked up 53 cents, or 1.4%, to $38.83.
Credit Suisse cut the rating on Manulife Financial to neutral from outperform. Manulife shares faded 20 cents to $25.05.
Scotiabank raised the target price on Power Corporation of Canada: to $48 from $47. Power docked 28 cents to $41.81.
ON BAYSTREET
The TSX Venture Exchange recovered 2.89 points to 920.88.
All but three of the 12 TSX subgroups advanced in the first hour of trade, with energy stronger 1.5%, information technology clicking higher 1% and materials up 0.8%.
The three laggards were utilities, down 0.3%, while gold and real-estate each sank 0.1%.
ON WALLSTREET
Stocks were little changed on Tuesday, with the Dow Jones Industrial Average and S&P 500 hovering under record highs, capped by concerns about a resurgence in COVID-19 cases.
The 30-stock index recovered 73.06 points to kick off Tuesday at 35,174.91,
The S&P 500 jumped 8.74 points to 4,441.09
The NASDAQ advanced 24.3 points to open at 14,884.48.
Energy stocks rebounded on Tuesday, after leading the market’s declines on Monday spurred by a drop in oil prices. Exxon Mobil and Chevron popped more than 1% on Tuesday and Diamondback Energy rebounded more than 2%. U.S. oil prices rose 1.6% on Tuesday.
Stocks tied to the economic reopening also made back some of their losses from Monday. Norwegian Cruise Line gained 2% and American Airlines rose 1%.
AMC’s stock jumped 4.7% after reporting a lower loss than expected. The company also announced it would begin accepting bitcoin at all U.S. locations this year.
Earnings season continues Tuesday, with Coinbase set to report. Its stock, which trades closely with the price of bitcoin, dropped 3% Tuesday. SoftBank and Sysco are also set to report.
The U.S. Senate could pass a $1-trillion bipartisan infrastructure bill as soon as Tuesday. The plan, which includes $550 billion in new spending on transportation and broadband, could help give the economy a boost as peak growth slows following the reopening from the pandemic.
Prices for 10-Year Treasurys were static, keeping yields at Monday’s 1.33%.
Oil prices hiked 87 cents to $67.35 U.S. a barrel.
Gold prices slid $3.70 to $1,722.80 U.S. an ounce.
Boris Johnson pledges action on 'coal, cars, cash and trees' at COP26
Prime Minister Boris Johnson has come out with a new slogan for the UK's priorities for COP26, promising new domestic pledges and new plans to garner international commitments on "coal, cars cash and trees".
In a video address responding to the Intergovernmental Panel on Climate Change’s (IPCC) major new report this week, Johnson said the UK needs “every other country to follow its lead and commit to net-zero carbon emissions by the middle of the century”. Such commitments, he added, should be backed with “specific plans to cut emissions… well-before this deadline”.
Jonson specifically urged G20 nations to act. This group of nations is responsible for more than 75% of global emissions annually. Only 13 G20 nations met the target for updating their Paris Agreement commitments ahead of COP26, with only eight presenting more ambitious plans than their originals.
One of the IPCC report’s conclusions is that the global temperature increase is likely to exceed the Paris Agreement’s 1.5C trajectory by 2040, meaning that the world may need to go beyond net-zero by 2050 to avoid the worst physical impacts of the climate crisis.
The @IPCC_CH report couldn’t be clearer: humans are causing potentially catastrophic climate change. The world must act together @COP26 to avoid incalculable damage in the future. pic.twitter.com/75KPmyjXFj — Boris Johnson (@BorisJohnson) August 9, 2021
As the four-minute video, published on Johnson’s Twitter feed, continues, he states that the UK will make “extremely bold” commitments in four specific areas and encourage the rest of the world to follow suit. He explains them as such:
"Coal - we want the developed world to kick the coal habit entirely by 2030 and the developing world by 2040.
"Cars - we want the world to follow the UK lead and abandon fossil fuel internal combustion engine machines.
"Cash - we want the richest nations which have historically produced so much of the world's carbon to recommit to supporting the rest of the planet to go green with funds of $100bn a year.
"Trees - we want COP26, the UN great summit, to commit to restoring nature and habitat and ending the massacre of the forests, because trees are among our best natural defences against climate change. To be net-zero for carbon you must be net-positive for trees and by 2030 we want to be planting far more trees across the world than we are losing."
Johnson stated that the goals are “hugely ambitious and will require a massive amount of global diplomacy and imagination” but that nations “must be ambitious for [COP26], no matter how difficult it looks now”.
He said: “The IPCC has put it beyond reasonable doubt. This is our best chance, now, to make the changes we need for the health and prosperity and growth of our economy, and the best chance to safeguard the beauty and balance of the natural world and pass it on to our children and grandchildren. It’s not a chance we can miss.”
He also emphasised the potential economic benefits of the net-zero transition, amid reports that backbench Conservative Party MPs are raising concerns about the cost of measures designed to reduce emissions through forthcoming policy packages such as the Heat & Buildings Strategy.
Johnson said: “The costs of new green technology are falling the whole time – 85% fall in the cost of solar in the last 10 years, 70% fall in the cost of offshore wind, and colossal investments in the UK’s Ten-Point Green Industrial Revolution [Plan] will be driving hundreds of thousands of high-skill, high-wage jobs for decades to come. We have the technology and finance to make a big economic success of this agenda. We lack only one thing, and that is time.”
“It’s a shame that while American producers continue to recover from price wars and economic uncertainty from the COVID-19 pandemic, the White House is begging foreign governments, with abysmal records of environmental stewardship, to come to the aid of American consumers. For America’s oilfield, the Permian Basin, the Biden administration is contemplating job killing regulations on American producers, all the while signaling to foreign, state-owned producers, to drill baby drill.”
Ben Shepperd
President, Permian Basin Petroleum Association
“Our nation is the leading producer of oil and natural gas providing affordable and reliable energy. Our companies employ millions of Americans and are the primary funders in many states of roads, schools, universities and economic stabilization funds, yet the Biden Administration has cancelled energy infrastructure projects and suspended federal oil and natural gas leasing permits. And now the Administration wants to count on OPEC+ to increase production to bring stability to energy markets. Why promote jobs in other countries and not American jobs? Why rely on other countries while hamstringing our own energy sector?
“The best way to ensure Americans and our trade partners have access to clean, affordable and reliable energy is to encourage homegrown, domestic energy that supports jobs and economic growth while continuing our commitment to environmental progress.”
Todd Staples
President, Texas Oil & Gas Association.
“While many in his own party are bashing the move as anti-green, Biden's move is simply based in practicality,” said Jerry Bailey, chief executive officer of Petroteq Energy, and former CEO of Exxon Arabian Gulf. He offered these factoids:
While many in the political sphere want to see the total elimination of oil and other fossil fuels, oil companies are not moving away from fossil fuels. They will continue to become more efficient and environmentally friendly, but oil is still the lowest cost source of energy.
Many investors claim to be more green in public, but investments they make are still in oil stocks
Oil will be around for another 100 years
“These discussions tacitly acknowledge the important role of fossil fuels for American families to have access to cheap, plentiful, and reliable energy. While I appreciate your support for increasing the production of oil, quite frankly, we do not need to rely on other countries for natural resources we can produce right here at home.
“By frequently attempting to weaken the American oil and gas industry you are not reducing emissions, you are merely shipping them overseas while killing American jobs, increasing costs to American consumers, and harming our country’s national security.
“Here’s the truth. The environment in the United States is getting cleaner, not dirtier. Over the last fifty years, the six major pollutants regulated by the EPA have fallen by 77 percent while the U.S. economy grew 285 percent and its population by 60 percent. While natural gas production increased more than 50 percent between 1990 and 2017, methane emissions from natural gas decreased by more than 14 percent. According to the U.S. Energy Information Administration, between 2005 and 2019, total U.S. electricity generation increased by almost 2 percent while related CO2 emissions fell by 33 percent.
“Meanwhile, China — already the largest carbon emitter on Earth — commissioned more coal-fired electric generation capacity last year than the rest of the world retired5. More than 50 percent of the raw materials required to make solar panels and wind turbines are now mined in China by power generated from fossil fuels. This means wind and solar generated electricity in the United States isn’t reducing global carbon emissions, it is just outsourcing them to China.
“America has proven we do not need to rely on OPEC+ or any other nation for our energy needs. We can produce the natural resources we need right here at home. History has shown us time and time again that oil and natural gas production and a clean environment are not mutually exclusive. America has proven that through technological innovation we can maintain a clean environment AND achieve energy independence.”
Wayne Christian
Texas Railroad Commissioner
08/08/2021 | 12:45
President Jair Bolsonaro participated this Sunday morning in another motorcycle tour with supporters, this time in Brasília. Summoned by the Chief Executive, the participants began to gather before 9:00 am in front of the Planalto Palace and were even able to climb the ramp that gives access to the second floor of the building.
The president started the journey shortly after 9 am towards Taguatinga and Ceilândia, administrative regions of the Federal District, and returned around 11:30 am to the Palácio do Planalto. By interacting with his supporters, Bolsonaro provoked a crowd. He and many of those present were not wearing a covid-19 protective mask.
The president has already taken the tour with supporters in Rio de Janeiro (RJ), São Paulo (SP), Chapecó (SC) and Porto Alegre (RS), and in Florianópolis (SC). Despite not being an official event of the Presidency, the "motorcycle" always mobilizes the public apparatus, as it requires reinforcement in policing, mobilization of traffic agents, an ambulance and even a helicopter to accompany the president on the way.
Yesterday, in Florianópolis, Bolsonaro again made accusations against the Brazilian electoral system, without presenting any evidence of fraud in the electronic voting machines. "They want to decide things on the mat in Brazil. It can't be that way. Democracy is born from responsible and accounted voting," he said at the time.
Bolsonaro wants the printed vote for the 2022 elections, but the Proposed Amendment to the Constitution (PEC) that changes the voting system in Brazil was defeated in the special commission by 23 to 11. Yesterday, the president of the Chamber of Deputies, Arthur Lira (Progressistas-AL), announced that, despite the rejection, it had decided to take the discussion about the printed vote to the plenary.
The proposal that institutes the printed vote in Brazil must be voted on in the plenary of the Chamber until next Wednesday. To be approved, the text needs at least 308 votes in the Chamber and 49 in the Senate, in two votes in each House, a number that party leaders find very difficult to achieve due to the crisis scenario. Lira has already warned Bolsonaro that, if the text is rejected, he will not accept institutional rupture.
Last Tuesday (3), Bolsonaro became the target of an investigation initiated by the STF minister Alexandre de Moraes at the request of the Superior Electoral Court (TSE) due to allegations of fraud in electronic voting machines.
The crime-news against Bolsonaro was presented to the STF on Monday night (2) by the president of the TSE, minister Luís Roberto Barroso, who is currently the preferred target of the president's attacks. The investigation request came after Bolsonaro made a live show featuring old videos and false information against the electronic voting machines, claiming once again that the system is fraudulent.
Original non-English text below:
O presidente Jair Bolsonaro participou na manhã deste domingo de novo passeio de moto com apoiadores, desta vez em Brasília. Convocados pelo chefe do Executivo, os participantes começaram a se concentrar antes das 9h em frente ao Palácio do Planalto e até puderam subir a rampa que dá acesso ao segundo andar do prédio.
O presidente iniciou o trajeto pouco depois das 9h em direção a Taguatinga e Ceilândia, regiões administrativas do Distrito Federal, e retornou por volta de 11h30 ao Palácio do Planalto. Ao interagir com seus apoiadores, Bolsonaro provocou aglomeração. Ele e muitas das pessoas presentes não usavam máscara de proteção contra a covid-19.
O presidente já realizou o passeio com apoiadores no Rio de Janeiro (RJ), em São Paulo (SP), Chapecó (SC) e Porto Alegre (RS), e em Florianópolis (SC). Apesar de não ser evento oficial da Presidência, a "motociata" sempre mobiliza o aparato público, pois requer reforço no policiamento, mobilização de agentes de trânsito, ambulância e até helicóptero para acompanhar o presidente no trajeto.
Ontem, em Florianópolis, Bolsonaro voltou a fazer acusações contra o sistema eleitoral brasileiro, sem apresentar qualquer prova de fraude nas urnas eletrônicas. "Querem no tapetão decidir as coisas no Brasil. Isso não pode ser dessa maneira. Democracia nasce do voto responsável e contabilizado", disse na ocasião.
Bolsonaro quer o voto impresso para as eleições de 2022, mas a Proposta de Emenda à Constituição (PEC) que muda o sistema de votação no Brasil foi derrotada na comissão especial por 23 a 11. Ontem, o presidente da Câmara dos Deputados, Arthur Lira (Progressistas-AL), anunciou que, a despeito da rejeição, decidiu levar para o plenário a discussão sobre o voto impresso.
A proposta que institui o voto impresso no Brasil deve ser votada no plenário da Câmara até a próxima quarta-feira. Para ser aprovado, o texto precisa de pelo menos 308 votos na Câmara e 49 no Senado, em duas votações em cada Casa, um número que dirigentes de partidos acham muito difícil de alcançar em razão do cenário de crise. Lira já avisou a Bolsonaro que, se o texto for rejeitado, não aceitará ruptura institucional.
Na última terça-feira (3), Bolsonaro se tornou alvo de uma investigação instaurada pelo ministro do STF Alexandre de Moraes a pedido do Tribunal Superior Eleitoral (TSE) em razão das alegações sobre fraudes nas urnas eletrônicas.
A notícia-crime contra Bolsonaro foi apresentada ao STF na noite de segunda (2) pelo presidente do TSE, ministro Luís Roberto Barroso, que atualmente é o alvo preferencial dos ataques do presidente. O pedido de investigação veio depois de Bolsonaro fazer uma live apresentando vídeos antigos e informações falsas contra as urnas eletrônicas, alegando mais uma vez que o sistema é fraudável.
08/08/2021 | 12:15
After overcoming its worst moment in the country, when the parent company considered, in early 2019, the departure of the brand from the region, General Motors is going through a new shakeup, this time involving a drastic drop in business. The problem is not a lack of investment or new products, as happened with Ford, but a shortage of semiconductors for production, which led the group to close the factory that produces its best-selling Onix for almost five months.
The Gravataí (RS) plant goes back into operation on the 16th with only one work shift. Analysts believe it will take a long time for GM to regain lost market this year. In addition, there is no guarantee of regular delivery of chips, which is expected by the sector only for 2022.
Onix represents about 40% of the sales of the brand, market leader in the last five years. Unable to meet the demand for the car hitherto best sold in the country, GM lost the podium in January and is in third place in the year, behind Fiat and Volkswagen.
The shortage of the electronic item has affected the auto industry around the world. In Brazil, most brands have already had to suspend production for several periods, but GM is the most affected. The company claims that the Onix has about 1,000 semiconductors and integrated systems, up to twice as much as other models in the same category.
The lack of chips led to the closure of the group's other factories, but for a shorter period. Despite this scenario, which will further affect its financial results, in the red since 2016, GM is financing a major renovation at the São Caetano do Sul (SP) plant for the production of the new Montana pickup.
"This almost century-old factory will be able to compete with any other in the world, in terms of quality and efficiency", says Michel Malka, executive director of the São Caetano and Mogi das Cruzes plants (read below).
Temporary situation. A year ago, GM's share of auto and light commercial sales through July was 17.5%. This year, it plummeted to 11.5%. In the last three isolated months, it was in seventh position, also behind Hyundai, Toyota, Jeep and Renault.
Fiat has managed to better dribble its supply and occupied the lead, earning points lost by GM and other brands. Its participation jumped from 14.4%, in the first seven months of 2020, to 22.9% of sales this year. For Paulo Cardamone, president of Bright Consulting, it will take time for GM to recover the lost slice.
To Estadão, GM says the situation is "punctual and temporary". It claims to have a broad portfolio of newly updated products with advanced technologies for energy efficiency, security and connectivity. The brand's latest great innovation was the SUV Tracker, made at the São Caetano factory since last year.
Jaime Ardila, a partner at the US-based consultancy Hawksbill Group, says the greater lack of chips for GM and other companies "is the result of the companies' strategy to favor more profitable vehicles in the US and China, and leave Latin America with lower priority". For him, the situation of the Brazilian GM is bad, "but without a doubt it is temporary and should improve by the end of the year". Ardila has presided over the automaker in Brazil and South America.
Cardamone also credits the situation to the strategies of the parent company, which acquires the semiconductors (mostly from Asia) and transfers them to subsidiaries. "The matrix favors more profitable and stable markets, mainly because it needs money to invest in electrifying its models." He points out that keeping a factory stopped for a long period is expensive. Even without producing, it is necessary to maintain robots, equipment and pay employees.
"What is happening is not GM's demerit, but the market's, and I can't see a quick reversal", says Ricardo Bacellar, responsible for the automotive area at KPMG do Brasil.
Without cuts
Leaders of workers at the three car factories say GM is not talking at the moment about a reduction in the workforce. At the plant in São José dos Campos (SP), the only one in operation, it is even believed that the third shift will be created if the delivery of chips is normalized, informs the secretary general of the Metallurgists Union, Renato Almeida. The company has already hired 450 temporary workers this year.
The São Caetano factory, stopped since June 26, partially returns on the 26th with about 2,000 employees, according to Aparecido Inácio da Silva, president of the union. He recalls that, before the crisis, the company was also studying the return of the third shift at the unit.
Valcir Ascari, leader of the Gravataí Metallurgist Union, estimates that 1,200 employees will return to the factory on the 16th to resume Onix production. The information is from the newspaper O Estado de S. Paulo.
(Original text below non-English)
Após superar seu pior momento no País, quando a matriz cogitou, no início de 2019, a saída da marca da região, a General Motors passa por novo abalo, desta vez envolvendo queda drástica nos negócios. O problema não é falta de investimentos nem novos produtos, como ocorreu com a Ford, mas escassez de semicondutores para a produção, que levou o grupo a manter fechada a fábrica que produz seu campeão de vendas, o Onix, por quase cinco meses.
A planta de Gravataí (RS) volta a operar no dia 16 só com um turno de trabalho. Analistas acreditam que levará um bom tempo para a GM recuperar o mercado perdido este ano. Além disso, não há garantia de entrega regular de chips, o que está previsto pelo setor só para 2022.
O Onix representa cerca de 40% das vendas da marca, líder do mercado nos últimos cinco anos. Sem poder atender à demanda pelo carro até então mais vendido no País, a GM perdeu o pódio em janeiro e está em terceiro lugar no acumulado do ano, atrás de Fiat e Volkswagen.
A escassez do item eletrônico tem afetado a indústria automobilística do mundo todo. No Brasil, a maioria das marcas já teve de suspender a produção em vários períodos, mas a GM é a mais prejudicada. A empresa alega que o Onix tem cerca de mil semicondutores e sistemas integrados, até o dobro do que outros modelos da mesma categoria.
A falta de chips levou ao fechamento das outras fábricas do grupo, mas por menor período. Apesar desse quadro, que vai afetar ainda mais seus resultados financeiros, no vermelho desde 2016, a GM está bancando grande reforma na fábrica de São Caetano do Sul (SP) para a produção da nova picape Montana.
"Essa fábrica quase centenária vai poder competir com qualquer outra do mundo, em qualidade e eficiência", diz Michel Malka, diretor executivo das plantas de São Caetano e de Mogi das Cruzes (ler mais abaixo).
Situação temporária. Há um ano, a fatia da GM nas vendas de automóveis e comerciais leves até julho era de 17,5%. Neste ano, despencou para 11,5%. Nos últimos três meses isolados, ficou na sétima posição, atrás também de Hyundai, Toyota, Jeep e Renault.
A Fiat tem conseguido driblar melhor seu abastecimento e ocupou a liderança ganhando pontos perdidos pela GM e outras marcas. Sua participação saltou de 14,4%, nos sete primeiros meses de 2020, para 22,9% das vendas neste ano. Para Paulo Cardamone, presidente da Bright Consulting, vai demorar para a GM recuperar a fatia perdida.
Ao Estadão, a GM diz que a situação é "pontual e temporária". Afirma ter portfólio amplo de produtos recém-atualizados com avançadas tecnologias de eficiência energética, segurança e conectividade. A última grande novidade da marca foi o SUV Tracker, feito na fábrica de São Caetano desde o ano passado.
Jaime Ardila, sócio da consultoria Hawksbill Group, com sede nos EUA, avalia que a falta maior de chip para a GM e outras empresas "é resultado da estratégia das companhias de privilegiar veículos mais rentáveis nos EUA e na China, e deixar a América Latina com prioridade menor". Para ele, a situação da GM brasileira é ruim, "mas sem dúvida é temporária e deve melhorar até o fim do ano". Ardila já presidiu a montadora no Brasil e na América do Sul.
Cardamone também credita a situação a estratégias da matriz, que adquire os semicondutores (a maioria da Ásia) e os repassa às subsidiárias. "A matriz privilegia mercados mais rentáveis e estáveis, principalmente porque precisa de dinheiro para investir em eletrificação dos seus modelos." Ele ressalta que manter uma fábrica parada por longo período custa caro. Mesmo sem produzir, é preciso fazer manutenção de robôs, equipamentos e pagar funcionários.
"O que está ocorrendo não é demérito da GM, mas do mercado, e não consigo vislumbrar reversão rápida", diz Ricardo Bacellar, responsável pela área automotiva da KPMG do Brasil.
Sem cortes
Líderes dos trabalhadores das três fábricas de carros dizem que a GM não fala, no momento, em redução de mão de obra. Na planta de São José dos Campos (SP), única em operação, acredita-se até em criação do terceiro turno se a entrega de chips for normalizada, informa o secretário-geral do Sindicato dos Metalúrgicos, Renato Almeida. A empresa já contratou 450 temporários neste ano.
A fábrica de São Caetano, parada desde 26 de junho, retorna parcialmente no dia 26 com cerca de 2 mil funcionários, segundo Aparecido Inácio da Silva, presidente do sindicato. Ele lembra que, antes da crise, a empresa também estudava a volta do terceiro turno na unidade.
Valcir Ascari, líder do Sindicato dos Metalúrgicos de Gravataí, calcula que 1,2 mil funcionários voltarão à fábrica dia 16 para retomar a produção do Onix. As informações são do jornal O Estado de S. Paulo.
(translated by Google)08/08/2021 | 12:15 pm
https://www.dgabc.com.br/Noticia/3739164/gm-ve-lideranca-do-mercado-mais-longe
08/08/2021 | 12:00
(translated by Google)08/08/2021 | 12:00 pm
Packaged robots and a crater 96 meters long, 12 m wide and 7 m deep in the middle of the assembly line at the General Motors factory in São Caetano do Sul, in ABC paulista, indicate the changes that the factory is undergoing to produce the new Montana, an unprecedented global pickup that will be produced first in Brazil.
GM took advantage of the lack of semiconductors to carry out the work that, in any case, would have required production to be stopped. There are 4,000 m² of new facilities that include 93 welding robots imported from Japan. They will join another 658 in the bodywork sector already in operation, several installed last year for the production of the SUV Tracker.
The main innovation of the renovation, one of the biggest in the factory's history of more than 90 years, is the installation of a High Speed press, the first with this technology in the Americas, says Michel Malka, executive director of the São Caetano and Mogi factory of the Crosses. "So far this type of press is only in operation in China." The gigantic equipment was developed by the German Schuller together with the Brazilian subsidiary. According to Malka, the new press has the capacity to stamp 26 thousand pieces a day - doors, sides, hood and back cover. The one in use makes 12 thousand.
"The new press works by intelligent drive and, in addition to greater productivity, it guarantees more quality and consumes 55% less energy", informs Malka. Last week he followed a "tour" of the report to the factory's production line, which has been closed to press visits for the past two years.
New concept
The new press will be installed in the crater that was opened in an area that used to house a parts and machinery warehouse. The executive explains that the car factory, the oldest in the country, is squeezed between a railroad, a viaduct, a river and the city's most important avenue, Goiás, and cannot grow in area, "only upwards or down".
To transform it into a globally competitive plant, GM created a new concept that, according to Malka, will be exported to other units of the group. "There is already a greenfield (when the factory starts from scratch) and brownfield (when the factory's area is expanded) and now we have created the goldenfield, which is to transform an old plant into one of the most modern of the group, within the same walls. "
The current and new lines will operate in parallel. The factory will continue to produce the Onix Joy in the 2012 version that previously shared space with the old Montana. The new line will make the Tracker and the new generation of Montana, which will hit the market at the end of 2022. It is GM's big bet to face the Fiat Toro and Strada pickups, the main responsible for the increase in sales of the brand that took the lead of GM.
Another novelty is an autonomous cart, the ATU (Automated Tugger Unit) that pulls several "wagons" of large parts over long distances to distribute them throughout the factory. It is different from AGVs (Automated Guide Vehicle), which are small self-guided robots that drive small parts on the production line and are used by various companies. According to Malka, the stand-alone was developed at a low cost by the Brazilian GM itself, is in the testing phase and there are other international branches of the group interested in the project.
The complete renovation will be completed in one year. The last major work at the plant took place in 2012 and 2013, for the production of the Cobalt, Cruze and Spin models, the first two already out of line in the country. At the time, a crater was also opened to install the press that operates today. The information is from the newspaper O Estado de S. Paulo.
https://www.dgabc.com.br/Noticia/3739158/fabrica-centenaria-sera-uma-das-mais-modernas-diz-gm
(Original non-English text)
Robôs embalados e uma cratera com 96 metros de comprimento, 12 m de largura e 7 m de profundidade em meio à linha de montagem da fábrica da General Motors de São Caetano do Sul, no ABC paulista, indicam as mudanças pelas quais a fábrica passa para produzir a nova Montana, picape global inédita que será produzida primeiro no Brasil.
A GM aproveitou o momento de falta de semicondutores para realizar a obra que, de qualquer forma, exigiria a parada da produção. São 4 mil m² de novas instalações que incluem 93 robôs de solda importados do Japão. Eles vão se juntar a outros 658 do setor de funilaria já em operação, vários instalados no ano passado para a produção do SUV Tracker.
A principal novidade da reforma, uma das maiores na história da fábrica de mais de 90 anos, é a instalação de uma prensa High Speed, a primeira com essa tecnologia nas Américas, informa Michel Malka, diretor executivo da fábrica de São Caetano e de Mogi das Cruzes. "Até agora esse tipo de prensa só está em operação na China." O equipamento gigantesco foi desenvolvido pela Schuller alemã junto com a filial brasileira. Segundo Malka, a nova prensa tem capacidade para estampar 26 mil peças ao dia - portas, laterais, capô e tampa traseira. A que está em uso faz 12 mil.
"A nova prensa funciona por acionamento inteligente e, além de maior produtividade, garante mais qualidade e consome 55% menos energia", informa Malka. Na semana passada ele acompanhou um "tour" da reportagem à linha de produção da fábrica que esteve fechada para visitas da imprensa nos últimos dois anos.
Novo conceito
A nova prensa será instalada na cratera que foi aberta em área que antes abrigava um armazém de peças e maquinários. O executivo explica que a fábrica de carros, a mais antiga no País, está espremida entre uma linha férrea, um viaduto, um rio e a mais importante avenida da cidade, a Goiás, e não tem como crescer em área, "só para cima ou para baixo".
Para transformá-la em uma planta competitiva mundialmente, a GM criou um novo conceito que, segundo Malka, será exportado para outras unidades do grupo. "Já existe o greenfield (quando a fábrica começa do zero) e o brownfield (quando a área da fábrica é ampliada) e agora criamos o goldenfield, que é transformar uma planta antiga em uma das mais modernas do grupo, dentro das mesmas paredes."
A linha atual e a nova vão operar em paralelo. A fábrica continuará a produzir o Onix Joy na versão de 2012 que antes dividia espaço com a velha Montana. A linha nova fará o Tracker e a geração inédita da Montana, que chegará ao mercado no fim de 2022. Ela é a grande aposta da GM para enfrentar as picapes Fiat Toro e Strada, principais responsáveis pelo aumento das vendas da marca que tirou a liderança da GM.
Outra novidade é um carrinho autônomo, o ATU (do inglês Automated Tugger Unit) que puxa vários "vagões" de peças de grande porte em longas distâncias para distribuí-las pela fábrica. Ele é diferente dos AGVs (Automated Guide Vehicle), que são pequenos robôs autoguiados que conduzem peças pequenas na linha de produção e são usados por várias empresas. Segundo Malka, o autônomo foi desenvolvido a baixo custo pela própria GM brasileira, está em fase de testes e há outras filiais internacionais do grupo interessadas no projeto.
A reforma total será concluída em um ano. A última grande obra na planta ocorreu em 2012 e 2013, para a produção dos modelos Cobalt, Cruze e Spin, os dois primeiros já fora de linha no País. Na ocasião também foi aberta uma cratera para instalar a prensa que opera hoje. As informações são do jornal O Estado de S. Paulo.
12222 Hamlin Crk, San Antonio TX , 78254 (Residential) $240,000 Calculate Payment 3 beds , 2 Full baths 1,536 sqft Status: Active Active Option MLS#: 1550836 1 of 1 of Full Screen Photos Photos Map
Most major stock markets in the Gulf rose in early trade on Sunday, supported by a slew of corporate earnings, although Dubai bucked the trend to trade lower.
Saudi Arabia's benchmark index edged up 0.1%, with Al Rajhi Bank gaining 0.9% and Dr Sulaiman Al-Habib Medical Services rising 3.1% following an increase in its quarterly net profit.
However, the index's gains were capped by losses at the kingdom's biggest lender Saudi National Bank, which declined 1.9%.
The bank reported a higher second-quarter net profit, however, saw a decrease sequentially in earnings.
Oil behemoth Saudi Aramco added 0.1%.
Aramco reported a near four-fold rise in second-quarter net profit on Sunday, beating expectations and boosted by higher oil prices and a recovery in oil demand.
Aramco's net profit rose to 95.47 billion riyals ($25.46 billion) for the quarter to June 30 from 24.62 billion riyals a year earlier.
Most Gulf stocks ease
In Abu Dhabi, the index advanced 1.1%, buoyed by a 4.6% jump in conglomerate International Holding and a 0.4% increase in top lender First Abu Dhabi Bank.
The Qatari benchmark added 0.1%, with Qatar National Bank, the Gulf's largest lender, rising 0.6% and petrochemical firm Industries Qatar was up 0.4%.
Elsewhere, Mesaieed Petrochemical climbed 1.3%, after reporting a net profit of 909.4 million riyals ($248.61 million), up from 135.1 million riyals a year earlier.
Dubai's main share index dropped 0.3%, hit by a 0.4% fall in Emirates NBD Bank and a 0.2% decrease in Sharia-compliant lender Dubai Islamic Bank.
Among other decliners, Aramex retreated 0.6%.
On Thursday, the courier firm said quarterly net profit fell 31% due to the disruptive impact of the COVID-19 pandemic on global supply chains.
Even the prime minister’s biggest fans will admit that he occasionally suffers from a debilitating form of foot-in-mouth disease.
Last week it took the form of a throw-away commentary on Margaret Thatcher and the miners’ strike, which, if uttered in the privacy of the Garrick Club, for example, would have raised a few laughs – but gone down the drain in the rest of the world. like a pork chop at a bar mitzvah.
During a visit to Scotland on Thursday, he was asked about preparations for the COP26 climate summit in Glasgow in November, in particular whether he would set a deadline for ending fossil fuel extraction.
Replying that the process was already well underway, he added: “Thanks to Margaret Thatcher, who has closed so many coal mines across the country, we had a great early start and are now moving away from coal very quickly.”
Not his smartest joke. Because while he’s technically right – as an Oxford-educated scientist, Thatcher was truly ahead of her time in climate change awareness and delivered several groundbreaking speeches on the subject – even her most loyal supporters would struggle to protect the environment. as its main driver for taking over the unions.
Top Australian miner BHP is facing a renewed shareholder push to launch a comprehensive review of its industry lobby groups and sever ties with those whose positions are deemed out of step with global efforts to combat climate change.
A motion filed ahead of BHP’s annual meetings in October asks investors in the world’s largest mining company to vote on demands to identify areas of industry groups’ “inconsistency” with the Paris climate accord’s goal to limit global temperature rises to well below 2 degrees.
BHP, the nation’s largest mining company, is facing renewed pressure to review its ties to fossil fuel lobby groups. Credit:
Although fossil fuels including coal and oil remain part of BHP’s portfolio, the company has set some of the resources sector’s most ambitious climate policies, with goals to tackle both its own greenhouse gas emissions and the emissions of the customers that use its products overseas.
However, BHP has come under growing pressure over its links to powerful lobby groups, which have advocated for policies said to be inconsistent with its own positions and the goals of the Paris agreement.
https://twitter.com/NBCOlympics/status/1420545904780713986
On the women's side, the New Zealand squad proved that the women could pay tribute to their heritage in just as meaningful of a way. The Black Ferns performed their own version of the haka, called "Ko Uhia Mai" or "Let it be known". The emotion in the women's eyes as Portia Woodman led them, leaves chills every time. In this underrated moment of the Olympics, the two squads shared their rich culture and history with the world, truly embodying the spirit of the Games. – STEPHANIE DE LANCEY
Found inside – Page 217
Webster's Third New International Dictionary of the English Language, Unabridged. Springfield, Mass: Merriam-Webster, 1993. Graham, Billy. I was hoping someone might enlighten me as to the approximate value of Volume I, II and III of Webster's New International Dictionary Second Edition Unabridged with Reference History 1948. In Webster’s Third New International Dictionary (Gove, 1993), “poltergeist” is defined as: “… a noisy and usu. Etymology in Webster's Third New International Dictionary. Noah's Ark New England Yankees and the Endless Quest: a Short History of the Original Webster Dictionaries, With Particular Reference to Their First Hundred Years. You . ZPat M. May 23, 2021.
Remaining true to its vintage roots, this five-bedroom, five-bathroom Highgate home takes you back in time to the 20th century.
The integrity of the property is evident through its federation-style facade, showcasing a red-brick exterior, stained glass and turned-timber posts.
The frontage has received minor touch-ups throughout the years, with the property’s original character features melded and retained throughout.
According to current homeowners Denice and Peter Rice, the property is drenched in history – built in 1898.
“8 St Albans Avenue was one of the earliest houses in the suburb,” Mrs Rice said. “The house was originally known as Dysonia.
“In 1908 the house was the site of a bazaar to raise funds to furnish the two wards of the new Perth Children’s Hospital.”
ISLAMABAD: Pakistan’s exports to the United Kingdom posted a 33 per cent growth when it reached $2.025 billion in the fiscal year 2021 (FY21) against $1.522bn over FY20, mainly led by textile products.
Pakistan’s exports to the UK primarily consist of textile and leather-related products, according to data compiled by the Ministry to Commerce.
Over the years, the UK has emerged Pakistan’s third largest export destination, second largest source of foreign direct investment and third largest source of remittances after Saudi Arabia and United Arab Emirates (UAE).
As a result, total bilateral trade between the two countries has reached over $2.648bn during FY21 against $2.122bn in the previous year, reflecting an increase of 25pc.
Britain mainly buys textile and leather products from Pakistan
The top export products to the UK in FY21 was home textile, which grew 42pc to $648 million from $456m in the previous year, followed by an increase of 57pc in apparel and clothing knitted or crocheted to $625m from $397m over the previous year, and increase of 5pc in apparel and clothing not knitted or crocheted to $304m against $2.88m in previous year.
The export of five products posted a growth but its exports in value term remain very less. The exports of surgical instruments posted a growth of 22pc on a year-on-year terms to $36m followed by 48pc in edible fruit and nuts, peel of citrus fruits to $31m, 55pc in furniture, bedding, mattresses, mattress to $30m and 241pc in beverages, spirits and vinegar to $20m, respectively.
However, the exports of cereals dipped by 2pc, cotton 4pc and article of leather 1pc during the year under review.
The main reason for the increase in textile products of Pakistan is due to the market diversification drive by the UK companies in the aftermath of the Covid-19 induced crisis. The companies have realised their vulnerability due to over-reliance on Bangladesh, India, and China.
Besides, Pakistan was among the first textile-producing countries to reopen the manufacturing facilities after lockdown, which gave the country a significant head-start over the competitors.
Contrary to this, Pakistan’s imports from the UK increased by 4pc to $623m in FY21 against $600m in FY20.
The top-ten import products include iron & steel (scrap and flat-rolled) $343m, machinery and mechanical $62m, chemicals $33m, medical apparatus $18m, respectively.
During 2020-21, remittances from the UK to Pakistan increased by 58 from $2.569bn in FY20 to $4.067bn. The remittances from the UK to Pakistan during this financial year have seen a robust increase, which is a good sign for the economy.
The UK is the fifth largest national economy in the world measured by nominal gross domestic product (GDP) comprising 3pc of world GDP. The size of GDP is $2.7 trillion, whereas per capita income is $40,406. The UK is the ninth largest exporter and the fourth largest importer in the world. It possesses the second-largest stocks of inward and outward foreign direct investment.
Published in Dawn, August 8th, 2021
The business community now understands the dire projections of the scientific community regarding human-induced climate change. They understand the global scientific consensus that rising average global temperatures caused by the emission of greenhouse gases will shift annual weather patterns and increase the frequency and severity of extreme weather events.
But while Malaysia appears unaffected by the most extreme weather, being too close to the equator to be ravaged by hurricanes, cyclones or typhoons, it is already facing a climate change triple threat to its Covid-19-weakened economy.
The Pakistan Stock Exchange (PSX) extended the decline on Monday with a loss of over 350 points as it was held hostage to the gnawing fear of the fourth wave of Covid-19 and uncertainty in the global oil market.
International oil prices fell 4%, extending last week’s steep losses on the back of a rising US dollar and concerns that new coronavirus-related restrictions in Asia, especially China, could slow the global recovery in fuel demand. The benchmark KSE-100 index moved in a wide range with intra-day high and low of 47,623.44 and 47,053.96 points.
On the results front, Lucky Cement announced its financial result, posting full-year earnings per share of Rs70.69, but skipped dividend payment for the April-June quarter, which weakened investor sentiment. In addition, expectations about the upcoming economic data kept playing on investors’ mind and they treaded cautiously while making investment decisions. At close, the benchmark KSE-100 index recorded a decrease of 366.33 points, or 0.77%, to settle at 47,123.62.
Arif Habib Limited, in its report, stated that the market took a negative turn, primarily due to sell-off in the technology sector. “Institutional investors were on the selling side, partly due to redemptions and also due to concerns over the rising current account deficit and inflation on the back of possible tariff hike,” it said. Technology, construction and steel sectors were the major losers, whereas other sectors also bore the brunt of selling because of weak sentiment. Some prominent stocks which held their ground included UBL, MCB and Pakistan Oilfields. Sectors contributing to the performance included cement (-87 points), technology (-69 points), power (-30 points), fertiliser (-29 points) and oil and gas marketing companies (-25 points).
Individually, stocks that contributed positively to the index included MCB (+13 points), Habib Metropolitan Bank (+9 points), Highnoon Laboratories (+4 points), FrieslandCampina Engro Pakistan (+4 points) and Abbott Laboratories (+3 points). Stocks that contributed negatively were TRG Pakistan (-55 points), Lucky Cement (-42 points), Hubco (-27 points), Engro (-24 points) and Ghani Glass (-17 points). JS Global analyst Neelum Naz said as anticipated the KSE-100 index lost further ground due to the ongoing pandemic situation in the country, eventually closing 366 points below Friday’s close at 47,124.
Major volume contributors were WorldCall Telecom (-3.7%), Fauji Foods (-7.4%), Ghani Global Holdings (-7.4%), Byco Petroleum (+0.3%), Telecard Limited (-5.4%) and Unity Foods (-1.4%).
“Going forward, the benchmark index can further slide down in the coming days. We recommend investors to adopt a buy-on-dip strategy in steel, technology, refinery and cement sectors,” the analyst said. Overall trading volumes fell to 337.3 million shares compared with Friday’s tally of 499.7 million. The value of shares traded during the day was Rs11.3 billion. Shares of 469 companies were traded. At the end of the day, 73 stocks closed higher, 372 declined and 24 remained unchanged.
WorldCall Telecom was the volume leader with 42.2 million shares, losing Rs0.13 to close at Rs3.36. It was followed by Fauji Foods with 17.4 million shares, losing Rs1.62 to close at Rs20.13 and Ghani Global Holdings with 17.3 million shares, losing Rs3.15 to close at Rs39.50. Foreign institutional investors were net buyers of Rs212.7 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.
U.S. President Joe Biden, left, listens as Vice President Kamala Harris speaks about the infrastructure bill passed by the Senate in the East Room of the White House in Washington, D.C., Tuesday. AFP-Yonhap
Steel, energy and materials sector viewed as top beneficiaries
By Anna J. Park
With the U.S. Senate passing a $1 trillion bipartisan infrastructure bill Tuesday (local time) that will invest massively in roads, railways, bridges and water facilities, cyclical and energy sector stocks are expected to benefit the most from the 10-year plan.
The U.S. stock market hailed the agreement with the Dow Jones Index finishing at a record high. Meanwhile the tech-heavy Nasdaq fell 0.49 percent on concerns about rising interest rates, as the U.S. Treasury bond rate rose to 1.42 percent.
On the Korean market, some representative cyclical stocks advanced despite the KOSPI's 0.7 percent retreat, Wednesday (KST), while local government bonds interest rates rose 0.63 percent to 1.92 percent. The greenback meanwhile remained rose 0.47 percent against the Korean won.
Steel giant POSCO advanced 2.37 percent, with foreign investors' net-buying of 140 billion won ($121 million) worth of shares, while Hyundai Steel also rose 1.18 percent on the back of foreign investors. This is impressive given foreign investors' selling spree Tuesday.
Energy and materials companies also benefited from the news. SK Materials, a company manufacturing industrial gas, rose 5.31 percent with overseas investors buying 36.4 billion won in shares.
KODEX Energy & Chemicals, an ETF tracking the KRX Energy & Chemical index, also saw an increase of 0.18 percent. KODEX WTI Crude Oil Futures, an ETF following the S&P GSCI Crude Oil Index Excess Return saw an increase of 1.66 percent, reflecting a rise in global oil prices following the announcement of the bill.
The $1 trillion infrastructure bill could provide fresh momentum to global stock markets, according to analysts.
"The infrastructure bill could provide momentum for some cyclical growth, calming market concerns over a slowdown in the U.S. economy. The bill is expected to bring positive effects, particularly for cyclical stocks," Park Sang-hyun, chief economist at Hi Investment & Securities, said.
The analyst added that the impact on the global market could be greater if Biden's bigger $3.5 trillion package passes the Senate next month.
However, concerns about the U.S.'s deteriorating trade balance due to the massive spending bill could be seen as upward pressure on market interest rates, Park added.
Other experts stressed an importance of having a long-term perspective in analyzing market impacts of the infrastructure bill, rather than seeing it as a temporary event.
"As the bill will be implemented over a 10-year term, its annual spending is not as massive as one supposes, considering the U.S. government's huge annual budget plan," said Stephen Lee, chief economist at Meritz Securities. "What is more significant for the market's focus would be how fast U.S. employment could be ameliorated."
STANFORD, Calif. (Project Syndicate)—Over the past few months, there has been a growing chorus of economic observers voicing concerns about the increase of inflation in the United States.
Much of the commentary (including my own) has focused on the Federal Reserve’s apparent continuation of easy monetary policy in the face of rising prices. Despite a sharp increase in the rate of money growth, the central bank is still engaged in a large-scale asset-purchase program (to the tune of $120 billion per month), and it has kept the federal-funds rate in the range of 0.05-0.1%.
MarketWatch news: U.S. inflation shows signs of moderating in July
Higher inflation in the U.S. is hitting consumers hard in their wallets. Here's how investors can avoid the same effect in their portfolio.
That rate is exceptionally low compared to similar periods in recent history. To understand why it is exceptional, one need look no further than the Fed’s own July 9, 2021, Monetary Policy Report, which includes long-studied policy rules that would prescribe a policy rate higher than the current actual rate. One of these is the “Taylor rule,” which holds that the Fed should set its target federal-funds rate according to the gap between actual and targeted inflation.
Taylor rule calculations
The Taylor rule, expressed as a straightforward equation, has worked well when it has been followed over the years. If you plug in the current inflation rate over the past four quarters (about 4%), the gap between gross domestic product and its potential for the second quarter of 2021 (about -2%), a target inflation rate of 2%, and a so-called equilibrium interest rate of 1%, you get a desired federal-funds rate of 5%.
Moreover, the Taylor rule implies that even if the inflation rate falls to 2% by the end of this year (which would be well below most forecasts), and economic output reaches its potential, the federal-funds rate still should be 3%. That is a long way from the near-zero level implied by the Fed’s forward guidance.
Since these calculations use the inflation rate averaged over the past four quarters, they are consistent with a form of “average inflation targeting” that the Fed itself endorsed last summer. They also follow the Fed’s own recently suggested equilibrium interest rate of 1%, rather than the 2% rate that has traditionally been used. If the latter had been used, the discrepancy between the policy rate in the rule and the actual level of the funds rate would be even larger.
These higher possible levels for the federal-funds rate are largely being ignored in the Fed’s reported discussions. Instead, the Fed insists that today’s higher inflation is a temporary byproduct of the pandemic’s effect on inflation last year.
Market Extra: Still-high U.S. inflation leaves Federal Reserve with little room for error
Are markets leading or following the Fed?
Those who defend its current stance point out that market interest rates on longer-term bonds remain very low. On safe Treasury assets, the five-year yield TMUBMUSD05Y, 0.827% is only 0.81%, and the 10-year yield TMUBMUSD10Y, 1.372% is only 1.35%—well below the rates suggested by the Taylor rule when averaged over these maturities. Considering these factors, many commentators are saying not to worry: the markets are probably being rational when they forecast low rates.
Opening Call:
European gains are seen limited after two Fed officials called for an end to the bond-buying program. In Asia, stocks mostly struggled on continuing Delta fears, the dollar was little changed after softening on Wednesday and Treasury yields advanced. In commodities, oil extended gains but gold dipped in a technical correction.
Equities:
European stocks are likely to extend gains Thursday, with the Stoxx Europe 600 seen continuing its march into record territory. This follows another record-breaking session on Wall Street as investors remained hopeful over infrastructure prospects and cheered the latest inflation data.
However, Europe's advance may be capped after two Federal Reserve officials said it was time for the central bank to start reversing its easy money policies.
Kansas City Fed President Esther George said the central bank has made enough progress toward its objectives of boosting growth and employment to end its $120 billion in monthly purchases of Treasury and mortgage securities. "With the recovery under way, a transition from extraordinary monetary policy accommodation to more neutral settings must follow," Ms. George said in a speech. "Today's tight economy...certainly does not call for a tight monetary policy, but it does signal that the time has come to dial back the settings."
In a separate interview, Dallas Fed President Robert Kaplan argued that the central bank should begin reducing the pace of asset purchases by October. "As long as the economy progresses as I expect, we will meet the...criteria at the September meeting," he said. He said he would support announcing then that the Fed would therefore begin reducing purchases the following month.
"Prices of most commodities have faltered recently and we expect them to decline further over the next few years--primarily due to slower growth in China."
Commodity currencies failed to benefit from higher commodity prices this year but the correlation between the two should re-establish itself, causing commodity currencies to drop as prices fall, said Capital Economics. The currencies will also be hit by higher long-term Treasury yields and country-specific factors such as concerns about fiscal sustainability.
Base metals were mixed, with copper prices up 0.2%, but aluminum and zinc nearly unchanged. All three metals are expected to benefit from increasing adoption of solar energy, said Wood Mackenzie, estimating usage of the metals in the solar-energy sector to double by 2040.
Lower solar-energy equipment production costs should mean it increasingly displaces other energy sources, which "presents a huge opportunity for the base metals sector," said Wood Mackenzie.
Iron ore was lower as China's steel output cuts continued to weigh on demand for the steelmaking material. However, short-term prices shouldn't decline too sharply as the effects of China's steel production cuts appear "tame," according to CBA.
While Beijing's policy goal of leaving full-year steel production unchanged from 2020 remains, the bank said individual steel mills are taking a wait-and-see approach to output cuts. CBA thinks steelmakers could keep production rates steady in the third quarter before reducing output in the fourth.
TODAY'S TOP HEADLINES
Two Fed Officials Call for End to Bond-Buying Program
Two Federal Reserve officials said Wednesday it is time for the central bank to start reversing the easy money policies put in place to support the economy after the coronavirus pandemic hit the U.S. in March 2020.
Kansas City Fed President Esther George said the central bank has made enough progress toward its objectives of boosting growth and employment to end its $120 billion in monthly purchases of Treasury and mortgage securities. The Fed has been purchasing large quantities of assets to provide extra stimulus after cutting its short-term interest rate to near zero, and officials in December pledged to continue those purchases until making "substantial" progress toward economic and labor-market health.
FDA Moving Towards Decision Authorizing Booster Shot for Immunocompromised
The U.S. Food and Drug Administration is nearing a decision to authorize Covid-19 booster shots for certain people with weak immune systems, people familiar with the matter said, a shift in the American vaccination strategy as the Delta variant drives up cases of infection.
Law360 (August 11, 2021, 9:05 PM EDT) -- Steel Hub Americas is accusing two companies in the shipping industry of intentionally interfering with its contracts after one of the companies purportedly refused to issue documentation that would authorize the release of its steel cargo, according to its Wednesday lawsuit filed in Texas federal court. Steel Hub claims that Norton Lilly International Inc., the ship agent for the merchant vessel Steel Hub chartered, has refused to issue a steamship release for its steel cargo by its own accord or by the direction of Contride Management Inc., who sub-chartered the vessel.
WASHINGTON COUNTY, Pa.—Drones darted in patterns above natural-gas wells in the hills of southwest Pennsylvania, as workers atop water tanks pointed specialized cameras, and a helicopter outfitted with a laser-light detection system swooped in low. All searched for an invisible enemy: methane.
Most oil market experts believe that the Opec deal last month will help cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.
The raising of the production limits by Opec plus oil producers is positive for oil in both short and medium-term as the 400,000 barrel per day monthly supply additions should still leave the oil market in deficit at the end of 2021, research analysts at Merrill Lynch said.
They argue that a change in baseline production levels does not mean an immediate 1.6 million b/d hike from April 2022 and will mostly redistribute quotas within Opec+. “Production quotas may be adjusted on the way, while baseline production changes signal a general commitment from the key member,” analysts Karen Kostanian and Ekaterina Smyk said.
“Production quotas may be adjusted on the way, while baseline production changes signal a general commitment from the key members,” they said.
In July, Opec+ nations raised the output limit imposed on five countries, including the UAE, by phasing out 5.8 million barrels per day of oil production cuts by September 2022.
The analysts allayed concerns that oil prices would run into some turbulence post the latest Opec+ agreement as the market feared upcoming supply hikes and importantly the select members potentially flooding the market in 2022 with cumulative 1.6 million b/d additions to baseline production levels.
Last week, oil settled lower in three consecutive sessions amid fears that the faster-spreading Delta variant would slow fuel demand in China and the rest of Asia. As of 8:41 a.m. EDT on Friday, WTI Crude was up 0.59 per cent at $69.80. Brent was trading up 1.14 per cent at $72.10.
Most oil market experts also believe that the Opec deal last month, marking the end of a gridlock, will help cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.
As part of the latest agreement, Russia should be able to add 100,000 b/d each month starting from August (its 25 per cent share of Opec+ quota) and its baseline production level will be increased from April 2022 by 500,000 b/d to 11.5 million b/d for crude only.
“First, the reversal of 500,000 b/d by the end of 2021 means oil production (crude + condensate) could reach almost 11 million b/d, just 3.0 per cent below pre-Covid levels. Should Opec+ continue to add 400,000 b/d per month in Q1, Russia essentially would be allowed to fully restore production by the end of Q1 2022. Second, the baseline crude production of 11.5 million /d practically means that Russia would have to produce roughly 1mn b/d above its historical maximum,” Merrill Lynch analysts said.
“We hence believe that Russia is highly unlikely to reach its baseline levels on a 1-2 year horizon considering flat capex levels over the past couple of years. The next big growth project is not expected to come online before the mid-2020s,” they said.
Preliminary Bloomberg survey for Opec production shows that the group increased crude production by 0.4 million b/d month on month in July as part of the Opec+ agreement to reverse 1.15 million b/d of the cuts through May-July.
Saudi led an increase adding close to 0.5 million b/d which was offset by small declines in production across other producers. Iranian production was almost flat in July (+30,000b/d). — issacjohn@khaleejtimes.com
Nigeria’s Production Faces Setbacks As Oil Price Tumbles To $68
The international oil benchmark, Brent crude, extended its losses on Monday, falling below the $70 per barrel mark to its lowest level since May. The further decline in the price of Brent followed the imposition of more travel restrictions by the world’s top crude importer, China, to fight what it sees as the worst outbreak since the original coronavirus outbreak in Wuhan. A stronger US dollar also depressed oil prices as it makes crude more expensive for holders of currencies other than the greenback.
Brent, against which Nigeria’s crude oil is priced, fell by $1.72 to $68.98 per barrel as of 7:20pm Nigerian time on Monday, compared to $77.72 per barrel at which it closed on July 30. Nigeria oil output remained hampered by operational and technical problems in July, S&P Global Platts quoted sources close to the matter as saying on Monday. Three of the country’s crude oil grades, namely Bonny Light, Escravos and Forcados, all faced production issues last month while output for other key grades such as Qua Iboe, Brass River, Agbami, Akpo and Egina were said to have also remained low.
Nigerian crude and condensate output stayed stable at 1.64 million barrels per day in July, according to data from the Department of Petroleum Resources. In June, crude production had fallen to a six-month low of 1.639 million bpd from 1.659 million bpd in May. Pipelines feeding into Bonny Light and Forcados and other grades have faced persistent sabotage in the past few months, resulting in lower production, sources added.
July crude production inched up to 1.32 million bpd from 1.31 million bpd in June while condensate output fell to 316,237 bpd from 326,012 bpd, DPR data showed. Nigeria’s crude oil production cap under the OPEC+ deal was 1.579 million bpd for July.
S&P Global Platts Analytics expects Nigerian crude supply to remain below its OPEC production quotas in the coming months due to ongoing field and pipeline issues with a downside risk to 2022 forecast if operational setbacks continue. It said in a recent note, “We forecast [crude] supply at 1.5 million bpd in July-September. Supply reaches 1.8 million bpd by end-2021. Growth is threatened by fiscal stress, which may pressure amnesty payments to former militants.
“The last time the government curtailed amnesty payments, disruptions surpassed 600,000 bpd by mid-2016. Militant threats are also rising.”
Growing threats by militants to renew attacks on oil infrastructure in the restive Niger Delta also pose a huge concern for Africa’s largest oil producer. Output has fallen in 2021 as key fields, especially those in the Niger Delta like Bonny, Brass River, Escravos, Forcados and Qua Iboe, are pumping well below full capacity due to technical problems or maintenance.
Nigeria has the capacity to produce between 2.2 million-2.3 million bpd of crude and condensate, but production has averaged only around 1.62 million bpd for the first months of 2021, according to S&P Global Platts estimates. Production has fallen also due to Nigeria’s obligation under OPEC+ caps.
An explosion on an oil tanker moored at the Syrian port of Latakia caused a fire that has injured two people in an incident on what was identified as a tanker previously used for transporting Iranian oil to Syria.
The tanker, identified by TankerTrackers.com as WISDOM, caught fire on Tuesday while undergoing maintenance at the Syrian port, Syria's state news agency SANA reported. The vessel was empty, the Syrian agency added.
According to TankerTrackers, WISDOM entered the port of Latakia at the end of June, docking on the north end of the port. It relocated later to the south to make room for the Iranian tanker SAM 121.
It was not immediately clear what caused the explosion on WISDOM.
This is not the first incident with the tanker, which caught fire in April this year, in what Syrian state media said was a drone attack.
The incident comes amid strained relations between Iran and Israel after recent attacks or attempted attacks on oil tankers in the Middle East.
The tensions between Israel and Iran have escalated in the past weeks after the drone attack on the oil tanker Mercer Street, which killed two crew members. Israel, the United States, and the UK blamed Iran for the attack.
"Upon review of the available information, we are confident that Iran conducted this attack, which killed two innocent people, using one-way explosive UAVs, a lethal capability it is increasingly employing throughout the region," U.S. Secretary of State Antony Blinken said in a statement.
The Middle East tensions further escalated last week, when a tanker carrying bitumen was the target of a hijacking attempt in the Gulf of Oman in which it was ordered to travel to Iran.
Israel is prepared to attack Iran, Israeli Defense Minister Benny Gantz was quoted as saying last Thursday, a week after the Israeli-linked oil tanker was attacked in the Gulf of Oman.
"Yes," Gantz said when asked in an interview broadcast by an Israeli media website if Israel was ready to attack Iran.
In response to the Israeli defense minister's words that Israel was prepared to attack Iran, the spokesman of Iran's Foreign Ministry, Saeed Khatibzadeh, tweeted on Thursday:
"In another brazen violation of Int'l law, Israeli regime now blatantly threatens #Iran with military action. Such malign behavior stems from blind Western support. We state this clearly: ANY foolish act against Iran will be met with a DECISIVE response. Don't test us."
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
* Ex-OPEC president says oil demand may peak in 10-20 years
* Peak demand could spur rivalry, strengthen big producers
* OPEC set to publish long-term demand forecast late-Sept
* New long-term OPEC forecast could see lower demand -source
By Alex Lawler
LONDON, Aug 11 (Reuters) - Moves to mitigate climate change are drawing peak oil demand closer, current and former OPEC officials told Reuters, potentially giving OPEC's biggest players and their allies more power and leaving some smaller producers struggling. Members of the Organization of the Petroleum Exporting Countries and the so-called OPEC+ group together face the threat of a focus by the United States and China on tackling carbon emissions and plans for greater use of renewables.
The impact on demand could trigger market share competition and spell the end to them working together on supply policy, with current and former OPEC officials and others close to the group saying they expect growing rivalry over time. "OPEC+ will face a major challenge in how to deal with shrinking demand but also increasing pressures to lower prices due to oversupply," Chakib Khelil, a former Algerian oil minister and two-time OPEC president, told Reuters.
After decades of saying oil demand will rise, OPEC last year acknowledged it will plateau, but not before the late 2030s. Since the COVID-19 pandemic, officials say a peak could come earlier.
"It could happen within the next ten to twenty years, given the present trend of renewable energy use in the energy mix of major consuming countries," Khelil said. OPEC whose 13 members all depend on oil sales as a main source of income, marked its 60th anniversary in September after surviving crises including the 1980-1988 Iran-Iraq war and several oil price collapses.
And since 2017, OPEC and allies led by Russia have worked together as OPEC+ to prop up the market by limiting production.
LOWER LONG-TERM OUTLOOK
OPEC's own scenario on when demand will peak is among the most distant forecast by energy companies, producers and analysts. But an OPEC source told Reuters the impact of the coronavirus pandemic would likely result in a lower long-term demand forecast when the group publishes its 2021 World Oil Outlook, expected in late September.
Other OPEC officials said that while it sees demand reaching pre-pandemic levels in 2022, downward pressure is looming. "OPEC may change its long-term forecast for oil demand in its 2021 report due to climate change issues and technological advances in the development of renewable energy and efficiency improvements," an official from a major OPEC producer said.
Demand could peak within a decade but maybe later, according to Hasan Qabazard, OPEC's head of research from 2006 to 2013, an earlier timeframe than he gave in comments to Reuters last year. "The energy mix will change, there will be peak oil demand at some time in the 2030s, when combustion engine phase-out mandates start to take effect," he said.
"This peak demand will plateau for a long, long time to come." OPEC's Vienna headquarters did not comment when asked by Reuters about its forecasts.
PEAK CONDITIONS
What is altering the outlook, Khelil and some current OPEC officials say, is the greater focus by the world's top two oil consumers on climate change. President Joe Biden in February took the United States back into the Paris climate deal, while China's President Xi Jinping in December targeted a steeper cut in carbon emissions by 2030. If demand growth peters out, producers will be chasing fewer customers and those with the lowest production costs could see more merit in a market-share strategy, potentially weakening prices and the OPEC+ alliance.
"Oil demand may peak quite early, even in the mid-2020s or earlier," a senior official at a major OPEC member's state oil company, who declined to be named, said.
"The low-cost producers such as Saudi Arabia and the rest of the Gulf would work hard to increase their market share. The smaller and higher-cost international oil companies and countries will indeed suffer."
OPEC has about 80% of the world's oil reserves of which the Middle East members Saudi Arabia, Iraq, Iran and the United Arab Emirates hold the bulk. Smaller members like Algeria and Angola, where output is declining, hold smaller amounts. Over the last decade, Saudi Arabia, Iraq and the UAE have added to their share of OPEC output, while that of most African producers has declined, OPEC figures show.
"A peak oil demand will introduce a new form of competition between oil producers, even within OPEC," Samuel Ciszuk, who founded ELS Analysis and used to work for Sweden's Energy Agency, said.
"Countries like Libya and Algeria export a lot to Europe, and Europe might have seen a peak in demand or be seeing one in the next few years. The big Gulf producers are more naturally inclined to Asia, so they will not be exposed as quickly."
Recent moves by OPEC+ to allocate higher baselines for supply curbs in 2022 for the biggest Gulf players show more market share going to the biggest producers already. This reallocation emerged after the UAE pushed for a higher baseline. The official at the major OPEC producer said that while larger OPEC+ players will be strengthened, it will not be for long.
"Increasing OPEC's share of the shrinking oil market will not be a long-term benefit for member countries if global oil demand is steadily declining," he said. Khelil, a veteran of dozens of OPEC meetings, also expects larger producers to gain most and for the group to retain a role to play in meeting a declining oil demand. "Depending on the politics between the OPEC+ countries we may witness a greater competition or greater cooperation. Greater competition may create havoc for small producers, while greater cooperation could allow their continued role in OPEC+."
DUBAI, Aug 11 (Reuters) - Iran's new President Ebrahim Raisi named an anti-Western diplomat as foreign minister on Wednesday as Iran and six world powers seek to restore their 2015 nuclear deal.
Raisi, a hardliner under Western sanctions over allegations of human rights abuses when he was a judge, was sworn into office on Aug. 5 with the Islamic Republic's clerical rulers facing growing crises at home and abroad. The mid-ranking Shi'ite cleric replaced pragmatist Hassan Rouhani as president after an election in June when most prominent rivals - including moderates and conservatives - were barred from standing.
Presenting his cabinet to parliament for an expected vote of confidence, Raisi chose Hossein Amirabdollahian as foreign minister and Javad Owji, an ex-deputy oil minister and managing director of the state-run gas company, as oil minister.
Owji also held top positions in Mofid Economics Group and Petro Mofid Development Holding, two subsidiaries of Setad Ejraiye Farmane Hazrate Emam - Headquarters for Executing the Order of the Imam - according to the oil ministry's news agency SHANA.
Iran's previous oil minister, Bijan Zanganeh, said in July his successor's main task would be lifting oil exports that have been hammered by the sanctions.
"Amirabdollahian is a hardline diplomat ... If the foreign ministry remains in charge of Iran's nuclear dossier, then obviously Tehran will adopt a very tough line in the talks," said an Iranian nuclear negotiator who asked not to be named.
Reports in semi-official Iranian media suggested that the Supreme National Security Council, which reports directly to hardline Supreme Leader Ayatollah Ali Khamenei would take over the nuclear talks in Vienna from the foreign ministry, which had been led by pragmatists during Rouhani's presidency.
Iran and world powers have been negotiating since April to revive the pact that was repudiated in 2018 by then-U.S. President Donald Trump, who also reimposed sanctions that have devastated Tehran's economy by squeezing its oil exports.
A sixth round of the talks were held on June 20, with Iranian and Western officials saying major gaps remained to be resolved in returning Tehran and Washington to full compliance with the pact. Iran has violated limits on its enrichment of uranium, a possible pathway to nuclear weapons, since 2019.
Parties involved in the talks have yet to set a date for the next round of negotiations.
Amirabdollahian is believed to have close ties with Iran's elite Revolutionary Guards, Lebanon's powerful Hezbollah movement and other Iranian proxies around the Middle East.
"Raisi's choice shows that he gives importance to regional issues in his foreign policy," a former Iranian official said.
A former ambassador to Bahrain, Amirabdollahian was deputy foreign minister for Arab and African affairs between 2011 and 2016. He was deputy chief of mission at Iran's embassy in Baghdad from 1997-2001.
NO WOMAN, SEVERAL GUARDS
Iran's hardliner-dominated parliament is not expected to challenge Raisi's picks for sensitive ministries such as foreign affairs and oil, as presidents only select them with the approval of Khamenei.
The powers of the elected president are limited in Iran by those of the supreme leader, who is commander-in-chief of the armed forces, appoints the head of the judiciary and decides major policies of the Islamic Republic.
While he did not nominate any woman for the cabinet, Raisi nominated several commanders of the Guards as ministers, including former defence minister and commander of Iran's Quds Force, Ahmad Vahidi, as his interior minister.
In 2007, Argentine secured Interpol arrest warrants for four Iranians, including Vahidi, for their alleged role in the 1994 bombing of a Jewish centre in Buenos Aires. Iran has denied any involvement in the bombing that killed 85 people and injured hundreds.
Former oil minister Rostam Qasemi, also a Guards commander who headed the elite military body's construction and engineering company in the past, was nominated by Raisi as the minister for roads and urbanisation.
Natural Law Energy, the Canadian indigenous group that sought a stake in the now defunct Keystone XL pipeline, has shifted its focus to owning part of the Trans Mountain oil sands pipeline to the Pacific.
The group is participating in meetings with the Canadian government and has spoken with Project Reconciliation, another organization of First Nations that seeks to own the oil pipeline currently being expanded in Alberta and British Columbia, Travis Meguinis, chief executive officer of Natural Law, said by phone. Meguinis didn’t say how big a stake or how much the group aims to invest.
The coalition of Western Canadian First Nations sprang to prominence late last year when it signed a memorandum of understanding with TC Energy Corp. to pursue an equity stake worth as much as C$1 billion ($799 billion) in Keystone XL. U.S. President Joe Biden rescinded a key permit for that pipeline on his first day in office and TC Energy scrapped the project a few months later.
British Columbia-based Western Indigenous Pipeline Group, which partnered with Pembina Pipeline Corp. in June, is also among other First Nations groups seeking a stake in Trans Mountain. Canada’s federal government bought Trans Mountain from Kinder Morgan Inc. for C$4.5 billion in 2018 after the company threatened to scrap the line’s expansion amid environmental opposition. The government has pledged to sell the system once the expansion is completed.
Alberta’s oil sands industry badly needs more conduits to export its crude, and many hope that indigenous participation will help quell objections to the project.
West Texas skies should start to be a little clearer with the inauguration of the Whistler Pipeline, carrying natural gas from the Waha Header in Reeves County to Agua Dulce.
The 2 billion cubic foot per day natural gas pipeline is owned by Whistler Pipeline LLC, a consortium of MPLX, WhiteWater and a joint venture between Stonepeak Infrastructure Partners and West Texas Gas. Placing the pipeline into service has allowed Midland-based West Texas Gas to lower the volumes of gas it flares, David Freeman, vice president, business development, told the Reporter-Telegram by telephone. He said the company joined the project because it needed capacity to move natural gas from its processing plants in the Midland Basin.
“We took our fair share of transport capacity,” he said. The company buys, gathers and processes natural gas and sells both dry gas and the liquid stream. Given the company’s focus on natural gas, Freeman said “we are bullish on natural gas and feel it will be around a long time.”
The Whistler Pipeline is a 42-inch intrastate pipeline that carries Permian Basin natural gas from the Waha header – with a 50-mile, 36-inch lateral providing connectivity to the Midland Basin – to Agua Dulce. From Agua Dulce, delivery points provide shippers with access to Gulf Coast industrial and export markets, including liquefied natural gas. In its earnings call this week, Marathon noted that the pipeline has entered full commercial service and includes minimum volume commitments from customers.
WTG is a family of related natural gas midstream and downstream entities with operations in more than 90 Texas and Oklahoma counties operating more than 700,000 cubic feet per day of gas processing capacity with more than 10,000 miles of gathering systems, 1,800 miles of transmission pipelines and distribution systems serving approximately 25,000 LDC customers.
MPLX is a partnership formed by Marathon Petroleum to own and operate midstream infrastructure and logistics assets and provides fuels distribution services. WhiteWater is an Austin-based independent midstream company providing transportation services. Stonepeak Infrastructure Partners is an infrastructure-focused private equity firm.
JP Morgan: oil and gas won’t be stranded [Gas in Transition]
The 2021 Annual Energy Paper, written by Michael Cembalest of JP Morgan Asset and Wealth Management, published in the same month, offers a radically different view. It says that “absent decarbonisation shock treatment, humans will be wedded to petroleum and other fossil fuels for longer than they would like.”
Every year JP Morgan Asset Management comes out with an Annual Energy Paper. This year the 11th edition is called Future Shock. Written by market and investment strategy chair Michael Cembalest, it provides what you might call a politically incorrect view of the energy transition. Not that Cembalest is disputing the need for a transition, but he is arguing that it will take considerably longer than everyone thinks.
To illustrate his point, he presents a graph showing a number of forecasts for renewable energy shares from prominent sources, which have all proven to be far too optimistic:
Global reliance on fossil fuels has declined from about 95% of primary energy in 1975 to about 85% in 2020, writes Cembalest. Although prices of wind and solar power have declined rapidly, they are still used mainly to generate electricity, which accounts for just 18% of energy use. “Direct use of fossil fuels is still the primary mover in the modern world, as the demise of fossil fuels continues to be prematurely declared by energy futurists.”
Cembalest thus does not agree with assessments made by the likes of think tank Carbon Tracker that “post-COVID global fossil fuel consumption may never surpass 2019 levels.” Although global coal consumption may decline, “the IEA’s projected increase for global natural gas consumption by 2025 of 390bn m3 is 2.8x the decline in coal in energy (exajoule) terms.”
Transmission requirements
The paper discusses “four big obstacles to faster deep decarbonisation: slow penetration of EVs, required upgrades to transmission infrastructure, geologic carbon sequestration and electrification of industrial energy use.”
We will leave the EVs aside, and discuss the other three here. The first deals with transmission infrastructure.
Cembalest notes that net-zero energy plans, such as the net-zero plan for the US coming from Princeton University, “Net-Zero America: Potential Pathways, Infrastructure and Impacts”, depend on unprecedented expansion of solar and wind power, but also on an accompanying huge expansion of transmission grids. “From 2004 to 2020, US transmission grid miles only grew by 1.2% per year and would have to accelerate [according to the Princeton plan] to 3.9%-5.7% (these are very big differences when compounded over decades).”
Such expansion will run into public opposition and other obstacles, writes Cembalest. Distributed storage can help reduce the need for additional transmission grids, but not much: once storage capacity reaches 4% of peak demand, further storage investment does not reduce transmission requirements further, according to an MIT study.
Steepest climb
The second obstacle Cembalest discusses is CCS, which “may face the steepest climb of all.”
“After 20 years of planning and conjecture, by the end of 2020 CCS facilities stored just 0.1% of global CO 2 emissions,” the author notes. “Challenges include cost overruns, failure of bellwether projects (Kemper Mississippi), the US Dept of Energy withdrawing support for demonstration projects (FutureGen), cancellations in Europe, legal uncertainties about liability and a 20%-40% energy drag required to perform CCS in the first place.”
Although in Norway the Northern Lights sequestration project involving Total, Equinor and Shell has been given the green light, “its capacity will be just 0.0045% of global emissions.”
Cembalest throws some doubt on the prospects of this project, one of the greatest hopes of the CCS community. Norway, writes Cembalest, has a long experience with CCS, which has been used in the Sleipner Field in the North Sea, “one of the few existing CCS locations on the planet. We had a conversation with Peter Haugan, Director of the Geophysical Institute at the University of Bergen (Norway)… As it turns out, CCS is a very complex process: some nearby CO 2 injection sites were abandoned since they turned out to be much less permeable than originally anticipated, in which case higher levels of pressure could have caused cracks; and in other locations, polluted water injection sites did cause cracks since injected water was found at the surface of the ocean.”
In other words, “the success of Sleipner so far is not a clear signal regarding the ease of CCS injection, even in well-known formations like the ones in the North Sea.”
Beyond daunting
Cembalest notes that studies touting the potential of CCS tend to rely on extremely ambitious assumptions. One prominent academic paper on CCS from Princeton assumes that 65,000 miles of CO 2 pipeline infrastructure will divert 929mn mt/yr of CO 2 from cement, gas-powered generation, natural gas reforming and biofuel production facilities to centralised locations “where they will be mostly sequestered underground (a small amount is assumed to be converted into synthetic fuels).” This compares to current US CCS infrastructure of 5,280 miles and 80mn mt/yr, most of which is used for enhanced oil recovery, Cembalest notes.
The Princeton CCS buildout, Cembalest points out, “just to sequester an amount equal to 15% of current US GHG emissions, would require infrastructure whose throughput volume would be higher than the volume of oil flowing through US distribution and refining pipelines, a system which has taken over 100 years to build. Princeton’s CCS projections are not that different from the ones found in pieces from Morgan Stanley, Goldman and other research houses.”
What about direct air capture (DAC), which is getting increasing coverage in net-zero plans? Cembalest writes that the material and energy demands of DAC “are beyond daunting”.
If DAC “based on aqueous hydroxide solutions were to capture 10 GT of CO 2 each year (25% of global emissions), “somewhere between 1.7 and 3.0 gigatons of NaOH (caustic soda) would be needed; NaOH reacts with CO 2 to create water and sodium carbonate Na 2 CO 3 , which can be heated to produce a gaseous CO 2 stream … This amount of NaOH is 20-40 times its recent annual production, and also equivalent to 40%-67% of recent global crude oil extraction by weight.”
Furthermore, Cembalest notes, “electrolysis required to produce the NaOH would consume 25%-40% of world electricity, and hydroxide regeneration (used to reduce NaOH requirements by regenerating and reusing most of the reactant) would claim another 11%-17% of global primary energy. Putting both pieces together, NaOH electrolysis plus regeneration would require 15%-24% of global primary energy to capture 25% of CO 2 emissions.”
A final nail in the coffin: “2,400 to 3,800 kWh per tonne of captured CO 2 via [DAC] would be needed before whatever energy is required to actually store the CO 2 underground; [DAC] energy needs appear to be 6 to 10 times higher than traditional CCS energy estimates, a process which itself is stuck in neutral.” As two scientists wrote in Nature last year: “[DAC] is unfortunately an energetically and financially costly distraction in effective mitigation of climate changes at a meaningful scale”.
It gets harder
The third obstacle, decarbonisation of the industrial sector – the largest user of fossil fuels – is also an extremely challenging affair, notes Cembalest. Some industrial processes – wood, plastics, rubber, certain mining activities, secondary steel processes – can be electrified. For other uses, such as chemicals, pulp/paper and food processes, “it gets harder”. These tend to rely on combined heat and power (CHP). To switch to electricity, “producers would need to purchase energy previously obtained at little to no cost, and/or redesign the entire process.”
Other hard to electrify sectors include non-metallic minerals such as glass, brick and cement “which require temperatures in excess of 1,400°C, and which are non-conductive solids (i.e., harder to electrify production of things that do not conduct electricity). Oil/coal refining exploits “own-use” fuel consumption, a source of energy lost when switching to electricity.”
Then there is primary steel production, which accounts for some 70% of global steel production. Most primary steel production relies on coke ovens and blast furnaces that use carbon as a reducing agent to strip oxygen from iron oxide, a process which produces CO 2 . Around 5% is produced using direct reduced iron (DRI) in which natural gas is used, leading to a 50% lower CO 2 footprint per ton.
There are now some projects getting started that use “green hydrogen” as ra educing agent. A consortium of Swedish companies (Vattenfall, LKAB and SSAB) has embarked on this route, planning for some commercial production in 2026 and completion in 2045. However, notes Cembalest, the Nordic steel industry produces 0.35% of the steel in the world.
Stick with oil and gas
Cembalest concludes that “the world is not on track to strand a lot of oil and gas in the future and is much closer to the IEA Stated Policies scenario than its Sustainable Development scenario. Only in the latter are oil, gas and coal assets projected to be left stranded in the ground … “
As a result, he notes, “peak oil demand forecasts may end up being just as wrong as peak oil supply forecasts were a generation ago.” (Note that the IEA’s Stated Policies scenario is not a “business-as-usual” scenario, but reflects some far-reaching and ambitious climate targets.)
What would happen if the world were to heed the IEA’s advice and stop investing in new oil projects? That is shown in this graph:
Clearly shortages would appear very quickly.
Thus, contrary to a lot of the advice in the media, JP Morgan recommends “that investors stick with oil and gas for now. World demand for liquid fuels should continue to rebound as COVID vaccinations increase and economies reopen. As demand grows, we expect supply to recover more slowly. ‘Big Oil’ return on capital fell to single digits by 2016 due to excess competition; we expect these returns to rise back to 1990’s levels of 10%-15%.”
Cembalest ends with a rhetorical question: “Is everyone sure that we should starve this industry of capital starting now?
“The overarching message of this paper,” he concludes, “is not climate nihilism; it’s that the behavioral, political and structural changes required for deep decarbonisation are still grossly underestimated. If so, the companies we all rely on for dispatchable, thermal power and energy will need to survive and prosper until we get there.”
SINGAPORE (ICIS)--China’s crude imports in July stood at 41.24m tonnes, down 19.6% year on year, recording its fourth straight month of decline, official data showed.
Total imports in the first seven month fell by 5.6% year on year to 301.8m tonnes, according to China Customs.
The decline was largely caused by a high base in the previous corresponding period.
In June and July last year, China’s oil imports hit record highs as buyers rushed to the market following a price slump.
China’s crude imports in August are unlikely to stay high as refiners are cutting operating rates amid high inventories and bearish demand outlook of oil products, according to ICIS senior analyst Yu Yunfeng.
“Ongoing COVID-19 containment measures in some provinces, typhoon and rain season in coastal regions are expected to continue dampening domestic gasoil and gasoline demand,” she said.
“Moreover, some independent refiners’ crude import quotas shortage and PetroChina’s distillates export quotas shortage will also constrain operating rates of independent refiners and PetroChina’s subsidiary refiners in August,” she added.
London (CNN Business) The UK government has been warned to stop a massive North Sea oil project or see its hopes of becoming a climate leader dashed as the country prepares to host a crucial environmental summit later this year.
In the coming weeks, Britain's oil regulator could decide whether to green-light the Cambo development near the Shetland Islands, which co-ownersand Blackstone-backed Siccar Point Energy expect to produce 164 million barrels of crude during the first phase of development.
We will know if politicians are listening if the UK government, as hosts of COP who aspire to lead on climate, call time and put a stop to Cambo."
But environmental groups and other activists are furious. They claim that approving the development would damage the environment and undermine claims by the UK government that it's taking bold action ahead of November's 26th UN Climate Change Conference , or COP26, in Glasgow.
"We will know if politicians are listening if the UK government, as hosts of COP who aspire to lead on climate, call time and put a stop to Cambo," said Tessa Khan, a climate lawyer who leads the advocacy group Uplift.
The political fight underscores the challenges facing governments and businesses as they strive to meet net-zero emissions goals aimed at limiting warming to 1.5 degrees Celsius, which is essential to maintaining a livable planet.
On Monday, the United Nations' Intergovernmental Panel on Climate Change warned the world has rapidly warmed 1.1 degrees Celsius higher than pre-industrial era levels, and is now careening toward 1.5 degrees.
Yet the world remains reliant on oil and gas, and companies like Shell are working to provide it. To reach net-zero emissions by 2050, however, no new oil or gas fields can be approved for development, the International Energy Agency warned earlier this year.
"If we reduce the consumption of oil in line with what is needed to reach [the 2050] targets, we will not need to invest in new oil or gas exploration or new coal mining. Very clear," Fatih Birol, the IEA's executive director, said in a recent interview on Cambo with the UK's Channel 4 . The UK government, he added, should choose to be an "inspiration for the rest of the world."
The Cambo oilfield
The Cambo oilfield is a key project for Shell, which holds a 30% stake, and Siccar Point, which controls 70% of the venture.
"It'll be important for both of them because there are so few developments now [in the North Sea]," said Alexander Kemp, a professor of petroleum economics at the University of Aberdeen.
Discovered in 2002, the field could contain over 800 million barrels of heavy crude. Deepwater drilling is expected to start in 2022, with oil production kicking off in 2025 and running until 2050.
"It's a significant size field by today's standards," said Kemp, noting that a more typical development would yield about 20 million barrels, not 164 million.
But the project has stoked the ire of a coalition of environmental advocates, who are ramping up political pressure by highlighting the optics of approving the development so close to COP26. The oil produced will have the same climate footprint as running about 18 coal-fired power stations for a year, Uplift has calculated.
"The proposed new Cambo oilfield is a clear climate contradiction," Jamie Livingstone, head of Oxfam Scotland, said in a statement this month. "If the UK government is to be a credible broker for a deal that can stop the planet overheating when it hosts the COP26 climate talks in November it must intervene in the Cambo case."
The IEA's net-zero roadmap published in May is another flash point. The report plainly states that as of 2021, no new oil and gas fields can be developed in order to reach climate targets. Uplift's Khan said this is "the first major test" since the warning was issued.
A looming decision
The UK Oil and Gas Authority (OGA) is expected to imminently decide whether to allow the development to proceed.
Prime Minister Boris Johnson told local media late last week that the choice is up to the regulator and "no contracts should be ripped up." Greenpeace has said if the OGA moves ahead, it could sue.
The activist group takes particular issue with the government's announcement that it will require new "climate compatibility checkpoints" on future oil and gas licensing rounds to make sure they're in line with the United Kingdom's pledge to reach net zero emissions by 2050. That doesn't apply to Cambo, since a license was already issued in 2001 when exploration of the area began. Greenpeace has called this a deliberate "loophole."
Alok Sharma, the lawmaker appointed by the UK government to lead COP26, did not directly address whether North Sea oil production contradicts UK climate goals when asked by reporters Monday, saying that the government was "going to be very rigorously applying a climate compatibility check" for "future" oil and gas licenses.
Cambo oilfield protestors rally outside a UK government building in Edinburgh, Scotland on July 19, 2021.
There's reason to believe the OGA will push forward with the project, even if it generates backlash.
The agency has emphasized that even under net-zero plans, oil and gas will remain crucial sources of energy for the country, and that it's closely monitoring emissions for all projects to make sure they align with the 2050 goal.
"Oil and gas still make up around three quarters of the UK's energy consumption," Chairman Tim Eggar wrote in the agency's latest annual report. "They are forecast to be needed now and into the future; not just for heating, transport and power generation, but also as a feedstock for manufacturing other materials such as chemicals, medicines and more."
Shell and Siccar Point's role
This position is echoed by those in the oil industry who believe that based on the United Kingdom's ongoing energy requirements, the focus on Cambo is overdone.
"Fields like Cambo meet the UK's energy needs, and producing it here means we can reduce emissions associated with production as much as possible," said Deirdre Michie, CEO of industry group Oil & Gas UK. "A premature ending of domestic production would mean we simply need to import more of it from other countries, at great expense, while losing all control of the environmental standards for how it was produced."
In response to questions from CNN Business, Siccar Point Energy CEO Jonathan Roger said that Cambo would directly create 1,000 jobs in the United Kingdom, and that the oilfield will be built using "modern, low-emission equipment and manufacturing processes and be electrification ready, with the potential to be powered by renewable energy when that's feasible."
Shell emphasized that its oil production peaked in 2019 and is expected to continue to decline until 2030.
POSCO International's Myanmar gas exploration project
POSCO International Co., the trading unit of South Korean steelmaker POSCO Co., is set to develop an offshore gas field in Malaysia with the country’s state-run energy company Petronas Nasional Bhd (Petronas), expanding its discovery of overseas energy resources.POSCO International said it has won the license in an international bid to explore and operate the PM524 block where Petronas is already operating a gas field.
The 4,738 square kilometres block lies east of the Malaysian peninsula in waters 50-80 metres deep."It is an opportunity to expand the energy business map concentrated in Myanmar," a POSCO International official said. Daewoo International, the former entity of POSCO International, secured the exploration rights in A-1 and A-3 gas fields off Myanmar in 2000.“We secured a potentially natural gas rich field, an important turning point that will serve as a new growth engine and groundwork for energy business expansion, when natural gas demand is increasing.”POSCO International is scheduled to sign a deal on product distribution with Petronas after discussing details. After the contract, it will explore the block in the next four years.
POSCO International will hold an 80% stake with the operation right, while Petronas’ subsidiary Petronas Carigali Sdn Bhd.Petronas is operating the Tanga Barat gas field in the PM524 block. POSCO International considers another development linked to the field once it succeeds in exploring gas in the PM524 block.“If realized, we will be able to reduce the gas field’s initial development costs and time,” said another POSCO international official.
In addition, POSCO International plans to develop eco-friendly energy technologies with Petronas in a move to achieve POSCO Group’s ‘2050 carbon neutrality’ target. Malaysia is stepping up efforts led by Petronas for a similar goal by developing such technologies including clean gas development through Carbon Capture and Storage (CCS), as well as green ammonia and hydrogen production.POSCO International last month announced an agreement with Indonesia’s PT Pertamina Hulu Energi (PHE) to look for joint oil and gas exploration opportunities off the Southeast Asian country .
The company is also seeking expansions of natural gas business in its strategic markets.
SINGAPORE (ICIS)--PTT Global Chemical's second-quarter net profit surged to Thai baht (Bt) 25bn ($746m) amid improved petrochemical product spreads although worries about global oversupply remain amid the pandemic.
Thai baht (Bt) million Q2 2021 Q2 2020 % change H1 2021 H1 2020 % change Sales 111,793 69,271 61.4% 213,657 162,307 31.6% EBITDA 16,810 5,563 202.2% 33,215 3,006 1,005.0% Net income 25,035 1,671 1,398.2% 34,730 -7,113 -
The Thai chemical major’s aromatics business outperformed, with the price spreads of paraxylene (PX) and benzene over feedstock condensate surging in the June quarter from the same period last year.
The PX-to-condensate spread for the period averaged $283/tonne, up 4% year on year due to seasonal peak demand from the downstream purified terephthalic acid (PTA) and polyester markets in China in April-May, as well as growing demand from the polyethylene terephthalate (PET) resins sector.
"However, there are the number of factors that could pressure the overall PX market, such as the high inventory level of paraxylene inventory, additional supply entering China market in Q3 2021, and the impact of COVID-19 infections," PTTGC said in a filing on the Stock Exchange of Thailand late on Monday.
ExxonMobil has started marketing gas assets in the Fayetteville Shale in Arkansas, the US supermajor’s spokeswoman Julie King told Reuters on Wednesday.
Since before the pandemic, Exxon has been marketing and divesting assets, focusing on key strategic operations such as the Permian Basin, Guyana, and Brazil.
“90 percent of our upstream investments in resource additions, including in Guyana, Brazil, and the U.S. Permian Basin, generate a 10 percent return at $35 per barrel or less,” Exxon’s chairman and chief executive Darren Woods said on the investor day in March 2021.
While focusing on these areas, Exxon is looking to divest assets elsewhere, and the shale gas assets in Arkansas are now up for sale.
“We are providing information to third parties that may have an interest in the assets,” Exxon’s spokeswoman King told Reuters. The company declined to comment which could be the potential bidders.
Exxon’s subsidiary XTO Energy operates more than 662,000 acres in 16 counties in Arkansas, with production at 271 million cubic feet of gas per day, according to XTO Energy.
Privately owned Merit Energy—which had acquired acreage in the area from BHP in 2018—is assessing the assets that Exxon has put up for sale, a source with knowledge of the matter told Reuters.
Related: Oil Prices Rebound From Three-Week Lows
In February this year, ExxonMobil said it would sell most of its non-operated assets in the UK’s central and northern North Sea to private equity fund HitecVision for more than $1 billion.
“We continue to high-grade our portfolio by divesting assets that are less strategic and focusing our investments on our advantaged projects that are among the best in the industry,” Neil Chapman, senior vice president of ExxonMobil, said in February.
On the Q2 earnings call at the end of July, CEO Woods said:
“To strengthen the earnings and cash flow potential of our assets, our plans will continue to advance high-return, advantaged projects and high-grade our existing assets through accretive divestments.”
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
The Midland basin in Texas produced an average of 1.68 million barrels per day (bpd) of crude oil last year, accounting for 15 percent of all crude output in America, the Energy Information Administration (EIA) said on Tuesday, citing data from Enverus.
In addition to crude oil, the Midland basin also produced a lot of dry natural gas—5.4 billion cubic feet per day (Bcf/d) in 2020, which made up roughly 6 percent of the entire dry natural gas production in the United States last year.
Since the start of the shale revolution in the 2010s, shale intervals of the Spraberry and Wolfcamp formations in the Midland basin have become the main targets for oil exploration and production. Before that, vertical drilling generated most of the Midland basin’s crude oil production until the middle of the 2010s, the EIA said.
As of the end of July 2021, a total of 107 drilling rigs and 28 fracking crews operated in the Midland Basin, as per Enverus data cited by the EIA. At that time, the Midland Basin accounted for 44 percent of all rigs operating in the Permian Basin and 22 percent of all rigs operating in the United States.
Last summer, the rig count in the Midland Basin dropped to as low as 58 active rigs, when low crude oil prices led to drastic reductions in drilling operations.
Midland County leads Texas as the most prolific crude oil-producing county, according to the latest data from the Railroad Commission of Texas for May 2021. Midland County was also third in the top ten natural gas-producing counties in Texas, RRC data showed.
The Permian basin, where the Midland basin is located, is expected to drive a modest 42,000 bpd increase in U.S. shale production in August, the EIA said last month.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Canada’s oil industry, which operates one of the world’s most emission-intensive ways of pumping crude, has recently pledged to work to make the oil sands net-zero emission by 2050. But the industry says it cannot do it alone as billions of dollars of investments will be needed to decarbonize the oil sands operations. Canada’s federal government has a part to play in supporting net-zero oil sands, and it should pay most of the tab for making the industry ‘greener’, top executives at the major Canadian oil firms say.
Federal government support, including with funds, for technologies to keep the oil sands’ license to operate in a world fearing imminent climate catastrophe may sound counterintuitive. However, crude, natural gas, and petroleum products are Canada’s single biggest export, and the sector is a major employer, especially in the province of Alberta.
So, Canada’s best bet of cutting emissions from oil sands and reaching its goal of a net-zero emissions economy by 2050 could be financing and supporting investment in technologies to cut the carbon footprint of its key economic engine.
Oil Industry Says Federal Govt Should Pay Up To Two-Thirds Of Costs
Canada will need as much as US$60 billion (C$75 billion) to make its oil sands operations net-zero emission businesses by 2050, the CEOs of Suncor and Cenovus said last month. The government would need to step up and likely fund up to two-thirds of that cost, Suncor CEO Mark Little and Cenovus Energy’s chief executive Alex Pourbaix told Bloomberg in an interview in July.
Cenovus Energy’s Pourbaix reiterated that assessment earlier this month, telling the Financial Times that the federal government should pay up to 70 percent of the tab.
Canada’s oil could become the world’s “cleanest” if the industry manages to develop solutions to slash the carbon intensity of operations, Pourbaix told FT.
Cenovus Energy became in June part of a net-zero collaboration initiative of the biggest oil sands producers in Canada aimed at achieving net-zero emissions from oil sands operations by 2050. The initiative includes companies that operate some 90 percent of Canada’s oil sands production—Canadian Natural Resources, Cenovus Energy, Imperial, MEG Energy, and Suncor Energy.
The initiative is ambitious and “will require significant investment on the part of both industry and government to advance the research and development of new and emerging technologies,” they said.
Decarbonizing the oil sands will cost tens of billions of dollars by 2050, but it will give a license to operate to an industry that would contribute roughly US$2.385 trillion (C$3 trillion) of gross domestic product, Cenovus Energy’s Pourbaix told FT.
SINGAPORE (ICIS)--Several producers in Saudi Arabia are facing production issues due to disruptions at upstream feedstock suppliers in Al Jubail due to a power outage in early August.
The sudden cut in feedstock supply has raised concerns over the near-term availability of several products, with potential delays of export allocations of some products to customers in India.
Uncertainty lingers on how soon the affected producers will resume normal production levels.
Supply of ethane to petrochemical complexes in Jubail was disrupted, market sources said, citing a power outage at feedstock supplier Saudi Aramco.
ICIS reached out to Saudi Aramco to check on the issue but has yet to receive a reply at the time of writing.
Ethane is the primary feedstock for most petrochemical producers in Saudi Arabia instead of naphtha. In 2019, several petrochemical producers had to cut their output after Saudi Aramco’s oil facilities were attacked, resulting in a shortage of ethane gas supply.
This week, operations are slowly resuming at most affected facilities although the extent of the disruption at downstream facilities at Jubail in Saudi Arabia’ east coast was not immediately clear, according to market sources.
“C2 [ethylene] and PE [polyethylene] production [is] impacted due to this,” said an industry source.
Saudi Ethylene and Polyethylene Company (SEPC) shut its 1m tonne/year cracker early in the month and reduced its polyethylene (PE) output due to the power outage.
SEPC, which is 45.34% owned by Saudi Arabia’s National Industrialization Company (Tasnee), can produce 450,000 tonnes/year of low density PE (LDPE); 400,000 tonnes/year of high density PE (HDPE); and 285,000 tonnes/year of propylene in Jubail.
In the PE market, Saudi Polymers raised its August HDPE offers last week to an equivalent of $1,293/tonne DEL (delivered) Saudi Arabia for cash payments.
Market sources said that the company’s HDPE allocation was hit, noting that its offer was $53/tonne higher than prices announced by other producers.
Saudi Polyolefins Co (SPC), another Tasnee subsidiary, has lowered its polypropylene (PP) output.
Tasnee on 10 August announced a force majeure on delivery of butyl acrylate (butyl-A) due to a shortage of feedstock supply, according to a letter the company sent to customers.
The force majeure is estimated to continue up to end-August based on preliminary assessment, it stated.
Tasnee is one of the major butyl-A suppliers to India. Import discussions in India have risen this week on keen enquiries.
Production at the company’s acrylic acid (AA) unit in Jubail was also affected due to disruption of feedstock propylene supply.
Jubail United Petrochemical (JUPC), meanwhile, has cut run rates at its 1.45m tonne/year cracker in early August, while its two monoethylene glycol (MEG) units with a combined capacity of 1.34m tonnes/year were shut at around the same time.
Era of changes in Russian petrochemistry
Coping with consequences of the coronacrisis, adoption of Russia’s energy strategy, the merger of TAIF and SIBUR businesses — what future awaits the country’s gas and petrochemical sector?
Some of Russia’s largest polymer manufacturers — Nizhnekamskneftekhim PJSC and Kazanorgsintez PJSC — are part of TAIF Group. Photo: NKNK press service
Nowadays 25 complexes making polymers on a large scale operate in Russia. Eight of them produce ethylene polymers. High-density polyethylene (HDPE) is manufactured at such plants as Kazanorgsintez, Tomskneftekhim, Ufaorgsintez, Angarsk Polymer Plant, Gazprom Neftekhim Salavat. Low-density polyethylene (LDPE) production is set up at such plants as Kazanorgsintez, Nizhnekamskneftekhim, Gazprom Neftekhim Salavat, Stavrolen. A new large producer — ZapSibNeftekhim built by SIBUR Holding PJSC — appeared in the polymer and linear polyethylene (LPE) market in 2019.
A new large producer — ZapSibNeftekhim built by SIBUR Holding PJSC — appeared in the polymer and linear polyethylene (LPE) market in 2019. Photo: cadmtyumen.ru
In December 2020, RBC agency’s experts calculated that depending on polymer types, enterprises of SIBUR Holding and TAIF account for about 74-77% of Russian polyethylene and polypropylene. Other plants are concentrated in enterprises (including joint ventures with SIBUR Holding) of the largest Russian gas and oil companies: Rosneft Oil Company, Gazprom PJSC and Gazprom Neft PJSC, LUKOIL PJSC. All the Russian low-density linear polyethylene is made in enterprises of SIBUR Holding and TAIF Group.
Credit: RBC
Russia’s share of the total amount of polymers produced in the world is comparably small but has demonstrated confident growth of production volumes in the last decades. After an economic depression in the 1990-1996s due to geopolitical changes, current plants started to be modernised and new capacities began to be built in 1998.
Petrochemical assets of leading Russian companies — SIBUR Holding PJSC and TAIF Group — played and continue playing a considerable role in these processes. So TAIF Group has been implementing the third Strategic Development Programme since the late 20th century. The ongoing programme designed from 2015 to 2030 includes 36 large-scale projects and is assessed at over 2,2 trillion rubles, of which more than 1,5 trillion are petrochemical enterprises. Actively mastering new areas and types of products, TAIF Group, first of all, focuses on import substitution — filling the Russian market with Russian high-quality products.
Despite all the efforts and accomplishments of Russian petrochemistry, only about 2,3% of world polymer capacities were situated in Russia in the early 21st century. While by 2018, after the launch of big enterprises in China, Saudi Arabia, Iran and the USA, the Russian share shrank and was just 2,0% in 2019. In some types, especially special (small-scale) brands, the Russian polymer consumption market, which was evaluated at about 6,8 million tonnes in total in 2019, turned to be considerably dependent on imports, while exports in 2019 amounted to some 1,4 million tonnes, or nearly 20% of total consumption.
The necessity of changing the situation was repeatedly tabled at federal level promising public support to those who were ready to invest in the sector and meet certain conditions in volumes and the type of investments as well as areas the state was especially interested in.
The coronavirus pandemic aggravated existing problems related to an imbalance between demand and supply in the global large-scale polymer market. A temporary shutdown of construction projects, enterprises of the automotive industry, including the tyre industry, a fall in the production of consumer commodities and so on inevitably entailed a sudden fall in demand for polymers. In January 2020, the decline was 0,8% compared to the previous month. In February, the decrease was 2,1%. In March, the world chemical industry reduced production output by as much as 4,2%.
“The biggest fall (by 10,3% in March) was registered in China where plants operated at the lowest capacities or stood idle during February and March,” notes a review of Higher School of Economics’s Large-Scale Polymer Market. The utilisation of gas and petrochemical capacities reduced to 76,9% around the world, a record low in the last 11 years due to logistic problems. And it was hard to deliver the remaining production to the consumer who is ready to receive a product.
Course for import substitution
Import substitution, expansion of industrial capabilities of Russian polymer manufacturers and processors, support for demand in the domestic market and finding a new niche on a global scale — these are the tasks the country’s management sets to the petrochemical sector. This was discussed in Tobolsk in early December 2020 where a meeting on the strategic development of Russia’s gas and petrochemical sector took place at ZapSibNeftekhim.
The development of Russia’s gas and petrochemical sector took place with the Russian president at SIBUR Holding’s ZapSibNeftekhim. Photo: kremlin.ru
It should be noted that the launch and then reaching the full capacity of ZapSibNeftekhim had a significant impact on both the Russian and world markets: the installed capacity of the plant is 1,5 million tonnes of polyethylene, 500,000 tonnes of polypropylene of more than 30 brands (with a prospect of expanding the production line to 100 brands by 2025) and over 240,000 tonnes of by-products. Another 500,000 tonnes of polypropylene is produced in a plant launched as early as 2013, which was built as part of Tobolsk Petrochemical Complex and later joined ZapSibNeftekhim.
In the second half of 2020 when the market started to gradually revive amid anti-COVID-19 concessions and demand and prices for demand gained lost positions, Russia’s share of global large-scale polymer production rose from a previous 2% to nearly 3,5%. Moreover, the country became a net polyethylene exporter, while it had already been a net polypropylene exporter.
It was noted at the meeting that further development plans of the sector supported by the government envisage a twofold ramp-up of the production of gas and petrochemical commodities by 2030 and reaching fourth place in ethylene production in the world. Among the largest projects scheduled to be implemented in the next few years besides SIBUR’s Amur Gas Chemical Complex, with a total capacity of 2,7 million tonnes of polymers (polyethylene and propylene) a year, there is a gas and petrochemical and LNG complex in Gazprom’s Ust-Luga and RusChemAlliance, Irkutsk Polymer Plant of Irkutsk Oil Company and the construction of a new olefin complex of Nizhnekamskneftekhim PJSC. Also, the government is developing a project of a gas and chemical complex on the Yamal Peninsula, including gas processing and gas and chemical plants.
Vladimir Putin drew the attention of the attendees of the meeting to the necessity of paying attention to medium- and small-scale petrochemistry not decreasing the development pace of the sector in general. Photo: kremlin.ru
Vladimir Putin who chaired the meeting in Tobolsk stressed the importance and necessity of active development of the oil processing and petrochemical sectors — the main driver of the Russian economy where unlike oil production (Editor’s note: with annual demand growth of 1% and a tendency for a fall) demand for products of oil processing and petrochemistry grow 4% a year (according to Statista agency’s data, the growth pace of the global petrochemical sector is twice faster than the world’s GDP, 5,4% against 2,7%) and 8-10% in some products. “It is necessary to promote Russian petrochemicals inside the country and abroad more actively, increase the effectiveness and production volumes. For this purpose, the sector needs to implement large-scale projects with total investments of some 5 trillion rubles,” the Russian president singled out in his speech.
Noting successes of the sector in import substitution in large-scale polymer production, the head of the country noted another vector: “In small-scale petrochemistry, we import 1,4 million tonnes of products with the production of 3,7 million tonnes. There are things to work on, plain to see. By the way, in European countries, in European economies, small-scale chemistry accounts for 30-40% of all chemical products. We have just 15%.” He also stressed: “Of course, domestic demand considerably exceeds what we produce now, and the deficit is covered by imports. In some products, the dependence on foreign suppliers reaches a hundred per cent. Of course, such a situation needs to change.”
Russian producers are already working to master the production of medium- and small-scale petrochemistry while actively increasing the capacity of basic products. The range of TAIF Group’s petrochemical commodities now includes 581 brands, including medium-scale products, premium brands. The development of Group and expansion of the assortment goes on. The investment programme through 2030 includes 36 large-scale projects with a total value of 2,2 trillion rubles, of which 1,7 trillion belong to petrochemical plants.
The petrochemical sector is the main development driver of Russia’s economy. Photo: ru.all.biz
So within a development programme that is implemented, Kazanorgsintez, which is part of TAIF Group, started to build an ethylene-vinyl acetate plant in early 2021 (the enterprise is the only Russian supplier of this product, the capacity of the current plant is 13,000 tonnes a year). The installed capacity of the new production line will be 100,000 tonnes a year, which will allow completely meeting the needs of Russian consumers and even exporting a part of products. Only Kazanorgsintez set up the production of metallocene linear polyethylene in Russia. A polycarbonate plant is being modernised to increase the capacity from today’s 67,000 to 100,000 tonnes a year.
Kazanorgsintez PJSC — the only Russian ethylene-vinyl acetate producer — intends to increase the production more than seven times. Photo: Kazanorgsintez PJSC press service
A large-scale project on the construction of a new EP-600 ethylene complex implemented by Nizhnekamskneftekhim PJSC (part of TAIF Group) will allow making 273,000 tonnes of propylene, nearly 250,000 tonnes of benzene, 88,000 tonnes of butadiene, 64,000 tonnes of butylene-isobutylene fraction, 65,000 tonnes of C5 fraction and 17,000 tonnes of C9 fraction as well as 93,000 tonnes of pyrolysis tar and over 300,000 tonnes of methane-hydrogen fraction besides 600,000 tonnes of ethylene. With the launch of this facility, the total feedstock processing volume made from oil and gas condensate at Nizhnekamskneftekhim PJSC will be over 3,5 million tonnes a year.
The launch of the complex will inevitably lead to the appearance and development of a number of plants in Tatarstan and Russia that will use the whole range of the EP-600’s commodities to make final products that are in demand among consumers. After this stage, Group intends to launch another ethylene plant, an analogous plant with an additional amount of ethylene production of 1,2 million tonnes a year. Also, the second and fourth construction stages of the complex envisage the creation of a series of satellite plants, including medium- and small-scale chemistry.
The EP-600 complex construction project at Nizhnekamskneftekhim PJSC envisages the launch of a series of satellite plants. Photo: Nizhnekamskneftekhim PJSC
SIBUR Holding PJSC plans to finish the construction soon and launch Amur Gas Chemical Complex. The Russian market will have another driver of the development of polymer plants, while the country in general will cement its positions as a big global exporter.
Nizhnekamskneftekhim is also making plans to obtain a licence in the foreseeable future and set up the production of methylene diphenyl diisocyanate and toluene diisocyanate to make polyurethane systems. Today Russia doesn’t almost have its own polyurethane production. Components are purchased abroad. The launch of a solution styrene-butadiene rubber production line with a capacity of 60,000 tonnes a year is another area TAIF Group already mastered. The production is necessary to make the so-called green tyres that are famous for environmental friendliness.
There are in general a lot of examples of projects of petrochemical factories that the country’s industry needs. By late 2021, SIBUR particularly will launch a maleic anhydride plant that is needed to produce a wide range of sought-after products, which are imported to Russia now. The capacity of the plant that is under construction is 45,000 tonnes. Tatneft plans to build another plant — for 50,000 tonnes a year.
SIBUR Holding PJSC implements a number of projects, including in medium- and small-scale petrochemistry. Photo: bashmedia.ru
The demand of the Russian polymer market for plasticisers — special additives to make end products plastic — is about 150,000 tonnes a year today. Lately, this niche has had a serious deficit because requirements for environmental safety of components have been tightened at international level, and phthalate plasticisers have been banned. SIBUR offered a solution by building and launching a phthalate-free plasticiser with a capacity of 100,000 tonnes in 2019.
The Russian market’s demand for flame retardants — special substances that are necessary to prevent the ignition of polymer materials — is just about a thousand tonnes a year. One of the advantages of such small-scale chemistry is high profitability. The product, which is harder to make, and just a small amount of it is needed but it is indispensable, is always expensive. And this is the main problem for the sector: owners of technologies and licensors who sell the technology of large-scale chemical production with a great desire and are more reluctant to sell medium-scale chemical production technology absolutely do not rush to share the small-scale chemistry market with anybody. SIBUR had to complete a cycle of developments on its own. In the second half of 2021, the holding plans to launch the production of the popular product with a capacity of 4,500 tonnes a year. Two-thirds of this amount is potentially designed for exports. At the meeting in Tobolsk, the Russian government was given the task of elaborating measures to increase the small- and medium-scale chemical production by 30% by 2025 and 70% by 2030.
In June 2020, Russia’s Energy Strategy through 2035 was adopted by the Russian government chaired by Mikhail Mishustin. Photo: mikhail_mishustin_politinformburo
These plans harmonically complement Russia’s Energy Strategy through 2035 that was adopted in June 2020. It was approved and adopted by the Russian government’s order No. 1523-r as of 9 June 2020. Not considering key targets of the sector that were made public as early as December 2019, the document implies the reduction in imports of large-scale polymers in consumption to 20% by 2024 and 15% by 2035.
Reinforcement of Russian gas and petrochemistry
A milestone took place in Russian petrochemistry on 23 April 2021: Russia’s two leading petrochemical groups, TAIF and SIBUR, announced their plans for uniting the businesses and working jointly, implementing large-scale investment programmes.
Russia’s two largest petrochemical groups announced plans for uniting businesses on 23 April 2021. Photo: Moscow branch of TNV channel
“The merger of our two largest companies, the creation of one company based on SIBUR and TAIF will be an additional driver of the development of this sector. The growth pace of gas and petrochemistry is up to 1,5 times above the world economy’s growth pace, there are huge prospects. Our country has huge hydrocarbon reserves and must occupy leading positions in world markets. This is why our sector will develop, and the Russian government creates conditions,” claimed Russia’s Vice Premier Alexander Novak immediately after signing the agreement.
Alexander Novak: “The merger of TAIF and SIBUR will be an additional driver of the development of this sector.” Photo: Moscow branch of TNV channel
“This merger will give a very serious effect. I believe that the volumes at Nizhnekamskneftekhim, Kazanorgsintez are to double. This means jobs, incomes in the budget. We think petrochemistry for the Republic of Tatarstan is a growth point, and we will support these projects,” Tatarstan President Rustam Minnikhanov emphasised immediately after the signing.
Rustam Minnikhanov: “Petrochemistry for the Republic of Tatarstan is a growth point.” Photo: Moscow branch of TNV channel
“The union of our assets and professional teams will allow increasing the productivity of leading gas and petrochemical enterprises and significantly reinforce Russian petrochemistry’s positions in the global market,” Dmitry Konov expressed his hope. He also stressed that “TAIF and SIBUR have very dynamically developed in the last years. We understand that the government the country sees gas and petrochemistry as an important resource in implementing a number of national projects. By uniting our efforts we can do much more to increase non-commodity exports, the hydrocarbon feedstock conversion rate than both companies have done this today.”
Dmitry Konov: “The united company will reinforce Russia’s positions in the international market.” Photo: Arseny Favstritsky
“The union will allow TAIF Group to significantly accelerate the implementation of projects that are included in the Development Strategy through 2030 whose amount of investments will be over 1,5 trillion rubles in the next 10 years, boost the productivity of our enterprises, expand the assortment of commodities. By 2030, taxes are expected to significantly rise, including to the budget of the Republic of Tatarstan, to 50 billion rubles a year. And from now on we are certainly provided with target quality resources that we have lacked like the air all our life,” noted Albert Shigabutdinov.
SIBUR Board Chairman, Board Chairman of Novatek PJSC Leonid Mikhelson also stressed the readiness to increase the growth pace of the united company, he emphasised: “
SINGAPORE (ICIS)--China’s total distillates exports, including gasoline, gasoil and kerosene, are expected to fall by at least 19% this year due to steep cuts in its export quotas.
China issued the year’s second batch export quotas for 7.5m tonnes of distillates, a sharp decline of 73.24%, compared with last year’s second batch quotas, according to industry sources citing a document issued by the Ministry of Commerce (MOFCOM).
The sharp cuts in export quotas indicate a significant policy change because the Chinese central government had encouraged distillates exports over the past four years. (See Chart 1).
Due to the much reduced second batch quotas, the total distillates export quotas issued in this year’s first two batches amounted to 37m tonnes, down by 33.96% from last year’s first two batches, according to MOFCOM data. (See chart 2).
The second batch export quotas is typically released in late March or early April, but this year’s was issued only in early August.
The unusual delay and sharp cuts in the second batch quotas have led to speculations in the industry that the MOFCOM may not issue the third batch of export quotas this year.
If the third batch export quotas are not issued this year, China’s total distillates export in 2021 is estimated to be up to 37m tonnes, down by about 19% from last year’s total exports of 45.74m tonnes.
Chinese distillates exporters are estimated to have used up 94% or 27.73m tonnes of the first batch quotas, based on the January-June trade data from the China General Administration of Customs (GAC) and ICIS research.
Chinese exporters are estimated to have at least 9.27m tonnes of export quotas that can be used during August-December, ICIS data shows.
Chinese major exporter PetroChina suspended distillates exports in July as it used up its first batch export quotas in June, refinery sources said.
With the new quotas released, PetroChina’s subsidiary refineries will resume exports in August, but their export volumes may not be the same as their pre-July levels, due to the much reduced second batch quotas, refinery sources said.
Despite the cuts in distillates export quotas, Sinopec’s and PetroChina’s subsidiary refineries have no plans to reduce throughput for the rest of the year, as in the absence of instructions to do so, most of them are sticking to the original throughput plans set out early in the year.
As state-owned refiners have not announced plans to cut throughput amid the bearish distillates export outlook, there are concerns that the domestic distillates oversupply will worsen in latter part of the year.
However, the domestic distillates oversupply may ease due to a shortage of crude import quotas in the private independent refinery sector following the recent crackdown on crude import quotas trading, and a tightened blended gasoline and gasoil supply in China.
Output from standalone gasoline and gasoil blenders have fallen sharply since a consumption tax was imposed in June on imported blending components.
The restraints on crude import quotas and distillates export quotas are in line with China’s emission goals.
China has pledged to achieve peak carbon by 2030 and carbon neutrality by 2060.
MOFCOM has also issued a second batch export quotas for 3m tonnes of very low sulphur fuel oil (VLSFO), according to the document from the MOFCOM.
China has issued 11m tonnes of VLSFO export quotas to date, up by 10% from the total export quotas last year (see chart 3).
The increased VLSFO export quotas is in line with China’s ambition to develop itself into a major bunker fuel hub in Asia.
Analysis by Yu Yunfeng and Anita Yang
Ather Energy has gained a massive momentum in the recent past thanks to its own expansion plans, the incentives from the Indian Government in the form of revised FAME II subsidies, as well as the rising fuel costs pushing newer buyers more towards going green. We caught up with its CEO and co-founder Tarun Mehta and got to know quite some interesting insights on the company’s future plans. Here’s what he had to say about other aspects such as the revised FAME II subsidies, battery-swapping vs fast-charging technologies, charging standardisation and more:
Does the FAME II scheme affect Ather in terms of manufacturing costs?
Tarun says the FAME II subsidy is essentially a direct consumer subsidy. The company passes it on to the consumers, and it reduces the final price of the product (Ather 450X) by Rs 14,500.
Is the current design of FAME II enough for faster adoption?
Tarun says that the demand originating from the incentive is very strong, and it also solves supply chain issues indirectly (more about this in the coming paragraphs). Consumers are now beginning to understand what the price points are like. Citing an example, Tarun says the Ather 450 Plus easily competes with the TVS NTorq 125 or the Suzuki Burgman in terms of performance. He also says the 450 Plus now costs roughly the same as the on-road price of a good petrol-powered scooter. And on top of it, one will be saving Rs 1,500 - Rs 2,000 a month on petrol, not to mention being able to enjoy better features such as a touchscreen console, Google Maps-enhanced navigation and the like.
He says, “If you put all these together, what the subsidy has really done is, while the Total Cost Of Ownership (TCO) was always good for an electric scooter for the last couple of years, a lot of consumers would have to do some math… What the new subsidy has done is for the last set of customers, the TCO works out in six months, depending on the product that you want to buy… As we also expand the product portfolio, we’ll also have more and more attractive price points. But now those price points won’t just be attractive, they’ll be actually lower than a petrol scooter up front...”
Tarun also says the monetisation of Ather Grid is not on the priority list in the immediate future. The company’s bigger priority right now is to ensure the entire experience of riding the electric scooter is seamless. And to this end, Ather feels the feedback received from consumers regarding the Ather Grid is a lot more valuable than monetisation. Tarun also says that the company wouldn’t rule out extending the free plan beyond September 2021. Moreover, Ather has also been expanding to several cities lately. It will be present in over 20-25 cities by September-October, and then another 25-30 cities six months after.
What’s holding back customers in buying electric scooters: Price or range anxiety?
“Range anxiety is not the bottleneck at all.... Because even (the Ather e-scooter’s) true range is 85km, and people who have a serious challenge of 85-90km of true range are very few. I don’t think the market is losing out because of that. Price, I can understand… We’re not trying to make this an ‘everybody scooter’, so the rationale is pretty clear. I’m sure it could do with lower price points and the current subsidy helps us cater to more and more of the market…”
Tarun opines that expanding range even further would be a nice thing to do because it increases the subsidies as they are linked to battery capacity, but that alone won’t help expanding the market. “I think the primary thing holding people back outside of price would largely be home charging, and for a large chunk of the market it’s just the fact that they’re not early adopters.”
And Ather is still a new brand in the electric space. Customers are aware of big names such as Hero, Bajaj, but not Ather as much. So it’s pretty much down to whether a customer is an early adopter if they want to go for a new-age brand like Ather. Tarun says, “Realistically, a lot of the market falls not in the early-adopter category, which is why we see a lot of people super excited, they like everything but just sort of wait for a little while…. They want to see a friend of theirs get one before they jump in...”
But as far as electric vehicle adoption is concerned, things are certainly changing for the better, especially in the recent past. In fact, Ather Energy managed to tally Rs 10 crore worth of sales in July from its Indiranagar (Bengaluru) experience center alone, which, according to Ather, is twice that of dealerships selling petrol-powered scooters, that too with half the size!
ROME — Of all the alternative fuels touted as future solutions for cleaner warships, one of Europe’s shipyards is betting on cow manure.
“I see biofuels based on substances like agricultural biomass and food waste as the short-term alternative to fossil fuels for naval vessels,” said Massimo Debenedetti, vice president for research and innovation at Italian shipyard Fincantieri.
Debenedetti’s views are to be taken seriously since he oversees a series of studies that the company hopes will lead to greener naval vessels through cooperation with partner firms and its own experience with cruise ships. The company is also collaborating with the French government and industry, but above all the driving force comes from the Italian Navy — Fincantieri’s biggest military customer.
“The Italian Navy is very conscious of the need to reduce the use of fossil fuels, even if international regulations on cutting emissions only concern civil vessels,” Debenedetti said.
Biofuels are part of an ongoing study led by Fincantieri-owned propulsion firm Isotta Fraschini Motori, which aims to develop a marine engine that can use either traditional fuel, liquid natural gas, ammonia, hydrogen or biofuel.
“Apart from biomass and food waste, biofuels can derive from crops which are not fit for consumption,” Debenedetti said.
But ammonia — another possible alternative to fossil fuels — is the “toughest challenge,” he added. “When burned it produces energy, but storing it is hard and igniting it is hard.”
If biofuel has short-term potential, the longer-term challenge Fincantieri is working on is creating hydrogen-powered fuel cells for surface vessels that are similar to those used on submarines today.
“The technology is mature, but not ready for use on ships at the proper scale. Whereas you might need them to generate 100 kilowatts on a submarine, you will need tens of megawatts on a surface vessel,” Debenedetti said.
A three-year joint study launched last year by Fincantieri, France’s Naval Group and their joint venture Naviris, with funding from the French and Italian defense ministries, is exploring how fuel cells can be put onboard a warship.
“It comes down to making the system anti-shock and making it fit into limited space,” Debenedetti said. “Fuel cells take up more space than traditional propulsion, not least because of the hydrogen storage. And while on a passenger ship I might remove cabins to make room for it, I cannot on a naval vessel.”
Another study, this time with a eye on both the civilian maritime market and the defense sector, aims to progress Zeus, a program to build a 25-meter, 170-ton experimental ship to test fuel cell technology. Now under construction at Fincantieri’s Castellammare di Stabia yard near Naples, Zeus involves input from Isotta Fraschini Motori and is funded by Italy’s Economic Development Ministry.
Fincantieri believes its work on technologies for both the civil and military sector will give it an industrial advantage. “People working on both sides can swap information — the learning curve on the civil side benefits our defense work,” Debenedetti explained.
It is the same kind of synergy that saw Fincantieri use its work on passenger comfort onboard cruise ships to improve the lives of sailors on its FREMM warships — a factor that convinced the U.S. to buy the frigate.
Likewise, work to reduce noise and vibration on military vessels was used on cruise ships.
When it comes to lowering environmentally unfriendly emissions, the pressure is felt more in the civil sector, where the European Union is pushing member states to go green.
On July 26, Fincantieri, energy company Snam and cruise ship-operator MSC signed a memorandum of understanding to jointly build a zero-emission, hydrogen-powered cruise ship.
“It could be achievable by the start of the next decade, probably using fuel cells which are more efficient although more expensive and larger than a hydrogen internal combustion engine,” Debenedetti said.
Another alternative to fossil fuels, liquid natural gas is already a mature technology for cargo ships, he said, “but refueling is the issue: In the Mediterranean, the only port with LNG refueling is Barcelona.”
Even if military ships don’t face regulatory pressure to reduce fuel consumption, there is a real need to use power sparingly, as new radars and laser weapons suck up enormous amounts of energy onboard.
That has prompted another study, this time funded by the Italian Defence Ministry, to look into the use of direct current electricity onboard ships, as opposed to the more usual alternating current.
Amara Raja Batteries Limited is eyeing acquisitions in the new energy area and exploring setting up overseas facility and possible buyout in it’s lead acid battery business.
Even as it awaits the outcome of the ₹18,100-crore Performance Linked Incentive scheme for Advanced Cell Chemistry batteries, which will pave way for its proposed $1-billion investment in a Gigafactory, it is scouting for more strategic investments in the start up space in the lithium ion and related areas, according to its management.
On a day it invested $5 million into Log 9 Materials, a Bengaluru-based advanced battery start up, where other investors pumped in $3.5 million, the company said it is looking out for more buyouts as start-ups are lot more nimble.
Vikramadithya Gourineni, Executive Director, ARBL, said “Our investment is in line with our plans to invest in cutting-edge technologies to accelerate its evolution towards becoming an 'Energy & Mobility' enterprise. This will mark the first in a series of interesting developments that we plan to execute in the future.”
“We are keenly watching the progress of the PLI scheme and expect its outcome later this fiscal. This will enable us to develop on our plans of an investment of $1 billion over 10 years. In the meantime, we are looking at more strategic investments in start ups in related areas,” he said.
Harshavardhana Gourineni, ED, ARBL, said “As we grow our lead acid battery business, we plan to increase exports to markets like South East Asia, Middle East, Africa and other markets. Last year, we exported about 3 million batteries and exports accounted for about 12 per cent of the business. We are looking at stepping this up to over 6-8 million.”
“In order to step up exports, we may have to build a new plant in other markets or even buyout existing companies to grow the market there due to local duties and taxes. We are exploring buyouts, even though nothing has been finalised as yet,” he explained.
AP issue
Asked about the recent AP Pollution Control Board notices, a senior company executive said: “the company is taking all necessary steps to address various issues relating to the plants. The matter is sub-judice and we would not like to comment on it at this point.”
ARBL as an anchor investor made an investment of $5 million for over 11 per cent stake as a part of it’s strategy to focus on entering into new green tech, battteries and fuel cell technologies.
Log 9 addresses the challenge of range anxiety and issues relating to fast charge through Rapid Charging Battery Packs.
Akshay Singhal, Founder & CEO, Log 9 Materials, said, "The partnership with ARBL will enable us to propel commercialisation at scale of our Rapid Charging Batteries, which in turn shall play a major role in the future for Log 9 in advanced cell chemistries.”
Log 9 has secured funding from existing investors including Exfinity Ventures and Sequoia Capital.
These funds will be utilized to expand production capacity and business development efforts of Log 9's Rapid Charging Battery technology.
The start-up plans to set up cell manufacturing under the niche category of ACC PLI scheme.
Energy is woven into the fabric of modern geopolitics. The oligopolistic stranglehold OPEC nations enjoyed over global energy supply was made clear in the 1970s when embargoes almost brought the West to its knees. Today, the United States and its allies continue to indulge Saudi Arabia, Qatar and other OPEC members despite divergences on human rights, democracy and support for extremists. For OPEC+ leader Russia, the transit of gas provides a weapon against neighboring Ukraine, while the controversial Nord Stream 2 pipeline to Germany allows Moscow to divide and conquer Europe.
The geopolitical leverage derived from hydrocarbon exports is motivating the development of alternative energy resources among the world’s heaviest energy consumers. After the first oil embargo, France built a formidable nuclear reactor fleet to maximize its energy autonomy. As wind and solar power each nears cost parity with traditional sources, fuel importers have new opportunities to wean themselves off foreign hydrocarbon dependence.
But the transition to renewables, if poorly managed, may not be as conducive to energy independence as policymakers might hope. Alternative energy resources, as well as technical know-how and industrial inputs, obey the same established geopolitical logic. As the transition gathers pace, beware the advent of green geopolitics.
A recent book, “The Prologue: The Alternative Energy Megatrend in the Age of Great Power Competition,” by Dr. Alexander Mirtchev describes how an alternative energy “megatrend” — a confluence of interconnected trends transforming the global zeitgeist — is revolutionizing international relations.
With climate concerns, economic motives and energy security imperatives fashioning the megatrend, professor Mirtchev details a “green gold rush” as nations race to control renewable resources.
The unequal distribution of solar and wind power — and advances in cross-border power transmission — will entail uneven energy trade. British Prime Minister Boris Johnson’s pledge to make Britain the “Saudi Arabia of wind” implies significant export potential, while European Union plans to develop North African solar, wind and hydrogen power for European consumption could recreate the patron-client relations currently experienced by weaker fossil fuel suppliers. Other alternative energy resources could precipitate conflict: Ethiopia’s building of a hydroelectric dam risks Egyptian military intervention if downstream water flow is curtailed.
In the United States, a vast and varied geography, combining a sun-drenched Southwest with a wind-swept northeast coast, seems to make energy independence a simpler proposition. Estimates suggest the U.S. could easily meet its total electricity demand through wind and solar alone. Yet harvesting wind and solar energy requires turbines and solar panels built with rare earth elements — a group of metals used to create permanent magnets — which are also needed for portable electronics, electric vehicles and even advanced military hardware.
Sections of pipe lie at a pipe depot for construction of the Eugal gas pipeline on March 26, 2019, near Wrangelsburg, Germany. The pipeline is meant to transport natural gas arriving from Russia through the Nord Stream 2 pipeline. (Sean Gallup/Getty Images)
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The metals’ rarity is a misnomer; they are abundant within Earth’s crust. Yet, extracting them is costly and exacts a steep environmental toll. While the U.S. once mined its own rare earths, environmental neglect as well as low and subsidized production costs helped China conquer about 85 percent of the global market for rare earth oxides by 2019. Beijing’s dominance became clear in 2010 when a maritime dispute with Tokyo prompted a rare earths embargo, stifling Japan’s technology-intensive economy.
According to Mirtchev, the Sino-Japanese rare earths dispute presages increasing great power competition over critical green technology components.
Diversification of rare earth supplies has become a priority outside China. The U.S., the EU, Japan, Canada and Australia have drafted critical materials lists, all of which include rare earths. North America and Australia have ample deposits, but capital-intensive extraction may fall victim to Chinese price fixing, whereby markets are flooded with below-cost supply to bankrupt competing miners.
The U.S. Department of Defense has countered by pumping tens of millions of dollars into domestic rare earth production. Meanwhile, the State Department launched an Energy Resource Governance Initiative supporting extraction elsewhere. The Biden administration is reviewing America’s supply chain security, which includes reliable and affordable access to inputs vital to national security.
Solar power shares the same issue. Nearly four-fifths of the panels installed in the U.S. come from Chinese companies. Beijing subsidizes the industry heavily, and costs may be kept low in some cases through forced labor in Xinjiang — little wonder the United States’ own subsidized suppliers, like ill-fated Solyndra, find it difficult to compete.
Today, using a stick rather than former President Barack Obama’s carrot, the Biden administration has sanctioned Chinese firms linked to forced labor, a clear move of green economic statecraft.
A view of the headgear at the rare earth mind Steenkampskraal on July 29, 2019, about 80 kilometers from the Western Cape town of Vanrhynsdorp, South Africa. (Rodger Bosch/AFP via Getty Images)
In this alternative energy race, technology — like natural resources — is part of the game. Innovation is key to making the transition work; for solar and wind to fulfill their energy independence promise, reducing intermittency is crucial.
Advances in battery technology are required for storing excess power generated during periods of intense sun and wind. The country delivering these breakthroughs could control the grid-scale battery market.
As Mirtchev noted, technology is a vital component of green great power competition. In this megatrend, the intersection of geopolitics, economy and innovation creates a world where everything is a security matter.
In this universally securitized world, cooperative policies among democracies are desperately needed. Australia and Canada seek partnership with the U.S. on alternative mineral supply chains, while the U.S. kills the Keystone XL pipeline vital for Canadian oil exports.
In the North Sea, Britain, Norway and Denmark are integrating hydro and offshore wind transmission to create viable alternative power markets. Similarly, Western research should be collaboratively scaled up to compete with China.
Will collaboration prevail? The G-7 summit produced plenty of talk, including of a green rival to China’s Belt and Road Initiative, but relations among Western countries remain strained. The EU and the U.K. are in an uneasy “Sausage War” cease-fire, and American allies doubt if Washington can be trusted again.
Though former President Donald Trump’s “America First” policy has been softened to Biden’s “Buy American” version, in the post-pandemic “green recovery” and energy transition, every nation remains for itself.
As such, as Dr. Mirtchev warned, a fractured West could remain at the mercy of a politically minded energy cartel — only this time from China. We have yet to see how the green energy megatrend will unfold, but the geostrategic pieces are already ominously in motion.
Bluejay Mining has signed a joint venture (JV) agreement with mineral exploration firm KoBold Metals for the Disko-Nuussuaq project in Greenland.
The agreement will allow KoBold, which is backed by billionaires Bill Gates and Jeff Bezos, to earn a 51% stake in the Disko-Nuussuaq nickel, copper, cobalt, platinum magmatic large-scale sulphide project through a two-stage earn-in.
Under stage one, KoBold will utilise its technology for the advanced geological and geophysical evaluation of Disko-Nuussuaq for refining drill targets.
By the end of next year, the company will solely fund $3.4m for the implementation of stage one.
The second stage involves KoBold either solely funding $11.6m in drilling expenditure or 15 pre-agreed holes within the licence area by the end of 2024.
KoBold CEO Kurt House said: “The Disko region has seen the rare convergence of events in Earth’s history that could have resulted in forming a world-class battery metal deposit.
“KoBold’s technology is perfectly suited to discovering new resources at Disko. Our proprietary library of analytical tools, Machine Prospector, will enable effective deployment of exploration capital and maximise our chances of discovery at Disko-Nuussuaq.”
Bluejay would maintain a 49% stake in the project by funding its pro-rata commitment after the completion of stage two.
Bluejay CEO Bo Stensgaard said: “Disko is a project with great potential for the discovery of globally significant deposits of battery metals. It is, however, this scale that necessitated a financially and technically strong partner to develop Disko.”
Hosted within the West Greenland Tertiary Igneous Province, the Disko Project holds several licences with a total area of 2,897km².
KoBold is engaged in discovering and developing new ethical sources of the critical materials needed for electric vehicles.
The firm’s other investors include Silicon Valley venture capital firm Andreessen Horowitz, and Norwegian energy firm Equinor.
https://www.mining-technology.com/news/bluejay-kobold-critical-metals-jv/
On May 19, 2021, the US Environmental Protection Agency (EPA) announced1 that it had issued the final Clean Air Act Outer Continental Shelf air quality permit to Vineyard Wind 1, LLC. As described in the announcement:
[t]he permit includes air pollution control requirements for the construction and operation of the 800-MW windfarm. By issuing this permit, construction can now begin on the nation's first major offshore wind project, which will be in federal waters off the coast of Massachusetts. The permit regulates pollutants from "Outer Continental Shelf (OCS) sources," such as jack-up barges that will construct each wind turbine and the electrical service platforms. Additionally, emissions associated with air-emitting devices used during the operation of the windfarm . . . are also regulated.
Although the EPA's issuance of the permit further evinces the Biden administration's commitment to facilitating the deployment of offshore wind (OSW) projects, it is also a reminder to the developers, investors, sponsors and financing parties waiting in the wings of the multi-layered approval process that lies ahead for similar OSW projects.2
The focus of the permitting discussion for OSW has rightly been on the US Department of the Interior (DOI) and, specifically, the Bureau of Ocean Energy Management (BOEM) within DOI. BOEM has by statute—specifically the Outer Continental Shelf Lands Act of 1953 as modified by the Energy Policy Act of 2005 to include OSW—been given the authority to regulate the development of OSW in federal waters. Most notably, BOEM controls the federal leasing process for offshore wind.3 In its lead-agency role, it was BOEM who issued the record of decision and approval for the Vineyard Wind Project to move forward, earlier in May of this year.4
Notwithstanding the primary role of BOEM in the overall OSW permitting and approval process, even within DOI there are additional regulatory bodies with jurisdiction over the development and operation of commercial OSW projects. The Bureau of Safety and Environmental Enforcement (BSEE) is a sister agency of BOEM within DOI that is also tasked with regulating offshore wind. As set forth in a memorandum of understanding between the sub-agencies and, more recently, a memorandum of agreement, while BOEM has more general jurisdiction over offshore development and leasing, BSEE is responsible for and shall provide support and coordination to BOEM regarding safety and technical matters such as "engineering standards and regulations . . . inspections, enforcement, and investigations related to OCS mineral resource development activities."5 Of note, the Biden administration's recent budget proposal includes significant ()$250MM) funding for BSEE—inclusive of ~$9MM earmarked for increased activities related to the regulation in the offshore wind space.6
Another agency within DOI with jurisdiction over certain aspects of OSW development and operation is the US Fish and Wildlife Service (USFWS). Similar to onshore wind development, stakeholders in offshore wind projects will need to be mindful of, among other things, species matters under the purview of the USFWS.
Moving beyond DOI, within the Department of Transportation, the Federal Aviation Administration has jurisdiction over commercial OSW—similar to onshore wind projects—with respect to evaluating potential hazards to air navigation. Within the Department of Commerce, the National Oceanic Atmospheric Administration (NOAA) has jurisdiction over certain matters related to offshore wind development and operation pursuant to the Coastal Zone Management Act of 1972 and the Endangered Species Act of 1973. Under the latter's statutory authority, the National Marine Fisheries Service (an agency within NOAA) is charged with preparing a biological opinion with respect to a biological evaluation that must be prepared by BOEM for any offshore wind project that may affect listed species or their critical habitat. Within the Department of Defense, the US Army Corp of Engineers (USACE) and US Coast Guard (USCG) similarly have several touchpoints for OSW projects. These include regulatory authority conveyed to USACE and USCG pursuant to the Rivers and Harbor Act of 1899 and the Ports and Waterways Safety Act of 1972, respectively.
The foregoing is just an overview of part of the federal regulatory landscape for OSW projects—of course, regional, state and local permitting and approvals will also come into play, for example, related to onshore transmission interconnection and other facilities and any public utility commission matters.7
Boris Johnson has insisted that taking action to tackle climate now is far cheaper' amid claims his green drive will hit poorer Britons in the pocket.
The Prime Minister used a social video video last night to back his targets - including making the UK 'net zero' in terms of emissions by 2050.
Critics have warned that that target could cost £1.4trillion and a senior minister admitted yesterday that families will bear some of the cost.
Among the plans in place are banning the sale of new petrol and diesel cars from 2030 and scrapping gas boilers in just four years' time.
It came after a new UN climate report painted a bleak picture of the future without immediate action.
In the video, Mr Johnson said: 'It's far cheaper and more effective to act now to avoid incalculable (environmental) damage in the future, and economic (damage) as well.
'Here in the UK we have proved we can do it, we have halved emissions in the last three decades, even though our country has grown much richer.'
It came as it was revealed ministers are examining the idea of a £4,000 'clean heat grant' that would help pay for new green boilers from next April.
The Prime Minister used a social video video last night to back his targets - including making the UK 'net zero' in terms of emissions by 2050.
It came after a new UN climate report painted a bleak picture of the future without immediate action. Pictured are people fighting forest fires in Greece this week.
How much will new green projects cost Britons? Boris Johnson's green projects could end up costing Britain's households more than £28,000 each over the coming decade if they are fully implemented. The Prime Minister is considering a range of eco-friendly policies during his tenure such as a ban on new fossil-fuelled cars including hybrids by 2033. £15,000 : Extra average cost of buying a new electric vehicle is £44,000 compared to £29,000 for a new medium-sized car
: Extra average cost of buying a new electric vehicle is £44,000 compared to £29,000 for a new medium-sized car £10,500 : Extra cost of energy efficiency measures, such as improving insulation and installing low carbon boilers. A new gas-fired boiler costs about £1,500 with installation, compared to up to £11,000 for an air source heat pump
: Extra cost of energy efficiency measures, such as improving insulation and installing low carbon boilers. A new gas-fired boiler costs about £1,500 with installation, compared to up to £11,000 for an air source heat pump £2,400 : How much a 'snack tax' would cost the average family of four over a decade if implemented - which is £60 per person per year
: How much a 'snack tax' would cost the average family of four over a decade if implemented - which is £60 per person per year £200 : Average bill for new light fittings after the ban on sales of halogen bulbs from September, with an average of 4.4 new fittings each.
: Average bill for new light fittings after the ban on sales of halogen bulbs from September, with an average of 4.4 new fittings each. TOTAL: £28,100
The Telegraph said it was among options being considered, which include new taxes.
Mr Johnson set out four main areas to focus on:
Coal - outlawed entirely for power generation by 2040
Cars - outlawing fossil fuels for transport
Cash - Richer nations like Britain, often the higher emitters, committing money to clean up the planet tot he tune of $100billion a year.
Trees - Restore the natural habitat and end 'the massacre of the forests'
The pledge has caused fury in Tory circles, with MPs warning that the additional costs will hit lower earners in the Conservative-voting Red Wall. It has also reportedly led to clashes between the Prime Minister and his Chancellor Rishi Sunak.
Kent MP Craig Mackinlay has launched a group to to push back at plans he argues could be could 'completely kill us off politically'.
He and others argue they will hit poorer voters in former 'Red Wall' areas who voted Conservative for the first time in 2019.
Business Secretary Kwasi Kwarteng said last night ministers 'want to try and help people make that transition' when asked about the expense to consumers of scrapping gas boilers.
Yesterday a major UN climate report put huge pressure on Governments to take more action to cut emissions in the run up to international Cop26 climate talks in Glasgow in November.
The study, which focuses on the physical science of climate change, forms the first part of the IPCC's sixth assessment report, and is even clearer on the impact humans are having on the planet than the last such analysis in 2013.
It draws on more than 14,000 scientific papers to reach its conclusions and has found it is 'unequivocal' that human activity is warming the world.
Rapid and widespread changes to the land, atmosphere and oceans have occurred - from temperature increases to sea level rises - that are unprecedented for many centuries or even many thousands of years.
The report makes clear that human-caused climate change, which has pushed up global temperatures by 1.1C, is driving weather and climate extremes in every region across the world.
There are already more frequent and intense heatwaves and heavy rainstorms in many places, including northern Europe, as well as droughts and cyclones.
A new group is being set up by Kent MP Craig Mackinlay to push back at plans to outlaw sales of new petrol and diesel cars and replace gas boilers within the next 20 years. Chancellor Rishi Sunak (left) is said to be looking at ways to ease the pressure on poorer families of the transition.
Humans are also very likely the main driver in the global retreat of glaciers, declines in Arctic sea ice, and rising sea levels.
Sea level rises are speeding up, with the oceans rising by 3.7mm (0.15 inches) a year in recent years, and are set to continue to rise this century whether emissions remain high or fall dramatically.
Changes to oceans, sea levels and melting permafrost and glaciers are irreversible for decades, centuries or even millennia as a result of past and future warming.
And cities are at particular risk as the climate warms, experiencing hotter temperatures in heatwaves and flash flooding from heavy rain.
The study also warns that unlikely events such ice sheet collapses, abrupt changes to ocean circulation - which drives weather patterns - and much higher warming cannot be ruled out.
But the report, which assesses the potential impact of a range of five future scenarios from very low emissions to very high pollution, highlights the impacts of the choices the world makes now.
Temperature rises have a good chance of remaining below 1.5C in the long term if carbon emissions are cut to net zero by 2050, followed by efforts to take more carbon dioxide out of the air than is put into the atmosphere, along with deep cuts to other greenhouse gases.
Cutting methane - produced by oil and gas drilling and agriculture, particularly livestock farming - could help curb rising temperatures, as well as improving air quality, the report said.
But scientists who worked on the report said current pledges of action on emissions put the world on a pathway that could lead to 2.7C of warming by the late 21st century - or higher if the pledges were not delivered on.
Sea levels would rise by around 28-55cm (11-22 inches) by 2100 in a very low emissions scenario, but by significantly more if emissions stayed high.
Every additional 0.5C temperature rise leads to clear increases in the intensity of heatwaves, rainstorms and flooding, and droughts in some regions.
There’s a £16 trillion problem that’s been keeping central bankers past and present up at night: “stranded assets”. It’s one made all the more stark by the UN’s Intergovernmental Panel on Climate Change (IPCC) warning on Monday that time’s nearly up if the world’s to avoid extreme climate crisis.
Investment in fossil fuels has made the world more polluted. Now the world’s biggest money managers are trying to work out how investments can help mitigate and limit the impact of climate change. Quantifying and tackling the issue of stranded assets are a big part of that calculation, and so is working out what actually makes an investment meaningfully “green”.
These are assets which, depending on the course of climate policy, could end of up either being valueless, such as oil, which might never be allowed to be extracted, or curtailed, such as a gas power station that might have its energy production life cut short.
Stranded asset is a term used to describe something which has a value tied to fossil fuels but it can also refer to something which is considered ethically unacceptable for other reasons, such as shares in a company, or bonds from a regime linked to human right abuses.
A report from Swiss bank UBS cites analysts’ belief that as much as 80 per cent of oil and gas reserves might end up stranded. The former governor of the Bank of England and finance adviser Mark Carney has also warned that these assets could pose a risk to financial stability if companies and funds don’t divest from fossil fuels at pace.
Pressure is building to try to reach an agreement on issues like investing in coal and wider investment in fossil fuel, ahead of the Cop26 climate summit. The UK is hosting the global meeting in autumn, but so far it’s struggled to get enough support from other parties to sign up to initiatives such as the Powering Past Coal Alliance Finance Principles. At the G20, the US and Japan blocked efforts to set a specific date for phasing out coal use.
A UK Treasury spokesperson told The Independent that the government is “committed to the UK being the best place in the world for green and sustainable investment and was the first country in the world to commit to fully mandatory reporting by businesses across the economy on the financial risks posed by climate change.”
Still, if a loan for an oil field that is subsequently shut down offers a clear-cut example of a stranded asset to be avoided, the wider picture of what constitutes dirty versus green investment is more complicated.
That’s in part down to the role investment can play in moving brown companies – which have some stranded assets within their activities – towards the greener end of the spectrum. That role is gathering attention ahead of Cop26.
Holding a pension, insurance product or a savings account could in some manner expose a person to the risk of stranded assets. At a grander level, for money managers who hold billions, if not trillions, of dollars in order to generate returns for their clients, stranded assets are also a growing concern. Even just personal investments like an exchange traded fund, which is linked to an index, such as the FTSE 100, would include exposure to companies which may hold stranded assets as part of their activities.
The question of how to handle them is neither as easy nor clear cut as it might seem. While there are some straightforward examples of stranded assets, these are often only part of hybrid or transitioning companies that might be in the process of cleaning up their operations.
Even if businesses are producing oil at the moment, there can be a difference between producing the oil necessary to keep the lights on today, versus the oil of a decade from now, via fresh extraction of oil and gas.
While the world reeled from the IPCC’s “code red for humanity” warning, oil companies have continued to report strong profits. And at present, when interest rates are low, it’s very hard for investors to generate a return on their money. That’s not great news if you’re trying to build up the cash in a pension fund, for example.
Exxon Mobil reported its biggest quarterly profit in more than a year last month and Saudi Aramco’s profits have jumped by almost four times in its latest set of results, as they ride the recovery in oil prices. Major economies have returned to guzzling fuels as Covid-19 restrictions have eased bumping up oil prices. This kind of stock and profit performance can be a great way for investors to generate cash.
Tackling stranded assets, or companies exposed to them, can be done in a range of ways. One option for cleaning up companies is, if they are listed, to back activist investment that seeks to force companies to report on why they are not transitioning away from fossil fuels. Asset manager Allianz Global Investors (AllianzGI) did this when an activist investor was recently trying to reshape the board of Exxon Mobil. It’s a method known as “stewardship”.
AllianzGI, which has around £500bn in assets under management, tries to take a nuanced approach: it holds back from investing in companies that get more than 30 per cent of their revenue from coal. This has placed coal in a similar bucket to makers of anti-personnel mines, cluster munitions, biological weapons and chemical weapons under AllianzGI’s “exclusion” policies.
Meanwhile, the European Union is trying to push investors towards green investment by requiring more detailed reporting by companies which sell financial products. The rules (sustainability-related disclosures in the financial services sector), which came into force in March, aim to better illustrate the sustainability risks that an investment might involve. The UK has introduced similar extra reporting requirements.
But these new rules miss out the sort of engagement activity that AllianzGI supported with activist investors, according to Mark Wade, head of sustainability research and stewardship at the asset management firm.
“Sustainable investing is really about getting to that middle point where you can finance transition,” Mr Wade says. Having investments in a company can be a way to push them from a focus on stranded assets towards cleaner activities. Companies will need to go green to maintain their licences to operate, he explains, and they need investors’ money to do that. It’s a “co-dependent” relationship.
Governments and investors are racing against time to strike a balance between job losses and financial losses, if companies don’t move from brown to green quickly enough. But if you want the biggest bang for your sustainability buck, some investors believe you should invest in companies that are dirty yet can be pushed towards greener activities.
Clumsy government regulation might not do that job so well, however. If it’s too sudden, and too fast, public companies might go private, with lower thresholds for reporting on their ties to polluting activities. If governments go further still, aiming for drastic or overnight attempts to stop most polluting activity, they will need a clear plan for millions of people left suddenly without work and potential shocks to the financial system as a whole.
The City of London Corporation, which governs the UK capital’s financial district, has tried to lead by example. It’s aiming for its operation to reach net zero by 2027, but to make its financial portfolio net zero by 2040. Its audit and risk committee put the imperative in simple terms: “Not meeting our 2027 target is primarily a reputational impact whereas not meeting our 2040 target could result in a financial impact.”
Speaking anonymously because they aren’t allowed to speak publicly, a senior manager at one of the EU’s largest asset management firms says “that’s about right for all of us”, in reference to any investment that’s dependent on fossil fuels. A fund manager at one of the world’s largest asset managers in the US puts it differently: “We’re burned in any which way you want to think of it if we don’t kill fossil fuels by then.”
Investors don’t think Cop26 will fix the stranded asset problem, however, even with the IPCC report’s severe warnings. Instead, they believe the best that can be achieved is some closer alignment on what a green investment actually means, putting a squeeze on vague definitions which amount to very little impact, branded “greenwashing”.
“The lowest hanging fruit would be the standards”, says Mr Wade, so a green investment in Europe, the US or Asia has “some degree of comparability”.
Keeping fossil fuels in the ground will only happen at a quick enough pace to avoid catastrophic global warming if that’s achieved, investors say. That’s because, according to the same US money manager quoted above, there will be “a carrot for transition, as well as getting stranded with the s*** sticks”.
The aim of the energy transition is to move the world to a cleaner, more sustainable future, but the minerals required to produce electric cars, wind turbines and other new energy technologies raise some difficult questions.
While politicians and businesses talk about a greener economy, increasing amounts of minerals are extracted. Mines produced 17.7bn tonnes (t) of minerals in 2018, up from 11.3bn in 2000 and 9.6bn in 1985, shows data from the Austrian government’s latest world mining report.
Mineral requirements are also set to become more complicated as the world attempts to ditch fossil fuels. An average electric vehicle (EV) requires six times the amount of minerals as a conventional car, reports the International Energy Agency (IEA), including materials like nickel, cobalt and lithium that a petrol vehicle typically does not need. An onshore wind plant, meanwhile, needs nine times more mineral resources than a gas-fired plant. The World Bank estimates that demand for metals could increase ten-fold by 2050.
Some minerals are already seeing spikes in demand. Global production of lithium shot up from 18,000t in 2009 to 86,000t in 2019, shows data from the US Geological Survey (USG). By 2030, global EV demands will require a massive 2,700 gigawatt-hours-worth of lithium-ion batteries a year – around 13 times the amount required today, report analysts from Swiss investment bank UBS. The overall lithium market will have grown eight-fold by that same year.
A Tesla Basic Model 3 contains about 10kg of lithium in its battery cells. The 86,000t of lithium mined in 2019 is equivalent to 8.6 million cars, but there are 1.4 billion cars on the road globally, and the IEA’s Net Zero 2050 Roadmap anticipates that 20% of cars will be electric by 2030, and 86% by 2050.
To meet this demand, the world will need to massively step up lithium production. There is no shortage of lithium in the Earth’s crust. In 2020, 86 million tonnes of lithium resources were identified, equivalent to the needs of 8.6 billion cars, reports the UGS. However, converting reserves into usable metal is not simple. Opening mines is an expensive, time-intensive process. It takes 16.5 years on average to move mining projects from discovery to first production, estimates the IEA.
A crash in lithium prices between 2018 and 2019 also severely damaged investor confidence, say commodities experts S&P Global Platts, slowing investment in new mining capacity.
“At current production levels for key battery metals – namely lithium, cobalt and nickel sulphate – the market is headed towards a supply deficit as soon as 2025,” says Scott Yarham, battery metals team lead at Platts. However, prices and investment are already picking back up. “Positive prices have reinstalled confidence, resulting in investments in Q1 [2021] dwarfing the total seen for the whole of last year,” says Yarham.
Plenty of minerals
It can be easy to look at the scale of mineral requirements for the energy transition and take fright. However, evidence suggests it is highly unlikely the world will run out of any mineral.
As long as commodities have been traded, analysts have underestimated the size of reserves. “People in the industry are not worried about minerals running out,” says David Bo, a Beijing-based author, resources expert and director at the Fujian Province-based Zijin Mining Group. “The commodity business is cyclic. Mines open and close and ramp up or slow down production depending on prices. Demand and supply never perfectly match or they always mismatch. That is the reason there is volatility in pretty much the price of every commodity, but that does not mean we are running out of supplies.”
As demand for minerals grows, so do efforts to try and source more of them and bring them to market. This means that known reserves tend to increase as demand increases. The USG said in 1930 that there were around 80 million tonnes of copper in known reserves, but by 1980, this had grown to 350 million tonnes, and by 2020 the figure was at 870 million tonnes.
Nevertheless, “there will be bottlenecks, as with all rapidly growing sources of demand”, says Kingsmill Bond from think tank the Carbon Tracker Initiative. “[But] prices will go up. And supply will be built. And the bottleneck will be solved.”
Recent analysis from Carbon Tracker’s Kingsmill Bond highlights how, while some analysts fret about the mineral requirements for renewables, the 6.5 tonnes of minerals needed to build 1MW of solar capacity will last for decades, and produce an estimated 40,000 megawatt-hours (MWh) of electricity. By contrast, coal power requires 350kg of coal to generate one MWh. In all, Bond estimates the fossil fuel system requires 300 times more mineral material to function than a renewables system.
Drivers of electric cars are told they are in the vanguard of the biggest transport revolution since the invention of the horseless carriage at the end of the 19th century.
Not only are electric cars a powerful weapon in the fight against climate change but their soaring sales are changing global politics. The strategic importance of the Middle East oil states and the economic might of multi-national oil companies are waning as the rapid development of battery power becomes the key technological and resources battleground. As the Western world scrambles to keep pace with the development and wider geopolitical implications of electric vehicles, China has stolen a big lead.
It dominates both manufacture of batteries and the production of the one element without which no electric cars could move an inch - the lithium that is the irreplaceable component of battery cells. Indeed, the global competition for lithium is being called the ‘new oil rush’. It’s a race in which China leads and Britain lags on the starting grid, looking desperately short of power.
The rise of China to become world’s biggest market for electric vehicles went unnoticed in the West for a very long time. In 2008, the Toyota Prius and the first Tesla models grabbed all the attention in the global media. The odds on the largest electric vehicle market in the next decade were strongly in favour of the US or Japan. But today, China has more than five million electric cars - almost as many as the EU and the USA combined - and, in less than a decade, Beijing has constructed an end-to-end, inter-connected electric vehicle industry. To power the battery boom, China needed a lot of lithium - the lightest known metal and already used in mobile phones and laptops.
In the early stages of the development of its battery industry, the country relied on its vast interior for its needs. The north Western Chinese province of Xinjiang has become infamous for its Uighur ‘re-education’ centres and high level of state surveillance. The area, though, has hidden treasure. Beneath the ground lie huge reserves of oil and minerals, such as lithium ore. Pre-industrialised China had little use for lithium and it was only in 1958 that its first lithium factory was opened in Xinjiang to process ore into added-value products to be used in electronics, nuclear power stations and weapons.
As a result, state-owned mines and processing facilities opened in large numbers and China set up two of the world’s major lithium producers (Ganfeng Lithium, based in Jiangxi, and Tianqi Lithium, based in Sichuan) which, between them, now control a large part of the global market share. But in recent years even China’s vast mineral resources were unable to produce enough ore to supply the needs of its battery industry. So it started to look to lithium assets abroad. Australia is a major producer of lithium ore, with seven huge mines producing 240,000 tonnes a year, all of which is now exported to China for refining.
By far the biggest is Greenbushes, producing more than 100,000 tonnes of lithium concentrate a year. It is 51 per cent owned by Tianqi Lithium, whose Chinese founder Jiang Weiping is worth around £1.3 billion. Ganfeng Lithium, meanwhile, owns stakes in Australia’s second and third largest lithium mines. Even more important to Tianqi, perhaps, is a 23 per cent stake in SQM, one of the world’s largest lithium companies and which is the dominant producer in South America’s so-called Lithium Triangle. These are salt flats in the high arid plains of the Andes, on the borders of Bolivia, Argentina and Chile, which hold the world’s biggest deposits of lithium.
The richness of its deposits has led to Chile being called the ‘Saudi Arabia of Lithium’, but, actually, neighbouring Bolivia has greater reserves - though it is yet to fully exploit them. China’s bet that electric vehicles would be the future of transport paid off. Beijing was prepared to use the full apparatus of state central planning to become the dominant player - with huge state aid programmes and cheap loans to make acquisitions abroad. And so, just as the American version of capitalism - characterised by individual initiative and a free market - left its footprint on the oil industry in the 19th and 20th centuries, so the new Asian economic model - collective effort and priorities dictated from the top—is leaving its mark on the battery and lithium industry.
Pilot schemes to encourage electric vehicle ownership were introduced in cities and there were big subsidies on electric cars. These quickly helped popularise electric cars and built on the fact that electric bikes had been a common means of transport since the 1960s. Meanwhile, in the US and Europe, electric vehicles remained a preserve of the well-off and the upper-, eco-minded middle-classes. Mastery of battery technology was key to producing competitive cars, since this is what determines a vehicle’s mileage range, speed of charging, acceleration and safety. But as the story of electric vehicles in China started with bikes, so the story of batteries began with the affordable batteries that allowed mobile phones to become everyday items. In the early 2000s, rechargeable electronic gadgets in China would not work without Japanese batteries. Chinese companies had neither the know-how nor capital to get started in the battery industry. Lithium ion batteries are seen on a production line inside a factory in Dongguan, China, in 2018
It was a visionary from Anhui province who saw the way forward. Against all odds, Wang Chuanfu decided to enter the battery industry, naming his new company BYD—Build Your Dreams - with a production line of people instead of the Japan’s expensive robots. His batteries were a third of the price of Japanese equivalents and immediately sold well.
BYD’s labour practices in its early days might seem reminiscent of the darker side of England’s Industrial Revolution but Wang is now a hero in China as one of the fathers of the new-energy revolution. BYD is a multi-billion-dollar company and the legendary US investor Warren Buffet is a major shareholder. Its success has been based on its ability to transform itself from its humble beginnings as a cottage producer of phone batteries into one of the top three car-makers in China. Vitally, BYD’s managers also realised that lithium-ion batteries were crucial to the success of selling electric cars. Knowing nothing about car manufacture, they cleverly acquired the state-owned Tsinchuan Automobile Company in 2003 and within ten years, more than half its revenues came from car sales. BYD’s most successful model had a 186-mile driving range and with government subsidies, it could be bought for half price. Such state help demonstrates just how much financial support the Chinese government is willing to offer the electric car industry. Meanwhile, other Chinese firms were revving up.
The state-owned company Tianjin Lishen Battery did what many private entrepreneurs could not dream of: it bought a cutting-edge battery assembly line from Japan and, just a few years later was developing partnerships for its high quality products with Motorola and Philips. People often think of billionaire US tycoon Elon Musk’s Tesla as the trailblazer for electric cars. True, it is an innovative company, doing for the industry what Apple has done for smartphones. Its products are considered cool, premium and very American. But Tesla, contrary to common belief, does not make batteries. Not only is China ahead of the game in battery production, it’s stolen a march on recycling.
CorPower has constructed the world's largest wave energy test-rig following an intense two-year project.
The 45-tonne moving mass system, installed at CorPower's Stockholm base, is capable of simulating ocean wave conditions anywhere in the world. The design, build and accreditation has been supported by key supplier ABB and accrediting body DNV. Measuring 40m in length and 9m in width, the system will play a fundamental role supporting CorPower's flagship HiWave-5 demonstration project, involving the deployment of the firm's first full-scale WEC (Wave Energy Converter) off the coast of Portugal, later this year.
For the last decade CorPower has been steadily undergoing a rigorous five-stage product development and verification process, which initially started with small scale tests in Portugal and France. It later progressed to a half-scale WEC prototype, which also underwent dry-rig testing prior to sea trials in the Orkney Islands, Scotland, in partnership with utility firm Iberdrola. For further information see the IDTechEx report on Wave, Tidal and Hydro Power 1W-10MW 2018-2038
"We are thrilled to announce the completion of the world's largest wave energy test-rig," said CorPower Project lead Antoine Boudoin, responsible for delivering the system. "It's one-of-a-kind and purpose built to test the overall performance and survivability of CorPower's WECs at full-scale. The test-rig catapults us to the next phase, enabling us to perform a broad range of isolated tests, involving individual modules and equipment, before eventually testing the device as a complete integrated system in the ocean. Dry-rig testing is a highly effective process helping debug, improve, stabilize, fine-tune and optimise WEC systems before offshore operations, which are costly and weather dependent by comparison. As we now progress to full-scale we will continue with our rigorous approach to prove the robustness and durability of CorPower's technology."
CorPower's commercial scale WEC - 9m in diameter with a 300KW power rating - will spend around 4-months on the test-rig, which can deliver 7.2MW peaks and generate 80.6kNm torque, with 5 m/s maximum speed. The full consortium of partners supporting the test rig project include ABB (drive train and control system), Katsa Oy (gearbox) Wittenstein (gear rack) Särkinen industries (large mechanical parts) Vallourec (pneumatic cylinder) Blue Future (assembly) and Weforma (dampers).
Additional partners providing third-party approval include DNV-GL (pressure equipment) Rejlers (electrical installation and machine safety) and KIWA.
CorPower Ocean brings a new class of high efficiency Wave Energy Converters (WECs) enabling robust and cost-effective harvesting of electricity from ocean waves. The design principle is inspired by the pumping principles of the human heart and offers five times more energy per ton of device compared to previously known technologies, allowing a large amount of energy to be harvested using a small and low-cost device. The CorPower WEC's unique ability to become transparent to incoming waves provides survivability for the WEC in storm conditions. CorPower's is headquartered in Sweden, with offices in Portugal, Norway and Scotland. The company has received broad backing across Europe, with funders including EIT InnoEnergy, the European Commission , the Swedish Energy Agency, AICEP Global (Norte2020), Wave Energy Scotland, Midroc New Technology, ALMI Invest Greentech, SEB Greentech VC and additional private investors.
CorPower's HiWave-5 Project
CorPower's HiWave-5 Project continues in northern Portugal following a decade of product development and three decades of research on wave hydrodynamics. The Swedish-headquartered developer is currently fabricating its first commercial scale C4 WEC - a 9m diameter device with a weight of 60 tonnes and 300kW power rating. Dry testing in Sweden is scheduled for the first part of 2021, before ocean installation at the Aguçadoura site in Portugal towards the end of the year. This will be followed by three additional CorPower C5 machines in 2023 to form a pilot array and secure type certification. A 10-year marine license (TUPEM) has been secured for the use of the Aguçadoura site located offshore south of CorPower's facilities in Viana do Castelo.
Product verification process
CorPower follows a structured five-stage product verification program recognized as best practice in the sector. It includes verifying step-by-step that the business case is supported by the physical and economical metrics in each stage starting with small scale prototypes in Stage 1 to full scale array demonstration in Stage 5. Dry testing in controlled simulated wave loading on-land to debug and stabilize the machines prior to ocean deployment is a key part of the strategy. It includes a rigorous Certification process with DNV-GL and independent validation of device performance by EMEC and WavEC.
What Makes CorPower technology unique?
The CorPower Wave Energy Converter (WEC) produces 5 times more electricity per ton (>10MWh/t) than any other known wave technology by combining: storm survivability and strongly amplified power capture in regular sea conditions. CorPower WECs can harvest the same amount of Annual Energy from a buoy with 1/10 volume compared to conventional point absorber WEC. As comparison, a 300kW CorPower WEC has a diameter of 9m and weighs 60 tonnes. Getting large amounts of electricity from a small device significantly reduces CAPEX. The compact lightweight devices are also less costly to transport, install and service, bringing down OPEX.
The three mining majors are the founding patrons of the "Charge On Innovation Challenge", a global competition launched in May.
It now has 21 patrons, more than 350 companies have registered interest as vendors and more than 80 organisations have submitted expressions of interest.
The patrons, supported by Australia's METS industry body Austmine, will assess the proposals over the next month and select a shortlist of vendors to formally pitch their solutions.
"The sooner we bring these technologies to market, the sooner we can introduce them to our fleet, and reduce emissions," Rio Tinto's lead for the challenge John Mulcahy said.
BHP and Vale project leads, Scott Davis and Mauricio Duarte, both praised the industry's collaborative work and interest in reducing haul truck emissions.
Vale has committed to net zero scope 1 and 2 emissions by 2050, as have other mining majors including Barrick Gold.
Barrick is also a patron of the Charge On Challenge, although CEO Mark Bristow warned this week investors' current focus on emissions shouldn't be at the expense of other aspects of ESG.
NUR-SULTAN (TCA) — Kazakhstan’s remarkable economic growth during the last two decades, propelled by strong exports of fossil fuels and metals, has come at a high environmental cost. The country’s greenhouse gas emissions have already exceeded the 1990 level, amounting to approximately 400 million tons annually with electricity and heat generation accounting for a third of them.
Unless appropriate policies and state regulation are adopted, the total volume of greenhouse gas emissions in Kazakhstan will continue to grow. This not only jeopardizes the country's commitments under the Paris Agreement to reduce carbon dioxide emissions by 15% by 2030, but also threatens the government’s ambitious pledge to achieve carbon neutrality by 2060.
Kazakhstan uses coal in about 70% of its electricity generation. Coal, being one of the most carbon-intensive fossil fuels, is considered the main culprit in the country’s worsening air pollution. Kazakhstan is currently the world’s 14th largest CO2 emitter, and the air quality in wintertime in its capital Nur-Sultan often exceeds the permissible norms, according to the World Air Quality index.
From 2023, the European Union (EU) will gradually introduce a carbon tax on imports to tackle global warming. As Kazakhstan’s biggest trade partner, the EU accounts for about 40% of the country’s total exports. Other countries are following the same tax policy. This puts Kazakhstan in a difficult position, as the carbon intensity of its GDP is two times higher than the world average and three times higher than the EU. Unless the country shifts towards less carbon-intensive production, the competitiveness of its exports will substantially diminish.
There is a downward trend in global production and use of coal, despite significant reserves. The UK and France have announced plans to abandon coal by 2024, Italy by 2025, Denmark and Canada by 2030, Germany by 2038, and Poland by 2049. Since 2005, the People’s Republic of China has systematically reduced use of coal and aims for coal to be only 20% of its total energy balance by 2025. Most international financial institutions, including the Asian Development Bank (ADB), have stopped funding coal projects and refocused investments on clean energy.
This global trend towards a green economy has already reduced imports of Kazakhstan’s coal in favor of cleaner sources. In turn, domestic consumption is predicted to gradually decline, which will present a series of critical policy challenges. For instance, how can a new future be created for the country’s coal-producing regions, and 28,000 coal miners retrained? Are there ways to find other uses for coal beyond electricity generation?
Recalibrating coal’s economic role means finding a continued use for it beyond the energy market. Bekturov Institute of Chemical Sciences, an Almaty-based research institution, is trying to identify commercially viable alternative coal products and technologies, including for improving soil fertility, cleaning contaminated soil, and water purification. The government’s focus on innovation and investment in science is important for helping local scientists develop such technologies and make better use of abundant coal resources.
However, in 2019 Kazakhstan invested only around 0.1% of GDP in research and development (R&D) with the private sector contributing just 45% of the total spending. Other upper middle-income countries spend at least 2%-3% of their GDP on R&D. Boosting investment in R&D is important to promote innovation and develop commercially viable technological solutions for an alternative use of coal.
As heating season in most of the country lasts over six months, the heating sector is one of the key contributors to the economy’s high energy intensity and growing greenhouse gas emissions. Kazakhstan’s heating system emits an estimated 24 million tons—at least—of CO2 per year, with two-thirds of boiler houses and combined heat and power plants using coal.
In addition, over 30% of private households not connected to the central heating system are using coal. To address this and develop a cleaner heating sector, the government is collaborating with ADB on the development of the Concept of the Law on Heat Supply. Once approved, this law should create incentives for modernizing the heat sector using green and low-carbon energy sources.
The phase-out of coal-fired plants needs to be thoroughly planned and implemented, while considering grid stability and electricity pricing. If it takes too long, the timing for transformation would be missed and carbon neutrality will be even more difficult to achieve. Kazakhstan needs to start work now on a range of carefully tailored measures to mitigate the economic, social, and environmental impacts of this impending transition.
There is no time to waste. Focusing on renewable energy, innovation, and investment in new technologies will keep Kazakhstan competitive in global markets while navigating the economic consequences of the transition.
With careful preparation, Kazakhstan can decarbonize its economy and promote clean energy sources to achieve carbon neutrality without sacrificing the wellbeing of its people.
Between them, Genesis and Lodestone’s solar investments should meet more than 2.5 per cent of the country’s current power demand (file photo).
Genesis Energy plans to build enough solar energy farms over the next five years to meet a little under 2 per cent of the country’s current electricity demand.
The company said it was finalising a joint venture with overseas solar firms to generate about 750 gigawatt-hours of solar energy each year.
For comparison, last year, New Zealand’s total electricity demand was 43,500GWh.
Genesis chief executive Marc England said solar power made sense on a number of levels.
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“We believe there is an economic opportunity to develop utility-scale solar projects in New Zealand,” he said.
Earlier this year, a new company, Lodestone Energy, backed by investors including ‘‘rich lister’’ Gary Haddleton and Sir Stephen Tindall’s K1W1 venture capital fund committed to invest $300 million in five solar farms capable of producing 400GWh per year, or just under one per cent of the country’s demand.
However, Genesis’ plan would be the first major investment in grid-connected solar power by one of the majority state-owned gentailers.
Details of how many individual solar farms the joint venture would build and where they would be located have yet to be decided, spokeswoman Estelle Sarney said.
But they would be “predominantly” in the North Island.
She described the intent to build the capacity as firm.
Genesis said the joint venture could also consider incorporating battery storage for the power it generated, for flexibility.
Lodestone chief executive Gary Holden estimated its business could produce solar power from its planned farms at a similar price to wind power, which costs about 7 or 8 cents a kilowatt-hour to generate in New Zealand thanks to its high wind speeds.
Sarney said it was too soon for Genesis to make a similar estimate.
KELLY HODEL/STUFF Genesis’ major generating asset remains its thermal power station at Huntly.
The planned investment is one of series of investments in new renewable capacity that have kicked off or are in the planning stages after a lull in activity lasting more than decade that left the country with little cover for “dry years” when hydro generation is low.
Much more will be needed to meet the country’s decarbonisation and electrification goals and to keep up with the expected natural increase in demand for power, according to official forecasts.
The Ministry of Business, Innovation and Employment has estimated the country will need about an extra annual 20,000 to 25,000GWh of generating capacity by 2050.
That is equivalent to about 30 of the five-year investments in solar slated by Genesis on Thursday.
BusinessNZ’s energy council has suggested up to 60,000GWh of extra annual capacity might be needed by then, which would require 80 such investments.
Genesis has separately announced that it will buy solar energy from two other renewable projects that were already in different stages of planning or development.
The company has agreed to buy 41 per cent of the output of Contact Energy’s Tauhara geothermal power plant that is expected to produce about 1300GWh of power each year when it comes online in 2023.
It will also buy all the power from Mercury Energy’s Kaiwaikawe Wind Farm near Dargaville, which is expected to produce about 230GWh of power each year after construction is complete in 2024.
Tilt Energy, which has been bought by Mercury, applied for resource consent for the wind farm last year.
An underexamined success story from the 2015 Iran nuclear deal negotiations is the effective blocking of Tehran’s ability to collect plutonium for a nuclear bomb. Not only has the nuclear deal, known officially as the Joint Comprehensive Plan of Action (JCPOA), been effective in constraining Iran’s program, but it could, suitably adapted, provide a standard of guidance for research reactor construction that would lower proliferation risks worldwide.
There are two pathways to get the fissile material to fuel a nuclear bomb. The first is to enrich uranium, and the second is to recover plutonium from the spent fuel of a reactor. The JCPOA blocked both pathways. Now, Iran’s advancing enrichment program is the key obstacle for diplomats trying to revive the deal, and those talks have dragged on for months as the program marches forward.
Many nuclear weapons, including that used on Hiroshima, are uranium-based. However, every country that has a nuclear weapon has produced and separated plutonium for weapons. Iran has not reopened this path despite efforts by its conservative-dominated parliament to pressure the United States to lift sanctions in return for nuclear deal compliance. In December 2020, Iran passed a nuclear law requiring a return to a threatening research reactor design. So far, Iran has not adhered to that law because the modifications made to the original design under the JCPOA made the reactor even more efficient. This suggests that even in its weakened state, the JCPOA continues to provide permanent solutions to potential proliferation concerns. Its revival can further cement these gains as a “longer and stronger” deal is sought.
The inherent problem with nuclear reactors. Here’s the conundrum for nuclear negotiators both with Iran now and potentially with other countries in the future: Given enough time, all civilian research reactors will produce enough plutonium for a nuclear weapon that could be reprocessed—or separated from irradiated uranium—in their spent fuel. Some, like Iran’s Arak heavy water research reactor, as originally designed, are particularly well suited for plutonium production but also have civilian purposes such as medical radioisotope production and the testing of nuclear fuel and materials. Argentina, Brazil, South Korea, Sweden, and Taiwan have considered acquiring reprocessing plants but eventually demurred, given international reaction to the potential for proliferation. There is no public evidence that Iran has a reprocessing facility.
Since the Trump administration pulled out of the JCPOA, Iran has introduced advanced centrifuges and stockpiled uranium. This means that the amount of time for Iran to pursue a nuclear weapon via the enriched uranium path has been significantly decreased. However, the spent fuel pathway has not been reactivated as Iran has not done any work to reconstruct the Arak heavy water research reactor to its original design nor has it engaged in any reprocessing activities. Iran’s hedging strategy, ostensibly to accumulate leverage in negotiations to revive the JCPOA, suggests that nuclear brinksmanship with uranium enrichment grants a certain flexibility that plutonium does not.
How did the JCPOA prevent plutonium recovery? Initially, the Arak heavy water research reactor represented a serious proliferation threat because it was a plutonium-producing machine. As originally designed, the Arak reactor could produce enough plutonium in its spent fuel for one or two nuclear bombs per year. Construction of the Arak reactor was coming to completion when nuclear talks were beginning and the inclusion of a freeze on construction actually held up the conclusion of the 2013 Joint Plan of Action, which preceded the JCPOA. Groups of independent scientists, including Ali Ahmad, Frank von Hippel, Alexander Glaser, and Zia Mian, suggested new designs for the reactor that would rely on low-enriched uranium.
Eventually, Iran made the following proposal for the Arak reactor: to operate the reactor at half its original power; to modify the core size (height from 3.4 to 1.1 meters and core diameter from 3.4 to 2.4 meters); and to only use fuel enriched up to 3.67 percent, or low-enriched uranium. The new design reduced plutonium production from 11 kilograms (24.25 pounds) per year to about 1.2 kilograms (2.65 pounds) per year, meaning it would take Iran much longer than one year to produce a quantity sufficient for a nuclear weapon.
The JCPOA also required that Iran ship out its plutonium-containing spent fuel for the Arak reactor, likely to Russia, in perpetuity so that at no point would Iran be able to use the Arak reactor to recover plutonium. This is the critical provision that, if universalized, could mark an end to civilian research reactors providing cover for a secret nuclear weapons interest. As long as spent fuel can be accumulated, plutonium production for a nuclear weapon remains on the table.
Weather Drought Forces Calif. Water Restrictions, Power Plant Closure One of the worst droughts in state history is forcing painful choices statewide, and La Niña conditions mean relief is unlikely this winter. Replies (2)
OROVILLE, CALIFORNIA - JULY 22: In an aerial view, the Enterprise Bridge crosses over a section of Lake Oroville that was previously underwater on July 22, 2021 in Oroville, California. ( Justin Sullivan/Getty Images)
LOS ANGELES, CA — Deep into the dog days of summer, California is feeling some of the starkest impacts of the historic megadrought yet.
On Thursday, California was forced to shut down the Edward Hyatt Power Plant because there isn't enough water left in the Lake Oroville reservoir to power it. On Tuesday, the state's Water Resources Control Board voted to restrict water access for thousands of farmers in the Central Valley. And officials in the town of Mendocino announced that they are running out of water, prompting water rationing efforts and proposals to ship in water by train. "The fact remains that water supplies are extremely limited, and we are running out of options," Bureau of Reclamation California-Great Basin Regional Director Ernest A. Conant said Thursday.
The board justified the restrictions, explaining they are necessary to preserve drinking water for 25 million Californians.
California Department of Water Resources Director Karla Nemeth said the closure of the Edward Hyatt Power Plant is just one of many troubling concessions to the drought.
"This is just one of many unprecedented impacts we are experiencing in California as a result of our climate-induced drought," Nemeth said.
According to the U.S. Drought Monitor, 100 percent of the Golden State is experiencing drought while 95 percent is experiencing severe drought, 88 percent is experiencing extreme drought, and a parched 46 percent is in the midst of an exceptional drought. U.S. Drought Monitor Map of current drought conditions across California. The decision to restrict water access heavily impacts Central Valley farms and the state's overall agriculture industry, but for most crops, the growing season is winding down. If similar water restrictions are put into place in the spring, the effect on the state's agriculture and cattle industries would be even more devastating.
The experts don't see relief in the coming winter. The National Weather Service expects a La Nina climate pattern to dominate starting in September through the winter. La Nina typically exacerbates drought conditions in the Southern part of the state, pushing jet stream storms to the northwest, according to the National Weather Service. This month, the Farmer's Almanac released its forecast for a drier than normal winter in California. The West can expect some hefty storms moving inland from the Pacific during the second week of January and the end of February, but they most likely won't alleviate the drought conditions, according to the Farmer's Almanac.
Brazil accounts for an estimated 30% of global exports and its peak shipment season has already kicked off.
The most devastating frost in decades in top coffee producer Brazil and record freight costs sparked by Covid-19 causing massive shipping logjams are expected to push retail prices to multi-year highs in the coming weeks. A hike in coffee prices will further raise the cost of a basket of shopping following increases for other items such as bread, vegetable oils and sugar. The United Nations food agency’s index of world food prices for July showed a year-on-year rise of 31% at a time when many consumers are struggling financially due to the pandemic. The worst cold snap in Brazil since 1994 sent the price of green coffee beans to the highest level in almost seven years and is expected to pass through to consumers when they purchase roasted beans or ground coffee in supermarkets. Arabica coffee on the ICE Futures US exchange has doubled in price over the last 12 months with crops in Brazil already wilting after the worst dry spell in 91 years. The extent of the damage is still being assessed but in areas where coffee trees have not survived it may take up to seven years for production to fully recover.
Shipping disruptions, caused partly by a surge in demand for consumer goods and not enough ships as people stayed home due to the global coronavirus pandemic, has also led to a sharp rise in the cost of transporting beans to major consuming countries in North America and Europe. Traders believe while consumers will soon have to pay more to purchase coffee from supermarkets, the cost of a latte or Americano at high street coffee chains may not follow suit in the short term.
“Roast and ground (coffee in supermarkets) has only coffee and a bit of packaging. Your coffee at Starbucks might not go up (as much) because you pay more for the shop, the Wi-Fi, the experience,” he added. Data issued by the US Bureau of Labor Statistics show average ground coffee prices rose to a peak of $4.75 per lb in April, up 8.1% from a year earlier and the highest level since July 2015, as drought took an initial toll on Brazil’s crops.
The rise in arabica coffee prices on the ICE Futures US exchange accelerated rapidly, however, after the recent frost and retail prices appear certain to increase in response. In Brazil, the world’s number two consuming nation after the United States, roast and ground coffee prices increased 3.4% in June, according to statistics office IBGE.
They are set to rise further. After the July frosts, Brazil’s coffee industry group Abic told roasters to analyse their costs and adjust prices accordingly, to preserve the sustainability of their businesses. Abic estimates, green coffee prices for roasters in Brazil increased around 80% from December to late July.
“Some companies, including market leaders, have already announced price increases,” Abic said in a letter to associated roasters seen by Reuters.
JDE Peet’s, whose brands include Douwe Egberts, Kenco and Peet’s, noted that there had been a sharp rise in ingredient, freight and other costs in the last 12 months.
“Historically, significant fluctuations in green coffee prices have been reflected in the market (retail prices) and we expect that precedent to continue,” the company said.
Transport costs
The rise in transport costs, linked to a shortage of shipping containers, could play a major role in driving up prices. Coffee is normally shipped in containers, in contrast to commodities such as grains which are transported in bulk carriers. Many coffee companies find it easier to withstand a rise in the cost of beans, at least in the short-term, than increasing shipping costs as they often fix the price of their purchases several months in advance.
“We have hedging here in place for a good percentage of our coffee needs for the rest of this year and even for part of next year so I’m not short-term worried about that,” Nestle Chief Executive Mark Schneider said during a recent conference call, adding this was not the case with transportation costs.
Carlos Santana, coffee head trader for Eisa Interagricola, a unit of ECOM Trading, said it was very challenging to ship coffee, particularly in the Americas.
“It is almost not economical to use this route right now. The ports in the US are full, shipping companies do not want to take more cargoes to there, so they charge more. Prices are more than three times higher than they were before the pandemic,” he said.
Thiago Cazarini, a coffee broker in Brazil’s Minas Gerais state, said that even paying up the much higher prices to secure a container, exporters are having problems trying to load them into the ships. He said the problem is widespread, impacting all players.
“Brazil is such a mess logistically right now. I have coffees that were supposed to arrive two months ago and I haven’t got them yet,” one US coffee importer said.
Julian Thomas, managing director of Maersk Brazil, part of the world’s biggest container shipping line, said the “current bottlenecks from measures to contain the pandemic and a strong demand are also impacting supply chains in and out of Brazil.”
“We are still servicing our customers and can attend to their growing demand,” he told Reuters.
German container shipper Hapag Lloyd added that there were delays for shipping goods, “but not only coffee”. Brazil accounts for an estimated 30% of global exports and its peak shipment season has already kicked off.
The stray cattle menace has seen a 5 per cent decline in the country between 2012 and 2019.
Quoting livestock census of 2012 and 2019, Parshottam Rupala, Union Minister of Fisheries, Animal Husbandry and Dairying, told the Lok Sabha on Tuesday that the number of stray cattle (both rural and urban) was 50.21 lakh in 2019 against 52.87 lakh in 2012.
Of the 36 states and Union Territories (UTs), there was a decline in the number of stray cattle in 11 states and UTs. These include Chandigarh, Chhattisgarh, Dadra and Nagar Haveli, Kerala, Lakshadweep, Maharashtra, Manipur, Meghalaya, Puducherry, Tamil Nadu and Tripura.
The number of stray cattle came down to zero in 2019 from 1,029 and 280 in 2012 in UTs of Dadra and Nagar Haveli and Lakshadweep.
Reps. John Garamendi, D-Calif., and Dusty Johnson, R-S.D., today introduced legislation to stop shipping companies from denying U.S. exporters the ability to get their commodities overseas as well as protect against excessive port fees.
Spurred by reports of Chinese exporters paying shippers extra to return containers empty and leave U.S. rice, almonds, walnuts, wine, pork and other goods waiting at Western ports, the lawmakers unveiled the Ocean Shipping Reform Act of 2021, a bill they say has plenty of support in both houses of Congress. The legislation would prohibit shipping companies “from unreasonably declining export cargo bookings if the cargo can be loaded in a safe and timely manner,” according to a summary of the bill.
Chinese exporters sending everything from shoes to televisions to the U.S. can afford to pay far more for a container on a ship heading to the U.S. than American rice farmers can pay to send a container to Asia, so the vessel-operating common carriers, or VOCCs for short, tend to favor the Chinese companies, say lawmakers and farm groups. On top of that, Chinese exporters are often willing to pay more to expedite the return trip of ships, which means not waiting for the ships to load containers of U.S. farm goods that need to get to Asia.
Garamendi and Johnson say their bill would prevent that from happening.
“This is a major issue for ag producers in the middle of the country,” said Johnson, who stressed concern that U.S. pork exporters will have to freeze their product because of the delays at ports. That he said, would have a major impact on the price that U.S. sellers get from customers who prefer chilled product.
“Foreign businesses’ access to the American market and its consumers is a privilege, not a right,” said Garamendi. “California’s agricultural exporters and other businesses are willing to pay to ensure that American-made products reach key markets in the Asia-Pacific. In turn, companies looking to offload foreign-made products at West Coast ports must provide opportunities for American exports. Even during a global pandemic, trade must be mutually beneficial, and that is exactly what our bipartisan bill ensures.”
The Ocean Shipping Reform Act of 2021 doesn’t just have backing on Capitol Hill. More than 100 ag groups and companies have signed on to a letter penned by the Agriculture Transportation Coalition, expressing support for the bill. AgTC calculates that about 22% of U.S. ag export sales can’t be completed because of the shipping problems.
“Ocean carriers are declining to carry our cargo in favor of returning so many containers back to Asia empty, while unprecedented freight rate hikes, penalty charges, and unpredictable service are denying affordable, dependable US agriculture export access to our best foreign markets,” said AgTC Executive Director Peter Friedmann.
The Office of the U.S. Trade Representative still isn’t ready to sit down with Chinese trade officials and hash out a new path forward for trade relations, but U.S. farm groups are losing patience with the status quo.
The U.S. continues to hit Chinese goods with tariffs, and the Chinese continue to pick and choose which U.S. goods they’ll let in tariff-free under a trade war that’s technically still in place despite the “phase one” deal signed last year.
“The overall impression of everybody is we need to engage with China,” said American Farm Bureau Federation Senior Director of Congressional Relations David Salmonsen. “Both sides need to talk. We’ve got these tariffs and we’d rather have a better structure to make sure we can continue to have this good trade flow moving forward.”
According to World Bank’s commodity markets outlook, global cotton prices continued their upward rally in July 2021, reaching its highest level in at least 9 years. Cotton ‘A’ index breached $2.15 per kg during the month and has since stayed in the territory. Cotton prices have rallied since the great commodity crash of April last year, rising by 55 percent since their bottom over the past 16 months. In fact, cotton prices are already 30 percent higher than their pre-pandemic levels. This is one of the highest rises within agricultural commodities, outside of maize and edible oil crops.
It appears that the commodity analyst’s community is divided over how long the cotton price bonanza may last. While many have been quick to ascribe the broad-based rise in various commodity prices to global supply chain disruptions, it now seems that the great cotton rise has taken on more solid roots. USDA projects global cotton consumption for marketing year 2021-22 at nearly 27 million metric tons, highest since at least 2007-08. At that time, the global financial crisis that hit world markets in September 2008 quickly tampered commodity demand, bringing down world consumption precipitously by over 11 percent within a year. Most indicators suggest that a similar correction may not be on the cards for the foreseeable future this time around.
First, world cotton consumption has already been on the rise throughout Covid year, as 2020-21 witnessed a 15 percent rise in consumption led by quicker than expected re-opening of industrial base in China and efforts by various governments across the developing world to prop up export base, benefiting textile exporting companies. Moreover, national commodity procurement operations program continued unabated in major cotton producing regions such as India and China, as governments not only sought to top up strategic reserves during uncertain times but also used the procurement operations to roll out support to farming communities (India).
Meanwhile, uncertain demand outlook during peak sowing period (Feb-Jul 2020) across many regions led to reduction in area under cultivation, leading to fall in output by as much as 25 percent in major exporting countries such as USA and Brazil. This was further compounded by shortfalls in other regions such as Australia and Pakistan, where extreme weather events (drought and monsoon rains, respectively) damaged yield.
Furthermore, the passing of Uyghur Forced Labour Prevention Act by US Senate last month is expected to shift demand for cotton and cotton-based products to other textile exporting nations. While this may benefit competing yarn and garment producing regions such as Vietnam, Bangladesh, Turkey, and Pakistan, it has also increased pressure on commodity prices as world tradable surplus of cotton has diminished.
In recent years, the exportable surplus generated by Brazil and USA alone has been (theoretically) sufficient to meet combined import demand from top 5 importing nations: Bangladesh, Vietnam, Pakistan, Turkey, and India (excluding China). This is no longer the case. Meanwhile, Chinese yarn and garment exporters have also entered the fray, as they compete to procure non-Xinjiang based cotton to stay afloat in world textile global and regional value chains.
Thus, even as world demand touches its highest level in 13+ years, tradable cotton is short in supply, even as there is no shortage of willing buyers at ever-higher prices. Nothing short of dramatic rise in output in top three exporting countries – USA, Brazil, and India – may save the day. Unless of course China begins to offload its strategic reserve in world market just as it did in 2011. But that appears out of question at the moment.
AustralianFarmers
Australians love their red meat. And the good news is livestock producers are not only produce a world class product they play a lead role in Australia’s climate change solution.
Over the years the industry has made enormous steps, with red meat producers at the very front of climate action providing peace of mind to all of us who love our sirloin steak and lamb roast!
How are livestock part of the solution?
Ruminant livestock, emit methane, a strong greenhouse gas. But this methane is part of a natural, or biogenic, carbon cycle where the methane breaks down into CO 2 and water after about 12 years. The grass then absorbs the CO 2 through photosynthesis, cows eat the grass and the cycle continues.
The CO 2 from burning fossil fuel on the other hand, stays in the atmosphere for potentially 1,000 years
The animation below, put together by Meat and Livestock Australia, shows how the environmental impact of methane emissions from cows is fundamentally different to the carbon dioxide from fossil fuels.
In Australia methane emissions from agriculture are falling. In fact the Australian beef industry has more than halved GHG emissions since 2005. With investment into innovative emissions reduction practices and technologies the red meat and livestock industry will be carbon neutral by 2030 and play a key part of the climate solution.
Meet Australia’s sustainable red meat producers
Melinee Leather, Banana QLD
Central Queensland beef producer Melinee Leather is an industry leader and sustainability advocate. Producing organic and humane certified beef, Melinee and her husband Robert are passionate about animal wellbeing and natural grass fed beef. Melinee is working to ensure the land, cattle and industry remain productive for her children, grandchildren and future generations.
The Hallidays, Walcha NSW
On Ben Nevis Angus, Stu and Erica run a beef property in the high cold country of Walcha NSW where they are working to increase soil carbon through a combination of new pastures varieties and rotational grazing. The Halliday’s are on-track to be carbon neutral before 2030. Through their regenerative on-farm practices the Halliday’s are working to go beyond carbon neutrality to be a net carbon sink, using plants and livestock to sequester carbon from the atmosphere and put it back into the soil.
The Crooks, South Gippsland VIC
Paul and Samantha Crock produce grass-fed Angus cattle in Southern Victoria. After taking ownership of the land in late 2000, they quickly set about developing a grazing management system and fencing off steep areas, water courses and wind breaks to protect vegetation and improve water quality.
With help from friends and family they have planted over 50,000 indigenous plants to help increase biodiversity and provide shade and shelter for their livestock.
More resources can be found at Australian Good Meat, CLEAR Center and
Six months of extensive testing has proved Danakali can produce sulphate of potash at its flagship asset using filtered seawater, improving the project’s environmental footprint and lowering opex, capex and maintenance costs.
Danakali's Colluli Project hosts the world’s largest JORC-compliant solid salt and sulphate of potash reserve, weighing in at 1.1 billion tonnes.
Danakali has requested to cancel the admission of its ordinary shares from the London Stock Exchange (LSE) in a move described as being in the interests of shareholders.
The move will increase administrative efficiencies for the company with respect to completing its full funding solution.
It comes as around 97% of DNK’s current UK institutional investors are opting to invest on the ASX through their nominees.
Stakeholder support for the decision was received from Eritrean National Mining Corporation (ENAMCO), Afreximbank (AFX), African Finance Corporation (AFC), major shareholders of DNK and other key stakeholders.
Danakali will retain the listing of its ordinary shares on the ASX.
Coinbase Global (COIN) is set to report second-quarter results after market close on Tuesday, offering a look at the performance of the largest cryptocurrency exchange in the U.S. following a volatile stretch of trading for digital currencies.
Here are the main results Coinbase is expected to report, compared to consensus data compiled by Bloomberg:
Revenue: $1.85 billion expected
Adjusted earnings per share: $2.48 expected
Coinbase shares have traded choppily since the stock's direct listing in April, and have largely languished below their opening price of $381 apiece amid a broader drop in cryptocurrency prices.
Bitcoin prices (BTC-USD) hit an all-time high of more than $64,000 around the time of Coinbase's public debut, but have since slid to a year-to-date low of less than $30,000 as of mid-July. Bitcoin, the largest cryptocurrency by market capitalization, was trading around $46,000 as of Tuesday morning.
The drop in the prices of bitcoin and other major tokens like ethereum (ETH-USD) coincided with a regulatory crackdown against cryptocurrencies and mining in China, as well as increasing concern over digital currencies' mainstream adoption. Tesla CEO Elon Musk said in May the electric carmaker would no longer accept bitcoin as payment for vehicles. However, Tesla (TSLA), along with a number of other companies including Square (SQ) and PayPal (PYPL), still hold bitcoin on their balance sheets.
Weakening cryptocurrency-related results in these other companies' businesses during the second quarter presaged a potential slowdown for Coinbase. Bitcoin comprised $2.7 billion of overall revenues for Square in the second quarter, down from $3.5 billion in the first quarter of 2021. And Tesla, for its part, booked an impairment of $23 million related to bitcoin in its second quarter, after posting a positive impact of $101 million from selling some of its bitcoin holdings in the first quarter of the year.
https://finance.yahoo.com/news/coinbase-earnings-q2-2021-140559345.html
The precious metals explorer has several partner and joint venture projects in Chile and Argentina, as well as two projects it is solely funding, one of which is the Sascha Marcelina property
Targeting the Pellegrini and the Estancia Trends on the property, a total of 2,814m were drilled
Mirasol Resources Ltd has published the results from the maiden drill program on the company’s Sascha Marcelina project in Santa Cruz province, Argentina.
Targeting the Pellegrini and the Estancia Trends on the property, a total of 2,814 meters (m) were drilled.
The precious metals explorer has several partner and joint venture projects in Chile and Argentina, as well as two projects it is solely funding, one of which is the Sascha Marcelina property.
“We are encouraged with the early results from this maiden drill program on three of our priority prospects within the Sascha Marcelina project. The Pellegrini Trend returned a broad zone of gold (Au) and silver (Ag) mineralization overprinting a younger lead (Pb) and zinc (Zn) rich base metal pulse, that is interpreted to represent the high-level expression in this epithermal system," Tim Heenan, Mirasol’s President said in a statement.
He went on to say: “This mineralized zone may correspond to the top or the margins of a hydrothermal breccia body, or possibly the upper zones of a larger mineralized and dilated structure at depth, spatially associated with a rhyolitic dome complex. Drilling on the Igloo and Estancia Trends also returned a number of anomalous Au and Ag intercepts, and improved our understanding of the local geological settings, which will help in vectoring follow-up drill programs towards higher grade zones at depth and within a more permissive stratigraphic horizon.”
At the Pellegrini Trend, four diamond drill holes were completed in the main target area with two scout holes, for a combined total of 1,431m. Highlights from the Pellegrini testing include, holes PEL-DDH-001, PEL-DDH-002 and PEL-DDH-005 all encountered within their upper levels, restricted zones of anomalous mineralization associated with hydrothermal brecciation.
According to the company, hole PEL-DDH-005, which was drilled to a deeper depth below PEL-DDH-002, exhibited the best mineralized intersection to date.
While at the Estancia Trend, six holes for a total of 1,011m were completed. Three of the holes located in the southern part of the zone returned anomalous gold results.
Getchell Gold Corp. Intersects 3.0 G/t Au over 33.0 Metres in First Hole of the 2021 Drill Program at Fondaway Canyon, Nevada
Toronto, Ontario--(Newsfile Corp. - August 10, 2021) - Getchell Gold Corp. (CSE: GTCH) (OTCQB: GGLDF) ("Getchell" or the "Company") is pleased to present the results from the first drill hole of the 2021 drill program at the Company's flagship Fondaway Canyon Gold Project in Nevada ("Fondaway" or "Project").
Key Highlights
3.0 g/t Au over 33.0m in FCG21-07, the first hole of the 2021 drill program at Fondaway Canyon;
in FCG21-07, the first hole of the 2021 drill program at Fondaway Canyon; Represents a higher-grade gold mineralized interval than adjacent holes;
Establishes lateral continuity of the Colorado SW Extension gold zone;
Is the sixth consecutive hole in the Central Area that has intersected substantive gold mineralization by the Company;
Results for hole FCG21-08, testing the extent of the Colorado SW Extension zone on strike to the NW in an area not previously drilled, are pending;
Drill holes FCG21-07 and FCG21-08 were designed to start joining and demonstrate continuity of the previously drilled and widely spaced Colorado SW Extension mineralized zone drill intercepts along its 800m down-dip modelled length; and
Mining operations are underway at Viper following fast-track of pre-mining activities including grade control drilling, site clearing and topsoil removal. The satellite Viper Deposit is part of Firefinch's 80%-owned 'Morila the Gorilla' gold operations in Mali.
Firefinch has delivered further strong gold assays this morning providing further evidence of the growing strength of Morila Gold Project in Mali and prompting an improvement in share prices. The Mali-focused miner has received high-grade results from Viper Deposit, part of the 80%-owned Morila Project, with surface mining underway at the deposit. Firefinch is focused on the Morila Gold Mine that has produced 7.5 million ounces of gold since 2000 and aims to become a mid-tier gold producer in Mali. The new results coincide with the start of mining operations at Viper after Firefinch fast-tracked pre-mining activities including grade control drilling, site clearing and topsoil removal.
Shares higher
Shares have been as much as 9.8 per cent higher to A$0.505 while Firefinch's market cap is approximately A$418.7 million.
Highlights of today’s results include:
9 metres at 15.1 g/t gold from 40 metres, including 1-metre at 98.7 g/t;
5 metres at 11.7 g/t from 108 metres;
18 metres at 2.96 g/t from 54 metres, including 3 metres at 10.6 g/t;
2 metres at 12.5 g/t from 70 metres; and
4 metres at 6.36 g/t from 81 metres.
"Zones key to mining"
“We continue to generate excellent results from drilling the Viper system, which have enabled better definition of the deposit’s higher-grade zones,” Firefinch’s managing director Dr Michael Anders said. “Clearly these zones are key to mining and the next step is the commencement of mining operations in the southern part of the deposit. “Importantly, Viper will add oxide ore to complement the Morila Pit 5 mining operations.
"Plans are in place to expedite mining and haulage of this ore to be part of the plant feed from mid-September and increase near-term gold production.
"The fast-tracking of Viper is another example of the effort our on-site team has put in to delivering the ramp-up plan at Morila.”
Initial mining is designed to provide oxide feed to the Morila plant, increasing the ore types available for blending and processing. The company has engaged two mining contractors at Viper to increase mining capacity and once the current drilling program is finished, Firefinch will update the Viper mineral resource estimate with an increase in classification, tonnage and grade anticipated.
Morila: quick history lesson
The Viper deposit is around 27 kilometres northwest of Morila and is supported by infrastructure including an established haul road. The mine has historically been one of the highest-grade gold mines in the world under previous Barrick Gold and ( ) ownership. In May 2021, the mineral resources at Viper were updated based on drilling by Firefinch to:
Indicated – 1.52 million tonnes at 1.04 g/t for 51,000 ounces
Inferred – 20,000 tonnes at.41 g/t for 1,000 ounces
Total – 1.55 million tonnes at 1.05 g/t for 52,000 ounces
Based on this, a probable ore reserve of 1.30 million tonnes at 1.46 g/t for 43,000 contained ounces of gold was declared for Viper.
President and CEO Scott Perry said the company had "derecognised" the assets and liabilities of Kumtor and recorded a loss on the change of control of $926.4 million in its second quarter results.
Kyrgyz seized control of the circa 500,000 ounce per annum Kumtor in May, citing what Centerra dubbed "groundless" corruption, tax and environmental claims, prompting the miner to seek international arbitration and take legal action in the US and Canada.
Centerra yesterday cut 2021 gold guidance to 270,000-310,000oz and reduced all-in sustaining costs on a by-product basis to $750-800/oz.
This compares with the original forecast of 740,000-820,000oz of gold and AISC of $850-$900/oz. Copper guidance was maintained at 70-80 million pounds.
Centerra said it was on track to achieve 2021 guidance at Oksut in Turkey and Mount Milligan in Canada, where it did not expect an impact from forest fires in the province.
It reported earnings from continuing operations of $33 million.
The net loss of $851.7 million compared with net earnings of $80.7 million a year earlier.
Perry said Centerra continued to be "financially and operationally strong".
It finished the quarter debt-free, with $882.9 million in cash and declared a C7c quarterly dividend.
"A generally messy quarter, with Kumtor being re-classified as a discontinued operation following its nationalisation by the Kyrgyz government and accounting for copper hedges rendering Mount Milligan's metrics not directly comparable to our estimates," Canaccord Genuity analyst Dalton Baretto said.
"Our view remains that the most probable outcome is the cancellation of [state-owned] Kyrgyzaltyn shares in exchange for the loss of Kumtor."
He said there was "some urgency" for the company to add one or more producing assets via M&A, given its cash position and Canaccord's forecast drop in consolidated gold production from Centerra's existing asset base from about 400,000oz in 2022 to circa 250,000oz in 2024.
Canaccord maintained a speculative buy rating but lowered its price target from $12 to $11.50.
Centerra shares (TSX: CG) are trading near a one-year low, closing down almost 2% yesterday to $9.04 to value it at $2.68 billion (US$2.1 billion).
Vancouver, British Columbia--(Newsfile Corp. - August 11, 2021) - Doubleview Gold Corp. (TSXV: DBG) (OTC PINK: DBLVF) (FSE: 1D4) ("Doubleview") is pleased to announce that it has mobilized a geological and site preparation team in anticipation of the Company's 2021 summer/fall drill program at its 100% owned Gold rich Copper HAT property, a polymetallic project located in Northwest British Columbia, situated in the Golden Triangle of the Tahltan First Nation's traditional territory. The exploration team will prepare drill sites, the camp and will coordinate with local suppliers and the Tahltan Central Government's employment and contracting department for the upcoming drilling campaign. The drilling program is to begin as soon as possible.
Site preparation will concentrate on the Lisle Zone North of the Hat deposit, as well as the eastern and southern areas of the deposit. The locations shown in the illustration below will be the anticipated phase I drilling sites that are subject to minor changes as per the onsite geologist's review.
Additionally, the geological team will verify the drill core on site with the geological model that is now further refined considering the recent drill results.
"The upcoming and well anticipated exploration program will be Doubleview's first program based on its recently updated database, with the potential to contain economically significant, critical metals that now define HAT as a polymetallic deposit. It is anticipated that this next phase of drilling will test the northern and eastern limits of the HAT deposit, providing the data necessary to develop a resource estimate and model. We look forward to working collaboratively with Tahltan service providers as exploration commences" President and CEO, Mr. Farshad Shirvani stated.
Vancouver, British Columbia--(Newsfile Corp. - August 11, 2021) - Doubleview Gold Corp. (TSXV: DBG) (OTC PINK: DBLVF) (FSE: 1D4) ("Doubleview") is pleased to announce that it has mobilized a geological and site preparation team in anticipation of the Company's 2021 summer/fall drill program at its 100% owned Gold rich Copper HAT property, a polymetallic project located in Northwest British Columbia, situated in the Golden Triangle of the Tahltan First Nation's traditional territory. The exploration team will prepare drill sites, the camp and will coordinate with local suppliers and the Tahltan Central Government's employment and contracting department for the upcoming drilling campaign. The drilling program is to begin as soon as possible.
Site preparation will concentrate on the Lisle Zone North of the Hat deposit, as well as the eastern and southern areas of the deposit. The locations shown in the illustration below will be the anticipated phase I drilling sites that are subject to minor changes as per the onsite geologist's review.
Additionally, the geological team will verify the drill core on site with the geological model that is now further refined considering the recent drill results.
"The upcoming and well anticipated exploration program will be Doubleview's first program based on its recently updated database, with the potential to contain economically significant, critical metals that now define HAT as a polymetallic deposit. It is anticipated that this next phase of drilling will test the northern and eastern limits of the HAT deposit, providing the data necessary to develop a resource estimate and model. We look forward to working collaboratively with Tahltan service providers as exploration commences" President and CEO, Mr. Farshad Shirvani stated.
VANCOUVER, BC, Aug. 11, 2021 /CNW/ - K2 Gold Corporation ("K2" or the "Company") (TSXV: KTO) (OTCQB: KTGDF) (FRANKFURT: 23K) is pleased to report that it has signed an option agreement (the "Agreement") to acquire a 100% interest in the Cerro Gordo Gold Project or "Cerro Gordo Project", located adjacent to the Company's Mojave Project in Inyo County, California.
Highlights:
The Cerro Gordo Project is road accessible and in part adjoins the NW corner K2's Mojave Gold Project
Since the mid 1800's, Cerro Gordo has been worked by several senior, mid-tier and junior companies including Asamera, Coeur, Phelps Dodge and Newgold
Vancouver, British Columbia--(Newsfile Corp. - August 11, 2021) - Silver Valley Metals Corp. (TSXV: SILV) (FSE: L3U) (OTC Pink: BNRJF) ("Silver Valley Metals" or "the Company") is pleased to announce that it has commenced a ground geophysical survey on the entire Ranger-Page Project (the "Project") in the Silver Valley, Idaho. The survey will be a first for the Project. It is anticipated to be completed in the fourth quarter of 2021. The Company is currently finalizing its 3D digital geological model sourced from a comprehensive underground workings database which will be utilized alongside the geophysical survey to identify drill targets for the Company's maiden diamond drill program anticipated to start towards the end of 2021.
The survey will be conducted by Gradient Geophysics ("Gradient") from Missoula, Montana and will be comprised of two phases. The first phase is a continuous reading magnetometer survey in conjunction with a VLF-EM survey (readings every 10 meters) at 120 meter line spacing. The second phase will be a high-resolution induced polarization ("IP") survey oriented north-south at the same line spacing of 120 meters. The IP data is planned to detail the east-west vein systems and will be presented in 3D color contour plots. Furthermore, a high-resolution surface lidar and imagery collection over the entirety of the survey area is underway and anticipated to be completed prior to geophysical data collection. obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the Company's expectations or projections.
HALIFAX, Nova Scotia, Aug. 11, 2021 (GLOBE NEWSWIRE) -- Erdene Resource Development Corporation (TSX: ERD | MSE: ERDN) (“Erdene” or the “Company”) is pleased to announce results from its maiden drill program on the southern portion of its 100%-owned Ulaan exploration license. The program returned a significant new gold discovery 300 metres west of the Bayan Khundii deposit. Follow-up drilling on the Ulaan license is currently underway.
Highlights
Significant gold discovery at Ulaan, 300 metres west of the Bayan Khundii Gold Deposit, with multiple holes intersecting mineralization, highlights include: 3.77 g/t gold over 40 metres, within 258 metres of 0.98 g/t gold beginning 92 metres downhole in UDH-10 High grade quartz-adularia veins in upper portion of zone – 39.6 g/t and 58.4 g/t gold over 1 metre intervals at 103 and 123 metres depth, respectively Hole ended in gold mineralization at 350 metres – bottom 20 metres averaging 0.48 g/t gold Open along strike to west-northwest and at depth 50 metres south of UDH-10, UDH-07 intersected 100 metres averaging 0.63 g/t gold, beginning 85 metres down hole
Adds a third development prospect within the Khundii-Ulaan alteration system alongside the Bayan Khundii Gold Deposit and the Dark Horse gold prospect
Quotes from the Company:
“These exceptional results confirm a significant new gold discovery just 300 metres west of the Bayan Khundii gold deposit,” said Peter Akerley, Erdene’s President and CEO. “This new discovery at Ulaan, combined with recent high-grade, near-surface, oxide gold intercepts at Dark Horse and the high-grade Bayan Khundii gold deposit demonstrates the existence of a very large gold-bearing hydrothermal alteration system underlying the Khundii and Ulaan licenses.”
“Although the Khundii and Ulaan licenses host a low sulfidation epithermal system, the broader Khundii District, including our Altan Nar intermediate sulfidation gold-polymetallic deposit and the molybdenum-copper porphyry deposit at Zuun Mod demonstrate the continuum and potential for discovery of arc related deposits in the Khundii Gold District,” concluded Mr. Akerley. “We are targeting the definition of over 2 million gold equivalent ounces by the end of 2022. Furthermore, we see the potential to add resources beyond this target through further discoveries in our unexplored portion of the prolific gold and copper producing Central Asian Orogenic Belt.”
2 M&I: 171,000 ounces of 3.77 g/t gold Measured, and 349,700 ounces of 2.93 g/t gold Indicated
Meanwhile China has signalled its push to regulate sweeping parts of the economy, which has jolted markets, will be deep and sustained over the next five years, Bloomberg reported.
The gold price has climbed to US$1,751 an ounce on the spot market.
"The gold bulls were hurt in Monday's liquidation dump, but have picked themselves up, dusted themselves off and recognising the forced nature of the flow on Monday bought into weakness," Pepperstone head of research Chris Weston said.
Gold majors Newmont and Barrick Gold rose more than 2% in New York and Toronto, respectively.
There were mixed moves among mining majors in London, where Glencore gained 3.3% and Rio Tinto lost 1%.
The S&P 500 and Dow Jones Industrial Average rose slightly to fresh highs.
Iron ore continued its slide, losing circa 3% for 62% Australian fines to $163 per tonne, according to MySteel.
Finally in a sign of the times, Recharge Resources (TSXV: RR) - formerly Le Mare Gold - shot up 55% to C15.5c yesterday as it launched a new website to reflect its battery metals-focused rebrand.
Mako Gold Ltd (ASX:MKG) has started a follow-up 10,000-metre reverse circulation (RC) and diamond drill (DD) program at the Gogbala Prospect within the company’s flagship Napié Project in Côte d’Ivoire.
Gogbala, at which the company has identified a high priority two-kilometre-long area, is on the same 23-kilometre soil anomaly and coincident 30-kilometre-long Napié Fault as the more advanced Tchaga Prospect.
At the outset, Mako has 31 RC/ DD holes totalling 3,400 metres planned for the first phase of drilling.
The second phase of drilling will be planned once results have been received from phase 1 drilling.
Mako managing director Peter Ledwidge said: “We are excited to be returning to the Gogbala Prospect where our previous drilling returned some wide and high-grade results.
“We view Gogbala as the next step towards progressing the Napié Project in our goal to delineate several significant gold deposits on the permit.
“Our previous drilling was wide-spaced and returned some outstanding results worthy of follow-up drilling. As part of our overall strategy, it is logical to resume drilling on Gogbala while we await drill results on Tchaga.”
The geology at Gogbala is similar to Tchaga a few kilometres to the north
Previous drilling by Mako at Gogbala identified a two kilometre-long high-priority drill target which is the same strike length as the Tchaga Prospect.
This target has consistently delivered wide and high-grade results and is the focus of the upcoming maiden mineral resource estimate.
Select results from previous limited wide-spaced drilling by Mako on the two-kilometre target at Gogbala include:
Youanmi Near-Mine Prospects Delivers High-Grades
Perth, Aug 12, 2021 AEST (ABN Newswire) - West Australian focused gold exploration and development company, Rox Resources Limited ( ASX:RXL ), in conjunction with its joint venture partner Venus Metals Corporation Limited ( ASX:VMC ), is pleased to provide an update on drill results from the Youanmi Gold Project near Mt Magnet, WA, in the OYG JV area (Rox 70% and Manager, VMC 30%).Drilling continues at Youanmi, with diamond and RC rigs operating at the OYG JV and regional aircore drilling progressing at the VMC JV (Rox 50% and Manager, VMC 50%).Assay results have been received for four RC holes and two diamond holes from the current drilling program at Youanmi. These holes were drilled during May. Results are pending for 14 RC and 14 diamond holes with drilling ongoing.The highlights of this round of results include 17m @ 5.14g/t Au from 151m, including 11m @ 7g/t Au from 156m intersected in RXRC402 at Link (Table 1, Figure 1*) and 9m @ 4.57g/t Au from 148m intersected in RXRC396 at Junction (Table 1, Figure 2*)Rox Managing Director Alex Passmore commented: "We are very pleased to announce ongoing successful drilling results.
Big Sky Delivers More Near-Surface Gold
Perth, Aug 12, 2021 AEST (ABN Newswire) - Musgrave Minerals Ltd ( ASX:MGV ) ( FRA:6MU ) ( OTCMKTS:MGVMF ) is pleased to report further strong assay results from reverse circulation ("RC") drilling at the Big Sky Prospect along the new gold corridor south-west of Lena and Break of Day on its 100% owned ground at its flagship Cue Gold Project in Western Australia's Murchison district (Figure 1). Assays for a further 35 RC drillholes have been received and continue to define thick regolith gold mineralisation within the extensive 2.6km-long aircore gold anomaly at Big Sky. Gold mineralisation remains open to the south and down dip at Big Sky where RC drilling is continuing.Musgrave Managing Director Rob Waugh said:
Centinela, in Chile, has become the first of the Antofagasta’s mines to obtain the international Copper Mark, an assurance framework that certifies the company operates under strict internationally recognised sustainable production standards, the copper miner says.
Zaldívar (owned 50:50 by Antofagasta and Barrick Gold) expects to obtain the Copper Mark next month and the group’s other two mining operations, Los Pelambres and Antucoya, will shortly begin their own certification processes, Antofagasta said.
Iván Arriagada, Chief Executive Officer of Antofagasta plc, said: “The importance of obtaining this certification lies in Antofagasta’s commitment to modern and sustainable mining, which transparently incorporates the best practices of the global mining industry.”
Inspired by the UN Sustainable Development Goals, the Copper Mark takes a comprehensive approach to sustainability and includes the verification of activities at the sites where copper is produced, the miner said. To this end, it requires compliance with 32 criteria in five categories: business and human rights, community, labour and working conditions, environment and governance.
Copper Mark follows up its original certification with a further review within one year, and then every three years thereafter to certify ongoing compliance with the criteria. In this way, Copper Mark offers workers, investors, copper end-users and communities a simple and credible way to verify sustainable practices, the company said.
Carlos Espinoza, General Manager of Centinela, said: “After a rigorous process, involving self-assessment and an independent audit, we are very proud to be the first mining operation in the company to obtain the Copper Mark, which certifies that our operating and other processes are carried out in accordance with the best sustainability practices in the industry.”
The massive sulphide mineralisation which appears to be thickening to the south also contains a significant amount of magnetite inclusions.
The sulphide assemblage in order of abundance intersected appears to be pyrrhotite, pentlandite, and chalcopyrite. Aldoro has revealed the latest results from its second diamond drill hole, testing the VC1 target at the Narndee Igneous Complex in Western Australia.
The company’s drill hole NDD0002 intersected significantly thicker and stronger zones of massive, semi-massive, blebby, and veined nickel-copper sulphides than NDD0001. Notably, Aldoro’s portable XRF analyses confirmed nickel and copper are present in the sulphides.
Multiple discrete ultramafic intrusions
NDD0002 was designed to test a shallower up plunge position of the VC1 electromagnetic (EM) conductor 85 metres south-southwest of NDD0001. The drill hole intersected about 3.6 metres of massive sulphide (two zones), 0.5 metres of semi-massive sulphide (one zone), and 6.9 metres of veined, blebby, and breccia sulphide (two zones). Aldoro also noted that the multiple discrete ultramafic intrusions observed in NDD0001 appear to have coalesced into a single thick ultramafic package in NDD0002.
Massive sulphide thickening to the south
NDD0002’s massive sulphide mineralisation appears to be thickening to the south and contains a significant amount of magnetite inclusions.
The sulphide assemblage in order of abundance intersected by NDD0002 appears to be pyrrhotite, pentlandite, and chalcopyrite. However, petrographic and geochemical analyses are required to confirm the species, geological setting, and relative abundance. Importantly, NDD0002 intersected significant zones of quartz veining, disseminated sulphides, and bleaching in the footwall sequence.
Forward plan
Aldoro’s third hole, NDD0003, will be drilled 85 metres south-southwest of NDD0002 to track the thicker sulphide accumulation further up plunge to the south. The company is awaiting the downhole EM contractor to arrive on site. Downhole EM will be conducted on all holes completed at VC1 to aid and refine drill targeting. There will now be four holes to DHTEM survey this week with the results expected to significantly refine the models for follow-up drill targeting.
Handheld XRF analysis has indicated significant cobalt grades in mylonitic units, with samples being prepared for laboratory confirmation
Red Rock said reverse circulation drilling at the Luanshimba copper-cobalt project in the Democratic Republic of Congo is now proceeding satisfactorily after slow initial progress.
So far at the project, which is operated by 80% owned subsidiary Red Rock Galaxy SA, 11 holes of 60m to 100m have so far been drilled in the 2,000 first phase.
This number may be extended, the company said, with cobalt-copper oxides including heterogenite having been encountered in 10 of the holes in zones starting at depths between approximately 19m and 70m.
Some 850km of samples are being prepared for laboratory assay in South Africa, with handheld XRF analysis indicating significant Cobalt grades in mylonitic units but needing laboratory confirmation.
Pyrite has also been encountered towards the bottom of some holes, indicating the possibility of sulphide mineralisation at depth.
Red Rock chairman Andrew Bell said: “Initial progress was slow but the drillers were able to replace the initial rig with a more powerful model, and drilling is now proceeding satisfactorily.
“Black oxide ores within the dolomites appear to host some copper and significant cobalt mineralisation, possibly related to a brecciated zone on the slopes of the west-dipping anticlinal structure.
“We look forward to receiving lab results, and are considering utilising the more powerful rig now on site to extend some holes to a 120-200m depth to test for copper sulphide mineralisation.”
Red Rock earlier put out a statement saying that a London initial public offer of Australian gold joint venture Red Rock Australasia could be on the cards.
Hot on the heels of this week’s earlier announcement that Glencore has agreed to pump A$14.4m into Hot Chili in return for a 9.99 per cent equity stake, Hot Chili has surprised the market with further news that it plans to raise $40 million to move to full ownership of its massive Cortadera copper-gold deposit. Hot Chili stock soared immediately by almost 20 per cent on the news.
Hot Chili is also preparing to tap North America’s capital markets via a dual listing in Toronto.
The $40 million raise will be split into a fully underwritten $4 million share purchase plan and a $35 million private placement, corner-stoned by the previously announced Glencore deal and underpinned by several big domestic and international investment players and some of Hot Chili’s largest shareholders. Glencore will emerge in pole position as Hot Chili’s largest shareholder with a 9.99 per cent interest.
The main purpose of the capital raise will be a US$15 million payment to secure 100 per cent of the massive Cortadera copper porphyry discovery in Chile. The project is part of the company’s massive Costa Fuego project that contains a whopping 724 million tonnes grading 0.48 per cent copper equivalent, including 2.9 million tonnes contained copper, 2.7 million ounces of gold and 9.9 million ounces of silver plus a healthy 64,000 tonnes of molybdenum.
Hot Chili’s nest of porphyry copper-gold deposits at Costa Fuego already makes the project one of the most globally significant copper discoveries in the last decade. Cortadera is one of two major global copper discoveries of the past five years or so – the other is Rio Tinto’s revered Winu project in WA.
The funding will also deliver a major resource upgrade and pre-feasibility study for the Costa Fuego project.
The $35 million private placement to selected investors will see new shares issued at $0.032 per share. The fully underwritten A$5 million share purchase plan will allow participation by all shareholders under the same terms as the private placement. In total, 1,093,750,000 new fully paid ordinary shares are up for grabs. The strategic cornerstone investment by Glencore was made as part of the private placement. Glencore will appoint a representative to the Hot Chili board.
Hot Chili is now the largest ASX-listed copper developer, and importantly, it is the only major copper-gold porphyry developer in the Americas that is not listed in North America. Full ownership of the massive Cortadera copper porphyry project, a strong cash position, rapid resource growth and now backing by mining giant Glencore will provide a compelling foundation for the company’s plans to dual list on the Toronto stock exchange later this year.
The $40 million funding secures ownership of Cortadera, and Glencore’s investment and involvement is a strong endorsement of our future.
Along with Glencore who will subscribe for $13.93 million under the placement, a second new major new shareholder will be an associated entity of Hot Chili’s Chairman, Murray Black, who has opened his purse strings for a tidy $3 million after continuing to back the company since inception.
Black is a well-known Kalgoorlie mining identity, owner of Blue Spec Drilling and part of the initial brains trust that decided to target Chile’s tier-one deposit potential.
The issue of 665,004,511 shares under Tranche 1 of the private placement will not be subject to shareholder approval and will be made within the Company’s 25 per cent placement capacity under Australian Securities Exchange listing rules. The general share offer is subject to shareholder approval at the next meeting anticipated to be on or around 15 September 2021. The issue price of $0.032 cents per new share represents an 11.1 per cent discount to the Company’s last closing price. The share purchase plan offer period will open on Tuesday, 17 August 2021 and is expected to close at 5 pm AWST on Friday, 10 September 2021.
Hot Chili’s progress with the Cortadera acquisition and development has been astonishingly rapid with the deal struck in early 2019, world-class drill results delivered by mid-2019 and a maiden resource announced just over a year later. And now, only four years into the project, the Perth-based explorer will be the 100 per cent owner of one the largest copper deposits in the world.
The Renison tin mine has had a win, while a company which half-owns it has decided to run without a chief executive. Coronavirus troubles in Malaysia in June led to the government ordering a national lockdown of economic activities. It was due to end on June 14, but was then extended by a fortnight. That prompted the Malaysian Smelter Corporation (MSC) to declare force majeure on all concentrate contracts, including those with Metals X Limited covering tin concentrates from Renison on Tasmania's West Coast.
Force majeure is when an unexpected event - such as war or an earthquake - is invoked as a reason not to honour a contract. Metals X said the shipments in transit or shortly to be sent to MSC and shipments it had already received would be subject to extended payment terms. It later announced three extra shipments to Yunnan Tin China, saying that would mitigate risk related to any potential long-term smelter disruptions in Malaysia. The Thailand Smelting and Refining Co. also agreed to take extra shipments. On August 3, Metals X said MSC was now operational and payment for previous shipments had started. "On receipt of payment for all outstanding shipments, the company will recommence new shipments of concentrate to MSC," it said.
"This return to operations has occurred earlier than anticipated in the company's forecast cashflow for the balance of 2021." It later announced chief executive Michael Spreadborough would step down as of Monday. "Given the change in the strategic direction of the company following the divestment of its copper and nickel assets, the role will not be replaced at this time," it said.
Executive director Brett Smith thanked Mr Spreadborough for his contribution to Metals X and its turnaround. Renison achieved earnings before interest, tax, depreciation and amortisation of $41.43 million for the June quarter. That was well up on a $15.14 million result for the March quarter.
Killer Bore is located 5 kilometres from Vendetta’s 100% owned Pegmont lead-zinc project in Queensland
Historic drill results from Killer Bore included 4 metres of 8.97% zinc and 0.51% copper
Vendetta Mining Corp said it has entered into an option agreement to acquire 100% of the Killer Bore zinc exploration concession, which is 5 kilometres from the company’s 100% owned Pegmont lead-zinc project in Queensland, Australia.
Vendetta noted that the Killer Bore exploration permit includes two non-contiguous blocks totaling 1,550 hectares, with historic drill results that included 4 metres (m) of 8.97% zinc and 0.51% copper from 80m to 84m down hole.
“It is our contention that the mineralisation intersected in the historic drilling at Killer Bore represents the distal part of the Pegmont mineralising system, which is zinc dominant, with copper, little to no lead and within pyrrhotite iron formations,” Vendetta Mining CEO Michael Williams said in a statement.
“If this is shown to be correct it highlights the scale of the Pegmont system and could provide high-grade mineralisation that could be incorporated into the development plan for Pegmont,” Williams added.
Vendetta will acquire the Killer Bore concession option from Australian copper producer Sandfire Resources by completing A$102,000 in exploration expenditures before the end of the second anniversary of the agreement, plus an additional A$500,000 in exploration expenditures between the start of the third anniversary and before the end of the fifth anniversary.
Sandfire Resources will retain a 2% Net Smelter Returns (NSR) royalty over the Killer Bore property.
Vendetta Mining's wholly-owned Pegmont lead-zinc project lies in the Mount Isa - McArthur Mineral Province, Australia which hosts one of the world's richest endowments of lead-zinc-silver mineralization, including several significant mines.
Contact Sean at sean@proactiveinvestors.com
Announces Quarterly Dividend of C$0.04 per share
TORONTO, ON / ACCESSWIRE / August 10, 2021 / Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX:JAG, OTCQX:JAGGF) today announced financial results for the second quarter ("Q2 2021") ended June 30. 2021. All figures are in US Dollars, unless otherwise expressed.
Q2 2021 Financial Highlights
Revenue for Q2 2021 decreased 15% to $36.3 million, compared with $42.5 million in Q2 2020, mainly due to a reduction in gold sales by 19% to the comparison period, this was partially offset by 5% increase in the average realized gold price of $1,795/oz. in Q2 2021 as compared to $1,703/oz. for Q2 2020.
Vern Baker, President and CEO of Jaguar Mining stated: "Jaguar began moving back toward our sustainable production levels in the second half of Q2 2021. Production of over 20,000 ounces was the first step in bringing ounce production back to sustainable levels. Within the limitations of the first half of the year the company managed to expand the exploration program and increase capital expenditures on growth projects. Jaguar sees significant potential for growth and will increase expenditures on exploration and growth in the second half of the year."
Vern added, "Similarly to Brazil, Jaguar was impacted by Covid-19 in Q1 2021 and Q2 2021. Jaguar has seen the impacts of the pandemic reducing in the second half of Q2 2021 and expects operations to return to normal in the next few months. Jaguar is working to ensure our work force receives the Covid-19 vaccination and expects our workforce to be near full vaccination levels later this year. One of the impacts from the pandemic appears to be inflation. Our operations are seeing that our main inputs of steel, chemicals, and diesel are all experiencing significant upward price pressure. Jaguar has committed to several focused projects to minimize the effect of inflation on our costs. Efforts to reduce consumption, push back price hikes, and improve productivity should begin to impact costs in the next several quarters.
"The challenges at this point for Jaguar are to bring ounce production levels up to target, keep costs down, and to begin capitalizing on the exploration results we are seeing. The Jaguar team is focused on accomplishing these challenges over the next two quarters."
(In 2020, Chile’s copper mine production was estimated at 5.7 million metric tons of metal content, representing 28.5 percent of the global copper production that year.)
Copper prices have dropped after BHP and mine workers reach a tentative wage deal at the Escondida mine in Chile. This comes after the workers’ union announced on Monday that they would extend the government-mediated talks by a day to stave off a strike by workers which would paralyse the mine’s production capability.
The long-running negotiation between the company and the powerful 2,300-member union has global copper markets on edge as demand increases and supply remains tight amid a nascent global recovery from the COVID-19 pandemic.
The dispute arose after union officials rejected BHP’s final wage offer which prompted the owners to request government mediated talks. The two sides are close in terms of benefits. Union officials have requested a bonus equivalent to 1% of the company’s profit, which would be about 21 million pesos ($26,600) for each worker. In regular talks, the company offered 18 million pesos apiece and says it has sweetened terms during mediation.
The preliminary deal goes a long way to ease fears that the union will seek strike action at the culmination of the government mediated talks. A deal at Escondida would also likely ease labor tensions across the country, after workers at the Caserones mine, owned by JX Nippon Mining & Metals, opted to walk off the job Tuesday when their talks with management collapsed.
An Escondida deal would set an important precedent for labor relations in the booming cooper industry due to its centrality to Chile’s copper production. However, strike action is still possible with union officials claiming that BHP has not done enough during the mediation process. The cost of a prolonged strike like the 44-day stoppage in 2017 could prove especially damaging given the current highs of copper in global markets.
“We have gone to great lengths to reach an agreement during the process, and especially in mandatory mediation,” the company said in a message late Friday. “We hope that these efforts will be appreciated by the workers because the offer in mediation will be the best that the company will present.”
The Escondida mine is the biggest in the world, with proven reserves of 34.7 million tonnes, of which 22.5 million tonnes is estimated to be recoverable, representing 5% of the world’s supply of the metal. The mine is of critical importance to Chile, with copper production accounting for 10-15% of the country’s GDP.
https://www.mining-technology.com/news/company-news/copper-prices-deal-escondida/
BISHOPSGATE, LONDON / ACCESSWIRE / August 11, 2021 / The Board of Directors of SolGold (LSE:SOLG)(TSX:SOLG) is pleased to provide an update on the Regional Exploration programme in Ecuador with the commencement of drilling at its Sharug Project in southern Ecuador, held by Green Rock Resources S.A., a 100% owned subsidiary of SolGold.
HIGHLIGHTS
Drilling has commenced at the Santa Martha copper gold porphyry target at the Sharug Project as part of an initial six-hole drilling program testing extensive coincident surface geochemical and geophysical anomalies
Mineralisation at Santa Martha is part of a 600m wide by 1,200m long northeast trending corridor containing mineralisation styles, size and geometry consistent with surface exposure of a vertically extensive, well-preserved copper-gold porphyry system
The Santa Martha target is characterised by coincident soil Cu, Au, Mo soil geochemistry, porphyry style alteration, and a classic magnetic high surrounded by an annular magnetic low
All scout drilling regulatory approvals have been received for 13 drilling platforms to accommodate multiple holes at the Santa Martha target
Commenting on today's release, Mr Jason Ward, Executive Director and Country Manager for SolGold in Ecuador said:
'Santa Martha displays all of the classic porphyry copper gold signatures that SolGold has recognised through Ecuador and define the blueprint we developed at the tier 1 Alpala project. The permitting and organisation of the Santa Martha programme further endorses SolGold's pan Ecuadorean activities and strategy and are a testament to our hard-working team and supportive government and communities.
It's a further step to becoming a large and integrated explorer, developer and producer in Ecuador, on the most under explored and prospective section of the Andean Copper Belt. SolGold is dominant in Ecuador's exploration effort and results to date endorse this strategy.'
References to figures relate to the version visible in PDF format by clicking the link below: http://www.rns-pdf.londonstockexchange.com/rns/2271I_1-2021-8-10.pdf
FURTHER INFORMATION
SolGold continues to pursue its strategy to become a tier 1 copper and gold production company through aggressive exploration of its extensive tenement portfolio in Ecuador. The regional exploration programme is fully funded to 2022.
The Sharug project which contains the Santa Martha target is located within the Miocene aged metallogenic Belt of southern Ecuador (Figure 1). All scout drilling regulatory approvals have been received for the 100% SolGold owned Sharug Project in Ecuador's Southern Copper-Gold Province for 13 drill pads to accommodate multiple drill holes.
Drilling operations have commenced at the Santa Martha target in the Sharug Project utilising one man-portable HydracoreTM 5000 hybrid man-portable machine modified to drill NQ sized diamond drill core up to 1,800m depth. Hole 1 is part of a planned six-hole 3,200m initial drilling program at Sharug (Figures 4 & 5).
The Santa Martha copper-gold-molybdenum porphyry target covers an area of 1,200m by 600m and remains open to the east on granted Green Rock Resources S.A. (100% SolGold) tenure. The Santa Martha target is characterised by coincident Cu, Au, Mo soil geochemistry, porphyry style alteration, and a classic magnetic high surrounded by an annular magnetic low (Figure 3).
Mineralisation is exposed at surface at Santa Martha where outcropping stockwork quartz veining is associated with a central Cu-Au-Mo anomaly (Figure 6).
The Santa Martha target geology consists of diorite and quartz-diorite intruded by lesser tourmaline breccias. This geological setting compares favourably with the geology at SolGold's flagship Cascabel and Porvenir projects, where Solgold has defined tier 1 resources and significant discoveries.
Hydrothermal alteration comprises zones of biotite-sericite, quartz-sericite, chlorite, chlorite-epidote and sericite alteration typical of fertile porphyry systems (Figure 2).
The initial six-hole drilling program is planned to test the coincident geochemical and geophysical anomalies at the Santa Martha target. Seven additional platforms to accommodate multiple additional holes have been permitted to allow for a seamless extension of the program depending on initial results.
Figure 1: Location plan showing Sharug Project in southern Ecuador
Figure 2: Prospect locations at the Sharug Project showing the Santa Martha porphyry target and the Quillosisa epithermal Target areas with concession outlines and geology mapping
Figure 3: Interpretation of 3D magnetic inversion under RTP ground magnetic data, showing secondary magnetic enrichment surrounded by pervasive alteration and magnetite destruction
Figure 4: Plan of permitted drilling platforms with the drilling rig currently setup on the PDH15 platform displayed over gridded copper in soil anomalism
Figure 5: 3D magnetic inversion cross section of initial drilling traverse at Santa Martha, showing copper results in soil
Figure 6: Photos of outcropping quartz stockwork veining at the Santa Martha target
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 until the release of this announcement.
Qualified Person:
Information in this report relating to the exploration results is based on data reviewed by Mr Jason Ward ((CP) B.Sc. Geol.), the Chief Geologist of the Company. Mr Ward is a Fellow of the Australasian Institute of Mining and Metallurgy, holds the designation FAusIMM (CP), and has in excess of 20 years' experience in mineral exploration and is a Qualified Person for the purposes of the relevant LSE and TSX Rules. Mr Ward consents to the inclusion of the information in the form and context in which it appears.
By order of the Board
Kamoa-Kakula Copper Mine achieved Phase 1 commercial production on July 1, 2021; first phase projected to produce approximately 200,000 tonnes of copper per year
Kamoa-Kakula's Phase 2 expansion, scheduled for Q3 2022, will double annual copper output to approximately 400,000 tonnes
Ivanhoe Mines pledges net-zero greenhouse gas emissions at the Kamoa-Kakula Copper Mine
Good progress being made on Ivanhoe's Western Foreland exploration program, searching for DRC's next tier-one copper discovery
Development of the world-scale Platreef palladium, rhodium, platinum, nickel, copper and gold project in South Africa making excellent progress
Toronto, Ontario--(Newsfile Corp. - August 11, 2021) - Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) today announced its financial results for the three and six months ended June 30, 2021. Ivanhoe Mines is a Canadian mining company advancing its three mining projects in Southern Africa: the Kamoa-Kakula copper mining complex in the Democratic Republic of Congo (DRC); the Platreef palladium-rhodium-platinum-nickel-copper-gold discovery in South Africa; and the extensive upgrading of the historic Kipushi zinc-copper-lead-germanium mine, also in the DRC. Ivanhoe also is exploring for new copper discoveries on its Western Foreland exploration licences in the DRC, near the Kamoa-Kakula Project. All figures are in U.S. dollars unless otherwise stated.
HIGHLIGHTS
Kamoa-Kakula's Phase 1 concentrator plant achieved commercial production on July 1, 2021. Kamoa-Kakula's initial production guidance, on a 100%-project basis, is between 80,000 and 95,000 tonnes of copper in concentrate for 2021.
Kamoa-Kakula's Phase 2 construction is progressing slightly ahead of plan and remains on track for start-up in Q3 2022, which will see a doubling of mill throughput to 7.6 million tonnes per annum (Mtpa). Phases 1 and 2 combined are forecast to produce approximately 400,000 tonnes of copper per year.
Study work to accelerate Phase 3 mine and concentrator expansion to at least 11.4 Mtpa is ongoing. Based on independent benchmarking, the project's phased expansion scenario to 19 Mtpa would position Kamoa-Kakula as the world's second-largest copper mining complex, with peak annual copper production of more than 800,000 tonnes.
At the end of July 2021, Kamoa-Kakula's surface ore stockpiles held approximately 3.54 million tonnes grading 4.77% copper, containing more than 168,000 tonnes of copper.
Ivanhoe, together with its partner Zijin, is exploring the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion, which includes optimization work to determine mining production capacity and costs at the various mining areas on the Kamoa-Kakula complex, including expanded facilities at the Kansoko Mine, Kamoa North (including the Bonanza Zone) and Kakula West. Kamoa Copper also is refining its longer-term downstream processing strategy, including the potential construction of a smelter or hydrometallurgical processing facility.
In April 2021, Ivanhoe Mines Energy DRC entered into an agreement with the DRC's state-owned power company Société Nationale d'Électricité (SNEL) to upgrade a major turbine at the Inga II hydropower facility. The upgraded turbine is expected to produce 162 megawatts (MW) of clean, renewable hydropower, providing the Kamoa-Kakula Copper Mine with sufficient, sustainable electricity for future expansions, including a copper smelter.
In May 2021, Ivanhoe pledged to achieve net-zero operational greenhouse gas emissions (Scope 1 and 2) at the industry-leading Kamoa-Kakula Copper Mine. Since the mine already is powered by clean, renewable hydro-generated electricity, the focus of the company's net-zero commitment will be on electrifying the project's mining fleet with new, state-of-the-art equipment powered by electric batteries or hydrogen fuel cells. Emissions-free underground mining equipment, at the size and scale required for Kamoa-Kakula's bulk-scale operations, is at an advanced stage of development by several of the world's leading equipment manufacturers.
During Q2, Ivanhoe continued its 2021 copper exploration program on its Western Foreland licences that cover a combined area of approximately 2,550 square kilometres in close proximity to Kamoa-Kakula. Drilling in the quarter was focused on the western and eastern extensions of the Makoko Discovery, as well as the northern and western extensions of the Kiala Discovery. Good progress was made on construction of critical infrastructure to access high-priority, newly-acquired westerly exploration permits, including construction of a 60-kilometre spine road across the Western Foreland and a new bridge across the Lubudi River.
In February 2021, Ivanhoe announced that its South African subsidiary, Ivanplats, is arranging project-level financing of up to $420 million to advance development of the world-scale Platreef palladium, rhodium, platinum, nickel, copper and gold project in South Africa.
Ivanplats has signed a non-binding term sheet with Orion Mine Finance, a leading international provider of production-linked stream financing to base and precious metals mining companies, for a $300-million gold, palladium and platinum streaming facility. Ivanplats also has appointed two prominent, international commercial banks - Societe Generale and Nedbank - as mandated lead arrangers for a senior project debt facility of up to $120 million.
Ivanplats' proposed financings follow the November 30, 2020 issuance of the outstanding findings of an independent Platreef Integrated Development Plan 2020 (Platreef IDP20), which consists of an updated feasibility study (Platreef 2020 FS) and a preliminary economic assessment (Platreef 2020 PEA). The initial capital cost for the phased development plan under the Platreef 2020 PEA, starting at a mining rate of 700,000 tonnes per annum (700 ktpa), is estimated at $390 million.
Detailed engineering is progressing on Platreef's 700-ktpa initial mine design, 770-ktpa concentrator and associated infrastructure for the phased development plan, which is scheduled to be incorporated into an updated feasibility study by year end or early 2022. The Shaft 1 changeover is progressing well in preparation for permanent hoisting in early 2022. Construction activities on the Shaft 2 headframe also are advancing. In July 2021, Ivanplats ordered emissions-free, battery electric drill rigs and underground loaders from leading Swedish manufacturer Epiroc, for use in the mine's underground development.
Construction activities on Platreef's Shaft 2 headframe also are advancing.
At the Kipushi Mine redevelopment project in the DRC, the Kipushi Project's draft feasibility study, and development and financing plan are being reviewed by Ivanhoe Mines together with its joint-venture partner and state-owned mining company, Gécamines. The project is maintaining a reduced workforce to conduct maintenance activities and pumping operations.
Ivanhoe has made excellent progress in upgrading Kipushi's underground infrastructure to allow for mining to quickly begin at the ultra-high-grade Big Zinc orebody. Resumption of production at the mine now requires the construction of a surface processing plant and other related production facilities. Discussions are continuing with Gécamines to advance a new era of production at Kipushi and it is anticipated that these discussions will be concluded with the finalization of the feasibility study and the agreement on the development and financing plan.
At the end of Q2 2021, Kamoa-Kakula had reached 1.49 million work hours free of a lost-time injury, Kipushi had reached 3.44 million work hours free of a lost-time injury, and Platreef had reached 57,000 work hours free of a lost-time injury.
Principal projects and review of activities
1. Kamoa-Kakula Project
39.6%-owned by Ivanhoe Mines
Democratic Republic of Congo
The Kamoa-Kakula Project, a joint venture between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world's fourth-largest copper deposit by international mining consultant Wood Mackenzie. The project is approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of Lubumbashi. The Kamoa-Kakula Project began producing copper in May 2021 and achieved commercial production on July 1, 2021.
Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately-owned Crystal River in December 2015. Since the conclusion of the Zijin transaction, each shareholder has been required to fund expenditures at the Kamoa-Kakula Project in an amount equivalent to its proportionate shareholding interest in Kamoa Holding.
A 5%, non-dilutable interest in the Kamoa-Kakula Project was transferred to the DRC government on September 11, 2012, for no consideration, pursuant to the 2002 DRC mining code. Following the signing of an agreement with the DRC government in November 2016, in which an additional 15% interest in the Kamoa-Kakula Project was transferred to the DRC government, Ivanhoe and Zijin Mining now each hold an indirect 39.6% interest in the Kamoa-Kakula Project, Crystal River holds an indirect 0.8% interest and the DRC government holds a direct 20% interest. Kamoa Holding holds an 80% interest in the project.
Health and safety at Kamoa-Kakula
At the end of June 2021, the Kamoa-Kakula Project reached 1,492,769 work hours free of a lost-time injury. A fatality occurred on May 31, 2021 when a contractor's employee was hit in the leg by a loose falling rock while working at one of the mine's underground faces, which caused the employee to fall backwards, striking his head. Despite immediate first-aid assistance by his colleagues, he passed away at the accident scene. Since the fatality, remedial safety interventions have been implemented. Two other lost-time injuries occurred in Q2 2021. The project continues to strive toward its workplace objective of zero harm to all employees and contractors.
Kamoa-Kakula has successfully focused on prevention, preparation, and mitigation in managing the risks associated with COVID-19. Large-scale testing, combined with focused preventative measures, ensured that positive cases were quickly identified, isolated, and treated, with cross contamination kept to a minimum. Maintaining this high standard of risk management remains a daily focus, to prevent future cases. During the first six months of 2021, the Kamoa-Kakula Project conducted 3,743 COVID-19 tests, with 163 patients testing positive for COVID-19.
Kamoa Copper has secured an initial supply of the AstraZeneca vaccine for employees, contractors and Democratic Republic of Congo residents who live in the mine's host communities. Kamoa Copper continues to administer its initial supply of 1,500 doses. The second dose will be administered eight to 12 weeks after the first and a certificate of vaccination completion will be issued to those who have received two doses.
The Kamoa COVID-19 hospital continues to treat patients when required, as construction progresses well for the expansion and upgrade of the primary healthcare wing. Kamoa-Kakula's highly-experienced doctors and nurses apply the latest medical treatments, supported by a world-leading emergency response and paramedic team.
Kamoa is one of 15 sites in the province where COVID-19 vaccination programs are being rolled-out to curb the spread of the virus. As the pandemic evolves, the medical team at the Kamoa hospital continues to review and update risk mitigation protocols, while ensuring that new medical advances are investigated and applied to protect the health and safety of employees and community members.
Copper concentrate production from the initial 3.8-Mtpa Kakula concentrator plant commenced in May 2021; commercial production achieved on July 1, 2021
Overall progress of Kamoa-Kakula's first phase, 3.8-Mtpa mining and milling operation (covering mine infrastructure, concentrator plant and surface infrastructure) was very nearly complete at the end of Q2 2021. The only major construction activity that still was outstanding was the backfill plant which was completed in July 2021, with the first paste to be delivered to underground stopes in August 2021.
The backfill plant will be used to mix tailings from the processing plant with cement to produce paste backfill. The backfill will be pumped back into the mine and used to help support mined-out areas. Approximately one-half of the mine's tailings will be sent back underground, significantly reducing the surface tailings storage. Construction of the tailings storage facility has been completed and first tailings deposited.
Overall construction of the project's first phase, 3.8-Mtpa concentrator plant and associated facilities is complete, with C4 or hot commissioning advancing according to plan. First ore was introduced into the ball mills on May 20, 2021, and first saleable concentrate was filtered on May 25, 2021, marking the start of concentrate production. Lower-grade ore was fed into the plant during initial hot commissioning and the feed grade has since been increased.
The Kamoa-Kakula Project was deemed to have reached commercial production on July 1, 2021, after achieving a milling rate in excess of 80% of design capacity and recoveries close to 70% for a continuous, seven-day period. Revenue recognition, as well as depreciation of Kamoa-Kakula's first phase, 3.8-Mtpa concentrator plant and milling operation, commenced from this date.
Approximately 500,000 tonnes of ore had been milled by early August 2021. Copper production has steadily increased since hot commissioning began at the end of May 2021. Copper production exceeded 500 tonnes per day on occasion during July, nearing the Phase 1 steady-state design capacity of approximately 550 tonnes per day, or 200,000 tonnes per year. During August, the focus of the commissioning team will shift from the front end crushing and milling circuit to balancing and optimizing the flotation and regrind milling areas. This is expected to further improve concentrate grade and recovery.
Copper recoveries increased from an average of approximately 70% in June 2021 to approximately 81% in July 2021, progressively increasing toward the Phase 1 steady-state design copper recoveries of approximately 86%.
As at June 30, 2021, contained copper in concentrate produced by the Kamoa-Kakula Project amounted to 9,858 tonnes. Ivanhoe's guidance for contained copper in concentrate expected to be produced by the Kamoa-Kakula Project for 2021 assumes ramp-up from first production continues in line with published technical disclosures, and is as follows:
Kamoa-Kakula Project 2021 Guidance Contained Copper in Concentrate 80,000 to 95,000 tonnes
All figures in the above table are on a 100%-project basis. Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms. Cost guidance is expected to be provided once the Kamoa-Kakula Project's Phase 1 plant has operated at steady-state production for a continuous period.
Loading high-grade copper concentrate at the Kamoa-Kakula concentrate storage warehouse for transport to the nearby Lualaba Copper Smelter for processing into blister copper ingots, containing approximately 99% copper.
Construction of Kamoa-Kakula's Phase 2 expansion is more than 35% complete; Phase 3 studies are progressing
Construction of the second 3.8-Mtpa concentrator plant is progressing well toward a Q3 2022 start-up with the current focus on the completion of civil works and early structural steel erection. Civil works are over 80% complete with a number of areas handed over to the steel, mechanical, piping and platework contractor.
Engineering and procurement activities are well advanced with both approximately 80% complete. Structural steel, platework and major equipment has started arriving on site and steel erection in the high-pressure grinding rolls and tailings thickening areas has commenced. The bulk of the structural steel and platework is scheduled to be on site in early Q3 2021. Piping fabrication is advancing well with some piping en route to site.
Ivanhoe and its partner Zijin are exploring the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion, which may be fed from expanded mining operations at Kansoko, or new mining areas at Kamoa North (including the Bonanza Zone) and Kakula West.
Study work for the Phase 3 mine and concentrator expansion is underway, which includes optimization work to determine mining production capacity and costs at the various mining areas. This work also will inform the optimal sizing of the Phase 3 concentrator, which was outlined as a further expansion of 3.8 Mtpa in the Kamoa-Kakula Integrated Development Plan announced in September 2020. In addition, the studies will take into consideration the plans to upgrade Turbine 5 at the Inga II hydropower complex to provide 162 megawatts of renewable hydropower, as well as the construction of a direct-to-blister smelter.
Once the optimization work is completed, Kamoa Copper will advance into a more detailed phase of design and engineering work with its objective to accelerate the Phase 3 concentrator expansion.
Two views of Kamoa-Kakula's Phase 1 concentrator plant in full operation and the adjacent, parallel Phase 2 concentrator plant under construction.
Construction of the Phase 2 tailings thickener is nearing completion
Ore stockpiles now hold approximately 3.54 million tonnes grading 4.77% copper, containing more than 168,000 tonnes of copper
At the end of March 2021, Kamoa-Kakula's pre-production surface stockpiles contained approximately 2.56 million tonnes of high-grade and medium-grade ore at an estimated blended grade of 4.60% copper, containing more than 117,000 tonnes of copper.
The project's combined medium-grade and high-grade ore mined was approximately 409,000 tonnes at an average grade of 5.71% copper in April 2021; approximately 406,000 tonnes at an average grade of 5.77% copper in May 2021; and approximately 338,000 tonnes at an average grade of 4.59% copper in June 2021.
This brings the project's total pre-production high- and medium-grade ore surface stockpiles to approximately 3.40 million tonnes at an estimated grade of 4.78% copper as of the end of June 2021.
A total of 414,000 tonnes grading 5.16% copper was mined in July 2021 and comprised 367,000 tonnes grading 5.29% copper from the Kakula Mine, including 85,000 tonnes grading 7.70% copper from the mine's high-grade centre, and 47,000 tonnes grading 4.13% copper from the Kansoko Mine.
First ore was fed into the concentrator plant on May 20, 2021, and the start of copper concentrate production occurred on May 25, 2021, several months ahead of schedule. As of June 30, 2021, 313,000 tonnes of ore grading 4.85% copper had been conveyed to the run-of-mine (ROM) stockpile.
New employee accommodations under construction at the Kakula Mine, with the Kakula North ore stockpiles and concentrator plant in the background.
Kamoa-Kakula's off-take agreements signed for Phase 1 blister copper and copper concentrate
On June 9, 2021, Kamoa Copper signed off-take agreements with CITIC Metal (HK) Limited (CITIC Metal) and Gold Mountains (H.K.) International Mining Company Limited, a subsidiary of Zijin, for 50% each of the copper products from Kamoa-Kakula's Phase 1 production. The off-take agreements are evergreen for the production volumes from Phase 1, including copper concentrate and blister copper resulting from processing of copper concentrates at the nearby Lualaba Copper Smelter.
The off-take agreements contain standard, international commercial terms, including copper payables and treatment and refining charges based on the annual benchmark across the copper industry. The ultra-high-grade, clean concentrate produced by Kamoa-Kakula is expected to contain approximately 57% copper and very low levels of impurities.
CITIC Metal and Zijin are purchasing the copper concentrate at the Kakula Mine and the blister copper at the Lualaba Copper Smelter on a free-carrier basis, meaning the buyers will be responsible for arranging freight and shipment to the final destination, initially via the port of Durban, South Africa.
CITIC Metal and Zijin each provided an advance payment facility of $150 million ($300 million in total), which was drawn at the election of Kamoa Copper and received in June 2021. The facility carries an annual interest rate of 8% and will be offset against provisional payments due to Kamoa Copper from product deliveries. Payment terms include an option to receive a provisional payment on a 100%-basis within three business days of invoicing, at the end of each delivery month.
Agreement signed with Lualaba Copper Smelter to produce 99% blister copper in the DRC
On May 31, 2021, Kamoa Copper signed a 10-year agreement with the Lualaba Copper Smelter, located outside the town of Kolwezi, for the processing of a portion of Kamoa's copper concentrate production. Kamoa Copper delivered its first bulk copper concentrates to the Lualaba Copper Smelter on June 1, 2021, and since then, deliveries to the smelter have been occurring on a daily basis. The Lualaba Copper Smelter is 60%-owned by China Nonferrous Metal Mining Group (CNMC) of Beijing, China. Yunnan Copper of Kunming, China, owns the remaining 40%.
The smelter, which began operations in early 2020, will treat up to 150,000 wet metric tonnes of copper concentrates from Kamoa-Kakula, in return for a treatment charge and market-based realization fee, and produce blister copper containing approximately 99% copper that will be returned to Kamoa Copper, and collected by CITIC Metal and Zijin from a dedicated storage area at the Lualaba Copper Smelter.
The Lualaba Copper Smelter is the first modern, large, pyro-metallurgical copper smelter built in the DRC, and is approximately 40 kilometres from Kamoa-Kakula via the recently-constructed, dedicated by-pass road.
The first truckloads of Kamoa-Kakula's blister copper ingots, containing approximately 99% copper, were exported from the Lualaba Copper Smelter to international markets in July 2021.
Pouring Kamoa Copper blister ingots, containing approximately 99% copper, at the local Lualaba Copper Smelter.
Kamoa Copper blister copper ingots produced at the Lualaba Copper Smelter being loaded for transport to international markets.
Kamoa-Kakula begins exporting copper concentrate internationally as production ramps up
Kamoa Copper SA began exporting its copper concentrate internationally in July 2021. The first truckloads of copper concentrate destined for smelters outside of the DRC departed from the mine site on July 17, 2021, marking a significant milestone in the ongoing ramp-up of Kamoa-Kakula's Phase 1, 3.8-Mtpa concentrator plant.
By early August 2021, approximately 32,700 tonnes of copper concentrate had been loaded at the mine site for delivery to either the Lualaba Copper Smelter, or to international markets.
Kamoa Copper received all necessary authorizations from the DRC government to export copper concentrate and blister copper on June 8, 2021.
Transport trucks loaded with high-grade copper concentrate at Kamoa-Kakula awaiting customs approval, which usually takes five days, before beginning their journey to international smelters, via the port of Durban, South Africa.
Draw-down of equipment financing facility successfully commenced
On December 1, 2020, Ivanhoe announced the Kamoa-Kakula Project had secured an equipment financing facility of up to EUR 176 million (approximately $211 million), together with a $9 million down-payment facility to purchase underground mobile mining equipment and services from leading Swedish manufacturers Sandvik AB and Epiroc AB, and Finnish manufacturer Normet Oy.
The facility has an availability period of three years and amortizes over five years from utilization and is tied to underground mining equipment at the Kamoa-Kakula Project. The Swedish Export Credit Agency (EKN) has provided both political and commercial cover to the lenders and receives a one-off premium per each tranche's first utilization.
After the completion of all conditions precedent, the Kamoa-Kakula Project completed the draw-down of $9 million of the down-payment facility, and an equivalent of $56 million of the equipment financing, in December 2020. In 2021, further draw-downs of the equipment financing equivalent of $16.2 million were completed. Further draw-downs under the equipment finance facilities remain subject to conditions precedent customary for facilities of this nature. The company expects the conditions precedent to be met prior to each utilization.
The equipment finance is secured only by the equipment that is being financed. The down-payment facility is unsecured. No guarantee is required from any of the sponsors or parent companies with Kamoa Holding Limited issuing a non-binding Letter of Support, confirming its support for the project.
In addition, Gold Mountains (H.K.) International Mining Company has provided Kamoa Holding Limited with a limited recourse line of credit of $200 million secured by the project's pre-production ore stockpiles to fund the Phase 2 concentrator expansion. Kamoa Holding has not yet drawn on this line of credit.
Kamoa-Kakula connected to the national power grid, providing clean, renewable 220-kV hydropower
The mine is receiving hydroelectric power via the permanent 35-kilometre, 220-kilovolt (kV) power line, supplying the project with reliable and clean hydro-generated electricity from the national grid.
The main mine 220-kilovolt Kamoa Consumer Substation (KCS) has been energized on grid power, as has the 33kV KCS substation. The main plant 33kV substation and all the plant medium-voltage and low-voltage substations also are energized.
Agreement reached to upgrade major turbine at the Inga II hydropower facility
On April 26, 2021, Ivanhoe announced that Ivanhoe Mines Energy DRC, a subsidiary of Kamoa Holding and sister company of Kamoa Copper SA, tasked with delivering reliable, clean, renewable hydropower to the Kamoa-Kakula Project, signed a memorandum of understanding in a public-private partnership with the DRC's state-owned power company SNEL to upgrade a turbine 5, a major turbine at the existing Inga II hydropower facility on the Congo River. The upgraded turbine is expected to produce 162 MW of clean, renewable hydropower, providing the Kamoa-Kakula Copper Mine with sufficient, sustainable electricity for future expansions, including its own copper smelter.
A definitive agreement superseding the memorandum of understanding has been prepared and is expected to be signed imminently.
Aerial view of the Inga I (rear) and Inga II (front) hydropower plants on the Congo River. The penstock funneling water to turbine 5 at Inga II is circled in red.
Ongoing upgrading work enables Mwadingusha hydropower station to supply clean, sustainable electricity
The upgrading work of six new turbines at the Mwadingusha hydropower plant, the first public-private partnership between Ivanhoe Mines Energy DRC and SNEL, is nearing completion and is expected to soon deliver approximately 78 MW of electricity to the national electrical grid, to provide power for Kamoa-Kakula's initial two phases of production to 7.6 Mtpa. Five of the six new turbines at the Mwadingusha hydropower plant now have been synchronized to the national electrical grid, with each generating unit producing approximately 13 MW of power. The completion and commissioning of the hydropower plant's remaining one generating unit is in progress. The synchronization of this last unit to the grid is expected in August 2021.
The work is being conducted by engineering firm Stucky Ltd. of Renens, Switzerland, under the direction of Ivanhoe Mines and Zijin Mining, in conjunction with the DRC's state-owned power company, SNEL.
Aerial view of the 78-MW Mwadingusha hydropower plant, the reservoir and the community of Mwadingusha.
Kamoa-Kakula aiming to become the first net-zero carbon emitter among top-tier copper mines by electrifying its mining fleet with state-of-the-art equipment powered by electric batteries or hydrogen fuel cells
On May 5, 2021, Ivanhoe Mines announced its pledge to achieve net-zero operational greenhouse gas emissions (Scope 1 and 2) at the industry-leading Kamoa-Kakula Copper Mine.
In support of the Paris Agreement on climate change, and in the spirit of the commitments at the April 2021 Leaders Summit on Climate by the Chinese and American governments to sharply cut emissions, Ivanhoe Mines has committed to working with its joint-venture partners and leading underground mining equipment manufacturers to ensure that Kamoa-Kakula becomes the first net-zero operational carbon emitter among the world's top-tier copper producers.
Since the Kamoa-Kakula mine and concentrator plant already are powered by clean, renewable hydro-generated electricity, the focus of the company's net-zero commitment will be on electrifying the project's mining fleet with new, state-of-the-art equipment powered by electric batteries or hydrogen fuel cells.
Kamoa-Kakula is working closely with its mining equipment suppliers to decrease the use of fossil fuels in its mining fleet, and evaluate the viability, safety and performance of new electric, hydrogen and hybrid technologies. The mine plans to introduce them into its mining fleet as soon as they become commercially available.
Enriching communities through sustainable development
The Sustainable Livelihoods Program was founded in 2010 to strengthen food security and farming capacity in the host communities near Kamoa-Kakula by establishing an agricultural training garden and support for farmers at the community level. Today, approximately 467 community farmers are benefiting from the Sustainable Livelihoods Program, producing high-quality food for their families and selling the surplus for additional income. The Sustainable Livelihoods Program, which commenced with maize and vegetable production, now includes fruit, aquaculture, poultry and honey.
The construction of 100 new fish ponds is progressing well with 60 ponds complete, of which 21 ponds are fully stocked and operational, and 20 ponds currently under construction. The project will significantly contribute toward local entrepreneurship and enhanced regional food security. The Musokantanda Agronomist Secondary School, constructed and equipped during 2020, now serves as a research facility and offers educational programs to 118 students, as well as training programs to local farmers. Plans also are underway for a collaboration between the agronomy school and the University of Kolwezi, which will provide further practical training for students.
Additional non-farming-related activities continued during Q2 2021 and include education programs, a community brick-making program, a sewing program, and the supply of fresh water to a number of local communities using solar-powered boreholes. The Tujenge brick-making program purchased an additional machine to enable the production of hollow bricks to meet the mine's demand, successfully producing 9,000 bricks so far. To ensure that the sewing team is geared to commence operations and that production of Kamoa-Kakula personal protective equipment (PPE) and other garments meet quality standards, 28 members of the project have completed a six-month professional training program. The new Muvunda Primary School, catering to 206 students, has been opened. Construction and equipping of the Kaponda Primary School is underway. A total of 13 of a planned 29 boreholes were drilled in communities using local contractors, providing thousands of community members with easy access to clean water.
Construction of resettlement houses for the relocation program is continuing as planned. To date, 114 homes have been relocated, with 20 households remaining. The remaining families are scheduled for relocation upon completion of the construction of their new homes. Construction of the community church at Kaponda is 80% complete, with all concrete work finalized and the contractor currently installing all door frames and windows.
Excellent progress is being made on the new primary healthcare wing of the Kamoa hospital.
Five of the 100 new fish ponds being constructed in surrounding communities under the Kamoa-Kakula Sustainable Livelihoods Program.
2. Platreef Project
64%-owned by Ivanhoe Mines
South Africa
The Platreef Project is owned by Ivanplats (Pty) Ltd (Ivanplats), which is 64%-owned by Ivanhoe Mines. A 26% interest is held by Ivanplats' historically-disadvantaged, broad-based, black economic empowerment (B-BBEE) partners, which include 20 local host communities with approximately 150,000 people, project employees and local entrepreneurs. Ivanplats reached Level 4 contributor status in its most recent verification assessment on the B-BBEE scorecard. A Japanese consortium of ITOCHU Corporation, Japan Oil, Gas and Metals National Corporation, and Japan Gas Corporation, owns a 10% interest in Ivanplats, which it acquired in two tranches for a total investment of $290 million.
The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper and gold mineralization on the Northern Limb of the Bushveld Igneous Complex in Limpopo Province - approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane.
On the Northern Limb, platinum-group metals mineralization is primarily hosted within the Platreef, a mineralized sequence that is traced more than 30 kilometres along strike. Ivanhoe's Platreef Project, within the Platreef's southern sector, is comprised of two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous with, and along strike from, Anglo Platinum's Mogalakwena group of mining operations and properties.
Since 2007, Ivanhoe has focused its exploration and development activities on defining and advancing the down-dip extension of its original discovery at Platreef, now known as the Flatreef Deposit, which is amenable to highly-mechanized, underground mining methods. The Flatreef area lies entirely on the Turfspruit and Macalacaskop properties that form part of the company's mining right.
Health and safety at Platreef
At the end of June 2021, the Platreef Project reached a total of 57,616 lost-time, injury-free hours worked, after the Project reported the first recordable injury for 2021 in June.
COVID-19 protocols are continuously reviewed and optimized to prevent and mitigate viral spread. During the first 6 months of 2021, the Platreef Project conducted 760 COVID-19 tests, with 38 patients testing positive for COVID-19. In support of the National Department of Health's national vaccine rollout strategy, Ivanplats launched its own on-site COVID-19 vaccination campaign that has administered 279 vaccine doses to date. Approximately 73% of the Platreef Project's employees and contractors working on site have at minimum received their first dose of vaccine.
Phased development plan, detailed engineering and feasibility study progressing well
Platreef's detailed engineering and updated feasibility study for the phased development plan is progressing well toward completion by late 2021 or early 2022. Most of the design and engineering work has been completed and the focus now is on finalizing cost estimates.
Platreef Project with the Shaft 1 headframe on the right and a construction crane working on Shaft 2 in the centre.
Project-level financing arrangements of up to $420 million to advance Platreef's development
In February 2021, Ivanplats signed a non-binding term sheet with Orion Mine Finance, a leading international provider of production-linked stream financing to base and precious metals mining companies, for a $300 million gold, palladium and platinum streaming facility. The stream financing remains subject to completion of legal due diligence and structuring, as well as negotiation and execution of definitive documentation. The streaming facility is planned to be drawn down in two separate tranches, as needed, in parallel with the engineering studies to upgrade the Platreef 2020 PEA to a feasibility study and the changeover of Platreef's Shaft 1 to a production shaft.
Ivanplats also appointed two prominent, international commercial banks - Societe Generale and Nedbank - as mandated lead arrangers for a senior project debt facility of up to $120 million. The senior project debt facility is scheduled to be utilized only after the streaming facility is fully drawn. Definitive terms and conditions of the debt facility are subject to the completion of the feasibility study for Platreef's phased development plan, completion of due diligence and structuring, as well as negotiation and execution of definitive documentation. Terms and conditions of the debt facility will be made available when finalized.
Shaft 1 changeover to a production shaft progressing well
The construction of the 996-metre-level station at the bottom of Shaft 1 was completed in July 2020. Shaft 1 will initially be used to access the orebody, and is approximately 350 metres away from a high-grade area of Flatreef that is planned for bulk, mechanized mining. The three development stations that will provide initial, underground access to the high-grade orebody also have been completed on the 750-, 850-, and 950-metre levels.
Construction of the auxiliary winder foundations has been completed, and the auxiliary winder installed and commissioned. The headgear, both winders, equipping stage, conveyances and control systems comply with the highest current industry safety standards, with proven and tested safety and redundancy systems in place.
The changeover construction at Shaft 1 is progressing to plan and is on schedule for commencement of rock hoisting early in 2022. All equipment for the shaft changeover has been procured and is on site. The changeover work within the shaft is being done by Platreef's experienced owners' team.
The winder that was used to successfully sink Shaft 1 has been converted to function as the main equipping conveyance during the shaft changeover, and will serve as the permanent rock, personnel and material winder following the shaft-equipping phase. The shaft will be equipped with two 12.5-tonne skips (with hoisting capacity of 825,000 tonnes per year) and an interchangeable personnel and materials conveyance to accommodate the movement of personnel and materials during the initial phase of mining.
Rope guides will be used for the main rock, personnel and materials conveyances, while steel sets and guides will be used for the auxiliary winder conveyance. The stage and winder ropes used during the sinking phase have been removed, and the new equipping stage, permanent guide-ropes and permanent hoisting ropes have been installed. The auxiliary winder has been installed and commissioned to assist during the shaft and station equipping phase, and to function as a man winder during the main rock hoisting cycle. Shaft equipping reached the 450-metre-level station in July 2021.
Newly-designed rock chutes will connect the conveyors feeding the concentrator plant and the waste rock area; from there the waste rock will be crushed and used as cemented backfill underground, as well as for protection berms to contain storm water and reduce noise emissions.
Shaft equipping commenced in May 2021 and remains on track to be completed in early 2022. Following the completion of the changeover work in the shaft, underground stations, and establishment of the ore and waste passes, lateral underground mine development will commence toward high-grade ore zones.
Key underground development orders placed
The design and engineering for the waste conveyor, which will feed from Shaft 1, has been completed with the radial stacker conveyor order placed for delivery in February 2022. Additionally, Ivanplats placed an initial order with Epiroc for its primary mining fleet consisting of emissions-free, battery electric jumbo face drill rigs and load haul dumpers, due for delivery in early 2022.
An Epiroc Scooptram ST14 Battery loader, one of the emissions-free mining machines ordered by Ivanplats to begin underground development at the Platreef Mine.
Shaft 2 headgear construction from hitch to collar well underway
Early-works surface construction for Shaft 2 began in 2017, including the excavation of a surface box-cut to a depth of approximately 29 metres below surface and construction of the concrete hitch for the 103-metre-tall concrete headgear (headframe), which will house the shaft's permanent hoisting facilities and support the shaft collar.
The Shaft 2 headframe construction, from the hitch to the collar level, is progressing well with the first and second headgear lifts well advanced. A total of 10 civil lifts are to be constructed, including a ventilation plenum and personnel access tunnel, with a targeted completion of May 2022.
Platreef's Shaft 2 construction, raising the headframe from the hitch to the collar (at surface).
Underground mining to incorporate highly-productive, mechanized methods
Mining zones in the current Platreef mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below surface. Initial access to the mine will be via the 996-metre-deep, 7.25-metre-diameter Shaft 1, that recently has been sunk to its final depth. Once expanded mine production is achieved, primary access to the mine will be by way of a 1,104-metre-deep, 10-metre-diameter production shaft (Shaft 2). During mine production, both shafts also will serve as ventilation intakes. Three additional ventilation exhaust raises (Ventilation Raise 1, 2 and 3) are planned to achieve steady-state production.
Mining will be performed using highly-productive mechanized methods, including long-hole stoping and drift-and-fill. Each method will utilize cemented backfill for maximum ore extraction. The production plans in both the PEA's initial five-year drift-and-fill mining operation hoisting from Shaft 1, and the expansion when Shaft 2 is available, are focused on maximizing higher-grade areas, which is achieved through optimization based on stope locations, stope grades, mining method, and zone productivities. The orebody was targeted to recover approximately 125 million tonnes at the highest net smelter return.
Ore will be hauled from the stopes to a series of internal ore passes and fed to the bottom of the shafts, where it will be crushed and hoisted to surface.
Development of human resources and job skills
The Platreef Project's second Social and Labour Plan (SLP) now has been approved. Through the implementation of this second SLP, Ivanplats plans to build on the first SLP and continue with its training and development suite, which includes 15 new mentors, internal skills training for 78 staff members, a legends program to prepare retiring employees with new/other skills, community adult education training for host community members, core technical skills training for at least 100 community members, portable skills training, and more. The Platreef Project continues to support several educational programs and the provision of free Wi-Fi in host communities.
Local economic development projects will contribute to community water-source development through the Mogalakwena Municipality boreholes program. Other projects, which will be undertaken in partnership with other parties, include the refurbishment and equipping of a clinic in Tshamahansi Village.
The enterprise and supplier development commitments comprise of expanding the existing kiosk and laundry facilities and adding expanded change house facilities to be managed by a community partner in the future. A five-year integrated business accelerator and funding project will assist community members to obtain help with development and supplier readiness.
3. Kipushi Project
68%-owned by Ivanhoe Mines
Democratic Republic of Congo
The Kipushi copper-zinc-germanium-silver-lead mine in the DRC is adjacent to the town of Kipushi and approximately 30 kilometres southwest of Lubumbashi. It is located on the Central African Copperbelt, approximately 250 kilometres southeast of the Kamoa-Kakula Project and less than one kilometre from the Zambian border. Ivanhoe acquired its 68% interest in the Kipushi Project in November 2011; the balance of 32% is held by the state-owned mining company, Gécamines.
Health and safety at Kipushi
At the end of June 2021, the Kipushi Project reached a total of 3,441,678 work hours free of lost-time injuries. It has been more than two and a half years since the last lost-time injury occurred at the project.
Since temporarily suspending mine development operations due to the COVID-19 pandemic, the project maintained a reduced workforce to safely and cost-effectively maintain infrastructure and pumping systems and to execute planned projects.
The Kipushi Project has built a new potable water station to provide a free daily supply of water to the municipality of Kipushi. The daily support in supply of free potable water to the Kipushi municipality community members includes power supply, disinfectant chemicals, routine maintenance, security and emergency repair of leaks to the primary reticulation to the benefit of an estimated 100,000 people, excluding those from rural areas. Approximately 1,000 cubic metres of potable water is pumped hourly and continuously to consumers on a daily basis.
50 boreholes of potable water are planned to be drilled around the Kipushi district over five years to reach areas not served by the current distribution reticulation. To date, 11 solar-powered potable water wells have been drilled and operate throughout the district.
The Kipushi Project continues to support educational initiatives through renovations and the supply of school desks to the Mungoti School, and the granting of bursaries and scholarships to students from Kipushi. Over the past four years, approximately 300 students have been supported through the bursary program. The sewing training centre project established by the Kipushi Project continued producing cloth face masks, donating approximately 2,000 masks a month to host communities. The Kipushi Project also is broadcasting daily COVID-19 awareness messages on a local community radio station, as well as through a motorized caravan.
The Sustainable Livelihoods Program, which commenced in 2020 with a poultry farming initiative established for the benefit of a consortium of local women, is progressing well with more than 500 chickens having been brought to market. This program is planned for expansion around the Kipushi district.
Kipushi's definitive feasibility study in final stages of completion
The Kipushi Project's pre-feasibility study (PFS), announced by Ivanhoe Mines on December 13, 2017, anticipated annual production of an average of 381,000 tonnes of zinc concentrate over an 11-year, initial mine life at a total cash cost of approximately $0.48 per pound (lb) of zinc.
The draft definitive feasibility study, together with the development and financing plan for Kipushi, are being reviewed by Ivanhoe Mines and its partner Gécamines. It is anticipated that these discussions will be concluded with the finalization of the feasibility study and the agreement on the development and financing plan by Q4 2021.
(L-R) Ethienne Mulambe, Jhon Nkunda and Mulanga stripping out the old winder from Kipushi's Shaft 15.
Project development and infrastructure
Although development and rehabilitation activities in the first half of 2021, as well as for 2020, were limited, significant progress has been made in recent years to modernize the Kipushi Mine's underground infrastructure as part of preparations for the mine to resume commercial production, including upgrading a series of vertical mine shafts to various depths, with associated headframes, as well as underground mine excavations and infrastructure. A series of crosscuts and ventilation infrastructure still is in working condition and have been cleared of old materials and equipment to facilitate modern, mechanized mining. The underground infrastructure also includes a series of high-capacity pumps to manage the mine's water levels, which now are easily maintained at the bottom of the mine.
Shaft 5 is eight metres in diameter and 1,240 metres deep and has been upgraded and re-commissioned. The main personnel and material winder has been upgraded and modernized to meet international industry standards and safety criteria. The Shaft 5 rock-hoisting winder also is fully operational with new rock skips, new head- and tail-ropes, and attachments installed. The two newly-manufactured rock conveyances (skips) and the supporting frames (bridles) have been installed in the shaft to facilitate the hoisting of rock from the main ore and waste storage silos feeding rock on the 1,200-metre level.
Since temporarily suspending mine development operations, priority engineering tasks still continue, including new winder installations as a second means of egress on the cascade side, and repairs, as well as replacement of main critical pump columns in Shaft 5 to ensure reliable and continued pumping of water from the mine.
Gael Shimatu drilling an anchor hole to install a safety barricade.
4. Western Foreland Exploration Project
100%-owned and 90%-owned by Ivanhoe Mines
Democratic Republic of Congo
Ivanhoe's DRC exploration group is targeting Kamoa-Kakula-style copper mineralization through a regional exploration and drilling program on its Western Foreland exploration licences, located to the north, south and west of the Kamoa-Kakula Project. Ivanhoe's Western Foreland Exploration Project consists of 17 licences that cover a combined area of approximately 2,550 square kilometres.
Exploration models that successfully led to the discoveries of Kakula, Kakula West, and the Kamoa North Bonanza Zone on the Kamoa-Kakula joint-venture mining licence are being applied to the extensive Western Foreland land package by the same team of exploration geologists responsible for previous discoveries.
Exploration activities at the Western Foreland area continued during Q2 2021, with drilling in the western and eastern extensions of the main Makoko area.
In Q2 2021, 32 diamond holes were completed at the Makoko area, on the west and the east of the main Makoko areas, following a fence of 1,000-metre spacing for a total of 7,310 metres. These results are pending assay. A 200-metre by 200-metre soil-sampling grid on this zone is planned for Q3 2021 for a follow-up on the previous soil geochemistry work.
Diamond drilling started at the Kiala discovery zone in late April. Nine holes have been drilled in the area to date for a total of 2,947 metres, investigating the extension to the north of the high-grade copper structure, as well as exploring the western extent of the zone. Assay results are pending.
The construction of a 16-kilometre road to provide critical access to the new exploration target areas on the newly-acquired western permits has been completed, as well as a bridge over the Lubudi River. Construction of a 60-kilometre access spine road across the western permits also has started, with 20 kilometres having been cleared to date, of which six kilometres have been covered with laterite. The plan is to complete the final bridge construction toward the end of the year once the spine road is complete.
Geophysical airborne surveys such as magnetics, gravity and electromagnetics are scheduled to start in early Q3 2021 in the Western Foreland and the Kamoa North areas. This new geophysical data will enhance the target delineation program for drill testing and soil sampling.
The recent Makoko West drilling is extremely significant for the exploration potential of the new exploration permits as it demonstrates that the target stratigraphy extends westward and that the copper mineralizing system on the western edge of the basin is laterally extensive. Future drilling in the Makoko West area will target specific structural locations that are conducive to developing higher copper grades.
Ivanhoe Mines' Western Foreland exploration core shack at the Makoko Discovery.
Results continue to extend the potential size of the Minyari resource and enhance the project development opportunity in a prolific copper-gold region.
Three drill rigs are on site undergoing the phase-2 drill program to evaluate Minyari East.
(Antipa Minerals has received further high-grade results from drilling on its Minyari Dome Project in Western Australia’s Paterson Province that continue to extend the potential size of the gold-copper resource and enhance the project development opportunity.
Encouraging copper and gold results have been returned from the deposit, which is within 25 kilometres of Newcrest Mining Ltd’s Telfer Gold-Copper-Silver Mine and mineral processing facility and 54 kilometres along strike from ( , , )-Newcrest’s Havieron gold-copper development project.
Among the results was 28 metres at 1.63 g/t gold and 0.18% copper from 161 metres down hole in 21MYC0218, including 14 metres at 2.67 g/t gold and 0.32% copper from 173 metres.
Great Southern Mining has rattled the tin for $2.5 million that will largely be funnelled into exploration at its exciting Duketon gold project about 45km north of Laverton in WA’s prolific north-eastern Goldfields. Last week the company reeled off a stellar 59m drill intersection grading 2.1 grams per tonne gold from 53m down hole at the project’s Southern Star prospect.
The wide headline intersection included higher-grade sections of 9m going 4.5 g/t and 16m at 3.2 g/t gold.
Other notable intercepts from Great Southern’s inaugural RC drilling program at Southern Star were 46m at 1.2 g/t gold from 40m including 11m at 3.4 g/t gold, 5m at 2.7 g/t from 127m including 2m at 6.3 g/t and 19m at 1.8 g/t from 64m including 6m at 3.9 g/t gold.
The Perth-based company says funding from the “oversubscribed” placement of 50 million shares at 5¢ apiece to new and existing sophisticated and professional investors will help expand and rapidly advance drilling work at Duketon.
Duketon’s One Weight Wonder, Erlistoun and Ogilvies regional prospects will also be targeted in the company’s ramped-up exploration mix.
The recently announced intersections at Southern Star were a fantastic start to the drilling program at the company’s 100 per cent-owned Duketon greenstone belt project.
Drilling at a number of regional targets has been brought forward to rapidly advance exploration activities in the region and to continue to build on this success at Southern Star.
Great Southern says the promising drill hits at Southern Star point to mineralisation at the footwall of the same quartz dolerite unit that takes in Regis Resources’ 390,000-ounce Ben Hur gold deposit 4km north-west along strike on the Rosemont trend.
Regis’ Rosemont open-pit and underground million ounce-plus gold mine also lies about 24km north-west along strike of Southern Star.
According to the company, the footwall quartz dolerite unit appears to be where the primary lode occurs.
The RC drilling at Southern Star, where more than 3,400m has been punched out so far, was aimed at delineating the extent of mineralisation that the company says remains open to the north, south and at depth.
Further assays from the current campaign are pending.
Great Southern’s recently acquired Duketon project spans more than 450 square kilometres within the auriferous Duketon greenstone belt.
RC drilling carried out by previous owners of Southern Star yielded a veritable smorgasbord of encouraging intersections.
Stand-out intercepts include 15m at 6.5 g/t gold including 4m at 23.3 g/t gold, 50m at 1.8 g/t including 5m at 9.2 g/t and 25m at 2.5 g/t including 5m at 10.7 g/t.
Other solid hits were 50m at 1.6 g/t including 17m at 3.8 g/t, 34m at 2.3 g/t including 12m at 5.3 g/t, 12m at 4 g/t including 8m at 5.9 g/t, 26m at 1.6 g/t including 5m at 6.3 g/t and 15m at 2.2 g/t including 4m at 7.4 g/t.
Great Southern looks to have plenty to work with at Duketon and no doubt gold watchers will be keeping a close eye on the calibre of drilling results coming out of the new project.
Analysts noted there was currently a soft patch in metals demand.
The copper and iron ore prices have softened from record highs reached in May, of US$10,747.50 per tonne and circa $230/t respectively.
Spot copper was below $9,500/t on the London Metal Exchange yesterday and 62% Australian fines have fallen to $163/t according to MySteel.
"Slowing [Chinese] credit growth, especially when combined with high inflation, implies that Chinese demand is likely to remain weak, but there are reasons to be optimistic about more accommodative policies leading to a recovery from the current soft patch in 2022," equity analyst Christopher LaFemina said.
He said the lagging impact of decelerating credit growth was still an issue, as was the Delta variant outbreak and seasonal weakness in August, and demand strength in the rest of the world was unlikely to offset further Chinese weakness in the near term.
"However, we believe the inflection is coming as demand is likely to stabilise in China and improve elsewhere in 2022," he said.
"Consensus estimates continue to be far too low, in our view, free cash flow is at record levels in most cases, very large capital returns have begun and should continue, and sentiment has become overly negative.
"Our top picks for leverage to the recovery from the current soft patch include Glencore, Anglo American, Freeport and First Quantum."
Jefferies has price targets of 3,352.50p for Anglo American, 330.45p for Glencore, C$26.54 for First Quantum Minerals and US$38.22 for Freeport-McMoRan.
VANCOUVER, British Columbia (AP) _ MAG Silver Corp. (MAG) on Wednesday reported second-quarter profit of $3.3 million.
On a per-share basis, the Vancouver, British Columbia-based company said it had profit of 3 cents.
MAG Silver shares have decreased roughly 9% since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $18.69, a climb of 22% in the last 12 months.
https://www.greenwichtime.com/business/article/MAG-Silver-Q2-Earnings-Snapshot-16380981.php
Taruga Minerals is set to join the expanding field of hopefuls hunting for a repeat of Chalice Mining’s spectacular Julimar nickel/platinum discovery in the south west mineral terrane of Western Australia.
A detailed review of the company’s comprehensive ground position surrounding the forestry mecca of Manjimup has turned up a quiver of new targets, including intrusive-style nickel-copper mineralisation at Manjimup East and potential volcanogenic massive sulphides adjacent to Teck’s Wheatley copper discoveries.
The company also flagged the potential for pegmatite-hosted lithium and tin deposits in the region, with the world’s largest hard rock lithium deposit sitting just up the road, 30km to the north of Manjimup, at Greenbushes.
Taruga has its foot on close to 600 square kilometres of potentially fertile ground in southern WA. The company’s tenure comprises of four exploration lease applications which can be divided into three distinct project areas.
The company’s Manjimup West project stretches over the southern tail of the Darling Fault over more than 38km of prospective stratigraphy from Nannup in the north to just past Pemberton in the south. Recent reprocessing of various geophysical surveys, including airborne electromagnetics has already highlighted two potential Julimar-style nickel targets requiring further investigation.
In addition, the Manjimup West tenure is recognised as being a highly prospective environment for a range of other styles of mineralisation, including high-grade lode style gold, similar to that found to the north at Donnybrook and dioritic, intrusive-hosted gold and copper mineralisation, similar in nature to the recent Hemi discoveries in the Pilbara and the million-ounce per annum Boddington mine, located 150km to the north of the tenure.
Immediately east of the company’s Manjimup West project is its Central block, which sits adjacent the Wheatley-Kingsley copper discoveries in that region. A review of the EM over the company’s tenure has highlighted three potential conductors, which according to the company may represent sulphide lodes. They have all been flagged as priority targets for ongoing exploration.
The company’s third project area sits on the eastern side of the South West highway and is coined Manjimup East. The tenement block is next to Venture Minerals “Odin” discovery, which shows early signs of being a mafic intrusion with associated nickel and platinum group element, or “PGE” mineralisation.
Taruga’s initial work over the eastern tenure shows the presence of intrusive stratigraphy with rock chips returning up to 7,541 parts per million copper and 58 parts per billion PGE, pointing to the potential for nickel, copper and PGE-rich sulphide mineralisation at depth.
Encouragingly, the geology and mineralisation in the Bridgetown-Manjimup region is attracting the attention of larger market players, with IGO recently purchasing a 24.5 per cent holding in the Greenbushes operation whilst Chalice Mining will spend $3.7 million on Venture Minerals Manjimup tenure to earn a 70 per cent interest in that ground.
Venture’s ground hosts the Thor and Odin discoveries, which Chalice says shows a number of striking similarities to its own Gonneville nickel-copper-PGE mineralisation at Julimar, boding well for Taruga’s evolving exploration program in the region.
With Taruga now expediting the granting of its south-west tenure and a slew of geochemical and geophysical surveys on the cards in the months ahead, the base metals explorer looks well placed to join the hunt for copper, nickel and PGE’s in this highly prospective terrane.
Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au
New England is home to many railroad firsts, but none is more impressive than the Mount Washington Cog Railway, the world’s first cog rail line. And it’s still running, at a profit, 152 years later while still using some of the original equipment.
Unlike most railroads, the cog doesn’t pull its coaches along a relatively flat line with flanged wheels on two parallel tracks. A cog railroad’s locomotive directly connects its gears to a center rack of iron teeth, pushing the train up the mountain very slowly, but surely.
On a normal railroad the train can handle a two percent grade — or climb — at best. On the Mount Washington Cog the grade is as steep as 38% as the train ascends the 6,288-foot peak over three miles of steep track at about 3 mph.
A recent race up the mountain between humans on foot and the cog saw the train win the climb to the summit by about ten seconds.
Originally proposed as a tourist attraction by Sylvester Marsh in 1858, the entrepreneur was almost laughed out of the New Hampshire legislature when seeking a charter, teasing him that he had as much chance of building a train line to the top of New England’s highest peak as building “a railway to the moon”.
But build it he did and it is still running to this date, now owned by the Presby family, who once owned the nearby Mount Washington Hotel and Bretton Woods Resorts. Since assuming sole ownership of this historic line, the Presby family has poured over $3 million of dollars into its preservation and enhancement.
While the cog still operates two century-old steam locomotives, their unique design with slanting boilers to handle the steep pitch requires hand-made replacement parts. These old puffers consume a ton of coal and a thousand gallons of water on every trip while generating a lot of smoke, known to locals as “cog smog”.
Augmenting the two steam powered trips each day is a fleet of biodiesels that do the journey on 18 gallons of cleaner-burning fuel. Each locomotive pushes one passenger car carrying 70 passengers. Like the locomotives, the passenger cars are all hand-crafted on the property and are adorned with beautiful wood inlays. The newest cars also have a reassuring automatic air brake system.
During the COVID shutdown in 2020, the railway accelerated a rehab process, replacing the rails and racks on the line and building a state-of-the-art repair shop. The five-year project was finished in eight months.
Since its opening over 150 years ago, the cog has always attracted crowds. Pre-COVID ridership topped 120,000 annually and with an expanded all-year schedule, they hope to surpass those numbers this year.
Unlike some railroads we know, the cog runs on time thanks to superb maintenance and a dedicated staff of 100. They’re even hiring new engineers and mechanics, some of them coming from an apprenticeship program with a nearby community college.
Summer and fall are the busy seasons, but a wintertime climb half-way up the peak sounds spectacular, given extreme weather conditions atop the peak where the winter wind chill gets to 50 below.
Tickets aren’t cheap, but well worth it for the experience. Some of the fall steam trips are already booked up. If you’re any kind of railfan, the cog is a must for your bucket list.
Jim Cameron is a longtime commuter advocate based in Fairfield County. Contact him at CommuterActionGroup@gmail.com.
Jindal Steel and Power Ltd reported a consolidated profit of ₹2,516 crore in the quarter ended June 30, 12 per cent lower than ₹2,869-crore profit posted in the previous quarter, the company said in a statement.
However, this was 10 times greater than the profit of ₹235.17 crore posted in the corresponding period last year.
JSPL’s consolidated net revenue stood at ₹10,610 crore, similar to its earnings of ₹10,594 crore in Q4FY21 but up 63 per cent on a year-on-year basis.
Volume growth coupled with an upward momentum in steel prices in Q1FY22 resulted in standalone net revenue rising 65 per cent YoY to ₹10,385 crore.
“The quarter also witnessed a sharp rise in input costs, the impact of which was compounded by exhaustion of low-cost iron ore inventory. Although standalone EBITDA of ₹4,524 crore was up YoY, it declined 7 by per cent QoQ due to a drop in sales volume and lower benefit accruing from iron ore compared to the prior quarter,” the statement added.
Also, the consolidated net debt declined further to ₹15,227 crore in Q1FY22 from ₹22,146 crore in March 2021. The company said the conclusion of JPL divestment, now accounted as asset held for sale, will result in net debt declining further, taking JSPL a step closer to its vision of becoming a net debt free company - a rare feat in the steel sector.
Iron prices have dropped to a near three-month low as China’s imports have dropped following its move to control steel production during the current half to meet carbon emission norms.
Iron ore with 63.5 per cent ferrous content ruled at $167 a tonne on Tuesday, down from a peak of $230.2 on May 12 this year. Iron ore with 62 per cent ferrous content quoted at $173.52 a tonne down from $231 in May and also last month.
The global drop in iron prices has benefited the Indian user industry, mainly steel firms, with the National Mineral Development Corporation, the country’s largest iron ore producer, reducing lump ore prices by ₹300 a tonne and that of fines by ₹200 to ₹7,150 and ₹6,160, respectively.
It is for the second consecutive time that NMDC has cut iron ore prices since July.
Major reason
A major reason for iron prices to decline is fears of the Chinese government controlling steel production in the next few months. Reports say that Beijing has asked 20 steel mills in Tangshan city to suspend operations at some of their units for a week ending Tuesday.
The order was to help meet the norms for reducing carbon emissions. The Chinese steel sector makes up 15 per cent of the total carbon emissions by the Communist country.
One of the world’s top five producers Shagang Group, located in Jiangsu province, has said that it was cutting its steel output to comply with its government’s efforts to cut carbon emissions. It has been asked to reduce its overseas sale of steel products by 50 per cent.
Imports below 100 mt
The company produced 41.6 million tonnes (mt) of crude steel last year. A further indication of Chinese steel production declining is data showing that iron ore imports into China from Australia slipped for the fourth consecutive month in June.
The drop in imports is seen in sync with the Chinese efforts to control steel production and keep it at last year’s level. China’s iron ore imports dropped to 88.51 mt in July compared with 89.41 mt in June. Shipments have been below 100 mt since March, when imports were recorded at 102.1 mt.
Iron ore prices have rallied since the last quarter of 2020 in tune with the commodity prices’ rally as developed nations came up with monetary measures to strengthen demand.
Brazilian pressure
In addition, production in the world’s largest producer Vale in Brazil was affected following a dam burst. Vale said improvements have been made to dam safety, which points to an increase in production.
The Brazilian firm said that its ore production capacity had increased to 330 mt per annum during the June quarter. This is also putting pressure on iron ore prices.
Analysts are of the view that iron ore has peaked during May-June and its prices are headed south for the rest of the year. Chinese analysts and investment banks have been betting on the ore prices dropping on the back of a fall in steel production growth.
The Chinese Iron and Steel Association has projected a slower growth in steel production during the current half compared with the first half this year. This augurs well for Indian steel user industries, which have been affected by the surge in ore prices since November last year.
Tuesday, 10 August 2021 14:49:00 (GMT+3) | Istanbul
According to the preliminary data released by Statistics South Africa (SSA), in June this year South Africa’s manufacturing output increased by 12.5 percent compared to the same month of 2020.
In June, the production of basic iron and steel, non-ferrous metal products, metal products and machinery increased by 19.2 percent on year-on-year basis. In the given month, the production of basic iron and steel products in South Africa rose by 41.1 percent, while the production of structural metal products was up by 3.1 percent, both compared to the same month of 2020. In June this year, the production of basic iron and steel products in South Africa was up by 4.6 percent, while the production of structural metal products in South Africa fell by 9.6 percent, both on month-on-month basis.
For basic iron and steel products, the estimated seasonally adjusted sales of basic iron and steel products (at current prices) in June this year increased by 5.9 percent month on month, amounting to ZAR 11.70 billion ($791.36 million).