Tuesday, November 30, 2021

Copper price sinks as new covid variant spooks markets

 Copper price sinks as new covid variant spooks markets


Global stocks are climbing but remain at historically low levels. (Image courtesy of Codelco.)

Copper prices and other industrial metals slid on Friday as a new and possibly vaccine-resistant coronavirus variant found in South Africa shook market sentiment.

Benchmark copper on the London Metal Exchange (LME) shed 2.9% to $9,474 per tonne in official trading. Copper for delivery in March was down 3.9% on the Comex market in New York, touching $4.28 per pound ($9,416 per tonne). 

LME aluminium lost 4.2% to $2,601 a tonne, zinc shed 3.1% to $3,197, lead was down 0.4% to $2,261, tin eased 0.5% to $38,600 while nickel ceded 3.7% to $19,895.

Shares in copper and base metals-producing miners reflected the slide. BHP Group fell 3.1%, Glencore plc was down 6.5%, Freeport-McMoRan dropped 5.4%, and Southern Copper was down 3.6%. First Quantum Minerals fell 9.4% on the day.

Copper has long been considered a bellwether of the global economy’s financial health. The metal is a common component in most electrical wiring, power generation, transmission, distribution, and circuitry because of its high conductivity and durability.

Copper rally turns into rout.

It is also key in the transition to a greener economy due to its use in battery storage, EV charging stations and related grid infrastructure.

“Copper is still very tight, due to low stocks on LME and supply has not completely recovered and so prices could hold up fairly well even if economic growth slows,” said Amelia Fu, Head of Commodity Market Strategy at Bank of China International.

RELATED: This chart shows copper price could dive 28% going into 2022

The copper market was in a 107,000 tonnes deficit in the first eight months of this year compared with a 97,000 tonnes deficit in the same period a year earlier, the International Copper Study Group said.

The downward moves came after WHO officials on Thursday warned of a new covid-19 variant detected in South Africa. The B.1.1.529 variant, its scientific name, reportedly contains more mutations to the spike protein, the component of the virus that binds to cells, than the highly contagious Delta variant. Because of these mutations, scientists fear it could have increased resistance to vaccines, though WHO said further investigation is needed.

Within hours, the United Kingdom, Israel and Singapore had restricted travel from South Africa and some neighboring countries. Officials in Australia and in New Zealand said that they were monitoring the new variant closely.

Click here for an interactive chart of copper prices

Asian markets were all down on Friday morning in response to the discovery. European markets followed suit after the European Commission announced that restricting air travel to the bloc from southern Africa would be discussed.

“It’s important to stress that very little is known at this point about this latest strain (so) it’s hard to make any informed investment decisions at this point,” Bespoke Investment Group’s Paul Hickey said in a note to clients. 

“Historically speaking, chasing a rally or selling into a sharp decline (especially on a very illiquid trading day) rarely ends up being profitable, but that isn’t stopping a lot of people this morning.”

(With files from Reuters)

Dangote Refinery To Drive Huge Demand For Petroleum Products



The 650,000bpd Dangote Petroleum Refinery, Nigerian National Petroleum Corporation (NNPC) as well as other modular refineries are expected to be the major drivers of Nigeria’s demand for petroleum products, which is projected to grow massively in the nearest future.

Nigeria is the largest oil and gas producer in Africa. Nigeria’s economy and budget has been largely supported from income and revenues generated from the petroleum industry since 1960 and statistics as of February 2021 shows that the Nigeria’s oil sector contributes to about nine per cent of the entire country’s GDP.

The need for holistic reforms in the petroleum industry, ease of doing business, and encouragement of local content in the industry birthed the Petroleum Industry Bill by the Goodluck Jonathan administration on July 18th, 2008.

Speaking at the 15th Oil Trading and Logistics (OTL) Africa Downstream Week in Lagos, recently, the group managing director of NNPC, Mallam Mele Kyari, said NNPC Refineries’ 445,000 barrels-per-day (BPD), Dangote Refinery’s 650,000 BPD and the 250,000 BSD expected to come from the Condensate Refineries through the private sector partnership respectively would supply the Premium Motor Spirit (PMS) requirement in Nigeria.

Kyari’s position only corroborated that of president of the Dangote Group, Aliko Dangote who said he was dissatisfied with the fact that Nigeria is a leading oil producer but imports all her petroleum products for consumption.

Dangote, who was speaking on his mega refinery project in Lagos said, it was the unsavoury situation the nation found itself that made him to take up the challenge to embark on the construction of the gigantic refinery project, which he said is one of the biggest in the world.

According to him, some 29,000 Nigerians would be employed in the refinery when completed and that would also help in the employment generation drive of the federal government.

Kyari, who was represented by the group executive director, Downstream, NNPC, Adeyemi Adetunji, explained that the diversification of NNPC’s portfolio through acquisition of 20 per cent equity valued at $2.6 billion in the 650,000 bpd Dangote Refinery located in the Lekki Free Trade Zone would ensure national energy security and guarantee market for Nigeria’s 300,000 bpd.

He stated, “NNPC is adding 215,000 BPD of refining capacity through private sector driven co-location at the existing facilities in Warri Refining and Petrochemical Company (WRPC) and Port Harcourt Refining Company (PHRC) respectively. Modular refineries are also adding capacities such as the 5,000 BPD Waltersmith refinery, which will be upgraded to 50,000 BPD.

“Additional 250,000 BPD is expected to come from the Condensate Refineries through the private sector partnership. The co-location and Condensate refineries will close the PMS supply-demand gap and create positive returns to the investors.”

He said the corporation has progressed with the Refineries Rehabilitation Programme to boost its participation in the oil & gas value chain by awarding the $1.5 billion Port Harcourt rehabilitation contract with the commitment to deliver on Warri and Kaduna Refineries.

On gas commercialisation effort, Kyari said the federal government has declared 2021-2030 as the decade of gas development in Nigeria. Kyari said the demand for natural gas could grow about four times over the next decade, increasing from 4.8 billion cubic feet per day (bcf/d) in 2020 to between 10 – 23 bcf/d in 2030.

He said currently, supply to the domestic market was about 8bcf/d to power, 0.77 bcf/d to industries, and about 54 bcf/d was flared, while 3.2 bcf/d was for export gas through the LNG and the West Africa Gas Pipeline (WAGP).

According to him, achieving this growth in demand would be occasioned by increasing the dispatchable capacity of existing power, in line with the Presidential Power Initiative, which is less than 1.4 bcf/d).

He added that the growth would be achieved through assuring delivery of major fertiliser projects (Dangote, Brass) 5 bcf/d), and enabling industrial demand for natural gas in the northern axis of the country (1.2 bcf/d).

On the global oil market outlook, Kyari said, “Some $10.4 trillion global stimulus in response to the COVID-19 pandemic has led to the rebound in consumers’ spending while incentives for long-term investments in hydro-carbon have waned.”

He stated that hydrocarbon would continue to be relevant in the global energy mix for the next two decades, quoting the recent data by the Organisation of Petroleum Exporting Countries (OPEC).

On the issue of downstream in transition, the NNPC boss noted that the Nigerian oil and gas industry has been in transition prior to the passage of the Petroleum Industry Bill (PIB), in response to the global energy transition and decarbonisation initiatives.

Kyari maintained that it would be difficult to discuss the transition in the downstream sub-sector in isolation from the overall evolution that was happening in the industry, saying NNPC had diversified its portfolio over the years, transiting to an energy company with new investments in gas, power, and renewables, pointing out that key pipeline projects are ongoing to assure delivery of gas to the demand nodes.

He stated, “the OB3 project, which brings gas from East to West, is nearing completion. The 614km Ajaokuta, Kaduna, Kano (AKK) project, which was launched by Mr. President in June 2020, is progressing very well. These could add up to $40 billion to annual GDP and create additional six million jobs.

“The corporation has progressed with the Refineries Rehabilitation Programme to further boost its participation in the Oil and Gas value chain by awarding the $1.5 billion Port Harcourt rehabilitation contract with the commitment to deliver on Warri and Kaduna Refineries.

“The rehabilitation of critical downstream infrastructure comprising of major pipelines, depots and terminals through the Build, Operate and Transfer (BOT) financing model is on course.”

Kyari explained that the transition in Nigeria’s oil and gas sector was being driven by the global decarbonisation efforts to switch to renewables in response to environmental concerns.

As investments in hydrocarbon continued to wane due to energy transition and geopolitics, Kyari said the world economy faced shortages, high energy prices, rising inflation and sluggish growth.

Dangote refinery is a 650,000 barrels per day (bpd) integrated refinery and petrochemical project under construction in the Lekki Free Zone near Lagos, Nigeria. It is expected to be the Africa’s biggest oil refinery and the world’s biggest single-train facility, upon completion.

The Dangote refinery will process a variety of light and medium grades of crude to produce Euro-V quality clean fuels including gasoline and diesel as well as jet fuel and polypropylene. The integrated refinery and petrochemical project are expected to generate 9,500 direct and 25,000 indirect jobs.

Monday, November 29, 2021

Biden's "Strategic" Oil Reserve Release Will Mostly Go To China And India


Today in "the left hand doesn't know what the right hand is doing" news...

Remember that big release of 50 million barrels of oil from the Strategic Petroleum Reserve? Let us jog your memory: it was the hallmark solution proposed by the Biden administration to try and address soaring energy costs for Americans. 

Well, it turns out that most of that oil is going to wind up in China and India, Fox News reports. Both countries have been "actively purchasing U.S. sour crude oil produced in the Gulf of Mexico".

Sour crude is appealing to foreign buyers due to its affordable price, which comes from its high sulfur content. This also makes it tougher to refine and process. 

18 million barrels of the 50 million released have already been approved for sale. 32 million barrels remain and will be "intended for U.S. consumers to alleviate increased demand," Fox News reports.

China, India, Japan, South Korea and the United Kingdom are all tapping into their petroleum reserves as well.

The White House commented: "The President has been working with countries across the world to address the lack of supply as the world exits the pandemic."

The administration continued: "The president stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic."

"Exit the pandemic?" We're certain that's not a Dr. Fauci-approved PR statement...

Biden sets out oil, gas leasing reform, stops short of ban



The Biden administration on Friday recommended an overhaul of the nation's oil and gas leasing program to limit areas available areas for energy development and raise costs for oil and gas companies to drill on public land and water.

The long-awaited report by the Interior Department stops short of recommending an end to oil and gas leasing on public lands, as many environmental groups have urged. But officials said the report would lead to a more responsible leasing process that provides a better return to U.S. taxpayers.

“Our nation faces a profound climate crisis that is impacting every American,″ Interior Secretary Deb Haaland said in a statement, adding that the new report’s recommendations will mitigate worsening climate change impacts “while staying steadfast in the pursuit of environmental justice.″

The report completes a review ordered in January by President Joe Biden, who directed a pause in federal oil and gas lease sales in his first days in office, citing worries about climate change.

The moratorium drew sharp criticism from congressional Republicans and the oil industry, even as many environmentalists and Democrats said Biden should make the leasing pause permanent.

The new report seeks a middle ground that would continue the multibillion-dollar leasing program while reforming it to end what many officials consider overly favorable terms for the industry.

The report recommends hiking federal royalty rates for oil and gas drilling, which have not been raised for 100 years. The federal rate of 12.5 percent that developers must pay to drill on public lands is significantly lower than many states and private landowners charge for drilling leases on state or private lands.

The report also said the government should consider raising bond payments that energy companies must set aside for future cleanup before they drill new wells. Bond rates have not been increased in decades, the report said.

The Bureau of Land Management, an Interior Department agency, should focus potential leasing on areas that have high potential for oil and gas resources and are in proximity to existing oil and gas infrastructure, the report said.

The White House declined to comment Friday, referring questions to Interior.

The federal leasing program has drawn renewed focus in recent weeks as gasoline prices have skyrocketed and Republicans complained that Biden policies, including the leasing moratorium, rejection of the Keystone XL oil pipeline and a ban on oil leasing in Alaska’s Arctic National Wildlife Refuge, contributed to the price spike.

Biden on Tuesday ordered a record 50 million barrels of oil released from America’s strategic reserve, aiming to bring down gas prices amid concerns about inflation. Gasoline prices are at about $3.40 a gallon, more than 50% higher than a year ago, according to the American Automobile Association.

The Biden administration conducted a lease sale on federal oil and gas reserves in the Gulf of Mexico last week, after attorneys general from Republican-led states successfully sued in federal court to lift the suspension on federal oil and gas sales that Biden imposed when he took office.

Energy companies including Shell, BP, Chevron and ExxonMobil offered a combined $192 million for offshore drilling rights in the Gulf, highlighting the hurdles Biden faces to reach climate goals dependent on deep cuts in fossil fuel emissions.

The leases will take years to develop, meaning oil companies could keep producing crude long past 2030, when Biden has set a goal to lower greenhouse gas emissions by at least 50%, compared with 2005 levels. Scientists say the world needs to be well on the way to that goal over the next decade to avoid catastrophic climate change.

Yet even as Biden has tried to cajole other world leaders into strengthening efforts against global warming, including at this month’s U.N/ climate talks in Scotland, he’s had difficulty gaining ground on climate issues at home.

The administration has proposed another round of oil and gas sales early next year in Wyoming, Colorado, Montana and other states. Interior Department officials proceeded despite concluding that burning the fuels could lead to billions of dollars in potential future climate damages.

Emissions from burning and extracting fossil fuels from public lands and waters account for about a quarter of U.S. carbon dioxide emissions, according to the U.S. Geological Survey.

Environmentalists hailed the report's recommendation to raise royalty rates, but some groups said the report falls short of action needed to address the climate crisis.

"Today’s report is a complete failure of the climate leadership that our world desperately needs,'' said Taylor McKinnon of the Center for Biological Diversity, an environmental group.

The report “presumes more fossil fuel leasing that our climate can’t afford” and abandons Biden’s campaign promise to stop new oil and gas leasing on public lands, McKinnon said.

The American Petroleum Institute, the top lobbying group for the oil industry, said Interior was proposing to "increase costs on American energy development with no clear roadmap for the future of federal leasing.”

Other groups were more upbeat.

“This report makes an incredibly compelling case both economically and ecologically for bringing the federal oil and gas leasing program into the 21st century,” said Collin O’Mara, president and CEO of the National Wildlife Federation. “Enacting these overdue reforms will ensure taxpayers, communities and wildlife are no longer harmed by below-market rates, insufficient protections and poor planning.''

The wildlife federation and other groups urged the Senate to include reforms to the oil and gas program in Biden's sweeping social and environmental policy bill. Many reforms, including an end to drilling in the Arctic refuge and a ban on offshore drilling along the Atlantic and Pacific Coasts and the eastern Gulf of Mexico, were included in a House version of the bill approved last week.

Jennifer Rokala, executive director of the left-leaning Center for Western Priorities, said the report “provides a critical roadmap to ensure drilling decisions on public lands take into account (climate) impacts on our land, water and wildlife, while ensuring a fair return for taxpayers.''

Republicans called the report a continuation of what they call Biden's war on domestic energy production.

While the report hides behind language of “necessary reforms'' and royalty rates adjustments, ”we know the real story,'' said Arkansas Rep. Bruce Westerman, the top Republican on the House Natural Resources Committee.

The Biden administration “will bog small energy companies down in years of regulatory gridlock, place millions of acres of resources-rich land under lock and key (and) ignore local input,'' Westerman said. "Ultimately, the American consumer will pay the price. Look no further than the skyrocketing prices you are already paying at the gas pump.''

Friday, November 26, 2021

Manchin Demands Biden Restart Keystone XL Pipeline


Senator Joe Manchin (D-WV), who is known for being one of the biggest centrists in Congress, is calling on President Joe Biden to restart the Keystone XL pipeline.

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“I continue to call on President Biden to responsibly increase energy production here at home and to reverse course to allow the Keystone XL pipeline to be built which would have provided our country with up to 900,000 barrels of oil per day from Canada, one of our closest allies,” Manchin said in a statement on Tuesday, according to The Hill.

“To be clear, this is about American energy independence and the fact that hard-working Americans should not depend on foreign actors, like OPEC+, for our energy security and instead focus on the real challenges facing our country’s future,” he added, referring to the group of countries that are major producers of oil.

This came hours after the Biden administration announced plans to release 50 million barrels of oil from the nation’s Strategic Petroleum Reserve in an attempt to curb rising gas prices. Earlier this year, Manchin joined Republicans in calling on Biden to restart the permit for the pipeline, because, he said, pipelines across the country “continue to be the safest mode to transport our oil and natural gas resources, and they support thousands of high-paying, American union jobs.″

< Sign the petition: Ban Federal Vaccine Mandates! >

Last week, Manchin touched on the inflation crisis when he expressed his beliefs that Biden’s Build Back Better Act, which was recently passed by the House and is set to go to the Senate, would not help lower prices.

Speaking on rising gas prices, Manchin said, “The cost they see every day. And every day they go to fill up is a dollar and a quarter more a gallon. Three twenty-nine, $3.39. A gallon of milk is now $4 in many places. It’s taking a toll. And I hear it when I go to the grocery store or if I go to the gas station. They say, ‘Are you as mad as I am?’ and I say, ‘Absolutely.'”


Senator Joe Manchin (D-WV), who is known for being one of the biggest centrists in Congress, is calling on President Joe Biden to restart the Keystone XL pipeline.

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“I continue to call on President Biden to responsibly increase energy production here at home and to reverse course to allow the Keystone XL pipeline to be built which would have provided our country with up to 900,000 barrels of oil per day from Canada, one of our closest allies,” Manchin said in a statement on Tuesday, according to The Hill.

“To be clear, this is about American energy independence and the fact that hard-working Americans should not depend on foreign actors, like OPEC+, for our energy security and instead focus on the real challenges facing our country’s future,” he added, referring to the group of countries that are major producers of oil.

This came hours after the Biden administration announced plans to release 50 million barrels of oil from the nation’s Strategic Petroleum Reserve in an attempt to curb rising gas prices. Earlier this year, Manchin joined Republicans in calling on Biden to restart the permit for the pipeline, because, he said, pipelines across the country “continue to be the safest mode to transport our oil and natural gas resources, and they support thousands of high-paying, American union jobs.″

< Sign the petition: Ban Federal Vaccine Mandates! >

Last week, Manchin touched on the inflation crisis when he expressed his beliefs that Biden’s Build Back Better Act, which was recently passed by the House and is set to go to the Senate, would not help lower prices.

Speaking on rising gas prices, Manchin said, “The cost they see every day. And every day they go to fill up is a dollar and a quarter more a gallon. Three twenty-nine, $3.39. A gallon of milk is now $4 in many places. It’s taking a toll. And I hear it when I go to the grocery store or if I go to the gas station. They say, ‘Are you as mad as I am?’ and I say, ‘Absolutely.'”

Wednesday, November 24, 2021

CATL becomes China’s second-biggest stock



China investor favorite Contemporary Amperex Technology Co. hit a fresh record on Monday, overtaking a state-owned bank to become the second-largest company listed onshore. 

With a market capitalization of nearly 1.59 trillion yuan ($249 billion) at the close, the Tesla supplier narrowly surpassed Industrial & Commercial Bank of China Ltd. at 1.55 trillion yuan. Chinese liquor maker Kweichow Moutai Co. remains the number-one stock with a market value of 2.33 trillion yuan.
Expectation that CATL will be included in China’s benchmark CSI 300 Index when a rebalancing decision is announced later this month helped send the stock 6.6% higher on Monday, its steepest gain in more than a month. The firm may become the second-heaviest in the gauge after Moutai with an around 4% weighting, which would bring an estimated 9 billion yuan worth of passive inflows, Sinolink Securities analysts wrote in a note.

The company currently has an almost 21% weighting in China’s Nasdaq-style ChiNext Index.

CATL overtakes ICBC to become China's second largest stock onshore.

U.S. President Joe Biden’s $2 trillion tax and spending bill, passed by the House on Friday, is seen to significantly expand the country’s demand for lithium batteries and provide opportunities for Chinese EV supply chain leaders including CATL, China International Capital Corp. analysts including Zeng Tao wrote in a Sunday note.  

Based in the southeastern province of Fujian, CATL is the world’s largest manufacturer of power batteries and materials and also counts auto giants Daimler, BMW, BAIC Motor Corp as its customers. Shares of the bellwether of China’s EV supply chain have nearly doubled this year, amid Beijing’s vigorous support for green vehicles and carbon neutrality. 

CATL replaced Moutai as the stock most held by mutual fund managers in the third quarter, according to a Shanghai Securities News report. Its shares are up 2600% from its mid-2018 initial public offering, with stock placements and lock-up expiries yet to affect the upward trajectory.

Ranked: The top 10 EV battery manufacturers

Tuesday, November 23, 2021

JFK Speech The Monolithic and Ruthless Conspiracy

Trump Slams Biden for Tapping the Strategic Oil Reserve

 Trump Slams Biden for Tapping the Strategic Oil Reserve

Source: AP Photo/John Raoux


The White House announced Tuesday morning President Joe Biden plans to tap the strategic oil reserve as gas prices across the country continue to surge. 

"Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply," the White House released in a statement. "The U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways: 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today's specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs. 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized." 

As a reminder, President Joe Biden canceled the Keystone XL Pipeline within hours of his inauguration in January. He also halted oil and gas leases on federal land. 

Former President Donald Trump is slamming the move and reminding Americans the reserve is for emergencies and war, not a self-inflicted energy crisis. 

"For decades our Country's very important Strategic Oil Reserves were low or virtually empty in that no President wanted to pay the price of filling them up. I filled them up three years ago, right to the top, when oil prices were very low. Those reserves are meant to be used for serious emergencies, like war, and nothing else," Trump released in a statement. "Now I understand that Joe Biden will be announcing an 'attack' on the newly brimming Strategic Oil Reserves so that he could get the close to record-setting high oil prices artificially lowered. We were energy independent one year ago, now we are at the mercy of OPEC, gasoline is selling for $7 in parts of California, going up all over the Country, and they are taking oil from our Strategic Reserves. Is this any way to run a Country?" 

During President Trump's term, the United States became energy independent and a net exporter. For months and to no avail, President Joe Biden has been begging OPEC to pump more oil.

Monday, November 22, 2021

Chile elections may impact a third of the world’s copper supply

Chile’s elections may impact a third of the world’s copper supply

Gabriel Boric and José Antonio Kast face off this weekend in the he most crucial and polarized election in Chile’s recent history. (Images from Instagram | Flickr Commons.


Chileans voters head to the polling stations on Sunday in a highly polarized presidential election that has as frontrunners a far-right conservative and a young former student leader on the left, in a face-off of extremes not seen since the country’s return to democracy in 1990.

The election in Chile, the world’s top copper producing nation that also has the largest known lithium reserves, will be the first since months of violent protests over inequality rocked the nation in late 2019.

It comes as the nation is in the midst of drafting a new constitution to replace the one approved during dictator Augusto Pinochet’s military regime, which is considered the main cause of the extreme socio-economic realities that have divided the nations for decades.

The fresh chart is likely to imply tougher rules on water, mineral and community rights, experts say.

Adding to the overall sense of uncertainty, current president Sebastián Piñera (who is barred from seeking a second consecutive term by Chile’s term limits) just survived impeachment.

Until recently, it appeared likely that Chile would elect a new president who shares the protesters’ goals. Gabriel Boric, a 35-year old former student leader allied with the Communist Party, was the favourite for months.

He has centred his campaign on promises of an egalitarian, feminist and ecological Chile.

When it comes to mining, the 35-year old candidate is leaning towards a more active role for the State in the sector, as well as higher royalties.

Ultra-conservative José Antonio Kast, a 55-year-old lawyer, Catholic and father of nine, has instead talked of more private investment in state-owned copper giant Codelco, as well as changes to mining property law. Praising the “economic legacy” of former dictator Pinochet, Kast, often likened to Brazilian President Jair Bolsonaro or former US President Donald Trump, has promised measures to boost foreign investment in the sector.

Both candidates are in favour of diversifying the country’s mining industry into other metals outside of copper and molybdenum, improving sustainability and lowering emissions.

Royalty bill

The results of Sunday’s elections will decide the fate of a controversial tax reform bill that may put a quarter of Chilean copper output at risk. 

Under the proposed change, the ‘royalty’ rate – the amount taken by the government – would be based on output rather than profits and could rise to 75% when copper prices exceed $4 per pound.

Around 14 of the country’s large copper mines have production costs above $2.50 per pound. With a royalty, many could be forced to close when prices slip again.

Click here for an interactive chart of copper prices

“Many low-grade operations will be put out of businesses, destroying jobs,” Manuel Viera, president of the Chilean Mining Chamber, said in May.

The full impact of the new tax would not be felt immediately. According to the Mining Council of Chile, most privately owned mines are covered by tax invariability agreements signed with the Chilean state until 2023.

Diego Hernández, president of the National Mining Society (Sonami), which represents firms in the sector, believes the results of Sunday’s election could lead to a period of “investment drought.” This, he has said, would delay the availability of new copper and lithium to meet the expected increase in demand.

The government has projected mining investments of about $70 billion through the end of the decade, most from private firms.

Chile produced last year a third of the world’s copper in the form of concentrates, anodes and cathodes. The nation is also the no. 2 producer of lithium and is home to large zinc, molybdenum, gold, silver and lead reserves. 

It’s estimated that Chile would need $150 billion in investment to hit its goal to nearly double copper output by 2050.

Copper is seen as a bellwether for economic growth because of the metal’s central role in construction, wiring and electronic goods. It’s also considered a key metal in the ongoing global transition to a green economy.

BHP, the world’s largest miner, estimates that the world will need almost double the copper in the next 30 years.

The vision echoes those of most experts, from consultants such as Wood MackenzieING Economics and BloombergNEF, to industry actors including top miners and electric vehicles makers lead by Tesla and Volkswagen.

Mining companies and investors alike will be closely following the upcoming events in Chile. The results of Sunday’s presidential and congressional elections, the royalty bill’s future as well as the rewriting of the constitution are all critical for the future of foreign investment in the nation and the availability of critical metals.

If no candidate receives more than 50% of the votes, a runoff will be held December 19. Chileans will also elect new deputies for the 155-member lower house and about half of the senate. 

(With files from Bloomberg and Reuters)

Friday, November 19, 2021

Iron ore price falls to lowest in 18 months on dismal demand outlook

 Iron ore price falls to lowest in 18 months on dismal demand outlook

Piles of iron ore at Cape Lambert (Credit: Rio Tinto)


Iron ore prices sank on Thursday, dragged down by a dismal demand outlook for steel products and raw materials in China.

The most-traded iron ore contract for January delivery on the Dalian Commodity Exchange ended daytime trading 5.1% lower at 511.50 yuan ($80.21) a tonne, after touching 510.50 yuan earlier in the session, its lowest since November 4, 2020.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $87.27 a tonne, down 4% from Wednesday’s closing, the lowest since May 2020.

“The price of iron ore has not yet bottomed out,” analysts at Zhongzhou Futures Co Ltd wrote in a weekly note, citing continuing steel production curbs in China in line with its decarbonisation goals and the turmoil in the country’s property sector.

“The profit of some steel mills turned negative, and the steel mills switched from administrative restriction of production to active maintenance.”

China’s monthly steel production has been falling since July after seeing double-digit growth in the first half of the year, as strict output controls and curbs on power usage dented both supply and demand.

The country’s crude steel output from January-October totaled 877.05 million tonnes, down 0.7% on an annual basis.

Rising iron ore supply, with imported materials stocked at Chinese ports swelling to a 31 month high of 147.60 million tonnes last week, according to SteelHome consultancy data, also added to the pressure on prices.

With China tapping the brakes on steelmaking, top producer Vale said this week is taking to Latin steel mills to diversify its iron ore and pellet sales.

Market analyst Fitch Solutions recently revised down its iron ore price forecast from $170/tonne in 2021 and $130/tonne in 2022 to $155/tonne and $110/tonne, respectively.

In the longer term, Fitch forecasts prices to decline to $65/tonne by 2025 and $52/tonne by 2030.

“We maintain our view that iron ore prices will consistently trend downwards, as cooling Chinese steel production growth and higher output from global producers will continue to loosen the market.”

(With files from Reuters)

Tuesday, November 16, 2021

US coal price hits 12-year high, threatening more energy inflation

US coal price hits 12-year high, threatening more energy inflation


U.S. coal prices surged to the highest in more than 12 years, threatening to bloat America’s already soaring electricity bills and signaling the dirty fuel isn’t get phased out anytime soon.

Prices for coal from Central Appalachia climbed more than $10 last week to $89.75 a ton on the spot market, according to figures released Monday from S&P Global Market Intelligence. That’s the highest since 2009, when a spike in exports boosted domestic prices for the power-plant fuel. Prices in other U.S. regions are lower but have also climbed in recent months. 
Higher prices for coal — which comes as natural gas gets costlier, too — means U.S. consumers will almost certainly pay more for energy this winter. Companies including Duke Energy Corp. and Xcel Energy Inc. have been warning customers that winter bills may increase by about $11 a month during heating season. That added expense comes on top of already soaring costs for food, housing and cars in the U.S., driving consumer-price inflation to the fastest annual pace since 1990 and stretching households’ budgets increasingly thin.

The surging coal prices come as a global power crisis drives up demand for the dirtiest fossil fuel that some had prematurely assumed was on a rapid glide-path to extinction in the U.S. With energy demand surging, efforts to reach a deal to completely quit coal’s use failed at the COP26 international climate conference that just ended. Delegates instead pledged to “phase down” rather than “phase out” coal power.

Coal generates more than one-third of the world’s electricity, and countries including China and India depend on it for cheap, reliable power.

The economic recovery from the coronavirus pandemic has driven up demand for electricity around the world, leading to fuel shortfalls. While there’s widespread agreement among climate negotiators that eliminating coal from the global power mix is critical to avert climate disaster, the immediate need to keep factories humming shows that short-term demands are taking precedence over long-term goals.

U.S. miners are struggling to ramp up coal production as American utilities burn more, leading to dwindling stockpiles and rising prices. U.S. miners say demand is going to remain strong through next year, and some already have contracts to sell almost all of their expected output for 2022. 

“The reason spot prices are so high in the U.S. is because there’s no supply, no availability,” said Andrew Cosgrove, a mining analyst for Bloomberg Intelligence.

Prices will probably come down over the next few months but won’t return to where they were at the start of the year, Cosgrove said, noting that he expects utilities to sign long-term contracts for the next few years that are about 30% higher than in recent years. Natural gas prices will stay high and so will demand for coal, but miners have limited ability to expand production and none are expected to invest in new capacity. 

“There are no extra tons,” he said.

(By Will Wade)

Monday, November 15, 2021

Prepare for Armageddon: China's warning to the world | 60 Minutes Australia

Oil Has Staying Power for Years to Come. Why Does It Matter and Where Does it Come From?

 A pumpjack stands in a field next to Arvin High School with the Tehachapi Mountains in the background. Credit: Julia Kane

A pumpjack stands in a field next to Arvin High School with the Tehachapi Mountains in the background. Credit: Julia Kane


Even as more countries and companies pledge to get to net-zero carbon emissions, the world will continue to require fossil fuels for years to come, analysts say, because oil and natural gas are so intertwined with modern life.

But for all the talk about getting to a low-carbon future, there’s been little granular analysis on which fossil fuels produced from which oil fields emit the least amount of harmful greenhouse gases. Sure, there’s a general industry consensus that coal is dirtier than natural gas and that offshore oil is cleaner than shale — but by how much?

That’s the question global energy research firm S&P Global Platts set out to answer with its recently revealed carbon intensity report, a monthly metric that calculates how much carbon is emitted from 14 major crude fields around the world.

Platts analysts said they saw growing demand for low-carbon crude from investors, consumers and producers looking to reduce their carbon footprint. They realized that calculating the carbon intensity of different fuels can help determine which oil and gas fields to focus production on while the world transitions toward cleaner fuels.

“Oil and gas will remain part of the energy mix for decades to come,” said Deb Ryan, Platts’ head of low-carbon market analytics. “In order for the world to meet ambitious emissions reduction targets, a premium value needs to be associated with the lowest carbon intensity oil and gas assets as these fossil fuels continue to play a role in the overall energy mix. By launching carbon intensity values and price premiums, Platts is bringing much needed transparency into the market.”

Platts looked at the carbon emissions from the production of various crude and natural gas fields. Not surprisingly, Platts found that the oil sands from the Cold Lake field in Canada had the highest carbon intensity among the 14 oil fields analyzed, because it takes more energy to extract oil from sand than it does from shale or conventional wells.

The analysis also found that a barrel of offshore oil from the Mars oil field in the Gulf of Mexico has about half the carbon emissions of a barrel of shale oil from the Permian Basin in West Texas.

Even within similar oil fields, there are small differences in carbon intensities.

For example, Platts found that crude from the Permian’s Midland oil patch has slightly lower carbon intensity than crude from the Permian’s Delaware basin. It also found that crude from the Permian had lower carbon intensity than that from the Eagle Ford and Bakken.

Offshore, crude from the Johan-Sverdrup oil field off Norway, which uses electricity to power production, had lower carbon intensity than crude from the Mars oil field in the Gulf of Mexico, Platts said. Crude from Girassol in Angola, Cantarel in Mexico and Tengiz in Kazakhstan had generally lower carbon intensity than crude from Tupi in Brazil and Kirkuk in Iraq.

Platts found there’s no clear correlation between carbon emissions from heavy sulfurous crude or light sweet crude, because the way that crude is extracted, processed and transported can increase or decrease the carbon intensity.

Ultimately, Platts’ carbon intensity metrics could be used to put carbon taxes on various crude and natural gas sources, said Paula VanLaningham, Platts’ global head of carbon. The higher the carbon intensity of a barrel of crude, the higher the carbon taxes. cost of a carbon offset would be.

“What this (metric) does is puts it into perspective about what it would cost to truly mitigate your emissions from one type of barrel of crude over a different one, and that’s pretty critical” VanLaningham said. “When you’re actually looking at the cost of managing your emissions footprint from the beginning , just managing the venting and flaring makes an enormous difference in terms of what the overall environmental impact of running one barrel of oil over a different barrel of oil would mean.”

Friday, November 12, 2021

Codelco’s China clients stall on 2022 deals amid copper backwardation

 Codelco's China clients stall on 2022 deals amid copper backwardation


Codelco’s Chinese customers are reluctant to sign up for copper supply in 2022 at the highest premium in seven years because of strong backwardation in the copper market, three sources with knowledge of the matter said.

Backwardation is a structure where prices for immediate delivery are higher than for future delivery, indicating strong near-term demand, and Chinese buyers are afraid they may lose money on the copper further down the line.
Chile’s Codelco, the world’s biggest producer of mined copper, on Nov. 1 offered Chinese clients physical delivery of copper at a premium of $105 a tonne over London Metal Exchange (LME) prices next year, the highest level since 2015.

It is not unusual for buyers in top copper consumer China to consider Codelco’s offer too high and take time to agree. On this occasion, however, backwardation is the main stumbling block, the sources said, declining to be identified because the discussions are private.

Codelco did not immediately respond to a request for comment.

The spread between cash and three-month LME copper prices blew out to a record of more than $1,100 a tonne on Oct. 18 as inventories dwindled to their lowest since 1974.

The backwardation has since eased to $160 a tonne but buyers are still reluctant to sign up while prompt prices are higher.

“Traders don’t know when they are going to sell the material or put it in a warehouse,” one of the sources said. “They want to make money for certain the Codelco number is fixed.”

He Jinbi, chairman of Chinese metals trader Maike Group, a Codelco customer, said he sees the backwardation persisting for a whole year because of low copper inventories and logistical constraints.

A shortage of shipping containers is causing bottlenecks in global trade.

Maike is in the process of arranging logistics for possible copper exports from China, said He, in a move that could ease backwardation by delivering metal into LME warehouses.

(By Tom Daly; Editing by Mark Potter)

Thursday, November 11, 2021

Tucker: This is why Biden doesn't care about inflation

7-Year-Old Cellist Prodigy Yo-Yo Ma's Debut Performance for President JF...

Forever Grateful for Our American Heroes

Gold price marches to 5-month peak as tune of inflation amplifies


Gold kept its hot streak going on Wednesday, rising by as much as 2% to a five-month high, after a surge in US consumer prices last month elevated bullion’s appeal as an inflation hedge.

Spot gold was up 1.1% at $1,852.36 per ounce by 12:18 p.m. EDT, having earlier hit its highest since June 15 at $1,857.09. Meanwhile, December gold futures rose 1.4% to $1,856.70 per ounce in New York.

[Click here for an interactive chart of gold prices]

“Once again we have hot inflationary data,” High Ridge Futures’ David Meger told Reuters. The brokerage firm’s director of metals trading went on to say:

“Gold being the quintessential hedge against inflation, we believe inflation is the underlying positive environment that will foster the gold market rally in the weeks and months ahead.”

US consumer prices increased more than expected in October as the cost of gasoline and food surged, leading to the biggest annual gain since 1990.

“This environment is a double-edged sword because as inflationary data continues to come out hotter than expected, the concern will be whether the Federal Reserve reduces liquidity faster than anticipated,” Meger added.

The rally came despite strength in the US dollar, which usually weighs on demand for precious metals from holders of other currencies.

Gold, now on course for a fifth straight day of gains, also drew support from a slide in real yields on US Treasuries and the overall risk-off sentiment that pushed down Wall Street’s main indexes.

“Its break above the key resistance level of $1,835 per ounce is important and a close above the $1,851 mark could ignite upward momentum towards $1,900,” according to Standard Chartered analyst Suki Cooper.

“Gold has a solid floor to build price momentum from given the seasonally strong demand from India,” she said.

(With files from Reuters)


Wednesday, November 10, 2021

Biden's OCC nominee Saule Omarova wants the U.S. oil, coal, and gas indu...

Copper price rises on strong export growth in China

 Copper price rises on strong export growth in China

Port Rizhao, China. Stock Image.


The copper price rose on Monday as worries about demand in top consumer China were offset by strong export growth data from the country.

Copper for delivery in December was up 1.6% on the Comex market in New York, touching $4.41 per pound ($9,702 per tonne) on Monday afternoon.

[Click here for an interactive chart of copper prices]

China’s export growth beat forecasts, helped by booming global demand ahead of the winter holiday season, an easing power crunch and an improvement in supply chains that have been badly disrupted by the pandemic.

Outbound shipments jumped 27.1% in October from a year earlier, slower than September’s 28.1% gain. Analysts polled by Reuters said forecast growth would ease to 24.5%.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said the strong exports would help to mitigate the weakening domestic economy, and give the government greater room to maneuver on economic policy.

“The government can afford to wait until the year-end to loosen monetary and fiscal policies, now that exports provide a buffer to smooth the economic slowdown,” Zhang said.

Copper stocks in LME registered warehouses have more than halved since late August to 115,525 tonnes.

RANKED: Top 10 mining projects by ore value

“Industrial metals are still faced with headwinds amid signs of an easing energy crisis and demand destruction that added pressure on the economic outlook from the largest consumer (China) and elsewhere in the world,” ING analyst Wenyu Yao.

“As a result, the outcomes from China’s Politburo meeting this week will be closely scrutinised for clues on demand-side prospects for metals.”

President Joe Biden on Saturday hailed the congressional passage of a long-delayed $1 trillion US infrastructure bill which supported sentiment in industrial metals markets.

(With files from Reuters)

Gold price extends rally to hit 2-month high

 2021 1 oz Gold American Eagle $50 Coin BU Type 2


Gold extended its rally on Monday despite facing pressure from rising US treasury yields, as investors try to maneuver around market-wide expectations that key central banks will keep interest rates low in the near term.

Spot gold continued its momentum from last Friday, up 0.4% to $1,824.27 per ounce by noon EDT, its highest in two months. US gold futures gained 0.5% to $1,825.70 per ounce in New York.

[Click here for an interactive chart of gold prices]

“Gold is drifting after the very strong finish on Friday…traders are still not convinced we have enough ammunition in the gold market to challenge the key area of resistance at $1,820 an ounce,” Saxo Bank’s Ole Hansen commented in a Reuters report.

The precious metal ended last week about 2% higher after the US Federal Reserve maintained its view inflation was transitory, and as the Bank of England surprised markets by holding rates.

“Yields ticking up a few basis points is potentially enough to trigger some profit taking in gold,” Hansen added.

In the meantime, benchmark 10-year yields rose after touching a one-and-a-half-month low in the previous session, increasing the opportunity cost of holding bullion.

Gold has been benefiting from an ultra-low interest rate environment to spur growth during the pandemic. However, the possibility that central banks will start tightening policy to combat rising inflation have kept investors on the lookout for economic data.

Tightness in the labor market combined with dislocation in global supply chains could result in another high reading for US consumer prices due on Wednesday, according to Reuters, with any upside surprise likely to rekindle talk of an earlier Fed hike.

However, IG Markets analyst Kyle Rodda predicts that “inflation data will have to be markedly above expectation for any sort of jolt back into the fear of higher interest rates.”

(With files from Reuters)

Monday, November 8, 2021

The Only Cop In America Speaking Out 🇺🇸

When Will America’s Oil Industry Open The Taps?


U.S. shale basins. (U.S. Energy Information Administration)


Oil prices are through the roof and oil companies are raking it in.

The oil industry has made a truly unbelievable turnaround after prices bottomed out last year during the early phases of the novel coronavirus pandemic and now some industry insiders are even speculating whether oil is on track to hit $100 a barrel.

In early 2020, as Covid-19 rapidly spread around the globe, industry shut down and people were driven into their homes, causing demand for oil to plummet seemingly overnight. As OPEC+ entered talks to strategize their response, Saudi Arabia and Russia began a spat which developed into an all-out oil price war. Soon, a global oil glut had flooded the market to such an extent that storage was at a premium and owning oil became a liability. This is how, on April 20, 2020 the West Texas Intermediate crude benchmark did the previously unthinkable and plunged into the negatives, ending the day at nearly $40 below zero a barrel.

Now, at the time of writing, West Texas Intermediate is at $83.89 a barrel. Last week Saudi Arabia warned the world that global spare oil capacities are falling rapidly. So has the pandemic-fuelled oil crisis ended? On the contrary, oil prices have skyrocketed thanks to the newest phase of the Covid-19 crisis thanks to a ‘scarcity premium.’ Around the world, supply chains are still reeling and energy supply has been unable to keep up with demand as it bounces back to pre-pandemic levels. China, India, and the European Union are now all facing a very serious energy crunch heading into a very grim winter.

So now that oil companies are rolling in the dough will they increase production to help out the world’s energy supply squeeze? Don’t count on it. “Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. confirmed this week that, for the most part, they’ll spend their windfall profits on share buybacks and dividends,” Bloomberg recently reported. While capital expenditures will increase in 2022, the report continues, “the increases come off 2021’s exceptionally low base and within frameworks established before the recent surge in fossil-fuel prices.”

This is a huge change in behavior for the oil industry, which usually brings a “drill, baby, drill” mentality to even the smallest upticks in oil prices. The oil industry has been historically characterized by booms and busts as the oil sector reacts to high prices by flooding the market with oil, which then sinks those prices. The oil industry then repents, curbs production, waits for oil prices to rise, and then starts the cycle all over again. Until now.

For the duration of the Covid-19 crisis, oil producers have shown uncharacteristic restraint and held tight to their pledged production cuts. And now that restraint will turn into a payoff for shareholders. While this is bad news in the short term for countries suffering from an energy crunch, in the long run this move is good news for climate change mitigation.

Big Oil is more than aware that world leaders are getting more serious than ever about the clean energy transition, and the future of fossil fuels is far from certain. “We will not double down on fossil fuels,” Shell CEO Ben Van Beurden was quoted by Bloomberg. Supermajors might just stay the course on their production caps and focus on diversifying in the coming years.

ExxonMobil Earns $6.8 Billion In Third Quarter 2021


ExxonMobil's intervention against the Russia sanctions bill could add to concerns among senators. | Getty


Exxon Mobil Corporation announced Friday estimated third-quarter 2021 earnings of $6.8 billion, or $1.57 per share assuming dilution. Third-quarter capital and exploration expenditures were $3.9 billion, bringing year-to-date 2021 investments to $10.8 billion, as the company continued strategic investments in its advantaged assets, including Guyana, Permian Basin, and in Chemical.

Oil-equivalent production in the third quarter was 3.7 million barrels per day. Excluding entitlement effects, divestments, and government mandates, oil-equivalent production increased 4% versus the prior-year quarter, including growth in the Permian and Guyana.

“All three of our core businesses generated positive earnings during the quarter, with strong operations and cost control, as well as increased realizations and improved demand for fuels,” said Darren Woods, chairman and chief executive officer.

“Free cash flow more than covered the dividend and $4 billion of additional debt reduction. With the progress made in restoring the strength of our balance sheet, this week we announced a dividend increase maintaining 39 consecutive years of annual dividend growth.”

“Next month, the board will finalize our corporate plan that supports investment in industry-advantaged, high-return projects, and a growing list of strategic and financially accretive lower-carbon business opportunities,” added Woods.

“The strong returns generated by our core businesses provide the near-term cash flows to fund lower-carbon opportunities that leverage our competitive strengths in technology, engineering and project development. We expect to increase the level of spend in lower-emission energy solutions by four times over the prior plan, adding projects with strong returns as well as seeding some development investment in large hub projects that require further policy support.

Retaining flexibility to strike a balance across our different investment opportunities, while maintaining a strong balance sheet, is critical to ensure our business produces accretive, long-term returns and remains resilient under a wide range of future scenarios. We anticipate the company’s strong cash flow outlook will enable us to further increase shareholder distributions by up to $10 billion through a share repurchase program over 12-24 months, beginning in 2022."

Friday, November 5, 2021

Top 10 mines with world’s most valuable ore

 Cameco pares Q2 loss as uranium contract business grows


In mining, grade is king. Across the commodity spectrum, some of the most anticipated results — which can determine the scope of a mining project — are assay values from drill testing.

As one of mining’s most influential figures, Robert Friedland, sums it up:

“Mining 101. High grade is good. Low grade is bad.”

“The higher the grade, the smaller the environmental footprint, Friedland has said. “The higher the grade, the smaller the plant; the less the electrical consumption, the smaller the labour force, the smaller the tailings pond, the less the global warming gas per unit of metal produced.”

The value of the ore is calculated by multiplying the contained metals and minerals per tonne in the proven and probable reserves by the ruling price for the commodities.

Silver and gold shine on the top ten list of mines with the most valuable ore, compiled with data provided by our sister company Miningintelligence.

*Commodity prices as of October 27

Top listed uranium producer Cameco’s Cigar Lake uranium mine in Canada’s Saskatchewan province takes top spot with ore reserves valued at $9,105 per tonne, totaling $4.3 billion. After a six-month pandemic induced halt, Cameco restarted operations at Cigar Lake in April.

Pan American Silver’s Cap-Oeste Sur Este (COSE) mine in Argentina is in second place, with ore reserves valued at $1,606 per tonne, totaling $60 million.

In third place is Alphamin Resources’ Bisie tin mine in the Democratic Republic of Congo, which saw record production in Q420, with ore reserves valued at $1,560 per tonne, totaling $5.2 billion. Fourth place goes to Alexco Resource Corp’s Bellekeno silver mine in Canada’s Yukon territory, with ore reserves valued at $1,314 per tonne for a total value of $20 million.

Kirkland Lake Gold, which recently merged with Agnico Eagle takes two spots in the top ten list, for its Macassa gold mine in Canada and Fosterville gold mine in Australia at fifth and sixth places, respectively. Fosterville’s ore reserves are valued at $915 per tonne for a total of $5.45 billion.

In seventh place is Glencore’s Shaimerden Zinc mine in Kazakhstan, with ore reserves valued at $874.7 million for a total value of $1.05 billion. Alexco Resource Corp’s takes another spot with Flame and Moth silver mine in the Yukon territory with ore reserves valued at $846.9 per tonne, for a total value of $610 million.

Rounding out the top ten are Hecla Mining’s Greens Creek silver-zinc mine in Alaska with ore reserves valued at $844 per tonne for a total value of $6.88 billion. Western Areas Spotted Quoll nickel mine in Australia with ore reserves valued at $821 per tonne — a total value of $1.31 billion.

Download more information from Miningintelligence here.