Monday, January 24, 2022

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China’s record coal spree seen preventing any new energy crunch

China’s record coal spree seen preventing any new energy crunch

Coal bulker terminal at the port of Qinhuangdao. (Copyright Greenpeace | Liu Feiyue) 
Coal bulker terminal at the port of Qinhuangdao. (Copyright Greenpeace | Liu Feiyue)

China is better prepared to avoid any energy supply crisis even with power demand forecast to continue to grow rapidly, authorities said.

A 10% lift in demand last year triggered a supply crunch in the second half and caused widespread electricity shortages, prompting a raft of government action to tame surging fuel prices, secure imports and boost local production.
The nation now has sufficient fuel supply to meet “reasonable domestic demand,” the National Development and Reform Commission, the county’s top economic planning agency, said Tuesday. A rush to accelerate coal output in the final months of 2021 pushed annual production to more than four billion tonnes, including a record December haul.

Utilities have also secured more longer-term coal contracts to manage price volatility, while gas suppliers are maintaining high inventories and have been able to meet home heating needs so far this winter without curbing flows to industrial users.

To support China’s adoption of wind and solar power, authorities will speed up approvals for giant, cross-regional power transmission lines and back the development of desert-based hubs for renewables, the NDRC said. President Xi Jinping in October announced the first 100 GW of projects in a desert build-out were already under construction.

Codelco adds 30 years to Andina copper mine

Codelco adds 30 years to Andina copper mine

Construction took eight years and includes a 52-metre-tall dome that encloses the truck unloading area. (Image courtesy of Codelco.)

Chile state-owned copper miner Codelco has cut the ribbon at its $1.4 billion Andina Transfer project at its namesake division, which allows the world’s largest copper producer to extend the life of the asset for another 30 years.

The project turned the underground operation into an open pit mine located 3,500 metres above sea level nestled in the Andes Mountains – which hold 30% of Chile’s copper reserves.

Construction took eight years and included a 52-metre-tall dome that encloses the truck unloading area, protecting the primary crusher from winter temperatures and preventing dust emissions.

Andina Transfer will also operate with a 4km underground, regenerative ore conveyor belt that will supply over 3.6MW to the division’s electricity network, reducing energy consumption from external sources.

The crushing and ore transportation system will now need only 14 pieces of equipment, down from 50 previously needed.

Andina Transfer’s production capacity is set at 240,000 tonnes of copper per year. Until now, the division had annual production of 184,000 tonnes of the metal, representing only 10% of Codelco’s total output.

The operation is currently in the commissioning phase and the ramp-up stage will begin in February.

Chile, the world’s largest producer of the metal used in everything from construction to electric vehicles and renewable energy, accounts for nearly 30% of the world’s output.

The nation expects to receive almost $69 billion in mining investments through the end of the decade, down 6.9% from the previous forecast, state copper commission Cochilco said in November. 

Thursday, January 20, 2022

Iron ore price back above $130 as China pledges support

 Iron ore price back above $130 as China pledges support

Workers in machinery factory in China. (Stock Image) 

Iron ore led gains among industrial metals Wednesday as China vows to use more monetary policy tools to spur the economy, brightening the outlook for raw materials demand. 

Futures in Singapore climbed over 3% to more than $130 a tonne. Dalian iron ore jumped nearly 5%, while benchmark 62% Fe fines imported into Northern China were changing hands for $131.23 a tonne during morning trading, up 2.8% compared to Tuesday’s closing, according to Fastmarkets MB.

“Expectations of easing from the People’s Bank of China while bracing for tighter US monetary policy will spur traders to punt on rates-sensitive assets such as commodities and bonds,” Hong Hao, head of research at BOCOM International, wrote in a research note.

China, the world’s biggest buyer of metals, has been mired in a property market slump, credit stress and repeated virus outbreaks. In response, the central bank this week cut its policy interest rate for the first time in almost two years, signaling the beginning of an easing cycle. 

“There’s a trend of strengthening the macro policies to stabilize the economy amid downward pressure on the real-estate market,” Huatai Futures said in a note.

Singapore iron ore price

Top steel-producing region Tangshan announced plans for winter curbs on Tuesday, Mysteel reported, citing local government documents.

According to Mysteel’s own survey, the capacity utilization rate for blast furnaces in the city will be lowered to 63% from 78% when 16 more furnaces shut from January 30 to February 20 and from March 3-13, affecting capacity of about 60,000 tonnes a day. 

“The resumption of production at steel mills may have to wait until after the Lunar New Year holidays, which could have an impact on the supply of steel,” Huatai said.

Read More: BHP posts 5% jump in second-quarter iron ore output

(With files from Reuters and Bloomberg)

Shell to Hand Over Deer Park Refinery to Pemex Next Week - Sources 

Mexican state oil company Petroleos Mexicanos will take control of the Deer Park refinery in Houston, Texas on Jan. 20, three sources with knowledge of the matter said on Thursday.

Royal Dutch Shell (RDSa.L) had agreed in May to sell its majority stake in the Deer Park refinery, which can process up to 340,000 barrels per day (bpd), to Pemex (PEMX.UL), its long-time partner in the plant, for about $596 million.

“Next Thursday, the payment and transfer of the asset will happen,” said a Pemex source, who spoke on condition of anonymity. “The refinery will then be operated directly by Pemex”.

Pemex has reached an agreement with personnel already working in the refinery, the source added.

The operators would be the same to guarantee stability, but they would no longer be working for Shell, the source said.

A Pemex delegation, including Chief Executive Officer Octavio Romero, will travel to Texas to finalize the deal on Thursday, a second source added.

Pemex did not immediately respond to a request for comment and a Shell spokesman did not immediately confirm the delivery date.

A third source close to the talks said there are still final transition activities pending, but added that he expected the deal to complete in the next few days.

Mexican Energy Minister Rocio Nahle did not confirm the Jan. 20 date in an interview with local television network Milenio, saying the timing of the process was being managed between Shell and Pemex.

“It is very risky to give a date … but this process is already underway,” Nahle said. “Hopefully soon.”

Conversations had accelerated in recent days in order to complete the entire purchase operation before Feb. 1, the third source said.

Neither Shell nor Pemex have detailed what volumes of refined product Mexico will receive from the Texas plant nor how much crude it will be able to supply from now on.

Wednesday, January 19, 2022

De Beers makes diamond buyers cough up cash with fresh price rise

De Beers makes diamond buyers cough up with fresh price rise

The miner increased the price of its rough diamonds throughout much of 2021 as it sought to recover from the first year of the pandemic. (Image courtesy of De Beers Group.) 

De Beers has implemented its biggest price increase for diamonds in years as the industry consolidates its recovery from the first pandemic-induced shutdowns.

The Anglo American unit hiked prices by about 8% at its first sale of the year, according to Bloomberg. The sharpest increases of up to 20% were for smaller, cheaper stones.

The changes at the January sight, which runs from Monday to Friday this week, reflected buoyant polished sales during the recent US festive period, as well as a hot rough market.

The company increased the price of its rough diamonds throughout much of 2021 as it sought to recover from the first year of the pandemic when the industry came to a near halt. Most of these hikes, however, were applied to stones bigger than 1 carat.

The strategy granted De Beers a steady recovery during 2021. Its diamond prices rose by 23% in “just over a year,” said Mark Cutifani, CEO of Anglo American in a December presentation.

De Beers sells its gems through 10 sales each year in Botswana’s capital, Gaborone, and the handpicked buyers — known as sightholders — generally have to accept the price and the quantities offered.

Customers are given a black and yellow box containing plastic bags filled with stones, with the number of boxes and quality of diamonds depending on what the buyer and De Beers agreed to in an annual allocation.

Main winners

Diamonds ended up being the big winners from lockdowns around the globe as access to rival luxury offerings was limited. That first showed with stronger-than-expected holiday sales, from Thanksgiving through to Christmas, and has since continued. 

“The rough market is hot. There’s enthusiastic buying across all rough categories,” Anish Aggarwal, a partner at specialist diamond advisory firm Gemdax told Bloomberg in June. “There are supply shortages at the moment. That’s creating a sense of scarcity at every stage of the pipeline.” 

Russia’s Alrosa, the world’s top diamond producer by output, has also increased the price of its diamonds over the last few months, triggering complaints from some industry actors. They claim the price hike has gone too far, especially as polished prices need to climb higher to justify the rates that rough stones are fetching. 

(With files from Bloomberg)