Congo initiates probe into China Moly’s Tenke Fungurume mine
Bloomberg News | August 20, 2021 

Tenke Fungurume operation. (Image courtesy of Freeport-McMoRan Copper & Gold).

The Democratic Republic of Congo established a commission to ensure China Molybdenum Co. is complying with its contractual obligations regarding the giant Tenke Fungurume copper and cobalt project.


The office of President Felix Tshisekedi authorized the investigation earlier this month into CMOC’s mineral reserve data and the financing costs for the project, according to documents seen by Bloomberg News and verified by the presidency. CMOC on Aug. 6 announced a $2.5 billion investment to more than double production at the mine, which is already one of the world’s biggest sources of cobalt, a key mineral in electric-vehicle batteries.

“The goal isn’t anything new, or to attack foreign investors,” Andre Wameso, Tshisekedi’s deputy chief of staff for economic and financial matters and a member of the commission, said by phone Thursday. “If we find nothing, the contract will stay as it was established with its initial inequalities. But if it’s changed disfavoring the DRC, we’re ready to go in another direction.”

A CMOC media representative said the company has no comment.

Tenke produced more than 180,000 tonnes of copper and over 15,000 tonnes of cobalt last year. CMOC wants to add 200,000 tonnes of copper capacity and 17,000 tonnes for cobalt by 2023. World cobalt production totaled about 140,000 tonnes in 2020, according to the US Geological Survey.

“The mine has a lot more reserves than what was in the original contract, so it’s quite logical that we should review what equitably belongs to each according to the contributions of each,” Wameso said. “If the conditions have changed in terms of something that wasn’t there at the initial time, we must review the agreement on the basis of reality.”
Renegotiated deal

Congo last renegotiated the Tenke deal with former owners Freeport-McMoRan Inc. and Lundin Mining Corp. in 2010, when the government increased the shareholding of state-miner Gecamines to 20% from 17.5%. The amended contract also required the Tenke joint venture to pay Gecamines a $1.2 million royalty for each additional 100,000 tonnes of copper reserves discovered beyond 2.5 million tonnes.

Those terms could be up for negotiation if the commission finds the current arrangement is out of balance, Wameso said. The project’s financing terms, which were increased in 2010 to Libor plus 600 basis points from Libor plus 200 basis points, will also be reviewed by the commission, according to the documents.

The Tenke venture is required to find more advantageous financing terms if it can, according to the 2010 amended contract. The current interest rate “eats at profits” and reduces the taxes and dividends paid to Congo, Wameso said.

(By Michael J. Kavanagh, with assistance from Winnie Zhu and Annie Lee)

Russell: BHP’s petroleum exit shows oil and gas may follow coal’s path to toxic status

Reuters | August 18, 2021 

Mt Arthur coal operation in Australia. Image courtesy of BHP Group

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters.)


The market hasn’t exactly cheered BHP Group’s proposed exit from its oil and gas business, with shares of both the mining giant and the acquirer, Woodside Petroleum, tumbling in the wake of deal.

A point of concern for investors is that BHP may have sold the assets too cheaply, and that getting only Woodside shares as payment is less than desirable.

While there is likely some element of truth in this, investors may be missing the wider point of the deal, which will create a $29 billion oil and gas company after all.

It’s likely that this deal signals that the era of paying premiums to acquire oil and gas assets is over. From now on, companies seeking to offload these type of assets will be forced to accept ever-diminishing prices.

BHP’s Sydney-listed shares dropped 8.4% in the two days after the deal was announced on Aug. 17 to close at A$47.70 ($34.44) on Wednesday. Woodside slid 4.2% in the same time period to end at A$20.29.

The pullback continued in early trade on Thursday, with BHP again down, as much as 6.2%, and Woodside dropping as much as 2.6%.

To be sure, there were other reasons for BHP’s stock to retreat. For one, there’s the ongoing slump in the spot price of iron ore, the commodity that generates the most revenue for the world’s biggest mining company.

It’s also possible that some investors may have sought to take profits after BHP on Tuesday reported its strongest earnings since 2012.

But if some BHP stockholders are feeling hard done by, perhaps they should reflect on another asset the Melbourne-based miner is trying to sell.

BHP has had its Mount Arthur thermal coal mine in Australia’s New South Wales state up for sale for more than a year. It still hasn’t found a suitable buyer.

At this stage it’s like that BHP might even pay somebody to take the mine, the biggest in New South Wales, off its hands, given the company slashed the value of the asset on Wednesday from a value of about A$550 million to a liability of A$275 million ($198 million), the Sydney Morning Herald reported.

Just seven months ago the Mount Arthur mine was valued at more than A$2 billion by BHP. The massive writedown in value has come despite the price of Australian thermal coal rising to the highest in 13 years.

The Newcastle Weekly Index, the benchmark thermal coal price, has more than tripled since its 2020 low of $46.37 a tonne, reaching $168.71 in the week to Aug. 13, according to assessments by commodity price reporting agency Argus.

While there are costs associated with rehabilitation that any buyer would have to bear, the fact that BHP can’t seem to find a buyer for Mount Arthur in the best market for thermal coal since 2008 is telling.

Coal assets have largely become toxic, with South32 , the company spun out of BHP, ending up paying about $250 million to offload its thermal coal mines in South Africa.
Oil to follow coal?

While it’s not a fait accompli that oil and gas assets will travel down the same path as coal, the risks are increasing that they will.

A renewed focus on mitigating climate change and rising concern about the environment among investors will make it difficult for oil and gas companies to attract shareholders and capital, even if the prices and demand for crude oil, natural gas and liquefied natural gas (LNG) remain strong.

BHP may have exited oil and gas at just the right time. Its investment in the Jansen potash project in Canada shows that the company is more focused on commodities that will be needed in the future.

However, BHP may still battle to win over climate-sensitive investors given its status as the world’s biggest exporter of coking coal, the polluting fuel used to make steel.

While steel is essential to many products vital to transitioning the world from fossil fuels to clean energy, the process of making it is carbon-intensive – and likely to remain that way for some time to come.

Whether BHP will be able to mount an argument that coking coal is good for the energy transition, or at least a necessary evil, remains to be seen. However, it will likely have to commit to offsetting the emissions from the burning of its coal at some future point.

($1 = 1.3862 Australian dollars)

(Editing by Kenneth Maxwell)

ECOCIDE HAS A COST

Brazil prosecutors compel Vale, BHP to pay $9.5bn in Samarco’s debt

Reuters | August 18, 2021 | 

Paracatu de Baixo resettlement. Credit: BHP

Brazilian prosecutors asked a bankruptcy court on Wednesday to compel miners Vale SA and BHP Group Ltd to fully pay off their Samarco joint venture’s 50.7 billion reais ($9.47 billion) debt, according to a court document reviewed by Reuters.


Samarco filed for bankruptcy protection in April as it struggled to restructure its debt, which it stopped servicing after a dam burst at a mine in 2015, killing 19 people, releasing a giant torrent of sludge and halting production.

Prosecutors consider Samarco’s co-owners to be responsible for the disaster and are seeking a restraining order that would oblige them to cover its debt, according to the document.

The prosecutors said both controlling shareholders used Samarco to obtain immediate gains amid an iron-ore price boom, which they say precipitated the dam’s collapse.

“They chose to put at risk the lives of people who lived and worked there, as well as the environment, causing tragic consequences and incalculable damages,” they wrote.

Vale said in a securities filing it was surprised by the prosecutors’ request.

“The request attacks the clear letter of the agreements signed between the parties, to which the MPMG (prosecutors from Minas Gerais state) is a signatory, in addition to threatening the ongoing discussions and efforts to renegotiate the reparation measures for damage resulting from the Fundão dam collapse,” the company said.

BHP said in a statement the bankruptcy protection request was the best solution it found to allow Samarco to recover financially.

($1 = 5.3543 reais)

(By Carolina Mandl and Marta Nogueira; Editing by Christian Plumb and Peter Cooney)

Chile court orders BHP’s Cerro Colorado mine to stop pumping from aquifer

Reuters | August 19, 2021 | 

Cerro Colorado mine in Chile. (Image by Zwansaurio | Flickr Commons)

A Chilean court ordered BHP’s Cerro Colorado copper mine on Thursday to stop pumping water from an aquifer over environmental concerns, according to filings seen by Reuters.


The same First Environmental Court in July ruled that the relatively small copper mine in Chile’s northern desert must start again from scratch on an environmental plan for a maintenance project.


The court on Thursday called for “precautionary measures” that include ceasing groundwater extraction for 90 days from an aquifer near the mine.

The court said the measures were necessary to prevent adverse effects from pumping from becoming more acute.

Copper miners across Chile, the world’s top producer of the red metal, have been forced in recent years to find alternative means to feed water to their operations as drought and receding aquifers have hampered prior plans. Many have sharply reduced use of continental freshwater or turned to desalination plants.

BHP said in a statement that once the company is officially notified it “will evaluate what course of action to take, based on instruments that the legal framework provides.”

A ruling in January by Chile’s Supreme Court upheld local indigenous communities’ complaint that the environmental review process had failed to consider concerns about the project’s impacts on natural resources, including the regional aquifer.

Cerro Colorado, a small mine in BHP’s Chilean portfolio, produced about 1.2% of Chile’s total copper output in 2020.

(By Fabian Cambero, Erik Lopez and Dave Sherwood; Editing by Grant McCool)

ECOCIDE GENOCIDE MINAMATA DISEASE

Brazil’s Munduruku tribe haunted by mercury’s deadly threat

WATER IS LIFE
Reuters | August 20, 2021 | 

Aerial view of Tapajos River (Credit: Shutterstock)

By the time 38-year-old Irene Munduruku was rushed to a hospital in northern Brazil last year, she could not move her arms and legs. Her husband Jairo Munduruku recalls she was unable to speak or open her eyes.


Doctors told Jairo his wife had tumors in her liver and right lung, but he doubted that cancer was the only cause for her illness.

Recent testing showed Irene’s blood with one of the highest levels of mercury in their village of Sawré Aboy, by the banks of the Tapajós river in the Amazon rainforest. He suspected illegal gold mining had something to do with her illness.

Related Article: Illegal gold represents 17% of Brazil’s exports — study

Wildcat gold mining has expanded fast in Brazil, where the relaxing of environmental controls under far-right President Jair Bolsonaro has emboldened thousands of miners to invade constitutionally protected indigenous lands since 2019.

Brazil’s National Mining Agency estimated that year that wildcat gold miners were extracting some 30 tonnes of gold annually from the Tapajós watershed alone, using the toxic heavy metal mercury to separate gold from sediment.

Driven by sprawling mining camps, deforestation in the indigenous reservation that is home to most of the Munduruku has tripled since Bolsonaro took office, according to government satellite data.

“Since 2019, there has been an immense increase in activity in the region with the opening of new gold mines,” said Carol Marçal, a spokesperson for Greenpeace Brazil’s Amazon Campaign. “Preventative efforts exist, but little has been done to get illegal gold miners out of the area.”

IN THE MOST SEVERE CASES, IT CAN CAUSE NEUROLOGICAL DAMAGE IN UNBORN CHILDREN AND LEAD TO PREMATURE DEATH

Bolsonaro has called for more mining and commercial farming on indigenous land, pushing a bill to lift legal restrictions and – critics say – emboldening miners breaking existing law.

The presidential press office did not reply to a request for comment. Federal indigenous agency FUNAI said it was working to protect tribal reservations including the Munduruku’s and referred questions about their illnesses to indigenous health agency SESAI, which did not answer a request for comment.

Munduruku community leaders told Reuters they fear the advance of illegal mining will poison their rivers, robbing them of their traditions and saddling them with chronic illness.

Irene Munduruku returned home in June, but her condition has deteriorated and she is scheduled to return to hospital this month. Jairo tells his wife’s story as a warning of the crisis his community faces.

“Our ancestors never said we had to become rich from destroying the patrimony that we share,” he wrote to Reuters. “The greatest wealth is knowledge, to know how to respect life.”

Shifting diets

Although mercury poisoning has no cure, community leaders and non-profit groups have looked for ways to reduce risks.

This year, Brazilian NGO Saúde e Alegria has collaborated with nine Munduruku villages to develop alternative water systems reducing reliance on the polluted Tapajós. The local Pariri Association aims to cultivate fish in cleaner streams.

Although project leaders are still looking for funding, they plan on raising species suited for fish farming such as pacu and tambaqui, said Anderson Munduruku, of the Pariri Association.

They are urging neighbors to cut catfish, dogfish and piranha from their diets, since their positions higher up the food chain make them far more contaminated with mercury.

Sometimes members of the tribe can see for themselves what miners have done to the rivers, turning them a muddy brown that community leader Deuziano Munduruku compared to chocolate milk.

But often the mercury poisoning is invisible, contaminating the fish that is their main source of protein.

In a 2019 study of three Munduruku villages, researchers from the Oswaldo Cruz Foundation (Fiocruz) found mercury in the hair samples of all 200 participants.

Most samples showed levels above the safe range – up to nine times the threshold set by the Food and Agriculture Organization of the United Nations.

“It’s incredibly worrying that we are consuming this metal,” said Beka Munduruku, an 18-year-old from Sawré Maybu.

Symptoms of mercury poisoning are far-ranging. Some report weakness, dulled senses and difficulty moving. Others suffer from mood and memory disorders, according to the Fiocruz report.

In the most severe cases, it can cause neurological damage in unborn children and lead to premature death.

Since the Fiocruz study was made public, Munduruku leaders say their people have been plunged into speculation.

Teenagers complain of joint pains. A child is born with crippling disabilities. A local leader dies unexpectedly. Neighbors are left wondering if mercury is to blame.

Mercury poisoning is hard to diagnose because few local clinics test for the metal, according to schoolteacher Honesio Dace Munduruku.

Honesio, who tracks indigenous schools in the Middle Tapajós region, has seen behavioral and physical problems on the rise among students since 2018.

Paulo Basta, one of the principal Fiocruz researchers, said those who performed worse on aptitude tests administered in 2019 had the highest levels of mercury in their hair.

Correlations between mercury levels and tests of memory, verbal fluency and rational thinking were most notable in subjects between the ages of 12 and 20 years, he said, casting a pall over the future of the Munduruku.

(By Jimin Kang; Editing by Brad Haynes and Marguerita Choy)

ECOCIDE  WATER IS LIFE

Angola mine leak causes ‘unprecedented’ pollution in Congo rivers, researchers say

Reuters | August 20, 2021 | 

Congo river viewed from Kintambo. Credit: Wikimedia Commons

A suspected leak of heavy metals from a mine in northern Angola is causing an “unprecedented environmental catastrophe”, affecting some 2 million people in Democratic Republic of Congo, researchers at Kinshasa University said on Friday.


Analysis of satellite imagery and interviews indicate a reservoir used to store mining pollutants was breached on July 15 in a diamond-mining area straddling Lunda Sul and Lunda Norte provinces in Angola, said Raphael Tshimanga, director of The Congo Basin Water Resources Research Centre (CRREBaC).


Two tributaries of the Congo river, the Tshikapa and Kasai rivers, turned red, killing fish and causing diarrhoea amongst communities along their banks, Tshimanga said. There are reports hippopotamuses have also died, he said.

“We have never seen such huge pollution in the Congo river,” Tshimanga said by phone. “It is still increasing, the consequences are beyond what we could imagine. This is a catastrophe. It’s an unprecedented environmental catastrophe.”

The Congolese and Angolan governments have agreed to set up a joint team to investigate the source of the pollution, Congo’s ministry of foreign affairs said.

The discolouration of the waterways appears to have been caused by a toxic substance spill at an industrial diamond mine in Angola, Congo’s environment minister Eve Bazaiba said in a statement on Aug. 9.

Reuters could not independently verify the claim. An Angolan mines ministry official did not respond to a request for comment.

The spill has killed a “significant number of fish and other animal species living in the contaminated waters,” Bazaiba said, adding that pollution was at the “door of Kinshasa”, Congo’s capital and home to some 12 million people.

“We can confidently say that this pollution is from heavy metals that have surged into the river and our worry is that it should get into the food chain,” CRREBaC’s Tshimanga said.

“It could pollute natural reservoirs and aquifers. If this is the case it could take years, decades to resolve this issue.”

(By Hereward Holland, Helen Reid and Stanis Bujakera; Editing by Grant McCool)

Greenhouse gas emissions at gold mines unaffected by lockdowns — report

MINING.com Editor | August 20, 2021 

Stock image.

A new Metal and Mining research report on greenhouse gas emissions in gold mines by S&P Global Market Intelligence reviewed 2020 sustainability reports from more than 90 leading gold mines globally to conduct a year-over-year comparison of greenhouse gas emissions to see the impact of lockdown on emissions.


The report looks at the year-over year comparison of emissions. Mining grades declined in 2020, but despite some fluctuations in actual emissions, that drop in grade led to a drop in gold output, which caused a drop in per-ounce emissions intensity, says S&P.

In 2020, gold output was down 5% globally compared with 2019, largely due to lockdowns imposed to curb the covid-19 pandemic. The combined output from primary gold mines that accounted for around 35% of global supply in 2020 fell just over 1% from 2019 production, the report reads.

Throughput from these mines also fell around 1%, from 847 million tonnes of ore processed in 2019 to 840 Mt in 2020, S&P reports. Meanwhile, emissions from these operations increased less than 1%, from 27.7 million tonnes of CO2 equivalent, or tCO2e, in 2019 to 27.6 MtCO2e in 2020.

Emissions intensity averaged 0.697 tCO2e per ounce of gold produced, the report reads, a negligible decrease year over year. On a per tonne of throughput basis, emissions intensity increased incrementally, up less than 1% to 28.7 tCO2e per thousand tonnes of ore processed.


Negligible change in emissions, divided by less gold gives a bigger value in tCO2e/oz. Supporting that somewhat more-stable nature of open pits, grade didn’t change by much at open pit mines. Underground mines’ per-ounce intensity increased by 13% but declined at open pits, the report finds. Generally, per-tonne emissions intensity remained stable overall.

Lockdowns did occur in a number of regions in 2020 but overall they didn’t cause much change in terms of emissions intensity of a project.

“A period of lockdown might have caused a drop in output, but the emissions are coming from operating the mines. During the lockdown, the equipment and the mills were shut down, therefore the emissions would decline anyway. A drop in emissions divided by a lower output (or throughput for that matter) can just as easily yield the same emissions intensity,” says S&P.

Analysis of 2019 data from 96 gold mines highlighted clear differences in the emissions intensity across mine types, the report finds, with open pit mines exhibiting a higher intensity on a per ounce of gold produced but a lower intensity on a per tonne of ore processed basis.

Resource nationalism sweeps Latin America’s top mining countries

Cecilia Jamasmie | August 19, 2021 | 

Newmont walked away from the $5bn Conga copper-gold project in Peru in 2016, due to relentless community opposition. (Image: Screenshot via YouTube.)

A move towards resource expropriation, tax and royalty increases, as well as demands for local participation in companies’ ownership, all resource nationalism components, continue to increase, with Latin America taking centre stage, a new study shows.


According to the latest report from risk consultancy Verisk Maplecroft, there is a clear four-year trend in minerals-rich nations to seek greater control over the revenues generated by their natural resources, which is expected to increase over the next two years.

The consultancy identified 66 countries out of the 198 included in the resource nationalism index (RNI), or 33% of them, that have tightened the grip on their riches since 2017.

LATIN AMERICA IS THE JURISDICTION WHERE RISKS OF EXPROPRIATION AND TAXES HIKES HAVE INCREASED THE MOST IN THE PAST FOUR YEARS

Latin America is the jurisdiction where risks of expropriation and taxes hikes have increased the most, the study says. Mexico stands out as seeing the nation where the risks have climbed the most, driven by López Obrador administration’s nationalist agenda that wields community and environmental arguments as justification for greater state involvement in the extractive sector, Verisk Maplecroft says.

Mexico’s situation is indicative of a wider regional trend affecting miners and energy firms in the region. South America’s three largest economies, Brazil, Argentina and Colombia are also experiencing substantial negative shifts in the index, while the once stable mining destinations of Chile and Peru are in the midst of political changes that threaten to alter the operating environment for the industry.

Courtesy of Verisk Maplecroft. (Click to enlarge)

Copper prices have soared to record highs this year, handing unions in the two largest producers of the metal — Chile and Peru — additional leverage. The price rally has also ratcheted up tensions in labour negotiations and put pressure on global supply of the red metal.

Verisk Maplecroft’s RNI tracks incidents of direct expropriation and nationalization. The highest scores go to cases where there hasn’t been adequate compensation, no compensation, or in which a government hasn’t paid an award to a company following arbitration.

The ten highest risk countries in the latest edition of the index are Venezuela, Tanzania, Mexico, PNG, Zambia, Russia, North Korea, Kazakhstan, DRC and Zimbabwe.

The motive behind direct expropriation could be short-term political gain or a genuine attempt to save a vital but ailing industry to support the national interest. “The adequacy of compensation is the key factor from a business perspective,” the consultancy says.
Politics and community pressure

In Latin America, the push to gain greater benefit from natural resources generally hinges on two factors. In Mexico and Argentina, the main driving force is ideology, while in Colombia and Chile pressure comes from communities — both those hosting mining projects and civil society.

“While the traditional bastions of stability for Latin America’s mining investors are not yet crumbling, they appear to be joining their regional peers on the path of greater resource nationalism,” the report reads. “Only time will tell how far each one goes down this road.”

In Africa, motivations are much more diverse. The interventionism seen in Liberia and Mauritania is driven by structural governance shortcomings, not nationalist sentiment, Verisk Maplecroft points out.

The line between resource nationalism and legitimate national interest isn’t always easy to draw, and this can exacerbate tensions.

What is key for miners, according to the report, is to detect the signals early on, so that companies can adapt their investment strategies and exploration portfolios to mitigate future exposure to nationalism trends.

By doing so, the consultancy concludes, companies can also prioritize investment in jurisdictions where they can be part of the solution. They can work with local stakeholders to find a balance between community needs and industry profitability to secure long-term social license to operate.

Mexico leads LatAm push for more control of resource revenue

Reuters | August 18, 2021 

Mexican President Andrés Manuel López Obrador. (Image by ProtoplasmaKid, Wikimedia Commons)

Latin American governments have increasingly sought more control of their mining and energy revenue over the past few years, with Mexico leading the pack according to the latest Resource Nationalism Index rankings published by Verisk Maplecroft on Wednesday.


The report said environmental concerns as well as those from local communities increasingly play a bigger role in influencing policy shifts.

Over the past four years, Mexico has risen the most in the ranking, which is currently led by Venezuela. Argentina was placed in the top 20 for the first time after coming in at No. 81 out of 198 countries in the third quarter of 2018.

The rankings represent the level of risk to business from governments taking greater control of economic activity and revenue generated in extractive industries, Verisk Maplecroft said.

The measurements take in to account state drivers, participation in extraction and expropriation outcomes. The higher a country’s ranking, the greater the perceived risk.


THE RISK INCREASE COMES AS COMMODITY PRICES MEASURED BY THE REFINITIV/CORECOMMODITY CRB INDEX THIS QUARTER HIT THE HIGHEST LEVEL SINCE 2015

Mexico’s rise from 101 in 2018’s third quarter to No. 3 at present is driven by President Andres Manuel Lopez Obrador’s “nationalist agenda,” according to the analysis.

“A legislative proposal (now stalled) to nationalize lithium indicates AMLO’s interventionism is all but certain to expand beyond oil and gas in the second half of his term,” the report noted, using an abbreviation for Lopez Obrador.

Mexico’s president has argued that his push to bolster state companies aims to balance a market that has been skewed in favor of the private sector.

In the case of Argentina, Verisk Maplecroft said President Alberto Fernandez’s intervention in multiple sectors is the source of the increased risk.

“Because intervention has largely ideological and political motivations, we expect it to intensify as the government heads into the second half of its term, regardless of the outcome of the November midterms.”

The report notes, however, that Brazil and Colombia, which are led by center-right governments as opposed to the left-leaning Mexico and Argentina, are also seeing an increase in risk for investors in resource sectors.

“The once stable mining destinations of Peru and Chile are on the cusp of political changes that will alter the operating environment for the industry,” said the report.

Peru’s president, Pedro Castillo, sworn in late last month, campaigned partly on the promise of keeping for the country a larger chunk of the revenue derived from mining. Legislation along the same lines is being discussed in Chile, the world’s largest copper producer.

Ecuador, bucking the regional trend, dropped from No. 3 in 2017 to a current rank of 74.

A third of the countries assessed show increasing risks for business over the past four years as governments aim to take more control of revenue associated with extracting industries. About a fourth showed a decrease in such risks.

The risk increase comes as commodity prices measured by the Refinitiv/CoreCommodity CRB index this quarter hit the highest level since 2015. The index last year hit its lowest level in records dating back to 1994.

The MSCI Global Metals and Mining Producers ETF in May hit its highest price since early 2012, while the MSCI Global Energy Producers ETF has nearly doubled in price from depths hit in March 2020.

(By Rodrigo Campos; Editing by Matthew Lewis)

Court rules Intrepid Potash has no water rights in New Mexico

Cecilia Jamasmie | August 20, 2021 | 

Intrepid Potash wanted to temporarily lease 5,700-acre feet of water from the Pecos River (pictured) to oil and gas operators in the area to use in extraction. 

(Image courtesy of Clinton Steeds |Flickr Commons.)

Shares in Intrepid Potash (NYSE: IPI) have lost almost 20% of their value in two days, as the company announced it was “reviewing its options” following a court ruling that determined the miner no longer has water rights for commercial use from the Pecos River in New Mexico.


Intrepid’s use of the Pecos River water gained controversy after the company disclosed it planned to pump water from the river for sale to the oil and gas industry.

The Denver, Colorado-based miner said the river was too saline for its water to be used in agriculture but noted it could be utilized in lieu of potable freshwater in activities such as drilling.

INTREPID’S USE OF THE PECOS RIVER WATER BECAME CONTROVERSIAL AFTER THE COMPANY DISCLOSED IT PLANNED TO PUMP WATER FROM THE RIVER FOR SALE TO THE OIL AND GAS INDUSTRY

Intrepid, which held water rights to 19,000 acre-feet per year at Pecos River, has not diverted its water since 2016, when it shut down its money-losing West facility in Carlsbad, New Mexico.

In 2017 and 2018, Intrepid submitted eight applications for temporary changes to its water rights to accommodate plans to sell water. The company received preliminary approval from the Office of the State Engineer (OSE) to sell or lease 5,700-acre feet per year.

Opponents argued the company’s water rights were forfeited years ago for non-use, adding that selling water rather than using it for potash refining would require public hearings and approval.

Friday’s verdict confirms that almost all the company’s Pecos River water rights had been either forfeited or abandoned before 2017.

Among top three US juniors

Intrepid Potash reported earlier this month better than expected earnings and revenues for the second quarter of the year.

The company, which belongs to the Zacks Fertilizers industry, posted revenues of $57.77 million for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 18.87%. This compares to revenue of $37.72 million in the same period last year.

Intrepid, which has topped consensus revenue estimates three times over the last four quarters, is one of the top ten US-based mid-tiers to junior miners.

The company has risen from its fifth position last year to the number three spot in 2021.

Intrepid is the only US producer of muriate of potash, which is used in several industrial applications and as an ingredient in animal feed. It currently supplies about 3.5% of the country’s annual consumption of muriate of potash.

Shares in the company have fallen from a high of $35.5 a piece on August 18 to $28.32 in early afternoon on Friday, leaving it with a market value of about $381 million.

Hydrogen power

Carbon from UK’s blue hydrogen bid still to equal 1m petrol cars

Government’s plan to use ‘blue’ fossil-fuel hydrogen alongside green version raises concern, say campaigners

A hydrogen-hybrid power plant in Germany. The UK plans to use hydrogen technology to replace fossil gas use in factories, refineries and heating. 

Photograph: Bernd Settnik/EPA


Jillian Ambrose Energy correspondent
Sun 22 Aug 2021 17.27 BST

Opting for hydrogen that is made using fossil fuels rather than renewable electricity could create up to 8m tonnes of carbon emissions every year by 2050, according to an analysis of government data.

The figures show that the use of fossil-fuel hydrogen, or “blue hydrogen”, would create the same carbon emissions each year that more than a million petrol cars would produce, compared with using zero-carbon “green hydrogen”.

Ministers plan to use both blue and green hydrogen to replace fossil gas in factories, refineries and heating, but new figures show that an over-reliance on blue hydrogen would still lead to millions of tonnes of carbon emissions entering the atmosphere every year.

Blue hydrogen is extracted from fossil gas in a process that requires carbon capture technology to trap emissions – but this method still fails to capture between 5% and 15% of the CO2. Carbon emissions are also released when the fossil gas is extracted from oil and gas fields.

Using blue hydrogen exclusively to replace fossil gas would result in between 6m and 8m tonnes of carbon dioxide emissions every year from the late 2020s, or the equivalent of running an average of 1.5m more fossil-fuel cars on the road every year by 2050.

If the government used zero-carbon green hydrogen to meet a third of the UK’s forecast hydrogen demand, blue hydrogen would create the same emissions as around 1m cars running on the UK’s roads each year.

The analysis, undertaken on behalf of the Guardian by Friends of the Earth Scotland, was based on government data published last week in a long-awaited report on the future of the UK’s hydrogen economy.

The strategy sets out a “twin track” approach to supporting hydrogen production, but it failed to suggest a balance between blue and green hydrogen. This has raised concerns among climate groups that an over-reliance on blue hydrogen could lock the UK into decades of North Sea gas production, fossil-fuel imports and millions of tonnes of carbon emissions.

Richard Dixon, the director of Friends of the Earth Scotland, said the government’s support for the major oil companies behind plans for blue hydrogen projects, including BP and the Norwegian state oil giant Equinor, would allow them to “prolong fossil-fuel production indefinitely”.

A spokesperson for the Department for Business, Energy and Industrial Strategy, which reviewed the analysis, said investing in both green and blue hydrogen would “allow us to kickstart an entire industry from scratch that creates tens of thousands of jobs and unlocks billions of pounds worth of private investment”.

Quick Guide
What are the hydrogen options?


Hydrogen impact

Hydrogen is considered a crucial tool in the UK government’s plan to cut the country’s emissions to net zero' by 2050. The clean-burning gas could be used to replace fossil gas in factories and refineries, or as a fuel for heavy transport such as shipping, without emitting greenhouse gases.

Although hydrogen itself is a clean fuel, the process of producing hydrogen can be extremely polluting. Most of the world’s hydrogen is produced from fossil gas, and releases millions of tons of carbon emissions every year. There are three main types of hydrogen:

Grey hydrogen
About 98% of the hydrogen used today is known as "grey hydrogen". It is extracted from the methane found in fossil gas, using a process known as steam methane reforming, and releases carbon dioxide emissions into the atmosphere where it contributes to global heating. It is extremely damaging to the environment.

Blue hydrogen
This “low carbon” alternative to grey hydrogen uses carbon capture technology to trap between 85% to 95% of the harmful emissions created by hydrogen production, which could then be transported in pipelines to underground storage facilities such as disused subsea gas caverns under the North Sea. Blue hydrogen is not a net zero fuel because it requires fossil fuel production, which causes emissions and releases up to 15% of the emissions as grey hydrogen.

Green hydrogen
Green hydrogen is made by splitting water molecules using an electrolyser powered by renewable electricity. The only byproduct is oxygen which can be safely released into the air. Renewable energy developers believe giant offshore wind farms could be used to power green hydrogen production, particularly overnight when electricity demand is low.

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“Achieving the scale we need would be more challenging if we just used green hydrogen,” the spokesperson added.

The government’s official climate advisers at the Committee on Climate Change (CCC) have backed the idea of a “blue hydrogen bridge” through the 2030s for areas of the UK economy which would struggle to run on electricity, while the UK uses its renewable electricity to meet the growing demand for electric vehicles and heating.

But David Joffe, the head of carbon budgets at the CCC, warned that the government must begin to rein in the proportion of hydrogen produced from fossil fuels in favour of green hydrogen by the late 2030s to meet its legally binding climate targets.

“Blue hydrogen is not an amazing solution, and we don’t embrace it unreservedly,” he told the Guardian.