BHP invests $79m in South America-focused Filo Mining

Cecilia Jamasmie | February 28, 2022 

The Filo del Sol project straddles the international border between Chile and Argentina. (Image courtesy of Filo Mining.)

BHP (ASX: BHP), which has been expanding its copper footprint in the past, will invest C$100 million ($79m) in Canadian junior Filo Mining (TSX: FIL), which is developing a copper-gold-silver project straddling the border between Argentina and Chile.


The Vancouver-based company said on Monday it would issue 6.27-million common shares in a private placement to BHP at C$15.95 a piece, representing a 12% premium to the 20-day volume-weighted average trading price. Filo Mining’s stock closed at C$14.30 a share on Friday.

Once the private placement is completed, which is expected to happen on or before March 11, BHP will own about 5% of Filo Mining and will be granted certain participation and top-up rights, the companies said.

The junior plans to use the funds for further exploration and development of its Filo del Sol project.

According to Lundin Mining Corp., Filo Mining’s majority owner, the project is expected to be an operation of equal size or bigger that its Candelaria mine in Chile. Chairman Lukas Lundin has said that building Filo del Sol will cost between $4 billion and $5 billion.

Filo’s president and CEO Jamie Beck said BHP’s investment was a “significant endorsement” of the company’s project, team and strategy.

Beck added that the company and BHP had also agreed to form a joint advisory committee to share expertise, exploration concepts, and discuss future project development.

Stamp on project’s potential

“We believe that while funding for exploration was never in doubt, the quality of the source of funding in this transaction, and the potential capacity of BHP to fund future development endeavors places a firm stamp on the project’s potential,” Haywood Capital Markets said in a Monday note to investors.

“We see potential project longevity spanning several decades,” the experts added.

Filo Mining, and its predecessors, have been exploring at Filo del Sol since the 1999-2000 field season. Work has been limited to the summer season, typically between November and April.

Based on the latest figures released by the company, the Filo del Sol project will have an estimated after-tax value of C$1.28 billion, with an internal rate of return of 23%.

The asset is expected to produce an annual average of 67,000 tonnes of copper, 159,000 ounces of gold and 8.65 million ounces of silver.

Charlebois: Ukraine conflict — the global agri-food industry is about to take a big hit and Canada won't be immune

Given what has already been happening around the world with supply chain issues, saying that this conflict will prompt food-price inflation is an understatement.

Author of the article:Sylvain Charlebois
Publishing date:Feb 28, 2022 

Ukraine, formerly nicknamed the 'granary of Europe,' counts broadly on its farming sector. So does the rest of the world. 

Humanity just got dealt another blow with Russia’s invasion of Ukraine. Only thinking of the human cost is unbearable. But the agri-food sector has already been impacted by the conflict in more ways than one.

First, Ukraine is Europe’s breadbasket, so this conflict will affect global commodity markets in a meaningful way. Wheat and corn futures are slowly reaching record levels. Ukraine is the ninth-largest producer of wheat in the world, producing slightly less than Canada yearly. Ukraine is also the fifth-largest producer of corn in the world, with 13 per cent of all world exports in corn. Agricultural activity represents about 70 per cent of the country’s land, and about 25 per cent of the world’s reserves of black soil is in Ukraine. The country has exceptional growing conditions.

But this conflict obviously includes Russia. Both countries together account for 25 per cent of global wheat exports. Barley and rye are also heavily produced in the region. All these commodities combined could compromise many agri-food companies’ access to key ingredients. The invasion has led to a ban on all commercial vessels in the inland sea of Azov, which is the main connection to the Black Sea, where Ukrainian ports are located. Almost 90 per cent of Ukrainian grain exports are transported by sea, and marine logistics in the region have been severely compromised.

Given what has been happening around the world over the last several months with supply chain issues, saying that food price inflation will stem from this conflict is an understatement. If you think Canada is immune to all of this, given our domestic agriculture production, think again. Agricultural commodities are traded on world markets. What happens in Ukraine and Russia affects us. The world, especially the agri-food world, is deeply interconnected.

Oil is now trading between $90 and $100 U.S. a barrel, which is the highest it’s been in more than six years. Russia exports about 5 million barrels of crude per day and about half of that goes to Europe. Countries are trying to penalize Vladimir Putin’s regime without disrupting Russia’s energy exports, to help the world recover from the pandemic. This is telling of how incredibly delicate the situation is, and how Putin strategically chose his moment to invade. But if energy costs haven’t been a factor with the current food inflation problem, they certainly are now. We are expecting transportation fees to be impacted within weeks, if not days.

The fertilizer market has also been affected by this conflict. The region is a significant exporter of nitrogen, potassium and phosphorus fertilizers. The invasion last week increased fertilizer prices globally by more than $200 a ton overnight. This is not great news for farmers who were looking to increase yields this year due to higher prices. Fertilizers were already quite expensive before the conflict in Ukraine. Canadian farmers are likely to do well with markets, but prohibitively expensive fertilizer prices could impact agricultural output in the Northern Hemisphere, including Canada. If Mother Nature doesn’t co-operate yet again, this could be another challenging year for our farmers.

Price gouging in the industry has always been an issue, and U.S. Agriculture Secretary Tom Vilsack has notified companies already not to inflate fertilizer prices unnecessarily. It’s not a sector most consumers know about, but without the proper soil science supported by effective fertilizers, the cost of our food just wouldn’t be the same.

And make no mistake. For Russia, China is an ally. Putin is not simply seeking to mend lost Soviet territory; he is focused on restoring Russian influence. And controlling global food supply chains with China is one way to do it. Given their production, both countries combined are agriculturally influential. So western economies are being destabilized yet again. For two years, it was a virus, and now, it is a tyrant.

In essence, what this conflict will do is bring to the agri-food sector a new layer of uncertainty, at the worst possible time. And as consumers, we need to take a deep breath and hope the conflict doesn’t last long. But we have been down this awful road before, so the prospects are not great.

In the meantime, we need to stand for Ukrainians as they are the victims of evil, simply put.

Prof. Sylvain Charlebois is Senior Director, Agri-Food Analytics Lab, Dalhousie University.

Ontario schools need sweeping changes to help children learn to read: Ontario Human Rights Commission

The report concluded that overwhelming scientific evidence on the best way to teach reading has been ignored and Ontario students are suffering the sometimes lifelong consequences.

Author of the article: Jacquie Miller
Publishing date:Mar 01, 2022 • 

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"If the education system is working as it should, a reading disability can be prevented for almost all students," an Ontario Human Rights Commission report stated. 

PHOTO BY IVAN PANTIC /Getty Images/iStockphoto


Ontario schools are failing to teach many students how to read, says a report from the Ontario Human Rights Commission that recommends sweeping changes to language curriculum and teacher training, and says the youngest children should be screened twice a year to pick up problems early.

The report is the culmination of a public inquiry called Right To Read begun in October 2019 that included public hearings, surveys, briefs and analysis of practices at eight sample school boards, including the Ottawa-Carleton District School Board.

The report concluded that overwhelming scientific evidence on the best way to teach reading has been ignored and Ontario students are suffering the sometimes lifelong consequences.

Students who don’t master the foundational skill of reading words by sight quickly and accurately can be set up for poor academic performance, low self-esteem and mental health problems.

“Consistent with findings in the academic research, many students and parents told the inquiry about depression and anxiety, school avoidance, acting out, being bullied or victimized, self-harming, and thinking about or even attempting suicide,” said the report released Monday.

The inquiry focused on foundational early reading skills.

With the appropriate instruction, 80 to 90 per cent of students won’t need intensive help and students with reading disabilities like dyslexia who are identified early and taught properly can be helped, said the report.

“If the education system is working as it should, a reading disability can be prevented for almost all students.”

However, while there is an “enormous body of settled scientific research on how children learn to read and the most effective way to teach them,” those methods are not used in Ontario, said the report.

It recommended the Ontario Grade 1 to 8 language curriculum be replaced with an “explicit, systematic approach based on reading science” called structured literacy.

Starting in kindergarten, students should learn the sounds letters make, phonics, decoding or “sounding out” words, spelling and also practise reading words in stories to build accuracy and speed, said the report.

By about Grade 2, children should be taught word structures and patterns, like prefixes and suffixes, the report said.

In contrast, Ontario schools employ a “whole language” approach, which suggests that “by immersing children in spoken and written language, they will discover how to read,” said the report.

Following that philosophy, Ontario schools use “cueing”, which encourages students to guess or predict words using clues from the context of what they are reading or their prior knowledge, and a “balanced literacy” approach that has teachers read to students and guide them.

That approach has been discredited in “many studies, expert reviews and reports on teaching” and is ineffective for teaching a significant proportion of students to read words, said the report.

“Students most at risk for reading failure, including students with reading disabilities and many students from other (Human Rights Code)-protected groups, will not develop critical early reading skills when these approaches are used in schools.”

That cueing system should be discontinued, said the report.

“Currently, Ontario teachers are required to deliver a curriculum that is inconsistent with a science-based core curriculum that meets the right to read.”

The report recommends that all students be screened for reading using standardized evidence-based measures twice a year from kindergarten to Grade 2.

“Age four to seven is a critical window of opportunity for teaching children foundational word-reading skills and is when intervention will be most effective.”

The report offers a devastating summary of what happens now. There is no consistency among school boards, screening consists mostly of “non evidence-based” reading assessments, effective intervention typically doesn’t start until Grade 3 or later, or isn’t offered at all.

“Boards’ first response to struggling readers is often to provide more of the same ineffective reading instruction that has already failed the student, but in smaller groups or one-on-one,” said the report.

At the eight boards sampled, there were at least 16 commercial reading intervention programs in use, said the report. Only five of them were evidence-based and two of those were seldom used.

Faculties of education and professional development for teachers place little emphasis on the evidence about how reading develops and the best way to teach it, said the report.

The report recommends changes to faculty of education programs and that the Ministry of Education develop comprehensive professional development programs for teachers.

Ontario Education Minister Stephen Lecce responded to the report Monday by promising changes. The province will revamp the elementary language curriculum as well as Grade 9 English to align with “scientific, evidence-based approaches that emphasize direct, explicit and systematic instruction,” he said in a statement.

Ontario will end the three-cueing system for teaching reading and eliminate “all references to unscientific discover and inquiry-based learning” by September 2023, he said.

Lecce also promised a $25-million investment in reading intervention programs and professional assessments to allow school boards to immediately begin meeting the needs of struggling readers.

There may be some resistance to change, the report noted.

“The inquiry also found another barrier is that some people in the education sector are resistant to change and hold strong beliefs supporting whole language philosophies.”

Faculties of education also tend to emphasize “socio-cultural perspectives and culturally responsive pedagogy,” which are important but not a substitute for preparing teachers to teach foundational reading skills, said the report.

“This lack of a strong focus on scientifically supported early reading instruction may be harmful to many historically marginalized student populations and contradict the goal of promoting equity.”

40 trucks worth of garbage: Ottawa cleans up after the 'Freedom Convoy' clears out

The city estimates the tab for the occupation will cost Ottawa about $30-million

Author of the article: Adam Hussain, Special to National Post

Publishing date: Mar 01, 2022

A pair of boots and a Canadian flag left behind for clean-up after the Ottawa protesters cleared out. 

REUTERS/Lars Hagberg

After three weeks of Freedom Convoy protests and the invoking and revoking of the Emergencies Act, the city of Ottawa has all but returned to normal. Businesses have reopened their doors to the public, and relative peace and quiet has been restored.

The only lingering signs of the occupation in the capital are the abandoned trucks in the impound lots and barriers on the streets.

Alain Gonthier, general manager of transportation, utilities, and public works for the city of Ottawa said that all litter and debris left by the protesters was to be cleared by last weekend.

The last step, he said, “will be to remove the barriers that were used to block off streets and this work will take several days to complete.”

According to a report released by the city, Ottawa workers have cleaned up 40 cement mixer trucks worth of garbage. The trash has been collected in 16 large 25-cubic metre garbage bins. The city did ensure that all food products left behind were not sent to landfills.

All fuel brought to the city by the protestors has been collected and disposed of.

A total of 115 vehicles were towed from the protest area, according to Ottawa Police Services (OPS). Owners had seven days to retrieve them, for a cost of $1,191 for a heavy vehicle, or $516 for a light one.

Additionally, 196 arrests were made, and over 3,700 fines issued. Steve Kanellakos, Ottawa’s city manager, has stated the protests cost the city upwards of $30 million, mostly for increased police and support staff presence.

Lawyer Paul Champ, who is leading a legal team overseeing a class-action lawsuit against protest participants, pegs the total amount of wages and revenue lost because of the occupation at a minimum of $306 million. The lawsuit represents three impacted parties: city residents, Happy Goat Coffee Co. and Union Local 613, and employees who lost wages when their workplaces were shut down.

The lawsuit is targetted at every person involved with the convoy protests. Champ has collected the licence plates of over 400 attendees and hopes to get information on those who donated to the convoy after February 4th.

Smol: Canada ignores Russia’s militarized Arctic at our own risk

Like Ukraine, the region is perceived by Vladimir Putin as an integral part of his country. Several modern Arctic warfare bases house, operate and are testing some of Russia’s most advanced weapons.

Author of the article: Robert Smol
Publishing date:Mar 01, 2022 •

Canadian Rangers participate in the cleanup of a mock oil spill in Resolute, Nunavut in this file photo. They are fine civil defence volunteers but no substitute for the military. 

PHOTO BY ANDRE FORGET /Postmedia


As the war in Ukraine heats up, it may be prudent for Canada to finally take serious strategic stock of Russia’s other major military buildup. It’s a militarized front which, like Ukraine, involves disputed territorial and maritime claims, pitting Vladimir Putin’s Russia against democratic countries within and outside the NATO alliance. Like Ukraine, it is also perceived by Putin as an integral part of Russia. It holds growing strategic importance in trade, defence and resource extraction, and it is a front where Russia has been amassing unprecedented levels of military hardware and personnel.

It is the Arctic in 2022. And we ignore at our own peril this militarized, disputed region around, over and opposite our northern territory and maritime claim.

On the Russian shores of this disputed maritime and land border with Canada, Scandinavia and the United States stand new or expanded and modernized Russian Arctic coastal military bases at Rogachevo, Pechenga, Severomorsk, Tiksi, Zvyozdny, Sredny Ostrov, Nagurskoye, and Temp, to name just a few. These modern Arctic warfare bases house, operate and are testing some of Russia’s most advanced weapons, such as the MIG 31BM fighter jet and the Poseidon 2M39 nuclear stealth torpedo, and TOR-M2DT missiles.

This reality has not been lost to NATO members Denmark and Norway, or allied nations such as Sweden and Finland who, like the U.S., have been upgrading and expanding their military presence in the region with professionally trained combat personnel and newly acquired equipment.

Let us momentarily dispense with the widespread (and I daresay naïve) assumption driving Canada’s defence policy: that the U.S. is at Canada’s beck and call, to expend whatever is necessary in American military resources and American military lives to defend every square kilometre of Canada, at no corresponding cost or effort to Canadians.

Where would we be if our defence were, first and foremost, up to us

The answer is: as prepared and battle-ready as an administrative headquarters in Yellowknife can be alongside a company-sized detachment of part-time Army reservists nearby. As martially worthy of Putin’s awe as 440 Squadron, Canada’s only permanent airforce squadron in the Arctic which mans a “fleet” of four non-combat CC-138 twin-otter utility aircraft. As stern in our willingness to stand our ground as the 55-person (not all military) signals station (CFS Alert) on Ellesmere Island. As worthy a match for the Russian warships and nuclear submarines, with their increasingly sophisticated weapons, as our lumbering constabulary arctic patrol vessels (only one is in operation so far), each designed to tout a single mounted machine gun on their deck.

Yes, we do have about 5,000 local Canadian Rangers in the North — ready to do just about everything but actually go to war for Canada. Professionally, that is a good thing since these non-combat reserve auxiliaries from northern communities sponsored by the Department of National Defence receive almost no military training. They have done yeoman service on occasion when community assistance is needed in operations such as search-and-rescue. And, especially during this pandemic, these temporary augmentees have stepped up to provide needed assistance to beleaguered communities. Canadian Rangers are worthy civil defence volunteers, but in no way are they soldiers.

So let’s not spin them as somehow standing in the forefront of Canada’s alleged determination to assert its sovereignty over the Arctic.

Of course, since we are a member of NATO, any attack on Canada is deemed an attack on all NATO members. Certainly, in a potential maritime-based standoff in the region, Canada can expect some protection and assurance from the U.S. as well as from the better-armed and equipped militaries of Denmark and Norway, not to mention our former colonial masters, France and the United Kingdom.

But should this happen in our current deplorable state of military preparedness, let’s have the honesty and integrity to abstain from clinging to the absurd international “middle power” illusion many Canadians still hold.

Robert Smol is a retired military intelligence officer who served in the Canadian Armed Forces for more than 20 years. He is currently working as a paralegal and security professional while completing a PhD in military history.rmsmol@gmail.com

CRIMINAL CAPITALI$M

PwC Canada fined over one million CDN by US, Canadian regulators

Big Four accounting firm voluntarily disclosed to regulators that its employees shared answers on mandatory internal training courses
Mar 1, 2022 Author: Colin Ellis

TORONTO, March 1, 2022 – The Canadian affiliate of PricewaterhouseCoopers LLP has agreed to pay more than one million dollars in penalties after disclosing widespread sharing of answers by its accountants on internal training tests. After discovering the training-related misconduct in January 2020, PwC Canada reported the matter to the Canadian Public Accountability Board, conducted an internal investigation, and began implementing remedial policies and procedures.

The US Public Company Accounting Oversight Board (PCAOB) censured PwC Canada and imposed a civil money penalty of $750,000 USD. CPAB also censured the Big Four accounting firm and imposed a penalty of “up to a maximum of $200,000” CDN. If paid in full and, accounting for exchange rates, PwC Canada would ultimately pay regulators fines amounting to a total of approximately $1.105M CDN.

Widespread test cheating over a period of four years at all firm levels

From at least 2016 until early 2020, more than 1,200 employees at PwC Canada were involved in improper answer sharing — either by providing or receiving answers — in connection with tests for mandatory internal training courses covering topics that included auditing, accounting, and professional independence, according to a seven-page enforcement action by the PCAOB.

More than 1,100 of the auditors were employed in the firm’s Assurance practice. PwC Canada used an online platform to conduct mandatory online courses, including courses containing content regarding professional independence and performing professional responsibilities with integrity, and tailored to the experience level of the employee.

Over the four-year period, firm personnel primarily shared answers through the use of shared drives that employees had created on the firm's computer network, posting the answers and providing supplemental answers. According to the enforcement actions, the shared drives contained answers to at least 46 of the firm’s approximately 55 mandatory assurance tests, and the “improper sharing” of answers occurred at all levels of the firm, from junior staff to partners.

Commenters in the online r/accounting community on Reddit dismissed the size of the monetary penalty as negligible to a Big Four professional services firm; noted the significant disparity between the US and Canadian fines; and complained about the number of mandatory internal courses conducted at large public accounting firms, saying that time and billing pressures encouraged cheating.
PwC Canada disclosed the answer sharing to CPAB

Audit regulators have policies in place that provide credit in circumstances of voluntary disclosure. In ordering sanctions, the regulators took into account the accounting firm’s “extraordinary cooperation” in the matter. PwC Canada voluntarily self-reported the matter and instituted remedial measures (the penalties levied were largely for the lack of internal controls at PwC). “Absent the Firm’s extraordinary cooperation, the civil money penalty imposed would have been significantly larger, and the Board may have imposed additional sanctions.”

During the four-year period when PwC employees were improperly sharing answers on mandatory courses on professional independence and integrity, “the Firm served as the principal auditor for over 55 issuer audit clients. Additionally, at all relevant times, the Firm performed audit work that other PCAOB registered firms, including member firms of PwC Global, used or relied on in issuing audit reports for their issuer clients.”

The PCAOB has the authority to levy penalties against foreign accounting firms that do business on American soil. In 2021, the PCAOB levied penalties against five Canadian accounting firms, including Big Four accounting firm Deloitte Canada. In 2019, the US Securities and Exchange Commission fined KPMG US 50 million dollars for “illicit use of PCAOB data and cheating on training exams,” one year after charging five former KPMG US officials in a case alleging they schemed to interfere with the PCAOB’s ability to detect audit deficiencies at KPMG.

In a statement posted on the PwC Canada website, the firm states: “we are committed to serving our stakeholders to the best of our ability and in accordance with our values and purpose — to build trust in society and solve important problems. When we do not meet the standards we set for ourselves, we acknowledge it and take action to do better.”

Colin Ellis is a contributing editor to Canadian Accountant. Image : PwC Canada, Toronto, Canada (iStock).

Hydro-Québec could lose more than $500M if power export line through Maine is dropped

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Constitutionality of referendum that suspended construction to be challenged

CBC News · Posted: Mar 01, 2022 

All construction for the $10-billion project, known as the New England Clean Energy Corridor, has been on hold since 59 per cent of Maine residents voted against it in a referendum last November. (Paul Chiasson/The Canadian Press)

A new Hydro-Québec report says the utility could lose more than $500 million if its power export project to Massachusetts is abandoned.

All construction for the project, known as the New England Clean Energy Corridor, has been on hold since 59 per cent of Maine residents voted against it in a referendum last November. 

The planned project would carry some 1,200 megawatts of electricity over a new 336-kilometre high-voltage transmission line between Thetford Mines, Que., and Lewiston, Maine.

The electricity would be sent over existing or rebuilt lines to Massachusetts for 20 years, and would reduce greenhouse gas emissions by up to 3.6 million metric tons per year — the equivalent of taking 700,000 cars off the road, according to the Maine Public Utilities Commission.

The project would also generate a projected $10 billion US for Hydro-Québec over 20 years. 

• Maine referendum deals blow to Hydro-Québec project

• Construction halted on $1B Hydro-Québec transmission line project in Maine

But some people in Maine protested against the fact that the project requires cutting down 1,000 trees, even though most of those trees had already been cleared when the project got underway in 2020. Others were opposed to a foreign company — Hydro-Québec — providing power to Americans.

Now, the parent company of Hydro-Québec's U.S. partner, Central Maine Power (CMP), is challenging the constitutionality of the referendum in the Maine Supreme Court.

In a memorandum filed in mid-February, Avangrid argues that the referendum retroactively bans a project that had received executive and judicial approval and had already led to hundreds of millions of dollars in expenditures.

Close to $1B total on the line for Quebec, U.S. 

In its 2021 annual report, the Quebec Crown corporation disclosed it could lose $536 million if the project is dropped. 

Of the estimated $600 million budget, $347 million has already been committed to capital expenditures for construction of the 103-kilometre line on the Quebec side. The other $189 million represents amounts that the company has committed to pay under agreements with CMP. 

The project would cut a new path from the Quebec border through 85 km of Maine's forest, before widening an existing hydro route for another 148 km and connecting to the grid. (Sködt McNalty/CBC)

This sum doesn't include the $20 million spent in recent years on lobbying and advertising for the project. Hydro-Québec also had to write off $46 million in 2019 following the failure of its first project to export power to the U.S. through New Hampshire, which had the same objectives. 

Avangrid has spent $450 million US to date in Maine to clear 86 per cent of the corridor and install 120 structures. This represents 43 per cent of the total cost of the U.S. portion, estimated at $1.04 billion US. 

No plans to abandon project

Despite the suspension of work on the project, Hydro-Québec and Avangrid say they have no intention of letting it go anytime soon.

"We followed the process and the laws in Maine, and that process led to all the permits being obtained," said Hydro-Québec spokesperson Lynn St-Laurent. 

"Once we get the green light, we start working," she said. 

Last December, a Maine judge denied Avangrid's bid to resume construction of the power line, rejecting a preliminary injunction sought by the utility company. In the ongoing lawsuit against Maine's Bureau of Parks and Lands, Avangrid writes that the referendum initiative "would render all development in the state, no matter how big or small, or its advancement, vulnerable to discriminatory legislation passed after the fact."

• Quebec premier 'confident' $10B Hydro-Québec project will go through despite referendum loss

Opponents of the New England Clean Energy Connect — made up of both energy providers such as natural gas and wind as well as environmental and citizens' groups — are expected to file briefs in the coming weeks to present their arguments.

The case will be heard in May.

Based on a report by Radio Canada's Mathieu Dion

Germany Brings Forward Goal of 100% Renewable Power to 2035

Arne Delfs and Vanessa Dezem
Mon., February 28, 2022

(Bloomberg) -- Germany plans to rapidly accelerate the expansion of wind and solar power, bringing forward a target to generate almost all the country’s electricity from renewable sources by 15 years to 2035.

The Economy Ministry, which also oversees energy and climate policy, proposed new legislation on Monday that aims to roughly triple the annual additions from onshore wind and solar facilities. Offshore wind capacity is set to more than double.

Germany is launching a series of measures to diversify its energy sources away from Russia after Moscow’s invasion of Ukraine. Germany relies on Russia for more than half its natural gas, and a decision to phase out nuclear power -- the last three reactors are set to go offline this year -- has left Europe’s largest economy vulnerable to disruption.

To avoid a short-term energy crunch in the future, the ministry also proposed measures that would force operators to maintain minimum levels in gas storage facilities.

The ministry called out Russia’s Gazprom PJSC as having especially low reserves in Germany this winter, when households were hit by soaring heating costs. More than 30% of Germany’s gas reservoirs are controlled by the Russian gas giant.

To bridge the gap until there’s sufficient renewable power capacity, Germany is also getting ready to prolong the use of coal beyond 2030. To create alternatives to Russian gas, Germany is seeking to revive plans to build liquefied natural gas terminals.

In the renewable-energy legislation, onshore wind capacity is set to increase from 3 gigawatts this year to 10 gigawatts annually in 2027. Solar expansion will go from 7 gigawatts to 20 gigawatts a year in 2028.

Offshore wind facilities are also a key part of the plan. The country foresees capacity rising from 30 gigawatts in 2030 to 70 gigawatts in 2045.

Amid an ongoing energy squeeze, a levy to finance the expansion of renewables will be scrapped at the beginning of July as part of the government’s efforts to ease the burden of higher prices on consumers.

The proposed law on a new national gas reserve will require owners of storage facilities to have them 65% filled by August, 80% filled by October, and 90% filled by December.

“This is especially necessary against the background of Russia’s delivery behavior, which has not been reliable,” the government said in the document. “The Russian war of aggression in Ukraine has increased the urgency.”

The laws are still drafts, and details could change before they go into force.

Germany May Extend Coal Use to Replace Russian Gas

Angela Cullen and Birgit Jennen
Mon., February 28, 2022




Germany is getting ready to prolong the use of coal as the country seeks to reduce its reliance on Russian energy in the aftermath of Moscow’s invasion of Ukraine.

Coal plants could run beyond 2030 -- when Germany currently targets an end for the fuel -- but the ultimate goal is greater energy independence through renewable power, said Robert Habeck, vice chancellor and minister for economy and energy.

“Energy policy is security policy,” Habeck said on Monday prior to talks with European Union counterparts. “Strengthening our energy sovereignty strengthens our security. Therefore, we must first overcome the high dependence on Russian imports of fossil fuels -- a warmonger is not a reliable partner.”

Germany, which gets more than half of its gas from Russia, has undergone a rapid shift in policy in reaction to the assault on Ukraine. Alongside a massive boost in defense spending, Chancellor Olaf Scholz announced on Sunday plans to build two new liquefied natural gas terminals, signaling a longer term realignment of Germany’s energy sector.

Even before the invasion, Scholz halted the certification process for the Nord Stream 2 pipeline built to bring more Russian gas directly to Germany and bypass transit through Ukraine.

Germany is now looking at short- and long-term measures to safeguard its energy market from any possible abrupt cutoff of Russian gas. Habeck, the former co-leader of the anti-nuclear Green party, even said he wasn’t “ideologically opposed” to extending the use of the country’s last reactors, but safety is a concern.

“There are no taboos,” Habeck said in an interview late Sunday with public broadcaster ARD. “The real path to independence in terms of energy policy is actually to phase out fossil fuels. The sun and the wind don’t belong to anyone.”

The Economy Ministry is proposing that Germany generate all of its electricity from renewable sources by 2035, 15 years earlier than originally planned, according to a tweet from a ministry official.

The energy rethink has broad backing in Germany’s ruling coalition. Finance Minister Christian Lindner -- from the business-friendly Free Democrats -- on Sunday called renewable power “freedom energy” as it would help reduce reliance on Russia and said he supports the efforts to push ahead with an expansion of hydrogen and synthetic fuels.

“I strongly urge that we review our foreign energy policy,” he said in an ARD interview late Sunday. “This is now all the more pressing.”

‘Pick and Choose’

Germany wants to reach a point where it can “pick and choose which countries we want to build energy partnerships with,” Habeck told ARD. “Being able to choose also means that you can become independent from Russian gas, coal or oil.”

While Germany can manage without Russian gas for the coming months, the country would have to expand its purchasing strategy significantly for next winter, he said.

Read More: European Gas Jumps as Sanctions Spur Energy Shortage Concerns

Coal could help offset the use of Russian gas, but relying on the most polluting fossil fuel also has its own security risks, Habeck said.

“Running for longer means a longer dependence on coal, possibly also from Russia. Or we get it somewhere else,” he said. “But it’s another form of dependence.”

Foreign Minister Annalena Baerbock -- also a former co-leader of the Greens -- said an extended use of coal is “the price that we all have to pay for this war.”

Nuclear is unlikely to be a short-term fix, since the country’s last three reactors are already in the process of being wound down.

“The preparations for shutting down are at such an advanced stage that the atomic power plants could only be operated for longer under the highest security concerns and possibly with fuel supply that hasn’t yet been secured,” Habeck said. “That’s certainly 

©2022 Bloomberg L.P.

Nuclear, coal, LNG: 'no taboos' in Germany's energy about-face

Christoph Steitz, Riham Alkousaa and Maria Sheahan
Sun., February 27, 2022

FILE PHOTO: Woman cleans inside of exhibit representing natural gas pipeline during final preparations at the Hannover Messe industrial trade fair in Hannover

BERLIN (Reuters) -Germany signalled a U-turn in key energy policies on Sunday, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, part of a broad political rethink following Moscow's invasion of Ukraine.

Europe's top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options.

In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany's energy needs.

"The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security," Scholz told lawmakers in a special Bundestag session called to address the Ukraine crisis.

"We must change course to overcome our dependence on imports from individual energy suppliers," he said.

This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves.

These plans will likely be a boon for Germany's top utility RWE, which has been backing efforts by German LNG Terminal, a joint venture of Gasunie, Oiltanking GmbH and Vopak LNG Holding, to build an LNG terminal in Brunsbuettel.

Separately, the German government has asked RWE's smaller rival Uniper to revive plans to build an LNG terminal in Wilhelmshaven, Handelsblatt newspaper reported on Sunday, after the company scrapped such plans in late 2020.

Uniper was not immediately available for comment and the Economy Ministry declined to comment.

Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project, Europe's most divisive energy project after Russia formally recognised two breakaway regions in eastern Ukraine.

Russia has since invaded Ukraine, prompting the West to slap further sanctions on Moscow and making the energy supply issue even more pressing.

The revamp of energy priorities comes alongside a paradigm shift in German foreign and defence policy, with Scholz also announcing a dramatic hike in military spending.

'NO TABOOS'

Germany last year embarked on an ambitious shift towards solar and wind power and Greens member Oliver Krischer on Sunday said a draft law to ensure renewables will account for 100% of Germany's power supply by 2035 already was completed.

Germany will also increase the volume of natural gas in its storage facilities by 2 billion cubic metres (bcm) via long-term options and will buy additional natural gas on world markets in coordination with the European Union, Scholz said.

Germany has 24 bcm of underground caverns of gas storage, which are currently around 30% full, according to industry group Gas Infrastructure Europe data.

Germany is also weighing whether to extend the life-span of its remaining nuclear power plants as a way to secure the country's energy supply, the country's economy minister Robert Habeck, a member of the Greens, said.

Asked by German broadcaster ARD whether he could imagine allowing nuclear plants to run longer than planned under Germany's exit plan, which foresees shutting the country's three remaining plants by the end of 2022, he said: "It is part of my ministry's tasks to answer this question ... I would not reject it on ideological grounds."

Isar 2, Emsland and Neckarwestheim 2 are the last remaining nuclear plants producing power in Germany after the country a decade ago decided to phase out the fuel in the wake of Japan's Fukushima disaster.

The three plants are owned by German energy firms E.ON, RWE and EnBW, respectively.

Habeck also said letting coal-fired power plants to run longer than planned was an option, throwing into doubt Germany's ambitious exit from coal, which is planned for 2030.

"There are no taboos on deliberations," Habeck said, adding that it was Germany's goal to ultimately choose which country will supply its energy.

"Being able to choose also means, in case of doubt, saying goodbye to Russian gas, coal or oil. And should Russia wilfully cut off this supply, then the decision has of course been made," Habeck said.

"In that case they will never be rebuilt. I think the Kremlin knows that, too."

(Reporting by Christoph Steitz, Riham Alkousaa and Maria Sheahan; Editing by Sarah Marsh, Jan Harvey, Raissa Kasolowsky and Alison Williams)

Explainer-Could Germany keep its nuclear plants running?

By Christoph Steitz and Markus Wacket

© Reuters/Alex Grimm FILE PHOTO: Security route in front of the generator of a nuclear reactor block

FRANKFURT (Reuters) - German Chancellor Olaf Scholz and economy minister Robert Habeck on Sunday mapped out potentially radical changes to the country's energy system, going as far as floating the possibility to keep nuclear power plants running for longer.

© Reuters/Thilo Schmuelgen FILE PHOTO: E.ON headquarters in Essen

WHY BOTHER?

Germany depends massively on Russian gas but Moscow's invasion of Ukraine has caused a political rethink in Berlin.

Overall, gas accounts for more than a fifth of Germany's energy mix, and Russia supplies 38% of it with Norway ranking second at 35%.

Alternatives are now under consideration, including more solar and wind power, liquefied natural gas (LNG) terminals, gas- and coal-fired power plants as well as possibly a return to nuclear power.

WHAT'S HAPPENING WITH GERMANY'S NUCLEAR PLANTS?

Nuclear-fired power plants, which still supplied 12% of Germany's gross electricity generation in 2021, remain controversial in Germany, which decided to shut them down after Japan's Fukushima disaster in 2011.

Of the 17 nuclear power plants Germany had at the time, only three remain in operation now: Isar 2, Emsland and Neckarwestheim 2, which are operated by German energy firms E.ON, RWE and EnBW, respectively.

Under current plans, the plants, with combined capacity of 4,200 gigawatts (GW), will be shut down by the end of 2022.

WOULD IT BE POSSIBLE TO KEEP THE PLANTS RUNNING?

It's politically tricky given opposition from the rank and file of the ecologist Greens party, but not impossible.

Under current legislation the remaining operators will lose the right to operate the plants beyond Dec. 31, 2022, the effective end-date for the stations.

Should Germany's network regulator, which is part of the Economy Ministry, decide that they are critical to Germany's security of supply it could allow them to run for longer, which they could technically do.

"Yes, you can extend the life-span of the nuclear-fired power plants ... if there's the will and the operators are on board," said Dirk Uwer, partner at law firm Hengeler Mueller.

Achieving this would still be complex and require parliament to change existing laws, most notably a 2017 deal under which the utilities transferred their decommissioning funds to a public trust.

"There are no longer any prohibitions on thinking," said Marc Ruttloff, partner at law firm Gleiss Lutz, who has advised E.ON on various matters related to nuclear energy policy.

Due to the hurdles, however, chances for an extension are rather low, with Germany's minister for nuclear safety - of the Greens party of which Habeck is also a member - saying on Monday such a move was irresponsible and unsafe.

WHAT ARE THE OPERATORS SAYING?

They're not euphoric.

"For years, we have been doing nothing other than preparing both technically and organisationally for the decommissioning of our plants," a spokesperson for E.ON's nuclear division PreussenElektra said.

The group neither has the nuclear fuel nor the staff that would be required to keep plants going, the spokesperson added.

RWE said its Emsland plant was scheduled to be decommissioned at the end of 2022, by which time its fuel will have been used up, adding there would be high hurdles to overcome, both technically and in terms of getting the necessary approvals, to extend the life-span.

EnBW, however, is less opposed.

"If it is necessary for the security of supply, EnBW is of course prepared to examine measures in an open-minded manner and to provide advice to the German government," it said in e-mailed comments.

(Reporting by Christoph Steitz in Frankfurt and Markus Wacket in Berlin; Editing by Emelia Sithole-Matarise)