Autonomous Mayflower reaches American shores -- in Canada

A crewless robotic boat that had tried to retrace the 1620 sea voyage of the Mayflower has finally reached the shores of North America — this time in Canada instead of the Massachusetts coast where its namesake landed more than 400 years ago.

The sleek autonomous trimaran docked in Halifax, Nova Scotia, on Sunday, after more than five weeks crossing the Atlantic Ocean from England, according to tech company IBM, which helped build it.

Piloted by artificial intelligence technology, the 50-foot (15-meter) Mayflower Autonomous Ship didn't have a captain, navigator or any humans on board — though it might have helped to have a mechanic.

“The technology that makes up the autonomous system worked perfectly, flawlessly,” said Rob High, an IBM computing executive involved in the project. “Mechanically, we did run into problems.”

Its first attempt at the trans-Atlantic crossing to Plymouth, Massachusetts, in June 2021 was beset by technical glitches, forcing the boat to return to its home port of Plymouth, England.

It set off again from England nearly a year later on April 27, bound for Virginia — but a generator problem diverted it to Portugal's Azores islands, where a team member flew in to perform emergency repairs. More troubles on the open sea came in late May when the U.S.-bound boat developed a problem with the charging circuit for the generator's starter batteries.

AI software is getting better at helping self-driving machines understand their surroundings and pilot themselves, but most robots can't heal themselves when the hardware goes awry.

Nonprofit marine research organization ProMare, which worked with IBM to build the ship, switched to a back-up navigation computer on May 30 and charted a course to Halifax — which was closer than any U.S. destination. The boat's webcam on Sunday morning showed it being towed by a larger boat as the Halifax skyline neared — a safety requirement under international maritime rules, IBM said.

How Close Are We To Peak Oil Demand?

Editor OilPrice.com
Sun, June 5, 2022

Two years ago, British oil and gas supermajor BP Plc. (NYSE:BP) sent shockwaves through the energy markets after it declared that the world was already past Peak Oil demand. In the company's 2020 Energy Outlook, chief executive Bernard Looney pledged that BP would increase its renewables spending twentyfold to $5 billion a year by 2030 and "... not enter any new countries for oil and gas exploration".

That announcement came as a bit of a shocker given how aggressive BP has been in exploring new oil and gas frontiers.

When many analysts talk about Peak Oil, they are usually referring to that point in time when global oil demand enters a phase of terminal and irreversible decline. According to BP, this point has already come and gone, with oil demand slated to fall by at least 10% in the current decade and by as much as 50% over the next two. BP noted that historically, energy demand has risen steadily in tandem with global economic growth with few interruptions; however, the COVID-19 crisis and increased climate action might have permanently altered that playbook.

However, BP has been forced to do a mea culpa after it became clear that the COVID-19 pandemic that began more than two years ago has not resulted in a significant reduction in oil demand.

In its Energy Outlook 2022 edition, BP has revised down its forecast for global economic growth saying global GDP will only contract 1.5% by 2025 from 2019 levels compared to its earlier projection of a 2.5% contraction.

BP notes that its former grim outlook was prepared prior to the Russian invasion of Ukraine-- another black swan event--which has driven global energy prices higher and cast an uncertain shadow over Russia's oil and gas sector in recent months.

The Scenarios

In its latest report, BP offers three scenarios--all foresee oil demand surpassing pre-pandemic levels by the middle of this decade before beginning to slip to varying degrees.

In the most bullish case for oil, BP projects that crude demand will rise to 101 million b/d in 2025 and remain flat into 2030. After that point, global demand retreats to 98 million b/d by 2035 and to 92 million b/d by 2040.

In yet another scenario that BP has termed "net-zero," which is the most aggressive in terms of global climate ambitions being achieved, the company pegs 2025 demand at 98 million b/d and just 75 million b/d by 2035. BP assumes that a 95% reduction in greenhouse-gas (GHG) emissions must be achieved for the net-zero predictions to come true.

In the middle-of-the-road scenario, BP assumes that the world will still be broadly in-line with climate goals but with a 75% reduction in GHG emissions by 2025. This picture of the future suggests that oil demand will be around 96 million b/d in 2025 and 85 million b/d by 2035.

However, recent events in the energy sector suggest that oil companies might get a leeway to grow production and even relax climate goals as long as oil and gas prices remain high.

Last year, Exxon Mobil (NYSE:XOM) found itself in trouble after a tiny hedge fund by the name Engine No. 1 successfully waged a battle to install three directors on the board of Exxon with the goal of pushing the energy giant to reduce its carbon footprint. Engine No. 1 enjoyed the stunning victory thanks to support from BlackRock, Vanguard and State Street who all voted against Exxon's leadership.

Luckily, Exxon has finally managed to turn the tables and get shareholders on its side: last week, Exxon recorded a major victory after its shareholders supported the company's energy transition strategy at the annual general meeting.

Only 28% of the participants backed a resolution filed by the Follow This activist group urging faster action to battle climate change; a proposal calling for a report on low carbon business planning received just 10.5% support, while a report on plastic production garnered a 37% favorable vote.

In other words, it appears that Exxon's legacy fossil fuel business remains safe, at least for now, as long as it keeps returning that excess cash to shareholders in the form of dividends and buybacks.

Just like its bigger peer, Chevron Inc.(NYSE:CVX) shareholders voted on Wednesday against a resolution asking the company to adopt greenhouse gas emissions reductions targets, indicating support for the steps the company already has taken to address climate change.

Just 33% of shareholders voted in favor of the proposal, according to preliminary figures disclosed by the company, a sharp turnaround from last year when 61% of shareholders voted to support a similar proposal.

Meanwhile, Hess Corp. (NYSE: HES) has broken with the industry trend of returning excess cash flows to shareholders after announcing plans for massive capex spending in a bid to boost production. Hess has announced a 2022 capex budget of $2.6b; good for a 37% jump, with Bakken spend up 75% to $790m. In the Bakken, Hess plans to run three rigs to achieve its 168kb/d production target.

Changing Map

In yet another report published in the Geopolitical Intelligence Services blog , Carol Nakhle, CEO of Crystol Energy, says the consensus is that global oil consumption will peak within the next 20 years, but demand will not necessarily fall off a cliff thereafter.

Nakhle notes that in OECD countries, oil demand peaked in 2005 at around 50 million barrels per day. What has been driving the growth in global demand is the developing world, primarily Asia (mainly China and India – the second- and third-largest oil consumers in the world after the United States) and the Middle East (led by Saudi Arabia, which is also the sixth-largest consumer in the world). In fact, between 2009 and 2019, almost all the growth in global oil demand was driven by the developing world, with Asia expected to continue to be the growth center in the coming years. Non-OECD countries account for ~54% of global oil consumption.

Nakhle says, "…after peak oil demand is reached, it will at some point plateau and then shrink. In a growing market, there is space for everyone. In a shrinking market, for one country to increase production, supply from another country is squeezed out, usually done by price competition. In such a world, market power will shift toward consumers. Today they are desperately looking for oil; tomorrow they will be in a much stronger position."

She says that once global oil demand peaks and starts to fall, competition among producers to sell more oil and safeguard market share will intensify. In a stagnant or shrinking market, oil and gas producers will face new rules, very different from the ones they have been accustomed to. For instance, OPEC's strategy of cutting supplies to increase prices or Russia threatening to cut its supplies to keep sanctions off its oil exports will no longer be effective. To be fair, higher prices will attract additional production, as it always does. However, In a shrinking market, this will force prices lower, and any deliberate attempts to cut production to raise prices would simply backfire.

In the end, the consumer will end up holding most of the chips.

By Alex Kimani for Oilprice.com

The arrest heard 'round the crypto world

Lucas Matney and Anita Ramaswamy
Sun, June 5, 2022, 

Hey everyone, and welcome back to Chain Reaction.

Last week, we discussed $4.5 billion in new crypto funds from a16z. This week, we're talking about the arrest that has everyone in the NFT space sweating bullets.


Ocean climate tech
Image Credits: Getty Images

crimes of the future

The crypto space has been moving so quickly over the past couple years that builders have generally seemed to believe existing rules didn’t apply to them. Well, after years of snails’ pace legal action, it seems U.S. prosecutors are starting to feel it’s time to challenge that perception.

This week, the U.S. Attorney’s Office in the Southern District of New York arrested and filed charges against a former OpenSea executive who used his position to front-run NFT projects that were going to be listed on the home page of the marketplace. Members of the community discovered his actions by tracking his activity on public blockchains.

I would’ve loved to rant on this during the podcast, but news broke while we were recording, so I’ll leave you with some thoughts here.

The arrest was pretty much a massive shock to people in the NFT space who generally believed that Nate Chastain had acted unethically but that it couldn't be "insider trading" because NFTs weren't securities. This is a framing that was held by many, including Chastain's boss at OpenSea who fired him.

"I do think there was a misframing of it as insider trading. We don't view NFTs as financial assets, so that does not apply. That's a very specific term for a very specific thing," OpenSea Devin Finzer told Decrypt in September.

Former OpenSea exec arrested and charged with insider trading of NFTs

There are an awful lot of people taking a very close reading of the SDNY press release, which states it specifically charged Chastain "with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens." They notably describe NFTs as "digital assets" later in the release. Also, it's worth reiterating that this is the DOJ -- not the SEC -- charging him, though it is the Office’s Securities and Commodities Fraud Task Force handling this case.

Now, why don't crypto people want NFTs to be classified as securities? Well, there's a lot of existing regulatory guidance there, and most feel it would basically upend the industry if NFTs were unilaterally subjected to securities law; it would certainly raise the barrier of entry for creation of NFTs and curtail a lot of the experimentation happening in the space right now.

Another big reason that it would be bad if NFTs are treated as securities is that it would mean an awful lot of people have been doing illegal things for an awfully long time.

The NFT space made it through this latest crypto bull run without any meaningful regulation coming down on it. As NFT volumes start to show signs of slowing, there's a fear that more regulation could be just around the corner.

the latest pod

What’s up, it’s Anita here to give you a preview of the latest episode of our Chain Reaction podcast, where we unpack the latest web3 news, block-by-block for the crypto-curious.

This week, we talked about Coinbase’s new approach to what can be one of the most anxiety-inducing aspects of corporate life -- the performance review. Our colleague, Amanda, wrote about how the crypto exchange is trying to emulate Ray Dalio’s hedge fund, Bridgewater Associates, by letting employees give each other real-time feedback and ratings. Is this part of tech’s descent into a Black Mirror-style reality? Tune in to hear our thoughts.

We also recapped two recent crypto comeback stories, one from the OnlyFans founder and CEO who left the company after trying to ban sexually explicit content from the platform and another from the architect of the highly unstable stablecoin, Terra.

Our guest this week was Outdoor Voices founder Ty Haney, who shared details about her pivot from athleisure to crypto with her new venture, Try Your Best. Haney broke the news on our podcast that the startup just landed its second round of institutional funding.

Where startup money is moving in the crypto world:

New York-based enterprise blockchain startup Digital Asset took in a strategic investment of undisclosed size from Japanese banking giant SBI Holdings.


InfStones, a blockchain infrastructure provider, nabbed $66 million in a round led by SoftBank and GGV.


Indian music NFT startup FanTiger bagged $5.5 million for its seed round led by Multicoin Capital.


LivingCities, a metaverse-focused social startup co-founded by Foursquare founder Dennis Crowley, banked $4 million in early funding led by DCVC.


Zimbabwe’s FlexID received an undisclosed amount of funding from Algorand for its blockchain-based identity system for the underbanked.


Web3 augmented reality gaming company Jadu raised $36 million in funding for its Series A led by Bain Capital Crypto.


VillageStudio raised $2.3 million in an Animoca Brands-led round for its NFT-based Playken avatars.


Web3 payments API Merge got $9.5 million in seed funding led by Octopus Ventures.


GoSats, an India-based bitcoin rewards platform, raised $4 million in a pre-Series A funding round from investors including Y Combinator, Accel and Gossamer Capital.


DAO management platform Utopia Labs closed a $23 million Series A led by Paradigm.

Foursquare founder banks funding for mystery 3D social network startup
the week in web3

It was an uncharacteristically quiet week in web3, and our team members in the U.S. took some time to enjoy the rare, uneventful long weekend. Still, some big personalities made waves in the space, for better and for worse.

OnlyFans founder Tim Stokely is pivoting to crypto after leaving the company last December following controversy over his push to ban sexually explicit content from the platform. Anita wrote about the new “family-friendly” NFT startup he’s launching alongside another former OnlyFans exec that will allow people to buy, sell and trade virtual cards featuring influencers and celebrities.

NFT platform OpenSea had fired Nate Chastain, its head of product, back in September after he was accused of front-running trades on the platform. Now, he’s been arrested and charged with insider trading; Lucas has the details.

OnlyFans founder makes crypto debut selling influencer trading cards
added analysis

Here's some of this week's crypto analysis you can read on our subscription service TC+ (written by TC's Jacquelyn Melinek):

VC funding for crypto projects fell in May, but many investors remain bullish
VC funding in crypto has fallen month-over-month from April to May, but many investors are not concerned. “For investors like us, it’s time to buy,” Stan Miroshnik, partner and co-founder of 10T Holdings, told TechCrunch. The pace of capital deployment might be more measured as investors and founders alike become more calculated, but VCs will still continue to have a robust amount of activity, Miroshnik said. Even though there might be a gloomy sentiment in digital asset markets, true crypto-native funds will continue to invest heavily, Saurabh Sharma, head of investments at Jump Crypto, said to TechCrunch.

As crypto becomes more mainstream, can it stay decentralized?
Whether it’s first-time buyers of cryptocurrency or people learning more about NFTs, Bitcoin and the general crypto ecosystem, there has been an uptick globally in awareness of crypto. But as it gains momentum, regulators worldwide will continue to monitor the space more closely, but the headline speaks for itself: what does this mean for the future of crypto? A number of founders and executives in the industry weighed in with their thoughts.

Longtime Bitcoiner Dan Held says this ‘crypto winter’ won’t be as harsh as others
As the cryptomarkets remain bearish, some longtime market participants, like Dan Held, director of growth marketing at crypto exchange Kraken, aren’t worried. Even though there is lots of talk of a crypto winter circulating through the community, Held said the sentiment for this current market cycle is different. While he -- and many others -- persisted through major market cycles over the years, the narratives have shifted a lot, thanks to more prominent institutional players and massive amounts of capital entering the space.

Toshiba directors exchange criticism over public statements


Makiko Yamazaki
Mon, June 6, 2022


FILE PHOTO: Toshiba Corp's annual general meeting with its shareholders in Tokyo

TOKYO (Reuters) - External directors at Toshiba Corp exchanged criticism on Monday over statements on board decisions, signalling a public rift as the embattled conglomerate reviews strategic options including going private.

In an annual business report released on Monday, Toshiba external directors Mariko Watahiki and Katsunori Hashimoto, both members of Toshiba's three-member audit committee, were quoted as saying that external director Raymond Zage raised concern about Toshiba's governance by breaking ranks with the board's official stance after a March meeting.

Zage defended his actions in a statement to Reuters, saying the criticisms were misleading and that his actions had received a positive shareholder response.

Company documents also confirmed that Watahiki had objected to two nominations supported by the board. Reuters reported on Friday, citing people familiar with the matter, that Watahiki had objected and that the company, in a rare move, would make her objections public.

In March, Zage came out in public support of a proposal from Singapore-based 3D Investment Partners that the company solicit buyout offers from private equity firms. It had been rejected by the board but was later taken up, and voted down, at an extraordinary shareholders' meeting.

"(Zage's comments) damaged shareholder confidence in the board and caused concerns about corporate governance," Watahiki and Hashimoto were quoted as saying. "Even if the above act cannot be said to constitute a breach of the duty of care."

Zage said in the statement to Reuters: "(It is) inaccurate, incomplete and misleading representing a failure on the part of the authors to consider the substantial positive shareholder feedback as well as the content of substantial discussions at the board on this matter both before and after the public statement."

Toshiba declined to comment on the matter.

Zage also chairs the nomination committee, which proposed the two board candidates - from U.S. activist hedge funds Elliott Management and Farallon Capital Management - formally opposed by Watahiki.

Caught up in accounting and governance crises since 2015, Toshiba has had tussles with its activist shareholder base, some of whom want it taken private.

Toshiba said last week that it had received eight initial proposals to take it private and two proposals for capital alliances that would leave it publicly listed.

(Reporting by Makiko Yamazaki; Editing by Edmund Klamann)

There’s no reason to question why BTS was at the White House

Kuan-lin F. Liu - 

New Taipei City, Taiwan — Global K-pop icons BTS traveled to the White House on Tuesday to meet with President Joe Biden and speak to a packed briefing room of journalists about anti-Asian hate. On the last day of Asian American, Native Hawaiian and Pacific Islander Heritage Month, the seven members of the boy band — RM, Jin, Suga, J-Hope, Jimin, V and Jungkook — took turns at the podium to voice their support for the AANHPI community, condemn anti-Asian hate and promote inclusivity.



While the many reporters present and more than 300,000 viewers streaming on YouTube were clearly excited about the group’s presence and involvement with the campaign against anti-Asian violence, others, such as Fox News’ Tucker Carlson, were less than impressed. On his show, Carlson took a quick jab at the Biden administration for getting “a Korean pop group to discuss anti-Asian hate crimes in the United States.”

His comment may have been aimed at the president, but it caught the attention of the group’s fandom, known as the BTS Army, who quickly flooded social media to push back against Carlson’s dismissive comment.

By raising an eyebrow at the involvement of BTS in a campaign against anti-Asian hate in the U.S., Carlson and like-minded critics gave themselves away as being ignorant of the group’s history of speaking up about social issues and donating to social causes, even ones pertaining specifically to the U.S. There was no reason to question why BTS was at the White House.

Following last year’s Atlanta spa shootings that killed eight people, including six Asian women, BTS posted an impassioned statement in both Korean and English to its official Twitter account denouncing anti-Asian hate, violence and racial discrimination of any form. In the statement, the group briefly mentioned their own experiences as victims of anti-Asian racism, making it clear that this was an issue particularly close to their hearts.

“We recall moments when we faced discrimination as Asians,” the statement said. “We have endured expletives without reason and were mocked for the way we look. We were even asked why Asians spoke in English.”

The tweet became the most retweeted tweet of 2021, with approximately 1 million retweets and 2.5 million likes worldwide.

In 2020, the group made a $1 million donation to Black Lives Matter shortly after the death of George Floyd. Standing in solidarity with Black Lives Matter supporters, the group posted to its Twitter account using the hashtag #BlackLivesMatter.

BTS sits down with Biden to discuss hate crimes against Asians

There is no denying that by being from South Korea, BTS may not have had the same experiences as those in the AANHPI community who grew up in the U.S. But this does not mean that the band cannot understand what people who have experienced anti-Asian hate, or any racially motivated hate for that matter, have gone through and continue to go through, nor does it preclude the band’s members ​from being allies and lending support to such an important cause.

Unlike some of the group’s peers in the K-pop industry who are generally advised to stay mum about social issues, BTS is among the most prominent of K-pop artists who have spoken out about such issues. This, some have said, is in part a result of the group’s large number of international fans who have urged the group to use its platform to shine light on these issues, but it is also because of BTS’ own experiences with racism.

This personal connection to the issue, coupled with its sense of responsibility and love for its fans around the world, seems to be what continues to motivate the group to speak out and act to effect social change. And it is what makes the band members the right spokespeople for the issue of anti-Asian hate — even in the U.S.

BTS has a massive global fanbase with fans of different races and nationalities. So, when the K-pop superstars speak and address their BTS Army, as they did during their speech at the White House, they are speaking to Americans as well as to people from all over the world. Their message to promote Asian inclusion, diversity and representation is one that will give hope to their Asian American, Native Hawaiian and Pacific Islander fans and inspire non-AANHPI fans to join the movement against anti-Asian hate.

When it comes to changing social attitudes and culture, a good message is not enough. A message is only as strong as who delivers it, and how. As artists, the members of BTS have always genuinely addressed the issues young people go through and conveyed a message of hope in their music, which is one of the reasons their fans connect with the group so deeply. Personally, I got through a particularly rough bout of homesickness when I lived in Hong Kong by listening to the band’s “Map of the Soul: 7” album and watching its hilarious behind-the-scenes videos.

As BTS became more prominent globally, it partnered with UNICEF for the “Love Myself” campaign to end violence against children and teens so that they may lead safe lives. The band has also spoken at the United Nations General Assembly three times about a number of important world issues such as poverty, climate change and the Covid-19 pandemic. What the group has said and done has resonated with its fans, and the BTS Army has modeled many of its own projects after the group’s philanthropic efforts and causes.

Anti-Asian hate is a global issue, exacerbated by the Covid-19 pandemic. It was only fitting that Biden, the leader of the free world, invited BTS — undeniably a global force to be reckoned with — to speak out about the issue and, it is hoped, make things better in every corner of the world.

South Korean steelmaker warns green push will benefit China and India

Madeleine Bruder

 

South Korea’s Posco has warned that efforts to make its steelmaking processes less polluting in the face of tougher regulations and customer demands could make the company less cost-competitive against Chinese and Indian rivals.

The world’s sixth-biggest steelmaker is South Korea’s worst polluter, as conventional processes of producing the metal that use coking coal to melt iron ore and remove oxygen are highly carbon-intensive. The company wants to replace coal with hydrogen by 2050 to meet tougher domestic regulations and growing public calls for low-carbon steel products.

Posco estimates that decarbonising its steelmaking operations will cost about Won40tn ($32bn) and wants to apply the hydrogen-based steelmaking technology to eight furnaces from 2034.

“We are taking environmental concerns seriously as our customers like Apple and Ørsted are asking us to supply green steel while Europe is imposing a carbon border tax and South Korea is reducing carbon credits for steelmakers,” Cho Ju-ik, head of Posco’s hydrogen business, told the Financial Times in an interview. “We need to fundamentally change how we make steel.”

But he added that the transition would weaken the company’s competitive position as Chinese and Indians rivals face less pressure to change their approach.

“Our concern is if countries can strike a balance. Europe, Japan and South Korea are going aggressively [towards green steelmaking] but our competitors in China and India face looser domestic regulations,” he said.

“This can put us at a disadvantage. China also has good conditions for producing renewable energy, which will result in different hydrogen prices and steelmaking costs.”

The steel industry accounts for 7-9 per cent of all fossil fuel emissions and some of the world’s biggest steelmakers, including ArcelorMittal, ThyssenKrupp and China’s Baowu, have launched initiatives to reduce their carbon footprint. Sweden’s SSAB is at the forefront of such efforts, producing fossil-free steel using hydrogen gas last year.

Analysts said that building a hydrogen supply chain was crucial to Posco’s transition to green steelmaking, as South Korea lacks enough renewable energy capacity to produce sufficient quantities of the gas.

Cho estimated that Posco needed about 5mn tonnes of hydrogen by 2050 and planned to source 80 per cent of supplies of the gas from abroad. The company has signed preliminary deals with global oil producers to secure hydrogen from imported natural gas.

It also plans to develop green hydrogen projects using renewable sources in Australia, Malaysia and the Middle East.

“It is not easy to secure the price competitiveness of green steel because it is difficult to mass produce green hydrogen from renewable sources,” said Kim Kyung-sik, who heads Steel Scrap Research Center. “The industry has a long way to go for decarbonisation in terms of technological development and cost reduction.”

Can Anyone Compete With China’s Battery Dominance?


Editor OilPrice.com
Sat, June 4, 2022

The global electric battery market has expanded dramatically over the last year, as the push to shift from traditionally fuelled cars to electric alternatives has never been stronger. So, how will emerging battery markets overcome supply chain challenges to ensure that the future of electric battery development is secure?

The global supply chain is still being hit hard by ongoing pandemic restrictions, the Covid spill-over effect, and, most recently, the Russian invasion of Ukraine. This means that renewable energy projects are seeing lengthy delays and the production of core components is being outweighed by the growing demand. But energy and manufacturing firms around the world are optimistic about raising battery production to meet consumer needs as demand increases over the next decade.

McKinsey estimates that the global battery market will grow by over 20 percent per year until 2030 to reach at least $360 billion, with upper-end estimates increasing to $410 billion. In addition, the development of one 30 to 40 GWh factory per year would create around 3,200 direct jobs.

Europe and North America are likely to see the biggest opportunities, with the potential for substantial growth in their largely underdeveloped battery markets over the next decade. However, China and South Korea already have well-established battery markets, which will continue to expand, presenting the main competition. Based on similar industries, McKinsey predicts that the global market will consolidate around ten to 15 battery cell manufacturing players, meaning that the time to develop competitive projects is quickly running out. Battery performance, the scale of production, and the competitiveness of costs will likely be the driving factors for competing companies.


With the ongoing Russia-Ukraine conflict, it has become evident that Europe and North America must decrease their reliance on authoritarian powers to ensure the future stability of their major industries and energy supply. In addition, pandemic-related supply chain disruptions have already demonstrated European and U.S. dependence on China’s manufactured goods for many industrial sectors. As the U.S. and Europe develop their battery manufacturing industries, this could be the chance for the two regions to overcome supply chain challenges and establish stronger energy security for the next decade.

However, emerging markets are already stumbling at the first hurdle. According to recent reports, the U.K. may fail to establish a strong electric car industry by the end of the decade – in line with its ban on the sale of petrol and diesel vehicles by 2030 – if it cannot develop its battery manufacturing industry more rapidly. Automakers are ambitious in their rollout of several electric vehicle models over the coming years, expecting consumer demand to grow significantly as they switch away from traditionally fuelled cars.

However, the limit on the import of low-cost Asian batteries means that the U.K. will have to develop its battery manufacturing industry to meet demand. The main obstacle is the lack of suitable sites for the development of ‘gigafactories’, as well as the tendency to import batteries from other European countries.

Related: Why Russia’s Economy Hasn’t Collapsed Under The Weight Of Sanctions

The U.K. government has pledged $1.2 billion in support of the country’s EV battery supply chain but is doing little to encourage greater battery plant development. At present, researchers Benchmark Mineral Intelligence estimate that the U.K. will require around 175 GWh of battery capacity by 2035 to supply around 3 million EVs. It is expected to achieve 56.9 GWh by 2030, based on current developments. Meanwhile, the rest of Europe is expected to reach an output of 821.3 GWh, with Germany leading the market.

And some say that others simply cannot replicate the success of China when it comes to lithium batteries, as it continues to dominate the global market. One reason is the significant head start that China has had over its competitors, many of which are currently searching for suitable locations for huge battery factories before they can even consider building them.

Despite its lack of lithium reserves, China has established itself as the world’s biggest lithium battery manufacturer, with around 72 percent of the battery market share in 2020, compared to 60 percent in 2018. Some estimates are even higher. Comparatively, the U.S. holds around 8.5 percent of the market share.

China has achieved its battery dominance by investing huge amounts of money in its EV market. The Chinese government has invested anywhere between $60 billion and $100 billion in subsiding the production of EVs to rapidly expand the market and create greater demand for lithium batteries. It has also been subsiding battery production costs to boost output. But the rest of the world simply cannot offer this type of financing, particularly at a time when countries are racing to secure their energy security in the face of major oil and gas shortages.

Another major obstacle for emerging battery manufacturers is the inevitable increase in raw material prices over the coming years. EV battery prices have been decreasing in recent years as the production scale has risen. Battery cells cost around $128 per kilowatt-hour at present. But prices could increase by 22 percent between 2023 and 2026 due to an increase in raw material costs, to reach $138 per kilowatt-hour.

Sam Jaffe, Vice President of battery solutions at E Source, stated “The tsunami of demand is coming” but “I don’t think the battery industry is ready for it.” The global shortage of raw materials, such as lithium, has exposed the battery manufacturing industry’s weakness and the need for much greater levels of mining to meet the growing global demand. This is just one more challenge that emerging manufacturing countries must face as they try to develop their battery manufacturing industries to compete with that of China.

As global demand for batteries increases, in line with growing EV demand, several countries around the world hold the potential to establish their battery manufacturing industries to compete with the dominant Chinese market. However, companies across Europe and North America must overcome significant challenges if they want to solidify their reputations as major global players in the battery market.

By Felicity Bradstock for Oilprice.com

Engineer Who Fled Charges of Stealing Chip Technology in US Now Thrives in China



Jordan Robertson and Michael Riley
Sun, June 5, 2022

(Bloomberg) -- Few companies are better positioned to benefit from the crippling shortage of computer chips than ASML Holding NV, a Dutch manufacturer whose equipment plays an integral role in making the world’s most advanced semiconductors.

But four lines tucked halfway into an otherwise upbeat, 281-page annual report from February hinted at a potentially incendiary problem. ASML accused a Beijing-based firm, regarded by Chinese officials as one of the country’s most promising tech ventures, of potentially stealing its trade secrets. Behind the brief disclosure is an extraordinary multiyear tale of intellectual property theft and a broader threat facing the $556 billion semiconductor industry.

In the report, ASML said the Chinese company, Dongfang Jingyuan Electron Ltd., is related to a defunct Silicon Valley firm, Xtal Inc., which ASML sued for intellectual property theft. A 2018 trial in California, which received scant attention at the time, provided more detail. Dongfang and Xtal were essentially the same, created a month apart in 2014 by a former ASML engineer named Zongchang Yu, ASML’s attorney told the court. The two companies worked in tandem toward the same goal: obtaining ASML’s technology and transferring it to China, which is seeking to foster its own semiconductor industry, often at the expense of Western companies, the attorney argued.That technology was secured in sometimes audacious fashion: one engineer was accused of stealing all 2 million lines of source code for critical ASML software and then sharing part of it with Xtal and Dongfang employees in the US and China, according to transcripts of the proceedings.“It’s not an accident. It’s not anything else,” Patrick Ryan, ASML’s lead attorney, told the court. “But it is a plot to get technology for the Chinese government.” Xtal lost and filed for bankruptcy protection. It was ordered to pay $845 million, which ASML deemed “uncollectable.”ASML declined to comment for this story. A Dongfang representative declined to comment. Yu, 60, who has an outstanding arrest warrant in California on allegations of stealing trade secrets from ASML, couldn’t be reached for comment. He now runs Dongfang in Beijing with ample support from the Chinese government, according to company statements and other Chinese documents. The allegations the company made in court and in its annual report reflect the delicate position ASML finds itself in, trying to grow its business in China while pursuing claims of IP theft against a Chinese company.

China is the world’s largest market for semiconductors. Its electronics factories and growing middle class are vital consumers of chips. Semiconductor companies have struggled for years to balance access to China against concerns the country is seeking to pilfer their intellectual property and overtake them.

For now, China lags in semiconductor manufacturing, leaving its most important industries dependent on technology dominated by foreign companies. Making its own advanced chips is a priority that’s complicated by US sanctions that limit access to the latest equipment. Beijing has taken unprecedented steps to clear such hurdles, including launching a $150 billion semiconductor initiative in 2014 to turbocharge domestic production.

China has also encouraged people to steal technology that advances Beijing’s interests, according to the FBI. “China recognizes it needs to make leaps in cutting-edge technologies,” FBI Director Christopher Wray said. “Instead of engaging in the hard slog of innovation, China often steals American intellectual property and then uses it to compete against the very American companies it victimized.”

ASML’s allegations offer a detailed example of what national security authorities describe as China’s playbook to acquire advanced technology. It’s a set of strategies, they say, that depends on inducements from Beijing, theft by well-placed workers, and in at least some cases, a reluctance to complain by corporate victims seeking to preserve or enhance access to the Chinese market.

“Taken individually these cases can seem really anecdotal, and some victim companies might say there’s not really any master plan,” said Anna Puglisi, senior fellow at the Center for Security and Emerging Technology at Georgetown University. “But take this together with other cases over time and you can see the silent—and in some cases not so silent—hand of the Chinese government.”

China’s Ministry of Foreign Affairs called the allegations “malicious hype.” “Anti-China politicians in the US have been using ‘IP theft’ topics to tarnish China,” the ministry said in a statement. “China didn’t make its technology achievements by stealing or robbing from others.”

Veldhoven, Netherlands-based ASML makes technology that’s crucial for manufacturing the fastest, most powerful computer chips. According to research firm Gartner Inc., as of 2021, ASML controlled more than 90% of the $17.1 billion global market for lithography equipment, which is used to shrink and then print patterns of transistors onto silicon wafers that are then sliced into individual chips.

A single machine can be the size of a small house and cost roughly $170 million. That technology is why the company’s market capitalization has more than quadrupled in four years, to $284 billion at the end of 2021.

At the center of the litigation is software called optical proximity correction, or OPC. It makes up less than 1% of ASML’s revenue. But without it, lithography machines can’t accurately print tiny circuits, according to trial testimony.

“If you didn’t do any OPC, then the pattern on the chip is totally scummed,” testified Yu Cao, an ASML executive who was general manager of the division that develops the software. “This would be a chip that doesn’t work.”

China is developing its own lithography machines, but it could take years to catch up to ASML, if ever, according to Robert Castellano, president of The Information Network, a Pennsylvania-based semiconductor research firm. Mastering OPC software could close some of the gap by allowing Chinese manufacturers to improve those machines and pack more transistors onto chips they produce, he said.

That leap could have implications beyond consumer devices. “This is not about making a better smartphone,” Castellano said. “It’s about making weapons that are more sophisticated than they are right now.”

The year 2014 was important for China’s semiconductor ambitions. That’s when the country created its $150 billion fund to jumpstart companies to compete with foreign behemoths.

It’s also when Yu started his two companies. Educated in China, he had worked mostly in Japan and the US, including at ASML, which he left in 2012, according to court documents. In January 2014, he incorporated Xtal, based in an office park near San Jose International Airport. A month later, he founded Dongfang, in a government-funded industrial enclave in Beijing.

Yu created the companies at the direction of Jingyuan Han, a member of China’s economic elite who retains close ties to the Communist Party, Ryan, ASML’s attorney, alleged in court. Han serves as chairman and chief executive officer of China Oriental Group Co., a large steel producer, where his biography lists multiple Communist Party roles.

The goal was to tap into incentive programs while delivering critical technologies for China’s semiconductor initiative, Ryan alleged.

Despite its industrial-age specialization, China Oriental is a player in the country’s race to become a global technology superpower, often through investments by the company or by Han personally, according to corporate filings and Ryan’s courtroom arguments. Until 2019, China Oriental, through subsidiaries, owned more than 50% of Dongfang, according to Datenna, a Dutch firm that tracks the ownership of Chinese companies. It has since sold its stake as other investors have come onboard, Datenna said.

Representatives for China Oriental didn't return messages seeking comment.

As trial testimony alleged, Yu recruited engineers from the ASML division where they worked developing OPC software, and the departing employees assured their managers they would be working on unrelated technologies.

But after Song Lan, director of engineering, resigned in August 2015, ASML examined his computer. Investigators found he was working for both companies at the same time and had downloaded ASML files to a hard drive that he took to his new employer, according to a filing by the Dutch company in Xtal’s bankruptcy proceedings. The company said it found similar violations involving others who left for Xtal.After Xtal began marketing OPC software, ASML sued.

The data taken by Lan, who became Xtal’s vice president of engineering, included source code for ASML’s OPC software, according to the filing. Lan testified that he took the code inadvertently, while backing up his ASML email to preserve personal data. The code was in a file attached to an email that Lan said he never opened.

ASML’s attorneys said they weren’t able to learn the full scope of Lan’s activities. After ASML informed Xtal of its intent to sue, Lan used a wiper program on the hard drive and erased as much as 61 gigabytes of data, according to the filing. Lan didn’t address the deletion in his testimony, as Xtal’s attorneys objected to a question about it.

Another former employee, Wanyu Li, who became Xtal’s IT director, downloaded the source code for ASML’s OPC software—all 2 million lines of it—to a hard drive, according to testimony from ASML forensic experts. Investigators found evidence that Li used it immediately at Xtal, uploading part of the code to a GitHub server where it was accessible to about 30 engineers with Xtal and Dongfang, according to the testimony.

The judge informed the jury that Li admitted to destroying evidence, breaking the hard drive’s circuit board into pieces before turning it over to Xtal’s attorneys on the eve of trial, according to trial transcripts.

Xtal’s attorney, Donald Putterman, acknowledged that Li stole the source code and damaged the hard drive. “There's no sugarcoating with what Wanyu Li did,” Putterman told the court. “You can’t do it. It was wrong. It was illegal. Off the charts.”

However, he said no one at Xtal knew that Li had the stolen code. “It was never actually used by Xtal,” he said. “Xtal never made a penny on it.”

ASML attorneys referred the case to Santa Clara County’s District Attorney’s Office, which filed criminal charges in April 2019 alleging theft of trade secrets against Yu, Li and Lan, according to court documents.

Li, 56, pleaded guilty to a felony charge and Lan, 48, to a misdemeanor charge, both for taking computer data, according to prosecutor Erin West. Li was sentenced to seven months of electronic monitoring, and Lan to 90 days of community service, she said.

Both men, through their attorneys, declined to comment. When authorities went to arrest the three men in May 2019, Yu had left for China, West said.

ASML’s attorneys accused Yu of orchestrating the thefts. Yu was on emails where his employees discussed using the Dutch company’s source code to help speed up Xtal’s software development, according to testimony from ASML’s forensic experts. He also had copies of confidential ASML technical manuals and emailed them to his staff, they testified.

Yu testified that at the time he didn’t believe there was a problem using some internal ASML materials to help guide Xtal’s work.

“It is very good reference for our modeling work,” Yu wrote in one email.

By using stolen data as a roadmap, Xtal shaved years off the time needed to develop the software, Ryan argued.

In January 2016, Xtal won a $27 million contract with South Korea's Samsung Electronics Co., a longtime ASML customer, to supply OPC software, according to trial testimony. In two years, Yu’s company had replicated a technology that ASML said it had spent $100 million and 10 years developing.

“Xtal didn’t have to go down dead ends, because it knew which ones were dead ends, and it knew which ones were the path to glory, the path to speed, the path to development, the path to the money,” Ryan told the jury.

Samsung said it doesn’t have a current relationship with Xtal or Dongfang. The company pointed to a statement by ASML saying that Samsung wasn’t involved in “any malicious actions against ASML.” The Dutch company didn’t lose any business because the work between Samsung and Xtal was “thwarted” when the theft was discovered, according to the statement.

After ASML’s court victory, a Dutch newspaper Het Financieele Dagblad published a report alleging a link between the thefts and China. ASML refuted it and offered a different motive that didn’t involve China. “The wide speculation about a government-directed ‘conspiracy’ to steal our IP and trade secrets is therefore just that: wide speculation,” ASML said, in an April 2019 press release.

Chief Executive Officer Peter Wennink reiterated that position. “The suggestion that we were somehow victim of a national conspiracy is wrong.”“The facts of the matter are that we were robbed by a handful of our own employees based in Silicon Valley who had broken the law to enrich themselves,” he said.

“The suggestion that we were somehow victim of a national conspiracy is wrong” — ASML CEO Peter Wennink

However, months earlier, ASML’s own attorneys had directly linked Yu’s companies to China’s technology ambitions. “It’s consistent with a broader strategy that is being employed the Chinese government,” Andrew Winetroub, an ASML attorney, told the court. ASML had evidence, he argued, that Dongfang was receiving funds from the Chinese government and that “Xtal is intimately involved.”“They want to essentially be ASML in China,” Ryan, the lead ASML attorney, argued. “Stealing our software was a step in the right direction.”

ASML sought to introduce evidence that its lawyers said would support those claims. Putterman, Xtal’s attorney, argued that it amounted to “repetitive efforts” to “back-door prejudicial intonation” about China. The judge instructed ASML to focus on allegations limited to the US company, Xtal.

ASML’s case highlights the complications many Western companies face dealing with China.

China is ASML’s third-biggest market. Since 2019, the Dutch government has prevented the company from selling its most advanced lithography equipment there because the chips the equipment makes have potential military uses. ASML has opposed the restrictions.

Nick Eftimiades, a senior fellow at the Atlantic Council, said China “put ASML in an extraordinarily awkward position.”

“This isn’t the first time that a company’s been stolen from and refused to make it a big issue publicly,” said Eftimiades, a former US Department of Defense official who tracks Chinese IP theft and espionage cases. “Many companies go to extraordinary lengths to keep these events from being known to the public, stockholders and investors."

For Yu, Xtal’s troubles did little to slow Dongfang’s ascent.

In 2015, Dongfang signed a research agreement with the Institute of Microelectronics of the Chinese Academy of Sciences, the government’s semiconductor research center, according to Chinese documents. There, Yu caught the attention of Tianchun Ye, the institute’s director and the chief scientist directing China’s chip equipment development. Dongfang and the institute created a joint venture for chip technology development. Since then, Dongfang has won repeated honors and praise from the Chinese government.

Despite losing the Xtal case, Chinese authorities granted Dongfang a wide-ranging patent in 2019 that includes OPC software. Last year, Dongfang announced that it was named a “little giant” by China’s Ministry of Industry and Information Technology, a designation often followed by significant new investment and expectations of rapid growth.

Since returning to Beijing, Yu has raised millions of dollars while being courted by Chinese officials. He appeared on the reviewing stand for a military parade marking the 70th anniversary of China’s founding—an invitation-only affair reserved for elites.

A 2020 book of interviews with Chinese tech entrepreneurs portrayed Yu as a “flagbearer” for semiconductor development. He told the authors one of his biggest dreams was to help China create its own OPC software—and “break the foreign monopoly.”

IMPERIALISM HIGHEST STAGE OF STATE CAPITALI$M

Chinese debt traps in Africa? The bigger worry is bondholders, study finds


Mon, June 6, 2022

The rise in African debt due to Chinese lending pales in comparison with the debt burden created by private creditors in the last decade, according to a new report taking aim at accusations that Beijing engages in "debt-trap diplomacy" on the continent.

The study - by Harry Verhoeven from the Centre on Global Energy Policy at Columbia University, and Nicolas Lippolis from the department of politics and international relations at the University of Oxford - says the debt-trap narrative is a function of China-US strategic and ideological rivalry rather than a reflection of African realities or perspectives.

"What keeps African leaders awake at night is not Chinese debt traps. It is the whims of the bond market," the report says.

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Debt-trap diplomacy involves extending loans to countries and taking control of key assets if the debtor defaults on repayments.

While China is the continent's biggest bilateral creditor, most of the debt is due to private Western holders of African debt, according to the researchers. Capital, in the form of debt repayments, thus continued to flow from Africa to Europe and North America, the study said.

Verhoeven said the percentage of African debt owed to China was less compared to that borrowed from private creditors.

"[Chinese debt] is not the most rapidly growing segment of debt. Other credit lines have grown a lot more in recent years, especially those towards commercial creditors," said Verhoeven, co-author of the report "Politics by Default: China and the Global Governance of African Debt".

"These are bondholders, people from London, Frankfurt and New York who are buying African debt. That segment in the last couple of years has grown much faster than any liabilities that African states owe other creditors."

The report cited confidential estimates of international financial institutions (IFIs) that showed sub-Saharan Africa's government debts to Chinese entities at the end of 2019 totalled around US$78 billion. This was about 8 per cent of the region's total debt of US$954 billion and 18 per cent of Africa's external debt.

The researchers said roughly half of Africa's public debt was domestically issued, and the other half was owed to external actors. Of the latter, one-third was owed to bilateral official partners, one-third to international financial institutions and one-third in the form of Eurobonds denominated in a currency other than that of the issuing state. Of the bilateral debt, the IFIs estimated that about half was owed to China, the researchers said.

This is broadly supported by the World Bank's publicly available International Debt Statistics, which show the continent has about US$427 billion in external debt.

Moreover, the publicly available data shows that Chinese-held debt makes up roughly half of the bilateral debt stock, again in line with the IFI estimates.

The Global Development Policy Center at Boston University and the China Africa Research Initiative at Johns Hopkins University estimate that Beijing has lent about US$150 billion to African countries since 2000, mostly through the China Eximbank (60 per cent) and the China Development Bank (25 per cent), suggesting that about US$75 billion has been paid off already.

"This is a sizeable amount, but not large enough to have been the main driver of the debt build-up since 2004-05," the study said.

Furthermore, it said the data revealed that Chinese lending, rather than driving a continentwide expansion of debt, was heavily concentrated in five countries: Angola, Ethiopia, Kenya, Nigeria and Zambia.

"The idea that Chinese debt traps jeopardise the entire continent is hyperbolic," the study said.

It is also a claim that China has repeatedly rejected.

In Nairobi in January, Chinese Foreign Minister Wang Yi said the debt-trap claims were an "utterance trap" created by those forces that do not want to see Africa speed up development.

"China has never attached any political strings or imposed anything on others," Wang said.

Some African leaders have also dismissed the debt-trap allegations, saying Chinese money had helped build infrastructure on the continent that the West had shunned.

Among them is Zimbabwean President Emmerson Mnangagwa who said last month: "We have seen Chinese capital supporting landmark and iconic infrastructural projects across the African continent.

"Here in Zimbabwe, China has helped fund and implement several projects in the sectors of energy, air transport, water, real estate, industrial value addition, mining and defence."

In the last two years, China has also come in for criticism for allegedly not doing enough to help African countries struggling to make repayments amid the coronavirus pandemic.

To give poor nations time to cope with the ravages of the pandemic, the Group of 20 wealthy nations, the IMF and the World Bank, proposed the Debt Service Suspension Initiative (DSSI) and followed up with the Common Framework plan for restructuring debt.

Beijing, through the Ministry of Commerce and China International Development Cooperation Agency, and China Eximbank signed up to the G20 initiative, freeing up more than US$1.3 billion in service payments from dozens of low and middle-income countries, mostly from Africa.

CDB and Industrial and Commercial Bank of China, which Beijing claims are not official creditors but rather for-profit lenders, initially opted out. In response to US criticism, these institutions made numerous "goodwill" gestures, postponing roughly US$750 million in repayments by countries such as Angola and Zambia, the study said.

According to the World Bank, from May 2020 to December 2021, the DSSI suspended US$12.9 billion in debt-service payments owed by participating countries to their creditors.

But little else has happened as a result of the DSSI and the Common Framework. Only three countries - Chad, Zambia and Ethiopia - sought help and not one of them has received any debt relief.

In any case, private capital is the single greatest growth factor for African debt in the last decade, and it is under no obligation to abide by the DSSI or the Common Framework, according to the authors.

"Contrary to the debt-trap narrative, if a wave of African defaults materialises in the near future, as IFI officials have been fearing since at least 2015, it will be catalysed more by private-sector manoeuvring and intransigence than by Chinese scheming," the study said.

"All efforts are demanded of official creditors - which is a very clear targeting of China," Verhoeven said. "We argue it is more about the competition for power and influence between the United States, and China rather than thinking about what African states need."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

China to conclude cybersecurity probe, Didi app to be restored - WSJ


Didi, Lenovo founders go private on China social media, joining retreat from spotlight

Mon, June 6, 2022

(Reuters) - Chinese regulators are concluding their probes into Didi Global Inc, preparing to allow the ride-hailing company's mobile app back on domestic app stores as early as this week, the Wall Street Journal reported on Monday.

Didi's U.S. shares rose 46% in pre-market trade.

Last year, the Cyberspace Administration of China (CAC) ordered app stores to remove 25 mobile apps operated by Didi - just days after the ride-hailing giant listed in New York. It also told the company to stop registering new users, citing national security and the public interest.

Regulators are also planning to allow the apps of logistics platform Full Truck Alliance Co and online recruitment services company Kanzhun Ltd back on Chinese app stores this week, the WSJ said, citing people familiar with the discussions.

Chinese regulators will also lift a ban on the companies adding new users, WSJ said.

Didi, Full Truck, and Kanzhun did not immediately respond to Reuters' requests for comment. The Cyberspace Administration of China (CAC) was not immediately available for comment.

The three companies are expected to face financial penalties, along with offering 1% equity stakes to the state and give the government a direct role in corporate decisions, WSJ reported.

Last year, Chinese authorities launched a cybersecurity probe into the companies, after which their apps were removed.

(Reporting by Maria Ponnezhath in Bengaluru; editing by Uttaresh.V and Louise Heavens)