Restaurants worried about supply of single-use plastic alternatives ahead of ban

Holly McKenzie-Sutter, BNN Bloomberg

A restaurant industry group wants assurance from Ottawa that supply of affordable alternatives to single-use plastic items like forks, straws and takeout containers will be available to meet growing demand as a federal ban on the items is poised to take effect.

Olivier Bourbeau, vice-president of federal affairs at Restaurants Canada, said the industry is keen to transition to more environmentally-friendly operations, but restaurateurs – particularly small businesses – are in the dark about whether there will be enough plastic alternatives to go around if demand for them spikes.

“The government needs to make sure that these products will be available at an affordable price,” Bourbeau said in an interview on Dec. 13.

“If we do not have access to these products, what can we do? We really want to be part of the change, obviously, but we want to have the tools in our hands to do so.”

The first phase of Canada’s national ban on select single-use plastic items is due to kick in on Dec. 20, prohibiting the manufacturing and importing of most plastic checkout bags, cutlery, foodservice ware, stir sticks and straws in a federal government bid to reduce plastic waste and greenhouse gas emissions.

PANDEMIC CAUSED SHORTAGES

Businesses have another year until it becomes illegal to sell the banned products to customers.

However, even plastic options have been in short supply since the COVID-19 pandemic and its related social distancing public health rules drove up global interest in take-out and delivery, Bourbeau said. The phenomenon has led to depleted stockpiles and less availability of products.

Chain restaurants have been forced to make smaller orders as a result, Bourbeau said, and the issue is more difficult for small independent operators to manage.

“With the new regulation asking for alternative products, it’s going to be really, really challenging,” Bourbeau.

GOVERNMENT RESPONSE

Restaurants Canada said it’s asking Ottawa to work closely with suppliers to ensure there is enough manufacturing capacity for alternative products to meet expected demand for the transition, and that the products are affordable.

A spokesperson for Environment and Climate Change Canada (ECCC) didn’t directly say if the government was working with suppliers on the supply issue, but pointed to plans outlined in the 2022 federal budget “to attract significant private sector investment to achieve important national economic policy objectives.”

As for the price tag for the items, spokesperson Nicole Allen of ECCC said in an email that the government expects costs of the substitutes for single-use plastics “to be passed on to customers” at an expected cost of around $5 each year per Canadian.

She also pointed to guidance published by the department that outlines alternatives and encourages businesses to seek out reusable options.

TOO EARLY TO FULLY ASSESS DEMAND

Many Canadian businesses have already made the shift away from single-use plastics, and bans on plastic bags are already in effect in some municipalities and provinces.

The owner of Greenmunch, an Alberta-based sustainable food packaging company, said more operators are inquiring about the products his company offers but it’s “a bit early yet” for supply issues to emerge, with a year left for businesses to use up their plastic inventory.

“I have seen a big increase in businesses asking questions about the upcoming ban however I expect that we won't see a big surge in demand until customers are forced to search out alternatives as their normal supply is discontinued,” Phillip Jacobsen said in an email.

Supply of all disposables has been “very tough” this year, he said, but the situation has improved in the last few months.

A spokesman for E6PR, a company highlighted in the federal guidance as a biodegradable alternative to plastic ring beverage carriers, said, meanwhile, that the businesses is “ready to take on demand” as Canada and other jurisdictions move away from single-use plastic, and more potential customers reach out.

“We will be able to meet the increase in demand because we can increase our manufacturing capacity rather quickly,” Ricardo Mulas Ochoa of E6PR said in an email.

Bourbeau said Restaurants Canada doesn’t have figures yet about a potential supply-demand gap for sustainable alternatives, but he said the lack of information is a source of stress, and his organization will be closely watching for any issues that might arise after the ban takes effect.

“We want to be part of the change,” he said. “The question should be, are there enough suppliers? Are we ready to make the transition?

Big oil stages a big comeback as Exxon's valuation passes Tesla

Geoffrey Morgan and Esha Dey, Bloomberg News

The largest U.S. oil company, Exxon Mobil Corp., has surpassed electric-vehicle giant Tesla Inc. in market value for the first time since 2020 as investors sell high-growth stocks and buy up value stocks in the energy sector.

Exxon shares have soared 75 per cent year-to-date, putting the energy giant on pace for its best ever annual performance, while Tesla’s stock has plummeted roughly 60 per cent over the same period, for its worst annual slump ever. 

Broadly, the change in fortunes illustrates how in the face of growing economic and geopolitical uncertainty, investors flocked to businesses with strong cash flow this year, ditching riskier assets whose valuations are pinned to future growth prospects. 

Tesla’s own troubles have contributed heavily to the decline as well. Chief Executive Officer Elon Musk’s preoccupation with his acquisition of Twitter and his propensity for controversial Tweets are making investors nervous about his focus and potential damage to the Tesla brand. And the maker of electric cars — which are still relatively more expensive than gas-fueled ones — is expected to see the demand for its vehicles take a hit as consumers postpone or even cancel big-ticket purchases amid a slowing economy, high inflation and rising interest rates.

“In the first part of the year the divergence was caused by a shift away from growth into value,” said Ivana Delevska, chief investment officer at SPEAR Invest. “Now we have a fundamental problem where consumer preference is not shifting to EVs at the rate that was previously expected.”

For its part, Exxon’s equity value has been steadily climbing since hitting a two-decade low in early 2020, when the outset of the Covid-19 pandemic sent crude prices into a tailspin. Since that time, rising crude prices have helped the US oil producer steadily climb back up the ranks of the most valuable companies in the S&P 500, surpassing Facebook parent Meta Platforms Inc. in September and now Tesla. The company’s stock set record highs along the way as it aggressively bought its own shares.

Exxon is reclaiming its title as “the poster child of buybacks” spent US$10.6 billion repurchasing its shares in the 12-months ended Sept. 2022, up from just US$100 million in the preceding year, according to S&P Dow Jones Indices’ Howard Silverblatt. The oil giant plans to spend US$50 billion buying up its own stock through 2024, up from previous plans of US$30 billion.

The share repurchases offer another contrast to Tesla, the growth-oriented stock has issued more of its own shares as it embarked on an ambitious expansion in recent years.

Despite Tesla’s fall, generalist investors remain underweight energy amid concerns about the long-term demand for oil and gas in a world where governments are trying to reduce emissions and encourage electrification.

Exxon and Tesla also traded places on the S&P 500 ESG Index in May, an event that Navellier & Associates chief investment officer Louis Navellier said caused some index-tracking investors to buy up shares in the oil firm and sell stock of the electric car giant. “You are now in an energy renaissance where the world has rediscovered the importance of fossil fuels as the G7 strives to break away from Russian energy,” he wrote in a Dec. 19 note.

Number of job vacancies down in the third quarter: Statistics Canada

The Canadian Press

Statistics Canada says the number of job vacancies fell in the third quarter after reaching a record high in the second quarter.

The agency says employers in Canada were actively seeking to fill 959,600 vacant positions in the third quarter, down 3.3 per cent from 992,200 in the April-to-June period.

However, job vacancies in the third quarter remained elevated compared with before the pandemic.

The job vacancy rate — which corresponds to the number of vacant positions as a proportion of total labour demand — was 5.4 per cent in the third quarter, down from 5.7 per cent in the second quarter, but up from 3.3 per cent in the first quarter of 2020 at the onset of the COVID-19 pandemic.

Statistics Canada says there was an average of 1.1 unemployed persons for each job vacancy in the third quarter of 2022, similar to the record low reached in the second quarter.

However, the reading compared with an average of 2.3 unemployed persons for each job vacancy in the first quarter of 2020.

Nova Scotia Power bond rating downgraded by credit rating agency DBRS Morningstar

NOT TO BE CONFUSED WITH CPGB MORNINGSTAR

The Canadian Press

A prominent credit rating agency has downgraded the bonds of Nova Scotia's electrical utility amid the company's conflicts with the provincial government.

In an announcement published on Tuesday, DBRS Morningstar dropped the rating one notch to BBB high from A low for Nova Scotia Power, an Emera Inc. subsidiary. The agency said the downgrade is due to what it called the "deterioration in the regulatory environment for the firm."

Early last month, Nova Scotia's Progressive Conservative government capped power rate increases over the next two years to 1.8 per cent — excluding increases linked to fuel costs and energy efficiency programs.

The rating agency said the rate caps are a problem because of the "significant investment" needed to phase out the utility's coal-fired generation plants by 2030.

DBRS Morningstar said the utility can improve its rating if the provincial government doesn't interfere in the next rate increase application.

The province's Department of Natural Resources and Renewables released a statement Wednesday saying it has a responsibility to protect ratepayers.

"It is up to (Nova Scotia Power) to manage its relationships with its stakeholders," the statement said. 

"We expect them to work within their considerable resources to produce power that is affordable, reliable and clean. We are controlling what we can control to protect the ratepayers of Nova Scotia."

Micron to cut 10% of workforce as demand for computer chips slumps

Ian King, Bloomberg News

Micron Technology Inc., the largest US maker of memory chips, gave a lackluster revenue outlook for the current period, indicating the slump in demand for computer components will drag on, and said it will reduce its workforce by about 10 per cent over the next year. 

Sales will be about US$3.8 billion in the fiscal second quarter, Micron said Wednesday in a statement. That compares with analysts’ average estimate of US$3.88 billion, according to data compiled by Bloomberg. The company projected a loss of about 62 cents a share, excluding certain items, in the period ending in February, compared with a loss of 29 cents expected by analysts.

Semiconductor makers are suffering plummeting demand for their products less than a year after being unable to produce enough to meet orders. Consumers have shelved purchases of personal computers and smartphones amid rising inflation and an uncertain economy. Makers of those devices, the main users of memory chips, are now stuck with unused stockpiles of components and are slowing orders for new stock.

The industry is experiencing its worst imbalance between supply and demand in 13 years, according to Chief Executive Officer Sanjay Mehrotra. Inventory should peak in the current period, then decline the rest of the year, he said. Customers will move to more healthy inventory levels by about the middle of 2023, and the chipmaker’s revenue will improve in the second half of the year, Mehrotra said on a conference call after the results were released. 

Micron is cutting its budget for new plants and equipment, and now expects to spend from US$7 billion to US$7.5 billion for the fiscal year, a reduction from an earlier target of as much as US$12 billion. The company is also slowing the introduction of more advanced manufacturing techniques. Micron predicts that overall industry spending on new production will also decline.

Unlike other parts of the chip sector, products from Micron are built to industry standards, meaning they can be swapped out for those of its competitors. Because memory can be traded like a commodity, its makers are exposed to more pronounced price swings. 

Micron’s pledge to reduce output from its factories and slow expansion projects won’t ease the glut of chips available unless rivals, including Samsung Electronics Co. and SK Hynix Inc., follow suit. That step can help support prices but comes with the penalty of running expensive plants at less than full capacity, something that can weigh heavily on profitability. 

It will be difficult to generate a profit in the memory chip industry in the coming year, Mehrotra said. In addition to its planned workforce reductions, the company has suspended share repurchases, is cutting executive salaries and will skip companywide bonus payments, executives said on the call.

In the three months ended Dec. 1, Micron’s sales declined 47 per cent to US$4.09 billion. The company had a loss of 4 cents a share, excluding certain items. That compares with an average estimate of a loss of 1 cent a share on revenue of US$4.13 billion.

Micron’s shares declined about 1.5 per cent in extended trading after closing at US$51.19 in New York. The stock has dropped 45 per cent this year, a worst decline than most chip-related equities. The Philadelphia Stock Exchange Semiconductor Index is down 33 per cent in 2022.

Last month the company warned it was cutting production by about 20 per cent “in response to market conditions.” Boise, Idaho-based Micron had 48,000 employees as of Sept. 1, according to filings. 

Bumper green aluminum output is good news for carmakers, and climate

Reuters | December 19, 2022 | 

Bratsk aluminium smelter. (Reference image by UC Rusal Photo Gallery, Wikimedia Commons).

Aluminum makers are set to boost low-carbon metal output by 10% in 2023 and churn out even more in the years ahead, driving down the cost for carmakers seeking climate-friendly supplies and shrinking the industry’s hefty carbon footprint.


Aluminum is the most energy-intensive metal to produce, accounting for about 1.1 billion tonnes of global CO2 emissions per year. Next year’s forecast increase in “green aluminum” output would reduce that by 13 million tonnes, or about 1.2%.

Pressure by governments to cut greenhouse gas emissions has given aluminum producers an incentive to ramp up output of the low-carbon material, which emits less than 4 tonnes of CO2 per tonne of metal compared to the global average of 16.6 tonnes.

That means global surpluses of green aluminum – largely produced using hydro power or recycled material – already weigh on the premium that producers can charge buyers, from automakers and beverage can firms to construction suppliers.

“It’s (the premium) been very modest now for the last couple of years,” Ivan Vella, chief executive of Rio Tinto Aluminium, told an investor conference last month.

Vella added that the company had seen some increases in premiums recently, without giving details.

Green products

Global supplies of low-carbon aluminum have been robust for several years, but dipped in 2022 mainly due to restrictions in southern provinces in top producer China that rely on hydro power.

Output is due to bounce back globally next year, rising 10% to 18.56 million tonnes – accounting for 26% of total aluminum production, said Simon Large, analyst at consultancy CRU.

In Europe, the proportion of low-carbon products to overall supply is much higher than in the rest of the world, because large Scandinavian producers typically use hydro power, and should reach 83% next year, he added.

Auto industry

The increase in more sustainable supplies has coincided with growing efforts by companies to demonstrate their green credentials to consumers, led by the European car sector.

Germany’s BMW agreed last year to buy aluminum made with solar power from Emirates Global Aluminium, while Volkswagen’s premium brand Audi is piloting metal from the new ELYSIS technology pioneered by Alcoa and Rio Tinto, which eliminates all CO2 emissions and replaces them with oxygen.

Most companies are reluctant to disclose how much low-carbon material they buy and any premiums paid for competitive reasons.

Electric vehicle (EV) maker Polestar has started to use green aluminum as part of a project to create a vehicle with zero emissions from every aspect of production, teaming up with Norway’s Norsk Hydro (NHY.OL), which uses hydro power to produce much of its metal.

Polestar said it pays slightly more for green aluminum, partly due to the administrative costs of changing suppliers, but did not say how much more.

“The cost per reduced kg of CO2 emissions when shifting to green aluminum is still significantly lower than many other ways of reducing raw material emissions,” a company spokesperson told Reuters.

Norsk Hydro also inked a deal to supply Mercedes-Benz (MBGn.DE) with aluminum that produces less than 3 tonnes of CO2 emissions per tonne of metal.

Heavy investment, low premiums

Aluminum companies have invested heavily in low-carbon technologies. Norsk Hydro said this year it had spent billions making its aluminum more sustainable, while Rio Tinto, Alcoa and the Canadian government invested $228 million in their new ELYSIS process.

But such investments to step up output are dampening the prices that producers can charge for their low-carbon products, especially this year when overall demand has been hit by recession fears, analysts say.

“Low carbon premiums on the spot side have basically disappeared,” said Jorge Vazquez at consultancy Harbor Aluminum.

The spot premium for low-carbon billet, a fabricated product often used in construction, has slid to zero from $30 a tonne in January, he said.

Producers, however, are still managing to sell some of their low-carbon output at higher prices under quarterly and annual contracts.

Wire rod commands the highest premiums due to its use in power wiring linked to the green energy transition around the world, he added.

But even the bumper premium for wire rod of $45 a tonne represents less than 2% of the underlying benchmark aluminum price.

There are regional variations as well.

“Where we’ve seen the most willingness to entertain green premiums is Europe, where it is quite accelerated, and we’re starting to see the early elements in North America, but Asia is behind,” said an industry source who declined to be identified.

In Europe, premiums may get a lift from European Union proposals to impose tariffs on imports of high-carbon goods by 2026, another analyst said.

Consumers are benefitting from the plentiful supplies of not only low-carbon primary aluminum, but recycled material, which uses about 95% less energy to make.

Rising output of both will keep green premiums relatively low in the coming years, said Marcelo Azevedo at the McKinsey consultancy.

Limited movement of supplies between regions, however, could lead to deficits in high-demand areas such as Europe, he added.

One area bucking the weak trend is “ultra-low” carbon aluminum, meaning metal produced with less than 2 tonnes of carbon emissions per tonne of metals, where premiums are strong due to lack of material, Azevedo said.

(By Eric Onstad; Editing by Helen Popper)

AUSTRALIA
Fortescue reveals green steel plans but warns task is enormous

Bloomberg News | December 19, 2022 | 

Andrew Forrest, Australian billionaire and Chief Executive Officer of Fortescue.

Fortescue Metals Group Ltd., the world’s fourth-biggest iron ore miner, has joined forces with Japan’s Mitsubishi Corp. and European steelmaker Voestalpine AG to develop zero-carbon iron using hydrogen at a plant in Austria.


It’s the Australian miner’s first foray into so-called “green steel,” which aims to exclude coal from the steelmaking process and so help clean up one of the world’s dirtiest industries. Iron ore is the primary feedstock for the majority of steel, the world’s most widely used metal.

The project will use technology developed by Primetals Technologies Ltd., a venture involving another Mitsubishi company, that replaces coal-reliant blast furnaces with hydrogen and a smelter powered by electricity. If that electricity is entirely renewable, then in theory the process won’t emit any carbon.

“You make enormous amounts of carbon when you make steel — it’s about 7% to 10% of the world’s emissions,” Mark Hutchinson, chief executive officer of the company’s green energy division, Fortescue Future Industries, said in a phone interview. “We’ve got to fix this.”

Fortescue’s joint venture, which will mostly be funded by European government grants, aims to complete a pilot plant by 2025, and build a commercial scale facility by the end of the decade, Hutchinson said.

Hydrogen demand

Decarbonizing steel is a crucial step in the fight to halt climate change, and development of large-scale plants would send demand for hydrogen soaring. That would benefit Fortescue, which plans to produce 15 million tons a year of green hydrogen by 2030 as part of Chairman Andrew Forrest’s goal of becoming a major clean energy producer.

A growing number of miners and steelmakers are racing to develop green steel technologies using hydrogen. The most advanced is Hybrit, a Swedish joint venture of steelmaker SSAB AB, iron ore producer Luossavaara-Kiirunavaara AB and power company Vattenfall AB. Germany’s Thyssenkrupp AG, South Korea’s Posco Holdings Inc., and China Baowu Steel Group Corp. are also experimenting with green steel.

But the technology is expensive and at an early stage and often requires a high grade of iron ore. According to Hutchinson, the method developed by Primetals may work with the lower quality ore that Fortescue and others mine in Australia’s Pilbara region. Part of the goal of the pilot plant will be to test different grades, which Fortescue will supply.

Hutchinson cautioned not to expect quick results, saying that decarbonizing the world’s steel sector is likely to develop slowly over decades and will require “enormous” investment in renewable energy.

“To think about doing the entire industry, the amount of renewables needed to do that is just extraordinary,” he said.

Austria’s Voestalpine plans to begin switching its coal-based steel output to hydrogen from 2027. “Over the long term, our mission is carbon-neutral steel production using green hydrogen, for which we are already undertaking intensive research into promising breakthrough technologies,” Hubert Zajicek, the company’s head of steel, said in a statement.

(By James Fernyhough)

Nucor, Electra partner to produce carbon-free iron for steelmaking

Staff Writer | December 16, 2022 |

Electric arc furnace. (Image courtesy of Nucor).

Steelmaker Nucor Corporation (NYSE: NUE) and Electra, a Colorado-based start-up developing a process to produce carbon-free iron that can be used to make steel, have partnered to produce emissions-free iron.


Electra uses renewable energy to refine low-grade iron ores into high-purity iron through electrochemical and hydrometallurgical processes. This material will be used by Nucor in the steelmaking process to offset other high-quality metallics that come with higher greenhouse gas emissions.

In detail, the process produces Low-Temperature Iron (LTI) from commercial and low-grade ores. The company electrochemically refines iron ore into pure iron at 60 degrees Celsius using renewable electricity. That iron can be turned into steel using existing electric arc furnaces.

Electra’s process results in zero carbon dioxide emissions. By comparison, approximately 70% of the steel produced globally is made with blast furnace technology, an extractive process fed by iron ore, coal, and limestone that emits about two tonnes of carbon dioxide for every tonne of steel produced.

Nucor already uses primarily recycled scrap as raw material and is, thus, considered a clean steelmaker.

“The circular nature of remelting recycled scrap in electric arc furnaces, combined with steel’s ability to be infinitely recycled, means that Nucor’s steelmaking facilities generate roughly one-third of the carbon dioxide of extractive steelmaking plants,” the firm said in a media statement.

“Its investment in Electra is one of several investments the company is making that furthers Nucor’s status as a sustainability leader and builds on the innovation that has already led to cleaner steel production in the United States.”

EnCore Energy wins court challenge to South Dakota uranium project 

The EnCore Energy team at the company’s Rosita Central Processing Facility is located in Duval County, Texas. Credit: EnCore Energy

POSTED BY: COLIN MCCLELLAND DECEMBER 16, 2022

EnCore Energy (TSXV: EU; OTCQB: ENCUF) 

has won a court challenge to its US$32 million Dewey-Burdock uranium project in South Dakota.  

The Oglala Sioux Tribe and watchdog group Aligning for Responsible Mining wanted a United States appeals court to review its decision in August approving the Nuclear Regulatory Commission’s (NRC) licence for enCore to mine uranium at the project about 150 km southwest of Rapid City, SD.   

The court denied the request on Thursday, but the project’s opponents can appeal to the U.S. Supreme Court.  

Jeffrey C. Parsons, a lawyer based in Lyons, CO with the Western Mining Action Project who argued for the Indigenous group, didn’t immediately reply to a phone call Friday morning seeking comment.  

A spokesperson for Corpus Christi, Texas-based enCore said by phone the company may provide comment on the court’s decision.  

The Dewey-Burdock in-situ recovery project is among several enCore is pursuing with others in Texas, Wyoming and New Mexico as the company plugs in to a renewed interest in nuclear power by governments for producing energy without harmful gas emissions. Several countries have rolled back attempts to retire nuclear plants in the face of a European energy crisis and calls to fight climate change.  

A 2020 report shows Dewey-Burdock has 5.4 million tonnes grading 0.132% uranium oxide for contained metal of 14.4 million lb. over a 16-year mine life. EnCore estimated construction costs at US$31.7 million, a post-income tax net present value of US$147.5 million at a discount rate of 8% and an internal rate of return of 50%. The calculations used a uranium price of $55 per lb., an operating cost of US$10.46 per lb. and royalties and local taxes of $5.15 per lb. of production. 

According to court documents, the project’s opponents objected to how the NRC conducted environmental impact studies from 2009-19 on the property and the proposed in-situ recovery process. In-situ recovery involves pumping a solution into underground ore beds to dissolve uranium, then pumping it to the surface where the uranium is recovered for processing into fuel. 

A decade of negotiations between enCore and local Indigenous groups found some on side with the company while the Oglala Sioux Tribe at times sought greater compensation for participation and at one point proposed a study process that would have cost another US$2 million but was eventually dropped. 

EnCore and the NRC argued successfully in court to support the agency’s environmental review process, although there had been some flaws in consultations with locals. 

Last month, enCore bought the past-producing Alta Mesa uranium project in Texas from Energy Fuels (TSX: EFR) for US$120 million. The deal gives enCore three of only 11 licenced production facilities in the United States.  

The acquisition lifts enCore’s total production capacity including the Rosita and Kingsville Dome plants in Texas by about 70% to 3.6 million lb. a year with the goal of starting production at Rosita next year, it said. 

Shares in enCore Energy fell 1.5% on Friday in Toronto to $3.22 apiece, within a 52-week range of $2.84 and $5.91, valuing the company at $347 million. 

The U.S. Court of Appeals case is 20-1489 Oglala Sioux Tribe and Aligning v. NRC, et al “Per Curiam Order Filed (Merits Panel).” 

Hedge funds say they lost $95 million in LME nickel crisis
Bloomberg News | December 16, 2022 

Credit: LME

A group of hedge funds led by AQR Capital Management LLC said that they lost a combined $95 million during a turbulent few days when the London Metal Exchange controversially canceled billions of dollars in nickel trades and suspended the market.


The group of funds on Friday applied to force LME to hand over information relating to two key phone calls on March 8, the day that the trades were canceled. AQR Chief Investment Officer Clifford Asness has been among the most vocal critics of the LME’s actions during the crisis, describing the events as “one of the worst things I’ve ever seen.”

The LME is already facing regulatory investigations and separate lawsuits from Jane Street and Paul Singer’s Elliott Investment Management over its handling of the March nickel crisis, when futures spiked 250% in a little over 24 hours in a massive squeeze centered around a large short position held by tycoon Xiang Guangda.

The LME responded by suspending the market for a week, and — most controversially — canceled about $3.9 billion of trades made at the highest prices.

“Those decisions were unprecedented and out of the norm,” Paul McGrath, a lawyer for the funds, said at the hearing. The “effects of those were to benefit certain participants, like short sellers.”

In court filings, lawyers for the applicants said the LME had “point blank refused” to provide documentation to back up its claim that its actions were necessary to protect the market. The applicants, which also include DRW Commodities LLC, Flow Traders BV, Capstone Investment Advisors LLC, and Winton Capital Management Ltd., have suffered loss “in the combined approximate total of $95 million.”

Joint letter

Due to the LME’s legal status as a public body, Elliott and Jane Street are pursuing their claims by way of a judicial review. AQR and the other funds filed their initial request at London’s Commercial Court for documents from the LME in September.

In court filings opposing the funds’ claim, lawyers for the LME revealed that AQR and Elliott wrote to the exchange jointly in the wake of the squeeze, and in April the bourse responded to both with a “detailed account of the reasons for its decisions.”

While Elliott then issue legal proceedings against the LME, “AQR ceased corresponding with the respondents and sat on its hands”, the LME said.

Lawyers for the LME also responded to the funds’ apparent claim that it canceled the trades to protect Tsingshan, and other holders of short positions. The bourse was not acting to protect any specific market participant, and its “concern was with systemic risk and the potentially catastrophic effects of multiple, simultaneous disorderly defaults.”

(By Katharine Gemmell and Mark Burton)