North Korean satellite wasn’t advanced enough to conduct reconnaissance from space, Seoul says
Tue, July 4, 2023
SEOUL, South Korea (AP) — The satellite North Korea failed to put into orbit wasn't advanced enough to conduct military reconnaissance from space as it claimed, South Korea's military said Wednesday after retrieving and studying the wreckage.
North Korea had tried to launch its first spy satellite in late May, but the long-range rocket carrying it plunged into the waters off the Korean Peninsula's west coast soon after liftoff. The satellite was to be part of a space-based reconnaissance system North Korea says it needs to counter escalating security threats from South Korea and the United States.
South Korea mobilized navy ships, aircraft and divers to recover debris from the rocket and satellite in a 36-day operation that ended Wednesday, the South’s Joint Chiefs of Staff said in a statement.
"Numerous” and “key” parts of the rocket and the satellite were recovered and the South Korean and U.S. experts who jointly examined them concluded the satellite wasn't capable of conducting military reconnaissance works at all, the statement said.
North Korea didn’t immediately respond to the South Korean announcement.
The day the launch failed, North Korea's state media said the rocket lost thrust following the separation of its first and second stages, then crashed into the sea. At a ruling party meeting last month, North Korea called the failed launch “the most serious” shortcoming this year and harshly criticized those responsible.
Top North Korean officials have repeatedly vowed to attempt a second launch after learning what went wrong with the failed launch.
North Korean leader Kim Jong Un has said acquiring a military spy satellite is crucial to beef up his country’s defense capability. He’s said North Korea also needs to introduce other high-tech weapons systems such as multi-warhead nuclear missiles, solid-fueled intercontinental ballistic missiles and nuclear-powered submarines.
Months before its failed satellite launch, North Korea launched a test satellite and publicized photos showing South Korean cities as viewed from space. Some civilian experts said at the time the photos were too crude for a surveillance purpose and that they were likely capable of only recognizing big targets like warships at sea or military installations on the ground.
North Korea had responded to that skepticism by saying there was no reason to use a sophisticated camera for one test.
The U.S., South Korea and others denounced North Korea's rocket launch as a security risk and a violation of U.N. Security Council resolutions that ban the country's use of ballistic missile technology. But further sanctions are unlikely since permanent council members Russia and China oppose new action.
Hyung-jin Kim, The Associated Press
Wednesday, July 05, 2023
BNY Mellon Asset-Management Unit Piles Most Cash Since Internet Bubble Burst
Tania Chen and Iris Ouyang
Tue, July 4, 2023
(Bloomberg) -- Bank of New York Mellon’s asset management arm has built up its biggest cash buffer since the bursting of the Internet bubble, out of concern that Federal Reserve interest rate hikes still have the potential to upend markets.
Investors are underestimating how high rates will have to go to curb inflation, sending the US and Europe into recession as early as the second half of the year, according to BNY Mellon Investment Management’s Aninda Mitra. The firm’s head of Asia macro and investment strategy drew a comparison between the environment today and the dotcom crisis at the beginning of the millennium, at an outlook briefing in Hong Kong.
“During the dotcom crash, a lot of equities looked very overvalued and the Fed was hiking rates as well,” Mitra said. “That was the time when we were probably last actively recommending keeping some powder dry.”
With tight monetary policy being re-priced higher for longer, the $1.9 trillion money manager has set its cash and Treasuries levels at “highest conviction” overweight.
Investors continue to mull the consequences of central bank rate hikes on the global economy, with some raising the prospect of policy error from too much tightening. But while the bond market shows some signs of concern, risk assets like technology stocks continue to push higher, with the Nasdaq 100 Index recently notching its best ever first-half of a year.
Still, BNY will look to put its cash pile to good use, should a decline in risk assets create buying opportunities.
Equity valuations look “vulnerable” but could become attractive in the first or second quarter next year after markets have meaningfully sold off in a recession, Mitra said. The firm is also eyeing so-called fallen angels — once investment-grade debt downgraded to high yield status.
“Inflation won’t go back to 2% until 2025,” Mitra said. “Learn to embrace cash.”
Tania Chen and Iris Ouyang
Tue, July 4, 2023
(Bloomberg) -- Bank of New York Mellon’s asset management arm has built up its biggest cash buffer since the bursting of the Internet bubble, out of concern that Federal Reserve interest rate hikes still have the potential to upend markets.
Investors are underestimating how high rates will have to go to curb inflation, sending the US and Europe into recession as early as the second half of the year, according to BNY Mellon Investment Management’s Aninda Mitra. The firm’s head of Asia macro and investment strategy drew a comparison between the environment today and the dotcom crisis at the beginning of the millennium, at an outlook briefing in Hong Kong.
“During the dotcom crash, a lot of equities looked very overvalued and the Fed was hiking rates as well,” Mitra said. “That was the time when we were probably last actively recommending keeping some powder dry.”
With tight monetary policy being re-priced higher for longer, the $1.9 trillion money manager has set its cash and Treasuries levels at “highest conviction” overweight.
Investors continue to mull the consequences of central bank rate hikes on the global economy, with some raising the prospect of policy error from too much tightening. But while the bond market shows some signs of concern, risk assets like technology stocks continue to push higher, with the Nasdaq 100 Index recently notching its best ever first-half of a year.
Still, BNY will look to put its cash pile to good use, should a decline in risk assets create buying opportunities.
Equity valuations look “vulnerable” but could become attractive in the first or second quarter next year after markets have meaningfully sold off in a recession, Mitra said. The firm is also eyeing so-called fallen angels — once investment-grade debt downgraded to high yield status.
“Inflation won’t go back to 2% until 2025,” Mitra said. “Learn to embrace cash.”
Trafigura-Led Group to Invest $555 Million in Angola Railway
Candido Mendes
Tue, July 4, 2023
(Bloomberg) -- A group of investors led by commodity trader Trafigura Group plans to invest as much as $555 million in a railway project that will link the Angolan port of Lobito to neighboring Democratic Republic of Congo.
The consortium, known as Lobito Atlantic Railways, will spend $455 million on the so-called Lobito Corridor — a 1,344 kilometer-long trade route - as well as up to $100 million on a 400-kilometer railway line in Congo, Angolan Transport Minister Ricardo Viegas d’Abreu said Tuesday in a statement. The group of investors includes Portuguese construction company Mota-Engil Engenharia e Construcao Africa and Vecturis SA, a Brussels-based private railway operator.
Lobito Atlantic has been granted a 30-year concession to operate the Lobito Corridor, with the possibility of it being extended to 50 years if the railway is expanded into Zambia, Viegas d’Abreu said. The US has pledged to help finance the project, Angolan President Joao Lourenco said in the statement.
Using the so-called Caminho-de-Ferro de Benguela railway will provide faster trade routes to Europe and the Americas from the copper and cobalt-rich areas of Congo and Zambia, according to the statement.
“The full operationalization of this corridor will ultimately allow the opening up of mines in Zambia and the DRC, as well as access to and circulation of inputs essential to both the mining and agricultural industries,” Congolese President Felix Tshisekedi said in a separate statement sent to reporters Tuesday.
--With assistance from Michael J. Kavanagh.
Candido Mendes
Tue, July 4, 2023
(Bloomberg) -- A group of investors led by commodity trader Trafigura Group plans to invest as much as $555 million in a railway project that will link the Angolan port of Lobito to neighboring Democratic Republic of Congo.
The consortium, known as Lobito Atlantic Railways, will spend $455 million on the so-called Lobito Corridor — a 1,344 kilometer-long trade route - as well as up to $100 million on a 400-kilometer railway line in Congo, Angolan Transport Minister Ricardo Viegas d’Abreu said Tuesday in a statement. The group of investors includes Portuguese construction company Mota-Engil Engenharia e Construcao Africa and Vecturis SA, a Brussels-based private railway operator.
Lobito Atlantic has been granted a 30-year concession to operate the Lobito Corridor, with the possibility of it being extended to 50 years if the railway is expanded into Zambia, Viegas d’Abreu said. The US has pledged to help finance the project, Angolan President Joao Lourenco said in the statement.
Using the so-called Caminho-de-Ferro de Benguela railway will provide faster trade routes to Europe and the Americas from the copper and cobalt-rich areas of Congo and Zambia, according to the statement.
“The full operationalization of this corridor will ultimately allow the opening up of mines in Zambia and the DRC, as well as access to and circulation of inputs essential to both the mining and agricultural industries,” Congolese President Felix Tshisekedi said in a separate statement sent to reporters Tuesday.
--With assistance from Michael J. Kavanagh.
Tesla's top China rival is exploring a faster method for lithium mining in Latin America — and offering free patents to build the industry
Phil Rosen
Wed, July 5, 2023
The BYD Han.
Phil Rosen
Wed, July 5, 2023
The BYD Han.
Richard Bord/Getty Images
Tesla rival BYD is exploring a new method of lithium mining in Chile, Bloomberg reported Tuesday.
The Chinese firm aims to use a more direct way to extract lithium from Chilean salt flats.
A BYD exec said the company plans to offer local patents and build up the industry in Chile.
Tesla's biggest Chinese rival BYD is looking to secure more lithium, a key battery material, by using a faster extraction method in northern Chile, Bloomberg reports.
BYD Executive Vice President Stella Li said in an interview Tuesday the company is holding talks with officials in Chile, a nation with huge lithium reserves, as well as companies in the lithium battery industry like SQM to explore new extraction technologies that would tap directly into Chilean salt flats, rather than the current technique of pumping brine and housing it in evaporation pods.
The goal would be for the company to establish in Chile the same direct lithium extraction, or DLE, method used in China, Li said. At the same time, BYD would be able to uplift the local commodity sector.
"BYD is ready to bring advanced DLE technology to Chile, and also we will develop R&D patents locally and offer free patents to the Chilean government to help Chile build up this industry," Li told Bloomberg.
Meanwhile, data from Benchmark Mineral Intelligence suggests the electric vehicle boom is going to squeeze lithium reserves in the coming years. It's possible, per the report, that more than $514 billion of funding will be necessary to meet the demand by 2030.
Lithium, while coveted in the EV business, leaves negative repercussions in locations where it's mined. There's a lot of land, water, and chemicals involved in extracting lithium, and it leaves waste in its wake.
In any case, BYD is coming off a record quarter, selling 700,244 cars, about half of which were all-electric.
In the same three month stretch, Elon Musk's Tesla delivered 466,140 vehicles, beating expectations and pushing its share price higher.
Still, Tesla's record-setting quarter and subsequent cheers from Wall Street masked a key stat: The company made more cars than it delivered for the fifth straight quarter.
That means Musk has his work cut out for him as far as finding new ways to boost demand, or else his company's inventory could keep ballooning and margins may shrink.
It's worth noting, too, that competition across the auto industry continues to heat up, with the likes of Tesla and BYD pitted against the long-standing demand for traditional gas-powered cars.
The two company's record delivery figures suggest that plenty of consumers do indeed want to go electric, but for Tesla in particular to resolve its production and delivery disparity, analysts say more price cuts could loom.
Tesla rival BYD is exploring a new method of lithium mining in Chile, Bloomberg reported Tuesday.
The Chinese firm aims to use a more direct way to extract lithium from Chilean salt flats.
A BYD exec said the company plans to offer local patents and build up the industry in Chile.
Tesla's biggest Chinese rival BYD is looking to secure more lithium, a key battery material, by using a faster extraction method in northern Chile, Bloomberg reports.
BYD Executive Vice President Stella Li said in an interview Tuesday the company is holding talks with officials in Chile, a nation with huge lithium reserves, as well as companies in the lithium battery industry like SQM to explore new extraction technologies that would tap directly into Chilean salt flats, rather than the current technique of pumping brine and housing it in evaporation pods.
The goal would be for the company to establish in Chile the same direct lithium extraction, or DLE, method used in China, Li said. At the same time, BYD would be able to uplift the local commodity sector.
"BYD is ready to bring advanced DLE technology to Chile, and also we will develop R&D patents locally and offer free patents to the Chilean government to help Chile build up this industry," Li told Bloomberg.
Meanwhile, data from Benchmark Mineral Intelligence suggests the electric vehicle boom is going to squeeze lithium reserves in the coming years. It's possible, per the report, that more than $514 billion of funding will be necessary to meet the demand by 2030.
Lithium, while coveted in the EV business, leaves negative repercussions in locations where it's mined. There's a lot of land, water, and chemicals involved in extracting lithium, and it leaves waste in its wake.
In any case, BYD is coming off a record quarter, selling 700,244 cars, about half of which were all-electric.
In the same three month stretch, Elon Musk's Tesla delivered 466,140 vehicles, beating expectations and pushing its share price higher.
Still, Tesla's record-setting quarter and subsequent cheers from Wall Street masked a key stat: The company made more cars than it delivered for the fifth straight quarter.
That means Musk has his work cut out for him as far as finding new ways to boost demand, or else his company's inventory could keep ballooning and margins may shrink.
It's worth noting, too, that competition across the auto industry continues to heat up, with the likes of Tesla and BYD pitted against the long-standing demand for traditional gas-powered cars.
The two company's record delivery figures suggest that plenty of consumers do indeed want to go electric, but for Tesla in particular to resolve its production and delivery disparity, analysts say more price cuts could loom.
IMPERIALISM IS STATE CAPITALI$M
A troubled new power plant leaves Jordan in debt to China, raising concerns over Beijing's influence
The Canadian Press
Wed, July 5, 2023
ATTARAT, Jordan (AP) — Jordan’s Attarat power plant was envisioned as a landmark project promising to provide the desert kingdom with a major source of energy while solidifying its relations with China.
But weeks after its official opening, the site, a sea of black, crumbly rock in the barren desert south of Jordan’s capital, is instead a source of heated controversy. Deals surrounding the plant put Jordan on the hook for billions of dollars in debt to China — all for a plant that is no longer needed for its energy, because of other agreements made since the project’s conception.
The result is fueling tensions between China and Jordan and causing grief for the Jordanian government as it tries to contest the deal in an international legal battle. As Chinese influence grows in the Middle East and America withdraws, the $2.1 billion shale oil station has come to characterize China’s wider model that has burdened many Asian and African states with crippling debt and served as a cautionary tale for the region.
“Attarat is a representation of what the Belt and Road Initiative was and has become,” said Jesse Marks, a nonresident fellow at the Washington-based Stimson Center, referring to China’s scheme to build global infrastructure and boost Beijing’s political sway.
“Jordan evolves as an interesting case study not for China’s success in the region but for how China engages in middle-income countries,” he said.
First conceived some 15 years ago as a way to fulfill national ambitions of energy independence, the Attarat shale oil plant is now causing anger in Jordan because of its enormous price tag. If the original agreement holds, Jordan would have to pay China a staggering $8.4 billion over 30 years to buy the electricity generated by the plant.
Laborers flown from rural China toil in the shadow of the giant station, some 100 kilometers (60 miles) south of Amman.
When Shi Changqing arrived in the Jordanian desert earlier this year from the Jilin province in China’s northeast, fears were mounting in the workers’ dormitories that the project could grind to a halt, leaving everyone in the lurch, the 36-year-old welder said.
“It’s very strange to feel that, being from China, you are not wanted here,” he said.
With its meager natural resources in a region awash with oil and gas, Jordan seemed to have drawn a losing ticket. Then in the 2000s, it struck shale oil trapped in the black rock that underlies the country. With the fourth-largest concentration of shale oil in the world, Jordan had high hopes for a big pay-off.
In 2012, the Jordanian Attarat Power Company proposed to the government to extract shale oil from the desert and build a plant using it to provide 15% of the country’s electricity supply. The proposal fit the government’s intensifying desire for energy self-sufficiency amid the turmoil of the 2011 Arab uprisings, company officials say.
But extraction proved expensive, risky and technologically challenging. As the project lagged, Jordan struck a $15 billion agreement to import vast amounts of natural gas at competitive prices from Israel in 2014. Interest in Attarat waned.
Attarat Power Co. CEO Mohammed Maaitah said he pitched the project the world over — from the United States and Europe to Japan and South Korea. No one bit, he said.
To Jordan’s surprise, Chinese banks offered Jordan over $1.6 billion in loans to finance the plant in 2017. A Chinese state-owned firm, Guangdong Energy Group, bought a 45% stake in the Attarat Power Co., turning the white elephant into the largest private enterprise to come out of President Xi Jinping’s Belt and Road Initiative outside China, according to the company.
Guangdong Energy Group did not respond to requests for comment.
The investment was part of China’s wider push into an Arab world hungry for foreign investment, experts say. The money for large infrastructure projects came with few political strings attached.
“China doesn’t bring with it the baggage of the United States in that we actually have some concern about democratic processes, transparency, corruption,” said David Schenker, a former U.S. assistant secretary of state for Middle East policy. “For authoritarian states, there’s some appeal in China.”
As talk grew of American unreliability, China turned to acquiring strategic assets in the Middle East, even in economically troubled states. It bought lots of Iraqi oil, tendered a port in northern Lebanon and poured money into President Abdel-Fattah el-Sissi’s new capital in Egypt.
With Syrian President Bashar Assad in 2017 gaining the upper hand in his country’s civil war, China had an interest in investing in the Attarat project in neighboring Jordan as a springboard, anticipating a Syrian reconstruction boom that could unlock billions of dollars in investments, experts say.
Under their 30-year power purchase deal, Jordan’s state-run electricity company will have to buy electricity from the now effectively Chinese-led Attarat at an exorbitant rate that means the Jordanian government would lose $280 million annually, the treasury estimated. To cover the payments, Jordan would have to raise electricity prices for consumers by 17%, energy experts said — a severe blow to an economy already saddled with debt and inflation.
The extent of losses to China appalled the Jordanian government. Jordan’s Ministry of Energy launched international arbitration against Attarat Power Co. in 2020 “on the grounds of gross unfairness.”
When asked why Jordan had agreed to such a lopsided contract to begin with, Jordan’s Ministry of Energy declined to comment, as did the National Electricity Co. As of June, hearings were being held at an arbitration tribunal of the Paris-based International Chamber of Commerce.
Musa Hantash, a geologist on the parliamentary energy committee, described the deal as the natural outcome of corruption and a lack of technical expertise.
“It’s very difficult to convince these big companies to invest in Jordan. There are things to help certain people make a profit,” he said, without elaborating.
American officials portrayed the Attarat contract as a case of Beijing’s “ debt trap diplomacy.”
The Chinese Foreign Ministry declined to comment on the Attarat project. But it defended Beijing’s investment in developing countries, denying allegations it ensnares partners in debt and arguing that China never compels “others to borrow from us forcibly.”
“We never attach any political strings to loan agreements,” the ministry said, urging international financial institutions to help provide debt relief.
Attarat Power said it expects a decision in the case later this year. Rulings by the world business organization are legally binding and enforceable.
Maaitah and other company officials dismissed Jordan’s claims of unjustly inflated prices, accusing Jordan of backtracking on its agreement due to anti-China sentiment.
Since the first of two power units went live last fall, the Jordanian government has paid only half its monthly dues, Maaitah said.
In Jordan and other poorer Arab states allied with the U.S., the pace of Chinese investment in recent years has slowed.
Faced with pushback abroad and rising concerns at home, China is shifting its approach in the region, said Amman-based China expert Samer Khraino, focusing on the oil-rich Persian Gulf. Wealthy states like the United Arab Emirates and Saudi Arabia have no issue paying back China’s big loans.
For now, Jordan appears unwilling to take any more chances with China.
In May, Jordan’s telecommunications company Orange signed a new agreement for 5G equipment. It had long been a customer of Huawei, the Chinese telecoms giant under American sanctions.
This time, it chose Nokia.
Isabel Debre, The Associated Press
A troubled new power plant leaves Jordan in debt to China, raising concerns over Beijing's influence
The Canadian Press
Wed, July 5, 2023
ATTARAT, Jordan (AP) — Jordan’s Attarat power plant was envisioned as a landmark project promising to provide the desert kingdom with a major source of energy while solidifying its relations with China.
But weeks after its official opening, the site, a sea of black, crumbly rock in the barren desert south of Jordan’s capital, is instead a source of heated controversy. Deals surrounding the plant put Jordan on the hook for billions of dollars in debt to China — all for a plant that is no longer needed for its energy, because of other agreements made since the project’s conception.
The result is fueling tensions between China and Jordan and causing grief for the Jordanian government as it tries to contest the deal in an international legal battle. As Chinese influence grows in the Middle East and America withdraws, the $2.1 billion shale oil station has come to characterize China’s wider model that has burdened many Asian and African states with crippling debt and served as a cautionary tale for the region.
“Attarat is a representation of what the Belt and Road Initiative was and has become,” said Jesse Marks, a nonresident fellow at the Washington-based Stimson Center, referring to China’s scheme to build global infrastructure and boost Beijing’s political sway.
“Jordan evolves as an interesting case study not for China’s success in the region but for how China engages in middle-income countries,” he said.
First conceived some 15 years ago as a way to fulfill national ambitions of energy independence, the Attarat shale oil plant is now causing anger in Jordan because of its enormous price tag. If the original agreement holds, Jordan would have to pay China a staggering $8.4 billion over 30 years to buy the electricity generated by the plant.
Laborers flown from rural China toil in the shadow of the giant station, some 100 kilometers (60 miles) south of Amman.
When Shi Changqing arrived in the Jordanian desert earlier this year from the Jilin province in China’s northeast, fears were mounting in the workers’ dormitories that the project could grind to a halt, leaving everyone in the lurch, the 36-year-old welder said.
“It’s very strange to feel that, being from China, you are not wanted here,” he said.
With its meager natural resources in a region awash with oil and gas, Jordan seemed to have drawn a losing ticket. Then in the 2000s, it struck shale oil trapped in the black rock that underlies the country. With the fourth-largest concentration of shale oil in the world, Jordan had high hopes for a big pay-off.
In 2012, the Jordanian Attarat Power Company proposed to the government to extract shale oil from the desert and build a plant using it to provide 15% of the country’s electricity supply. The proposal fit the government’s intensifying desire for energy self-sufficiency amid the turmoil of the 2011 Arab uprisings, company officials say.
But extraction proved expensive, risky and technologically challenging. As the project lagged, Jordan struck a $15 billion agreement to import vast amounts of natural gas at competitive prices from Israel in 2014. Interest in Attarat waned.
Attarat Power Co. CEO Mohammed Maaitah said he pitched the project the world over — from the United States and Europe to Japan and South Korea. No one bit, he said.
To Jordan’s surprise, Chinese banks offered Jordan over $1.6 billion in loans to finance the plant in 2017. A Chinese state-owned firm, Guangdong Energy Group, bought a 45% stake in the Attarat Power Co., turning the white elephant into the largest private enterprise to come out of President Xi Jinping’s Belt and Road Initiative outside China, according to the company.
Guangdong Energy Group did not respond to requests for comment.
The investment was part of China’s wider push into an Arab world hungry for foreign investment, experts say. The money for large infrastructure projects came with few political strings attached.
“China doesn’t bring with it the baggage of the United States in that we actually have some concern about democratic processes, transparency, corruption,” said David Schenker, a former U.S. assistant secretary of state for Middle East policy. “For authoritarian states, there’s some appeal in China.”
As talk grew of American unreliability, China turned to acquiring strategic assets in the Middle East, even in economically troubled states. It bought lots of Iraqi oil, tendered a port in northern Lebanon and poured money into President Abdel-Fattah el-Sissi’s new capital in Egypt.
With Syrian President Bashar Assad in 2017 gaining the upper hand in his country’s civil war, China had an interest in investing in the Attarat project in neighboring Jordan as a springboard, anticipating a Syrian reconstruction boom that could unlock billions of dollars in investments, experts say.
Under their 30-year power purchase deal, Jordan’s state-run electricity company will have to buy electricity from the now effectively Chinese-led Attarat at an exorbitant rate that means the Jordanian government would lose $280 million annually, the treasury estimated. To cover the payments, Jordan would have to raise electricity prices for consumers by 17%, energy experts said — a severe blow to an economy already saddled with debt and inflation.
The extent of losses to China appalled the Jordanian government. Jordan’s Ministry of Energy launched international arbitration against Attarat Power Co. in 2020 “on the grounds of gross unfairness.”
When asked why Jordan had agreed to such a lopsided contract to begin with, Jordan’s Ministry of Energy declined to comment, as did the National Electricity Co. As of June, hearings were being held at an arbitration tribunal of the Paris-based International Chamber of Commerce.
Musa Hantash, a geologist on the parliamentary energy committee, described the deal as the natural outcome of corruption and a lack of technical expertise.
“It’s very difficult to convince these big companies to invest in Jordan. There are things to help certain people make a profit,” he said, without elaborating.
American officials portrayed the Attarat contract as a case of Beijing’s “ debt trap diplomacy.”
The Chinese Foreign Ministry declined to comment on the Attarat project. But it defended Beijing’s investment in developing countries, denying allegations it ensnares partners in debt and arguing that China never compels “others to borrow from us forcibly.”
“We never attach any political strings to loan agreements,” the ministry said, urging international financial institutions to help provide debt relief.
Attarat Power said it expects a decision in the case later this year. Rulings by the world business organization are legally binding and enforceable.
Maaitah and other company officials dismissed Jordan’s claims of unjustly inflated prices, accusing Jordan of backtracking on its agreement due to anti-China sentiment.
Since the first of two power units went live last fall, the Jordanian government has paid only half its monthly dues, Maaitah said.
In Jordan and other poorer Arab states allied with the U.S., the pace of Chinese investment in recent years has slowed.
Faced with pushback abroad and rising concerns at home, China is shifting its approach in the region, said Amman-based China expert Samer Khraino, focusing on the oil-rich Persian Gulf. Wealthy states like the United Arab Emirates and Saudi Arabia have no issue paying back China’s big loans.
For now, Jordan appears unwilling to take any more chances with China.
In May, Jordan’s telecommunications company Orange signed a new agreement for 5G equipment. It had long been a customer of Huawei, the Chinese telecoms giant under American sanctions.
This time, it chose Nokia.
Isabel Debre, The Associated Press
CRIMINAL CYBER CAPITALI$M
Ransomware criminals are dumping kids' private files online after school hacks
The Canadian Press
Wed, July 5, 2023
The confidential documents stolen from schools and dumped online by ransomware gangs are raw, intimate and graphic. They describe student sexual assaults, psychiatric hospitalizations, abusive parents, truancy — even suicide attempts.
“Please do something,” begged a student in one leaked file, recalling the trauma of continually bumping into an ex-abuser at a school in Minneapolis. Other victims talked about wetting the bed or crying themselves to sleep.
Complete sexual assault case folios containing these details were among more than 300,000 files dumped online in March after the 36,000-student Minneapolis Public Schools refused to pay a $1 million ransom. Other exposed data included medical records and discrimination complaints.
Rich in digitized data, the nation’s schools are prime targets for far-flung criminal hackers, who are assiduously locating and scooping up sensitive files.
Often strapped for cash, districts are grossly ill-equipped not just to defend themselves but to respond diligently and transparently when attacked, especially as they struggle to help kids catch up from the pandemic and grapple with shrinking budgets.
Months after the Minneapolis attack, administrators have not delivered on their promise to inform individual victims. Unlike for hospitals, no federal law exists to require this notification from schools.
The Associated Press reached families of six students whose sexual assault case files were exposed. The message from a reporter was the first time anyone had alerted them.
“Truth is, they didn’t notify us about anything,” said a mother whose son’s case file has 80 documents.
Even when schools catch a ransomware attack in progress, the data are typically already gone. That was what Los Angeles Unified School District did last Labor Day weekend, only to see the private paperwork of more than 1,900 former students — including psychological evaluations and medical records — leaked online. Not until February did district officials disclose the breach’s full dimensions.
The lasting legacy of school ransomware attacks, it turns out, is not in school closures, recovery costs or even soaring cyberinsurance premiums. It is the trauma for staff, students and parents from the online exposure of private records — which the AP found on the open internet and dark web.
“A massive amount of information is being posted online, and nobody is looking to see just how bad it all is. Or, if somebody is looking, they’re not making the results public,” said analyst Brett Callow of the cybersecurity firm Emsisoft.
Other big districts recently stung by data theft include San Diego, Des Moines and Tucson, Arizona. While the severity of those hacks remains unclear, all have been criticized either for being slow to admit to being hit by ransomware, dragging their feet on notifying victims — or both.
ON CYBER SECURITY, SCHOOLS HAVE LAGGED
While other ransomware targets have fortified and segmented networks, encrypting data and mandating multi-factor authentication, school systems have been slower to react.
Ransomware likely has affected well over 5 million U.S. students by now, with district attacks on track to rise this year, said analyst Allan Liska of the cybersecurity firm Recorded Future. Nearly one in three U.S. districts had been breached by the end of 2021, according to a survey by the Center for Internet Security, a federally funded nonprofit.
Just three years ago, criminals did not routinely grab data in ransomware attacks, said TJ Sayers, cyberthreat intelligence manager at the Center for Internet Security. Now, it’s common, he said, with much of it sold on the dark web.
The criminals in the Minneapolis theft were especially aggressive. They shared links to the stolen data on Facebook, Twitter, Telegram and the dark web, which standard browsers can’t access.
The Minneapolis parents informed by the AP of the leaked sexual assault complaints feel doubly victimized. Their children have battled PTSD, and some even left their schools. Now this.
“The family is beyond horrified to learn that this highly sensitive information is now available in perpetuity on the internet for the child’s future friends, romantic interests, employers, and others to discover,” said Jeff Storms, an attorney for one of the families. It is AP policy not to identify sexual abuse victims.
Minneapolis Schools spokeswoman Crystina Lugo-Beach would not say how many people have been contacted so far or answer other AP questions about the attack.
Despite parents' and teachers' frustration, schools are routinely advised by incident response teams concerned about legal liability issues and ransom negotiations against being more transparent, said Callow of Emsisoft. Minneapolis school officials apparently followed that playbook, initially describing the Feb. 17 attack cryptically as a “system incident,” then as “technical difficulties” and later an “encryption event.”
The extent of the breach became clear though when a ransomware group posted video of stolen data, giving the district 10 days to pay the ransom before leaking files.
The district declined to pay, following the standing advice of the FBI, which says ransoms encourage criminals to target more victims.
SCHOOLS SPEND TECH BUDGETS ON LEARNING TOOLS, NOT SECURITY
During the COVID-19 pandemic, districts prioritized spending on internet connectivity and remote learning. Security got short shrift as IT departments invested in software to track student engagement and performance, often at the expense of privacy and safety, University of Chicago and New York University researchers found.
Cybersecurity money for public schools is limited. As it stands, districts can only expect slivers of the $1 billion in cybersecurity grants that the federal government is distributing over four years.
Minnesota’s chief information security officer, John Israel, said his state got $18 million of it this year to divvy among 3,600 different entities. State lawmakers provided an additional $22.5 million in grants for cyber and physical security in schools.
It’s already too late for the mother of one of the Minneapolis students whose confidential sexual assault complaint was released online. She almost feels “violated again.”
“All the stuff we kept private,” she said, “it’s out there. And it’s been out there for a very long time.”
Frank Bajak, Heather Hollingsworth And Larry Fenn, The Associated Press
Ransomware criminals are dumping kids' private files online after school hacks
The Canadian Press
Wed, July 5, 2023
The confidential documents stolen from schools and dumped online by ransomware gangs are raw, intimate and graphic. They describe student sexual assaults, psychiatric hospitalizations, abusive parents, truancy — even suicide attempts.
“Please do something,” begged a student in one leaked file, recalling the trauma of continually bumping into an ex-abuser at a school in Minneapolis. Other victims talked about wetting the bed or crying themselves to sleep.
Complete sexual assault case folios containing these details were among more than 300,000 files dumped online in March after the 36,000-student Minneapolis Public Schools refused to pay a $1 million ransom. Other exposed data included medical records and discrimination complaints.
Rich in digitized data, the nation’s schools are prime targets for far-flung criminal hackers, who are assiduously locating and scooping up sensitive files.
Often strapped for cash, districts are grossly ill-equipped not just to defend themselves but to respond diligently and transparently when attacked, especially as they struggle to help kids catch up from the pandemic and grapple with shrinking budgets.
Months after the Minneapolis attack, administrators have not delivered on their promise to inform individual victims. Unlike for hospitals, no federal law exists to require this notification from schools.
The Associated Press reached families of six students whose sexual assault case files were exposed. The message from a reporter was the first time anyone had alerted them.
“Truth is, they didn’t notify us about anything,” said a mother whose son’s case file has 80 documents.
Even when schools catch a ransomware attack in progress, the data are typically already gone. That was what Los Angeles Unified School District did last Labor Day weekend, only to see the private paperwork of more than 1,900 former students — including psychological evaluations and medical records — leaked online. Not until February did district officials disclose the breach’s full dimensions.
The lasting legacy of school ransomware attacks, it turns out, is not in school closures, recovery costs or even soaring cyberinsurance premiums. It is the trauma for staff, students and parents from the online exposure of private records — which the AP found on the open internet and dark web.
“A massive amount of information is being posted online, and nobody is looking to see just how bad it all is. Or, if somebody is looking, they’re not making the results public,” said analyst Brett Callow of the cybersecurity firm Emsisoft.
Other big districts recently stung by data theft include San Diego, Des Moines and Tucson, Arizona. While the severity of those hacks remains unclear, all have been criticized either for being slow to admit to being hit by ransomware, dragging their feet on notifying victims — or both.
ON CYBER SECURITY, SCHOOLS HAVE LAGGED
While other ransomware targets have fortified and segmented networks, encrypting data and mandating multi-factor authentication, school systems have been slower to react.
Ransomware likely has affected well over 5 million U.S. students by now, with district attacks on track to rise this year, said analyst Allan Liska of the cybersecurity firm Recorded Future. Nearly one in three U.S. districts had been breached by the end of 2021, according to a survey by the Center for Internet Security, a federally funded nonprofit.
Just three years ago, criminals did not routinely grab data in ransomware attacks, said TJ Sayers, cyberthreat intelligence manager at the Center for Internet Security. Now, it’s common, he said, with much of it sold on the dark web.
The criminals in the Minneapolis theft were especially aggressive. They shared links to the stolen data on Facebook, Twitter, Telegram and the dark web, which standard browsers can’t access.
The Minneapolis parents informed by the AP of the leaked sexual assault complaints feel doubly victimized. Their children have battled PTSD, and some even left their schools. Now this.
“The family is beyond horrified to learn that this highly sensitive information is now available in perpetuity on the internet for the child’s future friends, romantic interests, employers, and others to discover,” said Jeff Storms, an attorney for one of the families. It is AP policy not to identify sexual abuse victims.
Minneapolis Schools spokeswoman Crystina Lugo-Beach would not say how many people have been contacted so far or answer other AP questions about the attack.
Despite parents' and teachers' frustration, schools are routinely advised by incident response teams concerned about legal liability issues and ransom negotiations against being more transparent, said Callow of Emsisoft. Minneapolis school officials apparently followed that playbook, initially describing the Feb. 17 attack cryptically as a “system incident,” then as “technical difficulties” and later an “encryption event.”
The extent of the breach became clear though when a ransomware group posted video of stolen data, giving the district 10 days to pay the ransom before leaking files.
The district declined to pay, following the standing advice of the FBI, which says ransoms encourage criminals to target more victims.
SCHOOLS SPEND TECH BUDGETS ON LEARNING TOOLS, NOT SECURITY
During the COVID-19 pandemic, districts prioritized spending on internet connectivity and remote learning. Security got short shrift as IT departments invested in software to track student engagement and performance, often at the expense of privacy and safety, University of Chicago and New York University researchers found.
Cybersecurity money for public schools is limited. As it stands, districts can only expect slivers of the $1 billion in cybersecurity grants that the federal government is distributing over four years.
Minnesota’s chief information security officer, John Israel, said his state got $18 million of it this year to divvy among 3,600 different entities. State lawmakers provided an additional $22.5 million in grants for cyber and physical security in schools.
It’s already too late for the mother of one of the Minneapolis students whose confidential sexual assault complaint was released online. She almost feels “violated again.”
“All the stuff we kept private,” she said, “it’s out there. And it’s been out there for a very long time.”
Frank Bajak, Heather Hollingsworth And Larry Fenn, The Associated Press
CANADA
Signs of wage growth cooling encouraging amid inflation fight: economists
 |
| TIFF MACLIN BOC |
The Canadian Press
Wed, July 5, 2023
TORONTO — Early signs of wage growth slowing are an indicator the Bank of Canada’s fight against inflation is slowly gaining ground, economists said, but it’s too soon to tell whether Canadians will regain the purchasing power they lost amid sustained price growth.
“If wage growth is going to cool, then we better see inflation come down even faster,” said Brendon Bernard, senior economist with job site Indeed.
Otherwise, workers won’t make up that lost ground, he said.
“It's a bit of a tug of war between the two.”
Wage growth is just one factor the Bank of Canada is eyeing in its ongoing fight against inflation, said BMO economist Shelly Kaushik.
“We are seeing a bit of a slowdown in broader economic activity. We are starting to see demand for labour, demand for some goods and services, starting to step down,” she said.
“That's all in line with what the bank wants to see, to help cool those inflation pressures.”
On Friday, Statistics Canada said the economy was essentially unchanged in April, neither growing nor shrinking.
Inflation peaked last June at more than eight per cent and has been moderating ever since, coming in at 3.4 per cent in May. The central bank is targeting roughly two per cent for inflation, said Kaushik, and ideally wage growth would more or less match inflation.
Wages grew 5.1 per cent in May, year-over-year, slightly slower than 5.2 per cent in April, the month wage growth surpassed inflation, according to Statistics Canada’s labour force survey.
Meanwhile, Statistics Canada’s latest report on payroll employment found that wage growth got stronger in April, but job vacancies declined.
The payroll report provides data at a small lag compared with the labour force survey, but often comes with more nuance, said Kaushik.
CIBC senior economist Andrew Grantham said in a note that the payroll report suggests demand for labour is continuing to cool in line with what the central bank wants to see.
“Evidence from Canadian employers suggests that the labour market may have been cooling earlier and quicker than the more timely labour force survey,” Grantham wrote.
Signs of slowing in the labour market are consistent with the broader economic slowdown expected in the coming months, said BMO's Kaushik.
“But I don't think that that easing of wages is the only thing that needs to happen for inflation to get back to target,” she cautioned.
“More broadly, we are seeing very strong demand still for goods and services, not just for labour. And so I think we need to see cooling in all of these aspects that are still running quite hot in order to get inflation back down to our target.”
Indeed has been tracking posted wages on Canadian job ads, and said wage growth on those postings has cooled somewhat at four per cent in May 2023 down from 5.3 per cent in August of last year.
In a report this week, the company said advertised pay has grown faster among low- and mid-paying job postings, mainly in areas where hiring conditions have been tight, including construction and manufacturing. At the same time, total Canadian job postings on Indeed have also slowed, the company said.
Indeed's Bernard said job postings in many areas are still above pre-pandemic levels, but have come down noticeably from earlier highs.
He said there seems to be hope for what he called “immaculate disinflation,” where inflation comes down but the labour market stays in good shape.
The Canadian Federation of Independent Business has also noticed some easing on wage pressures. In a Thursday report, the organization said businesses’ expectations for wage and price increases are cooling.
A report from the Bank of Canada on Friday seemed to support this. The central bank’s business outlook survey found that businesses continue to see larger-than-normal wage and price increases ahead, but their expectations are moving closer to what they were before the pandemic.
The data so far points to another potential hike in rates from the central bank in July, said Kaushik, though she said it's not a done deal.
Of course, many Canadians are seeking for their pay to catch up to last year’s breakneck inflation pace, said Bernard, which is why wage growth accelerated in the wake of rising prices.
But there is a worry among economists that if higher wage growth becomes sustained, it may actually drive inflation as businesses raise prices to deal with rising labour costs, Kaushik said — the dreaded wage-price spiral.
In a note Friday, RBC’s Nathan Janzen and Carrie Freestone said all eyes will be on the labour force survey at the end of this week as the central bank weighs its July decision.
“Though there are signs that labour markets are softening, the unemployment rate is still historically very low,” they said.
“Economic momentum has likely been too firm for the (central bank) to change course just yet.”
Rosa Saba, The Canadian Press
(Bloomberg) -- Consumer expectations for euro-area inflation continued to decline in May, adding to a steep drop in the previous month and coming as a relief for European Central Bank officials who are debating how much more monetary tightening is needed.
The anticipation for the next 12 months fell to 3.9% from 4.1% in April, the ECB said Wednesday in its monthly survey. For three years ahead, however, it remains unchanged at 2.5%, still above the central bank’s 2% target.
The decline in expectations for the coming period follows a retreat in the headline number for price gains in the currency bloc, mainly driven by falling energy costs. Underlying price pressures — the main focus of policymakers at the moment — have remained more robust, picking up again in June.
Several ECB officials have said they want to see a sustained decline in the measure stripping out items like energy and food before they can pause interest-rate hikes. Another increase in borrowing costs on July 27 is almost certain, but the following steps are more open.
Bundesbank President Joachim Nagel said earlier Wednesday that while the ECB hasn’t reached the end of its tightening path, “the question of how much further interest rates will have to rise cannot be answered at the present time.”
In its survey, the ECB also said:
Uncertainty about inflation expectations 12 months ahead fell to the lowest since March 2022
Nominal income expected to rise by 1.2% over the next 12 months, up from 1.1% in April
Expectations for economic growth for the next 12 months rose to -0.7% from -0.8%
Unemployment rate seen at 11% in 12 months, down from 11.2% in April
1929 REDUX
China Property Pain Worsens With Failed Auction, Sino-Ocean RoutBloomberg News
Wed, July 5, 2023
(Bloomberg) -- Fresh signs emerged Wednesday that China is facing yet more challenges in its property debt crisis.
Defaulted developer Shimao Group Holdings Ltd. failed to find a buyer for a $1.8 billion project at a forced auction, even at a heavy discount. Sino-Ocean Group Holding Ltd. saw its bonds tumble on news that the state-backed builder told some creditors it’s been working with two major shareholders on its debt load.
They’re the latest indications that China’s two-year real estate crisis is likely to remain one of the biggest drags on the world’s second-largest economy. A brief rebound after the nation scrapped Covid restrictions has quickly faded, with home sales resuming declines and property investment worsening — hurting markets ranging from iron ore to high-yield bonds.
“Investors are disappointed with the slow recovery of the housing market,” said Anitza Nip, Union Bancaire Privee’s head of fixed income research for Asia. “The recovery path appears to be even longer than what the market had initially anticipated earlier this year.”
The nation’s second-largest developer by sales, China Vanke Co., said last week that the home market is “worse than expected,” joining a chorus of investors and analysts who have become bearish on the sector. Goldman Sachs Group Inc. recently raised its projected default rate for Chinese high-yield property dollar bonds.
No buyers bid for Shimao’s land portfolio in Shenzhen, even though the asset was offered at a price 20% lower than its appraised value, according to results posted on online auction site JD.com.
That will likely add hurdles to Shimao’s debt restructuring, Bloomberg Intelligence property analysts Kristy Hung and Lisa Zhou wrote in a note. The developer’s onshore commercial property unit purchased the land — spanning an area equivalent to 34 football fields — in 2017 for 24 billion yuan ($3.3 billion), a record in Shenzhen at the time.
Its original plan was to build a landmark complex with a 500-meter skyscraper, but the project ran into trouble last year after the company missed some payments on high-yield trust products used to fund the construction. Citic Trust Co., which manages the trust project, seized the asset and sued Shimao’s unit, according to the auction documents and Shimao’s company filing.
Meanwhile, China Life Insurance Co. and Dajia Life Insurance Co. sent a working group to Sino-Ocean regarding a holistic risk mitigation plan, people familiar with the matter said. That added to concerns that even China’s state-backed developers aren’t immune to the industry’s unprecedented liquidity squeeze.
Sino-Ocean bonds slumped further Wednesday, putting prices at just half their start-of-week levels. A 2 billion yuan onshore note due next month, the company’s next maturity, plunged 34.6% and saw trading suspended twice. A Sino-Ocean dollar bond due 2024 fell to a record low at about 15 cents. Shares dropped as much as 4.4% in Hong Kong.
This week’s bond selloff at Sino-Ocean was kicked off by people familiar with the matter saying that a state-owned shareholder-led working group of the developer had engaged China International Capital Corp. to conduct due diligence on the firm.
China’s renewed housing slump has fueled expectations for the government to issue more stimulus measures. Adding to the economy’s woes, figures on Wednesday showed China’s services sector slowed in June.
Yet support measures have so far been modest, keeping pressure on developers facing mounting debts.
“Investors are concerned not only about credit risk on individual names now, but also about the sector as whole as the restructuring process remains slow,” UBP’s Nip said.
--With assistance from Pearl Liu.
Sino-Ocean Working With Major Shareholders on Debt Plan, Sources Say
Jackie Cai, Wei Zhou and Dorothy Ma
Tue, July 4, 2023
(Bloomberg) -- A state-backed Chinese developer facing mounting signs of concern in credit markets told some creditors Tuesday that it’s been working with two major shareholders regarding its debt load, according to people familiar with the matter.
State-owned China Life Insurance Co. and Dajia Life Insurance Co. sent a working group to Sino-Ocean Group Holding Ltd. regarding a holistic risk mitigation plan, said the people, who asked not to be named as the matter is private.
The builder has so far avoided debt defaults that have hit even some of its government-linked peers. But credit markets are indicating growing strains. HSBC Holdings Plc credit analyst Keith Chan downgraded Sino-Ocean to underweight on Tuesday, predicting the builder will halt offshore-debt servicing pending a holistic restructuring.
Sino-Ocean bonds slumped further Wednesday, putting prices at just half their start-of-week levels. A 2 billion yuan ($277 million) onshore note due next month, the company’s next maturity, plunged 32% and saw trading suspended twice. A Sino-Ocean dollar bond due 2024 fell to 17 cents, approaching its all-time low. Shares dropped as much as 4.4% in Hong Kong.
This week’s bond selloff was kicked off by people familiar with the matter saying that a state-owned shareholder-led working group of the developer had engaged China International Capital Corp. to conduct due diligence on Sino-Ocean.
The firm is adding to concerns that even China’s state-backed developers aren’t immune to the industry’s unprecedented liquidity squeeze as a housing crisis persists. Sino-Ocean’s woes follow a recent default by Central China Real Estate Ltd. and a debt setback last year by another state-linked peer, Greenland Holding Group Co.
Moody’s Investors Service and Fitch Ratings both dropped the company’s credit ratings deeper into junk territory last week, citing upcoming debt maturities and liquidity levels.
A representative at Sino-Ocean’s investor relations department declined to comment.
Jackie Cai, Wei Zhou and Dorothy Ma
Tue, July 4, 2023
(Bloomberg) -- A state-backed Chinese developer facing mounting signs of concern in credit markets told some creditors Tuesday that it’s been working with two major shareholders regarding its debt load, according to people familiar with the matter.
State-owned China Life Insurance Co. and Dajia Life Insurance Co. sent a working group to Sino-Ocean Group Holding Ltd. regarding a holistic risk mitigation plan, said the people, who asked not to be named as the matter is private.
The builder has so far avoided debt defaults that have hit even some of its government-linked peers. But credit markets are indicating growing strains. HSBC Holdings Plc credit analyst Keith Chan downgraded Sino-Ocean to underweight on Tuesday, predicting the builder will halt offshore-debt servicing pending a holistic restructuring.
Sino-Ocean bonds slumped further Wednesday, putting prices at just half their start-of-week levels. A 2 billion yuan ($277 million) onshore note due next month, the company’s next maturity, plunged 32% and saw trading suspended twice. A Sino-Ocean dollar bond due 2024 fell to 17 cents, approaching its all-time low. Shares dropped as much as 4.4% in Hong Kong.
This week’s bond selloff was kicked off by people familiar with the matter saying that a state-owned shareholder-led working group of the developer had engaged China International Capital Corp. to conduct due diligence on Sino-Ocean.
The firm is adding to concerns that even China’s state-backed developers aren’t immune to the industry’s unprecedented liquidity squeeze as a housing crisis persists. Sino-Ocean’s woes follow a recent default by Central China Real Estate Ltd. and a debt setback last year by another state-linked peer, Greenland Holding Group Co.
Moody’s Investors Service and Fitch Ratings both dropped the company’s credit ratings deeper into junk territory last week, citing upcoming debt maturities and liquidity levels.
A representative at Sino-Ocean’s investor relations department declined to comment.
Borouge Surges as Abu Dhabi Envisions $30 Billion Chemical Giant
Eyk Henning, Dinesh Nair and Aaron Kirchfeld
Wed, July 5, 2023
(Bloomberg) -- Borouge Plc surged the most in over a year as Abu Dhabi explores an ambitious plan to use the company to create a chemicals and plastics giant worth more than $30 billion.
Shares of Borouge jumped as much as 9.4% in Abu Dhabi trading Wednesday, the biggest intraday gain since June 2022. They were up 4.1% at 11:44 a.m. in the United Arab Emirates, giving the company a market value of about $23 billion.
Abu Dhabi and Austria’s OMV AG are discussing the valuation and ownership structure for a potential merger of Borouge and Borealis AG, people with knowledge of the matter said. The owners may reach the broad outlines for formal negotiations in the coming weeks, according to the people.
The mooted transaction would dovetail with a wider plan by the United Arab Emirates to attract investment and technology as well as build new industries and manufacturing capabilities. State-owned Abu Dhabi National Oil Co. has been expanding a refining and chemicals hub in Abu Dhabi to find additional outlets for its oil and natural gas production and make the plastics that go into consumer goods.
Vienna-headquartered Borealis is 75% owned by OMV, with the remainder held by Adnoc. Borouge is itself a partnership between Adnoc and Borealis.
Global Market
Combining the companies would give Borouge access to Borealis’s established European markets as well as growth from the US, according to Citigroup Inc. It could also help Borouge broaden its portfolio to include more olefin monomers and base chemicals, plus offer synergies on sales and distribution costs by uniting a global customer base, Citigroup analysts wrote in a research note.
“Any merger would likely boost Borouge’s current technological abilities and product offerings,” they said. “For Adnoc we see it deepening its presence in the petrochemicals value-chain as it looks to hedge against what may happen long-term in oil transport demand.”
The two parties are discussing a possible valuation of about $10 billion for Borealis, including its Borouge stake, the people said. After taking into account potential synergies, the overall valuation of the combined entity could exceed $30 billion, the people said. The exact value and ownership structure remain the two key hurdles for any agreement and may still change, they said.
Talks have been on-and-off for several months and could still be delayed or fall apart, the people said, asking not to be identified because deliberations are private.
Plastics Ambitions
Combining Borealis and Borouge would simplify the ownership structure and is likely aimed at creating a stronger competitor to chemical rivals like Sabic, Bloomberg Intelligence analysts Salih Yilmaz and Darja Lema wrote in a research note Tuesday.
The Abu Dhabi energy group and OMV are still discussing whether they would have the same stake in the merged entity, though they envision the two parties having equal control of the board and decision-making capabilities, according to some of the people.
Under one scenario, both the Mideast investor and Austrians would eventually hold similar stakes that are less than 50%, with free float on the stock exchange making up the rest, though Adnoc could end up with a slightly larger share, they said.
The Austrian side would also prefer to have the headquarters in Europe, where most of the operations are, even if the combined entity was listed in Abu Dhabi, the people said. Representatives for Adnoc and OMV declined to comment. Spokespeople for Borealis and Borouge referred queries to their owners.
Borouge went public last year in a $2 billion initial public offering. The company, which makes specialty plastics for manufacturing and consumer goods, reported $6.7 billion in sales in 2022. Borealis employs about 7,600 people and makes plastics, chemicals and fertilizers. It had total sales and other income of €12.2 billion ($13.3 billion) last year, according to the Borealis website.
Asia Expansion
A combination would give the companies significant scale to compete, simplify the ownership structure and create more flexibility to invest and expand in Asia, where demand for chemicals and plastics continues to rise. Still, given the various stakeholders, including governments, reaching a final agreement is not ensured.
The possible deal comes at a pivotal time for OMV, whose biggest shareholders are the Austrian government followed by Abu Dhabi. OMV last year announced plans to transform itself from one of eastern Europe’s biggest fossil-fuel companies to an integrated green enterprise built around chemicals, recycling and electric-vehicle infrastructure. This February, it confirmed a Bloomberg News report that it’s considering selling some exploration and production assets as part of that shift.
Adnoc has been busy hunting for deals in this space. Chief Executive Officer Sultan Al Jaber last month made a preliminary $12 billion takeover approach for German polymers producer Covestro AG, Bloomberg News has reported. The target’s management rejected the proposal as too low, though signaled it’s open to discussing the deal at better terms.
The Abu Dhabi firm is continuing its pursuit of a potential Covestro takeover and has been studying its next steps, according to people with knowledge of the matter. Adnoc is likely to decide as soon as the next couple weeks whether to increase its offer for Covestro, the people said. A spokesperson for Covestro declined to comment.
Adnoc, which pumps almost all the oil in OPEC member United Arab Emirates, plans to invest $150 billion to expand production capacity for crude, natural gas and chemicals. It’s also investing in low-carbon energy.
--With assistance from Archana Narayanan.
Eyk Henning, Dinesh Nair and Aaron Kirchfeld
Wed, July 5, 2023
(Bloomberg) -- Borouge Plc surged the most in over a year as Abu Dhabi explores an ambitious plan to use the company to create a chemicals and plastics giant worth more than $30 billion.
Shares of Borouge jumped as much as 9.4% in Abu Dhabi trading Wednesday, the biggest intraday gain since June 2022. They were up 4.1% at 11:44 a.m. in the United Arab Emirates, giving the company a market value of about $23 billion.
Abu Dhabi and Austria’s OMV AG are discussing the valuation and ownership structure for a potential merger of Borouge and Borealis AG, people with knowledge of the matter said. The owners may reach the broad outlines for formal negotiations in the coming weeks, according to the people.
The mooted transaction would dovetail with a wider plan by the United Arab Emirates to attract investment and technology as well as build new industries and manufacturing capabilities. State-owned Abu Dhabi National Oil Co. has been expanding a refining and chemicals hub in Abu Dhabi to find additional outlets for its oil and natural gas production and make the plastics that go into consumer goods.
Vienna-headquartered Borealis is 75% owned by OMV, with the remainder held by Adnoc. Borouge is itself a partnership between Adnoc and Borealis.
Global Market
Combining the companies would give Borouge access to Borealis’s established European markets as well as growth from the US, according to Citigroup Inc. It could also help Borouge broaden its portfolio to include more olefin monomers and base chemicals, plus offer synergies on sales and distribution costs by uniting a global customer base, Citigroup analysts wrote in a research note.
“Any merger would likely boost Borouge’s current technological abilities and product offerings,” they said. “For Adnoc we see it deepening its presence in the petrochemicals value-chain as it looks to hedge against what may happen long-term in oil transport demand.”
The two parties are discussing a possible valuation of about $10 billion for Borealis, including its Borouge stake, the people said. After taking into account potential synergies, the overall valuation of the combined entity could exceed $30 billion, the people said. The exact value and ownership structure remain the two key hurdles for any agreement and may still change, they said.
Talks have been on-and-off for several months and could still be delayed or fall apart, the people said, asking not to be identified because deliberations are private.
Plastics Ambitions
Combining Borealis and Borouge would simplify the ownership structure and is likely aimed at creating a stronger competitor to chemical rivals like Sabic, Bloomberg Intelligence analysts Salih Yilmaz and Darja Lema wrote in a research note Tuesday.
The Abu Dhabi energy group and OMV are still discussing whether they would have the same stake in the merged entity, though they envision the two parties having equal control of the board and decision-making capabilities, according to some of the people.
Under one scenario, both the Mideast investor and Austrians would eventually hold similar stakes that are less than 50%, with free float on the stock exchange making up the rest, though Adnoc could end up with a slightly larger share, they said.
The Austrian side would also prefer to have the headquarters in Europe, where most of the operations are, even if the combined entity was listed in Abu Dhabi, the people said. Representatives for Adnoc and OMV declined to comment. Spokespeople for Borealis and Borouge referred queries to their owners.
Borouge went public last year in a $2 billion initial public offering. The company, which makes specialty plastics for manufacturing and consumer goods, reported $6.7 billion in sales in 2022. Borealis employs about 7,600 people and makes plastics, chemicals and fertilizers. It had total sales and other income of €12.2 billion ($13.3 billion) last year, according to the Borealis website.
Asia Expansion
A combination would give the companies significant scale to compete, simplify the ownership structure and create more flexibility to invest and expand in Asia, where demand for chemicals and plastics continues to rise. Still, given the various stakeholders, including governments, reaching a final agreement is not ensured.
The possible deal comes at a pivotal time for OMV, whose biggest shareholders are the Austrian government followed by Abu Dhabi. OMV last year announced plans to transform itself from one of eastern Europe’s biggest fossil-fuel companies to an integrated green enterprise built around chemicals, recycling and electric-vehicle infrastructure. This February, it confirmed a Bloomberg News report that it’s considering selling some exploration and production assets as part of that shift.
Adnoc has been busy hunting for deals in this space. Chief Executive Officer Sultan Al Jaber last month made a preliminary $12 billion takeover approach for German polymers producer Covestro AG, Bloomberg News has reported. The target’s management rejected the proposal as too low, though signaled it’s open to discussing the deal at better terms.
The Abu Dhabi firm is continuing its pursuit of a potential Covestro takeover and has been studying its next steps, according to people with knowledge of the matter. Adnoc is likely to decide as soon as the next couple weeks whether to increase its offer for Covestro, the people said. A spokesperson for Covestro declined to comment.
Adnoc, which pumps almost all the oil in OPEC member United Arab Emirates, plans to invest $150 billion to expand production capacity for crude, natural gas and chemicals. It’s also investing in low-carbon energy.
--With assistance from Archana Narayanan.
GLOBALIZATION
Taiwan’s Powerchip Teams Up With SBI to Build Japan FoundryKomaki Ito and Yuki Furukawa
Wed, July 5, 2023
(Bloomberg) -- Taiwan’s Powerchip Semiconductor Manufacturing Corp. and investment firm SBI Holdings Inc. are teaming up to build a foundry in Japan to meet growing demand by manufacturers to source chips locally.
SBI will help raise funds for the new venture, which plans to begin with 40-nanometer and 55nm automotive and industrial chips and produce more advanced 28nm chips in the medium-to-longterm, according to SBI President Yoshitaka Kitao.
Details on the timing and location of the factory remain undecided, he said at a news conference Wednesday. The world’s leading contract chipmaker Taiwan Semiconductor Manufacturing Co. is building a plant in southwest Japan expected to go online as early as next year.
“The most important thing is how they will recover their investment,” said Masayuki Otani, chief market analyst at Securities Japan Inc. Shares in SBI closed up 2% after the announcement, while Powerchip rose 2.3%.
Tokyo-based SBI is eyeing the growing financing needs of chipmakers to create redundant production lines as manufacturers bow to political and investor pressure to diversify their suppliers. SBI will help the chip venture raise funds globally and consider measures including issuing municipal bonds and securing Japanese regional bank loans.
“Our priority is Japan,” Powerchip Chairman Frank Huang said, noting that the weak yen, lower labor costs and favorable financing now make Japan attractive as a production site.
Prime Minister Fumio Kishida is betting shifting geopolitical priorities will help Japan regain some of its long-lost leadership in semiconductors. Japan’s preparing billions of dollars in subsidies as part of a push to triple domestic production of chips by 2030. Such efforts are not enough, Kitao said.
“The government has spent ¥2 trillion over the past two years to develop domestic chip manufacturing capacity, but I think that’s too little,” Kitao said. “We want to help revive Japan’s chip industry.”
--With assistance from Takako Taniguchi.
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