It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, September 11, 2023
GEMOLOGY Alrosa says mines largest gem-quality diamond in Russia in decade
Reuters | September 9, 2023 | Udachny, Alrosa’s biggest diamond mine near city of Udachny, Yakutia.
(Reference image by Alrosa).
Sanctions-hit Alrosa, the world’s biggest diamond producing company, said on Sunday it has mined the largest gem-quality diamond in Russia in the past decade.
The 390.7-carat diamond was mined at one of the company’s mines in the Republic of Sakha, Alrosa said in a statement. The region, commonly known as Yakutia, lies in Russia’s Far East along the Arctic Ocean.
“The found diamond is a light crystal of an irregular shape, bordered by a yellow-brown halo – a combination of mass, shape and colour that is unique today,” Alrosa said.
The company mined the largest gem-quality diamond in Russia in 2013, weighing 401 carats, Alrosa said. The word’s largest gem-quality diamond ever mined – the 3,106 carat Cullinan stone – was recovered in South Africa in 1905.
Alrosa was last year placed under sanctions by the United States, which cut it off from its banking system and banned direct sales to the US market after Russia invaded Ukraine.
Last month the company reported a rise of 0.2% in revenue for the first half of the year but said net profit fell 35% year-on-year to 55.6 billion roubles.
(By Lidia Kelly; Editing by Michael Perry)
Four killed in blast at Chinese-owned quarry in Ghana
CHINA SHIPS BAD MINING PRACTICES ABROAD
Reuters | September 10, 2023 | Granite boulder. (Reference image by Tuan Lifecolor, Pixnio.)
At least four people were killed, including one Chinese national, in an explosion at a granite quarry in western Ghana owned by Chinese company Omni Quarries late on Saturday, local officials said on Sunday.
It was not immediately clear what caused the blast, which destroyed buildings near the quarry in Shama district and left rubble strewn across swathes of agricultural land, said local disaster management official Michael Nyah
Four more people are still missing while two are in a critical condition and being treated at a regional hospital, he told Reuters.
“Farmland around has been destroyed and the buildings that are not destroyed have ripped-off ceilings or cracked walls,” he said.
It was not immediately possible to reach Omni for comment.
Community assemblyman Emmanuel Owu-Ewie said he was woken late on Saturday by parts of his ceiling collapsing.
“Everything has come down; all you see around are electricity poles and trees but the area has been flattened,” he said.
He said rescue efforts were still underway.
(By Maxwell Akalaare Adombila, Christian Akorlie and Alessandra Prentice; Editing by Frances Kerry)
US, Saudi Arabia in talks to secure metals in Africa – WSJ
Reuters | September 10, 2023 | US President Joe Biden and Saudi Crown Prince Mohammed bin Salman bin Abdulaziz. (Image by the Saudi Press Agency, Wikimedia Commons.)
The United States and Saudi Arabia are in talks to secure metals in Africa needed to help them with their energy transitions, the Wall Street Journal reported on Sunday, citing people with knowledge of the talks.
A state-backed Saudi venture would buy stakes in mining assets worth $15 billion in African countries such as the Democratic Republic of Congo, Guinea and Namibia, which will permit US companies to have rights to buy some of the production, the report added.
The US is in a race to catch up with China for supplies of cobalt, lithium and other metals that are used in electric car batteries, laptops and smartphones.
In a similar arrangement in July, Saudi Arabian Mining Co (Ma’aden) and the Saudi Public Investment Fund (PIF) acquired 10% of Brazilian Vale’s base metal unit, while US investment firm Engine No. 1 acquired 3%.
The newspaper said the PIF approached Congo in June about investing in cobalt, copper and tantalum in the country via its $3 billion joint venture with Ma’aden called Manara Minerals
Manara is also focusing on iron ore, nickel and lithium.
The White House is seeking the financial backing of other sovereign-wealth funds in the region, but talks with Saudi Arabia have progressed the farthest, the Journal added.
The Saudi government and The White House did not immediately respond to a request for comment.
(By Urvi Dugar; Editing by Cynthia Osterman) Saudi Arabia’s crown prince looks to metals as new source of wealth
Bloomberg News | September 7, 2023 | \ Saudi Arabian Crown Prince Mohammed bin Salman is the Chairman of the Public Investment Fund (Image: Wikimedia Commons)
In scorching summer heat, Renier Swiegers marches through the desert toward a drilling rig. He’s not looking for oil, the dynamo of Saudi Arabia’s economy the past 80 years, though. It’s another potential source of wealth and influence the kingdom now has its eye on.
Having already used its energy riches to upend the worlds of sports, tourism and movies, Saudi Arabia’s Crown Prince Mohammed bin Salman is prepared to pour billions of dollars into tapping the more than $1.3 trillion of metals his government says is buried in places like this.
The plan may be among the less glamorous components of his grand Vision 2030 to transform the Saudi economy. The prospect of turning the country into a metals hub that can make a dent in a global industry also has no shortage of skeptics. But Saudi Arabia’s 38-year-old de-facto leader has no shortage of wealth or ambition. Key will be convincing international mining companies it’s worth their while.
If only partially successful, the dream would have implications beyond the Middle East, not just for metals mining but also Saudi Arabia’s relations with the US, China and the emerging markets the kingdom is inching closer to.
Swiegers, a Namibian who works for British mining firm Moxico Resources Plc, is a believer. He’s helping establish a new zinc and copper open pit mine about 200 kilometers (125 miles) west of the Saudi capital, Riyadh.
“I’ve done projects all over Africa, and I know the geology and where is good to mine,” said Swiegers, extracting earth samples from the rig from as deep as 200 meters and pointing to copper deposits glittering in the sun. “This site is just like those.”
If everything comes to fruition, by 2025 the Khnaiguiyah site he’s working on will be producing metals including 100,000 tons a year of zinc and 10,000 tons of copper in its first phase. That’s miniscule by global standards — equivalent to Chile’s copper output in about 18 hours — but the aim is to double the volume. It’s one of several projects in the kingdom.
As well as developing local mines, there’s also another element to the plan that industry insiders say is less speculative and quicker to get up and running. Saudi Arabia wants to buy up resources from elsewhere to be refined and processed at new facilities inside the kingdom.
In July, the country announced its first big push into international mining. It took part in a $3.4 billion deal in Brazil, buying a stake in Vale SA’s base metals unit alongside investment fund Engine No. 1.
The transaction was the first by Manara Minerals, a vehicle established by Saudi Arabia’s powerful sovereign wealth fund — the Public Investment Fund, or PIF — and Saudi Mining Co., also known as Maaden. The agreement gives the kingdom, which beat off competition from Japan and Qatar, a 10% slice in one of the world’s crucial suppliers of nickel and copper — essential metals needed to decarbonize.
There will be more. Manara’s two shareholders will initially provide about $3 billion for two or three international deals a year, and more funding will be provided if needed, people familiar with the strategy said. It’s part of Maaden’s aim to ramp up its role in domestic production, while also buying access to global resources. Pillar of the new Saudi economy
Using government subsidies and lending by state-controlled funds, the overarching goal is to position Saudi Arabia as an alternative supplier to China for the metals and minerals vital to the global energy transition, such as batteries for electric cars. In short, dirty old mining is one of the pillars of the clean new future.
“Saudi Arabia needs more than one engine to achieve its vision,” Khalid Al Mudaifer, vice minister of mining affairs, said in an interview. The kingdom’s plan is to transform itself into an economic and industrial powerhouse, he said. “For that we need minerals.”
The main metal of interest to companies is copper, but Saudi Arabia also wants to mine uranium and phosphates for its nascent nuclear program. That’s drawn the attention of Western powers and the United Nations, who are wary of nuclear proliferation in the Middle East.
Saudi Arabia has repeatedly pledged that its atomic program is strictly for peaceful purposes, but Prince Mohammed has said the kingdom would develop a bomb if the other big Middle Eastern power, Iran, did so.
Some executives and advisers at the world’s biggest miners, though, have doubts about the kingdom’s domestic mining plans and point first to its geology. Its uranium reserves have been called “severely uneconomic.” The copper deposits — the most desirable metal for most miners — were mainly formed by volcanic activity.
That means they will likely only be found in small to medium-sized areas. It makes them less attractive to mine than the deposits that stretch down the through the Andes in Latin America and provide the bulk of the world’s supplies or the sedimentary-rock formations in places like Central Africa.
These jurisdictions — and even the largely undeveloped copper crescent that runs through Iran and Pakistan — are seen as much more prospective for the large, long-life mines many of the major global companies are looking to develop.
There’s also the problem of water, something in scarce supply in Saudi Arabia, which is around 95% desert. “There is also the challenge of availability of infrastructure, particularly for deposits located in remote desert areas,” said Carole Nakhle, founder and chief executive officer of London-based consultancy Crystol Energy.
Much of the Saudi plan will hinge on how successful projects like the one at Khnaiguiyah are at getting from identifying specific locations of mineral deposits to commercial production. Ajlan & Bros, the local investor developing Khnaiguiyah along with UK-based Moxico Resources, has earmarked $14 billion to invest in developing mines and processing facilities by 2030.
The firm, controlled by a wealthy Saudi family that built its fortune on selling traditional Arab headdresses, is betting that “Saudi Arabia can become a new source of minerals and rare earths away from China,” said Fahad Alenezi, CEO for the metals and mining group at Ajlan & Bros. As China and the US compete for access to resources “this is healthy for us,” he said.
Ajlan is planning to develop the largest zinc and copper processing plant in the Middle East at Yanbu on Saudi Arabia’s west coast. Most of the focus will be domestic demand, but the firm is already getting offers from Chinese and European trading houses to take any commodities it can produce.
Saudi Arabia is partnering with the Chinese Geological Survey on a $207 million contract to help identify minerals in the so-called Arabian Shield area of the kingdom where most deposits are, officials said at a Saudi-China business conference in June. The government in Beijing has also led efforts to identify the kingdom’s uranium deposits.
“The bottom line is that Saudi is exceptionally prospective,” Mark Bristow, CEO of Barrick Gold Corp, said in an interview during a visit to Riyadh in January. As for the estimate of more than $1 trillion of metals in the ground, “Whatever that number is, it’s worth an investment,” said Bristow, whose company took a risk on Mali more than 25 years ago and helped to turn it into a top African gold producer.
Canada’s Barrick operates a copper mine on Saudi Arabia’s southwestern coast near the Red Sea. It’s also been in talks with the PIF about a potential stake in a copper project in Pakistan, which would bring in Saudi money and political influence, people familiar with the matter said recently.
Vision 2030 eyes $75 billion
The government is offering big incentives for companies to start mining. The Saudi Industrial Development Fund will offer financing for up to 75% of a project. There’s a five year grace period on royalty payments, a cap on taxation levels, and a commitment not to levy windfall taxes. All government income from mining will go into a special fund to be reinvested in the industry.
Mining is the so-called “third pillar” of the economy in Vision 2030. The others are petroleum and petrochemicals, meaning mining would become the biggest part of the economy after oil and gas. The industry would eventually employ more than 250,000 people and contribute some $75 billion to Saudi gross domestic product by 2030, according to the targets.
A metals refining and processing industry could have potential to draw interest from international partners looking to provide more competition with China, which currently dominates minerals processing and battery manufacturing. That, of course, is if it all goes to plan.
So far, Saudi auctions for exploration licenses in the country have attracted only smaller players. The kingdom in August announced another bid round for investment and development of eight mining areas across the country.
Doubts among the big miners, though, don’t mean they aren’t closely following the Saudi efforts. Under the crown prince, Saudi Arabia is willing to take the kind of commercial risks other countries with mining ambitions might balk at, and his futuristic new city in the desert, called Neom, and the recent lavish spending on football shows the kingdom’s belief in its aims.
“Others in the industry were telling me that this is real and it’s something you need to get closer to,” Mike Henry, CEO of BHP Group Ltd., the world’s biggest mining company, said during a trip to Saudi Arabia. “It’s definitely the real deal.” That was in January when he attended the country’s annual mining conference. Whether giants like BHP get involved remains to be seen.
(By Matthew Martin, Fahad Abuljadayel and Thomas Biesheuvel, with assistance from Anthony Di Paola, Tiffany Tsoi, Paul Wallace, Jonathan Tirone and Samuel Dodge)
Canary Media’s chart of the week translates crucial data about the clean energy transition into a visual format. Canary thanks Natural Power for its support of this feature.
China is the global leader in recycling of lithium-ion batteries, far outpacing all other nations. As of late 2021, China had more than three times as much existing and planned lithium-ion battery recycling capacity as the U.S., according to a recent paper.
Deployment of lithium-ion batteries is expected to skyrocket in the coming years — in electric vehicles and in energy storage systems for homes, businesses and the grid. Recycling these batteries at the end of their useful lives is important to keep hazardous waste out of the environment. But there are critical national-security and economic reasons to do it too, as Canary’s Julian Spector recently discussed on The Carbon Copy podcast. Countries that can reclaim valuable minerals and metals from spent batteries — notably lithium, cobalt, copper and nickel — can lessen their reliance on foreign sources and potentially cut materials costs. It’s better to mine a waste stream than to mine the earth.
In the U.S., lithium-ion battery recycling is a nascent industry, but it’s starting to develop, as Spector reports. Policies that would support or even super-charge the industry have not yet been adopted, however — and in most states and Congress, they’re barely even being considered.
Meanwhile, the European Union has banned landfilling of batteries since 2006, and it’s poised to implement new rules to make auto manufacturers responsible for recycling old batteries from their EVs, require new lithium-ion batteries to contain certain amounts of recycled content, and require new batteries to be designed in ways that make them easier to recycle.
China too has rules that have spurred the creation of its lithium-ion battery recycling sector. The country began promoting lithium-ion battery recycling through policy in 2012 and has adopted more measures since, including one in 2018 that requires manufacturers to collaborate with recycling companies to improve the recycling process.
***
Natural Power is a global consultancy that supports its clients to deliver a wide range of renewable energy projects. Its independent engineering experience covers all phases of the project lifecycle, from feasibility through construction to operations, and all stages of the transaction. Learn more.
First Quantum reaches deal with Panama copper mine union, avoids strike
Reuters | September 10, 2023 Cobre Panamá operation. (Image by Minera Panama.) The Panamanian unit of Canada’s First Quantum Minerals and a workers union at the company’s key copper mine in Panama said on Saturday they had reached an agreement, avoiding a planned strike over profit sharing and wage increases. The worker’s union, Utramipa, had threatened on Thursday to stop work on Saturday, alleging an impasse in negotiation with the directors of Minera Panama, the miner’s local unit. The company indicated on Friday that it was negotiating with workers. “Utramipa has reached an agreement where we have completed the negotiation processes with the Minera Panama company, we have complied with the corresponding deadlines,” union leader Michael Camacho said early Saturday in a video sent to Reuters. “There is no strike,” he stated later. Minera Panama confirmed in a Saturday statement that it had reached a deal with the workers.
“This agreement has been possible thanks to the collaboration, open dialogue and shared commitment to the collective wellbeing of our collaborators,” the statement said, without disclosing further details.
Cobre Panama, a huge open-pit copper project located in the Panama jungle, is First Quantum’s flagship operation, accounting for nearly half of its earnings. It also accounts for about 4% of Panama’s gross domestic product.
“We have successfully obtained all the clauses that were presented in this new project,” Camacho said.
He added that a salary increase had been agreed upon, but did not specify the amount, as well as several bonuses and improvements in retirement benefits.
Camacho said the union will provide more details about the agreement soon.
In a statement Thursday, the workers said there were disagreements over profit sharing and wage increases, and that the company was proposing an incentive instead of benefits, which would not be included in the collective bargaining agreement.
(Reporting by Valentine Hilaire and Raul Cortes; Translation by Jackie Botts; Editing by Marguerita Choy and Richard Chang)
Sunday, September 10, 2023
PANDEMIC DAY TRADERS
'Dumb Money' writers discuss their GameStop movie premiering at TIFF
Ben Cousins, BNN Bloomberg
The “meme stock” craze of 2021 is getting the Hollywood treatment.
In 2021, amateur investors bought mass shares of video game retailer GameStop and other struggling stocks, pitting them against the Wall Street executives who had shorted them. The GameStop stock then skyrocketed, leaving hedge fund managers losing billions while making headlines worldwide.
At their January 2021 peak, GameStop shares sold for more than US$81, compared to about $5 at the start of the month.
“This movie takes you on a wild ride,” Rebecca Angelo, one of the writers and executive producers of the movie, told BNN Bloomberg in a television interview. “You can walk out of the theatre realizing – as we all do – that there are big problems, terrible economic inequality all around us, but there is hope.”
Angelo wrote and produced the movie with Lauren Schuker Blum. The pair were coworkers at the Wall Street Journal at the time of the meme stock craze.
“We were baffled by what was happening, alarmed by it, intrigued and we immediately started researching it and saw it was much bigger than just about GameStop, it was actually about a movement happening,” Schuker Blum said in the interview.
The movie follows the recent releases of other business films “BlackBerry,” “Tetris” and “Air,” but while those movies took liberties with stories that inspired them, Angelo and Schuker Blum said they worked hard to get as many of the details as they could.
“It was really important for us to get the story right,” Schuker Blum said. “As reporters, we really wanted to get the facts out there, but also tell the story in a really entertaining way, because it is this wild ride.”
The film premieres at TIFF on Sept. 8, with a second public screening on Sept. 10.
Just eight exchanges handle 90% of all crypto trading volume
Vildana Hajric, Bloomberg News
Sep 8, 2023
In cryptocurrency markets, liquidity is uber-concentrated and has become more so over time, with nearly all of it found on just eight exchanges.
The top eight platforms account for nearly 92 per cent of depth — a measure of all bids and asks within 10 per cent of the mid price — and 90 per cent of volume, according to Kaiko. Binance, the largest crypto exchange, has this year accounted for more than 30 per cent of global market depth and more than 60 per cent of worldwide trade volumes. Besides Binance, the list also includes Coinbase, OKX and Huobi, among others. For context, there are hundreds of crypto exchanges, according to data from CoinGecko, though many of them see negligible or no trading at all.
“Highly concentrated crypto markets are both a good and bad thing. There is undoubtedly a shortage of liquidity, which when spread thin across many exchanges and trading pairs can exacerbate volatility and disrupt the price discovery process,” wrote Kaiko’s Dessislava Aubert and Clara Medalie in a note.
“Natural market forces have inevitably led to increasing concentration of this liquidity on a handful of platforms, which benefits the average trader. However, highly-concentrated crypto markets can create points of failure for the industry (ex: the FTX collapse),” they added.
Hoards of investors who collectively lost billions of dollars fled the market following last year’s implosion in prices and the downfall of a number of previously standout firms within the industry. Many crypto analysts have been paying close attention to measures of liquidity and trading volumes. That’s because moves, one way or the other, can be exaggerated when trading volumes are thinner.
In August, crypto trading volumes declined to the lowest level of the year, another sign of waning investor interest and a surprising one given the slew of positive news that the industry has seen come out, including exuberance over a potential Bitcoin ETF. The combined monthly volume of so-called spot and derivatives trading fell 11.5 per cent to $2.09 trillion, and was the second-lowest monthly total since October 2020, according to data compiled by CCData.
Volatility in crypto markets had remained subdued over the summer, with Bitcoin trading within a narrow range for months. However, the coin’s seven-day volatility this week hovered around three-month highs after it saw a couple of days of more outsize moves. Bitcoin on Friday traded little changed at around $25,800.
“The jumpy market over the last few weeks signals a changing volatility environment in BTC. This summer saw unusually low volatility, and while prices have yet to see any meaningful breakouts following the Aug. 17 push lower, climbing daily volatility reincentivizes participation from vol-thirsty day traders,” wrote K33’s Anders Helseth and Vetle Lunde in a note.
With assistance from Olga Kharif.
Virgin Galactic launches third commercial flight in step toward space tourism
Loren Grush, Bloomberg News
MOJAVE, CA - DECEMBER 7: Virgin Galactic unveils its new SpaceShipTwo spacecraft at the Mojave Spaceport on December 7, 2009 near Mojave, California. The eight-person VSS Enterprise, named after the Star Trek ship of the same name, is the first of a series of space-planes for customers of Virgin Galactic who have paid around $200,000 for a suborbital flight into space. British entrepreneur Sir Richard Branson is financing the spacecraft and aerospace designer Burt Rutan is building it through The Spaceship Company, a joint venture of Scaled Composites and Virgin Group. (Photo by David McNew/Getty Images) , Photographer: David McNew/Getty Images
Virgin Galactic Holdings Inc. said it launched its third commercial flight Friday morning, sending another crew of paying tourists to the edge of space and back.
The flight, called Galactic 03, marks the latest milestone for the venture, founded by billionaire Richard Branson, as it strives to reach a monthly cadence of launches for its commercial business.
The mission took off at 8:34 a.m. local time, the company said in a post on social media site X, with Virgin Galactic’s VMS Eve carrier aircraft hoisting the space plane VSS Unity into the sky from Spaceport America in New Mexico. Roughly 45 minutes later, Unity dropped from the aircraft and climbed to the edge of space, the company said in another X post.
On board this trip were two company pilots, three customers and one employee support astronaut, Virgin Galactic said.
After the flight, Virgin identified the passengers as U.S. real estate investor Ken Baxter, entrepreneur Tim Nash from South Africa and Adrian Reynard, an engineer from the United Kingdom. The company also released a short video of the astronauts floating while in space.
Galactic 03 comes a month after the company’s previous flight, which sent its first private tourists to space. Virgin Galactic kicked off commercial spaceflight operations in June with Galactic 01, a research mission for the Italian Air Force — a feat that came nearly two decades after the company’s founding.
Virgin Galactic’s shares closed down 2 per cent in New York. The stock is down 34 per cent so far this year.
“Glory Days”
The next generation of training platforms for U.S. mariners is being launched at Philly Shipyard.
(Article originally published in July/Aug 2023 edition.)
Maritime cadets have been trained on 50- and 60-year-old ships in the U.S. for too many decades. Well, that’s about to change as obsolete ships at the nation’s state maritime academies are being replaced with five next-generation training ships known as National Security Multi-Mission Vessels (NSMVs).
In June, Philly Shipyard launched the first of these vessels, the Empire State, for SUNY Maritime. Construction of the second and third vessels – for Massachusetts Maritime Academy (2024) and Maine Maritime Academy (2024) – is currently underway with Texas A&M Maritime Academy (2025) and California Maritime Academy (2026) ships next on the agenda.
The program is being sponsored and paid for by the U.S. Maritime Administration (MARAD) and marks a new beginning and a new era for U.S. maritime. It took me back to the old Bruce Springsteen hit, “Glory Days,” as a reminder of the good things to come. These vessels will pave the way for a renewal of the U.S.’s maritime leadership and train the next generation of merchant officers.
MARAD’s mission is to foster and promote the development of the U.S. maritime industry to meet the nation’s economic and security needs. Part of this mission entails educating the next generation of mariners through oversight of the U.S. Merchant Maritime Academy and the six state maritime academies. It’s also developed the Military to Mariner program, trade union-sponsored schools, community college certifications and high school maritime career path programs.
MARAD manages the Ready Reserve Force and the National Defense Reserve Fleet and has oversight of the deepwater Cargo Preference laws, which dictate that 50 percent of the gross tonnage of all civilian government-generated cargo – meaning cargoes procured, furnished, or financed by the U.S. – be transported on U.S.-flagged ships. And 10 percent of DOD cargo is also transported by U.S.-flagged operators.
MARAD also manages commercial Sealift programs that sustain the international trading fleet available to meet DOD requirements. A total of 72 ships are authorized stipends from the Maritime Security Program, Tanker Ship Program and Container Ship Program.
Today, only about two hundred U.S.-flagged deepwater vessels are available for cargo preference, which must also be in proximity and available to transport the cargo. Meanwhile, there are thirty-four U.S.-flagged companies registered with MARAD with vessels ranging from container ships and tankers to general cargo, ro-ro, tugs and barges that are available to support government mandates.
A Change in the Weather
The decline in the size of the U.S. deepwater fleet can be traced back to 1981 when Ronald Reagan arrived in Washington with a quixotic strategy for reducing the size and scope of the federal government.
The OMB pointed him in the direction of the maritime subsidies program, which had supported U.S. flag operators for nearly 50 years prior with a total of $10 billion. Meanwhile, the U.S. Navy had contracted out spending of over $90 billion during the next five years on building and repairing ships.
Reagan then appointed Harold E. Shear, a retired admiral, to head the Maritime Administration. Not only did Shear believe that maritime subsidies were both exorbitant and ineffective, he agreed with anti-subsidy factions that U.S.-flagged vessels could be built overseas for more than fifty percent less than in the states. He then went about gaining temporary approval for operators to build U.S. vessels overseas.
But it was clear to the U.S. maritime sector that the temporary provision had an ominous undercurrent, which put the Jones Act in the crosshairs of laissez-faire proponents. The shipyards, labor unions and operators could see the long game was to dismantle maritime laws. They either stood together or would have to deal separately with the consequences.
They stood together, and today more than 40,000 Jones Act vessels are considered the world's most modern fleet. U.S. cabotage also supports more than 650,000 American jobs and contributes about $1.5 billion in economic impact for the country. The civilian merchant fleet is considered a core strategic reserve of maritime power, which can transport logistical supplies for the military in wartime.
Evolution of the NSMV
The National Security Multi-Mission Vessel is a bold initiative of fixed-price construction, dating back to 2014 when Congress appropriated $5 million to develop a design. MARAD then hired Herbert Engineering to develop the design with various stakeholders including the maritime academies, Coast Guard and Navy, and the Federal Emergency Management Agency.
The NSMV ships are an off-the-shelf design with technologies currently employed on commercial ships. In 2017, then-Secretary of Transportation Elaine Chao allocated $300 million from DOT’s authorization budget to get the project underway. Senators Patty Murray (D-WA) and Susan Collins (R-ME) were influential in ensuring the training ship program was fully funded for all the ships.
Then-MARAD Administrator Rear Admiral Mark Buzby appointed Kevin Tokarski, Associate Administrator for Strategic Sealift, to develop a cross-agency team to implement congressional direction for a commercial entity to construct the ships. The Federal Acquisition Regulations (FAR) were in play for issuing a contract for the vessel construction manager (VCM), which mandated they had previously built Jones Act-compliant vessels.
TOTE Services met all the requirements and was selected through a competitive procurement to be the VCM for the project. TOTE was required to bid the complete design bids competitively, and Philly Shipyard was contracted to build the ships owned by MARAD.
While the “Build America” requirements were still valid and everyone would prefer the vessel be 100 percent-built with U.S. products, the reality is that many ship components are no longer made in this country. These ships are built with 98.5 percent of U.S. steel.
The Streets of Philadelphia
Philly Shipyard, formerly Aker Philadelphia Shipyard, is located on part of the original Philadelphia Naval Shipyard. Philadelphia’s Americana roots include Independence Hall and the birthplace of the U.S. Navy on the city’s Front Street Docks.
Philly Shipyard is listed on the Oslo Stock Exchange and is part of the Aker Group, controlled by Kjell Ingle Rokke. The yard was rebirthed in 1997 as a cooperation between Kvaerner ASA, the City of Philadelphia, the Commonwealth of Pennsylvania and the U.S. Government. The yard was reconstructed from the ground up with an investment of over $650 million. Twenty-six years later, it’s recognized as one of the world’s premier shipyards.
Steinar Norbovik is Philly’s President & CEO. He likes to say he’s been employed by the yard twice. First, as Vice President in 2003, but then transferred to the Norwegian Shipyard Vard Langsten. He returned to Philadelphia in 2013 as Senior Vice President of Operations and became President & CEO in 2014.
“We’re committed to seeking commercial and government newbuild projects while offering repairs and conversions on an opportunistic basis,” says Norbovik. “The five NSMVs are a government project, the first for Philly Shipyard, and the first government newbuilding in Philadelphia in almost fifty years.”
Since 2000, the shipyard’s stellar reputation for building deepwater Jones Act-compliant ships has become indisputable. The yard has recently received orders for a Subsea Rock Installation Vessel (SRIV) for Great Lakes Dredge & Dock and three new LNG-ready container ships for Matson. The Matson “green ships” will be delivered in 2026 and 2027.
Philly’s orderbook for the MARAD ships, Matson’s “green ships” and the Great Lakes SRIV totals $2 billion, the largest in the company’s 26-year history.
“The contracts are further evidence that our strategy of pivoting towards diversity with a mix of government and commercial contracts is working,” Norbovik notes. “We also ratified a new four-year collective bargaining agreement with the Philadelphia Metal Trades Council, which includes an apprenticeship program. There are 105 apprenticeships in our workforce with a total of 1,500 workers.”
So the NSMV program is in good hands, and the future of Jones Act shipping never looked brighter. The “Glory Days” are back. Kudos to MARAD, Tote and Philly Shipyard!
Tony Munoz is Publisher & Editor-in-Chief of The Maritime Executive.
NSMV specifications:
Length: 525 ft.
Beam: 88.7 ft.
Design draft: 21.4 ft.
Total berthing: 600 cadets, 100 officers, faculty & crew
Speed: 18 kts. full power- 12 kts. cruise
Deadweight: 8,487 MT
Diesel-electric drive with 4 main engines
Special note: We offer our gratitude to MARAD administrators Sean T. Connaughton (2006-2009), David T. Matsuda (2010-2014), Paul “Chip” Jaenichen (2014-2017) and Mark Buzby (2017-2021) for their commitment to the NSMV program. And John Graykowski and Jim Miller at Philly Shipyard, who made the impossible happen.
Libya Closes Four Major Oil Ports as Storm Daniel Sweeps Through
Libya has announced a temporary closure of four of its major oil ports as a precaution from Storm Daniel, which made a landfall in northeastern Libya on Sunday. The affected ports include Ras Lanuf, Zueitina, Brega and Es Sidra. The ports are expected to be closed for at least three days.
Meanwhile, the state-owned National Oil Corporation (NOC) has advised its affiliated companies to take utmost precaution and declare a state of maximum alert in preparation of the storm. “You are asked to monitor the ports and shipping movement and take measures to maintain the highest levels of safety…… and take measures to protect industrial units, production lines and storage units,” NOC said.
Last week, Storm Daniel swept across Greece, Bulgaria and Turkey leaving behind a trail of destruction. The storm has been hovering over the Mediterranean Sea for nearly a week, becoming a tropical-like depression. The system them moved south into Libya, making a landfall in Benghazi in the early hours of Sunday.
According to a report by the Arab Regional Weather Center, the presence of a storm with subtropical characteristics at the beginning of July/September in the central Mediterranean Sea is considered a rare event. This means that the subtropical system will be accompanied by warm temperatures, heavy rain, strong winds and waves turbulence. High-speed winds of 49- 74 mph and rains of as much as 50- 250 mm are expected, carrying immense risk of torrential floods. The sea will be rough on the Libyan coast from Ras Lanuf to Derna, with the possibility of limited coastal flooding, according to the Arab Weather Center.
