Monday, September 11, 2023

Utility Negligence In Maui Fires Sparks Nationwide Infrastructure Debate

  • Maui's wildfires, linked to utility negligence and aging power lines, highlight the deteriorating state of U.S. energy infrastructure.

  • Several U.S. states face challenges due to fragmented grid systems, outdated roads, bridges, and other critical infrastructure, exacerbated by climate change.

  • Despite governmental efforts like the $1.2 trillion Bipartisan Infrastructure Bill, experts estimate an investment gap of almost $2.6 trillion in the coming decade for infrastructure needs.

The recent wildfires in Maui, Hawaii demonstrated the importance of oversight and accountability when it comes to utility companies. These companies control vast amounts of power and must have a clear plan to respond to extreme weather events and other situations to prevent catastrophe. But what’s also been shown is the severe challenge of the ageing U.S. energy infrastructure. Wildfires and other catastrophic events, many caused by outdated infrastructure, have been an increasingly common occurrence in recent years, in states such as California and Texas. But how much comes down to utility companies and how much is down to public and private investment in a wide range of infrastructure?  

Following the recent devastating wildfires in Maui, the county is suing the Hawaiian Electric company for damages. During the fires, more than 100 people were killed, with the historic town of Lahaina being destroyed. Maui County claims that the downed power lines operated by the utility contributed to the fires. Hawaiian Electric has been accused of negligence for not shutting off power following a “red flag” weather warning by the National Weather Service, due to high winds from Hurricane Dora. 

In extreme weather events, high winds can knock down power lines, which can cause a fire during dry or drought conditions. This is a well-known risk, with over 32,000 wildfires started by transmission and distribution lines in the U.S. between 1992 and 2020, according to data from the U.S. Forest Service. But as well as demonstrating the responsibility of utility companies to create clear emergency strategies to follow, and states to establish better oversight measures, it also once again calls into question the dangers of ageing U.S. energy infrastructure. 

In states, such as California, Texas and Florida, that regularly experience severe weather, the ageing energy infrastructure has repeatedly been called into question following several failings in recent years. Many states simply do not have enough money to invest in the complete overhaul that is required to modernise their energy infrastructure. Further, the national grid system in the U.S. is highly fragmented, meaning that several states and regions run on completely different systems, under different utilities and different standards than others. This makes it extremely difficult to modernise infrastructure on a country-wide scale. 

And it doesn’t stop at the U.S. grid structure, with major concerns over ageing roads, bridges, dams, and electrical grids that keep the country running, which are decades old and often in dire need of repair. Infrastructure issues that were previously overlooked due to cost of a lack of awareness about the problem are now being seen as much more serious due to climate change. As weather events worldwide are worsening, with more widespread droughts, stronger storms and other unexpected events, people are putting increasing pressure on governments to address these issues. In turn, governments are putting mounting pressure on utility companies to ensure their safety strategies address the risks of a constantly changing world. 

For example, on 11 June this year, a tanker truck transporting gasoline on the I-95 in Philadelphia crashed and caught fire. The overpass above the crash, which carries around 160,000 vehicles a day, collapsed. This was blamed on either the heat of the flames or the explosion weakening the steel beams. However, some have questioned the fragility of the state’s ageing infrastructure and the need to invest in repairing key infrastructure to avoid future catastrophes. 

The U.S. government is aware of the rising concerns of poor infrastructure and has responded to these fears with the passing of the $1.2 trillion Bipartisan Infrastructure Bill and President Biden’s $2.3 trillion Build Back Better Act in 2021. These are aimed at developing and improving a wide range of critical U.S. infrastructure over the next decade. But public financing schemes will have to help attract a great deal more in private investment if the government hopes to successfully address the country’s failing infrastructure. 

A recent American Society of Civil Engineers assessment suggests there is an infrastructure investment gap of almost $2.6 trillion this decade, which could ultimately cost the U.S. $10 trillion in lost GDP by the end of 2039 if left unaddressed. This report covers sectors such as roads, electricity, airports, telecommunication, rail, water, and ports. Several analysts agree with this large funding gap. For example, McKinsey researchers suggest that $150 billion per year will be required between 2017 and 2030 to manage the country’s infrastructure needs. 

While the government’s new infrastructure laws go a long way to addressing the country’s ageing infrastructure problem – from transport to energy – there is still a long way to go to creating a cohesive plan and providing enough funding to ensure the critical infrastructure across the country is stable. The government will have to work with state powers, private companies, and utilities to ensure that improvements to U.S. infrastructure are being made in a less fragmented manner, to help establish a long-term plan for infrastructure across different sectors and states. 

By Felicity Bradstock for Oilprice.com

Guyana's Oil Boom Challenges OPEC+ Dominance

  • Guyana is expected to pump 1.2 million barrels of crude oil per day by 2027, surpassing many OPEC members, driven by Exxon's development of the Stabroek Block.

  • The high-quality light sweet crude oil, low breakeven prices, and successful exploration campaigns are attracting immense international interest in Guyana's oil sector.

  • Guyana's burgeoning oil production threatens to diminish OPEC Plus's influence, even as the cartel attempts to bring the country into its fold.

In a mere four years, Guyana went from first discovery to first oil, a rapid timeframe in an industry where it can take years to bring major energy projects online. The former British colony is now a major South American oil producer and global petroleum exporter. 

As a result, Guyana is benefiting from a tremendous economic windfall, with the country emerging as the world’s fastest-growing economy with 2022 gross domestic product (GDP) expanding by a stunning 62%. Industry consultancies and the government in Georgetown expect Guyana to be pumping 1.2 million barrels of crude oil per day by 2027, a figure greater than many OPEC members. Exxon’s commitment to developing the offshore 6.6-million-acre Stabroek Block indicates oil output could soar even higher. This has the potential to alter global energy market dynamics and challenge the price-making power of the OPEC Plus consortium.

Data from Guyana’s Ministry of Natural Resources shows the country of less than one million was lifting 351,600 barrels of oil per day at the end of July 2023. That production volume pumped by the Liza Destiny and Unity floating production storage and offloading vessels (FPSOs) is greater than their combined nameplate capacity of 340,000 barrels per day. Exxon, which holds a 45% stake in the Stabroek Block and is the operator, prioritized development of the block in late-2020 due to the Liza oilfield’s low breakeven price of $25 per barrel to $35 per barrel and high-quality light sweet crude oil. That saw the global energy supermajor ramp up activity with a large exploration drilling campaign that eventually yielded over 30 discoveries and more than 11 billion barrels of oil resources in the Stabroek Block.

Since the first oil discovery in the Stabroek Block was made in 2015, the Exxon-led consortium comprised of Hess, with a 30% interest, and CNOOC, holding a 25% stake, have approved six projects with the initial Liza phase-1 and 2 developments complete. There are four more operations being developed, which, on start-up, will significantly lift oil production to at least 1.2 million barrels per day, and perhaps more. These include the 220,000 barrel per day Payara operation, with the first oil slated for late 2023 and the 250,000 barrels per day Yellowtail project, which will commence operations in 2025. Earlier this year, the consortium approved the $12.7 billion 250,000 barrel-per-day Uaru project, which is expected to start production during 2026. In the latest news, Exxon and its partners in the prolific Stabroek Block announced they will proceed with the sixth development, the nearly $13 billion Whiptail project. This facility will consist of 72 wells with a nameplate production capacity of 250,000 barrels per day and commence operations in late 2027. 

Once all of those assets are operational, Exxon will have the capacity to lift just over 1.3 million barrels per day from the Stabroek Block. Each of those operations, like the functioning Liza Phase-1 and Phase-2 FPSOs, possesses the potential to pump more petroleum than the designated capacity. For this reason, oil output from the Stabroek Block could easily surpass the 1.3 million barrels expected. By 2027, Guyana’s petroleum output could very well surpass the forecast of 1.2 million barrels daily, which will see the country exceed the petroleum output of many OPEC members and become the world's 16th largest oil producer. 

The immense international interest in Guyana is being driven by a high exploration success rate and substantial offshore petroleum potential, which appears to exceed that estimated by the U.S. Geological Survey. The light sweet oil being discovered, with the Liza grade possessing an API gravity of 32 degrees and 0.58% sulfur content, is easier and cheaper for refineries to process into high-quality fuels further adding to offshore Guyana’s popularity. According to Rystad Energy, the carbon intensity of the oil being extracted is among some of the lowest globally. That is an extremely attractive attribute for foreign energy companies at a time when big oil is being pressured to sharply reduce emissions and become carbon neutral. Industry low breakeven prices, estimated by Rystad to average $28 per barrel, make operating in offshore Guyana highly profitable, especially with Brent selling for around $90 a barrel. 

For those reasons, Guyana’s rising petroleum output will not stop at 1.2 million or 1.3 million barrels per day, nor will discovered oil resources remain at around 11 billion barrels, both will expand at a solid clip. Earlier this year, Guyana’s Environmental Protection Agency greenlighted Exxon’s 35-well drilling campaign for the Stabroek Block, which will lead to further oil discoveries based on the supermajor’s success rate. Other foreign energy companies are investing in exploration assets and drilling activities in offshore Guyana. Georgetown’s pending first-time oil auction, which has been delayed multiple times since December 2022, captured considerable interest. Reportedly, Brazil’s national oil company Petrobras is eyeing investing in Guyana while French supermajor TotalEnergies, which made five commercial discoveries in nearby Block 58 offshore Suriname, has interests in Guyana’s Canje and Kanuku Blocks.

Guyana’s growing production and discovered oil resources will boost global supply at a crucial time, which will diminish the influence of the OPEC Plus cartel. In recognition of this and Guyana’s tremendous petroleum potential, OPEC is attempting to woo the former British colony to join its ranks. The cartel has invited representatives from Guyana to participate in its meetings in Europe but has yet to officially invite the country to join the cartel. Regardless, Georgetown appears reticent to join OPEC, especially with membership requiring Guyana to comply with various rules and regulations. Indeed, such a move would place limitations on Guyana’s oil industry by requiring compliance with OPEC Plus production quotas, a key reason regional neighbor Ecuador exited the cartel in 2020.

Guyana’s explosive arrival as a serious global oil producer, going from first discovery to first oil in a mere four years, will challenge OPEC’s dominance. When coupled with Brazil’s plans to become the world’s fourth largest producer, South America will reemerge as a major petroleum-producing region with the capability to challenge OPEC Plus’s role as a global price maker. These are all significant developments for the world’s largest oil consumer, the U.S., where Gulf Coast refineries, since 2019 when President Donald Trump ratcheted up sanctions against Venezuelan oil have been seeking alternate sources of supply. It will also blunt the Kingdom of Saudi Arabia’s at times antagonistic attitude toward the U.S., which is responsible for higher oil prices.

By Matthew Smith for Oilprice.com

China Races Ahead In Global Nuclear Power Development

  • China currently has 55 operational nuclear reactors and 21 more under construction, with aims to diversify and lead in clean energy sources.

  • The U.S. remains the highest generator of nuclear power with 93 operational reactors but has seen a decline in new projects since the mid-1980s.

  • China's success in the nuclear sector stems from government support, state financing, and a commitment to expanding nuclear capacity to 150 GW in the next 15 years

China is by far the world leader in nuclear reactor development at present. The country has been rapidly expanding its nuclear energy industry in line with its renewable energy development, to diversity and become a leader in several clean energy sources. In contrast, the development of new plants in the U.S. has gradually dwindled in recent decades, following public and government scepticism around nuclear safety and the high costs involved with new projects. So, will China achieve its aim of becoming the world leader in nuclear power in the long term? 

China currently has 55 nuclear reactors in operation, according to the International Atomic Energy Agency (IAEA). In 2021, nuclear power contributed 5.02 percent of the country’s energy mix, a figure that is expected to increase significantly with the opening of new facilities. During the 13th Five-Year Plan period, China rolled out several renewable energy projects, increasing the figure for non-fossil energy consumption to 15.9 percent. The 14th Five-Year Plan period is aimed at achieving peak carbon emissions by 2030 and net-zero emissions by 2060, meaning that China needs to rapidly develop a wide range of clean energy sources. 

In 2007, the Chinese government released the Medium and Long-Term Development Plan for Nuclear Power (2005-2020). Between 2017 and 2021, 16 nuclear units were put into commercial operation, with construction commencing on 13 new units. And by the end of 2021, the total installed capacity of nuclear power in China stood at 53.2 GW. In recent years, the Chinese government has focused on improving nuclear safety, through stronger regulations and safety standards. In addition, it has carried out a public attention and awareness campaign on nuclear power safety to ensure that its society is aware of its nuclear power programme and understands the emergency responses in place, to improve understanding and preparedness. 

China now has 21 new nuclear reactors under construction, which will have a capacity for generating more than 21 GW of electricity. This is two and a half times more than any other country’s nuclear construction pipeline. This is followed by India, which has 8 reactors currently under construction, expected to produce 6 GW of electricity, and Turkey with 4 reactors in development, aiming for 4.5 GW. 

In contrast, the U.S. currently has just one nuclear reactor under construction, the fourth reactor at the Vogtle power plant in Georgia. It is expected to generate 1 GW of electricity. However, there is evidence of the United States’ prior dominance in nuclear power, in its 93 existing operational nuclear reactors. The U.S. currently generates over 95 GW of electricity from nuclear sources, making it the highest generator of nuclear power worldwide. It is followed by France, with 56 operating nuclear reactors, capable of generating 61 GW of electricity. China comes in third worldwide when it comes to existing, operational nuclear reactors. 

Despite the high number of nuclear reactors currently in operation in the U.S., the lack of new projects in recent decades suggests its fall from dominance. Kenneth Luongo, president and founder of the Partnership for Global Security, believes this trend started in the mid-1980s, which has since made way for China as the “determined and pacing leader in global nuclear ambition at the moment.” China began developing its nuclear power as U.S. interest in the energy source was waning. Luongo explains, “China began building its first reactor in 1985, just as the U.S. nuclear build-out began a steep decline.” 

This represents a broader global trend. Approximately 70 percent of existing nuclear capacity is located in member states of the Organisation for Economic Cooperation and Development (OECD). However, almost 75 percent of the nuclear reactors that are currently under construction are in non-OECD countries, with half of those in China. The Asian giant is developing its nuclear energy capacity for several reasons, including the rapid growth of its population; to become competitive with other global leaders, and the aim of diversifying its energy mix to include more clean energy sources. Meanwhile, the U.S. has continued to rely heavily on its existing nuclear reactors as well as oil and gas, while developing renewable energy sources, such as wind and solar power. 

China has succeeded in overtaking other countries in nuclear power mainly thanks to the government’s dedication to rapidly expanding the sector. The country has long been pro-nuclear, but decades of planning have led to a projected scaling up of China’s nuclear capacity to 150 GW in the next 15 years. The government began by buying reactors from France the U.S. and Russia, with funds coming from its booming economy. But China has since begun to build its own reactors, with expertise coming from France. It is now able to develop multiple nuclear units at a lower cost thanks to state financing, a state-supported supply chain, and the government’s commitment to the development of nuclear power. 

By Felicity Bradstock for Oilprice.com

U$A 

IRA Subsidies Spark Green Energy Gold Rush In Conservative Regions

ALL CAPITALI$M IS STATE CAPITALI$M

  • Massive federal funding available for wind, solar, and EV initiatives are prompting conservative states to re-evaluate low-carbon energy projects.

  • West Virginia, traditionally coal-dependent, approved three renewable projects worth $400 million, driven by the prospect of job creation.

  • Most of the Inflation Reduction Act funding for renewable energy is being directed to conservative states, with 27 out of 30 projects located in these areas, valued at over $35 billion.

Massive federal subsidies for wind and solar energy are prompting conservative state governments to reconsider their opinions on low-carbon generation capacity or, indeed, consider having some.

With several hundred billion available in the form of subsidies for solar and wind farms, EV manufacturing, and batteries, among others, the Inflation Reduction Act passed by Congress last year has prompted a race among states for a piece of the subsidy pie.

It’s not just the money, either. West Virginia recently approved a titanium manufacturing project led by Berkshire Hathaway that will be powered by a solar+battery installation. It is one of three low-carbon energy projects the state has approved over the past year, the Wall Street Journal reported this week, worth $400 million in total.

This is a major breakthrough for a state so heavily dependent on coal it generates 90% of its electricity from it. The heart of coal country also, unsurprisingly, has a strong pro-coal lobby influencing energy decisions on the state government level. What did the trick, it appears, was the promise of new job creation.

The Berkshire factory, for instance, will employ some 200 people in its titanium production plant and another hundred in a facility for the production of utility-scale battery storage. That facility is being developed by a Berkshire partner in the West Virginia project, Michigan-based Our Next Energy.

Jobs are changing minds in conservative states, which also just so happen to have plenty of low-carbon resources, meaning a lot of sun and a lot of wind. Indeed, early this year, the Wall Street Journal reported that most of the IRA money for low-carbon energy was going into red states. Driven by the promise of generous subsidies, companies have also made pledges worth tens of billions for these states.

As of January, the report said, out of 30 low-carbon and other transition-related projects that had a location included in the description, 27 were in red states. Together, these 27 projects were worth over $35 billion.

Of course, investment pledges are not actual investments, and yet the abundant federal government support will likely motivate a lot of companies to really spend the promised sums. As for job creation, there seems to be a widespread misconception that everyone involved in every wind or solar project gets a job for life. This is not the case.

The number of people directly involved on a permanent basis in transition activities, that is, wind and solar power, battery and EV production, and green hydrogen, tends to be smaller than politicians like to boast. Scotland is a case in point: its government promised a few years ago offshore wind would create as many as 28,000 new jobs. The number of full-time jobs that industry actually created, as of 2021, was 3,100.

This has sparked an effort to define what a green job actually means. Perhaps this effort will spread to the United States as well as job creation as approving low-carbon generation and other transition-related projects gains popularity in the states with the most abundant wind, solar, and land resources.

While it becomes clear which of the prospective transition investors was indeed serious about it, the race between states will continue—there is still a lot of money to be distributed—and it will cost them money.

The FT wrote about that in May, saying states were competing to offer the best incentives to prospective transition investors looking for a place to set up shop and benefit from the IRA subsidy package. Some have questioned the outcome of such an approach to attracting investment, noting there is no certainty such incentives are necessary at all and what they would realistically achieve in terms of returns.

One executive at an accountability research company described the situation graphically: “The states are free to overspend and rip each other’s guts out and compete, race to the bottom, and waste gazillions of dollars,” Greg LeRoy from Good Jobs First told the FT.

By Irina Slav for Oilprice.com 

 Africa’s Energy Transition Plan Is Nonsense

  • The International Energy Agency this week reminded the world that Africa is ripe for a wind and solar revolution.

  • Africa currently accounts for a measly 4% of global carbon dioxide emissions.

  • High levels of debt in African countries were recently noted as one of the obstacles to the continent's full utilization of low-carbon resources.

Africa is a treasure trove of metals and minerals and home to some of the world's best natural resources, including wind and solar.

Africa currently accounts for a measly 4% of global carbon dioxide emissions. A variety of organizations want it to stay that way.

From the International Energy Agency, the IMF, and the World Bank to private businesses and nonprofits, transition advocates want Africa to go straight from pre-industrial to net-zero, skipping the oil and gas era.

That would be quite a feat.

The reason Africa has the lowest emission footprint is that hundreds of millions of people on the continent has no access to electricity. The reason they don't have access to electricity is that there is no power generation capacity or transmission infrastructure and not enough cheap coal and gas to power it.

Of course, there is also the case of South Africa, where years of mismanagement left the country in the dark last year, or Nigeria, which can only generate enough electricity for not even half its population despite its significant oil wealth. On the whole, however, Africans are short on power because they don't have enough capacity to generate it. And nowhere near enough money to build it.

It is in this context that the International Energy Agency this week reminded the world that Africa is ripe for a wind and solar revolution, at least when it comes to resources. The IEA also noted, however, that Africa is only getting 2% of global investments in low-carbon energy, just as it gets a tiny sliver of overall energy investments.

This, the IEA said, needs to change if Africa is to exploit these massive resources for low-carbon energy, as it should, according to the agency. Because, right now, "The cost of capital for utility-scale clean energy projects on the continent is at least two to three times higher than in advanced economies. This prevents developers from pursuing commercially viable projects that can deliver affordable energy solutions."

This much higher cost of capital has to do with real and perceived risks that are holding investors back. These risks have a lot to do with the uncertainty of returns on these hypothetical investments, given the high poverty levels across most of Africa.

Low-carbon energy may be good for the environment, but it also costs money. Building the infrastructure necessary to bring this energy to people also costs money. A lot of it. There are many in Africa who cannot afford such energy when the cost is calculated on a basis that is more realistic than the highly popular levelized cost of electricity.

On that more realistic basis, wind and solar require dispatchable backup generation capacity as well. Or massive batteries. Neither option comes free. And African governments are up to their necks in debt already.

Indeed, the high levels of debt in African countries were recently noted as one of the obstacles to the continent's full utilization of low-carbon resources. And it's a big one.

"At the moment, we've got developing countries paying way more in debt repayments back to richer countries than they ever hope to receive in climate finance or support," Tom Mitchell, director of sustainability think tank the International Institute for Environment and Development, said at an event in the UK, as quoted by Reuters.

Despite this state of affairs, those same richer countries, through their lending institutions, have essentially told African governments that they will not receive any financial support for developing their oil and gas resources. In other words, either invest in wind and solar—while repaying your debts—or sink because you can't finance oil and gas exploration.

Many African leaders have called out the hypocrisy: Europe and North America reaped the full range of benefits from hydrocarbons for decades, and now they want to deny Africa those same benefits.

There are now oil and gas activists in Africa who advocate for more, not less, hydrocarbons for African countries because of all the benefits they provide, from automation of many tasks that are now done manually to fertilizers, which would greatly improve crop yields like they do in Europe and North America.

There are also the international oil companies, which, despite their appearance as an industry in its own transition, somehow still manage to do some oil and gas exploration. Including in Africa.

TotalEnergies started drilling at the Tilenga oil project in Uganda in August, even though it is subjected to considerable pressure from environmentalists, including through a couple of lawsuits

Namibia is shaping up as the next Guyana, with discoveries made by Shell and TotalEnergies suggesting reserves of at least 11 billion barrels of oil equivalent.

Earlier this year, an Australian company, Invictus Energy, drilled a wildcat in Zimbabwe that confirmed the presence of light oil and condensate.

Oil and gas exploration in Africa is progressing without much media noise but with what appears to be strong government support, even as some of these governments are also 100% pro-transition.

By Irina Slav for Oilprice.com

De Beers eyes five-year agreement as 

diamond strike looms

Compiled by Karl Gernetzky

The De Beers Venetia mine in Limpopo.
Supplied


Anglo American subsidiary De Beers said on Friday it is looking to secure a five-year wage deal with the National Union of Mineworkers (NUM), with that union considering an offer amid the looming threat of a strike at its Venetia Mine and its sorting and sales business.

"We believe that a five-year agreement will provide a measure of certainty, particularly against the backdrop of the transition from open pit mining to the underground mine at Venetia Mine and the recent move of our sorting and valuation business from Kimberley to Johannesburg," it said in a statement.

"As the diamond industry, we are also faced with challenging market conditions that are continuing to have an adverse impact on our business."

NUM said on Tuesday it had begun a mobilisation process among its 1 500 members, with the union demanding a wage increase of 9%, while De Beers was offering 6%. After four months of talks, a dispute has been declared with the Commission for Conciliation, Mediation and Arbitration, the union said, adding that members would not accept less than 9%, and had progressively moved down from a demand of 25%.

The union said that food, fuel and general inflation had skyrocketed, leaving no room for "peanuts," and that it was prepared for the "mother of all strikes."

De Beers said on Friday the only outstanding issue is wages, with the union considering its offer after a meeting under the auspices of the CCMA on Wednesday. "We are confident that through continued engagement with the union and our employees we will reach a sustainable settlement with the NUM," it said. SA labour laws require a dispute to be referred to the CCMA, which starts a 30-day conciliation process, although this can be extended with the consent of the parties.

De Beers has had reached the bottom of its open pit at Venetia in Limpopo in 2022, and has since transitioned to underground mining, delivering its first stones in July.

READ | De Beers' new mine in Limpopo delivers first diamonds 

Venetia continues to process lower-grade surface stockpiles, which will result in temporary lower production levels as it transitions to underground operations, where first production was recently achieved. It will ramp-up over the next few years as development continues, the mining group said in its half-year results to end-June.

RUSSIAN MINER
Nornickel says cash flow not yet stable enough to resume dividends

Reuters | September 8, 2023 | 

Vladimir Potanin. (Image: The Kremlin.)

Russian metals and mining giant Norilsk Nickel is not yet generating free cash flow on a stable enough basis to resume dividend payments, but does not rule out doing so in future, head of investor relations Mikhail Borovikov told reporters on Thursday.


Nornickel this year failed to pay dividends on its 2022 results for the first time in 14 years, citing “negative geopolitics” without explicitly mentioning the Ukraine conflict and the Western economic sanctions it has triggered.

Borovikov said the decision on dividends rested with the two key shareholders.

“What could influence [their decision] is, of course, the company’s ability to generate free cash flow without jeopardising capital investment, jeopardising debt, jeopardising normal operations,” he said.

“Now the situation with cash flow is improving, but we would not say that all the risks are behind us … When we understand that we have reached a normal cash flow track, then we would, of course, like to use cash flow as a basis for the payment of dividends.”

Free cash flow increased by 28% in the first half, year-on-year, to $1.3 billion. In all of 2022, it decreased by 25% to $1.1 billion.

Dividends are a sensitive subject for Nornickel.

Disagreements on the issue have for years been the main reason for on-and-off rows between its powerful main owners, chief executive and largest shareholder Vladimir Potanin and aluminum producer Rusal.


A decade-old shareholder agreement protecting dividend payouts expired at the end of 2022, again putting them at odds.

Borovikov said it was a sound idea to buy back shares from non-residents, following the example of Russia’s Magnit, but that Nornickel was not considering the issue since it required the diversion of significant funds.

It is, however, seriously considering a share split to boost market liquidity, Borovikov said.

Nornickel’s shares were trading down around 1.8% at 1647 GMT in Moscow at 16,592 roubles, off an earlier low at 16,376.

(By Anastasia Lyrchikova and Kevin Liffey; Editing by David Evans and Alexandra Hudson)

Receiver puts abandoned Minto mine in the Yukon up for sale

Receiver PriceWaterhouseCoopers officially started the sale process last week

An aerial view of a mine, with tailings ponds, roads and buildings visible.
A file photo of the Minto mine. Receiver PriceWaterhouseCoopers has put the since-abandoned property up for sale. (Capstone Mining Corp.)

The abandoned Minto mine in central Yukon is officially up for sale. 

Receiver PriceWaterhouseCoopers, which has been managing the Minto Metal Corp.'s affairs since July, issued a sales and investment solicitation document on its website for the property last week.

Potential buyers can place bids for either the entire Minto property — located approximately 240 kilometres north of Whitehorse, near Pelly Crossing — or pieces of it, with initial bids accepted until Oct. 6. 

A timeline in the sale document states binding bids will be due Oct. 30, with an assessment period to follow. The firm hopes to select a successful bid — assuming there are any — before Dec. 31 and to have it approved by a judge within 60 days, anticipated to be Jan. 26, 2024. 

The launch of the sale process is the latest in the growing saga of the most recently-abandoned mine in the territory; Minto Metal Corp. suddenly ceased operations at the site in May, leaving dozens of contractors, workers and Selkirk First Nation, on whose territory the mine sits, in the lurch. 

Dozens of lawsuits and liens have been filed in the aftermath. The most recent figures from PriceWaterhouseCoopers say that while Minto has $75 million in assets, it also owes approximately $64 million-and-counting to a variety of creditors. 

That debt, along with other costs such as paying outstanding financial security for the property — Minto Metals owed the Yukon government an additional $18 million before its collapse — and getting the mine up and running again, may make Minto a hard sell, Yukon Conservation Society mining analyst Lewis Rifkind said in an interview. 

"There's a lot of money that's going to be required just to financially stabilize the site, let alone, you know, once you put boots on the ground, the environmental work [and] all that sort of stuff," he said. 

"Was it Mark Twain that said, you know, a mine is nothing more than a hole in the ground owned by a liar? Unfortunately we, as in Yukoners and the government, are the owners of this particular hole so it'll be interesting to see if anyone actually does put a bid in for the entire project."

"If someone buys this mine," he added, "maybe we can sell them the bridge to Riverdale."

The Yukon government, in the meantime, continues to pay for water treatment and other environmental protection activities at the site. 

No one from the territorial Department of Energy, Mines and Resources was available for an interview. In an email, department spokesperson John Thompson wrote that the government has spent $5.92 million to date on contracts at the Minto mine since the site was abandoned in May, including for site operation, water treatment and technical support. 

In total, the Yukon government has signed $20.5 million-worth of contracts for work that may be needed at the site up to the end of May 2024, though Thompson noted that there was "no certainty at this point that we would spend the entire amount."

"Our focus at Minto mine is on ensuring the environment is protected and on beginning reclamation and closure activities," he wrote.

"Water management continues to be a major focus at the site and will continue to be through all stages of reclamation and closure. We're also working on the plan to reclaim the underground workings, one of the early and priority tasks associated with reclamation and closure."

Before its collapse, Minto Metals had furnished just more than $75 million in financial security; Thompson said the Yukon government intends to access that money to cover its costs.  

Orano halts uranium treatment in Niger because of sanctions on junta

Bloomberg News | September 8, 2023 | 

Credit: Orano SA

French nuclear group Orano SA is halting the processing of uranium ore at one of its facilities in Niger because international sanctions against the military junta are hampering logistics.


The crisis that’s affecting the African nation, which has about 5% of the world’s uranium, may potentially tighten supplies of the material used to fuel nuclear reactors in the US, China and Europe. That may force utilities to become more dependent on other producers such as Kazakhstan, Canada and Australia.

The maintenance of Orano’s uranium-treatment plant in Niger — initially planned to start early next year — has been moved forward amid dwindling stockpiles of the chemicals needed for processing, the company said in a statement Friday.

Operations continue at the group’s Somair mine, which is 37% owned by the Niger government, the company said.

Orano usually exports uranium concentrate to Benin, where it’s either shipped back to France or to Canada. There typically are about 4-6 shipments a year.

To ensure supply for its customers, Orano is also sourcing material from mines in Canada and Kazakhstan where it has stakes, the company said. There’s no emergency in the short term, it said.

Ties between Niger and France, its former colonial ruler, have frayed since soldiers seized control of the country in July and ousted President Mohamed Bazoum. French President Emmanuel Macron has strongly condemned the coup, saying it poses a threat to the entire region.

(By Francois de Beaupuy)

G20 GREENWASHING
India forges global biofuel alliance in push toward net-zero aim

Bloomberg News | September 9, 2023 | 

India’s Prime Minister Narendra Modi. (Image by COP26, Flickr.)

India launched a global alliance for promoting biofuels adoption at the Group of 20 leaders meeting in New Delhi, aimed at reducing emissions in the transportation and industrial sectors.


The Global Biofuel Alliance, which include top producers Brazil and the US, has been one of India’s key priorities for the G-20 presidency. Indian Prime Minister Narendra Modi called on G-20 members to collaborate on the fuel-blending initiative as the South Asian nation aspires to increase ethanol mix in gasoline to as much as 20%.

This is the second major global initiative on green energy pioneered by the country after the launch of International Solar Alliance in 2015 and is expected to boost Modi’s credentials as global climate leader. During Modi’s nine-year tenure, India added renewable capacity at a record pace, but still pushes back on coal phase-down demands, citing its growing energy needs.

The global alliance will help build the worldwide market in biofuel trade, and fuels obtained from biomass could serve multiple purposes for India. India wants to tap into Brazil’s experience in running vehicles on blended ethanol, and it can use pellets made of crop waste to displace a certain amount of coal in its power plants.

Turning biomass into fuel will help India use up the thousands of tons of crop waste that farmers are currently forced to burn every harvest season, enveloping much of northern India in smog for weeks.

Adding ethanol to conventional fuels reduces the need for crude oil, the biggest component of India’s import bill. Refiners, such as Indian Oil and Bharat Petroleum Corp. currently mix 12% ethanol in gasoline, and the government plans to raise the target to 20% blending by 2025. Federal Oil Minister Hardeep Puri, who during his time as a diplomat served as India’s ambassador to Brazil, is leading the push.

Globally, the use of biofuels reduced the consumption of 2 million barrels of oil equivalent per day in 2022, equivalent to 4% of the global transport sector oil demand, according to the International Energy Agency. Local production in emerging markets, mainly Brazil, India and Indonesia, avoided $38 billion of import costs, the agency said.

(By Rakesh Sharma and Simone Iglesias, with assistance from Debjit Chakraborty)