Pemex Gives Processing Forecast for Newest Oil Refinery

By Julianne Geiger - Jan 04, 2024, 

Mexico’s state-run oil company Pemex said on Thursday that its newest refinery—with a nameplate processing capacity of 340,000 bpd, will process 243,000 bpd this year before achieving full capacity in 2025.

The country’s newest refinery has been hailed as one of Mexico’s President Andres Manuel Lopez Obrador’s critical achievements on the country’s quest to sever the yoke of imported fuels—a large chunk of which comes from the United States.

According to a presentation given by Pemex CEO Octavio Romero, the Olmeca refinery is expected to be producing 274,000 bpd of diesel, gasoline, and jet fuel by September, when President Obrador is set to leave office—a feat that will help solidify his legacy.

The presentation also said, however, that by year’s end, fuel output would dip to 208,000 bpd. For 2024, the new Olmeca refinery will increase Pemex’s overall processing to 1.5 million bpd—a sizeable 40% increase over 2023 processing rates.

The Pemex presentation estimated that the company’s petroleum liquids production averaged 1.88 million bpd last year and that its proven oil reserves will stay at 7.4 billion boe in 2024.

The Olmeca refinery—also referred to as Dos Bocas refinery, is located in the state of Tabasco and originally had an estimated cost of $8 billion. But billions in cost overruns and delays saw the price tag reach upwards of $12 billion by the time the project was complete. The refinery was originally scheduled to begin in mid-2022, but eventually delayed into late 2023.

Olmeca has a total capacity of processing 340,000 bpd of crude oil and a production capacity of 170,000 bpd of gasoline and 120,000 bpd of diesel. 

U.S. energy exports to Mexico totaled $55.8 billion in 2022, according to the EIA.

 

U.S. Refiner Phillips 66 Discussing Asset Sale

By Julianne Geiger - Jan 04, 2024

Houston-based petroleum refinery Phillips 66 (NYSE:PSX) is actively discussing the sale of some of its assets, according to a Thursday statement made by the company's CEO.

The plan to sell $3 billion of its non-core assets this year was hatched last year when the company said it would look to cut costs and assets in order to boost returns.

According to Mark Lashier, there is no fixed timeline as to when a sale of these assets may occur. "We don't have (a) sense of urgency... It's really going to be a function of whether someone puts a greater value on these assets than we do," Lashier said on Thursday.

2023 was an unkind year for the U.S.-based refiner, seeing its profits plunge by 46% in the second quarter of the year, with adjusted earnings of just $1.8 billion—compared to $3.3 billion in Q2 2022. Its Q3 adjusted earnings were higher at $2.1 billion, but still failed to live up to analyst expectations.

Its refinery utilization, however, was the highest in years at 95%.

Then, in November, activist investor Elliott Investment Management snapped up a $1 billion stake in the refiner, citing the company's underperformance. The group submitted a letter to Phillips 66 outlining the ways in which it could do better and chastised the company for letting operating expenses get too high.

But even before Elliot Investment Management bought shares in the refiner, Phillips 66 selected $3 billion in non-core assets for a possible 2024 sale. At the time, Lashier said the company had indeed identified which assets would go on the chopping block, but failed to disclose them. Lashier said the refiner wasn’t “in any rush” and that for now, the assets provided the refinery “good value”.

The Phillps 66 share price rose 34.63% over the past year to $135.55

New Rules for EVs: Only 13 Models Eligible for U.S. for $7,500 Tax Credit

By ZeroHedge - 

Jan 04, 2024


Just as EV demand appeared to be nearing super-saturation, incentives for buying electric vehicles are starting to fall by the wayside.

There are now just 13 EV models that are eligible for a consumer tax credit of as much as $7,500 thanks to new Biden administration rules that took effect on January 1, according to Bloomberg.

Previously, the number had stood closer to 24 models, but for the new year the tax credit excludes vehicles that use battery components manufactured by Chinese companies, the report says.

“Automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States,” said Treasury Department spokeswoman Ashley Schapitl.

She also commented that some companies were still in the process of submitted data to see if they qualify for the credit.



Last month, the Treasury Department announced rules targeting battery components made by companies under Chinese jurisdiction or with at least 25% Chinese government ownership, the report says.

These regulations, expanding in 2025 to include suppliers of essential battery materials like nickel and lithium, are part of President Joe Biden's climate law, influenced by Senator Joe Manchin.

Manchin, pivotal in passing the Inflation Reduction Act, aimed to address concerns over U.S. taxpayer money subsidizing Chinese-made batteries.

As Bloomberg notes, depending on the manufacturing location of battery components and parts, vehicles may qualify for a $7,500 or $3,750 credit.

Eligible models for the full or partial credit include Tesla's Model Y, Rivian’s R1T, Stellantis's Jeep Wrangler 4xe, and Ford's F-150 Lightning. However, Tesla's Cybertruck, certain Model 3 versions, Nissan’s Leaf, Ford’s E-Transit van, and GM’s electric Blazer and Silverado lost credit access.

By Zerohedge.com

 

Iran Withholds Oil Deliveries As It Seeks Higher Prices from China

By Tsvetana Paraskova - Jan 05, 2024

Iran seeks higher prices for its crude going to its top customer, China, and has been withholding some supply, Reuters reported on Friday, citing trading and refinery sources.

China has continued to buy cheaper crude from Iran even after the U.S. re-imposed sanctions on Iranian oil in 2018.

But now Iran is reportedly seeking narrower discounts to Brent for its crude supply to China, which has led to a “stalemate” between Iran and its Chinese customers.

Iran has sought discounts of $5 to $6 per barrel for its light crude for December and January compared to Dated Brent, trading sources who handle the crude have told Reuters. The deals for December and January were agreed in November at prices of around $10 per barrel discounts to Brent.

It’s not clear if the Chinese refiners would accept the new price, a trading executive based in China told Reuters.

At least one independent refiner based in Shandong has accepted the higher prices and bought a cargo at the narrower discounts in late December, trading sources told Reuters.

“The buyers are still struggling to find a solution as the new prices are too high,” a Chinese buyer based in Shandong.

“But since they have limited choices and the Iranian side is very tough, the room for price negotiations is difficult and is not favouring Chinese buyers.”

Higher prices for Iranian crude would squeeze profit margins for the independent refiners who haven’t shied away from buying supply from Iran after the U.S. sanctions were re-imposed. Moreover, the increase in Iran’s crude prices for Chinese customers could also reduce the availability of cheap crude supply for the world’s largest crude oil importer, which is saving billions of U.S. dollars by purchasing sanctioned oil.  

China was estimated to have saved $10 billion on crude oil imports between January and September 2023 as it imported record volumes of cheaper oil from Russia, Iran, and Venezuela—all three under U.S. and Western sanctions, a Reuters analysis showed last year.  

India-Guyana Ink Landmark Oil & Gas Cooperation Deal

By Tsvetana Paraskova - Jan 05, 2024



The world’s third-largest oil importer, India, has approved the signing of a cooperation agreement with the world’s newest oil exporter, Guyana, covering the entire value chain from crude supply to exploration offshore the South American country.

India’s government approved on Friday the signing of a Memorandum of Understanding (MoU) between India’s Ministry of Petroleum & Natural Gas and the Ministry of Natural Resources of Guyana on cooperation in the hydrocarbon sector.

“The proposed MoU covers the complete value chain of hydrocarbon sector including sourcing of crude oil from Guyana, participation of Indian companies in Exploration and Production (E&P) sector of Guyana,” among others, the Indian government said in a statement.

The agreement will be for an initial period of five years and will be renewed automatically if the two countries don’t object to its renewal.

The deal with Guyana will help India diversify its sources of crude oil, boosting India’s energy and supply security, said the cabinet of India, which imports around 85% of all the crude oil it consumes and which has been seeking to diversify supply and procure crude at the cheapest possible price.

Guyana, for its part, has a huge potential to boost its oil production and exports this decade.

It became the newest oil-producing country in the world in 2019 after ExxonMobil and its partner Hess Corp began production from the Stabroek block, where the companies have found more than 11 billion barrels of oil equivalent to date.

Currently, Guyana produces around 380,000 barrels per day (bpd) of crude oil, all from Exxon-operated wells. And it looks to triple that production and pump 1.2 million bpd by 2027.

Guyana, together with the United States and Brazil, is expected to lead oil production growth and capacity expansions from producers outside OPEC and the OPEC+ alliance this decade, the International Energy Agency (IEA) said in its annual Oil 2023 report with projections to 2028.


India Slashes Financial Support for State Oil Refiners' Green Goals

By Tsvetana Paraskova - Jan 05, 2024



In a bid to reduce government deficit, India plans to halve the equity support to three state-held oil refiners to help them fund measures to meet their net-zero operations targets, Reuters reported exclusively on Friday, quoting industry and government sources.

The three state-owned refiners, Indian Oil Corp, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, were set to receive the equivalent of $3.6 billion, or 300 billion Indian rupees, in equity support for the fiscal year 2023/2024 to reach their goals to have net-zero emissions from operations in the 2040s.

But now, facing rising fiscal deficit, India will allocate half of the planned support, $1.8 billion, or 150 billion rupees, for the current fiscal year ending March 31, 2024, according to Reuters’ sources.

In the middle of last year, India’s government asked some of the biggest state oil refiners to launch rights issues with which the authorities plan to help fund the firms’ net-zero and energy transition goals.

The government will be seeking equity in Indian Oil Corp and Bharat Petroleum Corporation Limited (BPCL) via rights issues, and has asked Hindustan Petroleum Corporation Limited (HPCL) to issue preferential shares to the government. In exchange for the equity in the refiners, India plans to support their goals to achieve net-zero operational emissions in the 2040s.

Indian Oil, BPCL, and HPCL are looking to invest a combined up to $48.8 billion (4 trillion Indian rupees) to reach their net zero-emissions goals by 2040.

Indian Oil Corp, the country’s top refiner and fuel retailer, said in 2023 it would consolidate all its green energy businesses into a wholly-owned unit with the purpose of boosting its clean energy division.

India, the world’s third-largest carbon emitter after China and the U.S., has a net-zero target set for 2070, twenty years later than the 2050 target of most developed economies including the U.S.

By Tsvetana Paraskova for Oilprice.com

 

Canada's Oil Sands Set for Expansion as Pipeline Nears Completion

By Tsvetana Paraskova - Jan 06, 2024, 

• Canadian Natural Resources and Cenovus Energy plan to increase oil production in anticipation of the pipeline's completion.
• 
  
• The Trans Mountain Expansion project, bought by the Canadian government in 2018, has faced cost increases and delays, but construction is now over 97.8% complete.
• 
  
• The expanded pipeline is expected to triple its capacity to 890,000 bpd, significantly increasing Alberta's oil export capabilities and narrowing the Western Canadian Select crude's discount to WTI.

Canada’s oil producers plan higher output for this year and expect to earn more from their heavy crude once the long-delayed expanded Trans Mountain Pipeline enters into service.  

The start date of the Trans Mountain Pipeline Expansion (TMX) is the key uncertainty this year for the Canadian oil industry, the benchmark Canadian heavy oil prices, and the revenues for the oil-producing province of Alberta. 

Despite this uncertainty about the additional export capacity from Alberta’s oil sands, some of the biggest Canadian producers plan to boost production in the short to medium term.  

The top liquids producer, Canadian Natural Resources, for example, announced last month its 2024 capital budget that targets exit 2024 production levels of around 1.455 million barrels of oil equivalent per day (boepd), up by around 40,000 boepd from the targeted exit 2023 production levels. The company also targets 2025 average annual production growth of approximately 4% to 5% compared to the 2024 average annual production levels.  

“In the second half of the year, assuming commodities do not have material price declines in 2024, the program will shift to being weighted towards shorter cycle development opportunities to better align with incremental market egress, allowing us to maximize value for our shareholders,” Canadian Natural Resources said in December. 

Cenovus Energy plans to invest capital this year primarily for progressing the West White Rose project “as well as incrementally growing production at the Foster Creek, Christina Lake and Sunrise oil sands facilities.” 

Analysts expect tie-backs to existing oil sands facilities or expansion of operational sites by some of the biggest Canadian oil firms to boost Canada’s crude oil production by 8% by 2025. 

Key to that expanded production would be the progress of TMX, the project that the Federal Government of Canada bought from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.37 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion) and could continue to increase. 

The expansion project has also faced continuous delays over the years. The latest roadblock emerged in December when the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions. Trans Mountain is now waiting to receive the reasons for the decision, the corporation said, adding that construction on the project was more than 97.8% complete. 

Trans Mountain has previously said that it plans on achieving first oil on the expanded pipeline to the Westridge Marine Terminal by the end of the first quarter of 2024.  

This week, the company said it plans to start line fill in March or May, depending on the diameter of pipe it uses and assuming there would be no other setbacks.  

The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.  

The sooner the expansion project is up and running, the higher Alberta’s takeaway capacity will be, narrowing the discount of the Western Canadian Select (WCS) crude to the U.S. benchmark WTI. 

“Additional pipeline capacity to move oil out of the province next year is expected to support Alberta oil prices and narrow the discount between WTI and the Western Canadian Select (WCS). The completion of TMX in the second half of 2024 will help bring the differential to around US$14-15/bbl in the next two fiscal years,” Alberta’s government said in its 2023-24 Mid-year Fiscal Update and Economic Statement in November.

“Producers are expected to continue drilling at a solid pace ahead of TMX coming online in the second half of 2024,” the provincial government said. 

“Increased takeaway capacity will help propel Alberta’s crude oil production from nearly 3.8 million barrels per day (bpd) in 2023 to over four million barrels bpd by 2026.”     

Canada's Energy and Mining Sectors Poised for M&A Surge in 2024

By Tsvetana Paraskova - Jan 04, 2024

The energy and mining sectors are set to drive a rebound in Canada’s mergers and acquisitions (M&A) activity in 2024 after a lackluster 2023 in which rising interest rates hampered deal-making, banking industry executives told Reuters. 

Last year, deal-making activity in North America and globally dropped amid uncertainties about the economy. 

Canadian deal-making was off to the slowest start since the same period in 2020, PwC said in the middle of last year. 

“The slow start in 2020 was largely due to uncertainty around the pandemic, but in 2023 we’re seeing some financial uncertainty,” PwC’s experts wrote. 

Between January and May 2023, there were 1,218 deals in Canada with a total value of $85 billion, down by 17% in terms of volume compared to the same period in 2022, though up by 10% in terms of value because of some large deals.

In the whole of 2023, the value of all M&A deals in Canada fell by 27% year-on-year to $183.9 billion, according to LSEG data cited by Reuters. 

But deals in the energy and power industries reached a five-year high of $70.4 billion last year, a 56% jump from 2022, per the data. 

The top acquisition of 2023 was Glencore’s deal to buy the steelmaking coal business operations of Teck Resources in a $9-billion transaction. Other energy and resources deals included Baytex Energy acquiring Ranger Oil Corporation for US$2.2 billion including debt, Crescent Point Energy buying Hammerhead Energy, and ConocoPhillips buying the remaining 50% interest in Surmont from TotalEnergies for approximately US$2.7 billion in cash. 

In October, Tom Pavic, president of Sayer Energy Advisors, told The Canadian Press “I think you'll still see some more consolidation, for sure. I think there's still going to be some more transactions.” 

At the start of 2024, bankers and analysts continue to believe more energy deals are in the works in Canada. 

“I think one of the things we did see in 2023 was continued consolidation in the resource sectors, particularly energy,” Mike Boyd, head of Global M&A at CIBC, told Reuters. 

“My sense is that will likely continue as well, driven by the benefits of scale and technology to lower costs and the largest companies targeting the most attractive regions,” Boyd added.  

By Tsvetana Paraskova for Oilprice.com

Circular economy can greatly increase secondary supply of REE in next three decades – study

Staff Writer | January 5, 2024 | 

(Reference image by Thierry Ehrmann, Flickr.)

An international team of researchers has presented a novel integrated model that quantifies how circular economy strategies can reshape global supply chains of critical rare earth elements, such as neodymium, dysprosium and terbium.


The analysis was published in the journal Nature Geoscience and it shows that circular economy strategies can lead to an increase of 701 kt secondary supply and a decrease of 2,306 kt demand within the next three decades.

By looking at the specific impacts of circular economy strategies on the global REE supply and demand landscape, the group found a significant mismatch between in-ground stocks, supply and demand at specific region and element levels, with the mismatch in the supply of heavy rare earth elements being a key obstacle to achieving net-zero emission targets.

This framework aims to map the REE flows from in-ground to in-use stocks for global just transition. a, The roles of different circular economy strategies in the shift of in-ground minerals to in-use stocks. b, How the transition of REEs can assist the clean and just transition along with its spread from mining sites to final consumers across the world. (Image from Nature Geoscience).

The study highlights that substitution, reuse, and recycling will reshape the global REE supply chains. In detail, the implementation of these strategies will lead to an increase in REE supply from urban mines within the next three decades, which can significantly reduce the dependency on mining REE. Some regions like the EU might also achieve a closed-loop REE supply with the implementation of circular economy strategies.

“Our model considers both in-ground stocks and in-use stocks, as well as their quite dramatic geographic shift across ten regions from 2001 to 2050 under three widely accepted climate scenarios,” Oliver Heidrich, co-author of the study and a professor at Newcastle University, said in a media statement. “Our study does shed important light on the demands and supplies and provides a good understanding of the geopolitical dynamics, climate goals and how the natural resources could be used for political gains.”

In Heidrich’s view, the findings can serve as the scientific basis for international cooperation in promoting the circular economy strategies of REE for global and just low-carbon transitions.

At present, the natural reserves of rare earth elements are located in a limited number of countries (China, Vietnam, Brazil, the US, Russia and the Democratic Republic of the Congo); China controls over 90% of the global supply and close to 40% of reserves. Their availability is therefore subject to fluctuations in supply and prices caused by opposing geopolitical interests, with the consequent danger of conflicts.

From wasteland to wetland: Restoring Tennessee’s Copper Basin mining district

Amanda Stutt | January 5, 2024 | 

The Copperhill Mine and sulfuric acid factory in 1939. Courtesy of the Library of Congress.

Across the United States there are thousands of contaminated sites where hazardous waste was dumped or improperly managed – and many of those are on former mining sites where operations were ongoing in a dark industry heyday before environmental regulations were enacted. The Clean Water Act only passed into law in 1977.


Among them is The Copper Basin Mining District site in Tennessee, just north of the Georgia state line, which includes parts of the North Potato Creek and Davis Mill Creek watersheds and a 26-mile-long reach of the Ocoee River affected by mining activities.

From the late 1800s until the 1980s, mining, processing, and chemical manufacturing operations resulted in the erosion and transportation of tens of millions of cubic yards of soil and wastes to the Ocoee River, according to the Environmental Protection Agency (EPA).

The former Copper Hill mine is a legacy site where the environmental degradation from mining – including onsite smelting – began in 1845 with Tennessee Copper Company operations. The landscape wound up so denuded that by the time the mine closed in 1987 acid rain had washed all the vegetation away. For miles there were no trees, no wildlife – there was nothing.

In the 1970s, toxic waste dumps like Love Canal and Valley of the Drums revealed the risks to the environment and human health posed by contaminated sites. US Congress established the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 1980 in response. CERCLA is now informally called Superfund, and the Copper Basin Mining District is an EPA designated Superfund site.
Superfund reclamation

Current owner of the site, Copperhill Industries, partnered with land reclamation company Denali to restore the Basin from a barren site with no vegetation or topsoil and very poor water quality to a healthy ecosystem.

“They extracted very rich copper ores there – they had their own train system and they would bring it over to the smelters and smelt it in and it produced a lot of sulfuric acid in and a lot of acid rain. They dumped residuals on the ground – mountains of it. So what you ended up with was incredibly acidic soils,” Denali’s southeast operations manager Glenn Dowling told MINING.com in an interview.

“You could see Copper Hill from space – the astronauts, when they circled the earth, they knew where they were across the United States because they could see this bare dot in the southeast that was Copper Hill,” Dowling said. “They’re teaching kids this in school. I called it the man-made ecological disaster because that’s exactly what it was.”

Dowling was a lobbyist at the state capital for years with the Georgia Wildlife Federation. Denali has worked with the State of Pennsylvania on reclaiming 1,500 acres of former coal mining sites that are now managed as state game lands with public hunting access.
Class A vs Class B biosolids make the difference

After failed attempts to restore the land with conventional fertilizer, the land was successfully returned to green grass and healthy waterways using biosolids, which the EPA defines as nutrient-rich organic material resulting from sewage treatment in a facility that is recycled and applied as fertilizer to improve and maintain productive soils and stimulate plant growth.

Copperhill Industries noted the land was particularly challenging because of low soil pH and a lack of organic matter, which plants need to survive. After reclamation efforts with chemical fertilizer failed, Class B biosolids from Moccasin Bend Wastewater Treatment Plant in Chattanooga were land applied to portions of the site in 2018.

Work with Class B biosolids, the lower class of levels of method of metals and pathogens, came to a halt in late 2022 when residents complained about odors emanating from the treatment plant and Copperhill Industries owner Buddy Haynes faced opposition from the local community.

Work resumed with Class A biosolids and 1,800 acres have now been successfully reclaimed.

Before and after images at portions of Copper Hill treated with biosolids. Credit: Denali.

The project, Denali said, has raised the possibility that Superfund reclamation obligations may be completed under budget and ahead of schedule.

“The big thing that carbon based organic matter that is so valuable for the soil,” Dowling said. “It’s great for sequestering carbon. It’s great for regenerative soils. All these good things biosolids can provide. We would like to do more of it in mining. We’d love to push it out to Alabama, Tennessee and Georgia mining associations for their distribution and their use. It’s gone from a moonscape to a meadow in 11 months.”

Dowling said the reclamation brought the pH of the water up from a 2.0 to nearly a 6.

“If we can make that happen with flowing water from headwaters, this could be enormous nationwide.”

Dowling said Denali aims to work with state governments who have received funding from the Inflation Reduction Act and other Acts that have mine reclamation dollars in them.

“We see it as a way that we can contribute to the natural cycle of life – go back and reclaim what we’ve already used and turn it back into some more usable land where we see the public hunting and fishing and hiking and bird watching.”

“In Georgia they say all mine mining permits are reclamation permits. I want to help contribute to the success of those reclamation projects.”

Fatal blast in Indonesia puts battery metal ambitions in spotlight ahead of presidential vote

Bloomberg News | January 5, 2024 

Protests in Indonesia. Credit: Wikipedia

A deadly explosion at a Chinese-owned facility in Indonesia has highlighted the hidden costs of Jakarta’s ambitious bet on battery metal processing to accelerate industrial development, a signature policy of outgoing leader Joko Widodo.


The 21 fatalities at Tsingshan Holding Group’s plant at Morowali on the island of Sulawesi, just weeks ahead of a presidential election, have triggered worker protests, anger on social media, and calls for tighter regulation of a sector that has underpinned the president’s plan to shift Indonesia from ore exporter to electric vehicle hub. The disaster has also prompted the government to demand action from China to improve its smelting operations in the country.

The Southeast Asian nation has become a giant of the global battery material industry in the last decade, thanks to billions of dollars of Chinese investment and a surge in processing plants turning low-grade nickel ore into a key ingredient to power EVs. Seen as a stepping stone toward more sophisticated manufacturing, the policy has created jobs and export revenue, but last week’s tragedy is the worst yet in a series of accidents that have struck an industry expanding at breakneck speed.

“This issue could be a potential flashpoint in the presidential race,” said Bhima Yudhistira, executive director of the Center of Economics and Law Studies, a Jakarta-based think-tank. “It has been apparent that there’s a low level of safeguards when it comes to workers’ safety.”

Some 200 million Indonesians will vote for a new leader next month. The three campaigns still in the running have all backed the government’s policy on so-called downstreaming. But the Morowali disaster has thrown up criticisms of the price paid.

“We shouldn’t go crazy, going after investments when our own citizens become victims,” Mahfud MD, the running mate of former Central Java governor Ganjar Pranowo, told reporters on Dec. 27.

Erwin Aksa, vice chairman on the rival campaign for Defense Minister Prabowo Subianto that includes Jokowi’s eldest son as running mate, told local news outlet Tempo that domestic workers should be favored over foreigners and that firms should remove requirements around speaking Mandarin.

PT Indonesia Morowali Industrial Park, which manages the site where the blast took place, will continue to strive to improve health and safety at its operations, and will follow relevant policies in Indonesia and for the nickel sector, said Emilia Bassar, communications director at the park. It will implement recommendations from the police, the Ministry of Manpower, and other parties to improve standards and prevent such incidents in future, she said.

Senior managers at Tsingshan’s headquarters in China declined to comment.

The blast

Early in the morning of Dec. 24, residue from smelted ore leaked from a furnace at Tsingshan’s plant during maintenance and came into contact with highly flammable materials. An explosion and fire followed.

The facility — in a vast park covering over 3,000 hectares of what was a fishing town until a decade ago — has far more staff than comparable operations in China, resulting in more casualties, according to people familiar with a preliminary investigation, who declined to be named discussing sensitive matters. Language barriers between workers from China and Indonesia complicated their ability to handle the emergency, they said.

A spokesman for Central Sulawesi Regional Police, Djoko Wienartono, said the force had interviewed people at the scene and suspects there “was indeed a degree of negligence” that caused the accident. Its investigation is ongoing, he said.

In just the first nine months of 2023, the Makassar Legal Aid Institute recorded at least 16 deaths in accidents at nickel processing facilities in Indonesia. Another two workers died in January 2023 during a riot that broke out at a protest over pay and conditions at another smelter in Sulawesi.

The fear among labor groups is that any investigation into the Morowali blast will end up focusing on the actions of employees, rather than on wider management shortcomings or weakness in regulations.

“Punishments should not only apply to personnel but also to the company,” said Aulia Hakim, head of advocacy at Indonesian environmental monitoring group Walhi. “There needs to be a role for the central government in ensuring occupational safety and health standards, specifically for the nickel industry.”

Who cares

The concerns have implications well beyond the island of Sulawesi. Indonesia is courting investment from the likes of Tesla Inc. and China’s top carmaker BYD Co. at a time when the auto industry is increasingly focused on avoiding environmental, social and governance flaws in supply chains in response to investor concerns.

Nickel production in Indonesia has already drawn scrutiny because of its heavy reliance on coal-fired power, a major driver of global emissions, and over the disposal of toxic waste generated by processing low-grade ores.

Still, given Indonesia’s reliance on foreign investment, particularly from China, to accelerate development and create jobs, it’s unclear whether the Morowali incident will trigger lasting changes in the new government’s approach. Chinese investment surged to an annual $8.2 billion as of 2022, from just $800 million in 2014, the year Jokowi took office, according to official data. Indonesia has been a key destination for China’s Belt and Road Initiative.

“Contenders that raise the issue of improving the governance of downstreaming will get a spotlight from constituents,” said Dominique Nicky Fahrizal, political analyst at the Jakarta-based Centre for Strategic and International Studies. “But which constituents? Those that are aware about downstreaming and about the environment. Not everyone understands these issues.”

Tsingshan’s push

Tsingshan has spearheaded China’s push into Indonesian metals production as Jakarta moved to implement its ban on exports of nickel ore. In return for their investment and expertise, the companies have benefited from cheaper labor and abundant power supplies, and perhaps also less scrutiny on environmental and safety issues.

Indonesia for its part wants Beijing’s help in preventing another tragedy. Minister of Industry Agus Gumiwang Kartasasmita said he asked his Chinese counterpart to conduct an assessment to improve the governance of its smelter industry, according to news outlet Bisnis Indonesia.

While accidents and fatalities in the metals industry are not uncommon, they have become less frequent as the industry tightens standards, including in China after the government’s drive to improve worker and environmental safety in the past decade. There, the response usually involves widespread shutdowns, inspections and management overhauls.

By contrast, the people familiar with investigation said none of Tsingshan’s other operations at the Morowali park has shuttered in the aftermath of Dec. 24. The site is the world’s largest integrated stainless steel production base outside China, with 3 million tons of capacity.

Arnold Firdaus, the head of the Manpower and Transmigration office in Central Sulawesi province, said the Tsingshan unit that runs the Morowali facility, PT Indonesia Tsingshan Stainless Steel, hasn’t reported on health and safety in recent months.

“Supervision in the smelter industry, especially at ITSS, is not optimal,” he said. But the problems run deeper. His team are also hamstrung by a lack of personnel.

“We lack occupational safety and health experts,” he said. “We only have one fire expert, one electrician, one boiler expert, and two to three people as supervisors. There is no ideal standard, but we need at least 25 people.”

(By Eko Listiyorini, Chandra Asmara and Norman Harsono)

 

McAllister Receives New Built Low Emission Class Tractor Tug

PUBLISHED JAN 6, 2024 5:02 PM BY THE MARITIME EXECUTIVE

 

[By: McAllister Towing]

McAllister Towing is proud to announce the arrival of the tug GRACE MCALLISTER.

The GRACE MCALLISTER was recently delivered from Maine shipyard, Washburn & Doughty. She is equipped with 3516E Tier IV Caterpillar engines powering twin Schottel SRP 490 Z-drive units. The GRACE received a Low Emission Vessel class notation from ABS. Packed into her 93’ x 38’ hull producing 6,770 horsepower, the GRACE achieved over 85 metric tons during her bollard pull certification. Combining her eco-friendly CAT engines with Markey winches on the bow and stern makes the American-made GRACE one of the most advanced and powerful shipdocking tractor tugs serving the Port of New York.

Combining McAllister’s talented mariners and seasoned Pilots with the newest and most technologically advanced tugboats on the East Coast, McAllister has set the bar for services unlike any other. The GRACE joins a fleet of certified Low Emission vessels, including the AVA MCALLISTER and CAPT. BRIAN A. MCALLISTER in New York. The maritime industry will not only enjoy the safety and power of these tugs’ abilities, but can be assured that their carbon foot print has been reduced while calling our Ports.

2024 marks the 160th year of maritime expertise at McAllister Towing. The company is fifth generation owned and operated. Unsurpassed service and safety are the company’s mission for marine transportation from Eastport, Maine to San Juan, Puerto Rico.