India's Steel Industry Faces Challenges Despite Growing Demand

• By Metal Miner - Apr 29, 2024
• 
  
• India's finished steel imports increased by 38.1% in the last fiscal year, making it a net importer.
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• The Indian steel industry has called on the government to intervene and initiate safeguard measures to protect domestic producers.
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• India has announced ambitious targets to ramp up steel production capacity and reduce its environmental footprint.

India has ended the financial year 2023-2024 as a net importer of finished steel, which has sent the alarm bells ringing in industry circles throughout India. Mainly, insiders want to know how the changing import status might affect steel costs and India’s push for self reliance.

According to news agency Reuters, as per initial government data, India imported 8.3 million metric tons of finished steel in the last fiscal year. This represents an increase of 38.1% from a year earlier. Such high imports fly in the face of targets set by the Indian Government regarding self-reliance in steel manufacturing. 

Alarmed by the rising imports to feed the increasing consumption of steel in India, steel mills have now asked the Indian Government to intervene and initiate safeguard measures. The association representing the steel companies has also asked for similar interventions in the past. However, the Ministry of Steel has yet to act upon these demands. 

Indian Steel Industry Sounds the Alarm

A report in thehindu.com quoted the Secretary-General of the Indian Steel Association (ISA), Alok Sahay, as saying that the notable surge in predatory imports from China posed a substantial threat to India’s pursuit of self-reliance in the steel sector. Sahay claimed the country’s transition to a net importer serves as a clear warning sign in this regard. It also has the potential to affect steel costs.

Meanwhile, experts feel that having a lower or no import duty tax encourages importers to dump their steel into the Indian market. India’s steel companies now want this situation to change so that steel-surplus countries do not take advantage and use India’s growth momentum to aid their own steel mills.

The Hindu report also quoted Ranjan Dhar, the Chief Marketing Officer of ArcelorMittal Nippon Steel, as saying that “predatory imports” are a clear threat to India’s steel companies, and that it would serve the government well to confine steel imports for a robust GDP growth.

India’s Announces Fresh Steel Target

As if on cue, India recently announced ambitious targets for its steel industry, aiming to ramp up steel production capacity to an impressive 500 MTPA by 2047. According to this report in the Economic Times, this marks a significant leap from the targets outlined in the New Steel Policy (NSP) of 2017, which aimed for just 300 MT by 2030.

However, the focus isn’t solely on increasing production. India also renewed its dedication to reducing its environmental footprint. The country aims to lower its emission intensity to 2.25 tonnes of CO2 per tonne of crude steel produced by 2029, with further reductions anticipated by 2047. This goes to show that steel costs and industry independence are not on the only thing on India’s leaders’ minds.

According to the ET report, India is currently concentrating on reforming its mining sector to meet these environmental objectives. The government also plans to implement key reforms to enhance mineral availability, including innovative measures like hackathons to analyze geological data. These initiatives further underscore India’s commitment to both industrial expansion and environmental sustainability.

Consumption Keeps Growing, But What About Steel Costs?

India recently witnessed a significant surge in steel demand, increasing by approximately 15% year-on-year. This growth primarily stems from extensive government investments in infrastructure projects and accelerated construction activities in anticipation of the upcoming general elections.

However, despite the robust growth in steel demand, there are concerns that the approaching general elections may slow government spending. Consequently, analysts expect the projected demand growth rate to decrease from 15% to around 10% by the conclusion of FY24.

Furthermore, India’s transition into a net importer of steel continues to raise concerns among among industry insiders regarding the influx of substandard imports. In response, they continue to urge the government to take measures to address this issue and ensure fair competition for domestic steel producers.

By Sohrab Darabshaw

Azerbaijan Feels the Heat as U.S. House Considers Sanctions

• By Eurasianet - Apr 30, 2024, 
• 
  
• The threat of US sanctions has prompted Azerbaijan to release a prominent opposition figure, but concerns persist over crackdowns on journalists and activists.
• 
  
• US Secretary of State Antony Blinken discussed human rights concerns with Azerbaijani President Ilham Aliyev and urged adherence to international obligations.
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• The US House bill targets up to 40 Azerbaijani officials, including top aides to President Aliyev, amid deteriorating relations with the United States.
• 
  

Azerbaijan has spent much of the past half-year thumbing its nose at the United States and European Union over Western criticism of Baku’s authoritarian political practices. But it appears the West has at least one weapon in its arsenal capable of getting Azerbaijani leaders’ attention.

That tool is money. Or more specifically, the ability to hinder Azerbaijani officials from moving around the world and spending it.

Rights advocates in Baku and elsewhere say it is no surprise an Azerbaijani court released a prominent opposition figure, Gubad Ibadoglu, from jail shortly after a report started circulating on April 22 that the US Congress was moving to impose sanctions against top Azerbaijani officials. A few days later, the European Parliament too called for sanctions to be imposed against Azerbaijani officials.

“They [authorities] are even afraid of the first letter of the word ‘sanctions.’ No matter how loud they challenge the West,” lawyer and politician Samed Rahimli wrote on X. “Azerbaijani authorities showed today that they are afraid of sanctions.”

On April 28, US Secretary of State Antony Blinken had a phone discussion with Azerbaijani President Ilham Aliyev, aiming to put bilateral relations on a better footing. Blinken, according to a State Department statement, acknowledged recent progress in the Armenia-Azerbaijani peace process and reiterated Washington’s desire to “cooperate on mutual energy, climate, and connectivity goals.” He welcomed Ibadolgu’s release from jail while calling for his “expeditious” release. The statement concluded by noting Blinken “again urged Azerbaijan to adhere to its international human rights obligations and commitments and release those unjustly detained in Azerbaijan.”

The Baku court decision did not exonerate Ibadoglu, an economist who is a vocal opponent of Aliyev’s administration. Though out of jail, he will remain under house arrest as his case proceeds. Ibadoglu chairs Democracy and Prosperity Party and was a visiting professor at the London School of Economics at the time of his arrest in July 2023. Ibadoglu is accused of taking part in a scheme to profit from circulating “counterfeit money or securities by an organized group.” He denies the charge and says his case is politically motivated.

The Turan News Agency’s Washington correspondent, Alex Raufoglu, broke the news about brewing US sanctions against up to 40 political, law enforcement and military officials who “play active roles in violating the rule of law and human rights in the country.” Reportedly some of President Aliyev’s top lieutenants are on the list of those to be sanctioned, including the head of presidential administration, Samir Nuriyev, the chief of the State Security Service, Ali Nagiyev, and the commander of Special Forces, Hikmet Mirzayev. Dina Titus, a Nevada Democrat, is the primary sponsor of the sanctions bill in the House of Representatives.

According to the Turan report, the bill is a response to Azerbaijan’s recent crackdown on independent journalists and civil society activists amid a deterioration of relations with the United States. Since last fall, nearly 20 journalists and opposition activists have been arrested, many of them on smuggling charges. As with Ibadoglu’s case, the journalists and activists in custody insist the cases against them are bogus.

At a news conference during an official visit to Berlin, President Aliyev contended that all the cases against government critics conform with established laws. 

“Any country must defend its laws,” Aliyev said. “If a media representative who received illegal funding from abroad was investigated, it does not mean that our media is not free. Everyone should act within the law. We, like any other country, must protect our media space from external negative influence.”

The US sanctions bill reportedly also cites Azerbaijan’s allegedly harsh treatment of Armenian prisoners, captured during the last phase of the Nagorno-Karabakh conflict. “This calls into serious question the Azerbaijani government's commitment to human rights and its ability to negotiate a just and lasting peace [with Armenia],” the Turan report quotes the bill as stating.

Given that Republicans control the US House, the timetable for the Democrat-sponsored sanctions bill to come up for a vote is uncertain. European Parliament efforts to implement sanctions against Azerbaijan are far less advanced.

Also uncertain is whether Azerbaijan will take additional steps to tamp down the possibility of sanctions. The initial indications are not encouraging that Azerbaijan will change its ways. On April 29, the day after the Blinken-Aliyev phone discussion, law enforcement authorities in Baku detained a prominent activist, Anar Mammadli, who chairs the Election Monitoring and Democracy Studies Center, according to an opposition media report. Government critics are calling on Washington and Brussels to keep applying pressure. “There are still political prisoners in the prison. They need to be freed. There should be no compromise,” writer and blogger Samed Shikhi wrote on X.

By Eurasianet.org

Biden Aims to Bridge the Decarbonization Divide With $7 Billion Solar Initiative

• 
  

By Haley Zaremba - Apr 30, 2024

• Wealthy nations and individuals have greater capacity to transition to clean energy, leaving poorer communities more vulnerable to climate change.
• 
  
• Within wealthy nations, disparities exist in access to incentives for green technology adoption, such as rooftop solar panels.
• 
  
• President Biden's $7 billion Solar for All program aims to address the solar wealth gap and create union jobs in communities that need them most.

On a global level, rich nations have a greater capacity to transition toward clean technologies and leave cheap and abundant fossil fuels in the ground. Nevertheless, the richest countries are also responsible for the lion’s share of greenhouse gas emissions, while the poorest communities are left the most vulnerable to the impacts of climate change. Now, it’s more urgent than ever for all of humanity to jump on the clean energy bandwagon, but that’s much easier for those with the means to adopt often pricey green technologies.

Global leaders have long acknowledged that climate finance for poorer nations is an absolutely essential central tenet of global climate goals. But while the wealthiest nations have made lofty promises to finance the decarbonization trajectories of the poorest nations, so far they have broken those promises. In 2023, the United Nations estimated that funding to address climate disasters in developing nations had fallen several trillion dollars short. “While Western countries have started to mobilize vast sums for their own clean energy transitions,” the Washington Post reported last year, “government officials and other diplomats say poor and vulnerable nations — where the need is often greatest — are being left out.”

But even within wealthy nations where climate financing is more advanced, there are major disparities between who is securing those lines of finance and who is losing out. In England, for example, new research from Cardiff University shows that on the whole, households need greater financial support to transition to clean energy, but that “homeowners living in more affluent areas, who felt more financially secure, were more prepared to consider that households such as theirs might need to contribute towards the cost of retrofitting.” 

Meanwhile, in New York State, homeowners who earn more than $50,000 dollars a year are 2.5 times more likely to have rooftop solar panels than those who earn less, according to a study published last month by researchers from Columbia University and the think tank Win Climate. And while there are tax credits to ease the sticker shock of residential solar, the vast majority of those incentives are going to the wealthy as well. “The overwhelming majority of that money is going to wealthier people, but it's actually bypassing the people who need it most,” Win Climate’s Juan-Pablo Velez told Gothamist.

Last week President Joe Biden announced a new $7 billion expansion to the Solar for All program that aims to lessen this solar wealth gap on a national level. The initiative provides free or low-cost rooftop solar panels or access to community solar electricity, making residential solar accessible to those who could never otherwise afford it. “Essentially, the programs provide a share in the power provided by a nearby solar facility,” CNET reports.  

"This new Solar for All program means that 900,000 households will have solar on the rooftops for the first time, and soon," President Joe Biden said on Earth Day, when the expansion was announced. "Millions of families will save almost $400 a year on utility bills." Biden also promised that the initiative will “create 200,000 good-paying union jobs over five years in communities that need them most."

While the $7 billion endowment will certainly move the climate finance needle in the right direction within the United States, much more will need to be done to support climate justice nationwide. Lowering emissions in the United States is not just about putting solar panels on the roofs of poor people. It’s about the richest Americans lowering their own carbon emissions. 

The richest people in the U.S. are responsible for 40% of emissions due to a combination of carbon-heavy lifestyles and carbon-heavy investments. “It just seems morally and politically problematic to have one group of people reaping so much benefit from emissions while the poorer groups in society are asked to disproportionately deal with the harms of those emissions,” Jared Starr, a sustainability scientist at the University of Massachusetts at Amherst, told the Washington Post. At a global level, we have repeatedly seen that poorest people are the most vulnerable and least resilient to climate-related weather disasters and quieter climate-related issues like extreme heat in poor neighborhoods with more concrete and fewer trees than rich neighborhoods. 

By Haley Zaremba for Oilprice.com

MONOPOLY CAPITALI$M

Copper smelters in China wary of BHP-Anglo tie-up

Reuters | April 30, 2024 | 


Chinese smelters, the world’s biggest buyers of mined copper, are concerned they will lose power to negotiate prices if BHP Group, known locally as “the big miner”, succeeds in its bid for rival Anglo American.


BHP, the world’s largest listed mining group, is fine-tuning an offer that could make it the biggest producer of copper, a metal in high demand as the world seeks to shift towards electric vehicles and a lower carbon economy.

The proposed takeover would give BHP control of roughly 10% of global mined supplies, surpassing Chile’s Codelco and Freeport-McMoRan.

“This is not good news for China given the heavy reliance on external supply, and Chinese companies hold limited resources,” Zhang Weixin, a metal analyst at China Futures, said of the potential tie-up.

The China Smelters Purchase Team (CSPT), a group of top smelters that negotiates with miners on yearly prices to treat and refine copper, has no current plans to urge Beijing to investigate the deal, three sources familiar with the matter said.

CSPT’s head could not be reached for comment and BHP declined to comment.

China’s State Administration for Market Regulation also did not immediately respond to a request for comment.

There is a precedent of Chinese regulators getting involved in deals that impact copper supply.

In 2011, Glencore agreed to China’s demand that it sell its interest in Xstrata’s Las Bambas copper project in Peru to clinch their multi-billion dollar deal.

The world’s leading consumer of the metal, China imported 27.54 million metric tons of copper ore and concentrate in 2023, worth $60.1 billion, customs data showed, more than half of global supplies.
Tight market

In China, BHP is most active in the spot market, where it sells to domestic smelters using tenders, according to smelters and analysts, signing contracts for fixed volumes to be priced via an index provided by third parties.

By comparison, rival miners Freeport and Antofagasta agree an annual fixed sale price with China’s smelters that is widely used as an industry benchmark.

Chinese copper smelters said the prospect of more supply being sold under index pricing could increase uncertainty for costs and planning.

None of the smelter officials wished to be identified given the sensitivity of the matter.

One of them said index pricing meant smelters would be unable to estimate production costs and to draw up a full-year production plan.

Smelters are still recovering from supply shortages driven by the December closure of the First Quantum’s Cobre Panama mine, which drove down treatment charges (TCs) – their main source of income.

Treatment charges are fees paid by miners for converting raw materials into metal. They fall when mine output decreases as smelters have to compete for concentrate.


Adding to their difficulties, the concentrate market is expected to be in deficit for the next three years.

Last week, spot treatment charges (TCs) in China turned negative for the first time since pricing agency Fastmarkets started the index in 2013.

That compares with 2024 benchmark TCs settled between Chinese smelters and Freeport and Antofagasta at $80 per ton.

Much as consolidation raises concerns, however, William Adams, head of base metals research at Fastmarkets in London, said it could calm the market longer term by tackling the high cost and risk of developing mines.

“Look at the current tightness in spot treatment and refining charges, which is because there is insufficient mine supply to meeting smelter’s demand, highlights the need to invest more upstream,” he said.

(By Siyi Liu, Julian Luk, Mai Nguyen and Melanie Burton; Editing by Tony Munroe and Barbara Lewis)

Anglo spinoffs will ‘very likely’ need South Africa approval

Bloomberg News | April 30, 2024 | 

Loading hauled ore from the mine into the primary crusher at Kumba Iron Ore’s Kolomela. (Image courtesy of Anglo American | Flickr.)

BHP Group Ltd.’s proposal for Anglo American Plc to spin off platinum and iron ore units before a takeover would likely require approval from South African regulators, according to a government agency.


Under BHP’s offer, Anglo would need to first divest its controlling interests in Kumba Iron Ore Ltd. and Anglo American Platinum Ltd., both of which are listed in Johannesburg and operate assets in South Africa. Anglo rejected the initial $39 billion proposal from the Australian mining giant last week.

Analysts have pointed to South Africa as one of the biggest potential hurdles to a deal, even if Anglo’s board can be won over. Founded in 1917 by Ernest Oppenheimer, Anglo has long ties to South Africa and was built on the back of the country’s gold mines. The proposed spinoffs highlight the fragile state of the country’s critical mining industry, as the ruling African National Congress struggles to bolster its appeal before elections next month.

Even before BHP’s proposal, Anglo’s platinum subsidiary was weighing thousands of job cuts in a country with one of the world’s highest unemployment rates. The ANC’s national chairman has signaled his opposition to BHP’s proposed takeover.

Even though BHP doesn’t want to buy Kumba and Amplats, South Africa could have an important role to play if an eventual deal is structured in the manner originally outlined. The country’s Competition Commission not only evaluates antitrust impacts but also “public interest” factors, including how a proposed acquisition will affect employment levels and historically disadvantaged people.

“There are numerous and current merger reviews in which the agency has imposed stringent conditions on the basis of the transactions’ effect on the public interest criteria,” said John Oxenham, Johannesburg-based managing partner at Primerio, a law firm that specializes in competition cases.

BHP is considering making an improved proposal for London-listed Anglo, Bloomberg reported April 27, citing people familiar with the matter. The main prize for BHP is Anglo’s South American copper operations, while the non-South African iron ore business and coking coal mines in Australia would also fit well with its existing operations.

If Anglo shareholders accept an improved offer with the same conditions, spinning off Kumba and Amplats is “very likely to meet the mandatory thresholds” that would require approval from South Africa’s regulatory authorities, Competition Commission spokesman Siyabulela Makunga said in an emailed response to questions. The agency assesses each deal “based on its own merits” in accordance with the law, he said.

South Africa Mines Minister Gwede Mantashe has signaled his opposition to the takeover, telling Bloomberg last week that he “wouldn’t support” the proposal. “I don’t think Anglo will agree to that,” said Mantashe, who also chairs the ANC.

The country’s state pension fund – the Public Investment Corp. – is also Anglo’s second-largest shareholder, controlling an 8.4% stake, according to data compiled by Bloomberg.

(By William Clowes)

Data centers will likely provide boost to nuclear energy, says Cameco CEO

Chatbots like ChatGPT require about 10 times the energy as a Google search.

Reuters | April 30, 2024 |


Uranium miner Cameco Corp’s chief executive said on Tuesday projected demand from data centers powering technology like generative AI will likely be a boost for nuclear energy.


Over the past year, big technology companies have been racing to build data centers needed to power applications such as OpenAI’s viral chatbot, ChatGPT, as they try to capitalize on what is expected to be the industry’s next key growth driver.

Chatbots like ChatGPT require about 10 times the energy as a Google search.

“Gone are the days of rolling out new technology without worrying about future potential runway environmental impacts. Companies driving the technology forward are doing so while keeping carbon footprint and 24/7 reliability top of mind … nuclear is the clear winner,” CEO Timothy Gitzel said during a post-earnings call.

Many industrial power users and tech sector experts are signing agreements to ensure their facilities can access zero-carbon and reliable nuclear energy now and into the future, he said.

Overall, power use from the thousands of giant computing warehouses that comprise data centers is expected to triple globally from less than 15 terawatt-hours (TWh) in 2023 to 46 TWh this year, according to Morgan Stanley Research.

(By Mrinalika Roy; Editing by Shilpi Majumdar)

Half of all copper mining is at drought risk with climate change

Bloomberg News | April 29, 2024 | 5:08 pm Energy Intelligence Africa Canada Latin America USA Copper

Zambia’s copper mines are facing a power supply squeeze as drought roils hydroelectric installations. Pictured: Sentinel open-pit copper mine. (Image courtesy of First Quantum Minerals.)

As projections for all the copper needed in the clean-energy transition help send prices of the wiring metal to two-year highs, a new report highlights the risks to future metal supplies from climate change.


Even in an optimistic low emission scenario for 2050, more than half the world’s copper mines will be in areas exposed to drought risk that’s deemed significant, high or extreme, according to a PricewaterhouseCoopers LLP report. For two other energy transition metals — lithium and cobalt — drought exposure is even higher at 74%, the study found.

Copper has rallied in recent months to surpass $10,000 a metric ton, fueled by bets on looming shortages as mines struggle to meet rising demand from electric vehicles, grid infrastructure and data centers. New deposits are getting harder and costlier to extract while growing scrutiny of environmental and social issues also are discouraging investment.

Climate related disruptions would add another layer of supply risk. While the effects of rising temperatures and shifting weather patterns are widely documented for agricultural commodities, the impact on minerals is less known. Zambia’s copper mines are facing a power supply squeeze as drought roils hydroelectric installations. In Chile, water shortages have restrained copper production in recent years as the industry invests in the use of seawater.

For each of the nine commodities in the PwC study, at least 40% of global supply is produced from no more than three countries. In the case of copper, Chile, Peru and China account for more than half of production.

“That means that if climate change disrupts, it can have a disproportionate effect because you’ve not got that spread,” Emma Cox, global climate leader at PwC UK, said in an interview. “I don’t think everybody understands the dependencies and the impacts of a future change in climate.”

(By James Attwood)

China’s Zhaojin wins control of Tietto Minerals in $475 million deal

Tietto, which is Australian listed and headquartered, produces gold from its Abujar project in Ivory Coast.

Reuters | April 30, 2024 | 

Aerial view of the Abujar gold mine in Ivory Coast. Credit: Tietto Minerals

China’s Zhaojin Capital has won control of Australia’s Tietto Minerals after a protracted six months takeover tussle that values the gold producer at A$733 million ($474.62 million), according to a regulatory filing on Wednesday.


Zhaojin Capital, a unit of Hong Kong-listed Zhaojin Mining, now has 52.8% voting power, it said in the filing, up from 42.5% previously.

Tietto, which is Australian listed and headquartered, produces gold from its Abujar project in Ivory Coast.

Zhaojin’s victory to control more than half the company comes a day after the Tietto’s board called upon its shareholders to accept Zhaojin’s takeover bid.

The original offer of A$0.58 per share was increased on April 15 to A$0.68 per share and declared “best and final”, which meant Zhaojin could not increase its bid again.

Tietto’s board said it believed the bid still undervalued the company, but given key shareholders had accepted the offer it would change its official recommendation.

Tietto chairman Francis Harper, CEO Matthew Wilcox and non-executive director Paul Kitto said in a filing they intended to sell their stock on market if the price was not very different to Zhaojin’s offer. The trio will accept the Zhaojin offer if it is higher than the market price when the offer closes, they added.

Tietto had said earlier that two of its major shareholders might have accepted the Chinese suitor’s offer after a significant jump in the latter’s voting power to more than 42% as of April 29.

If the deal goes through, the takeover would help Zhaojin expand its mining operations overseas. The Chinese company has already received approval from Australia’s Foreign Investment Review Board.

($1 = 1.5444 Australian dollars)

(By Scott Murdoch and Poonam Behura; Editing by Pooja Desai, Rashmi Aich and Jamie Freed)

Brazil Potash aims to beat Russian, Canadian suppliers on price

Reuters | April 30, 2024 | 

Fertilizer in a farmer’s hand. Credit: Brazil Potash.

The cost to produce potash from a mine being developed in the Brazilian Amazon will be similar to Russia’s and lower than in No. 1 producer Canada, said the CEO of Brazil Potash Corp, citing a third-party assessment used in a company presentation.


The economics of the project — which faced a protracted licensing process involving multiple government agencies and Indigenous consultations — has drawn analysts’ attention after the price of potash fell sharply from highs above $1,000 per metric ton amid the threat of sanctions against Russia and Belarus in 2022, compared to the current level just above $300.

That, and new mining projects emerging in Canada and Laos, would likely keep a lid on prices, they said.

“All in, our cost to mine, process and deliver the potash to farmers in Mato Grosso state will be $130 per ton,” CEO Matt Simpson said in an interview on Monday, breaking down production cost in Brazil at $80 per ton and transportation at $50 per ton.

According to a separate price assessment, Russia’s extraction cost is estimated at $50 and Canada’s at $80, Simpson said. That would make the company’s Brazil potash less competitive than Russia’s and “in line” with Canada’s, he conceded.

Brazil relies on imports for nearly 100% of supplies, which come from nations like Canada and Russia.

Simpson noted freight tied to potash imports alone was higher than the total cost for the company, whose mine is significantly closer to local farmers.

In a presentation sent to Reuters, the company’s potash price in Brazil was forecast to be $459 on a cost-and-freight (CFR) basis, which seemed high to analysts who spoke to Reuters.

Simpson said that projection should be understood as an average over the mine’s life span, conservatively calculated at 23 years. He also cited 15 million tons of additional global demand for potash in the next eight years.

“There’s going to be a six-to-seven million ton shortfall in new supply versus demand that is going to cause a structural shift up of roughly $100 a ton,” he said, predicting Brazil’s potash price could be $400 or $500 by 2032.

Brazil Potash aims to produce 2.4 million tons per year, a fifth of national demand, and will target Mato Grosso farmers primarily.

The company also hopes to make direct sales, eliminating blenders, which Simpson said charge $50 to $70 premiums from buyers.

Production at the Amazon mine, which has 4 of 11 required licences to complete construction, is scheduled to start in 2029, Simpson said.

(By Ana Mano; Editing by Josie Kao)

 

From EVs to Wind Turbines, China is Winning the Clean-Energy War

The car carrier BYD Explorer No. 1 departs on its maiden voyage to deliver EVs to Europe (Image courtesy BYD)

PUBLISHED APR 29, 2024 10:40 PM BY G. ALLEN BROOKS

 

(Article originally published in Jan/Feb 2024 edition.)

 

The EPA has finalized its tailpipe emissions rules for light-duty vehicles beginning in 2027. When initially proposed, the rule sparked pushback from the automobile industry, among others. As the EPA noted, the rule would require electric vehicles to make up 67 percent of new vehicle sales by 2032. 

For perspective, EV sales in the U.S. last year reached a record of 1.2 million vehicles, a 7.6 percent market share, up from 5.9 percent in 2022. To achieve the Biden Administration’s goal of two-thirds of new car sales being electric, EVs’ market share must increase by 60 percentage points over nine years – a questionable undertaking. 

Annual auto sales average about 17 million units. Meeting the EPA’s goal requires a 10-fold EV output increase to nearly 12 million a year. This will require huge auto industry investments in new assembly plants, battery plants, mines and processing facilities for the critical minerals needed for EVs.  Those minerals – cobalt, graphite, lithium, manganese, nickel and copper ? are in short supply and mostly located outside North America. This means finding mineral deposits around the world and building extensive new supply chains in a short time. 

Late to the Party

The U.S. is late to the EV party, and its efforts to catch up are running into resistance. 

EV sales have largely targeted the luxury car market, which is limited in size. With an underdeveloped EV charging network and many potential buyers not being able to install home-charging stations, buyers are hesitant. 

In addition, EVs are expensive and have limited driving range, which can necessitate charging away from home. They’ve performed poorly in cold weather and are costly to insure and expensive to repair. These hurdles have combined to suddenly slow domestic EV sales – to the dismay of auto executives who were investing billions in new plants as their losses on EVs grew. 

The sales slowdown is not limited to the U.S. but has been experienced in Europe and China, the world’s number one EV market. For years, the subsidies-driven boom helped China sell more EVs than Europe and the U.S. combined. The subsidy reduction and consumer spending slowdown meant China’s EV growth rate fell below those of Europe and the U.S. With surplus EV manufacturing capacity, China has set in motion a global expansion strategy. 

Global EV Domination?

China is now targeting domination of the global EV market, and why not? If Western governments are determined to rapidly shift away from fossil fuels to renewables, China wants to be the supplier of the cheapest tools to facilitate the move. What would be good for Westerners – cheaper renewable energy products – would be good for China’s economy. 

Last year China’s BYD, backed by Warren Buffet of Berkshire Hathaway fame, passed Tesla as the world’s largest EV company. China is riding the nation’s EV boom to revolutionize the car business and leave traditional automakers in the dust. Legacy auto company executives acknowledge that Chinese EV companies are 30 percent faster in developing new EVs. 

Rather than following the traditional new model development protocol, these Chinese companies have embraced working on many phases of EV development at once. They’re willing to substitute smaller, faster suppliers for traditional ones. They run more virtual tests instead of time-consuming mechanical ones. And they’ve redefined when a model is ready for the market. 

Western automakers admit they’re chasing the Chinese auto companies, once considered also-rans. However, the fear now is that Chinese EV companies may flood the market with cheap EVs at a time when demand is slowing. Financial losses would explode. 

NIO, one of China’s leading EV manufacturers, takes less than 36 months from the start of a project to delivery to customers. That’s a year quicker than traditional auto manufacturers. Zeekr, an EV venture of Chinese auto giant Geely, can develop EV models in 24 months. Part of their strategy is to develop various models – SUVs, multipurpose vehicles and hatchbacks – that share the same manufacturing and digital architecture with other Geely brands such as Polestar and Smart. 

Another characteristic of the Chinese EV market is the rapid development of new models and the refreshment of older models. Chinese buyers tend to favor the latest models. According to China’s passenger car association, car models launched last year contributed 90 percent of the nation’s passenger car sales growth. 

An analysis by AlixPartners shows that “domestic EV makers offer models for sale for an average of 1.3 years before they are updated or refreshed, compared with 4.2 years for foreign brands.” 

Instead of being also-rans, Chinese EV companies are being mimicked and even partnered with for their skills rather than as a ticket to enter China’s auto market. Tesla’s Elon Musk and Ford’s CEO, Jim Farley, have warned that their biggest future threats will be from Chinese EV companies.  Germany’s Volkswagen is partnering with Chinese EV companies seeking to speed up its design and manufacturing processes. The head of Volkswagen’s China subsidiary noted that it traditionally took four years to bring a new model to market compared with 2½ years for Chinese EV companies. 

NIO, once considered to be China’s Tesla-killer, has redefined when a model is ready for market by utilizing “minimum viable products,” which means they build their EVs with more advanced chips, cameras or sensors than their software can support at the time. Once it has developed the new technology to utilize all the unused capabilities, the vehicle is sent software updates over the air. 

Solar and Wind Leadership

As China works to dominate the global EV market, it already dominates the solar panel market. It secured access to that technology from European manufacturers and then capitalized on the country’s cheap labor, power and abundant polysilicon supply to undercut competitors. 

China now controls 80 percent of the solar panel market and has plans to build more than 1,000 gigawatts of N-type cell capacity, the next generation after P-type, which will be 17 times the capacity of competitors. This market dominance results in Chinese modules costing half that of those made in Europe and two-thirds less than U.S. panels.

Is it any wonder solar subsidies and tariffs are needed in Europe and the U.S. to compete? 

When it comes to wind turbines, China controls nearly 60 percent of the global market, largely because it has been installing significant generating capacity and also because the country’s policy is to make renewable energy a foundation for economic growth. In 2022, ten of the world’s top 15 wind turbine manufacturers were Chinese, and they delivered 56 percent of the units installed. Having provided two-thirds of the 156 GW of capacity installed last year, China’s global market share further increased. 

Too Little, Too Late?

Western countries are trying to protect and grow domestic competitors to China in all three markets – EVs, solar panels and wind turbines. From government investigations into Chinese manufacturers anticompetitive actions to installing high tariffs and outright restrictions on access to local markets, Western governments are battling a Chinese commercial invasion. 

At risk are jobs, capital investments and tax revenues, along with potential national security implications. Recent renewable energy market slowdowns and turmoil have only helped strengthen China’s hand as its actions are blessed by its government, which is looking to the long-term for these industries to underpin the country’s economy. 

This economic policy battle will generate unintended consequences that we will only see when they emerge. The biggest loser will be Western consumers forced to buy more expensive items.  

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

Graphite miners lobby US govt to impose

 

levy on China-sourced EV material

Reuters | April 30, 2024 | 

The Lac des Iles mine in Quebec (LDI) is the only graphite producer in North America. (Image courtesy of Northern Graphite.)

North American graphite miners are lobbying the US government to impose a 25% tariff on three graphite products sourced from China in order to counter Beijing’s monopoly on a key material used in automobile batteries.


If successful, the move will pit the miners against their main customers- the original equipment manufacturers (OEMs) and add to tensions with China, which controls the majority of the critical metals used in the world’s electric vehicles and other motors.

The US government is set to decide in May whether to bring graphite into the list of minerals that attract the higher Section 301 tariff.

The Section 301 tariff was introduced by former US President Donald Trump after his administration found China’s “acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory”. Many other parts used in electric vehicles are also subjected to additional levies. China has called US 301 tariffs on its imports “discriminatory”.

Graphite was exempted because China accounts for 70% of global output of the material – used to make electric battery anodes, the negatively charged portion of the battery.


The graphite manufacturers depend on offtake agreements with automakers as a basis to raise capital from lenders, but if OEMs can secure cheaper graphite from China, there is no need for them to sign these offtake agreements.

The OEM lobby group opposes the higher tariff and argues that without a credible supply chain from North America it is forced to depend on China, and tariffs make them uncompetitive against Chinese auto makers.

The United States Trade Representative, the body responsible for imposing the levy, did not respond to a Reuters query on the inclusion of China-sourced graphite in the Section 301 list.

Graphite miners told Reuters that allowing the free flow of graphite from China into North America harms their chances of raising capital as auto makers would shun future offtake agreements if they could source graphite from China cheaply.

“If we don’t secure the project financing… we won’t be able to build a north American supply chain,” said Hugues Jacquemin, CEO of Montreal-based Northern Graphite.

Critical minerals such as lithium and graphite have become a flash point as western countries try and reduce their reliance on China for these metals that are key for energy transition.

In October last year Beijing imposed controls on graphite exports from the country to help “better safeguard national security and interests”.

Japan, the United States, India and South Korea are top buyers of China’s graphite according to its customs data.

“Trade protections must be enacted to blunt the effects of China’s ability to overproduce graphite and effectively control the global market,” said Erik Olson, spokesperson of North American Graphite Alliance, a group of Canadian and American graphite producers.

(By Divya Rajagopal; Editing by Alexandra Hudson)

Australia cracks down on foreign investment in critical minerals

Bloomberg News | April 30, 2024 | 

China’s Tianqi controls Greenbushes, the world’s biggest hard-rock lithium mine, located about 250 km from Perth, Australia. (Image courtesy of Tianqi.)

Australia will tighten scrutiny of foreign investment into mining and refining of critical minerals as part of an overhaul of its national regime, while speeding up approvals in low-risk areas to boost economic growth.


Treasurer Jim Chalmers will announce the changes in a speech to the Lowy Institute think tank in Sydney on Wednesday, saying Australia welcomes international investment “but only if it’s in our national interest.”

“Foreign investment is where the stovepipes of economic and national security have often failed to meet in the past,” he will say, according to excerpts released in advance. The government estimates direct and portfolio foreign investment in Australia’s economy grew to about A$3.5 trillion ($2.3 trillion) in 2023.

The treasurer pointed to “foreign investment in critical infrastructure, critical minerals, critical technology” as a focus for efforts to apply greater scrutiny to international funding. Since coming to office, Chalmers has blocked some investment by Chinese-linked companies in Australia’s critical minerals and rare earths industries.

China’s tight grip on the critical minerals supply chain, such as lithium and rare earths processing and refining, has prompted Australia to work with allies including the US, Japan and South Korea in recent years. This latest move by Chalmers builds on the momentum to date.

At the same time, Chalmers said the investment approval process would be streamlined for known investors and low-risk sectors, including a new target for Treasury to process 50% of cases within 30 days from the start of 2025.

The government will release an updated foreign investment policy document on Wednesday to guide investors on the new processes, including which parts of the economy will face tougher screening.

The government will also allow foreign investors to purchase established build-to-rent properties as part of a plan to increase demand and create incentives for more construction.

(By Ben Westcott)

IMPROVE PAY & BENEFITS

Hamburg Pleads With Port Workers to Say No to Drug Smugglers

Bags containing cocaine in a containerized shipment of tobacco, 2019 (Hauptzollamt Hamburg)

PUBLISHED APR 29, 2024 7:00 PM BY THE MARITIME EXECUTIVE

 

 

Hamburg's port is one of the main gateways for cocaine smuggling into Europe, a prized market for cartels because of the popularity of the drug and the high price it fetches. While Hamburg is not as busy as Rotterdam or Antwerp, it is still a regional hub, and local authorities are trying to crack down on the illicit trade - in part, by appealing to port employees to stay out of the smuggling industry. 

"Stay away from this type of crime, give information if you notice something, it protects yourself, it protects our port and it protects our urban society," Hamburg mayor Peter Tschentscher warned port personnel in comments to local media on Monday. 

Inside collaborators (or "internal harbor criminals") are essential to the smooth functioning of a narcotics smuggling network. Port employees can help gang members gain unauthorized access to storage yards; access yard location databases to help retrieve drugs from "dirty" containers; and tip off criminals to signs of law enforcement activity. Gangs use a variety of methods to gain leverage over port staff, including extortion, threats of violence and generous bribe offers for compliance. 

"If you get involved in it, you might find that the whole family gets involved," Tschentscher warned. 

The cautionary message is part of a broader EU-backed push to counter smuggling networks in Northern Europe, called the INOK project ("Infiltration of North Sea Ports by Organised Crime"). In addition to the awareness campaign, INOK aims to investigate and prosecute corrupt port employees; protect innocent employees from ever being contacted by cartel members; and strengthen ties with maritime companies, who can help to quickly spot and close vulnerabilities on the waterfront. 

The scale of the problem is significant. In Antwerp, authorities seized a record 116 tonnes of cocaine in 2023. Germany's federal police force is working with the ports of Rotterdam and Antwerp to ensure that when there is a crackdown in these key ports, the trade does not simply spill over into Port of Hamburg. (Hamburg already has plenty to contend with: officials there seized 35 tonnes last year). 

By weight, cocaine is worth more than platinum when delivered to the EU. The median wholesale price per kilo on the European market is about $37,000, or $37 per gram. When reduced in purity and sold to the end user, the price rises to an average of about $75 per gram - about the same as the price of pure gold. At the point of origin in Colombia, the same drug is worth $2-3,000 per kilo wholesale ($2-3 per gram), so the markup is more than an order of magnitude. There are few other industries with such a substantial opportunity for profit, even after accounting for product losses due to the occasional intercept and seizure.