Judge Greenlights Exxon Lawsuit Against Activist Investor

By Irina Slav - May 23, 2024

A U.S. District Judge has ruled that Exxon can proceed with its lawsuit against activist investor Arjuna Capital, which wanted to force the company to make more advanced net-zero commitments.

The judge, however, excluded Follow This, the other target of Exxon’s suit, due to jurisdictional obstacles. The activist investor group is based in the Netherlands and U.S. courts do not have jurisdiction over it, Judge Mark Pittman ruled, as reported by Reuters.

In January, the two activist investor entities filed a proposal for Exxon shareholders to vote at the annual general meeting on May 29 to have Exxon commit to further emissions reductions, including Scope 3 – emissions from the product it sells.

In response, Exxon filed a lawsuit at the U.S. District Court for the Northern District of Texas, saying that “Defendants are asking Exxon Mobil to change its day-to-day business by altering the mix of—or even eliminating—certain of the products that it sells.”

Exxon also argues that the two activist investors have “become shareholders solely to campaign for change through shareholder proposals that are calculated to diminish the company’s existing business.”

Some shareholders, notably Calpers, declared their support for the activists investors, with the California pension fund threatening Exxon to vote against the re-election of chief executive Darren Woods unless the company pulled out its lawsuit.

More recently, after Exxon refused to change course, Calpers has threatened to vote against all Exxon board members at the upcoming annual general meeting. It has also tried to influence other shareholders in the company to vote in tune with it. The pension fund holds a 0.19% stake in Exxon.

Commenting on the news about the lawsuit being allowed to proceed, Calpers chief executive Mark Frost said "Exxon's dangerous legal gambit, if successful, would undermine shareholder rights and allow corporate leaders to stifle the ideas of investors with impunity.”

Shell shareholders recently voted overwhelmingly against a climate resolution tabled by Follow This, suggesting a turning tide for Big Oil after two years of generous shareholder returns.

By Irina Slav for Oilprice.com

 

Democrats Urge DOJ to Investigate Oil Majors for Climate Change Disinformation

By Tsvetana Paraskova - May 23, 2024

U.S. Democratic lawmakers have referred the world’s largest international oil companies to the U.S. Department of Justice, urging an investigation into Big Oil’s ‘deceptive claims’ about its products that have misled the public about the effects on climate.

The U.S. House Oversight Committee launched in 2021 an investigation over “the reported role of the fossil fuel industry in a long-running, industry-wide campaign to spread disinformation about the role of fossil fuels in causing global warming.”   

The multi-year investigation, initiated by House Oversight Democrats and now undertaken jointly with Senate Budget, has “unveiled damning new documents that exposed the fossil fuel industry’s ongoing efforts to deceive the public and block climate action,” the office of Senate Budget Chairman Sheldon Whitehouse said this week.

The investigation into ExxonMobil, Chevron, Shell, BP, the American Petroleum Institute (API), and the U.S. Chamber of Commerce “uncovered new evidence of the fossil fuel industry’s pattern of deceptive claims regarding its products, their effects on the climate, and its plans to reduce emissions and combat climate change.”

As a result, Senate Budget Chairman Sheldon Whitehouse and House Oversight and Accountability Ranking Member Jamie Raskin called on Attorney General Merrick Garland to investigate Big Oil for a decades-long disinformation campaign. 

“The investigation also revealed significant collaboration with trade associations to deceive the public, policymakers, and investors about the fossil fuel companies’ true positions on various climate- and energy-related issues,” Whitehouse and Raskin wrote in the letter to DOJ.

“For these reasons, we formally refer this matter to DOJ and request that you launch an investigation into the fossil fuel industry’s decades-long history of engaging in deceptive practices to determine whether the entities violated any applicable federal statutes.”

The American Petroleum Institute (API) slammed the Democrats’ move with a spokesperson saying “This is another unfounded political charade to distract from persistent inflation and America’s need for more energy, including oil and natural gas.”

“U.S. energy workers are focused on delivering the reliable, affordable oil and natural gas Americans demand and any suggestion to the contrary is false,” according to the API statement carried by Reuters.

By Tsvetana Paraskova for Oilprice.com

Malaysian Wealth Fund Sues PetroSaudi CEO for $1.8 Billion Over Oil “Sham”

By Charles Kennedy - May 23, 2024

The scandalized Malaysian sovereign wealth fund 1MBD has filed a lawsuit against PetroSaudi International CEO Patrick Mahoney for $1.83 billion over what it says was a sham oil exploration joint venture. 

According to the lawsuit, 1MBD (1Malaysia Development Berhad) had been led to believe that Petrosaudi was owned by Saudi royalty, which served as the basis upon which the fund agreed to the JV deal. 

The joint venture “was a sham which resulted in 1MDB suffering a complete loss of its investment” of US$1.83 billion, 1MBD said in the lawsuit, calling for Mahoney to be held liable for the damages because of his “dishonest assistance” in relation to the 2009 joint venture, according to 1MBD, as reported by The Malaysian Reserve on Thursday. The lawuit represents lower-level damage control after the Fund became embroiled in a multi-billion-dollar global corruption scandal. 

The lawsuit also names UK-based law firm White & Case LLP as a defendant, claiming that Mahoney colluded with members of the law firm, including with a fugitive businessman, to defraud 1MBD. The Fund also claims that the law firm did Mahoney’s bidding when he instructed them to prepare fraudulent agreements for PetroSaudi Holdings, among other dubious transactions. Last month, the $1.8-billion fraud trial centered around 1MBD opened in Switzerland, with two individuals accused of embezzling $1.8 billion from the sovereign wealth fund on Tuesday. 

In 2022, former Malaysian premier Najib Razak was sentenced to 12 years in prison for offenses related to the scandal, though his sentence was reduced by half earlier this year. 

Swiss prosecutors have accused Mahoney and a Saudi-Swiss businessman also named in the lawsuit of fraudulently claiming to be negotiating on behalf of the late Saudi King Abdullah and of fraudulently claiming to have controlling rights to an oilfield in the Caspian Sea. 

Mahoney and his Saudi-Swiss counterpart will plead not guilty, Agence France Presse reports. 

By Charles Kennedy for Oilprice.com

The Harsh Truth About Space Mining and Direct Air Capture

  Kurt Cobb - May 22, 2024
• 
  
• As the energy transition gains momentum, there is ever more interest in capturing carbon and securing the critical minerals for new energy technologies.
• 
  
• One increasingly popular form of carbon capture is direct air capture, a technology that sounds very promising but doesn’t hold up under scrutiny.
• 
  
• The value of potential resources available in space is mindboggling to consider, but not as mindboggling as the cost of bringing it back to earth.

The dictionary doesn't quite do justice to the word "boondoggle" according to author Dmitri Orlov, best known for his book Reinventing Collapse. A contemporary boondoggle must not only be wasteful, it should, if possible, also create additional problems that can only be addressed by yet more boondoggles. (This does NOT preclude boondoggles from being profitable for certain insiders.)

In Orlov's universe, such boondoggles dissipate the wealth and vitality of a society until it collapses. But if executed properly, boondoggles first grind down society without actually collapsing it. When the collapse finally does come, it is like "falling out of a ground-floor window." In the collapsenik lexicon, this is what passes for a soft landing.

Two important boondoggles were in the news recently: a big set of machines that extract carbon dioxide from the air and companies formed to mine asteroids.

Let's take the carbon dioxide plant in Iceland first. My initial thought is to make this technology modular so any size extractor can be built. Then, declare deployment of this technology mandatory on the premises of any business emitting carbon dioxide directly into the air. Why wait to capture the greenhouse gas until it makes its way to Iceland? Let's trap it everywhere at its source.

However, I fear I may be violating the first rule of boondoggles with this proposal. Boondoggles must NOT be conceived in a way that would actually solve a problem. But it turns out that using this technology in places without ready access to sufficient sources of non-carbon energy would actually force increased use of fossil fuels to power the extractors that remove carbon dioxide from the air. It's a perfect circle that would increase emissions of the very gas it is trying to extract. (Compare to self-licking ice cream cone.)

There is the argument that the world will soon ramp up huge new sources of energy that are carbon-free. As of 2021 after decades of renewable energy deployment, the world now generates less than 2 percent of its total energy from solar and less than 3 percent from wind according to Our World in Data (and based on the BP Statistical Review of World Energy). A little over 6 percent is from hydroelectric. But most of the best sites in the world have been taken. And, the energy from existing hydroelectric plants is already committed anyway.

Other renewable energy (which includes geothermal power of the kind found in abundance in Iceland) contributes 1.3 percent of the world's energy. Moreover, fossil fuel use, particularly coal and natural gas, continue to grow. Renewable energy is adding to world energy capacity, but not substituting itself for existing fossil fuel use on a net basis.

Let us turn to the quest for minerals locked in asteroids which may be a better boondoggle than atmospheric carbon dioxide extractors in one very important way. This is because asteroid mining ventures appear to burn money without producing any tangible result, a characteristic that indicates one has found a pure boondoggle according to Orlov.

Here's how it works:

A sharp promoter gets members of the investing public—ones, for example, who are excited about science fiction stories such as those that make up any of the Star Trek series—to throw their money at the idea of mining asteroids that might be "pure metal" or close to it. (It's also possible that they are NOT pure metal. No one knows for sure.)

It's important for these investors NOT to understand the economics of mining. If they did, they would be investing in terrestrial mining operations or some other sector of the earthbound economy instead of the boondoggle of asteroid mining. Such mining assumes that the costs of extracting earthbound mineral deposits will rise sufficiently to match the cost of asteroid mining, thereby making asteroid mining competitive.

Let's take a general look at what might be involved in mining asteroids by reviewing a current NASA mission to what is thought to be a major metal-containing asteroid called Psyche, which is located in the Asteroid Belt:

1. The transport distances are enormous. Psyche will be visited by a NASA probe launched in October 2023, one that is expected to reach the asteroid in August 2029 after a journey of 2.2 billion miles.
2. The cost of the Psyche mission is around $1.2 billion. This is just to get a small craft weighing about three tons to its destination and have it orbit for a couple of years. Mining equipment would be much, much more massive.
3. Psyche doesn't have to return to Earth. But, metal ore would have to be extracted somehow under near zero gravity, loaded, and then transported billions of miles on a regular basis. (Some refining might take place before transport to reduce the bulk, but that then involves bringing more equipment and expending vast amounts of energy that must come from somewhere, possibly fuel that is also transported.) It's true that other asteroids that might have high metal content are closer to Earth. One of these asteroids, named (6178) 1986 DA, is about 18 million miles away from Earth which is equivalent to about 75 times the distance of the moon—not exactly next door.
4. Scientists estimate that the value of the metal in Psyche is around $10 quintillion and the metal in the much closer asteroid referred to above is $11.65 trillion. If asteroid miners were able to unlock vast amounts of ore from either of these and get it to Earth, prices of those minerals would likely plummet as huge supplies hit the market. Of course, asteroid miners could transport much smaller quantities, but that would greatly increase the cost per ton. Alternatively, the miners could hold back ore already delivered to Earth and sell only in relatively small quantities so as not to overwhelm the market. But that would add costs for storage and seriously delay any payback to investors who presumably would have already waited decades for a payout.

As my mother used to say about truly crazy ideas that defy logic: "It makes sense if you don't think about it." And the not thinking part is what promoters of asteroid mining are counting on. My mother, of course, was assuming that the purpose of such ideas was to solve a problem. In this particular case, however, we have an ideal vehicle for burning money with virtually no hope of any return—at least on any time frame that might matter to investors. In sum, asteroid mining is one of the best boondoggles available to investors today.

There are some who will say that metals mined from asteroids will, in fact, be used by space colonists and are not for Earth consumption. If that's so, then asteroid mining is an even better boondoggle than I thought it was.

There are many more boondoggles to cover, so much so that commentary on them could fill an entire blog for years. But my purpose here is to give you general tools to identify them and respond accordingly—in case you want to participate in the fun.

By Kurt Cobb via Resource Insights

 Moscow Withdraws Draft That Proposed Expanding its Territorial Waters

  RFE/RL staff - May 22, 2024,

• 
  
• Russia has withdrawn the draft from its Ministery of Defense that proposed expanding its territorial waters.
• 
  
• The draft, dated May 21, was initially published on an official Russian portal of legal drafts.
• 
  
• According to the draft, expanding the border off the coast of Kaliningrad between Baltiysk and Zelenogradsk and in the eastern part of the Gulf of Finland would have allowed the corresponding maritime areas to be used as internal sea waters of Russia.

Russia has withdrawn without explanation a Defense Ministry draft that proposed revising Moscow's maritime border in the eastern Baltic Sea and expanding its territorial waters that raised the ire of littoral NATO members Finland, Sweden, Lithuania, and Estonia.

The draft, dated May 21, was initially published on an official Russian portal of legal drafts. It proposed expanding Russia's territorial waters in the Gulf of Finland and around the Kaliningrad exclave near the maritime borders with Finland, Estonia, and Lithuania.

Since Russia launched its full-scale invasion of Ukraine in 2022, Finland and Sweden have joined NATO, leaving Kaliningrad completely surrounded by members of the alliance.

According to the draft, expanding the border off the coast of Kaliningrad between Baltiysk and Zelenogradsk and in the eastern part of the Gulf of Finland would have allowed the corresponding maritime areas to be used as internal sea waters of Russia as vessels made the trip from St. Petersburg.

It also proposed changes off the coast of Lithuania in the area of the Curonian Spit, the crescent-shaped sand dune separating the Curonian Lagoon from the Baltic Sea.

Following the publication of the draft, Lithuania's Foreign Ministry said it was "summoning a representative of the Russian Federation for a full explanation." Moscow has not had an ambassador in Vilnius since April 2022.

Lithuania expelled Moscow's envoy and downgraded its diplomatic relations with Russia following the atrocities allegedly committed by Russian forces in the Ukrainian town of Bucha.

"Another Russian hybrid operation is under way, this time attempting to spread fear, uncertainty, and doubt about their intentions in the Baltic Sea," Lithuanian Foreign Minister Gabrielius Landsbergis wrote on X, formerly Twitter.

“Finland acts as always: calmly and based on facts,” Finnish President Alexander Stubb wrote on X.

Finnish Prime Minister Petteri Orpo said Helsinki will monitor Russia's moves, while Foreign Minister Elina Valtonen told reporters that Helsinki was "following the situation."

"We don't have any official information on what Russia is planning," she said.

Swedish Prime Minister Ulf Kristersson reminded Moscow that it was a signatory to the UN convention regulating maritime border changes.

“Both we and Finland assume that Russia -- which is a signatory party to that convention -- lives up to that responsibility,” Kristersson was quoted as saying by the Swedish news agency TT.

The draft was withdrawn without any explanation just hours after the wave of criticism, with an unnamed Russian diplomatic source telling Interfax that Moscow had no intention of revising its maritime borders, while Kremlin spokesman Dmitry Peskov told reporters there was “nothing political” in the draft.

“You see how tensions and the level of confrontation are escalating, especially in the Baltic region. This requires appropriate steps from our relevant bodies to ensure our security,” Peskov said.

By RF/ERL

Russia May Try to Redraw its Boundaries in the Baltic Sea

Exclusive economic zones in the Baltic (European Maritime Observation and Data Network)

PUBLISHED MAY 22, 2024 3:27 PM BY THE MARITIME EXECUTIVE

 

Russia Proposes Controversial Review of Maritime Zones in the Baltic Sea

Russia has riled up its western neighbors with a new proposal to re-draw its maritime borders in the Baltic region. Early this week, reports emerged that the Russian Ministry of Defense is proposing an expansion of its territorial waters in the Baltic Sea. Specifically, Russia is hoping to revise maritime borders in parts of the eastern Gulf of Finland, as well as the territory near its coastal cities of Baltiysk and Zelenogradsk in the Kaliningrad region.

However, this proposal encroaches on the coastal boundaries of Lithuania and Finland, causing concerns amongst the NATO members in the region.

“Another Russian hybrid operation is underway, this time attempting to spread fear, uncertainty and doubt about their intentions in the Baltic Sea,” said Lithuania’s Foreign Affairs Minister, Gabrielius Landsbergis.

Finland also called the review of maritime zones by Russia a form of hybrid influence. The Finnish Foreign Affairs ministry implored Russia to abide by the UN Convention on the Law of the Sea, which discourages unilateral revision of maritime zones.

In the Russian proposal for delineation changes, the authors justify the claim on the basis that the current baselines, established by the USSR Council of Ministers in 1985, “do not fully correspond to the current geographical situation.” That is, the reference points used back then were recorded using small-scale marine navigation charts, which were based on the work from the mid-20th century. According to Russia’s logic, the geographical coordinates ought to be redrawn based on modern cartographical measurements.

While the Kremlin has said there is nothing political in the defense ministry’s proposal, most NATO members bordering the Baltic Sea interpret the move as a form of provocation. Analysts see this as yet another indication of the changing political landscape of the Baltic Sea, with Russia pushing back against increasing NATO control in the region. Currently, eight of the nine countries bordering the Baltic Sea are NATO member states, with the sole exception of Russia.

With the Baltic Sea hosting a growing offshore wind sector, as well as a spiderweb of subsea telecom and energy links, uncertainty in maritime governance would be an unwelcome development for the region – and could provide Russia with new leverage.

Turkey Emerges as the Largest Coal-Fired Electricity Producer in Europe

By Tsvetana Paraskova - May 22, 2024,

Turkey has consumed more coal-fired electricity in 2024 than any country in Europe.

Falling coal prices and reliance on Russian imports drive Turkey's coal dependency.

This shift away from renewables raises concerns about Turkey's environmental impact and energy security.

Turkey has emerged as the largest coal-fired electricity producer in Europe as major EU economies have continued to shut down coal power plants and boost renewable energy generation.    

In the first four months of this year, Turkey was the top coal power producer in Europe, overtaking Germany, according to data from energy think tank Ember cited by Reuters columnist Gavin Maguire.

This development highlights the diverging paths the EU and Turkey have taken in securing electricity supply. While the EU bloc—including top coal power producer Germany—is looking to reduce reliance on coal as much as possible, Turkey is importing and using more coal to meet its rising electricity demand as coal has become more economically viable to burn in power plants than imported natural gas. 

In 2023, Turkey overtook Poland to become Europe’s second-largest coal-fired power generator, behind Germany, Ember said in its Türkiye Electricity Review 2024 in March. At the same time, Turkey’s dependence on imported coal for electricity generation continued to increase, Ember’s energy analyst Bahadir Gumus says.  

Coal’s share in Turkey’s total power generation hit a record high of 36% last year, compared to a 12% share in the European Union. Turkey is dependent on coal imports from Russia—with which Ankara has kept friendly diplomatic and trade relations after the Russian invasion of Ukraine—and Russian coal imports held a 73% share in Turkey’s electricity generation, according to Ember’s data. 

Unlike the EU, Turkey doesn’t have a ban on imports of Russian energy products. 

As coal prices fell more than natural gas prices after the 2022 spike, gas-fired power generation in Turkey fell for the second year in a row in 2023, marking its lowest generation over four years. 

“Türkiye’s growing reliance on fossil fuels in electricity generation pushes Türkiye further from the path of clean energy transition,” Ember’s Gumus said. 

This year, Turkey generated 36 terawatt hours (TWh) of coal-fired electricity between January and April, surpassing Germany’s coal power output of 34.6 TWh and Poland’s 31.3 TWh, per Ember’s data.  

Germany, until recently Europe’s top coal-fired power producer, shut down additional coal plants this spring. 

At the beginning of the 2023/2024 winter, Germany’s government said it was bringing back online several coal-fired units for the winter in an attempt to save natural gas and avoid power supply shortfalls. 

Without Russian gas supply, the recent energy and gas crisis in Germany—and in Europe—has been keeping utilities and governments on edge and ready to have mothballed coal-fired power plants on stand-by in the coldest winter days to ensure the security of electricity supply. 

After the end of the winter, German utility RWE shut down permanently five coal power plant units, removing 2,100 megawatts (MW) of lignite capacity permanently from the grid. RWE has already decommissioned 12 lignite-fired power plant units with a total output of 4,200 MW since the end of 2020 and is confident it would complete its coal phase-out by 2030. 

In total, Germany shut down permanently 15 coal-fired power plants last month. 

“Several coal-fired power plants that were still on the grid as a precautionary measure over the last two years are therefore now superfluous and can be taken off the grid for good,” Economy Minister Robert Habeck told German agency dpa in early April, adding these were “neither necessary nor economical.” 

In 2023, lignite-powered electricity production in Germany slumped to the lowest level since 1963, while hard coal-powered plants produced the lowest electricity volumes since 1955, according to data compiled by the Fraunhofer Institute for Solar Energy Systems ISE. 

In Germany’s neighbor to the east, Poland, the biggest state utilities are preparing for a surge in clean energy investments in 2025, hoping that the government would move ahead with a plan to spin off coal assets that have been restricting the companies’ access to financial markets. 

Poland’s power grid operator said in March that it would spend $16 billion on upgrading and expanding its power grid to accommodate additional renewable and nuclear capacity.

Coal Still Powers More U.S. Electricity Than Any Renewable Energy Source

Tsvetana Paraskova - May 20, 2024

Coal still holds about 16% share of electricity generation.

Coal is declining, but not at the fast pace environmental campaigners and enthusiasts would have liked to.

But coal-fired power generation could rise in the summer, especially if heatwaves hit areas where wind power cannot provide the additional power supply.

Despite a continuous decline in U.S. coal power generation, the share of coal in America’s electricity mix is still above 15%, more than any renewable energy source.   

All renewable energy sources combined—wind, solar, hydropower, biomass, and geothermal—surpassed coal-fired generation in the U.S. electric power sector for the first time in 2022. But coal still holds about 16% share of electricity generation, more than wind’s share of around 11%, hydropower’s 6%, or solar power’s 4% share of the electric generation mix.  

True, coal generation and share have been declining in recent years – thanks to a surge in renewables and a higher share of natural gas-powered electricity due to rising production and falling gas prices. But coal is still playing a role in providing reliable baseload electricity and while falling, its share and contribution to the U.S. power system isn’t negligible at all.

Coal is declining, but not at the fast pace environmental campaigners and enthusiasts would have liked to.

The Biden Administration aims to make the U.S. power grid zero-emission by 2035. But this would be difficult to achieve, considering that currently fossil fuels – mostly natural gas and coal – provide 60% of the total U.S. electricity generation. Last year, gas accounted for 43% and coal for more than 16%.

Early this year, coal’s share held above 15%, although coal power generation fell between January and April to the lowest level in four years, per LSEG data cited by Reuters columnist Gavin Maguire.

Coal consumption typically falls in the spring and autumn – the so-called ‘shoulder’ season – when demand for heating and cooling is at its lowest.

But coal-fired power generation could rise in the summer, especially if heatwaves hit areas where wind power cannot provide the additional power supply.

Moreover, operators have planned fewer coal capacity retirements this year, per EIA data. Operators plan to retire 5.2 gigawatts (GW) of U.S. electric generating capacity in 2024, with coal and natural gas jointly accounting for 91% of the planned capacity retirements in the United States this year. The total capacity planned for retirement would be 62% lower compared to last year, when 13.5 GW was retired, and the least in any year since 2008.

After 22.3 GW of U.S. coal-fired electric generating capacity retired over the past two years, coal retirements will slow down in 2024, the EIA said in February. The 2.3 GW of coal-fired capacity scheduled to retire accounts for 1.3% of the U.S. coal fleet that was in operation as of the end of 2023. Coal retirements are scheduled to rebound in 2025 when operators expect to retire 10.9 GW.

The U.S. is now retiring coal capacity every year, but some areas depend on coal for their power generation more than others, while the expected surge in electricity demand due to data centers to support AI technologies will also require a stable power supply.

Five U.S. states rely on coal for more than half of their electricity generation. These are North Dakota, Missouri, Kentucky, Wyoming, and West Virginia, Reuters’s Maguire notes.

Moreover, data centers have seen such explosive growth that they are taxing utilities beyond what soaring power demand is calling for. 

Some utilities in the eastern and southern parts of the U.S. are proposing build-outs of new natural gas-fired capacity alongside renewables to support the growth in electricity consumption coming from data centers. Others have planned to delay the timeline for retiring coal-fired capacity to ensure grid reliability.

For example, Kansas City-based utility Evergy said in June 2023 that it would retire coal operations at its Lawrence Energy Center only in 2028, compared to earlier plans for end-2023 retirement.

“Our service area is experiencing some of its most robust electricity demand growth in decades, including very large projects like the Panasonic electric vehicle battery manufacturing factory and the Meta datacenter, as well as broad-based economic development in both Kansas and Missouri,” Evergy’s president and CEO David Campbell said last year.

By Tsvetana Paraskova for Oilprice.com

SANCTION BUSTERS

Glencore, Rusal extend aluminum supply contract into 2025

Reuters | May 22, 2024 | 

Credit: Rusal

Swiss-based trading house Glencore and aluminum producer Rusal have extended their long-term supply contract into next year after the amount traded so far has amounted to a fraction of the agreement’s maximum volumes, a source with direct knowledge said on Wednesday.


Glencore’s contract with Russia’s Rusal, the world’s largest aluminum producer outside China, was due to expire this year unless extended.

Rusal and Glencore declined to comment.

Glencore is legally bound to continue the contract because Rusal has not been directly targeted by Western sanctions, the source, who declined to be identified, told Reuters.

Last month, the London Metal Exchange (LME) broadly banned Russian aluminum, copper and nickel produced from April 13 to comply with new US and UK sanctions imposed over Russia’s 2022 invasion of Ukraine.

During the first four years of the contract up to last year, Glencore bought about one-third of the maximum 5.24 million metric tons, calculations by Reuters based on regulatory filings show.

“The remaining volumes will be taken at a later date,” the source said.

In 2023, Glencore bought aluminum worth $1.06 billion under the contract compared to a maximum of $3.93 billion worth, Rusal said in its annual report last month.

Last year’s purchases by Glencore from Rusal would amount to around 459,000 tons, according to a Reuters calculation based on the average LME cash price of $2,307 per ton for 2023.

It is a rough estimate because the price would also include regional premiums that depend on the shipments’ destinations. Rusal’s total 2023 aluminum sales were 4.2 million tons.

Rusal aluminum sales to Glencore fall short of contract caps

(By Eric Onstad and Polina Devitt; Editing by Rod Nickel)

Record gold and copper prices are also a boon for illegal mining in Peru

PRIMITIVE ACCUMULATION OF CAPITAL

Bloomberg News | May 22, 2024 |

Madre de Dios is one of the areas in Peru affected by illegal mining. (Image courtesy of Peru’s Ministry of Defense, Flickr).

Record prices of gold and copper are buoying the spirits of mining leaders gathered in the Peruvian capital this week.


But surging metal markets are also stoking concerns that the windfall will accelerate growth in illegal production that will increasingly disrupt the operations of global mining companies.

Informal miners are encroaching on the sites of large legal mines in the Andean nation, with executives at the Lima conference telling Bloomberg News they fear confrontations will worsen as prices climb. It’s an example of how surging commodity prices can bolster shadow economies around the world, particularly in poorer nations with weaker institutions, in a challenge to large companies and authorities.

The situation has also led to dangerous confrontations: One of Peru’s top gold miners, Minera Poderosa, has had more than a dozen employees killed in what the industry is increasingly describing as an open conflict between the company and violent illegal miners.

While most illegal mines in Peru focus on gold, there are also cases of undocumented copper operators who have found ways to handle the much bigger volumes needed to extract the wiring metal. Southern Copper Corp. has been trying to clear illegal miners from one of its projects, while MMG Ltd.’s Las Bambas faces the challenge of clearing the site of what will become a planned third pit. First Quantum Minerals Ltd. said Wednesday that it’s also had illegal miners at its nearby Haquira project.

“Evidently, higher prices bring incentives,” Southern Copper chief financial officer Raul Jacob said in an interview. “And we know that if we leave things the way they are now, there will be more illegal mining.”

Energy and Mines Minister Romulo Mucho said this week that illegal mining had become a “huge challenge” and that the government was working on a bill to create a new framework for small miners. An existing scheme to bring informal miners into the system has been criticized as having the unintended consequence of providing illegal groups further shelter from regulatory scrutiny.
Gold destinations

The output of illicit gold in the Andean nation may have climbed to 2 million ounces, or about $4.5 billion, said Victor Gobitz, head of mining and energy society SNMPE, citing the gap between formal output and shipments last year.

While foundries in Europe and North America heavily scrutinize the origin of bullion, that’s not the case in places like India and the United Arab Emirates, Gobitz said.

Operators in Peru exploit legal loopholes and a lack of supervision to boost profit, he said. Processing plants are able to register as small miners at a regional level, thereby staying off the radar of national regulators. With gold prices up about 80% in the past five years, such plants are able to fund more illegal mines in remote border areas and the Amazon, Gobitz said.

The formal mining industry is urging authorities and parliamentarians to trace the entire productive chain, including who produces, trades and uses supplies like explosives — and where bullion is exported for final refining. There has been some push-back from those defending the as many as half a million people working in precarious conditions in Peru.

“Those profiting are people that have treatment plants, who more than likely fund small miners, and those that sell critical supplies,” Gobitz said. “With such high prices and a state that has limited reach in these remote areas, this activity emerges.”

(By James Attwood and Marcelo Rochabrun)

Peru’s 2024 copper target is realistic, mining magnates say

Reuters | May 21, 2024 |

Las Bambas copper mine. (Image by MMG Las Bambas, Facebook.)

The Peruvian government’s 2024 copper production goal of 3 million metric tons is realistic, senior industry executives said on Tuesday, as the country seeks to boost mining investments to help lift the economy out of recession.


The South American country produced 2.76 million tons of copper last year, dropping its rank from first to second for global production of the red metal. It still ranks first globally for export volumes


Mining is key to Peru’s economy, which fell into a recession in 2023 due to adverse climate effects, social conflicts and a drop in investments.

“The 3 million ton projection is realistic,” Carlos Castro, manager of corporate affairs and business development at Minera Las Bambas, told Reuters on Tuesday on the sidelines of a forum attended by global mining executives.

Las Bambas, owned by the China’s MMG Ltd, has seen production drop in the recent years in the midst of social protests by residents demanding greater benefits from the mine.

“It’s a reasonable projection,” said Raul Jacob, vice president of finance at Southern Copper, the country’s third-largest copper producer.

Southern Copper hopes to increase its copper production by 20% this year from 2023, when it extracted 374,149 tons of the metal, according to government figures.


Peru’s Mining and Energy Minister Romulo Mucho announced the 3-million-ton goal in March.

“We’re going to break the record this year, we can do it, the first three months of the year show that we’re growing,” Mucho said on Tuesday.

Miners’ confidence comes as copper prices hit two-year highs.

Victor Gobitz, president of Antamina, Peru’s second-largest copper producer, said the forecast is “very optimistic,” but still achievable. “I would estimate production will land in the 2.8 to 3 million tons range.”

Antamina, which is controlled by Glencore, BHP, Teck and Mitsubishi, produced 435,378 tons of copper last year, and hopes to maintain that level in 2024.

In the last year, Peru has granted environmental permits for the expansion of some key projects and expects the construction of others such as Southern Copper’s Tia Maria.

Southern Copper’s long-stalled $1.4 billion Tia Maria project in Peru is set to break ground by the end of the year or in the first half of 2025, according to a senior company executive.

(By Marco Aquino; Editing by David Gregorio)