SWEAT SHOP POLITICS

'We were going to win': Activist kingmaker stages coup at Gildan

Derek Decloet, Bloomberg New

Usman Nabi was certain from the beginning that it would end this way — with his firm seizing control of Gildan Activewear Inc. as the company’s directors headed for the exits.

“We’ve always known we were going to win,” he said. 

Six months ago, few people inside corporate Canada had even heard of Browning West LP, the investment partnership founded in 2019 by Nabi and Peter Lee. They know it now, after Browning triumphed in an expensive and high-profile proxy fight at Gildan, one of world’s largest makers of T-shirts and other cheap apparel.  

The battle — which began in December when Gildan’s board sacked longtime Chief Executive Officer Glenn Chamandy — featured lawsuits, conspiracy theories and plenty of mudslinging. Browning West wanted Chamandy back. The board hired a new CEO in Vince Tyra, an ex-Fruit of the Loom executive who’d had a stint as the University of Louisville’s athletic director.

In the end, Gildan spent some US$65 million on advisers, legal fees, severance and other related expenses, according to Chamandy — more than one per cent of its market capitalization. It’s even more than Walt Disney Co. paid to fend off activist shareholders including Nelson Peltz earlier this year. 

The dollar figure is one indicator of how hostile it was. Gildan’s board publicly accused Chamandy of being a checked-out CEO, more interested in his golf resort in Barbados than running a $6 billion public company. But inside Gildan, some executives were quietly organizing on his behalf and urging shareholders to back Browning’s campaign to oust the existing board and Tyra, their new boss. 

The rebellion worked. 

• 'We're turning the page': Gildan's reappointed CEO on returning leadership

Faced with imminent defeat, Gildan’s entire board quit last week. The departures included former Goldman Sachs Group Inc. executive Tim Hodgson, who was brought in as Gildan’s new chair on May 1 — an unsuccessful attempt to persuade shareholders they could get an improved board without handing control to Browning West and Chamandy.

Now Tyra is gone, Chamandy is back and the directors are the eight men and women chosen by Browning West. All of them received at least 82 per cent of the shares voted in the board election, Gildan said in a statement Wednesday.  

“I think when we approach other public companies where change is required,” Nabi said, “folks are probably going to listen a little bit more carefully the next time.” 

Leadership focus

The Gildan proxy fight was shaped by Nabi’s time at H Partners Management LLC. There, he was part of the team that recapitalized Six Flags Entertainment Corp. and later pushed to replace the CEO of mattress maker Tempur Sealy International Inc. 

Under new leadership, both companies produced nice gains for investors, though in Tempur’s case it took several years for the strategy to work. Browning West is its fourth-largest holder today, according to data compiled by Bloomberg.

The experience showed that the quality of the top executives can make all the difference, Nabi said. Lee had a similar mindset. The two men, who both once worked for Lazard Inc., linked up to launch Browning West about five years ago and soon started building a stake in Gildan, which has produced annual returns of more than 18 per cent for shareholders since it went public in 1998. 

Chamandy — who ran Gildan with his brother Greg before becoming sole CEO in 2004 — is a supplier to Walmart Inc. and other apparel sellers. It has steadily built market share by exploiting a cost advantage over rivals such as Fruit of the Loom, a product of what Gildan executives said was Chamandy’s unparalleled knowledge of an intricate supply chain. 

The company takes cotton from the U.S. South and turns it into yarn that’s eventually transformed into T-shirts, socks and underwear by workers in low-wage textile centers such as Bangladesh. Chamandy knows better than anyone how to squeeze costs out of a vertically integrated manufacturing chain, Nabi said, and that’s the key. 

“It’s this game of inches,” Nabi said. “So the first thing you’d know is, let’s not hire someone who has no manufacturing experience, which is what the board did” when it chose Tyra, he said. 

Gildan’s board may have made a tactical error in the way it announced Chamandy’s departure on Dec. 11. The statement gave no explanation as to why the veteran CEO had left and said Tyra wouldn’t start working for two months. The stock fell 11 per cent that day.

It wasn’t until later that the board, then led by former alcohol executive Don Berg, came out with its story: that Chamandy, who’s in his early 60s, had run out of sensible ideas for growth, was proposing risky acquisitions and was stalling the board’s planning to find his eventual replacement. 

By that point, Chamandy had already grabbed control of the narrative, saying he’d been fired by a board that hadn’t consulted shareholders. Several of the largest investors went public with their unhappiness about the CEO change. 

By the end of December, Nabi and Lee had recruited former United Rentals Inc. CEO Michael Kneeland as a prospective new chair for Gildan, and the fight was on. “Our campaign started with a request for two board seats, then it went to five, and then it went to eight,” Nabi said. 

Browning West, which is based in Los Angeles, manages $1.6 billion for investors, including university endowments, wealthy individuals and the partners. Lee and Nabi say they have more than 90 per cent of their net worth in their fund. And the investment strategy is unusual. All of the money is in just six stocks, with the intention of owning them for years.

Under the operating plan unveiled by Browning West and Chamandy in March, Gildan will borrow more, repurchase stock, move additional production to Bangladesh and try to expand its sales of higher-quality products. There are ambitious targets — a $60 stock price by the end of next year, about 60 per cent higher than Tuesday’s closing price. If anything, the pressure on Chamandy is greater now: he’s accountable to a board that helped him get his job back. 

Gildan is Browning West’s second-largest holding, with a stake worth about $350 million. “What that means is, Gildan is extremely important to us as a fund,” Lee said, “but it’s also extremely important to us personally.

Proxy battle cost Gildan US$65M, as investors re-elect Chamandy, new slate to board

Christopher Reynolds, The Canadian Press

The bitter battle over who would run Gildan Activewear Inc. cost the company at least US$65 million, according to its newly returned CEO, as the apparel maker looks to turn a corner after a turbulent six months.

“This is probably the largest proxy fight in history, even more so than Disney, for example, which is 40 times our size,” said chief executive Glenn Chamandy, referring to a high-profile struggle at the entertainment company in recent years.

Shareholders of the T-shirt manufacturer voted to place Chamandy back on its board alongside a slate of candidates put forward by activist investors on Tuesday, capping a months-long leadership battle.

The election marks another vote of confidence for the company co-founder, who retook the helm last week after being ousted from the top job in December amid accusations he was no longer fit to lead the firm.

Chamandy told reporters in Montreal that Gildan's conduct over the past several months showed "poor judgement," causing a stressful period for him, his family and employees at the company. 

“I was a little saddened, I would say, by the way I think the board handled the succession — and handled me personally," he said.

Activist shareholders, including Browning West LP, pushed for Chamandy's return to the apparel manufacturer for months after former Fruit of the Loom executive Vince Tyra took over Gildan's CEO post. Gildan's largest shareholder, Jarislowsky Fraser, supported Browning West.

In a shock move last week, Tyra and Gildan's board stepped down, paving the way for Chamandy's return and for Browning West's slate of directors to be elected.

The US$65-million battle includes severances to outgoing board members and two executives, the company sale process — floated in March and since scrapped — as well as legal costs that include a pair of lawsuits launched by Gildan against Browning West, which were dismissed earlier this month, Chamandy said. That doesn't include his own severance, which he said he never received.

"This board was very entrenched and I think was very abusive to shareholders’ money,” he said of the departing directors. 

Roughly US$26 million of the US$65-million total went to Tyra, who headed the company for four months, and Arun Bajaj, Gildan's former human resources chief, said Chamandy, who called the compensation to his predecessor "shocking."

“They actually got the money for their severance and then left the company subsequently a couple days later, which is really strange,” he said. “From our view, it’s not very clean.”

Nonetheless, Chamandy suggested legal recourse is unlikely: “We’re putting this behind us.”

Meanwhile, the new board slate received “overwhelming support” from shareholders, the CEO said. The precise tally is expected by Wednesday morning.

Leading proxy firms Institutional Shareholder Services Inc., Glass Lewis and Egan Jones had all recommended Browning West's group of candidates be elected.

Gildan had previously replaced five directors in April and said it would back two Browning West nominees.

Browning West co-founder Peter Lee said Tuesday the legal battles cost his firm “millions of dollars.” The Los Angeles-based hedge fund will determine "down the road" whether Gildan might cover some of that expense, he said.

“Overall, justice has prevailed,” Chamandy told reporters. “The shareholders have spoken. This is a new beginning for Gildan.”

However, questions have already arisen around succession plans, given the tortuous saga of the past half-year.

“I’ve got a lot of energy. I’m in my early 60s, which is early 50s in the future," he said.

While Chamandy declined to speculate on when he might step down, chairman Michael Kneeland said, "Obviously, we’ll say three to five years — that’s probably good guardrails, but there’s no set time limit."

Chamandy also threw cold water on the idea of a sale of the clothing maker, which the previous board announced barely two months ago. The chief executive pointed to Gildan's ability as a publicly traded company to raise billions of dollars in capital for investment in garment factories.

“Private equity comes in and they buy the company and they put $5 billion of debt on the company, which is unmanageable," he said. "We're not going be able to reinvest in the company itself and we'll lose our competitive advantage."

Asked about complaints from factory workers in Honduras reported on by the Globe and Mail, Chamandy stood by the company’s practices, saying that most facilities are unionized and subject to periodic audits from monitoring and certification programs such as Worldwide Responsible Accredited Production. He also claimed high worker satisfaction among Gildan’s 44,000 employees and highlighted the whistleblower lines available to them.

This report by The Canadian Press was first published May 28, 2024.

Property controls a major barrier for grocery competition in Canada: experts

Darryl Greer, The Canadian Press

As Canadian consumers have increasingly soured on the major grocers, the country's competition watchdog has turned its sights on restrictive clauses in retail leases that it says are hampering competition in the grocery sector. 

Limiting the use of these clauses could open the door for more independent grocers and smaller chains to compete with the big players, giving consumers more choice and potentially even lower prices, experts say. 

“It would promote some more competition in the marketplace,” said Peter Chapman, founder of consulting firm SKUFood and a former Loblaw Cos. Ltd. executive. 

Grocery prices have increased by more than 20 per cent over three years, and the resulting political pressure has seen MPs order grocery executives to take action. The federal industry minister has said he's courting foreign grocers in the hope that a new entrant would boost competition. 

Meanwhile, the Competition Bureau is looking into the use of property controls in the grocery industry. 

The bureau says property controls, which are terms baked into commercial leases that put restrictions on other nearby tenants and their activities, can be barriers to both smaller domestic companies and foreign entrants. 

These clauses could limit the kinds of stores that can open in a mall, or limit the kind of store that can take over a vacated location. They might also limit other nearby stores from selling certain products.

But experts say limits on this practice would do more to boost domestic competition than it would to pave the way for a foreign grocer to enter Canada. 

"It's not going to necessarily bring a big international competitor in," said Michael von Massow, a food economy professor at the University of Guelph.

In May, the Competition Bureau launched investigations into the parent companies of grocery chains Loblaws and Sobeys over the use of property controls. 

“According to market participants, property controls are widespread in the retail grocery sector, impacting where and how businesses can compete in the retail sale of food products,” the commissioner said in court documents. 

Since large retailers draw traffic to malls and plazas, they have power in their negotiations with landlords to ask for restrictive clauses, said Chapman. 

“Some landlords would say that having a large retailer as a draw is worth restricting some of the other avenues they can pursue,” he said. 

If the grocer’s parent company has ownership in the landlord, it’s much more likely that the retailer will get property controls in the agreement, he added. 

In May, the Competition Commissioner applied in the Federal Court to order Empire Cos. Ltd. and George Weston Ltd. to hand over records about real estate holdings, lease agreements, customer data and more.

The court documents describe Empire's and George Weston’s holdings in real estate investment trusts, or REITs, which count the companies’ own grocery banners as major tenants. 

The REITs have a wide reach geographically, and so property controls often extend past one mall or one plaza, said von Massow. 

Over time, these clauses are becoming more specific as companies like Giant Tiger and Dollarama have expanded into food, said von Massow.

"We're seeing the introduction of new restrictions, because the nature of the competition has changed," he said. 

If consumers have access to several stores selling food within close proximity to each other, they are more likely to go to multiple stores in one trip, cherry-picking deals, said von Massow. By restricting which other stores can be near a large grocer, or what nearby stores can sell, the grocers are trying to be a one-stop shop for consumers instead, he said. 

Sobeys owner Empire said in a separate court application that the bureau’s investigation gives the Competition Commissioner “the appearance of a lack of independence” amid political pressure and criticism over grocers’ prices, and called the inquiry “unlawful.” The Competition Bureau has confirmed that it has filed a motion to strike Empire’s application for judicial review. 

Loblaw previously said it’s co-operating with the review, but noted that restrictive covenants are common in many industries including retail. 

“They help support property development investments, encouraging opening of new stores and capital risk-taking,” said spokeswoman Catherine Thomas in a statement last week. 

Though limiting the use of property controls could promote competition, Chapman said he doesn’t think restrictive clauses are one of the top barriers for potential foreign entrants like the ones being courted by federal Industry Minister François-Philippe Champagne. 

Chapman said the challenges of setting up a distribution network, and of building an economic model that works within Canada’s regulatory environment, would pose much bigger obstacles for companies looking to expand. 

If a foreign grocer decides to enter Canada, they’re more likely to build their own locations or partner with an investor, rather than try and enter shopping areas already occupied by an anchor tenant, added von Massow. 

But the experts said limiting property controls will help independent stores and smaller chains like Dollarama and Giant Tiger. 

If those stores are able to open more locations, consumers will benefit from more choice, said von Massow. 

With consumers better able to shop at multiple stores in one trip and look for deals, that could also boost local price competition on some items, he added. 

If the use of property controls is restricted, "it won't necessarily bring a Lidl or an Aldi in, but it will make it easier for a dollar store to go in and provide a choice for people who are willing to shop around," said von Massow. 

This report by The Canadian Press was first published May 29, 2024.

B.C. miners serve strike notice at Gibraltar copper pit in central Interior

The Canadian Press

A union representing 550 workers at a mine in British Columbia's central Interior says they're prepared to go on strike if a new contract is not reached by the end of Friday.

Unifor Local 3018 says the workers at Taseko's Gibraltar Mine deserve fair wages, strong safety protocols and equitable treatment on the job.

A statement from the union says despite several weeks of meetings, the company has failed to make meaningful proposals at the bargaining table ahead of the current collective agreement expiring on May 31.

The union says the mine, north of Williams Lake, B.C., is the second largest open-pit copper mine in Canada and the largest employer in the Cariboo region.

The statement says members voted 98 per cent in favour of a strike if a contract could not be achieved before the deadline.

A statement from Taseko says the bargaining process is ongoing and the company "remains committed to reaching a fair and equitable agreement.”

Unifor western regional director Gavin McGarrigle says in the statement that Taseko needs to "get serious" about resolving basic issues to avoid job action.

This report by The Canadian Press was first published May 28, 2024.

BHP, Rio Tinto on fast track with electric haul trucks

Australia

PILBARA, May 28, 2024 – Mining giants BHP and Rio Tinto will collaborate to fast-track trials of electric haul trucks, the two companies announced on Monday.

The trucks, built by Komatsu and Caterpillar, will be trialled at large-scale iron ore mines in Western Australia’s Pilbara region.

Ongoing testing, development and refinement of truck and battery design is anticipated with each manufacturer, the companies said.

Rio Tinto’s iron ore CEO, Simon Trott, hailed the collaboration as “bring[ing] together two leading global miners with two of the world’s biggest manufacturers of haul trucks to work on solving the critical challenge of zero-emissions haulage.”

“Testing two types of battery-electric haul trucks in Pilbara conditions will provide better data, and by combining our efforts with BHP we will accelerate learning,” he said.

Meanwhile, BHP president for Australia Geraldine Slattery said replacing diesel fuel would require “a whole new operational ecosystem to surround the fleet.”

“We need to address the way we plan our mines, operate our haulage networks, and consider the additional safety and operational considerations that these changes will bring.”

Report finds almost 50% of mining vehicles

 to be electric by 2044

28 MAY, 2024
WRITTEN BY Aaliyah Rogan

Ahead of World Environment Day on 5 June, IDTechEx’s report, Electric Vehicles in Mining 2024-2044: Technologies, Players, and Forecasts, reveals that nearly 50% of mining vehicle sales will be electric vehicles (EV) by 2044.

The report forecasts the electric mining vehicle market will grow to more than US$23 billion ($34.66 billion) within 20 years, representing a 32% compound annual growth rate.

IDTechEx says the electrification of haul trucks will be key to achieving meaningful emissions reductions in the industry and supporting mining companies to meet sustainability targets.

While the electric mining vehicle market is still in its early stages, many mining companies have shown a willingness to adopt EVs.

Mining giant BHP (ASX:BHP) revealed today that it is collaborating with Rio Tinto (ASX:RIO) on battery-electric haul truck trials in the Pilbara region of Western Australia.

IDTechEx reports that haul trucks are among the most critical assets on any mine and currently emit 174 megatonnes of carbon dioxide per year.

The collaboration, alongside manufacturers Caterpillar and Komatsu, supports both companies’ shared ambition of net zero operational greenhouse gas emissions by 2050.

As part of the collaboration, two CAT 793 haul trucks will be tested in the second half of 2024, while two Komatsu 930 haul trucks will be tested from 2026 at mine sites in the Pilbara region.

BHP President Geraldine Slattery says replacing diesel as a fuel source requires the sector to develop a new operational ecosystem to surround the fleet.

“We need to address the way we plan our mines, operate our haulage networks, and consider the additional safety and operational considerations that these changes will bring,” she says.

“This is why trials are so critical to our success as we test and learn how these new technologies could work and integrate into our mines.”

Rio Tinto Iron Ore CEO Simon Trott says there is no clear path to net zero without zero-emissions haulage, as such, it is critical to work together and get there as quickly and efficiently as possible.

“As we work to repower our Pilbara operations with renewable energy, collaborations like this move us closer to solving the shared challenge of decarbonising our operations and meeting our net zero commitments,” he says.

According to IDTechEx, the mining industry accounts for 2% to 3% of all global CO2 emissions, with 40% to 50% of this coming from diesel combustion engines of mining vehicles.

Mining vehicles have a wide variety of duties, however, the most intense of those can require operating for up to 20 hours a day. As a result, a lot of diesel is consumed in the process, which is more expensive than electricity and subject to considerable price volatility.

IDTechEx’s analysis reveals that a single 150-tonne haul truck requires more than US$850,000 per year in fuel, while electrification can save more than US$5.5 million in energy costs over the vehicle’s lifetime.

Write to Aaliyah Rogan at Mining.com.au


Electric mining vehicle industry’s value to reach $23 billion by 2044

The electric mining vehicle industry is expected to be valued at nearly $23 billion by 2044, according to a new report by IDTechEx.

The analysis points out that large EV batteries and innovative fast-charging methods are driving the adoption of electric and autonomous mining vehicles.

“Mining vehicles come in a wide range of sizes so mining batteries can vary wildly too – from 100 kWh for light vehicles up to 2 MWh for large electric haul trucks. The uniquely large nature of these batteries means they are only now becoming sufficiently developed and competitively priced,” the report reads. “Turnkey battery suppliers, including CATL, ABB, and Northvolt, have developed products that are particularly well-suited to mining vehicles, and their development work is continuing.”

The document notes that lithium-nickel-manganese-cobalt or NMC and lithium-iron-phosphate or LFP batteries are the two battery chemistries that have, so far, been used in mining. In detail, just under 80% of mining vehicles use LFP despite such batteries’ tendency to have lower energy densities, which is not a major concern as mining vehicles are typically already heavy and carry hefty loads of ore.

“Where LFP does win out is in its cycle life. IDTechEx expects that some of the most demanding mining vehicles, such as haul trucks, will far exceed the cycle life deliverable by a single NMC or LFP pack and require multiple battery replacements. Minimizing the frequency of replacements by using a longer-life battery pack is an effective way to make EVs more economical,” the dossier notes. “Safety is another crucial factor in mining, especially regarding the fire safety of batteries in underground tunnels. LFP cells are generally considered safer in this aspect, which limits the risk posed to mine workers.”

Looking beyond NMC and LFP, IDTechEx expects more battery technologies such as lithium-titanium-oxide or LTO and sodium-ion or Na-ion to continue developing and eventually see viability for mining vehicles.

Tackling charging challenges

IDTechEx’s report emphasizes that one of the things that has slowed down the adoption of EVs in the mining industry is the multiple hours of downtime that they are subjected to while charging, a situation that hinders vehicle productivity.

However, the market analyst points out that original equipment manufacturers or OEMs have made some progress when it comes to bringing downtime closer to a level that mines are more familiar with.

“Conventional cable-based charging methods are used in many of these solutions, with most mining EVs utilizing DC fast charging. OEMs are now looking to employ methods including multi-gun charging and megawatt charging systems to bring times down to between 20 and 60 minutes,” the dossier states. “This goes some way to increasing the productivity of vehicles, but charging at such high rates can accelerate the degradation of batteries and increase the frequency of battery replacements.”

The analysis indicates that battery swapping is an alternative to cable-based charging, which has seen a lot of interest from mining OEMs, particularly for underground vehicles.

Battery swapping involves having two swappable battery packs per vehicle, one of which can be charged while the other is used in operation. Swapping can be done in dedicated swapping stations using a crane or hoist in as little as 5 to 10 minutes.

“Battery swapping is excellent for productivity but can be more expensive in some scenarios and will require dedicated space and infrastructure for swapping.”

Dynamic charging also plays a role in mining – vehicles can be charged in-cycle using power rails or overhead catenary lines along major pathways. This has the potential to eliminate charging downtime and maximize productivity, but it is still being developed and has seen the least use.

“All of the above charging methods are likely to play a part in driving the electrification of the industry, with different methods to be used for different vehicles depending on their technical requirements and duty cycle demands,” the document reads. “OEMs and charging providers are still working on optimizing their technologies.”

Arafura Rare Earths secures up to $300 million in finance from Canada

ALL CAPITALI$M IS STATE CAPITALI$M

Reuters | May 27, 2024 | 

Pre-construction site inspection at the Nolans project. Credit: Arafura Rare Earths

Arafura Rare Earths said on Monday it had secured up to $300 million in debt financing from Export Development Canada (EDC) for its Nolans project in Australia’s Northern Territory.


The funding comes after Australia earlier this year pledged up to A$840 million ($556.42 million), as Western nations diversify the global supply chain for rare earths after Covid-related snarls highlighted China-linked supply risks. China produces more than 80% of the world’s rare earths.

Shares of the rare earths explorer climbed as much as 7.7% by 0115 GMT, compared to a 0.6% rise in the broader benchmark index.

The Nolans project is slated to be the country’s third rare earths processing plant after Lynas Rare Earths’ Kalgoorlie operations and Iluka Resources’ Eneabba heavy rare earths plant, which is under development.

Arafura said it had received conditional approval for 68% of the targeted $775 million senior debt funding for the project, bringing it closer to a final investment decision.

In November 2022, Arafura estimated capital costs and contingency for the Nolans project at about A$1.59 billion, according to the company’s 2023 annual report.

The company, whose largest shareholder is Australia’s richest person Gina Rinehart, already has supply agreements with Hyundai Motor, Kia Corp and Siemens Gamesa Renewable Energy. It also has a provisional agreement with General Electric.

The funding arrangement between Arafura and EDC was facilitated by a unit of General Electric, the Australian company said.

Arafura is working with a group of foreign and domestic commercial banks to seek the remaining funding for the project.

($1 = 1.5092 Australian dollars)

(By Aaditya Govind Rao; Editing by Tom Hogue, Subhranshu Sahu and Rashmi Aich)

Berkeley seeks $1bn in damages from Spain over uranium mine dispute

Reuters | May 28, 2024 | 

Credit: Berkeley Energia

Australian mining group Berkeley Energia said on Tuesday it had filed a request for an arbitration to seek $1 billion in damages from the Spanish government after it refused to give final approval for its uranium mine project.


The Retortillo project, Berkeley’s main asset, received preliminary approval in 2013, but Spain’s Energy Ministry refused to approve the project located near the central city of Salamanca first in 2021 and again in 2023.

A spokesperson for the Energy Ministry said the government blocked the project based on a report from the country’s Nuclear Security Council but declined to comment on the arbitration.

Berkeley filed an arbitration at the World Bank’s International Centre for Settlement of Investment Disputes, the company said in a filing to the Madrid stock market regulator.

It accuses the government of infringing on its rights under an international agreement known as the Energy Charter Treaty, designed to promote energy security through the operation of more open and competitive energy markets.

Berkeley said it was still committed to the project and was ready to collaborate with Spain for a resolution and hopeful for near-term discussions.

The company has said in the past the mine would require a 250-million-euro ($271.85 million) investment and would have created more than 2,500 jobs.

Shares in Berkeley were up 5.4% following the arbitration disclosure.

($1 = 0.9196 euros)

(By Marta Serafinko; Editing by Inti Landauro, Jan Harvey and Bernadette Baum)

Lithium in Marcellus shale gas wells could potentially meet part of US demand

Staff Writer | May 29, 2024 

Fracking wastewater. (Image by Faces of Fracking, Flickr.)

A new analysis using compliance data from the Pennsylvania Department of Environmental Protection suggests that if it could be extracted with complete efficiency, lithium from the wastewater of Marcellus shale gas wells in Pennsylvania could supply up to 40% of the United States demand.


Finding lithium in the wastewater in the Marcellus shale wasn’t a surprise: Researchers had analyzed the water recycled in hydraulic fracking and knew that it picked up minerals and elements from the shale. “But there hadn’t been enough measurements to quantify the resource,” Justin Mackey, a researcher at the National Energy Technology Laboratory, said in a media statement. “We just didn’t know how much was in there.”

Thanks to Pennsylvania regulatory requirements, his team was able to figure it out.

Companies are mandated to submit analyses of wastewater used in each well pad and lithium is one of the substances they must report. “And that’s how we were able to conduct this regional analysis,” Mackie said.

Meeting 30% to 40% of the country’s lithium needs would bring the country much closer to the US Geological Survey’s requirements, which demand all lithium to be produced domestically by 2030.

There’s also lithium-rich wastewater outside of the state’s boundaries. “Pennsylvania has the most robust data source for Marcellus shale,” Mackey said. “But there’s lots of activity in West Virginia, too.”

The next step toward making use of this lithium is to understand the environmental impact of extracting it and to implement a pilot facility to develop extraction techniques.

“Wastewater from oil and gas is a burgeoning issue,” the scientist pointed out. “Right now, it’s just minimally treated and reinjected.”

However, in his view, wastewater has the potential to provide a lot of value. After all, “it’s been dissolving rocks for hundreds of millions of years — essentially, the water has been mining the subsurface.”

Arizona Lithium Initiates Production Drilling at Prairie Project in Saskatchewan

• 28-May-2024 
• Journalist: Shiba Teramoto

Arizona Lithium Limited (ASX: AZL, AZLO, AZLOA, OTC: AZLAF), known as "Arizona Lithium" or "AZL", a company dedicated to sustainable development with a focus on two significant lithium projects in North America, namely the Big Sandy Lithium Project ("Big Sandy") and the Prairie Lithium Project ("Prairie"), announces the commencement of drilling at the Prairie Project in Saskatchewan, Canada. The drilling and completion operations will span Pad #1, Pad #2, and Pad #3 in the upcoming months. In June, production and disposal testing will kick off for the wells on Pad #1. The initial two wells on Pad #1 are being drilled vertically. Well #1 is slated to assess the Souris River and Duperow Formations, while Well #2 will target the Dawson Bay Formation and specific disposal sites within the Madison Group. Establishing both production and disposal wells is a critical milestone in advancing the Prairie Project Development, marking a significant stride towards lithium commercial production.

Paul Lloyd, the Managing Director of Arizona Lithium, remarked, "I am excited to announce the commencement of our drilling program as planned. With the rig now operational on-site and the first well initiated, our focus is on drilling our lithium wells efficiently. Operating within a mature and well-established oil and gas province provides us with access to the necessary expertise and services to advance our project rapidly. These wells are being drilled to significant depths by a robust oil drilling rig. The execution of a drilling and completion program of this scale requires the collaboration of over 40 service providers and the contribution of hundreds of individuals. I extend my gratitude to all the vendors, their employees, and the local community for their support of our project. We eagerly anticipate providing shareholders with updates as the extensive drilling program progresses."

The Prairie Lithium Project by AZL is situated in Saskatchewan, Canada, within the Williston Basin and boasts a resource estimate of 6.3 million tonnes (MT) of lithium carbonate equivalent (LCE), comprising 4.5 MT LCE in the Indicated category and 1.8 MT LCE in the Inferred category. Being located in one of the world's foremost mining-friendly jurisdictions, these projects benefit from convenient access to critical infrastructure such as electricity, natural gas, freshwater, well-maintained highways, and railways. Additionally, the projects prioritize strong environmental stewardship, with Arizona Lithium striving to minimize freshwater usage, land footprint, and waste generation, aligning closely with the company's sustainable ethos in lithium development.

Post-Covid, China is back in Africa and doubling down on minerals

Reuters | May 28, 2024 

Xi Jinping Image: Thierry Ehrmann

China’s flagship economic cooperation program is bouncing back after a lull during the global pandemic, with Africa a primary focus, according to a Reuters analysis of lending, investment and trade data.


Chinese leaders have been citing the billions of dollars committed to new construction projects and record two-way trade as evidence of their commitment to assist with the continent’s modernization and foster “win-win” cooperation.

But the data reveals a more complex relationship, one that is still largely extractive and has so far failed to live up to some of Beijing’s rhetoric about the Belt and Road Initiative, President Xi Jinping’s strategy to build an infrastructure network connecting China to the world.

While new Chinese investment in Africa increased 114% last year, according to the Griffith Asia Institute at Australia’s Griffith University, it was heavily focused on minerals essential to the global energy transition and China’s plans to revive its own flagging economy.

Those minerals and oil also dominated trade. As efforts falter to boost other imports from Africa, including agricultural products and manufactured goods, the continent’s trade deficit with China has ballooned.

Chinese sovereign lending, once the main source of financing for Africa’s infrastructure, is at its lowest level in two decades. And public-private partnerships (PPPs), which China has touted as its new preferred investment vehicle globally, have yet to gain traction in Africa.

The result is a more one-sided relationship than China says it wants, one that is dominated by imports of Africa’s raw materials and that some analysts argue contains echoes of colonial-era Europe’s economic relations with the continent.

“This is something late-19th century Britain would recognize,” said Eric Olander, co-founder of the China-Global South Project website and podcast.

China rejects such assertions.

“Africa has the right, capacity and wisdom to develop its external relations and choose its partners,” China’s foreign ministry wrote in response to Reuters‘ questions.

“China’s practical support for Africa’s path of modernization in accordance with its own characteristics has been welcomed by an increasing number of African countries.”
A pivot with potential?

China’s engagement in Africa, a focus of the Belt and Road Initiative (BRI), grew rapidly in the two decades before the Covid-19 pandemic. Chinese companies built ports, hydropower plants and railways across the continent, financed mainly through sovereign loans. Annual lending commitments peaked at $28.4 billion in 2016, according to the Global China Initiative at Boston University.

But many projects proved unprofitable. As some governments struggled to repay loans, China cut lending. Covid-19 then pushed it to turn inward, and Chinese construction projects in Africa fell.


A rebound in sovereign lending is not expected.

Policymakers in Beijing have instead been pushing Chinese companies to take equity stakes and operate infrastructure they build for foreign governments. The aim, China analysts say, is to help companies win higher-value contracts and, by giving them skin in the game, ensure the projects are economically viable.

Lending to Special Purpose Vehicles (SPVs), perhaps the most common means of PPP infrastructure investment, has been growing as a proportion of China’s overseas loans, according to figures shared exclusively with Reuters by AidData, a research centre at US university William & Mary.


The $668 million Nairobi Expressway, a public-private partnership built and run by the state-owned China Road and Bridge Corporation (CRBC), could be proof of concept for the model in Africa. Since it opened in August 2022, the toll road has been allowing commuters to speed above the Kenyan capital’s notorious traffic snarls, beating revenue and usage targets.

Daily average use in March was already 57,000 vehicles, exceeding a 2049 target of around 55,000 set by CRBC in a 2019 presentation on the project’s economic viability seen by Reuters.

But few companies are following CRBC’s example in Africa. While globally some 45% of Chinese non-emergency lending was to SPVs from 2018 to 2021, the most recent year for which AidData figures are available, the figure was only 27% for Africa.

Analysts point to a number of likely reasons, including a lack of legal frameworks for PPPs in many African countries and the view among some Chinese companies – many of them relative newcomers to PPPs – that African markets are risky.

China’s foreign ministry did not directly address a request for comment on the lower SPV figures for Africa. But it said the government encourages Chinese companies to “actively develop new modes of cooperation” such as PPPs to bring more private investment to Africa.
Growing engagement

The Griffith Asia Institute put China’s total engagement in Africa – a combination of construction contracts and investment commitments – at $21.7 billion last year, making it the largest regional recipient.

Data from the American Enterprise Institute, a Washington-based think tank, showed investments hitting nearly $11 billion in 2023, the highest level since it began tracking Chinese economic activity in Africa in 2005.

Some $7.8 billion of that went to mining, like Botswana’s Khoemacau copper mine, which China’s MMG Ltd bought for $1.9 billion, and cobalt and lithium mines in countries including Namibia, Zambia and Zimbabwe.

The hunt for critical minerals is driving infrastructure construction as well. In January, for example, Chinese companies pledged up to $7 billion in infrastructure investment under a revision of their copper and cobalt joint venture agreement with Democratic Republic of Congo.

Western and Gulf powers are also racing to lead the world’s energy transition, with the United States and European governments backing the Lobito Corridor, a rail link to bring metals from Zambia and Congo to Africa’s Atlantic coast.

African leaders have struggled, however, to raise financing for some other priority projects.

Despite the success of the Nairobi Expressway, for example, work on several Kenyan roads stalled when the government ran out of money to pay the Chinese construction firms.

During a visit to Beijing last October, President William Ruto asked for a $1 billion loan to complete the projects.

A Chinese foreign ministry spokesman, Wang Wenbin, said discussions about the request were ongoing. Kenya’s finance ministry did not respond to a request for comment.

The final phase of a railway line intended to traverse Kenya from its main port to the border with Uganda has been in similar limbo since Chinese financing dried up in 2019. Uganda cancelled the contract for its portion of the line in 2022, after Chinese backers pulled out.

When asked about the decline in lending for African infrastructure, Chinese officials point to a pivot to trade and investment, arguing that BRI-generated trade boosts Africa’s wealth and development.

Two-way trade reached a record $282 billion last year, according to Chinese customs data. But at the same time, the value of Africa’s exports to China fell 7%, mainly due to a decline in oil prices, and its trade deficit widened 46%.

Chinese officials have sought to assuage the concerns of some African leaders.

At a summit in Johannesburg last August, Xi said Beijing would launch initiatives to support the continent’s manufacturing and agricultural modernization – sectors African policymakers consider key to closing trade gaps, diversifying their economies and creating jobs.

China has also pledged to increase agricultural imports from Africa.

Such efforts, for now, are coming up short.

With one of Africa’s largest trade deficits to China, Kenya has been pushing to increase access to the world’s second-largest consumer market, recently gaining it for avocados and seafood. But cumbersome health and hygiene regulations mean Chinese consumers remain out of reach for many producers.

“The Chinese market is a new one,” said Ernest Muthomi, CEO of the Avocado Society of Kenya. “It was a challenge because you have to install the equipment for fumigation.”

Of 20 billion shillings ($150.94 million) worth of avocados exported last year, just 10% went to China.

Overall, Kenyan exports to China fell over 15% to $228 million, Chinese customs data showed, as a decline in titanium production led to a drop in shipments of the metal – a key export to China.

But Chinese manufactured goods kept coming.

That’s not sustainable, said Francis Mangeni, an advisor at the Secretariat of the African Continental Free Trade Area.

Unless African nations can add value to their exports through increased processing and manufacturing, he said, “we are just exporting raw minerals to fuel their economy.”

($1 = 132.5000 Kenyan shillings)

(By Rachel Savage, Duncan Miriri, Elias Biryabarema, Joe Cash, Nyasha Chingono, Chris Mfula and Felix Njini; Editing by Joe Bavier and Alexandra Zavis)

Marxists.orgwww.marxists.org/archive/bukharin/works/1917/imperial/

Nikolai Bukharin: Imperialism and World Economy

Lenin. Written: 1915 and 1917. Source: Nikolai Bukharin "Imperialism and World Economy", Monthly Review Press, no date. First Published in English: Nikolai ...

EU, Australia sign critical minerals pact to diversify supply chains

Bloomberg News | May 28, 2024 | 

Signing ceremony of the EU-Australia Strategic Partnership on Critical Raw Materials. Credit: European Commission

Australia and the European Union have struck an agreement to boost cooperation and investment in critical minerals, part of a drive by Western nations to loosen China’s grip on supply chains of materials essential to high-tech and green manufacturing.


Ministers in Canberra and Brussels signed a memorandum of understanding on Tuesday, which will be followed by the joint development of “concrete actions” over the next six months to improve collaboration on critical minerals projects.

“Australia is a like-minded partner and a global leader when it comes to critical raw materials,” EU Commissioner for Trade Valdis Dombrovskis said in a statement. “This partnership marks a major step forward in our efforts to secure a more sustainable supply of critical raw materials for the EU, whilst fostering investment in Australia.”

The US and its allies have been working in recent years to establish alternative sources of critical minerals such as lithium, cobalt and nickel, which are used in the manufacturing of equipment including computer chips, solar panels and military hardware. China currently controls much of the supply, leaving the US potentially exposed to export restrictions given intensifying strategic competition between Washington and Beijing.

Access to critical materials has become a serious concern for the EU due to the potential for China to “weaponize” its dominance of the sector.

Australia has vast, largely untapped deposits of several critical minerals and has been attempting to build up its domestic industry through financing vehicles and tax incentives, including new measures announced in its May budget.

Under the MoU signed on Tuesday, Australia and the EU will look to boost investment in critical mineral projects, including joint ventures, as well as cooperating on research and innovation.

(By Ben Westcott)

Glencore to consult investors on coal spinoff after Teck deal

Bloomberg News | May 29, 2024 | 

Image courtesy of Glencore.

Glencore (LON: GLEN) will start consulting with shareholders on the future of its coal business as soon as its deal to buy Teck Resources Ltd.’s mines closes later this year.


Crucially, Glencore said that should the majority of shareholders support keeping its coal mines, the company will not proceed with a vote.

Glencore’s coal business is one of its most profitable units, driving record returns in recent years, and the plan to exit the fossil fuel and list a new company in New York represented a major strategic pivot under current boss Gary Nagle. The company had long resisted pressure to follow rivals in jettisoning coal, arguing that the world still needed the dirtiest fuel and that it was more responsible to run the mines itself than sell them.

Bloomberg reported last month that several of Glencore’s largest shareholders believe the company should retain its coal assets.

The deal to buy Teck’s coal mines is expected to close in the third quarter.

Once the acquisition closes, Glencore will immediately consult with investors, Chief Executive Officer Nagle said at the company’s annual shareholder meeting on Wednesday. That will dictate the firm’s next move on coal, he said.

Nagle said that if the majority of shareholders want to keep coal, there will be no vote. Should the consultation show support, there will be a binding vote.

That approach would potentially allow Glencore to avoid some of its shareholders having to vote against a company proposal should they want to keep coal.

The company’s largest shareholders are former CEO Ivan Glasenberg, the Qatar Investment Authority and BlackRock Inc.

Glencore, the world’s largest shipper of thermal coal with a market capitalization of about $75 billion, had said it intended to spin the business off within two years of closing a deal to buy the steelmaking coal assets of Teck.

(By Thomas Biesheuvel)