Canada's biggest province expects to land another EV battery plant

Stephanie Hughes and Monique Mulima, Bloomberg News

Ontario expects to land another major electric vehicle battery plant, its economy minister said, as Canada’s most populous province tries to capitalize on what it views as a short-lived opportunity to secure the future of its auto sector.

It has already lured commitments for major plants from Stellantis NV, Volkswagen AG and Honda Motor Co., with the help of promises of billions of dollars from government. Ontario has its eyes on three more prospects and is confident it will land at least one, said Vic Fedeli, its minister of economic development and trade. 

“The window in EV is going to close very, very shortly,” Fedeli said in an interview with Bloomberg in Toronto, explaining that he believes new facilities need to be opened by 2027 or 2028. “It’s starting to close now, meaning that everybody needs a dance partner.”

Ontario has jumped into the global race to use public money to attract investment from EV manufacturers, making the case that it must act quickly to keep a share of the auto-assembly business amid aggressive competition from the U.S. and China. It’s also a strategy to ensure the long-term future of existing factories where automakers might wind down production of gasoline-powered cars and trucks. 

Fedeli wouldn’t disclose which companies he’s speaking with, though his team has concentrated much of its time and attention on major automaking countries including the U.S., Japan and Germany.

Canada got Volkswagen and Stellantis to sign on to new EV battery plants in Ontario by promising to match the enormous subsidies available in the U.S. Inflation Reduction Act. For the Honda deal, which is an estimated C$15 billion in total investment, the federal and provincial governments relied on a financial package — including tax credits and capital cost subsidies — worth as much as C$5 billion.

Canada has leaned into these investments even as demand for EVs is slowing. Global sales of all-electric and plug-in hybrid vehicles grew 62 per cent in 2022, 31 per cent last year and are forecast to rise at a slower rate again this year, according to Bloomberg NEF data. The vast majority of Canada’s vehicle production is exported to the U.S.

Ontario’s auto industry has hit those speed bumps. In April, Ford Motor Co. pushed back the start of electric vehicle production in Oakville, its lone Canadian assembly plant, by two years to 2027. The automaker said it needed more time to see the consumer market pick up.

Fedeli, however, argues that there’s “long-term life” in electric vehicle investments, pointing to robust North American sales as well as government mandates to try to force adoption of EVs.

Life sciences

Though provincial government is still chasing EV deals, Fedeli said the “closing window” for these projects means it’s starting to focus more on attracting foreign investment in the life sciences sector.

Ontario, which has a population of about 16 million people, has already landed C$4 billion in investments from companies like the vaccine-making division of France’s Sanofi SA, UK-based AstraZeneca Plc, Swiss health care company Roche Holding AG and US-based Omni International, he said. 

Fedeli, who founded an advertising company before entering politics, describes himself and Premier Doug Ford as businesspeople at heart. Pulling out his phone, Fedeli said that every single day without fail — even Christmas Day — he sends the premier a text message with the name of a company and the amount it’s investing in Ontario. It’s their “one-a-day vitamin,” he said.  

Magic mushrooms get Canadian export license in psychedelic race

Thomas Seal, BNN Bloomberg

The market today is clinical rather than recreational. (Moriah Ratner/Bloomberg)

Canada has licensed a startup to export psychedelics to Australia for patient use, the latest milestone in a contest to supply the potential growth of medical psychedelic drugs.

Canada’s health department awarded a drug establishment license to Optimi Health Corp., a spokeswoman for the company said, allowing it to ship pills containing the magic-mushroom extract psilocybin and MDMA — controlled and otherwise-illegal substances — to a provider in Australia.

The small Vancouver-based company hopes the certificate will help pave the way to an expanded market for psychedelic drugs as pharmaceuticals while giving it an early-mover advantage. 

Seven companies have legally exported psilocybin, MDMA or both from the country so far, all for clinical trial purposes, a spokeswoman for Canada’s health department said. She wasn’t able to say if any has ever been exported for regular patient use before; she declined to name the seven companies, citing security reasons.

The milestone puts Optimi among a small club of legal, international suppliers of psychedelic drugs, according to Chairman John James ‘JJ’ Wilson, its co-founder and the son of billionaire Lululemon Athletica Inc. founder Chip Wilson. 

Optimi’s vision is “to be the largest scalable quality manufacturer made available globally of psilocybin and MDMA,” JJ Wilson said in an interview. “The world is taking this more seriously as an alternative to traditional pharmaceuticals, to treat these mental health disorders.”

The market today is clinical rather than recreational, Wilson said, downplaying parallels to the legalization of cannabis in Canada and many U.S. states.

Optimi’s bet is that, even though magic mushrooms are naturally occurring, demand for a pharmaceutical-grade version of the substance will be robust, and the company will have the credentials and scale to supply it. 

As it seeks to carve out this niche, refine processes and strike early supply deals, it’s losing more than C$1 million ($733,000) per quarter and regularly raising funds, filings show. Chip Wilson, who sits on its advisory board, acquired shares with options worth as much as C$3.3 million in late 2022, and since then the company has closed small private placements.

To grow, test, and extract its trippy crop, Optimi has set up 20,000 square feet of facilities in Princeton, British Columbia, a mining and lumber town with a population of about 3,000 in the mountains three hours’ drive east of Vancouver. The nondescript blue warehouses are set behind high security fences.

Visitors must show government ID, don protective clothing, and pass through air jets to prevent contamination. Although warehoused mushroom strains have zany and obscene names like “Albino Penis Envy,” Optimi has built facilities to pass stringent manufacturing-quality tests set by authorities. Staff have to undergo background checks. 

‘Initial Promise’

All this effort and investment is part of jostling to be in prime position for a possible psychedelic renaissance. 

Although many jurisdictions have now relaxed rules around cannabis, the regular possession, sale and distribution of potent psychedelics remains illegal in Canada and the US. But attitudes are shifting, and there’s increased talk of potential benefits in treating psychiatric conditions. Research has increased — and in some cities like Vancouver, rebellious entrepreneurs have even opened brick-and-mortar stores, which sell psychedelics with apparent impunity. 

Optimi says it’s ready to step in first wherever MDMA and mushrooms become rescheduled, and points to regulatory developments.

Last June, the U.S. Food and Drug Administration published its first draft guidance on psychedelic clinical trials, saying they showed “initial promise”. A month later, Australia opened a world-first pathway for authorized psychiatrists to access MDMA and psilocybin, saying they can be used for the treatment of post-traumatic stress disorder and treatment-resistant depression, respectively. 

Outside advisers to the FDA are preparing to meet this week to weigh Lykos Therapeutics Inc.’s MDMA drug for post-traumatic stress disorder. A report from the agency scientists, posted Friday, focused on the difficulties of evaluating the drug and potential risks. 

Still, untested business models and regulation in flux means that investment prospects are highly uncertain. 

As with cannabis companies, psychedelic startups have gone through a shakeout. Optimi’s stock price is down 43 per cent since its 2021 initial public offering. Others including Lucy Scientific Discovery Inc., Psyence Biomedical Ltd. and AWAKN Life Sciences Corp. have also seen their shares plummet since listing.

“In 2024 we’ll develop a capital strategy for how we want to go to the next phase,” Wilson said.

Indigenous group urges boycott of record Canadian pipeline bond deal

Chunzi Xu, Bloomberg News

Wet’suwet’en Hereditary Chief Na’Moks speaks to protesters outside Royal Bank of Canada’s annual general meeting in Toronto in April.

, Bloomberg

Some Indigenous leaders in Canada are asking investors not to buy bonds issued by a natural gas pipeline company that’s marketing the country’s largest-ever corporate debt deal.

Hereditary Chiefs of the Wet’suwet’en First Nation said investors should shun the multibillion-dollar financing, citing violations of Indigenous and legal rights, environmental and regulatory concerns and financial risks. The project, Coastal GasLink, is owned by pipeline operator TC Energy Corp., KKR & Co. and Alberta’s public pension manager.

“We are asking you to publicly announce a commitment to deny new debt ahead of TC Energy’s bond issuance this June, and fully divest from CGL,” said a letter signed by Hereditary Chief Na’Moks of the Wet’suwet’en First Nation and others.

The pipeline project involved “a yearslong campaign of violence, harassment, discrimination, and dispossession against Indigenous Wet’suwet’en land defenders,” the letter asserts, citing an Amnesty International report. 

The Coastal GasLink project in British Columbia has long been controversial, and in early 2020 it boiled over as protesters blocked roads, rail lines and ports in numerous places in Canada. However, the pipeline has the support of some elected indigenous leaders on Wet’suwet’en territory, who see economic benefits for their people. The conduit will ship Western Canadian gas to a nearly-completed liquefied natural gas complex on the BC coast. 

Coastal GasLink is seeking to borrow as least C$5 billion ($3.7 billion) to refinance debt. The deal, marketed by Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada and Bank of America Corp., is expected to be sold on June 4. The pipeline’s owners and banks didn’t immediately respond to a request for comment on the letter. 

--With assistance from Christine Dobby.

  

Air Canada pilots union to seek conciliator, says parties are far apart in talks

Ian Bickis, The Canadian Press

Air Canada pilots intend to request help from a federal conciliator to assist in stalled contract negotiations with the airline, the union representing them announced Sunday.

The Air Line Pilots Association, representing more than 5,000 Air Canada pilots, said the two sides are not close to a deal despite a year of contract talks, including close to six months of voluntary mediation.

"Unfortunately, Air Canada continues to undervalue your contributions to the success of this airline," said Charlene Hudy, head of the union's Air Canada contingent, in a video message to members.

She said that while talks have allowed the two sides to reach important agreements, they remain too far apart in negotiations and so pilots will be leaving the voluntary process on June 15. 

The union says it will file a notice of dispute to inform the federal Minister of Labour that they've attempted, but failed, to reach a collective agreement, and to request the minister assign a conciliator.

Air Canada said in a statement that the airline remains committed to achieving a fair, negotiated agreement.

"Air Canada has worked hard and in good faith to reach a new collective agreement with ALPA under the bargaining protocol and the talks conducted under the bargaining protocol led to significant progress," it said.

The airline said it will continue to push for an agreement in the coming months under the normal bargaining process, insisting customers can continue to book and travel with confidence on Air Canada.

Canadian pilots have been seeking gains that will bring them closer to deals won by their counterparts in the U.S.

Between March and September last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay hikes ranging from 34 per cent to 40 per cent.

Hudy has called the wage gap between Canadian and American pilots "unacceptable."

The Canada Labour Code stipulates the minister has up to 15 days to appoint a conciliator, after which a 60-day period of talks begin. If no deal is reached in the talks, there's a 21-day cooling-off period before the union could be in a position to strike. 

Last week, WestJet Encore reached a deal with its pilots to narrowly avoid a potential strike. 

This report by The Canadian Press was first published June 2, 2024.

Operations suspended at British Columbia's Gibraltar copper mine due to worker strike

The Canadian Press

A worker strike has forced Vancouver-based Taseko Mines Limited to suspend operations at its Gibraltar copper mine in central British Columbia, about 200 kilometres south of Prince George.

The company issued a news release on Saturday saying negotiations for a new contract with unionized workers ended late Friday with no deal.

It says it then shut down mining and milling operations before midnight, and only essential staff remain to maintain critical operations.

Unifor says its Local 3018 members voted to strike today, accusing Taseko of refusing to negotiate "basic terms of a new collective agreement."

A news release from the union says contract negotiations began in February, and the workers' latest contract expired on Friday.

The release says Unifor Local 3018 represents about 550 workers at the mine, which is the second largest open-pit copper mine in Canada and the largest employer in the region.

This report by The Canadian Press was first published June 1, 2024.

 

Cargill shifts beef production after weeklong strike at Canada plant

Gerson Freitas Jr., Bloomberg News

Signage is displayed outside the Cargill Inc. meat plant in Chambly, Quebec, Canada, on Monday, May 11, 2020. The case-ready facility for beef, pork, chicken and sausage has shut down as the company is “concerned about the number of cases in the community and among our employees,” according to a May 9 statement. Photographer: Christinne Muschi/Bloomberg , Bloomberg

Cargill Inc. is shifting beef production to other facilities after halting operations at a Canadian plant due to a weeklong strike at the facility.

Beef processing at Cargill’s Dunlop plant in Guelph, Ontario was halted after about 1,000 workers took to the picket lines on May 27. The plant has capacity to process 1,500 head of cattle per day. The workers rejected a proposal that the US meatpacker said would have raised wages by 9.3 per cent in the first year of a four-year agreement.

“While we navigate this labor disruption, we will shift production to other facilities within our broad supply chain footprint to minimize any disruptions to our customers,” a Cargill spokesperson said.

The Ontario plant suspension comes as profit margins of North American beef producers have been under pressure due to a shortage of slaughter-weight cattle.

Chile President Gabriel Boric Lays Out Plans to Legalize Abortion and Euthanasia

Matthew Malinowski
Sat, June 1, 2024 

Chile President Gabriel Boric 

(Bloomberg) -- Chile President Gabriel Boric said he will introduce a bill to fully legalize abortion and will also accelerate debate on a euthanasia proposal, two plans that face an uphill battle for approval in a divided Congress.

The government will submit legislation on abortion in the second half of this year, Boric said in his annual State of the Nation address given Saturday in Chile’s Congress. The administration will also apply “urgency” to an existing bill on assisted death, he said, thus granting it priority status.

“As president, I am convinced of the need for a democratic debate on the topic of sexual and reproductive rights,” Boric said, prompting a burst of cheers while, at the same time, some lawmakers left the session in protest.

Stakes are high as the former student protest leader moves to rally support with headwinds growing for the approval of his main proposals. Boric has gotten some good news in recent weeks as economic growth forecasts rose while a report showed homicides fell last year. Still, those developments have failed to boost his low approval levels and spur agreements over crucial matters including pensions before political attention shifts to October’s local elections.

Only 30% of the population backs the leftist president, a figure that’s little changed from a year ago, according to a Cadem poll published this week. While voters recognize Boric for promoting gender equality and protecting the environment, they cite crime and clandestine migration as top problems.

“Chilean women deserve their right to decide,” Boric said on abortion in the nationally-televised address, quipping that he wasn’t surprised to see male lawmakers leave the room when he made the announcement.

Women in Chile can currently terminate a pregnancy in cases of rape, when the mother’s life is in danger or if the fetus won’t survive outside the womb.

Our Adversary

In recent weeks, the government has moved to expedite debate on key proposals in Congress. It negotiated a set of economic and public security bills for a fast track, granting them legislative priority in coming weeks.

Last month, the executive branch also applied “utmost urgency” to its pension reform proposal, meaning in theory that the Senate would vote on it within 15 days. Still, that decision sparked outcry from opposition lawmakers who had just agreed to a weeks-long time-frame to review aspects of the bill.

On Saturday, Boric said the government will present bills on income tax reform in the near-term and on collective bargaining by the end of the year. The administration will also expand jails nationwide, modernize police training and increase the number of law enforcement officers on the streets.

“Violence is our adversary,” Boric said.

In September, the government will propose a new financing system that will replace its main student loan program, known as the Credit with State Endorsement (CAE), Boric said. He added that Chile will apply to host the 2036 Olympic Games.

Difficult Times

In May, Boric’s administration raised its 2024 economic growth forecast to 2.7% from 2.5% on stronger-than-expected activity across sectors at the start of the year and higher prices for copper, the nation’s top export. Analysts surveyed by the central bank have lifted their estimates to 2.5% from 1.7% in February.

At the same time, the central bank is extending a cycle of interest rate cuts that have slashed borrowing costs by 5.25 percentage points since last July. The institution sees inflation at the 3% target next year.

“The most difficult times for the economy are over,” Boric said. “We beat inflation, we put our fiscal accounts in order, we worked out the divisions that arose during the constitutional process, foreign direct investment is rising and the world needs our copper, lithium and fruit.”

“Therefore, I tell you all that we have many reasons to look at the immediate future with renewed hope,” he said.

 Bloomberg Businessweek

Chile joins developing nations rallying behind genocide case against Israel at international court
Associated Press
Sat, June 1, 2024

Smoke rises from an Israeli airstrike in Rafah, southern Gaza Strip, Friday, May 31, 2024. (AP Photo/Abdel Kareem Hana)

SANTIAGO, Chile (AP) — Chile has joined a group of nations supporting a genocide case against Israel filed last year at the International Court of Justice.

President Gabriel Boric said in a speech to lawmakers Saturday that he was appalled by the humanitarian devastation in Gaza, especially against women and children. He accused the Israeli army of using "indiscriminate and disproportional" force.

“These acts demand a firm and permanent response of the international community,” the president said.

South Africa last year accused Israel at the International Court of Justice in The Hague, Netherlands, of violating its obligations under the Genocide Convention. Israel has strongly rejected the claim and has argued that the war in Gaza is a legitimate defense against Hamas militants for their Oct. 7 attack in southern Israel that killed around 1,200 people and took 250 hostages.

Chile is home to the largest Palestinian community outside the Middle East, with a population of around 500,000, many of them descendants of Christian Arab immigrants in the 19th and 20th centuries. They took root in the South American country as small retail traders but have since gained prominence in business and politics. One of the country's most popular soccer teams is Palestino, whose white, black, green and red uniforms match the colors of the Palestinian flag.

Chile joins a group of mostly developing countries including Mexico, Brazil and Indonesia that has rallied behind South Africa's petition.

Boric, a leftist former student leader, has balanced condemnation of Hamas' attack with fierce criticism of Israel's military offensive, which has killed more than 35,000 Palestinians, according to Gaza's Health Ministry, which doesn't distinguish between civilians and combatants in its count.

Saudi Aramco Courts Foreign Investors With Roadshows in US and London

Matthew Martin
Mon, Jun 3, 2024

(Bloomberg) -- Saudi Aramco’s top executives are set to hold a series of events in London and the US to drum up demand for the oil giant’s $12 billion share sale, five years after it scrapped an international roadshow for its initial public offering.

Aramco Chief Executive Officer Amin Nasser will be among officials attending at least one of the events in London this week, according to people familiar with the matter. Chief Financial Officer Ziad Al Murshed is also slated to be at a roadshow in the city over the next few days, they said.

The firm is planning a separate event in the US, the people said, declining to be identified as the information is private. Institutional investors can submit orders until June 6 for the share sale that kicked off Sunday.

The $1.8 trillion oil giant’s offer was covered in just a few hours after the deal opened. It wasn’t immediately clear how much demand came from overseas, though the order book reflected a mix of local and foreign investors, Bloomberg News reported.

The extent of foreign participation will be closely watched. During Aramco’s 2019 initial public offering, overseas investors had largely balked at valuation expectations and left the government reliant on local buyers.

The kingdom had planned a series of international events for that $29.4 billion deal, including one in London, which it later scrapped. The company also decided not to market the sale in the US, Canada or Japan, and instead held a roadshow in front of a home audience that had already made their minds up about investing.

The IPO eventually drew orders worth $106 billion, and about 23% of shares were allocated to foreign buyers.

A top selling point this time around is the chance to reap one of the world’s biggest dividends. Investors willing to look past a steep valuation and the lack of buybacks would cash in on a $124 billion annual payout that Bloomberg Intelligence estimates will give the company a dividend yield of 6.6%.

Read More: Investors Pile Into Saudi IPOs With $176 Billion in Orders

The Saudi government owns about 82% of Aramco, while the Public Investment Fund holds a further 16% stake. The kingdom will continue to be the main shareholder after the offering, which adds to Riyadh’s efforts to raise cash and fill a budget deficit.

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The world’s biggest oil company says it can reach ‘net zero’ without producing less oil.

Can Saudi Aramco thread that needle?


Fortune· Courtesy of Saudi Aramco

Vivienne Walt
Thu, May 23, 2024

On Saudi Aramco’s campus at the edge of the Arabian Gulf, the vast scale of the world’s biggest oil producer is on stark display. In one building, a curved monitor 140 feet long wraps around a room, tracking the crude flowing through 25,000 miles of pipelines.

A short distance away, in the company’s “advanced exploration and petroleum engineering research center,” or EXPECArc, scientists fine-tune seismic drones that can analyze underground rock formations and transmit the data back to engineers within seconds—sparing Aramco the expense and risk of dispatching teams into the desert to drill for oil. Meanwhile, others test fast-curing cement injected with carbon and experiment with compounds built to suck carbon directly from the air—trying to build technology that could reduce the polluting effects of burning that oil.

During a rare two-day visit by Fortune in early May, Aramco lifted the curtain on dozens of research projects underway at its headquarters in Dhahran, in eastern Saudi Arabia, where about 20 engineers, specialists, and executives detailed their home-grown inventions. Some of these, the company believes, could someday be hugely lucrative exports, with significant impact on the oil-and-gas industry.

Aramco’s purpose in revealing its work to a few hand-picked journalists was hardly subtle. With environmentalists pushing oil giants to phase out fossil fuels, the company was keen to present itself as a climate friend, not foe—deeply concerned about global warming, but intent on producing oil for generations to come. Projecting a green image is increasingly seen by oil producers as essential in quelling shareholder activism and appeasing regulators.

But Aramco execs stress that they see their climate commitments as in their own interest. “This is our environment. This is our country,” says Ashraf Al-Ghazzawi, executive vice president for strategy and corporate development, in a long interview. “This was not dictated on us.”

'We don't see any contradiction'

The message was simple: Aramco can tackle climate change, even while pumping a mammoth 9 million barrels or so of oil a day. (ExxonMobil, the second-biggest oil company, pumps less than one-third that amount.) “We don’t see any contradiction,” Ghazzawi says. “Combating emissions from these conventional energy sources is a very viable option.”

For the Saudi royals, conventional energy is also essential. Revenues from the country’s vast oil reserves comprise 50% of the Saudi economy. Profits from that oil—which costs Aramco less than $4 a barrel to produce—are crucial to supporting the government’s other economic-development endeavors. In May, the company reported free cash flow of nearly $23 billion for the first quarter of this year, and last year it brought in $440.8 in revenues.

The goal is to make that oil business last far into the future, regardless of the world’s green transition. Aramco claims its tech breakthroughs will cut carbon emissions from each barrel of oil it produces by 15% by 2035, a sum that engineers calculate to be equivalent to 51.1 million tons of carbon a year. The company aims to zero out its emissions by 2050 (its so-called net-zero target). That target excludes joint ventures, as well as Scope 3, or end-user, emissions. But Aramco predicts that even in 2050, millions of people will still be driving fuel-burning cars, flying on jet-fuel planes, and sending cargo on marine-fuel ships.

“We need all sources of energy to meet the growth in demand, which is just tremendous in the developing world,” says Ahmad Al-Khowaiter, executive vice president for technology and innovation. “The main pillar of our strategy and technology is efficiency and optimization of our existing production.”

The emphasis on efficiency, rather than reining in production, is pushed in every corner of the Dhahran headquarters, or “camp,” as the staff calls their American-style suburban complex. (There’s Starbucks and Tex-Mex food on offer, and Little League baseball.)

But to many climate scientists and environmentalists, squaring the circle—being an oil giant and a climate champion—seems impossible. The London-based financial NGO Carbon Tracker Initiative, which monitors companies’ environmental performance, last September ranked Aramco’s climate goals the weakest among 25 publicly traded oil and gas companies, and the only one that restricts its climate targets to wholly owned and operated facilities. In general, the NGO says, the industry “continues to put investors at risk by failing to plan for production cuts.”

The carbon-capture debate

Aramco is determined to far outlast that transition. Khowaiter, head of technology and innovation, says the company has tripled its research-and-development staff since 2010, and in 2023 it listed 1,033 patents with the U.S. patent office. To support those efforts, Aramco recruits staff straight from Saudi high schools, then sponsors their specialized studies, often in the U.S. One engineer Fortune met was about to begin her doctoral studies at Stanford, while another will be leaving this summer for Cornell.

Aramco now spends about $800 million a year on R&D, 60% of which is focused on “sustainability,” Khowaiter says. “Ultimately, the market will value low-carbon products.” That investment is reflected in the sheer amount of activity at headquarters, especially in its effort to capture and reuse carbon.

Carbon capture is a technology that oil producers have embraced. Many climate scientists and officials have regarded it skeptically, however, accusing the industry of promoting the technology in order to forestall implementing meaningful curbs on emissions. U.N. Secretary General António Gutteres has referred to industry plans that emphasize carbon capture over clean energy as “proposals to become more efficient planet wreckers.”

Aramco execs reject that notion. At the company’s Hawiyah gas plant, two hours south of Dhahran, it captures carbon emitted during oil and gas production, then transports it 50 miles away, where it is injected it into an oil well to boost the recovery of crude, as well as to store the carbon. It's a modest pilot project to reuse carbon, rather than emit particles into the atmosphere. Khowaiter says Aramco is aiming to halve the cost of carbon capture, making it commercially viable. Beginning in 2028, it will capture and store about 9 million tons a year of carbon in Jubail, north of Aramco’s headquarters.

Pricey hydrogen

But much of Aramco’s other whizzbang technology is still too expensive to market. That includes developing hydrogen as a source of fuel, which engineers at EXPECArc have researched for years. In 2020, Aramco made the world’s first shipment, to Japan, of blue ammonia—liquified hydrogen created from hydrocarbons. But blue ammonia remains difficult to transport, and vastly more costly than oil or gas.

Aramco predicts blue and green hydrogen (the kind made from renewables) will become a $700 million industry by 2050—admittedly small change for a company this size. It is developing ways to use blue hydrogen locally. One idea under consideration is using blue hydrogen to power a factory which Aramco operates with Saudi Arabia’s Baosteel: The plan would be to use the cleaner power to make steel plates, and then sell the low-carbon product for far higher prices than regular, higher-polluting steel.

Figuring out which among the many lines of R&D will finally work could take years for Aramco to determine—time that many fear the world does not have. “For me, a big litmus test is how rapidly they are actually going to be able to decarbonize their oil and gas,” says James Ingram, senior editor for the Middle East Economic Survey, “or whether it is just talk.”

Ghazzawi, Aramco’s strategy chief, rejects any notion that the company should cut fossil fuel output. “We were never an either-or company,” he says. “Aramco provides a great example where emissions can be dealt with, it can be managed.”

Editor's note: An earlier version of this story included a misspelling of the name of Ashraf Al-Ghazzawi, Saudi Aramco's executive vice president for strategy and corporate development

This story was originally featured on Fortune.com

De Beers Ditches Man-Made Diamonds as It Looks Beyond Anglo




Thomas Biesheuvel
Mon, Jun 3, 2024,

(Bloomberg) -- De Beers will ditch a controversial experiment to sell lab grown diamond jewelry, ending a six-year program that broke one of its oldest taboos.

While the company long held the technology to make synthetic gems, it always refused to sell them as jewelry, fearing they would undercut the allure of natural stones. Yet as man-made stones gained traction and started competing directly with natural diamonds, De Beers launched its own jewelry brand in 2018.

The company introduced Lightbox to sell synthetic diamonds at a steep discount to rival producers in an attempt to drag prices lower and create a clear divide in consumers’ minds. Now it’s pulling that offering, as De Beers Chief Executive Officer Al Cook overhauls a business that’s set to be cast adrift by owner Anglo American Plc.

As part of a turnaround plan to fend off an approach from BHP Group, Anglo last month said it planned to sell or separate De Beers, ending an almost century-long relationship with the industry’s most famous name. As De Beers — which coined the slogan “Diamonds are Forever” — prepares for that split, it will renew its focus on promoting natural stones.

“We know how to do it and we’re coming back,” CEO Cook said in an interview. “All of this comes together under a big theme of differentiating natural diamonds from lab grown.”

Read More: CEO Who Said No to $49 Billion Must Now Dismantle Anglo American

Synthetic diamond prices have now collapsed, though how much of that is down to De Beers and how much is because of a flood of new supply is open to debate. That undermines the logic for the De Beers venture, with wholesale prices of lab grown diamonds now lower than those of Lightbox, which were well below the going rate when first introduced.

Still, while synthetic diamond prices have collapsed, they’ve caused significant collateral damage. Natural stones used in cheaper 1 to 2 carat wedding rings have tumbled under pressure from synthetics and have so far shown little sign of a sustained recovery.

De Beers will not immediately stop selling its Lightbox stones. It will use up its existing inventory — which will take about a year — and then make a decision on what to do with the business.

Industry participants are still divided on what the long-term impact of synthetics will be and how much of the current diamond industry weakness is cyclical, rather than a structural change, partly brought about by lab-grown alternatives.

Unlike imitation gems such as cubic zirconia, diamonds grown in labs have the same physical characteristics and chemical makeup as mined stones. They’re made from a carbon seed placed in a microwave chamber and superheated into a glowing plasma ball. The process creates particles that can eventually crystallize into diamonds. The technology is so advanced that experts need a machine to distinguish between synthesized and mined gems.

Read More: Anglo Ditching De Beers Is Hard Blow for Troubled Diamond Market

De Beers will turn its focus on so-called category marketing, where it promotes diamond jewelry in general rather than just its own branded gems. It will also expand its retail footprint through its own jewelry stores.

The company will also dip its toe into polishing its own stones, part of the industry dominated by mostly family run firms in India and Belgium.

De Beers is targeting annual core profit of $1.5 billion by 2028. Last year, the business made just $72 million, though traditionally its profits have ranged between $500 million and $1.5 billion as the diamond industry swings from boom to bust.

That volatility created frustration within Anglo, where years of erratic performance eroded returns from more coveted commodities, such as copper.

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CAPITAL STRIKE

Rubio’s Coastal Grill closes over a dozen San Diego-area stores, surprising both workers and customers,  citing the “rising cost of doing business” in the state.

Danielle Dawson
Sat, Jun 1, 2024, 


SAN DIEGO (FOX 5/KUSI) — More than a dozen Rubio’s Coastal Grill locations across San Diego County abruptly closed this week, surprising both workers and customers.

In a statement sent to FOX 5/KUSI on Saturday, the Mexican food chain confirmed the closures to 13 local stores, as well as 35 other “underperforming” locations across California, citing the “rising cost of doing business” in the state.

“Making the decision to close a store is never an easy one,” a spokesperson for Rubio’s Coastal Grill said, adding the move came “after a thorough review of its operations and the current business climate.”

“While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come,” the spokesperson continued.

However, the move has still drawn pushback from purported customers and workers on the chain’s social media. At least one user who said they were a worker on a recent Instagram post, which has now been cleared of comments, said they were informed on Friday of their store’s closure.

Known for its fish tacos, Rubio’s Coastal Grill was founded in Mission Bay in 1983. Since then, the chain has expanded to over 100 stores in California, Arizona and Nevada. According to the spokesperson, 86 stores will remain open after the closures.

China hands over the keys to the railway as African countries take control of 2 major belt and road projects

South China Morning Post
Sun, Jun 2, 2024, 

China is handing over control of two key African belt and road railways to the governments of Ethiopia, Djibouti and Kenya, after years of training and observation in the operation of the infrastructure projects.

Recently, Chinese operators for the 752km (467 mile) railway linking Ethiopia and Djibouti handed it over to the Ethiopia-Djibouti Railway Share Company (EDR) after six years of operation.

Likewise, in Kenya, China Road and Bridge Corporation (CRBC) has so far transferred more than 90 per cent of the operations of the Mombasa-Nairobi Standard Gauge Railway to Kenya Railways Corporation, the country's national railway, and expects to complete the handover next year.

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In anticipation for such handovers, Chinese operators of major Belt and Road Initiative projects across Africa are training thousands of local workers, passing on skills and knowledge in the running and maintenance of the infrastructure. This, observers have said, is part of a localisation strategy, which is, in turn, part of China's wider efforts to promote its development model.

But it only goes so far. Observers added that knowledge transfer remains "partial" so as not to give away too much and jeopardise future projects.

The Ethiopia-Djibouti Standard Gauge Railway, also known as the Addis Ababa-Djibouti Railway, was built by a joint consortium of China Railway Engineering Corporation (CREC) and China Civil Engineering and Construction Corporation (CCECC) at a cost of US$4.5 billion. Some US$2.5 billion of this was financed by China Eximbank.

The railroad - the first electrified transnational railway in Eastern Africa - begins in Addis Ababa, the capital of landlocked Ethiopia, and runs to the Port of Doraleh in neighbouring Djibouti, which is strategically located at the point where the Red Sea meets the Indian Ocean. China has invested heavily in Djibouti's maritime industry, and set up its first overseas military base there in 2017.

Abdi Zenabi, executive director of the Ethio-Djibouti Railway, praised the project at the May 10 handover.

"The railway is more than just tracks and locomotives. It is a symbol of cooperation, friendship and shared aspirations," he said.

He noted that the railway had opened new markets, attracted investments and created job opportunities.

"The efficient transportation of goods - whether agricultural products, manufactured goods or minerals - has revitalised our economies," Zenabi said.

According to the Ethiopian office of the China Railway Construction Corporation (CRCC) - the parent company of the CCECC - the Chinese operators trained a total of 2,840 people over the past six years, "which has led to the localisation of all railway professions in the field of rolling stock operation, maintenance and safety".

Since commercial operations started in 2018, the railway contractor has operated 2,500 passenger trains with a passenger volume of 680,000 and operated more than 7,700 freight trains.

Nevertheless, the Chinese operator will continue to provide technical support for two more years.

In Kenya, Africa Star Railway Operation Company (Afristar), a subsidiary of CRBC, which has operated the Mombasa-Nairobi Standard Gauge Railway since 2017, has handed over most of the operations to Kenya.

Kenya Railways has been gradually taking over SGR operations bit by bit since 2021, starting with ticketing, then security, fuelling operations and cargo handling.

The 480km railway line was built by CRBC and its parent firm China Communications Construction Company at a cost of more than US$5 billion, with funds coming from China Eximbank. It runs from the coastal city of Mombasa to the capital Nairobi with an extension to Naivasha in Central Rift Valley.

"We are going to complete taking over operations from Afristar in 2025. All operations will be fully run and operated by Kenya Railways," Philip Mainga, managing director of Kenya Railways, said during the May 24 launch of the organisation's new five-year strategic plan in Mombasa.

Yunnan Chen, a research fellow at ODI (formerly Overseas Development Institute), said the belt and road projects are not just the handover of hard technology. In taking on new Chinese-built infrastructure and Chinese technologies and equipment, countries also need to take on the "soft" infrastructure, around management, maintenance, standard operating procedures and protocols.

She said in Ethiopia and Kenya, this has been largely the responsibility of the contractor firms themselves - who are largely construction contractors rather than railway operators - in conjunction with Chinese universities, vocational colleges and other training via development cooperation.

However, Chen said, there's a steep learning curve involved. Domestic abilities in railway engineering and management is relatively low, and this is the first major railway that Ethiopia has had since the French-built Chemin de Fer which became obsolete some decades ago.

The Addis Ababa-Djibouti Railway was built by China Railway Engineering Corporation and China Civil Engineering Construction Corporation to enable landlocked Ethiopia access to a seaport for trading. Photo: Bloomberg alt=optional cut endsThe Addis Ababa-Djibouti Railway was built by China Railway Engineering Corporation and China Civil Engineering Construction Corporation to enable landlocked Ethiopia access to a seaport for trading. Photo: Bloomberg>

"Added to that the multiple language and cultural barriers involved in communicating and teaching on a day-to-day basis between Chinese and Ethiopian staff means this is no small feat," Chen said.

However, she said that the handover remains limited.

"From my own experience, while training in operations and maintenance has been a dominant component, higher level management, financial management and ticketing was not something I saw in the training programme," Chen said.

"Neither was railway construction part of the training programme. So while there is technology transfer, it remains partial, and also reflects the interests of the contractor companies."

Tim Zajontz, a research fellow in the Centre for International and Comparative Politics at South Africa's Stellenbosch University, said in Ethiopia, there have been discussions about the sustainability of large-scale infrastructure projects, after challenges in the maintenance of the Addis Ababa Light Rail had come to the fore.

He said, as a flagship African belt and road project, China has a keen interest in a successful future performance of the Addis Ababa-Djibouti Railway. But successful operations and maintenance of infrastructure ultimately does not only depend on well-trained staff, as important as they are, Zajontz said.

"The efficiency of EDR's management structures and the availability of funds for maintenance will co-determine the future success of the binational railway," Zajontz, who is also a lecturer in global political economy at the University of Freiburg, said.

He said knowledge transfer, technical cooperation and human skills development have been central elements of China's South-South cooperation going all the way back to Zhou Enlai's Eight Principles for Economic Aid and Technical Assistance of 1964.

In recent years, Zajontz said the Chinese government and Chinese state-owned enterprises have re-emphasised the importance of local capacity building and the transfer of knowledge as part of China's wider efforts to promote its development model across the Global South.

"This has not least been a reaction to African demands for more skilled jobs, technology transfer and a better integration of belt and road projects with local economies," Zajontz, who is co-editor of the book Africa's Railway Renaissance: The Role and Impact of China, said.

Overall, the results have been mixed.

"Chinese projects have been flanked by localisation strategies that aim at increasing human skills to maintain and operate Chinese-built infrastructure. Yet, just like other foreign commercial actors, Chinese firms have little interest in technology transfers to an extent that would enable African manufacturers to join the very markets these firms are keen to exploit," Zajontz said.

Adhere Cavince, a Nairobi-based scholar of international relations, said the original design in the implementation of the cooperative projects between China and African countries is that, only when recipient countries do not have local talent to undertake projects does China bring along workers. This has been the case for technical aspects of projects' implementation along the belt and road value chain, Cavince said.

"But even when technical workers come from China, the implementing companies have the responsibility to train local workers and eventually hand over the operations of the projects upon completion," Cavince said.

"The two belt and road projects [Ethiopia and Kenya] demonstrate total technology transfer by Chinese companies operating in Africa. This is important for sustainable growth and development of the continent because human capacity has been a major deficit in Africa's bid to industrialise."

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