Automakers Hit the Brakes on Electric Vehicle Investments

By Metal Miner - Jul 13, 2024,

Automakers are reevaluating their electric vehicle investment plans due to slowing market growth and supply chain disruptions.

China's export restrictions on rare earths, crucial for semiconductor manufacturing, pose additional challenges to the auto industry.

Alternative sourcing strategies and technological advancements offer potential solutions to mitigate the impact of supply chain issues and promote sustainability.

Month over month, the Automotive MMI (Monthly Metals Index) failed to break very far outside of its year-long sideways trend. All in all, the index dropped by 4.23% Numerous factors tugged the index down month-over-month, including slowing electric vehicle production. Another pressing matter putting pressure on the automotive market is China implementing further restrictions on rare earths exports. This includes restrictions on gallium and germanium, two metals vital for vehicle microchip manufacturing.

With the automotive market already experiencing a global shortage of microchips, automotive manufacturers will need to plan accordingly to offset these new export restrictions. Vital geopolitical news like this which impacts metal markets are covered weekly in MetalMiner’s newsletter.


EV Market Slows Down in the Second Half of 2024

The electric vehicle (EV) market, once characterized by rapid growth and optimism, is now facing significant slowdown in the second half of 2024. Despite earlier projections anticipating robust production and sales, various factors have converged to temper the market’s momentum.

Divergent consumer response to various EV brands is one of the primary issues. While some manufacturers continue to see record demand, others struggle to hold onto their market share because of concerns about perceived quality. Within the EV industry, this discrepancy creates a narrative of two marketplaces where success and failure live in sharp contrast.

The state of the economy also played a crucial role in the slowdown of EV production. Inflation and rising interest rates continue to decrease the purchasing power of customers, making expensive products like EVs less accessible. Consequently, the predicted surge in EV sales has not materialized as expected.
Automakers Hit the Brakes on Electric Vehicles

Several automakers recently revised their investment plans in reaction to current market conditions. For example, Volvo reduced financing for its electric vehicle programs, including its ownership of Polestar. This action is part of a larger trend among manufacturers to reduce or postpone expenditures connected to electric vehicles until market circumstances improve.

Along with this, the EV industry’s supply chain has experienced obstacles, especially with locating vital battery materials. These interruptions in the supply chain continue to raise production costs and cause delays, which have a negative impact on the general effectiveness and profitability of EV production.
EV Projections Remain Optimistic

In an effort to reduce expenses and better match production to the demands of the market, a number of automakers are either slowing down or postponing the launch of new facilities for electric vehicles. However, the long-term picture for the EV is still positive despite these setbacks. Many experts anticipate that advancements in battery technology, government incentives, and a growing public awareness of environmental problems will drive future expansion.

Will China’s Rare Earths Export Ban Threaten the U.S. Auto Industry?

The already-severe microchip scarcity in the U.S. automobile sector could worsen due to China’s recent move to impose export restrictions on essential rare earths. This action, which is a component of a larger plan in the continuing tech war between the U.S. and China, targets metals essential to producing semiconductors, including gallium, germanium, and graphite.

Meanwhile, companies continue to explore several workable alternatives to lessen the effects of these difficulties, and finding alternative sourcing strategies such as the ones covered in MetalMiner’s 5 Best Metal Sourcing Strategies. Many American businesses are looking into other sources of rare earth elements. Indeed, potential suppliers from nations like Canada and Australia might lessen dependency on Chinese exports. Furthermore, technology advancements and their application could help recover more rare earth elements from electronic trash. This strategy not only resolves supply-side problems but also advances sustainability.
How U.S. Trade Agreements Can Mitigate China’s Rare Earths Restrictions

Establishing strategic alliances with allies may help build a network of trustworthy suppliers and act as a safety net against supply chain interruptions. Meanwhile, trade agreements and cooperative initiatives can guarantee a consistent supply of necessary resources.

By using these tactics, the U.S. can effectively handle the difficulties brought about by China’s export prohibitions and strive toward a safer and more environmentally friendly automobile supply chain. Diversification, innovation, investment, and international collaboration are all necessary on the route ahead to reduce risks and guarantee the consistent manufacturing of microchips that are essential for contemporary automobiles.

By Jennifer Kary

The Future May Not Be As Electric as We Think

By Irina Slav - Jul 11, 2024, 

Renault, China’s Geely, and Saudi Aramco are investing in new internal combustion engine technology.

Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion.

Affordability is one of the factors that make drivers loyal to the ICE technology.



Virtually every single forecast about the future of transport focuses on its electrification—on the idea that EVs will take over roads, displacing the internal combustion engine and making it history.

Not everyone agrees, however, and that includes Renault, China’s Geely and, as of last month, Saudi Aramco. The three are investing in a company that develops powertrain technology for internal combustion engine vehicles. The future may not be as electric as may expect.

Horse Powertrain came into existence at the end of May as a 50:50 joint venture between Renault and Geely. At the time, Renault’s chief executive said that the company would aim to become a leader in “ultra-low emission internal combustion engines and high economy hybrid technologies.”

Decarbonization, then, remains the top priority. Yet Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion rather than through total electrification.

It is no wonder Aramco is joining the party, especially in light of the recent performance of its EV darling, Lucid Motors. Lucid has seen its share price plummet from over $50 apiece to less than $9 in three years and has missed its own delivery target for the first half of this year even though it boasted record deliveries—of 2,394 cars.

The Saudi oil giant likes to spread its eggs across several baskets, and it looks like the ICE basket is still quite popular. People are still buying a lot more internal combustion engine cars than electric vehicles. A lot of EV drivers want to go back to their internal combustion engine car. Things are not looking good for the electrification of transport, with the normal glitches of new technology still being sorted out. However, they are looking as robust as ever for internal combustion.

“It will be incredibly expensive for the world to completely stamp out, or do without internal combustion engines,” Yasser Mufti, executive vice-president at Saudi Aramco who was in charge of the Horse Powertrain deal, told the Financial Times. “If you look at affordability and a lot of other factors, I do think they will be around for a very, very long time.”

Affordability is indeed one of the factors that make drivers loyal to the ICE technology. For all the efforts EV makers have been putting into lowering the price of their electric vehicles, and for all the government support of the technology, EVs remain costlier than comparable internal combustion engine vehicles.

Of course, affordability is only part of the car equation. Another is fueling or charging time and on this, the ICE car once again beats the EV. For all the talk about how convenient it was to charge your EV overnight in the comfort of your own garage, it has been dawning on forecasting EV bulls that globally, only a minority of drivers have a garage to charge an EV in, while most would need to rely on public chargers. Also, only a minority of drivers would be willing to spend hours charging their car overnight or not.

Perhaps the best testimonial to the enduring power of the internal combustion engine were the latest car sales figures from China. The world’s biggest market, China has been breaking records in EV sales. This seems to have created a perception that half of all cars in China are electric. In fact, the reality is quite different.Related: Putin Threatens Complete Energy Cut Off To West If Price Caps Are Imposed

Xinhua reported earlier this week that the total number of cars on Chinese roads had reached 440 million at the end of June. Of these, the data showed, new energy vehicles had a share of 24.72 million. Of these, 18.13 million were plug-in electric vehicles—what we commonly call EVs, and the rest were hybrids. In percentage terms, then, EVs represent barely a 4.1% of the Chinese market. In other words, even in the world’s biggest EV market, with billions spent on charging infrastructure and making EVs dirt cheap, most drivers still prefer internal combustion vehicles.

“We believe that as far out as 2035, 2040 and even beyond 2040 we still see a significant number of ICE vehicles,” Matias Giannini, chief executive of Horse Powertrain, told the FT. “More than half for sure, and up to 60 per cent of the population will still have some sort of an engine, whether it is pure ICE, a full hybrid or a plug-in hybrid.”

The internal combustion engine has survived so long and remained the overwhelmingly dominant transportation technology for one simple reason: it has been superior to alternatives and its benefits have outweighed the costs consistently. It is at the cost-benefit analysis state that the EV revolution tripped and fell—because it seems that no one bothered to do that analysis. So the market made it for them, with the EV surge celebrated loudly last year slowing down before the year was even over. Horse Powertrain may yet acquire new shareholders.

By Irina Slav for Oilprice.com

Banks Still Play a Major Role in Oil and Gas Funding

By Felicity Bradstock - Jul 13, 2024

Major banks provided $6.8 trillion to fossil fuels since the 2015 Paris Agreement.

Banks argue their financing supports energy transition, but critics say it's not enough.

Greater transparency is needed to understand how bank funds are actually used.



Despite increasing pressure to defund oil and gas firms in support of international decarbonisation efforts, many major banks are continuing to provide financing to fossil fuel companies. A recent report from the U.S. organisation Rainforest Action Network (RAN) and partners revealed that in the years following the 2015 Paris Agreement, the 60 largest private banks in the world provided $6.8 trillion in funding to fossil fuels. Over the past eight years, approximately $3.3 trillion went to fossil fuel expansion. These banks supported over 4,200 fossil fuel companies with loans and securities transactions or underwriting. In 2023, after many major banks had pledged to reduce or end funding to oil and gas companies as part of the Net Zero Banking Alliance, financing for fossil fuel companies reached $705 billion, with $347 going towards expansion.

The report shows that JPMorgan Chase was the biggest financer for fossil fuels, contributing $40.8 billion in funding to fossil fuel companies in 2023. This is followed by the Japanese bank Mizuho, which provided $37 billion in financing, with $18.8 billion contributing to fossil fuel expansion. Citibank was also a major contributor, providing $204 billion to fossil fuel companies since 2016. Meanwhile, Deutsche Bank gave nearly $13.4 billion, DZ Bank $2.5 billion, Barclays $24.2 billion and Santander $14.5 billion to the fossil fuel industry in 2023.

The Research and Policy Manager at RAN and the report’s co-author April Merleaux stated, “Wall Street’s biggest concern is profit, our main concern is climate and human rights. While the banks profiting from climate chaos create new greenwashing tales every year, our data shows how much money they are actually pouring into fossil fuels. Merleaux added, “Our report’s new methodology uncovers previously unknown details about bank financing of fossil fuels and gives activists new tools to confront the banks. Our data shows that bank financing of fossil fuels is not declining nearly fast enough. In 2023, nearly $350 billion has flowed to fossil fuel companies, incompatible with real climate commitments.”

Critics of the report said there was little evidence showing where the funding went in the fossil fuel sector, with several banks responding that their financing mainly went towards green transition efforts by energy companies. It was unclear whether some of the expansion funding went to supporting new green energy projects or fossil fuel activities.

U.S. banking institutions were found to be the biggest contributors to the fossil fuel sector, providing 30 percent of the financing in 2023. JPMorgan responded to the report saying it was one of the world’s biggest funders to both traditional and clean energy firms. It stated that it would disclose the proportion of financing contributing to low-carbon energy compared to fossil fuel energy financing, following a request from the New York City comptroller on behalf of pensions it manages. JPMorgan stated, “We believe our data reflects our activities more comprehensively and accurately than estimates by third parties.”

Meanwhile, Bank of America, the third biggest funder of fossil fuels worldwide, according to the report, said that it was a market leader in terms of energy transition funding. It stated, “We are engaged with clients across the energy spectrum to help them with their energy transition goals.” Citibank said that by 2020 it had achieved $441 billion towards a $1 trillion sustainable finance goal, suggesting that much of its energy financing is going towards transition sectors.

In June, the boss of Barclays bank, CS Venkatakrishnan, said he thought it was unrealistic to ask banks to stop this financing funding fossil fuel companies altogether. He said that lenders “cannot go cold turkey” and emphasised the importance of a transition away from the most polluting fossil fuels to cleaner alternatives, such as gas. Venkatakrishnan said that Barclays is “very much moving away from” coal and oil, but suggested that fossil fuels will be around “for quite some time” and “We are very much moving away from coal to oil, oil to gas, gas to clean energy and the reality is that for quite some time fossil fuels will be with us, especially natural gas.”

In February, Barclays announced plans to stop directly financing new oil and gas projects following mounting pressure to decarbonise operations. However, environmentalists continue to put pressure on Barclays to do more in support of a green transition. Recent reports suggest that Cambridge University is considering cutting ties with Barclays due to its poor climate change record.

Most major banks around the globe are continuing to finance fossil fuel companies, despite mounting pressure from governments and environmentalists to reduce funding in support of a green transition. However, it is still unclear how much of the financing is going towards fossil fuels compared to how much contributes to the transition energy sector. Greater transparency from these banks could help consumers understand where the financing is going as well as put pressure on banks to make a change.

By Felicity Bradstock for Oilprice.com

CRIMINAL CAPITALI$M

International Oil Companies Caught in Iraqi Kurdish Smuggling Web

By Tsvetana Paraskova - Jul 13, 2024

A Reuters investigation found that over 1,000 tanker trucks are smuggling at least 200,000 barrels of Kurdish oil per day to Iran and Turkey.

The smuggling operation generates an estimated $200 million in monthly revenue, but the destination of the funds remains unclear.

The illicit trade has flourished since a pipeline to Turkey was closed in March 2023 due to a dispute over export rights.



Kurdistan hasn’t been able to export its oil via a pipeline for more than a year now, but crude continues to flow out of the semi-autonomous Iraqi region—on tank trucks to the border with Iran.

More than 1,000 such tank trucks are estimated to be transporting at least 200,000 barrels per day (bpd) of Kurdish oil to Iran and Turkey, a Reuters investigation has found.

Although the price of the crude being smuggled out of the northern semi-autonomous region is reportedly around $40 per barrel in these murky deals, the trade is lucrative, especially compared to the hardships the Kurdistan regional government has seen without oil revenues over the past year.

The smuggling is estimated to be bringing around $200 million per month, according to Reuters, whose reporters talked with more than 20 people, including oil engineers, oil industry sources, traders, government officials, politicians, and diplomats.
Some of these sources told Reuters that the oil smuggling was likely happening with the knowledge of the regional and federal governments. Once in Iran, the oil is loaded onto ships at the Iranian ports in the Gulf at Bandar Imam Khomeini and Bandar Abbas, or transferred by road to Afghanistan and Pakistan, industry, political, and diplomatic sources told Reuters.

Other sources said that no one really knows what happens with the $200 million monthly revenue from these operations.

The smuggling business has thrived since the closure of the pipeline route to the Turkish port of Ceyhan, which the semi-autonomous region of OPEC’s second-largest producer used to ship its oil abroad until March 2023.

These exports via pipeline to Turkey, of about 450,000 bpd, ceased last year after they were shut in in March 2023 due to a dispute over who should authorize the Kurdish exports.

The impasse followed an International Chamber of Commerce ruling in March 2023 in a dispute between Turkey and Iraq regarding Kurdistan oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.

Now, only Iraq’s state oil marketing firm SOMO has the right to sell crude oil produced anywhere in Iraq.

And it looks like the re-opening of the pipeline to Ceyhan on the Turkish Mediterranean coast is not a priority for politicians in Baghdad.

In November 2023, Norwegian firm DNO, one of the six members of the Association of the Petroleum Industry of Kurdistan (APIKUR), said that the international oil companies operating in Kurdistan would not be producing oil for exports until they have clarity about overdue and future payments and sales terms.

Some companies have resumed oil production for the local market.

But industry sources told Reuters that the local buyers, approved to buy the crude, sell it via middlemen for export without the international firms knowing of these re-selling operations.

The smuggling adds between 200,000 bpd and over 300,000 bpd to Iraqi supply, as estimated by various Reuters sources. Privately, Iraqi officials have cited this trade as one of the reasons why Iraq – OPEC’s second-largest producer – has failed to limit its output under the OPEC+ deal so far.

Iraq hasn’t complied with the current cuts despite continuously pledging it would show better discipline going forward.

Compensation plans have been prepared for Iraq, as well as non-OPEC producer Kazakhstan, which is part of the OPEC+ group but has failed to stick to its quota, too. Between January and March 2024 alone, Iraq’s cumulative overproduction stood at 602,000 bpd, per OPEC’s estimates.

Iraq has a 4-million-bpd cap on production. It pumped 4.189 million bpd in June—down by 25,000 bpd from May, per OPEC’s secondary sources in its latest monthly report released this week. But that’s nearly 200,000 bpd above its target under the OPEC+ deal.

By Tsvetana Paraskova for Oilprice.com

WWIII

Southeast Asia Poised for $100 Billion Offshore Gas Boom

By Rystad Energy - Jul 14, 2024

Southeast Asia's offshore gas industry is poised for a $100 billion boom by 2028, driven by planned investments, deepwater projects, and CCS advancements.

Indonesia and Malaysia are leading the region's offshore gas growth, with major projects and recent discoveries boosting their potential.

Economic challenges, particularly in deepwater and sour gas ventures, could impact the profitability of some projects.


Offshore gas production in Southeast Asia is poised to unlock a $100 billion potential, driven by a flurry of planned final investment decisions (FIDs) expected to materialize by 2028, according to Rystad Energy’s latest analysis. This represents a more than twofold increase over the $45 billion worth of developments that reached FID from 2014 to 2023 and signals a surge for the region’s offshore gas industry. The upcoming period of rapid growth is bolstered by deepwater projects, recent successful discoveries in Indonesia and Malaysia, and positive carbon capture and storage (CCS) advancements, which will be crucial in meeting the region’s sanctioning agenda in the years ahead.

Oil and gas majors are expected to drive 25% of these planned investments through 2028, while national oil companies (NOCs) will account for a 31% share. Notably, East Asia's upstream companies are emerging with a 15% share and show potential for growth through their focus on mergers and acquisition (M&A) opportunities and upcoming exploration ventures. The role of majors could further expand to 27% following TotalEnergies' substantial acquisition efforts in Malaysia.

Discussions among Southeast Asian countries have focused on the future of domestic developments and limiting their dependence on gas imports. Energy security and the transition to gas as a fuel have become growing concerns for governments in the region. To address the energy trilemma – balancing energy security, energy equity and environmental sustainability – countries can prioritize utilizing domestic resources for gas development while crafting policies and incentives that promote sustainable practices and enhance regional energy security.

Despite the region’s promising future for offshore gas development, persistent project delays remain a concern. Deepwater and sour gas economics, infrastructure readiness and regional politics have caused widespread delays, some of which have been ongoing for over two decades. However, the emergence of CCS hubs in Malaysia and Indonesia could be a game-changer. The high carbon dioxide (CO2) content in upcoming offshore projects necessitates CCS for financing and regulatory compliance. Furthermore, both countries are exploring depleted reservoirs from mature fields as potential CO2 storage sites. The growing recognition of these reservoirs' potential, combined with the pressing need for emissions reductions, is significantly boosting demand for CO2 storage and fueling a surge in offshore gas development expected from 2025 onwards.

We recognize the potential of new project investments and capital commitments in the region, which surged from $9.5 billion in 2022-2023 to approximately $30 billion in 2024-25. As we delve deeper into the data, it becomes increasingly clear that this upward trajectory is projected to continue until 2028. Recent discoveries and the involvement of NOCs will play a vital role in this growth, particularly in deepwater developments, which are pivotal in determining how much of this anticipated $100 billion boom can be realized,

Prateek Pandey, Vice President of Upstream Research, Rystad Energy



Learn more with Rystad Energy’s Upstream Solution.

In only looking at forecasts for sanctioned investments between two leading nations in the region, Indonesia and Malaysia, the former stands out with expectations to accelerate its offshore gas activities. This is driven by major projects such as the Inpex-operate Abadi LNG, Eni’s Indonesia Deepwater Development (IDD) and BP’s Tangguh Ubadari Carbon Capture (UCC). These initiatives, along with recent discoveries in the East Kalimantan and Andaman provinces, are projected to account for 75% of Indonesia's total offshore gas investments slated for FID. This significant increase positions Indonesia as a formidable contender to Malaysia's established dominance, although Malaysia continues to maintain robust activity levels with recent FIDs, exploration success and planned exploration efforts.

Indonesia anticipates increased FID activity starting in 2025, bolstered by major projects spearheaded by global players like BP and Eni. Malaysia's upcoming FID projects underscore significant discoveries made since 2020, primarily managed by Petronas, PTTEP and Shell. Across Southeast Asia, more than half of planned gas projects contain CO2 content exceeding 5% and are predominantly managed by NOCs and major international companies, with a notable trend towards cluster development strategies for deepwater projects.data centers and EVs in the US, while continuing to displace coal in the generation mix.



The region's gas sector anticipates substantial growth, with projected gas resources from FIDs set to rise to 58 trillion cubic feet (Tcf) by 2028, marking a three-fold increase from levels observed in the past 5 years, 2019-2024. This growth hinges on efficiently monetizing recent discoveries and advancing delayed developments. Despite a favorable investment climate, operators face economic challenges, particularly in deepwater and sour gas ventures. Rystad Energy’s analysis indicates that many projects require gas prices above historical averages of $4 per thousand cubic feet to achieve profitability, with an optimal threshold closer to $6 per thousand cubic feet.

These economic realities have sparked discussions on revising domestic gas pricing policies across the region. Notably, a gas price of $7.5 per thousand cubic feet could potentially make up to 95% of planned developments economically viable, especially those associated with LNG projects in Indonesia and domestic supply initiatives in Vietnam. Supply chain companies could also see increased value for floater-based projects and deepwater drilling, adding motivation for them to facilitate this offshore gas renaissance that is on the cards for the region. As stakeholders navigate these market conditions, the region's offshore gas sector appears poised for significant growth, supported by strategic investments and evolving economic conditions.



By Rystad Energy

Could China Help Mexico Become A Green Energy Powerhouse?

By Haley Zaremba - Jul 14, 2024

Trade between Mexico and China has increased 60%, making it one of the fastest-growing trade routes in the world.

Mexico's strategic location and favorable trade agreements make it an attractive destination for Chinese manufacturers seeking to nearshore their operations.

Mexico's potential as a green energy powerhouse and supplier of critical minerals like lithium further strengthens its economic ties with China.


Mexico and China are quickly establishing one of the largest trade routes in the world. Trade between the two counties shot up by 60 percent compared to last year, making it “probably the strongest growing trade in the world right now,” in the words of European data analytics firm Xeneta.

The huge uptick in Chinese-Mexican trade comes as a result of a slew of U.S. tariffs on imports of Chinese goods. Mexico is an increasingly attractive trade partner for both Beijing and Washington in the face of waning economic cooperation between the U.S. and China and shifting global supply chains.

Suddenly, Mexico has found itself to be a key manufacturing and production linchpin for both of the biggest economies in the world. It surpassed China to become the top exporter to U.S. markets in 2023. Mexico, a middle-income country, pays wages comparative to those in China, and is already part of the world’s largest trading bloc, the United States-Mexico-Canada free trade agreement (USMCA).

Not only has the U.S.-China chill been a boon for Mexico, so too have global “near-shoring” and “friend-shoring” policies that have gained ground in the wake of the supply chain snarls brought on by Covid. Short supply chains are having a moment, and exporting from right over the border, as opposed to the other side of the world, is increasingly attractive for U.S. markets.

Former Mexican ambassador to China José Luis Bernal says that the country’s strengthened trade relationship with China will provide a key catalyst to the green energy transition and emerging clean technology and manufacturing sectors. "The diversified business potential will fuel bilateral trade growth and contribute to the global green transition," Bernal told the Global Times during the eighth Global Think Tank Summit last week.

Chinese electric vehicle companies are already looking to expand their production lines to Mexico, already one of the biggest automotive producers in the world and a highly strategic geographical hub for expanding markets. Chinese EV firm BYD plans to open up a new manufacturing plant in Mexico expected to create as many as 10,000 new jobs.

"Given Mexico's large domestic market and strong auto production capabilities, many Chinese car manufacturers are now selling vehicles in Mexico and showing rising interest in manufacturing vehicles locally," Bernal said. "Chinese investments also have positive impacts on local development such as job creation, income generation, technology absorption, and increased Mexico's exports to other markets," he continued.

Chinese companies are also keenly interested in Mexico’s potential as a green energy production powerhouse, and are already establishing themselves as key players in Mexican markets, where solar and wind energy have enormous expansion potential. Despite near-ideal conditions for large-scale solar and wind farms, the Mexican renewables market is relatively untapped after years of lagging climate action and petro-protectionism under outgoing President Andrés Manuel López Obrador.

Mexico could also be a key supplier of key primary materials, rare Earth elements, and other minerals critical to the green transition, such as lithium. China already controlled nearly ten percent of global lithium reserves and a whopping 72% of lithium refining capacity as of 2022, and they’re constantly looking to expand those holdings and shore up new supply chains, especially as the West is beginning to look for a competitive edge in those same markets.

While Mexico is so far emerging victorious from the U.S.-China trade row, however, the nation’s approach to these relationships could change over the next few years as Mexico’s freshly elected president takes office. Balancing Mexico’s strengthening trade relations with China as well as its diplomatic and economic relationship with the United States will be one of the most critical tight-rope acts for President Elect Claudia Sheinbaum.

Sheinbaum is under pressure from her own constituents to push back against an unbalanced bilateral trade primarily benefiting China, as well as from the United States, who has criticized the Mexican government for triangulating Chinese goods into American markets.

By Haley Zaremba for OIlprice.com

India Looks to Russia for Reliable Uranium Supply

By Alex Kimani - Jul 12, 2024

India is close to finalizing a long-term uranium supply deal with Russia, despite Western sanctions on Russia and concerns from the US.

India's uranium reserves are depleting, and the country is increasingly relying on imports to fuel its growing nuclear power sector.

India is projected to surpass China as the main driver of global oil demand growth in the coming years, while also continuing to rely heavily on coal for its energy needs.



For the first time in five years, Indian Prime Minister Narendra Modi landed in Russia for a state visit on Monday, where he is holding talks with President Vladimir Putin to help re-energize relations between the two countries, with an eye on strategic deals. One item on the top of the agenda is Modi’s desire to finalize a long-term uranium supply deal with Russia, in a bid to secure a stable and reliable source of uranium for India's expanding nuclear power sector.

It would be a big score for both India and Russia, and Washington is paying attention closely because India is the key element of the U.S. plan to contain China, first and foremost, and Russia, secondarily. Modi can influence them both. India already gets a pass on Russia oil and gas sanctions, and Washington will have little choice other than accept the same for Russian uranium.

The two allies are likely to agree on a long-term uranium supply pact for a nuclear power plant coming online in Tamil Nadu, said senior officials with knowledge on the matter. Cooperation in the civilian nuclear sphere doesn’t fall under the sanction regime by the U.S. and its western allies for Russia’s war on Ukraine. Russia’s state nuclear company Rosatom previously supplied nuclear fuel to India’s Kudankulam nuclear plant in 2022 and 2023.

“Kudankulam Nuclear Power Plant units 1 and 2 have already become operational, and the work is progressing on units 3 and 6,” India’s Foreign Secretary Vinay Kwatra said on Friday, adding that Moscow “remains an important partner for India’s energy security and defense.”

Currently, India gets the bulk of its uranium from mines in the northern state of Jharkhand. Unfortunately, the state’s uranium reserves are fast depleting while efforts to exploit deposits in other states such as Andhra Pradesh and Meghalaya have failed to meet expectations thus forcing the country to increasingly rely on imports. India currently relies on spot deals for the procurement of the fuel with nations including Kazakhstan, France, Russia, Canada and Uzbekistan.

India To Drive Future Global Oil Demand

The global nuclear sector is enjoying a new dawn, with the U.S., Europe, and now India increasingly embracing nuclear as a low-carbon energy source. However, India’s economy is likely to continue relying on fossil fuels as its primary energy source for decades to come.

For decades, China has done the majority of the heavy lifting when it comes to global oil demand growth thanks to an economy that maintained a blistering growth clip for a long stretch. China’s economy grew at an average 10% annual clip ever since Beijing embarked on economic reforms in 1978, taking GDP from $1.2 trillion in 2000 to nearly $18.5 trillion in 2024. But the law of large numbers has already kicked in, with economic pundits now predicting that China’s economic growth rate will slow down to between 2 and 5 percent in the coming years thanks to a declining population and slowing productivity.

More importantly, analysts have projected that India will soon replace China as the main driver of global oil demand growth. Over the past decade, the Asia-Pacific region accounted for 79% of global oil demand growth with China alone accounting for 58%.

“China’s role as a global oil demand growth engine is fading fast,” Emma Richards, senior analyst at London-based Fitch Solutions Ltd, has told The Times of India. According to the analyst, over the next decade, China’s share of emerging market oil demand growth will decline from nearly 50% to just 15% while India’s share will double to 24%. India’s rapidly growing population--which has likely surpassed China’s--is expected to be the main driver of consumption trends in India. Indeed, India's oil consumption increased by 3.7 million tonnes (4.8 per cent) in the first four months of 2024 compared to the corresponding period in 2023, with consumers, rather than industry, driving the growth.

Meanwhile, the country’s transition from traditional gasoline and diesel-fueled transport is expected to lag other regions, in sharp contrast to China’s skyrocketing adoption of electric vehicles and clean energy in general.

“India was always going to exceed China in a matter of time in terms of being the global demand growth driver, mainly due to demographic factors like population growth,” Parsley Ong, the head of Asia energy and chemicals research at JPMorgan Chase & Co. in Hong Kong, has told Bloomberg.

India has also doubled down on coal. Last year, India’s coal minister declared that the country will not ditch coal from its energy mix any time soon. Addressing a parliamentary committee, minister Pralhad Joshi said that coal will continue to play an important role in India until at least 2040, referring to the fuel as an affordable source of energy for which demand has yet to peak in India.

"Thus, no transition away from coal is happening in the foreseeable future in India," Joshi said, adding the fuel will continue to play a big role until 2040 and beyond.

The stunning declaration came across as defiance to calls to countries to phase out the carbon-heavy fossil fuel. Last year at the COP27 talks, U.N. Secretary General Antonio Guterres called for urgent action to cut emissions, including phasing out coal by 2040 globally.

By Alex Kimani for Oilprice.com

Oklo to Start Building First Small Modular Reactors in 2027

By ZeroHedge - Jul 12, 2024

Sam Altman-backed Oklo is looking to build its first SMR in 2027

Oklo's 'Aurora powerhouse' reactor will cost around $70 million for the 15 MW version, with an LCOE of $80-$130/MWh.

Oklo has managed to secure contracts with different industries including data centers and oil and gas operators.


Sam Altman-backed nuclear company Oklo is "push[ing] towards its target of building its first small modular reactor by 2027 at the Idaho National Laboratory," according to a new report from Reuters.

The company - which we have highlighted as the potential solution to the extreme forthcoming demands in energy as a result of artificial intelligence - makes nuclear power plants, ranging from 15 MWe to 50 MWe, utilizing liquid metal reactor technology.

And while licensing and fuel supply are still bottlenecks, according to the report, the company has "been selected by the Department of Energy for four cost-share awards to potentially commercialize advanced recycling technologies" and has "secured a site use permit from the DOE and a fuel award from INL," Reuters reports.

Oklo co-founder and CEO Jacob DeWitte commented: “We've tried to design and approach this whole thing in a way that we can get it built as soon as reasonably possible."

DeWitte added: “We're excited about the diversity of customers, because it shows that our size and business model clearly match with what customers are interested in."



“They're not starting overnight with a facility that's using that much power, but they typically build into that, and they want to have that n+1 or n+2 dynamic build up with them,” he added.

“You can't really do that if you're building a 300 MW reactor, but you can do that with what we're doing and that adds a lot of value."

Oklo's 'Aurora powerhouse' reactor will cost around $70 million for the 15 MW version, with an LCOE of $80-$130/MWh, similar to peaking gas-fired plants and offshore wind, per Lazard analysis.

The Reuters report notes that Oklo has signed an agreement with the Southern Ohio Diversification Initiative for its second and third commercial plants at the DOE Piketon Site and has interest in building over 50 reactors with a total capacity exceeding 700 MWe.

In May, Oklo partnered with Atomic Alchemy to produce medical isotopes from its recycling process for cancer treatment and diagnostic imaging. It also signed an LOI with Wyoming Hyperscale for a 20-year PPA to supply 100 MW to its data center campus.

In April, Oklo signed an LOI for a 20-year PPA with Diamondback Energy to power its shale-oil operations in the Permian Basin.

Oklo is preparing a pre-application readiness assessment for its reactor with the Nuclear Regulatory Commission (NRC). In 2022, the NRC denied Oklo's application for a combined construction and operation license (COLA), the first for an advanced non-light water reactor. DeWitte notes this pre-assessment is a "dress rehearsal" for their application, expressing optimism despite previous delays caused by the pandemic.

The federal ADVANCE Act, passed in June, aims to speed up licensing, mobilize the fuel supply chain, and benefit Oklo by reducing fees, shortening timelines, and offering incentives.

We noted about a month ago that the company had signed a deal to power data center Wyoming Hyperscale.

As we wrote back in May, Oklo won shareholder approval on May 8 for its NYSE listing. The company's mission is "to provide clean, reliable, affordable energy on a global scale through the design and deployment of next-generation fast reactor technology".

Backed by investors like Jeff Bezos, Bill Gates, and Peter Thiel, the who's who of the AI revolution, nuclear fusion startups are gaining traction. Sam Altman, who invested in Oklo in 2015, believes the company is "best positioned to commercialize advanced fission energy solutions," per a July press release.

For those who missed it, in "The Next AI Trade," we outlined various investment opportunities for powering up America, most of which have dramatically outperformed the market. In the next iteration, we will likely add Oklo to the list of beneficiaries certainly ahead of the inevitable cascade of Buy ratings sure flood the name over the next month.

By Zerohedge.com

 

Holtec calls for US Supreme Court to reinstate New Mexico licence

08 July 2024

Holtec International has joined the US Nuclear Regulatory Commission (NRC) and the US Federal Government in filing petitions asking the Supreme Court to reinstate the licence for a proposed interim storage facility for used fuel to be built in New Mexico.

Holtec's rendering of the HI-STORE CISF (Image: Holtec)

The NRC issued the licence in May 2023 for Holtec to build and operate the HI-STORE consolidated interim storage facility (CISF) on land owned by the Eddy Lea Energy Alliance (ELEA), a regional economic development entity in SoutheastNew Mexico. But in March this year, the Fifth Circuit Court of Appeals published a decision to "vacate" the licence following a similar ruling against another private interim storage licence in Texas.

Interim Storage Partners' licence to build and operate a CISF at an existing waste disposal site in Andrews County, Texas, was annulled by the court in August last year after it ruled that the NRC does not have the authority to license a private storage facility.

"We believe that the Fifth Circuit's decision plainly contradicts several aspects of federal law, including the authorisation of the NRC to license and regulate spent nuclear fuel storage facilities," the company said on 27 June.

The company said it has now joined the NRC and the federal government in filing petitions asking the Supreme Court to overturn the March ruling and to reinstate the licence for the HI-STORE CISF.

"The NRC's federally mandated authority and responsibility to license and regulate spent nuclear fuel is long established," Holtec Senior Vice President and Chief Communications Officer Joy Russell said. "The construction of the CISF is a key part of future growth of nuclear energy and a vitally important part of our nation's energy security. The Fifth Circuit's ruling that the US NRC was not authorised to license and regulate nuclear fuel storage is tantamount to calling OSHA unqualified for oversight of worker safety, FAA of aviation safety, and EPA for environmental safety. We urge the Supreme Court to overturn the Fifth Circuit's legally unsound position."

Holtec submitted its application with the NRC for a 40-year licence for the initial phase of the project, for up to 500 canisters holding some 8680 tonnes of used fuel, in 2017. Future amendments would see this ultimately increase to up to 10,000 storage canisters. The facility would use Holtec's licensed HI-STORM UMAX technology.

Researched and written by World Nuclear News

 

Research institute for SMR-powered ships launched

South Korea's Mokpo National University has opened the world's first SMR Ship Research Institute, aiming to develop a global hub for SMR ship research and education. The move comes as Lloyd's Register says the rise of small modular reactors points to a step change for nuclear applications in shipping if regulatory hurdles can be overcome.

The launch ceremony of the new research institute (Image: Mokpo National University)

Mokpo National University held the opening ceremony of its affiliated research institute, the SMR Ship Research Institute, on 2 July.

The ceremony was attended by more than 100 people, including representatives from Korea Hydro & Nuclear Power (KHNP), Korea Research Institute of Ships & Ocean Engineering Director, Korea Energy University, global shipyards such as Samsung Heavy Industries, HD Hyundai Samho, and HD Hyundai Mipo, international classification societies such as the American Bureau of Shipping, Det Norske Veritas, Lloyd's Register, and Korean Register of Shipping, local governments, and representatives and related parties from shipbuilding and marine industry companies and organisations.

Starting from 2050, all ships operating at sea will be required to use only carbon-free fuels, according to the International Maritime Organization (IMO) convention under the UN. "With such strong marine environmental regulations, ships that use carbon-free fuels and utilise advanced new technologies are in demand, and in particular, small modular reactor (SMR) ship technology is attracting attention as a core technology for the future marine industry," the university noted.

"In order to proactively respond to these demands, Mokpo National University established the SMR Ship Research Institute to build a cooperative network with domestic and international organisations and companies, including universities, research institutes, large shipbuilders, and international classification societies, and to conduct full-scale research," it continued.

The new research institute will focus on developing and commercialising SMR ship technology and also developing and operating world-class educational programmes to train specialised personnel.

"The establishment of the SMR Ship Research Institute marks an important milestone in the innovative convergence of Korea's world-class shipbuilding and nuclear industries, propelling Korea to become a global leader in accelerating carbon neutrality," KHNP President Whang Joo-ho said in a keynote speech. "KHNP will actively cooperate with the SMR Ship Research Institute to participate actively in the development and commercialisation of SMR-powered ships." 

Regulatory hurdles

Nuclear power could transform the maritime industry with emissions-free shipping, whilst extending the life cycle of vessels and removing the uncertainty of fuel and refuelling infrastructure development, Lloyd's Register said in a new report. However, it said regulation and safety considerations must be addressed for its widespread commercial adoption.

The report - titled Fuel for Thought: Nuclear - assesses the opportunity presented by nuclear for commercial maritime given its proven track record in naval applications, with the study pointing to the role of new SMRs in bringing to market suitable low-maintenance reactors to meet the propulsion and energy requirements of commercial ships.

According to the report, the commercial relationships between shipowners and energy producers will be altered as power is likely to be leased from reactor owners, separating the shipowner from the complexities of licensing and operating nuclear technology.

"SMRs represent a leap forward in reactor design, emphasising safety, efficiency, and modularity for streamlined production," Lloyd's Register said. "As SMR technology matures and regulatory clarity increases, ship designs optimised for nuclear propulsion will emerge, ushering in a new era of efficient and environmentally friendly vessels."

Mark Tipping, director Power to X at Lloyd's Register, said the report "represents one of the first easily accessible overviews on the use of nuclear power in shipping, combining information from a wide range of sources into one report tailored for commercial shipping and the wider maritime value chain.

"Whilst its use in commercial shipping has been limited, by overcoming negative perceptions and a lack of investment levels, nuclear propulsion could provide immense value for the maritime sector in its decarbonisation journey, allowing for emissions free vessels with longer life cycles which require minimal refuelling infrastructure, or in best case scenarios limit the need entirely."

KAERI, LG Innotek to cooperate on nuclear batteries

08 July 2024

The Korea Atomic Energy Research Institute (KAERI) and South Korean electronic component manufacturing firm LG Innotek have agreed to cooperate in the development of thermoelectric technology for nuclear batteries used in the space and defence sectors.

Young-Wook Jeong, director of KAERI's Hanaro Quantum Science Research Institute (left) and Jun-Wook Han, senior managing director of LG Innotek's Elements and Materials Research Institute (Image: KAERI))

Nuclear batteries - also known as radioisotope batteries - work on the principle of utilising the energy released by the decay of nuclear isotopes and converting it into electrical energy through semiconductor converters.

KAERI succeeded in developing a nuclear battery in 2022, making South Korea the third country to do so, after the USA and Russia. It has since been working to improve the performance of its batteries.

"Research on the development of nuclear batteries as a stable energy source in space exploration is producing results," KAERI said. "However, it has the limitation of being dependent on imports for the core components of the batteries. Recently, the public and private sectors have joined forces to overcome this limitation."

Under a memorandum of agreement signed between KAERI and LG Innotek, the partners will cooperate in developing the design, process, and evaluation technologies for thermoelectric elements for nuclear batteries. They will also collaborate on the design, synthesis, and processing of thermoelectric materials for thermoelectric elements, thereby moving toward domestic production of thermoelectric elements.

KAERI will focus on developing high-power thermoelectric device technology, while LG Innotek, which specialises in manufacturing and selling thermoelectric materials, plans to focus on developing high-efficiency energy conversion thermoelectric materials used in thermoelectric devices and establishing a domestic supply chain.

"In securing independent space exploration technology in the future, dependence on imports of key components is an issue that must be resolved," KAERI said.

Young-Wook Jeong, director of KAERI's Hanaro Quantum Science Institute, said: "In the new space era, we will actively cooperate with private companies to secure core nuclear battery technologies early. We will contribute so that our country can lead international space development cooperation."

Researched and written by World Nuclear News

Kazakhstan’s Surprise Tax Increase Shakes Up Global Uranium Market

By ZeroHedge - Jul 11, 2024

Kazakhstan has introduced a new Mineral Extraction Tax (MET) for uranium, with rates significantly increasing from 2026 onwards.

The new tax structure is expected to discourage uranium production growth in Kazakhstan, the world's largest uranium producer.

Analysts predict that the reduced supply incentive, coupled with increasing uncertainty, could drive uranium prices higher.


Uranium mining stocks soared on Wednesday after a surprise hike in extraction taxes in Kazakhstan, the world’s largest uranium-producing country, which BMO Capital Markets said will limit future supply growth.

As Interfax first reported, the government in Kazakhstan introduced a new Mineral Extraction Tax (MET) for uranium, replacing the existing 6% flat rate MET introduced in 2023.

Per the new code, the new MET rate is to increase to 9% from 6% in 2025. However, the biggest change is from 2026 onwards where the Government has introduced a two-tier MET, calculated based on production output and spot uranium prices (see the table below).




According to BMO analyst Alexander Pearce, the new mineral extraction tax “is a surprise given it was increased in 2023.” He also notes that "the new rates are not marginal, thus the new MET penalizes large mining assets with potential MET of up to 20.5% (18% for anything over 4ktU, or ~10.4Mlb U3O8, plus an additional 2.5% if the uranium price is >US$110/lb).

Pearce calculates the potential impact to cash flow and concludes that the new MET could impact Kazatomprom's NPV10% by 5-10% and 2025 EBITDA by up to 5%, and that "from 2026 onwards the EBITDA impact could be ~8-12%."

More significantly, however, he warns that the new rates "appear to provide less incentive for Kazatomprom to increase production, in our view, with less penalty for higher uranium prices than production, which could add to support for the uranium price."

The bottom line is that “with rates as high as 18% linked to production (from 6%) and additional 2.5% linked to uranium prices, there would now appear to be less incentive to increase production in future year” and "while this could have as much as a 5-12% impact to future cash flow, increasing uncertainty over future supply could drive higher uranium prices"

As news of the new tax spread across markets, the top-performing stocks in the S&P/TSX Composite Index on Wednesday are all uranium miners, led by NexGen Energy +6.8%, Denison Mines +6.8% and Cameco +6.6%. US-trader uranium stocks were also all sharply higher, with names such as CCJ, UEC, URA and URNM all soaring.



By Zerohedge.com