ILA: Threat of Strike at US East and Gulf Coast Ports “Growing More Likely”

ILA President Harold Dagget vows not to go past the September 30 deadline for a new contract (ILA)

PUBLISHED JUL 15, 2024 4:13 PM BY THE MARITIME EXECUTIVE

 

 

With the threat of a strike looming over U.S. East Coast and Gulf Coast ports, the International Longshoremen’s Association is increasing its rhetoric and digging in pointing out that there are only 80 days left on the current contract. Talks remain stalled after the union alleged that Maersk’s APM Terminals was using an auto gate system and may be encroaching on its jurisdiction.

The union’s strategy was to resolve all local jurisdiction contracts and then commence negotiations for the master contract. They however canceled the negotiations which had been scheduled to start a month ago citing the automation issue and said they would not start the talks until the dispute of the system in Mobile is resolved. 

“Only 80 days remain before the end of our current contract and we are waiting on USMX,” said ILA President Harold J. Daggett. “The actions of violating our current Master Contract by some of their members caused us to cancel scheduled negotiations with USMX in early June.”

He wanted in the latest statement that negotiators for the union and the employers represented by the United States Maritime Alliance (USMX) “are running out of time” to avoid a coastwide strike on October 1, 2024. The union is now saying that it is “growing more likely” that there will be a strike.

The ILA has a firm stance against increased port automation and singled out the auto gate system to highlight its position. They contend that APM introduced the system that makes it possible to process trucks without ILA labor. Further, they allege that they have observed “an increasing number of IT personnel on marine terminals,” with concern that APM Terminals is encroaching on the union’s jurisdiction. They also questioned if the system is being used in other ports.

Economists and the made trade organizations for retailers and apparel manufacturing have all warned of the potential impact a strike could have on already fragile supply chains. There have been repeated calls for the Biden administration to step in to bring the two sides to the negotiating table and guide the process. The Department of Labor helped to resolve the 2023 issues with the West Coast ports which had spent a year negotiating their dockworkers contract.

Daggett said in response to those calls, “We will not entertain any discussions about extending the current contract, nor are we interested in any help from outside agencies to interfere in our negotiations with USMX,” said President Daggett. “This includes the Biden Administration and the Department of Labor.”

Experts have questioned if the union would proceed with a potentially devastating strike five weeks before the presidential elections in the United States. Daggett asserts that the membership is 100 percent behind the union leadership and willing to “hit the streets” if the union’s contract demands are not met.

In addition to blocking automation in the ports, the ILA has said it is looking for recognition of the longshore workers' efforts at keeping the ports functioning during the pandemic. The West Coast union, the International Longshore and Warehouse Union (ILWU), a year ago reached an agreement for a new contract which Reuters reported contained a 32 percent pay increase over the six-year agreement.

The ILA and USMX and its predecessor organizations have a long history of positively resolving contracts. Both the 2018 and 2012 negotiations were resolved without work interruptions and indeed there have been 10 contracts since a strike in 1977.
 

German Port Workers to Vote on Contracts Proposals After Multiple Strikes

Hamburg is among the ports that was struck over the past six weeks tied to contract negotiations (file photo)

PUBLISHED JUL 15, 2024 1:49 PM BY THE MARITIME EXECUTIVE

 

Germany’s Ver.di union has decided to present two possible alternatives for a new dockworkers’ contact to the membership for comments after four rounds of contentious negotiations. Ver.di says it will determine its response after the membership survey to what the Central Association of German Seaport Operators (ZDS) called its final offer.

The contract for 11,000 port workers expired at the end of May with the union staging a series of warning strikes during June and July bringing cargo shipments and containers to a halt at major ports ranging from Hamburg to Bremerhaven and Edem. The stoppages ranged from one to two days at a time with carriers such as Maersk warning that they could be forced to divert ships or experience delays.

“The offer falls short of expectations,” the union’s Federal Collective Bargaining Committee said after the fourth round ended on Friday night. They noted however that the employers had accepted some of their demands including a financial bonus and compensation for the stress of shift work.

"Now it's up to the members," said Ver.di negotiator Maren Ulbrich. “The Ver.di Federal Collective Bargaining Commission will decide how to proceed at its meeting on August 22/23, 2024 based on the feedback from Ver.di members on the offer.”

ZDS responded by saying that it has offered pay increases that were significant at a time when port operators are under increased financial pressures from a range of issues and inflation. They point to the need to invest in the energy transformation and training while saying high international competitive pressure also requires increases in efficiency and productivity in seaports.

“The amount of the offer is at the limit of what can be sustained and poses considerable economic challenges for seaport operators,” said Torben Seebold, negotiator for the ZDS. “We are confident that we have found a long-term solution with the final offer and have thereby restored confidence in the reliability of our ports."

One alternative is a 12-month contract that provides a lump-sum payment of 1,000 euros (pro rata for part-time employees) as well as an increase of 0.95 euros starting January 1, 2025, and shift allowances and increased holiday pay. The alternative is a 16-month contract with a payment of 1,400 euros and a pay increase of 1.15 euros as of January 1, 2025. It also provides increases in shift allowances and holiday pay.

Two years ago, the negotiations stretched to ten rounds before an agreement. Ver.di also staged warning strikes causing widespread disruptions and backlogs. Reports said port operations were suspended for a total of 80 hours in 2022 with both sides working to avoid similar extended disruptions.

Sanctions Strand Over 50 Russian Oil Tankers

Tsvetana Paraskova - Jul 11, 2024

U.S., UK, and EU sanctions have resulted in the idling of dozens of tankers used to transport Russian crude.

The stepped-up sanction enforcement has created difficulties for Russia in shipping its oil to customers.

The shipping cost to transport Russia's sanctioned crude has slumped over the past month.


More than 50 oil tankers that have previously transported Russian oil are now sitting empty and idle in the Baltic Sea, the Black Sea, offshore Russia's Far East, China, South Korea, and near the Suez Canal.

All these tankers have been targeted by U.S., UK, and EU sanctions in recent months as the West ramped up efforts to choke off Russia's oil revenues. Very few of them, three to be precise, have loaded oil cargoes since they were designated by one or more Western authorities, according to tanker-tracking data compiled by Bloomberg.

The stepped-up sanction enforcement has created difficulties for Russia in shipping its oil to customers, now mainly in Asia.

However, the transport cost of delivering Russian oil has recently dropped to two-year lows and is now close to the freight rates for non-sanctioned crude on similar routes, analysts have estimated.

Part of the sanctions' objective is to drive the cost of carrying Russian crude so high that it would make it uneconomical for importers to be willing to buy Putin's oil.

But the shipping cost to transport Russia's sanctioned crude has slumped over the past month, which is currently blunting the Western sanctions' impact on Russian oil sales and revenues.

This trend may not be a lasting one because the drop in freight rates was attributed to higher refinery processing rates in Russia this month, which have reduced exports, anonymous sources told Reuters this week.

Sanctioned Tankers

The U.S. started at the end of last year to ramp up sanctions on entities carrying Russian oil, aiming to stifle Putin's revenues and address the violations of the price cap mechanism under which Russian oil can be transported on Western-owned, insured, or financed tankers only if the price is crude is $60 per barrel or below.

Related: The Value of Norway’s Oil Fund Soars to New High of $1.7 Trillion

Then the U.S. levied new sanctions against Russia in February on the second anniversary of the Russian invasion of Ukraine and in response to the death of opposition politician Alexey Navalny.

Among the 500 new sanctions targets, the U.S. Treasury and State are targeting Sovcomflot and more than a dozen tankers linked to the Russian state-owned fleet operator.

Last month, the UK explicitly targeted vessels in Putin's shadow fleet, used by Russia to circumvent UK and G7 sanctions, in its first sanctions directly aimed at the dark fleet, which is estimated to have grown to more than 600 tankers known to have shipped sanctioned oil at least once.

The sanctions "aim to disrupt and increase the costs of Russia's efforts to bypass UK and G7 sanctions through its shadow fleet," the UK said.

Weeks after the UK's latest sanctions, the EU adopted at the end of June a new sanctions package against Russia, targeting Russian LNG projects and shipments for the first time and looking to curb Moscow's use of the dark fleet to circumvent the price caps on Russian crude and oil products.

The EU placed 27 vessels on a sanctions list in a new measure targeting the dark fleet , which circumvents the price caps on Russian oil.

"This measure also targets tankers part of Putin's dark fleet which circumvent the EU and Price Cap Coalition's caps, while adopting deceptive shipping practices in complete disregard of international standards," the EU said.

The list of 27 sanctioned tankers "can be updated as regularly as needed to address the ever-evolving involvement of those vessels helping Russia to wage war against Ukraine," the bloc added.

In May, more tankers operating outside Western jurisdiction were tracked shipping oil from Russia as most crude prices continue to be above the $60 a barrel price cap, wrote Michelle Wiese Bockmann, Principal Analyst at Lloyd's List Intelligence.

The percentage of tankers by deadweight insured with the 12 clubs of the International Group of P&I Clubs was at a record low of 37%, while insurance for the rest was unknown, the analyst added.

Stranded Tankers

While the dark fleet is growing, the tankers sanctioned since October 2023 are idle and empty all over the world, from the Baltic to the Pacific, according to data compiled by Bloomberg. Of the 53 ships that have been targeted by sanctions since October 2023, only three have loaded oil cargoes since being designated.

About half a dozen sanctioned tankers are idling empty each in the Baltic Sea and the Black Sea, off the Russian Far Eastern ports, offshore China and South Korea, and near Port Said, on the north end of the Suez Canal, per the data compiled by Bloomberg.

Russia, however, continues with its efforts to skirt Western sanctions, and in many cases, it is succeeding.

For example, this spring, a Russian tanker of sanctioned tanker fleet operator Sovcomflot likely managed to circumvent U.S. sanctions by surreptitiously transferring its oil cargo to another vessel offshore Singapore.

These sanction-busting attempts with cargo switching, with transponders off, suggest the lengths to which Russia and buyers willing to purchase cheap crude could go.

By Tsvetana Paraskova for Oilprice.com

 

New Jersey Received Only Three Proposals in Fourth Round Wind Solicitation

New Jersey received one resubmission, one revision, and one new proposal in its latest round (file photo)

PUBLISHED JUL 12, 2024 8:30 AM BY THE MARITIME EXECUTIVE

 

 

Reports indicate that there was a lackluster response to New Jersey’s fourth round of solicitations for offshore wind projects. The state has already suffered setbacks after Ørsted walked away in October 2023 for what would have been the first large projects and the round that closed yesterday, July 10 received only two new proposals, one of which had been presented and rejected before, and a re-bid proposal for a third project.

This comes despite strains on the power grid across the Northeast United States as the states are having a hot summer, setting new high-temperature records, and are expecting continued heatwaves in the coming weeks. The recent temperatures surpassing the 100-degree Fahrenheit “feels like” for days prompted a widespread Heart Advisory in New Jersey and elsewhere. Further, the state’s grid operators forecast that electric load growth of nearly 40 percent over the next 15 years.

The most developed of New Jersey’s offshore wind projects, Atlantic Shores, which is a joint venture between Shell New Energies US and EDF-RE Offshore Development, took advantage of the opportunity to submit a re-bid for the two phases of its project. They highlight that they recently received Record of Decision from the Bureau of Ocean Energy Management, concluding the intensive review process. They expect to have full federal and state approval for both projects by the end of the year.

Combined the projects would have a capacity for 2.8 GW of electricity. The company did not detail the terms of the re-bid, likely adjusting its pricing. Instead, it emphasized that it is the most mature of the state’s projects and likely poised to become the first to reach operation.

Attentive Energy, which is a partnership between TotalEnergies and Corio Generation, also participated in the fourth round. The company’s project was selected in January 2024 in the third-round solicitation and it also sought a project in New York State, in the state’s recently canceled third round. 

The company did not announce details of its second submission to New Jersey. They said in a public statement, “Attentive Energy proposes to New Jersey a consistent and holistic vision prepared to build off of the momentum and early successes of its AE2 project.”

The third submission came from Community Offshore Wind, a partnership between RWE and National Grid. The company is saying that it revised its previous submission without providing details. The previous submission, which was not selected by New Jersey, called for a project 37 miles east of Long Beach Island’s Barnegat Light. It would have had a capacity of 1.3 GW.

The new proposal is for a project in the same lease area. The companies indicated construction could begin by 2027 or 2028 and the project would be operational by 2031.

New Jersey had set a goal of 1.2 to 4 GW in this round. The NJ Board of Public Utilities is promising to announce its decision by December. At the same time, the state is anxious to move forward and in May Governor Phil Murphy and the Board announced they would accelerate the fifth round. It had been scheduled for the third quarter of 2026 but will now be conducted in the second quarter of 2025.

By advancing New Jersey’s solicitation schedule, the Murphy administration said it would build upon the momentum of the state’s offshore wind industry, bringing additional economic benefits and jobs to the Garden State. New Jersey is well situated with the New York Bight which set a record of nearly $4.4 billion for that total bid amount when the Department of the Interior auctioned the leases in February 2022. The state has a goal of achieving 100 percent clean energy by 2035 and 11 GW of offshore wind installed by 2040, but so far has no wind projects approved and under construction.
 

Power Utility Urges New UK Government To Speed Up Wind Growth

By Irina Slav - Jul 12, 2024

RWE, the UK's largest power generator, is calling on the government to increase financial support for offshore wind projects.

Climate NGO Ember has also urged the government to offer higher prices for wind-generated electricity.

Both organizations believe that increased subsidies are crucial to attract private investment in wind power and achieve the UK's net-zero goals.



German RWE, the largest power generating utility in the UK, has urged the new Labour government to speed up the expansion of offshore wind capacity if it is to meet its own net-zero targets.

“We would urge them to increase [the budget] significantly and ensure they’re getting all the advice of all the relevant experts to work out how to do that,” Tom Glover, UK head of RWE, told the Financial Times.

This is the second call on the new government in less than a week to do more about wind power capacity growth, after climate NGO Ember urged the Labour cabinet to start offering higher prices for the electricity generated from wind installations in order to motivate growth.

The UK incentivizes new wind and solar capacity by guaranteeing minimum long-term prices for the energy produced from such installations via contracts for difference. Yet the prices that the government has been ready to offer recently have fallen short of developers’ funding needs, reducing interest in new projects.


RWE and Ember appear to be in agreement on what needs to be done in order for the planned wind power capacity to get built: increase the subsidies. These subsidies are believed to be instrumental for motivating comparable private investment, which in RWE’s case is a planned budget of 8 billion euro until 2030, equal to about $8.7 billion.

However, governments do not have unlimited funds at their disposal, which makes responding to such calls tricky. Germany recently decided to change its subsidy mechanism for wind and solar, going from a guaranteed minimum prices over an extended period of time (the same as the UK’s CfDs) to a lump sum granted to wind and solar developers in advance. The move is evidence that the subsidy support cannot be a long-term approach to securing the profitability of wind and solar installations, which would in turn draw more private investors in.

By Irina Slav for Oilprice.com

England’s biggest onshore windfarm plan is early test of anti-Nimby policy

The government must weigh up the need for huge amounts of green energy against strong opposition from locals for Calderdale Wind Farm proposal

The site that has been proposed for Calderdale Wind Farm

 (photo: Ali West)

By Tom Bawden
Science & Environment Correspondent
July 14, 2024 

Labour could be heading for a showdown with locals in the South Pennine Moors over plans to build England’s biggest onshore windfarm near Hebden Bridge.

The Calderdale Wind Farm’s 65 Blackpool Tower-height wind turbines would provide green electricity to more than a quarter of a million households, bring jobs to the area and give locals £75m over 30 years to help with energy bills.

But opponents say it would transform a beautiful, unspoilt area of peatland into an “industrial landscape”.

With its turbine tips reaching 200 metres into the sky, the proposed 23.5 square kilometre site on Walshaw Moor is just a few hundred metres from the farmhouse that is said to have inspired Emily Bronte’s novel, Wuthering Heights.

It is also near to where the tv drama Happy Valley was filmed.

The developers of Calderdale Wind Farm say they are ready to move “at pace” and will submit a planning application as soon possible after Labour’s planned changes to the way consent is granted for large onshore wind farms are finalised.

These would see planning decisions taken by central, rather than local, government, with this project thought likely to provide the first test case of Labour’s determination to drive through major wind farm – and other infrastructure – developments in the face of strong local opposition.

“Because of its size, location and timing Calderdale Wind Farm could be an important test case, showing whether we are likely to see a flurry of similar developments in the coming years,” Ed Griffiths, Head of Business & Client Analytics at Barbour ABI, a key provider of construction data to the Office for National Statistics and the government, told i.

“Large projects such as Calderdale, with 65 turbines proposed, will give an indication of the government’s determination to unblock onshore windfarms in England once planning has been submitted.”

Professor Rob Gross, director of Imperial College London’s UK Energy Research Centre, added: “The government will be keen that some well advanced large windfarms get going quickly. I’m sure that particular developments will come to be seen as a test case of controversial wind developments. This one might indeed be seen as that test case.”

Since taking power, Labour has ended the effective ban on all but the smallest onshore wind farms that was brought in by the Conservative party in 2015 – and vowed to take on the Nimbys.

This is a key part of the government’s plan to ensure the UK hits several ambitious, legally binding targets on reducing carbon emissions – which it is currently no-where near meeting – and to improve energy security.

But the wind farm is fiercely opposed by many people in the area, given its huge size and picturesque location

.

Steven Oldroyd of the Stop Calderdale Windfarm campaign (Steven Oldroyd)

“This will look absolutely horrendous. It just turns a wild area into an industrial landscape,” Steven Oldroyd, of the Stop Calderdale Windfarm campaign, told i.

“There are unspoilt views around there for miles and miles. You can walk for hours and not see another person, or building, or even a pylon. You can hear curlews, you can hear snipes – all wildlife,” added Oldroyd, who lives in nearby Sowerbury Bridge and runs a removal and courier delivery service.

“Areas that could pass as untouched are few and far between in this country. But the South Pennines is one of the last places like that.

“You have signs up in Japanese because they get that many tourists going to look at the area. What are they going to think when they see that?”

He is referring to the many tourists who throng to the area to see where the Bronte sisters grew up (in Haworth) and the ruined farmhouse of Top Withens, situated a few hundreds metres from the proposed wind farm site, which is said to be the origin of Cathy’s home Wuthering Heights in the novel and is particularly popular with Japanese tourists.

Jenny Shepherd, a retired creative writing lecturer living in Hebden Bridge is also strongly opposed to the development.

“I’m pretty angry, upset and pissed off about it to be honest,” she told i.

“We’re in favour of onshore wind but we’re absolutely clear it cannot be on peatland, particularly protected peatland like Walshaw Moor. Peatland is good for water quality, protects against flooding, helps against climate change by storing CO2 and provides habitat for birds, plants and animals,” she added.

Despite the opposition, Christopher Wilson, Executive Chairman at Worldwide Renewable Energy (WWRE), which is developing the project, insisted that it “is an incredible opportunity for Calderdale to play a nationally significant role in the UK’s Net Zero transition”.

“Our initial plans would also see the planting of thousands of trees and other planting across Walshaw Moor to enhance flood mitigation for the benefit of villages along the Calder Valley. It will also mean the end of grouse shooting on the moor,” he said.

“Together with a £75million community benefit fund over the lifetime of the project and an extra £26 million boost to the regional economy annually once operational, we firmly believe Calderdale Wind Farm to be a once in a generation opportunity for the local community.”

Newly elected Labour MP for Calder Valley, Josh Fenton-Glynn, said: “It’s hard to say whether I’m for or against a proposal that hasn’t been made yet.

“I have been clear that any decision on support or otherwise will consider the climate impact of potentially damaging deep peat and I would need assurances there would be no flooding impact on local communities.”

A Department for Energy Security and Net Zero (DESNZ) spokesperson declined to comment on the Calderdale proposal, however, they indicated a determination to drive through big windfarm projects more generally.

“By overturning the decade long ban on onshore wind, we have sent a signal to investors the UK is back in business, an immediate step in our mission to make Britain a clean energy superpower.

“Our bold action will help us take back control of our energy; boosting our energy independence and cutting bills for families as we tackle the climate crisis.”

A spokesperson for Calderdale Council said: “Calderdale Council has not received a planning application for the proposed wind farm development in Calderdale, so due to the pre-application stage, the Council isn’t in a position to comment further at the moment”

Cllr Scott Patient, Deputy Leader and Climate Action and Housing Cabinet Member, Calderdale Council, meanwhile, said: “We wholeheartedly welcome the new Labour Government’s decision to lift the effective ban on onshore wind.

“It will allow councils like ours to work more effectively with our local communities, harnessing the amazing resources we have in Calderdale to reduce energy bills, create good jobs and tackle the climate crisis.”

Kieran Turner, who stood for election as a Green MP for Calder Valley in this month’s election, said: “The Green Party believes in sustainable solutions. In the case of energy generation, this means projects need details of the total carbon footprint and environmental impact, of the site itself and all its connectivity infrastructure. In this example, we need more detail than has yet been made available in the scoping report from the proposers which uses uninformative vagueness such as ‘negotiations are ongoing’.”

MONOPOLY CAPITALI$M

FTC Requests More Info On $22.5 Billion ConocoPhillips-Marathon Oil Deal

By Tsvetana Paraskova - Jul 12, 2024

The U.S. Federal Trade Commission (FTC) has requested additional information from ConocoPhillips and Marathon Oil regarding their proposed $22.5 billion merger.

ConocoPhillips and Marathon continue to cooperate with the FTC's review and expect the merger to be completed in the fourth quarter of 2024, subject to regulatory approvals.

The merger is expected to boost ConocoPhillips' market capitalization above BP and behind Shell, solidifying its position as a leading independent producer in the energy industry.



The U.S. Federal Trade Commission (FTC) has sent a second request for additional information to ConocoPhillips and Marathon Oil while reviewing their proposed $22.5 billion merger, ConocoPhillips said on Friday.

On July 11, 2024, ConocoPhillips and Marathon each received a request for additional information and documentary materials from the FTC in connection with the FTC’s review of the merger announced in May.

“ConocoPhillips and Marathon continue to work constructively with the FTC in its review of the Merger and continue to expect that the Merger will be completed in the fourth quarter of 2024, subject to the fulfillment of the closing conditions in the Merger Agreement, including receipt of required regulatory approvals and approval of Marathon’s stockholders,” ConocoPhillips said today.

At the end of May, ConocoPhillips said it had agreed to buy Marathon Oil in an all-stock deal with an enterprise value of $22.5 billion, inclusive of $5.4 billion of net debt, in one of the latest transactions announced in the U.S. oil and gas industry.

In the case of ConocoPhillips, the company “is leveraging its premium market valuation, which it shares with the majors, to strike a deal that will immediately boost its free cash flow profile and enhance its capital return program for investors,” said Andrew Dittmar, a Director on the Enverus Intelligence team.

Merging with Marathon Oil will boost ConocoPhillips’ market capitalization to more than $150 billion. The surge in market cap will extend Conoco’s lead as the largest independent producer and place it broadly in the same scale as majors, above BP and behind Shell, according to Enverus Intelligence Research.

But the Eagle Ford position of the combined ConocoPhillips-Marathon Oil company could come under closer-than-usual scrutiny from the FTC, which will be reviewing closely the whole deal, considering the increased regulatory scrutiny for oil and gas transactions and Conoco’s existing scale, according to Enverus’ Dittmar.

By Tsvetana Paraskova for Oilprice.com

Houston we Have a Problem

By Leonard Hyman & William Tilles - Jul 13, 2024

Hurricanes, despite appearing with increasing frequency and greater force, are still relatively infrequent in terms of devastating any given electric utility’s service area.

There are basically two grid-hardening approaches but both are unpopular.

The strategy favored by utilities is to bury transmission lines underground which results in high reliability but at a steep price.



Hurricane Beryl barreled through Houston last Monday leaving over three million electric utility customers without power in the sweltering summer heat. Hurricanes, despite appearing with increasing frequency and greater force, are still relatively infrequent in terms of devastating any given electric utility’s service area. There are things that management routinely prepares for and executes and there are unexpected severe weather events no matter how accurately forecasted. In the latter case, management can only respond. They can't retroactively “harden” their distribution system after the lines are down and the poles are lying in the street. For this reason hurricane recovery always occurs in a crisis environment. The public profile of the utility and its senior executives is elevated instantly and suddenly subject to public scrutiny. The news features stories of angry customers anxious for information about power restoration efforts or upset about the lack thereof. From a business perspective, there is little upside and considerable downside from all this additional scrutiny. There is an asymmetry here—timely power restoration is expected, not rewarded, while extensive delays bring scorn from customers, regulators, and politicians. Houston-based Centerpoint, with almost one million customers still lacking power, is experiencing all of this right now. The latest Houston storm event brings up these questions:

1. Are there technological fixes that could reduce the impact of these adverse weather events, or said differently, could increase grid resilience? — And the answer is yes there are basically two grid-hardening approaches but both are unpopular. The strategy favored by utilities is to bury transmission lines underground which results in high reliability but at a steep price. Pacific Gas & Electric is embarking on this strategy as a way to increase grid resilience in fire prone areas. The estimated cost is in the tens of billions and the program provides considerable rate base growth which in turn drives utility earnings. The other approach, solar and battery based microgrids which essentially bypass the wires-based grid, also increases resilience but, being privately financed, adds liitle to the utility’s rate base and earnings growth potential. For this reason it is often disparaged by utilities, regardless of its usefulness in emergencies, and is not viewed as being in their economic interest.

2. Is there a deeper problem here? — We believe the answer is yes. Due to global warming and climate change, our built environment is increasingly unsuitable to maintain the infrastructure we need in our daily lives. Electricity is essential. We think access to it is almost the definition of a contemporary or modern lifestyle which includes on demand heating, hot water, A/C, lighting, and refrigeration, not to mention charging ports for phones and Ipads. A severe weather event with prolonged service restoration that deprives an area of electrical service for weeks or months (admittedly an extreme case) essentially forces the people in that service area to live the way they would in the nineteenth century. Can our technological society afford to put up with (and should it?) disruptions from natural events?

3. Would a Texas/ERCOT grid with better interconnections to other neighboring systems be better able to handle adverse weather events? —- The short answer is no. It doesn’t matter how many thousands of MWs of power are available from neighboring utilities if most of the in state power lines are down. However, the state has dramatically increased its expectations for future power needs and is likely to incentivize more fossil-fueled base-load power generation. If the Texas legislature pursues its plan to build more power generation (likely gas fired) without consideration of grid resilience, then all we can say is there may be power, but it is not likely to reach the people, at least not when they need it most.

As for the obvious question, “Will this happen again?”, we think the answer is just as obvious.

By Leonard Hyman and William Tilles for Oilprice.com

Raw Material Shortages Weigh on EU Ammunition Production


LONG READ

By RFE/RL staff - Jul 08, 2024

The EU's production capacity for 155mm artillery shells is estimated to be less than half of the figures announced by senior EU officials.

The EU has delivered only about half of the 1 million shells it promised to Ukraine within a year, with significant delays.

Shortages of gunpowder, explosives, and raw materials, as well as a lack of long-term contracts, are hindering the ramp-up of shell production in the EU.



The European Union's capacity to produce 155 mm artillery ammunition may be less than half as large as public estimates by senior EU officials indicate, affecting the bloc's ability to keep promises about supplies to Ukraine, Schemes and its partners in a journalistic investigation have found.

The finding is a result of months of reporting by Schemes -- the investigative unit of RFE/RL's Ukrainian Service -- and other outlets in a consortium of European media on shell production, a crucial factor in Ukraine's defense against the Russian invasion.

In addition to the capacity issue, interviews with ammunition producers, buyers, government officials, policy advisers, and defense experts in EU member states and Ukraine showed that the EU has given Ukraine about half as many shells as it has promised, with a significant delay.

In March, the European Commission said that thanks to its measures, European annual production capacity for 155 mm shells had reached 1 million a month earlier.

Three months later, in June, Thierry Breton, the European commissioner for the internal market, said that EU producers would reach an annual capacity of 1.7 million 155 mm shells by the end of this year and that capacity would continue to grow. However, according to a high-ranking European arms industry source, the current capacity is about one-third of this.

"It's a very bad idea to convince ourselves that we have three times the actual production capacity and make decisions based on that. Then suddenly to find out that nothing is coming out of the factories and you cannot supply Ukraine and the NATO alliance," the source said.

Like some others cited in this report, the source spoke on condition of anonymity due to the sensitivity of the subject.

This testimony aligns with that of two other knowledgeable industry sources journalists spoke to in June -- high-level officials in an EU country and in Ukraine -- who assessed the annual capacity of European 155 mm ammunition production at over half a million.

"Declarations of the EU leaders regarding the 155 mm production capacity that is to be reached by the end of this year are not reasonable. Production increases across Europe are lagging behind, with the current total capacity reaching about 580,000 shells per year," said a well-informed artillery industry source from Slovakia.

Two other documents estimate the European industry's annual capacity as of the beginning of the year at not much higher than half a million.

According to a December 2023 Estonian Defense Ministry report, the EU production capacity is about 600,000 shells a year. This fits with German arms maker Rheinmetall's January 2024 estimate, an internal document that journalists obtained, which says that all Western European arms makers taken together could produce around 550,000 shells annually as of the beginning of this year.

In response to questions from the journalistic consortium, the European Commission said that it based its assessment of the European ammunition production capacity on "facts" and that it was "taking into account ongoing investments" into the industry's scale-up.

The consortium -- which includes Schemes, Germany's Die Welt, Czech outlet Investigace.CZ, Poland's Vsquare and Frontstory.PL, Finland's Iltalehti, Slovakia's Jan Kuciak Investigative Center, Delfi Estonia, and The Investigative Desk -- examined the factors behind the pace of European ammunition-production capacity building.

Arms companies said the problem is a global shortage of gunpowder and explosives and a lack of cash to fuel the ammunition industry, with governments reluctant to sign long-term contracts.

High-ranking governmental and industry sources with whom Schemes and its partners spoke blamed ammunition shipment delays to Ukraine on EU bureaucracy and sluggishness and asserted that inadequate EU assessments of its own production capacity were among the causes of lagging supplies.

Ukraine is purchasing some ammunition on its own and plans to start mass production of 155 mm shells in the second half of 2024.

However, Strategic Industries Minister Oleksandr Kamyshin said that Ukraine's efforts will always be insufficient: "We will never be able to produce as much ammunition as our armed forces need now," he told Schemes.

The current need is 200,000 shells a month, according to Defense Minister Rustem Umerov -- more than the EU and the United States combined can manage.

"The entire free world cannot meet this need because we have an active front line of 1,500 kilometers, which has not happened since the Second World War," Kamyshin said.

The U.S. presidential election in November is adding to concerns in Kyiv about future aid and arms deliveries.

The Game Changer

NATO-standard artillery has been a game-changer on the front line, former Defense Minister Oleksiy Reznikov says.

Ukraine, which inherited Soviet artillery, received the first substantial batches of 155 mm artillery guns and shells in the spring of 2022, not long after Russia launched the full-scale invasion on February 24.

However, this didn't happen in a flash.

As Russian forces massed at the border before the invasion, Kyiv and its partners were searching for Soviet-caliber ammunition for the country's defense. Ukraine had roughly 1,000 pieces of 122 mm and 152 mm artillery and only one 155 mm NATO-standard howitzer, the Bohdana, domestically produced and at the time only a test sample.

Knowing this, the United States offered Ukraine Soviet ammunition it bought for Afghanistan and stored across the EU, Reznikov told Schemes.

"We negotiated with the Americans and received full access to all their warehouses in Europe that they had accumulated ammunition for the operation in Afghanistan," he said.

This ammunition helped Ukraine hugely, he said, but it didn't last long.

Soon, it became clear that Europe's limited capacity to produce Soviet-caliber ammunition could not keep up with demand. According to Reznikov, in the early days of the all-out war, Ukraine used 20,000 shells of all available calibers – one-third of what Russia fired but 12 times more Soviet-caliber shells than Europe could make in a day.

In spring 2022, Ukraine persuaded Britain and the United States to give it 155-caliber artillery and shells. Other countries followed suit.

Ukraine now has at least 12 types of 155 mm artillery from around the globe, Schemes found, in addition to the Bohdana. The total number of 155 mm artillery pieces at Ukraine's disposal rose from one at the start of the invasion to 500 to 600 now, said Mykola Byelyeskov, a research fellow at the National Institute for Strategic Studies in Kyiv and a senior defense analyst at the charitable foundation Come Back Alive, which supports Ukraine's military.

Reznikov said that 155 mm artillery is more accurate, technologically advanced, and longer-range than the 152 mm Soviet equivalent. Most important, NATO countries had more of it.

Soldiers Schemes interviewed at the front in the Kharkiv Oblast said that since they switched from Soviet artillery to NATO guns, they have experienced less drastic ammunition shortages.


"At the beginning of the full-scale war, when we worked with 152 mm caliber artillery, we had to save up shells because we could not always get them in time, and they were not always available," said Artur, an artilleryman with Ukraine's 40th Separate Artillery Brigade.

Since he switched to an AHS Krab, a Polish 155 mm howitzer, ammunition shortages have become less of a problem.

"It can do anything. It can hit absolutely any target. It can be a stronghold, a pillbox, dugouts, houses, heavy, medium, light vehicles, infantry," Artur said of the Krab.

Ramping Up

The NATO-standard shells have not been a cure-all, however, and Ukrainian forces tend to run short because they use the ammunition faster than the EU can replenish its stock.

"Experience from the war in Ukraine shows the immense demand for artillery ammunition. The production capacity available in the Western world is not designed for these quantities," Rheinmetall, one of the largest European arms producers, said in a statement in June.

The internal Rheinmetall document from January 2024, which Schemes obtained as part of the journalistic consortium, included a breakdown of what it said was the annual Western European ammunition production capacity of 550,000 artillery rounds at the time. Rheinmetall itself could make 350,000 shells, it said, while the other top producers -- Finnish-Norwegian Nammo, the French branch of KNDS, Britain's BAE, and Slovakia's MSM -- could produce 200,000 shells.

The Rheinmetall estimate contradicts the European Commission's claim that in January 2024, the EU's production capacity reached 1 million rounds of ammunition per year.

Breton has predicted an even greater increase in production, to 1.7 million shells in 2024. His spokesperson told Die Welt that the official bases his assessment of the production capacity on the data shared by governments and industry across the EU member states.

"We therefore stand [by] our estimation that production capacity of 1.5 to 1.7 million can be achieved under realistic operational conditions in response to orders received," Breton's spokesperson said.

Documents and statements from sources suggest that to deliver on that estimate, the European arms industry must increase its capacity by two to three times this year.

Multiple sources in the European arms industry said they struggle to invest big when governments don't finance or reimburse further capacity building: They need long-term contracts.

"It is a challenge because we are making investments of billions or hundreds of millions in machinery and hiring more people. We need a longer horizon," one industry source told The Investigative Desk.

Byelyeskov believes the industry's fears are justified.

"The main contracts are made on a governmental level, and if there are none, the manufacturer will not invest in additional production capacity or hire people," Byelyeskov told Schemes.

"In Europe, it's an interesting game," he said. "Private producers say, ‘Show us the money'…. And governments say, ‘Show us the ability to produce,' and it's a vicious circle -- who will be the first to show that?"

In June, Rheinmetall got what it had been seeking.

The German government has significantly expanded the existing framework agreement, signing a new one, the largest in the company's history, worth 8.5 billion euros. According to a German government document detailing the deal, which was obtained by the journalistic consortium, the company will supply over 2 million 155 mm shells to several European countries by 2030.

Other European ammunition producers haven't had similar success in securing such large state orders. Nammo, a state-owned Finnish-Norwegian arms company, says it only has short-term contracts for a few years ahead.

The company plans to triple the production of 155 mm shells at its Finnish factory in Sastamala by 2026, even though it has received no orders for this additional capacity yet. Colonel Mikko Myllykangas, a manager in charge of relations with the company's primary client, the Finnish military, said Nammo is pumping 200 million euros into its Finnish facilities alone.

"So here is an opportunity for politicians to fulfill their promises. We have the capacity and just need orders," Myllykangas told Iltalehti.

Other producers also claim to have gradually boosted investments despite the lack of state contracts.

Czech STV Group plans to invest 40 million euros in production over the next two years. MSM Group in Slovakia says it will inject 100 million euros into ramping up production. KNDS France has invested 300 million euros -- 20 percent of its revenue -- into the "war economy," a term used by Breton to refer to the expansion of the defense industry.

While NAMMO, Rheinmetall, and MSM all say they have scaled up ammunition production, such statements sometimes apply only to ammunition cartridge cases, or shells. Full artillery rounds also comprise explosives, initiators, and modular charges, and limited access to these components has hindered production increases.

French explosives maker Eurenco -- the European leader in the field whose clients include Rheinmetall, KNDS France, and MSM -- told The Investigative Desk it could supply modular charges for up to half a million artillery shells in 2024. A modular charge is an explosive that propels the shell out of a barrel.

Gunpowder and TNT, necessary for ammunition production, are also in short supply in Europe because few producers exist.

"It is impossible to double the capacity of explosives production in a matter of days, weeks, or months," Martin Vencl, a spokesperson for Explosia, a Czech producer of explosives, told Investigace.CZ. Explosia plans to double production of gunpowder and propellants by 2026-27.

European arms production stagnated after the Cold War's end, and reviving it is not a matter of flicking a switch.

"For 30 years, no one has invested in this, and now everyone has rushed to this limited pool of people, production facilities, and components," Byelyeskov said. "It's clear that [boosting production in the EU] will take time. The market is responding, but not as quickly as we would like."

The EU does take action to support the industry, but observers say its efforts have been insufficient.

"The EU and the governments have been a bit slow," said former NATO official Camille Grand.

"We're still falling short of our targets, I think, because we underestimated them," said Grand, NATO's assistant secretary-general for defense investment until November 2022.

This year, the Act in Support of Ammunition Production (ASAP) investment plan disbursed 500 million euros to ammunition and raw material producers in the EU. In March, the European Commission developed a second investment plan, the European Defense Investment Program (EDIP), worth 1.5 billion euros.

Russian production is much higher than even the EU targets. Estimates of its annual capacity range from 4 to 4.5 million artillery shells.

Not Only Ukraine

Not all the shells produced in the EU go to Ukraine -- EU states also reserve ammunition for themselves. They need to replenish their own stocks after supplying Ukraine, and they aim to meet the NATO requirement of having enough shells in their warehouses for 30 days of high-intensity warfare.

"I think there are maybe a couple of countries in Europe that have 155 mm supplies for 30 days," Kusti Salm, permanent secretary of the Estonian Defense Ministry, told Delfi Estonia.

"The warehouses are empty, that's clear. NATO's force targets are not being met either," said Magnus-Valdemar Saar, national armaments director of Estonia.

European producers also sell abroad.

"Our production…is primarily for France, our biggest customer. France keeps the ammunition for itself or [provides it to] Ukraine," a KNDS France spokesperson told The Investigative Desk. "We've always been 50-50, half France, half export, and right now the French share is slightly larger than the export share."

The company says it sells abroad to have extra cash for a production ramp-up.

A spokesperson for Josep Borrell, the EU's foreign affairs chief, told The Investigative Desk that as much as 40 percent of European production goes to third countries.

Ammunition Donations

If shell-production capacity has fallen short, so have actual supplies to Ukraine.

In March 2023, the EU committed to sending Ukraine 1 million shells within a year. But it sent a little over 500,000 rounds, the Ukrainian Defense Ministry told Schemes in May. The European Commission confirmed this number to The Investigative Desk in June.

The so-called Czech ammunition initiative, which also involves Denmark and the Netherlands, has not yet lived up to initial expectations, either.

In February, President Petr Pavel said the Czech Republic had identified 800,000 artillery shells globally that could quickly be directed to Ukraine if there was money. But progress has been slow, and a high-ranking Ukrainian Defense Ministry source said the first shipment, which arrived in June, consisted of fewer than 50,000 shells.

A source familiar with the initiative told RFE/RL that out of 15 countries that volunteered to buy ammunition for Ukraine jointly, only six had chipped in as of mid-June, while the other nine said the money was coming.

"So far, we have raised enough funds, including pledges that we are counting, for 500,000 [shells]," Tomas Kopecny, the Czech governmental envoy for the reconstruction of Ukraine, told Investigace.CZ. "It's a question of finance. The problem is not political leaning so much as lack of funding."

Former NATO official Grand believes the EU and member states failed to swiftly and fully deliver on their promises of ammunition supplies to Ukraine because they thought it would be an easier job than it was.

"There was a bit of an idea that all you had to do was give money, and you'd get shells. This betrayed a sort of ignorance of the complexity of today's arms market, which is a high-tech market even for relatively simple things like 155s," said Grand.

"We were really on a flawed logic. There is no stock and there is not even necessarily a stock of spare parts or even raw materials," he said.

Western weapons-supply disruptions quickly undermine Ukraine's capabilities on the battlefield. One example is the summer counteroffensive in 2023, which fell far short of its objectives.

"Partly because we dragged our feet in delivering the tanks and all that, the counteroffensive was probably more limited than it could have been. So we have some responsibility.… The lack of ammunition played a part," Grand told The Investigative Desk.

Since the full-scale invasion, Ukraine has experienced drastic ammunition shortages three times -- most recently this spring, when a six-month delay in a $61 billion U.S. aid package badly damaged its ability to defend against Russian forces.

The United States says it has shipped more than 3 million 155 mm artillery rounds to Ukraine since February 2022.

In addition to the coordinated EU support, European countries also individually donate ammunition to Ukraine, but numbers are kept secret.

Domestic Production

Ukraine independently buys and produces ammunition for itself, but the domestic production and procurement volume is far smaller than that of Kyiv's Western partners.

After the start of Russia's full-scale invasion, Ukraine began mass production of Soviet-caliber ammunition for the first time since independence. It has reached a capacity of a few tens of thousands of shells a month.

Meanwhile, "Active work is under way at several state and private defense companies to establish mass production of 155 mm shells," Ukroboronprom, the state defense conglomerate, told Schemes. "The first batch has already been produced."

Ukroboronprom claims that domestically produced 155 mm shells will be compatible with all types of artillery of that caliber. Ukraine has 13 different types.

Compatibility is a weakness in NATO arms: The Swedish howitzer Archer and the French howitzer CAESAR, for example, work best with shells made by the same country specially for them.

According to documents Schemes obtained, Ukrainian soldiers have had experience working with over 20 different types of NATO-standard 155 mm shells. They must adjust their guns for each type of shell, which may complicate their work.

In addition to imports and its own production, Ukraine is pursuing joint ventures with Western ammunition producers. According to the Strategic Industries Ministry, Ukrainian arms companies have negotiated with Rheinmetall, and separately with two unnamed U.S. firms, to produce 155 mm shells together.

"Launching joint ventures with foreigners to produce 155 mm shells in Ukraine will take more than two years. Such production will be based on the market principle of sale, but Ukraine will have the ‘right of the first night,'" Kamyshin told Schemes.

Separately, German-French KNDS is teaming up with an unnamed Ukrainian partner to produce 155 mm shells under KNDS license, the first such case in Ukraine, according to Kamyshin. Another Western arms producer will soon do the same, a source told journalists.

Additionally, Ukraine buys what ammunition it can afford on the global market. According to multiple industry sources, a single 155 mm round costs 3,000 to 5,000 euros. More advanced rounds can cost 8,000 euros.

Customs information from the trade data company ImportGenius for July 2023 shows that Ukraine imported NATO-standard 155 mm for over 39 million euros that month alone.

Among the importers of 155 mm shells listed by ImportGenius is Ukraine's Defense Procurement Agency. Its head, Maryna Bezrukova, told Schemes she will buy Ukrainian 155 mm shells as soon as they become available.

Until then, she says she orders the best of what the European market has to offer.

"EU production is growing," Bezrukova said. "However, to put it mildly, the production of 155 mm shells in Europe seems insufficient because of the shortage of raw materials and explosives."

By RFE/RL

Zimbabwe's Steel Industry Revitalized with New $1.5 Billion Plant

By Metal Miner - Jul 12, 2024

Zimbabwe's new $1.5 billion steel plant, built with Chinese funding, aims to revive the country's iron and steel industry and bolster economic growth.

The plant, located in Mvuma, is set to become Africa's largest integrated steelworks and create significant employment opportunities.

Zimbabwe hopes to capitalize on its natural resources, including iron ore, chrome, and coal, to reduce import dependence and boost export earnings through steel manufacturing.


Zimbabwe’s got itself a brand new iron and steel manufacturing plant, courtesy of the Chinese. This U.S. $1.5 billion Chinese-built plant’s blast furnace recently came online and is already producing pig iron, a crucial ingredient for making steel.

The team over at Dinson Iron and Steel Company (Disco), the Zimbabwean subsidiary of Chinese steel giant Tsingshan Holding Group, announced the production of their very first batch of pig iron on June 13. The Mvuma steel plant, situated about 120 miles south of Zimbabwe’s capital of Harare, is slated to be Africa’s largest integrated steelworks. According to a report in the South China Morning Post, it will also be one of Africa’s leading iron and steel producers.

MetalMiner’s Annual Metals Outlook provides 12 full months of industrial metal price forecasting. Our June update just released, get a sample report.

The Plant Projects a Steel Manufacturing Capacity of 5 Million Tons

The Chinese firm plans to take things up a notch next month. That’s when the new steel manufacturing plant will start producing billets, the precursor to making steel. There are also plans to begin creating steel products like pipes, bolts, nuts, and even smaller slags, rolled tubes, fences, shafts, wires, and bars.

As part of the first production phase, the new plant recently set a target to make 600,000 tons of steel annually. Later, after the final phase, that production target grows to more than 5 million tons. The plant will also create jobs for the people of Zimbabwe. In the first phase alone, the new steel manufacturing facility hopes to employ around 2,000 people. This figure would double in the second phase.
Zimbabwe’s Path to Economic Renewal through Local Resources

According to some experts, the steel plant could be a game-changer for Zimbabwe. The country has wanted to revive its iron and steel industry for a while now, especially after its largest steel plant shut down during the reign of ex-president Robert Mugabe.

In the coming years, the plant hopes to make use of Zimbabwe’s ample deposits of iron ore, chrome, coal, and more to produce iron and steel products that will strengthen the country’s value chain. Government officials recently stated that companies will mine and process these raw materials locally, with reserves projected to last for a whopping 100 years.

As a nation, Zimbabwe remains blessed with a wealth of natural resources like precious metals, nickel, ferroalloys and coking coal. According to analysts from inside and outside the country, these resources have the potential to help alleviate the country’s economic crisis.

Zimbabwe Set a High Bar

The Engineering, Iron, and Steel Association of Zimbabwe (EISAZ) has set its sights on raking in a staggering $6 billion from exports each year. Clearly, they’re counting on this $1.5 billion steel plant in Manhize to help them achieve this ambitious goal. As part of their sector strategy, EISAZ plans to boost operational capacity, improve production efficiency, and create more job opportunities in preparation for the opening of the new plant.

Back in 2008, when Ziscosteel shut down, Zimbabwe found itself forking over more than $1 billion a year on steel imports. Zisco shut down temporarily due to corruption allegations and mismanagement, though there are plans to revive the facility. However, with the new steel manufacturing facility, the country hopes to reduce its import dependence significantly, thus keeping more of that money within its borders.
U.S. Sanctions vs. Chinese Investments in Zimbabwe’s Lithium Sector

For over two decades, the U.S. and some European countries imposed sanctions on Zimbabwe. In March this year, the U.S., while terminating a Zimbabwe sanctions program, reimposed curbs on eleven individuals and three entities. This included the country’s president, Emmerson Mnangagwa, accused of human rights abuses, among other things. Chinese entities have capitalized on the situation by funding various projects in Zimbabwe, including dams, airports and a new parliament building.

Zimbabwe is also rich in lithium, a critical raw material for electric vehicle batteries. As a result, Chinese companies such as Zhejiang Huayou Cobalt and Sinomine Resource Group invested millions of dollars in acquiring lithium mines and over U.S.$1 billion in constructing processing plants.

U.S. Keen On Africa Metals

The U.S. is keen on accessing Africa’s resources. During a recent visit to South Africa, U.S. Deputy Treasury Secretary Wally Adeyemo made it clear that the U.S. hopes to secure metals essential for the global energy transition. Adeyemo also emphasized the importance of supporting the growth of South Africa’s mining industry and expressed concerns about infrastructure development primarily benefiting foreign interests.

The U.S. has strategically invested in African mining operations to challenge China’s dominance in the supply of critical minerals, especially in the production of lithium-ion batteries. These investments also include rare-earth operations and infrastructure development. With its substantial reserves of minerals crucial for battery production, South Africa holds a vital position in the global supply chain.

By Sohrab Darabshaw