China's clean energy demands fuel Zimbabwe's charge up the mining value chain


Sat, July 15, 2023

As nations seek to cut their carbon footprints, demand has surged for clean energy, fuelling the global competition to secure critical minerals for climate-friendly power sources like batteries. China has been laser-focused on the task.

After spending more than US$1 billion to acquire mining sites in Zimbabwe over the past two years, several Chinese-owned companies have now completed construction or upgrades of lithium processing plants. Observers said the new plants would help the country move up the mining value chain by processing - as well as mining - the metal while employing thousands of workers.

Shanghai Stock Exchange-listed Zhejiang Huayou Cobalt, China's Sinomine Resource Group, and Shenzhen-listed lithium materials producer Chengxin Lithium Group are three Chinese mining companies that have recently commissioned processing plants in Zimbabwe, which holds one of the world's largest hard-rock lithium reserves.

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Lithium - known as "white gold" - is an essential raw material for the lithium-ion rechargeable batteries that power electric vehicles and in solar panels that store solar energy.

Last week, Prospect Lithium Zimbabwe, a unit of the Chinese mining giant Zhejiang Huayou Cobalt, formally commissioned a US$300 million lithium processing plant at the Arcadia hard-rock lithium mine.

Located in the town of Goromonzi, 80km (49 miles) southeast of Harare, the facility has a processing capacity of 4.5 million tonnes of hard-rock lithium, which translates into around 400,000 tonnes of concentrate per year for export.

An armed soldier stands guard at the Prospect Lithium Zimbabwe plant on July 5, the day it was officially commissioned by the Zimbabwean President Emmerson Mnangagwa. 

Photo: EPA-EFE 

While commissioning the processing facility last week, Zimbabwean President Emmerson Mnangagwa said the plant would boost the government's ambitious target of generating US$12 billion in revenue from the mining sector by the end of this year, up from about US$5.6 billion of mineral exports in 2022. Lithium mining was expected to generate about US$500 million.

"Investment will promote the value addition of lithium ore. Lithium is the mineral of the present and future. Its beneficiation [for smelting] will position our country to be a competitive player in lithium production," said Mnangagwa, who was elected president in 2018 after a military coup and is seeking a second term in office. Mnangagwa said he appreciated the investment and support from China, and was looking forward to more.

Chinese ambassador to Zimbabwe Zhou Ding said mining cooperation between the two countries had good momentum and broad prospects. "Chinese mining companies have made better use of Zimbabwe's mineral resources, making Zimbabwe an important link in the international new energy industry chain," Zhou said at the Arcadia launch.

Huayou Cobalt bought the Arcadia operation from Australian-listed Prospect Resources and Zimbabwean minority stakes in 2021 for US$422 million. It invested US$300 million to develop the mine to expand production for the electric vehicle (EV) market. It is currently producing the lithium concentrates spodumene and petalite for export to China for further processing into lithium chemicals for making batteries.

Last year, Zimbabwe banned exports of raw lithium ore, forcing companies to set up local factories to process ore into concentrates before export.

The recent global rush to lithium has improved Zimbabwe's economic fortunes, with several Chinese companies making multimillion-dollar acquisitions to secure lithium supplies.

Zimbabwe is believed to hold Africa's largest lithium reserves, the fifth largest in the world. The resource had remained largely untapped, however, because of a lack of investment in the country, which two decades ago was slapped with Western sanctions over human rights violations and the seizure of land from white farmers.

Meanwhile, another firm, China's Sinomine Resource Group's Zimbabwe lithium unit, has just completed building a spodumene concentrate plant at its Bikita minerals site, with a total price tag of US$300 million for expansion and exploration.

Last year, Sinomine bought Bikita, the country's oldest lithium mines, for US$180 million with the aim of producing spodumene concentrate and petalite, which is used in the ceramics and glass industries.

The plant will produce 300,000 tonnes of chemical grade spodumene concentrate annually for export once the Bikita project reaches its full production capacity.

Sinomine expects to upgrade petalite production to 480,000 tonnes per year from the previous annual rate of 50,000 tonnes.

In May, another Chinese company, Chengxin Lithium Group, commissioned a 300,000 tonne per year lithium concentrator at the Sabi Star mine in eastern Zimbabwe.

Chris Berry, president of ­commodities advisory firm House Mountain Partners in New York, said for the energy transition to continue and lithium supplies to begin to approach demand in the coming years, Africa would need to become a more significant source of lithium.

"The Chinese have realised this and that's why projects in Zimbabwe and Mali are moving forward," Berry said. Ghana could join the ranks of lithium-producing countries in the next few years as well, he added.

"Lithium is not rare [in Africa or elsewhere], but producing commercial quantities of battery grade material is the challenge. As Chinese capital has a tougher time finding a home in Western projects, it would seem that African lithium projects are a natural fit."

Adam Megginson, a price analyst at Benchmark Mineral Intelligence, said there were only a handful of lithium mines operating in Zimbabwe, but announcements of new projects and project expansions continued, especially from Chinese miners, lithium converters and conglomerates.

"Overall we forecast Zimbabwe's mined supply to increase 250 per cent from limited current volumes to 2025 as more capacity comes online from the country," Megginson said.

But even if it meets those projections, he said Zimbabwe would only account for less than 3 per cent of global mined supply by then.

Megginson said Zimbabwe's ban on unrefined lithium exports had encouraged a build in the concentration capacity of spodumene and petalite ore before export, but it had yet to spur the construction of refining capacity for carbonate and hydroxide, which are refined lithium chemicals required to make lithium-ion batteries.

"We don't expect Zimbabwe to have any lithium [refining] chemicals capacity by 2025. So it will continue to rely on other countries, primarily China, to process material into battery grade carbonate and hydroxide required for use in batteries," Megginson said.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

Zimbabwe President Signs Law That Prohibits Criticism of State


Emmerson Mnangagwa
President of the Republic of Zimbabwe

Ray Ndlovu
Fri, July 14, 2023

(Bloomberg) -- Zimbabwean President Emmerson Mnangagwa signed a law that prohibits citizens from criticizing the government, a month before the southern African nation holds elections.

Mnangagwa’s assent to the so-called Patriotic Bill was announced in a government notice published in the capital, Harare, on Friday. The law lists as an offense “willfully injuring the sovereignty and national interests of Zimbabwe” by citizens calling for military intervention and sanctions against the country.

Zimbabwe will hold presidential elections on Aug. 23.

Read more: Bad-Mouthing The State Is Outlawed Before Election in Zimbabwe

Half of Zimbabweans Expect This Year’s Election to Be Manipulated, Survey Shows

Godfrey Marawanyika and Antony Sguazzin
Wed, July 12, 2023 

(Bloomberg) -- Almost half of Zimbabweans polled in a survey expect the result of next month’s election won’t reflect how citizens voted and a majority anticipate violence after the ballot.

All elections in the southern African nation since 2000 have been marred by allegations of intimidation and irregularities, and the findings of the poll of 2,400 Zimbabweans by pan-African survey company Afrobarometer will stoke fears that the trend will continue.

Another disputed vote could further isolate the country, which has been bedeviled by economic and political turmoil since it instituted a failed land reform program more than two decades ago. Many of its ruling politicians are subject to sanctions from the US, UK and European Union and the nation is locked out of international debt markets because it hasn’t serviced its loans.

The Zimbabwe African National Union-Patriotic Front, which has led the country since independence in 1980, is seeking to extend its rule in a year when the national currency has become virtually worthless and inflation is surging. Voters’ biggest concern is unemployment and 85% of those surveyed felt the government had managed the economy very badly, Afrobarometer said.

Still, change is unlikely.

More Zimbabweans believe the results will be manipulated than those who don’t, the survey showed. More than one-in-eight of those canvassed declined to answer the question as to whether the outcome was likely to be rigged, or said they don’t know.

A splintering of the opposition means ZANU-PF should still garner 35% of the vote in both the presidential and parliamentary vote, while the biggest opposition group, the Citizens Coalition for Change, would get 27% and 26% respectively in the two contests, Afrobarometer said. More than a quarter of respondents declined to identify their preferences.

Despite their cynicism about the process 85% of eligible Zimbabweans have registered to vote.

President Emmerson Mnangagwa, in power since ousting longtime ruler Robert Mugabe in a coup in 2017, will face off against nine presidential hopefuls on Aug. 23, with his main opponent being the CCC’s Nelson Chamisa. The High Court on Wednesday nullified the candidacy of Saviour Kasukuwere, a former cabinet minister who fled the country after Mugabe’s removal.

The survey, which was conducted between April 29 and May 13, has a margin of error of 2%.

--With assistance from Desmond Kumbuka.

Zimbabwe elections 2023: What you need to know

Shingai Nyoka - BBC News, Harare
Thu, July 13, 2023 

Voters will be choosing a president, MPs and local councillors

Zimbabwe heads to the polls in August against a backdrop of one of the world's highest rates of inflation and accusations of an intensifying crackdown on the opposition.

Long-time president Robert Mugabe was deposed in 2017 but many say that little has changed.

In the run-up to the vote, questions linger over how free and fair the ballot will be in a country that is trying to rehabilitate its image.

When are the elections?

Zimbabweans will vote on 23 August to elect councillors, members of parliament, and a president. If there is no outright winner in the presidential contest, a run-off will be held six weeks later, on 2 October.

Who is running for president?

Zimbabwe's electoral commission has approved 11 candidates.- ADVERTISEMENT -

This is sharply down on the 23 who contested the last election, in 2018, no doubt because each candidate now has to pay $20,000 (£16,000), up from $1,000 (£800).

But the contest is likely to be between two candidates:

Incumbent Emmerson Mnangagwa, from the governing Zanu-PF party

Opposition leader Nelson Chamisa, from the Citizen's Coalition for Change (CCC)

Mr Mnangagwa, 80, has led Zimbabwe since the military forced Robert Mugabe to resign in 2017, and then won a disputed election a year later. He was a long-time ally of Mugabe before the pair fell out.

Zanu-PF, the governing party, has a lot of support in rural parts of the country

Mr Chamisa, 45, came second in 2018, winning 44% of the vote. A 2020 court ruling stripped him of the leadership of the main opposition Movement for Democratic Change (MDC) and he subsequently lost access to party assets and state funding.

He formed the CCC in 2022, remains hugely popular in urban areas and is the main face of the opposition.

Other contenders include Douglas Mwonzora, the MDC's new leader.

Saviour Kasukuwere, an exiled former Mugabe ally, has been barred from standing on the basis that he has been living outside the country for more than 18 months - a decision he is challenging.

Who will win?

Zanu-PF has the advantage of incumbency, state power and access to state resources. The party, which has been in power since independence in 1980, also retains strong support in rural areas.

However with the economy in such a mess, many people, especially those in urban areas and the youth, think it is time for a change.

Rural voters normally turn out in huge numbers, unlike urban and youth voters, which could work against the opposition. The government has also refused to allow Zimbabweans living abroad to vote - which could also work against Mr Chamisa.

This is the first general election that the CCC will be contesting

Polling so far has predicted different results, so it is hard to use that as a guide as to who may end up president.

Furthermore, human rights activists say that in the past Zanu-PF has used various tactics to stay in power, including violence and intimidation, state-media blackouts and negative coverage of the opposition. Zanu-PF has previously denied using dirty tricks against its opponents.

What are the main issues?

The cost-of-living crisis continues to be at the core of voters' concerns, with the last three years having been some of the worst in a decade. In the 12 months leading up to May this year, prices rose by 86.5%, one of the highest annual inflation rates in the world.

Meanwhile, businesses are struggling to cope with crippling power outages and an unstable local currency, which lost 86% of its value between January and early June.

Allegations of corruption also remain a source of frustration, with a very low rate of prosecution. During the Covid pandemic, equipment was allegedly procured at inflated prices - the health minister was fired but then exonerated by the courts.

How do the elections work?

For members of parliament and council candidates, the election is won on a first-past-the-post basis - in other words the person who has the most votes.

In the presidential race, however, a candidate needs more than 50% of the vote to be declared the winner, otherwise there will be a run-off election between the top two.
When will we get the results?

By law the presidential election results must be announced within five days after voting ends.

Will they be free and fair?

Civil society groups and the opposition doubt that polls will be free or fair. They cite what they say has been a systemic crackdown on government critics.

The arrests and convictions of opposition figures and government critics has intensified over the last two years.

The electoral reforms that the opposition have demanded for years - to level the playing field, provide access to public media and remove ex-military personnel from the electoral body - have not happened.

CCC leader Mr Chamisa says more than 60 of the party's meetings were banned, or disrupted by police during by-elections last year, prompting fears it will happen again.

As former Zimbabwean politician Jonathan Moyo put it, Zanu-PF will not "reform itself out of power".

What happened in the last election in 2018?

This will be the second time Mr Mnangagwa and Mr Chamisa face each other.

Five years ago, the president won in the first round with 50.8% of the vote, but violence followed polling day in which six people were killed when security forces opened fire on protesters.

Observers generally commended the freedom of movement during the campaign period and relative peace on voting day, but the EU for example noted major shortcomings including state resources being misused in favour of the incumbent.

The EU said the final results as announced by the Electoral Commission contained numerous errors.

Mr Chamisa's party failed in its legal challenge to have the result overturned after arguing that the presidential and parliamentary vote tallies were off by tens of thousands.

TAIL WAGS DOG
Canada to Speed Up Critical Minerals Permits in Bid to Erode China’s Dominance

Jacob Lorinc and Brian Platt
Fri, July 14, 2023

(Bloomberg) -- Prime Minister Justin Trudeau’s government hopes to unveil a plan by the end of this year to streamline permitting for mining projects as the US and its allies push to accelerate the production of critical minerals in North America.

Canada faces mounting pressure to keep pace with its southern neighbor as the US ramps up efforts to secure the metals needed for electric vehicles, solar panels and wind turbines. American lawmakers have been debating legislation that could substantially speed up approval times for resource projects.- 

While Canada is home to significant deposits of key minerals, it can take anywhere between five and 25 years to develop them into a mine. This timeline poses a significant challenge to Canada’s dreams of becoming a key player in the US-led drive to topple China’s dominance in the sector.

US negotiations to introduce permitting reform legislation make it all the more urgent for Canada to accelerate mine building timelines, said Heather Exner-Pirot, special adviser with the Business Council of Canada.

“We know the Americans are getting much more serious on permitting reform as commodity prices go up and we start to see some shortages of critical metals,” she said. “If we want to be in the critical minerals business, we have to move on it.”

Ideally the Trudeau government will have its plan ready by a budget update due in the fall, according to an official familiar with the matter. It will seek to enforce legislation passed in 2019 that was designed to cut regulatory hurdles that can stall mining projects for more than a decade, the official said.

Permitting backlogs have largely stemmed from underfunding at agencies tasked with approving permits as well as a lack of coordination between the federal government and its provincial counterparts. The 2019 legislation — the Impact Assessment Act — was supposed to reduce permit timelines to a maximum of five and a half years by setting time limits on assessments and approvals, though in practice projects still experience delays well beyond that time frame.

The process creates uncertainty for investors, sometimes resulting in funding shortfalls for mine builders, said Exner-Pirot.

“It’s a very political process, and from an investor perspective that creates uncertainty and risk. You don’t know if a politician is going to put the brakes on a mine development five years from now,” Exner-Pirot said in an interview.

Mining projects are also subject to rigorous environmental assessments, both at the federal and provincial level, and often face opposition from neighboring Indigenous communities that may be vulnerable to the hazards of operations. Natural Resources Minister Jonathan Wilkinson has acknowledged the need to speed up permitting but vowed not to compromise environmental standards or Indigenous consultation.

One high-profile example of Canada’s lengthy process is Ontario’s “Ring of Fire,” a metals-heavy region seen as key to Canada’s critical minerals ambitions. Projects in the area have sat undeveloped for nearly two decades as mining companies struggle with permitting delays and opposition from some indigenous groups.

Recent high-level government departures have added to Canada’s challenge in making reforms. The permitting review was initially spearheaded by Janice Charette, the top federal civil servant, and Michael Sabia, the top Finance Department official. But both chose to leave government in the past two months.

John Hannaford, who replaced Charette at the top of the federal bureaucracy, is now helping shepherd the review along with Paul Halucha, a top official in the Environment department. Mollie Johnson, a senior official in the Natural Resources department who has been working on it, is moving to a new role as deputy secretary to the cabinet on July 24, the prime minister’s office announced Friday afternoon.

--With assistance from Derek Decloet.

TC Energy urges Canada to speed permits for energy transition projects



Wed, July 12, 2023 
By Nia Williams

VANCOUVER (Reuters) - Canada's TC Energy on Wednesday urged policymakers to streamline permitting for repurposing oil and gas infrastructure to advance energy transition projects and reduce greenhouse gas emissions.

TC Energy has more than 20,000 kilometers (14,300 miles) of pipeline in western Canada that could be repurposed to carry carbon dioxide for sequestration underground or transport low-emissions hydrogen, Chief Executive Francois Poirier said.

"Does there need to be same timeline and level of regulatory scrutiny as for a greenfield project on a new right of way? These are the conversations we are having with governments," Poirier said at the LNG 2023 conference in Vancouver.

"Policymakers are driving us towards significant emissions reduction by the end of this decade and we will not achieve those goals if it takes seven years to permit and put an asset into service," he added.

Canada, the world's fourth-largest oil and sixth-largest natural gas producer, aims to cut carbon emissions to 40-45% below 2005 levels by 2030.

Its oil and gas industry, the country's highest-polluting sector, is counting on deploying carbon capture and storage (CCS) and cleaner fuels like hydrogen to reduce greenhouse gas emissions. But those nascent energy transition industries will require a significant build-out of new infrastructure.

Paul Marsden, head of Bechtel Corp.'s energy business unit, said forcing new technologies that repurpose existing assets to go back to the beginning of the permitting process risked choking innovation.

"We are not asking for corner cutting," Bechtel said, speaking on the same panel, noting the cost of building new infrastructure was getting more expensive.

Trinidad and Tobago's Energy Minister Stuart Young said repurposing assets to help speed the transition to cleaner forms of energy was the next frontier.

"Why are we putting the private sector through the hurdles as though (they're) starting from ground zero and from scratch," Young said. "That's where I think governments and policymakers and regulators need be able to listen."

(Reporting by Nia Williams in Vancouver; Editing by David Gregorio)

Charting the Global Economy: Inflation Cools Further in US

Vince Golle and Molly Smith
Sat, July 15, 2023 


(Bloomberg) -- The US inflation rate slipped to a more than two-year low, spelling relief for American consumers and moving the Federal Reserve a step closer toward ending an historic cycle of interest-rate hikes.

China’s economy continues to struggle, with recent trade figures showing the largest drop in exports since early 2020. Industrial output in Europe remains weak, while strong wage growth in the UK threatens to add to inflationary pressures.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

US & Canada

US inflation cooled sharply last month, offering fresh hope that the Fed can wrap up the most aggressive tightening in decades soon after an expected hike at their July 25-26 meeting.

The Bank of Canada raised interest rates for a second straight meeting, keeping the door open for more hikes as it pushed back inflation’s return to its 2% target. At 5%, the overnight lending rate is the highest in 22 years.

Some 72,700 people in families with children were experiencing homelessness in 20 of the largest cities in the US as of January, a 37.6% jump from a year before, according to an analysis of data provided by jurisdictions. In New York, that figure shot up by two thirds, while Chicago, the District of Columbia and Fort Worth, Texas, also saw outsize increases.

Asia

China is facing pressure on trade as foreign shipments drop off and domestic demand remains weak, with a darkening global growth outlook and geopolitical tensions making a reprieve unlikely anytime soon.

India, the world’s biggest rice shipper, is considering banning exports of most varieties, a move that may send already lofty global prices higher as the disruptive El Niño weather pattern returns.

Australia’s business conditions showed ongoing resilience in June, defying the Reserve Bank’s more than yearlong tightening cycle and warnings of slower economic growth, while consumer confidence remained in “deeply pessimistic” territory.

Europe


UK wages rose more than expected to a level that Bank of England Governor Andrew Bailey said is fueling inflation, maintaining pressure for higher interest rates. Average weekly earnings excluding bonuses rose 7.3% in the three months through May from a year ago.

Euro-area industrial production rose less than anticipated in May — adding to signs that manufacturing is struggling to regain momentum after the 20-nation bloc suffered a recession over the winter.

Emerging Markets

Southeast Asian nations that were counting on Chinese travelers to drive tourism revenues and their economies post-Covid are finding the flow of visitors far from the flood they were hoping for. The visitor statistics suggest that Southeast Asia’s economic recovery this year will be muted.

Saudi Arabia’s decision to extend its oil production cuts — part of a largely unsuccessful bid to raise prices — may trigger an economic contraction in what was the Group of 20’s fastest-growing country last year.

Brazil’s inflation fell below target in June to hit its slowest level since September 2020, clearing the way for the central bank to begin cutting interest rates at its next meeting.

World

Israel left interest rates unchanged for the first time in over a year while New Zealand’s central bank stood pat for the first time since August 2021. Peru kept borrowing costs at a 22-year high and South Korea held rates steady.






























--With assistance from Philip Aldrick, Erik Hertzberg, James Mayger, Abeer Abu Omar, Aline Oyamada, Swati Pandey, Pratik Parija, Tom Rees, Andrew Rosati, Augusta Saraiva, Zoe Schneeweiss, Siddhartha Singh, Randy Thanthong-Knight, Fran Wang, Lucy White, Sonja Wind and Yihui Xie.

CRIMINAL CRYPTO CAPITALI$M
Celsius founder Alex Mashinsky arrested, pleads not guilty to fraud

Danny Park
Thu, July 13, 2023

Alex Mashinsky, founder and CEO of bankrupt cryptocurrency lender Celsius Network Limited, pleaded not guilty after being arrested in the U.S. Thursday for seven criminal charges including securities fraud, commodities fraud and wire fraud, Reuters reports.

See related article: Celsius misled investors, spent customer funds, bankruptcy examiner claims

Fast facts

• U.S. federal prosecutors say Mashinsky defrauded customers. According to the indictment released Thursday by the U.S. Attorney for the Southern District of New York, Mashinsky led customers to believe that Celsius was an air-tight storage space for their assets, obscuring associated risks.

• Additionally, prosecutors accuse Mashinsky and Celsius’ former chief revenue officer Roni Cohen-Pavon of manipulating the value of CEL, the company’s native cryptocurrency token. The two allegedly arranged the purchase of hundreds of millions of dollars of CEL in the open market with the objective of artificially supporting and inflating the token’s price.

• Prosecutors allege that Mashinsky made approximately US$42 million in proceeds from his sales of CEL tokens, with Cohen-Pavon making over US$3.6 million.

• In the lead up to June 12, 2022, when Celsius froze customer withdrawals, prosecutors say Mashinsky continued to assure customers that the company was in a strong financial position. He also informed them that the company had sufficient liquidity to meet all customer withdrawal demands. However, he had by that time allegedly removed approximately $8 million-worth of his own crypto assets from Celsius.

• The U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission and the Federal Trade Commission all sued Mashinsky and Celsius earlier on Thursday.

• Celsius filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York in July 2022 after the spiraling crypto market forced the lender to freeze withdrawals.

‘Extremely vulnerable to abuse’: Token grants back in the spotlight after former Celsius CEO allegedly pocketed $42 million

Marco Quiroz-Gutierrez
Fri, July 14, 2023 

Yuki Iwamura—Bloomberg via Getty Images

Alex Mashinsky, the ex-CEO of bankrupt crypto lender Celsius, insisted publicly that he was clinging to his share of the company’s CEL tokens. But according to the Justice Department, he netted millions of dollars by offloading coins at inflated prices.

The DOJ claims that Mashinsky, with the help of the company's former chief revenue officer, Roni Cohen-Pavon, manipulated the price of CEL by buying millions of dollars worth of the tokens—to help keep it afloat—without revealing it publicly. In some cases, Mashinsky and Cohen-Pavon also caused Celsius to dip into its customer deposits to buy CEL and prop up its price, the DOJ alleges.

At one point, Cohen-Pavon admitted to Mashinsky that the company made up most of the purchases of CEL. “[T]he issue is that people are selling [CEL] and no one is buying except for us,” he said in a private message to Mashinsky, according to the DOJ. “[T]he main problem was that the value was fake and was based on us spending millions (~8M a week and even more until February 2020) just to keep it where it is.”

By selling tokens at inflated prices, Mashinsky took home about $42 million, while Cohen-Pavon reaped $3.6 million. Mashinsky was arrested Thursday and charged with seven counts that include wire fraud and securities fraud. He could face up to 65 years in prison if convicted.

“It's such a flagrant abuse,” said Steven Lubka, head of Swan Private at Swan Bitcoin, a financial services firm.

But a company manipulating its own cryptocurrency isn't a new idea. In December, the Securities and Exchange Commission accused Caroline Ellison, the former CEO of FTX’s trading arm, Alameda Research, of fixing the price of the now-bankrupt crypto exchange’s native coin, FTT. Ellison, at the direction of ex-FTX CEO Sam Bankman-Fried, allegedly purchased large quantities of FTT on the open market to help it maintain its price. FTT was important for FTX because it accepted the coin as collateral for loans of customer funds provided to Alameda Research, and the inflated value of FTT made it seem like the company’s exposure to risk was less than it was, according to the SEC.

The fact that Celsius and Mashinsky were manipulating CEL was not surprising to Lubka. Releasing a crypto token is an effective way for crypto firms to raise money and reward executives and investors, but these coins are also prone to manipulation.

“It's just extremely vulnerable to abuse,” Lubka told Fortune. “All the incentives line up in favor of these companies abusing the unaccountable issuance of tokens.”

Yet these types of tokens remain common. Crypto companies often provide coins to investors or executives in a manner similar to awarding stock options or equity grants in the traditional business world.

The motivation behind sharing TradFi securities is to incentivize employees to work hard to create a viable business, which in theory would increase the value of their shares. With crypto markets, Lubka continued, token grants don’t create the same type of incentive. And tokens, unlike an equity stake, can be offloaded immediately in the open market, generating massive windfalls regardless of that crypto company's success.

“The incentive," Lubka added, "is just to drive a bunch of f****** marketing hype and pump up the value of the token, and then just start selling your tokens as fast as you can."

This story was originally featured on Fortune.com

AT&T Falls to 29-Year Low Amid Concerns of Cleanup Costs

Scott Moritz
Fri, July 14, 2023 



(Bloomberg) -- AT&T Inc. shares hit an almost three-decade low Friday amid growing concerns of the potentially high costs the phone giant faces if it must clean up contamination due to lead-clad wiring throughout parts of its nationwide network.

The issue was exposed earlier this week in a Wall Street Journal story that pointed to leaching lead cables that were part of early landline networks built by phone companies in the first half of the 20th century. Those networks are now owned by several national carriers including AT&T, Verizon Communications Inc. and Lumen Technologies Inc.

AT&T shares fell 4.1% to $14.50 at the close in New York, their lowest price since February 1994. Verizon declined 1.8% and Lumen dropped 10%.

Industry analysts have been trying to calculate the potential costs and risks that may await the carriers.

With a service area that covers about 40% of US homes plus an extensive long distance network, “AT&T will have the largest exposure,” JPMorgan analyst Phil Cusick wrote in a note Friday. Citing the uncertainty around the outcome, Cusick cut his AT&T target price to $17 from $22.

The lead concerns add to an already challenging year for the largest US phone company. In April, AT&T reported $1 billion in free cash flow, missing analysts’ $3 billion target and setting off alarms for the second year in a row about dividend payments. Last month, the company warned that wireless subscriber growth was less than anticipated. The company also clumsily obscured a massive restructuring and job reduction effort behind a new return-to-work policy.

AT&T declined to comment. The company has referred questions about the lead situation to USTelecom, an industry group, which has created a website featuring several statements including a claim disputing the charge that phone cables are a leading cause of lead exposure. The group, which represents most US phone companies, says it’s “ready to engage constructively on the issue.”

Hollywood strikes put pressure on streaming companies: 'The stakes are high'

Alexandra Canal
·Senior Reporter
Fri, July 14, 2023

Hollywood's double strike will likely pressure major media companies as the production pipeline grinds to a complete halt.

SAG-AFTRA — the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — joined writers on the picket lines early Friday after the guild failed to negotiate a deal with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of studios including Disney (DIS), Netflix (NLFX), Amazon (AMZN), Apple (AAPL), and NBCUniversal (CMCSA).

It is the first time SAG-AFTRA has gone on strike in over four decades and the first time since 1960 that both actors and writers are striking concurrently. The Writers Guild of America (WGA) strike is currently in its third month with no end in sight.

Third Bridge analyst Jamie Lumley, who interviewed a number of executives in the entertainment and streaming space, wrote that the two strikes come "amid the increasing pressure on traditional linear distribution models and the ongoing rise of streaming, which continues to change how content is consumed and monetized."

"We’ve been hearing that most streaming companies won’t feel the pain from strikes until 2024 given the pipeline of content that has already been locked in. However, streamers could be in trouble as soon as the velocity of content slows," he warned. "Our experts emphasize that content is still king and if streamers want subscribers to keep coming back, they need to have a steady feed of new movies and shows being released on their platforms."

SAG-AFTRA is fighting for more protections surrounding the role of artificial intelligence in media and entertainment, in addition to higher streaming residuals as more movies and TV shows go direct to streaming. These demands are similar to those posed by the writers guild.

"We had no choice," SAG-AFTRA President Fran Drescher said on Thursday following the strike announcement. "We are the victims here, being victimized by a very greedy entity. They stand on the wrong side of history. We stand in unprecedented unity. At some point the jig is up, you can’t keep being marginalized and disrespected. The business model has been changed by streaming and AI. If we don’t stand tall right now, we’ll all be in jeopardy."

Michael Pachter, managing director of equity research at Wedbush, said he agreed with Drescher's sentiments, telling Yahoo Finance Live, "I think the studios are just completely wrong on this one. I'm not suggesting that they cave, but I'm suggesting that they compromise and they just haven't even begun discussions with the writers. ... Content is their lifeblood. They're being really foolish about this."

He warned studio heads, such as Disney CEO Bob Iger, who called the unions' demands "unrealistic," risk creating "permanent damage" with the actors and writers they closely work with: "[Iger] is just completely wrong," he said.

'The stakes are high for everyone'

SAG-AFTRA president Fran Drescher from left, Duncan Crabtree-Ireland, SAG-AFTRA national executive director and chief negotiator, and actor Frances Fisher, right, take part in a rally by striking writers and actors outside Netflix studio in Los Angeles on Friday, July 14, 2023. (AP Photo/Chris Pizzello)

The media and entertainment industry today is being dramatically reshaped by the impact of streaming services. Streaming shows often have fewer episodes and less residual income compared to traditional network television, which often means less money in the pockets of both actors and writers.

At the same time, the majority of studios are no longer just "pure play" production houses. Rather, they have their own streaming divisions, which have brought on a new set of challenges as direct-to-consumer losses mount.

"Streaming companies have been feeling the heat from Wall Street to push towards profitability," Third Bridge's Lumley said. "This has put a number of players on challenging footing as they weigh content costs, strategic decisions, and the growth of their audience. With actors and writers seeing contracts and royalties heavily impacted by streaming, the stakes are high for everyone at the negotiating table."

Insider Intelligence principal analyst Paul Verna added, "While video advertising and subscription revenues are expected to grow by double digits this year and next, the dual strikes could threaten that economy, especially if the standoffs run deep into the fall season."

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Thames Water Crisis Fragments Industry’s $60 Billion Bond Market

LARGEST INVESTOR IS CANADA'S OMERS PENSION FUND

Tasos Vossos
Fri, July 14, 2023 


(Bloomberg) -- The crisis at Thames Water Ltd. has left the $60 billion market for UK water utility bonds deeply divided.

A measure of the dispersion in spreads in the sector has surged over the past few weeks as investors try to separate companies they see as well run, with manageable debt loads, from those that face the most operational and balance sheet issues. The standard deviation almost tripled after reports of a possible temporary nationalization of Thames Water, before settling at around double typical levels, according to data compiled by Bloomberg.

“Going forward we should see more differentiation in spread terms among various water companies, driven by an increasing focus on operational performance, gearing and amount of inflation linked debt,” said Kshitij Sinha, a portfolio manager at Canada Life Asset Management.

Bonds issued by Southern Water Ltd. and the holding company of Anglian Water — along with Thames Water’s Kemble bonds — saw the biggest spread widening over the past few weeks. Debt issued by Severn Trent Plc had one of the mildest reactions, with only a single-digit increase in the risk premium.

Representatives at Thames Water and Anglian Water didn’t respond to requests for comment. A representative at Severn Trent said they had no comment to add, while a spokesperson for Southern Water also declined to comment on bond spreads.

Thames Water has been engulfed in a crisis as it’s had to borrow more to fund investments in its ailing infrastructure, while soaring inflation in the UK has driven up the cost of servicing its £8 billion ($10.5 billion) of index-linked debt. The company — which serves about a quarter of the UK population — said this week that it is confident of raising further funds after investors agreed to a £750 million equity injection, but UK regulator Ofwat said that there are still “significant issues” to deal with.

And in a sign of industry issues going beyond Thames Water, Southern Water was downgraded by Fitch Ratings last week, triggering clauses in bond documents that forced it to suspend dividend payments.

To be sure, avoiding losses in water company bonds since Thames Water made the headlines in late June would have been difficult, with spreads on the vast majority of issuers widening, based on data compiled by Bloomberg.


Still, the dispersion indicates that investors are starting to pick which companies they see as winners and losers in the group.

“Investors are not going to abandon the sector: these companies are still high-quality, offering attractive returns,” said Canada Life’s Sinha. “However, spreads will start reflecting the risk in the sector, penalizing the constant underperformers.”

Most Read from Bloomberg Businessweek

DANIELLE SMITH'S TALKING POINTS

Will Canada's oil & gas industry join Europe's 'green retreat?'

"Impractical time frames" for emissions cuts could drive investment away from the industry

Jeff Lagerquist
Tue, July 11, 2023 

The International Energy Agency sees annual oil demand growing marginally over the next few years, before hitting a peak in 2030.

 (THE CANADIAN PRESS/Jeff McIntosh)

As the world's largest oil and gas companies shrink from climate goals, Canada's fossil fuel industry continues to seek wiggle-room on its own fast-approaching emissions target.

European supermajors BP (BP) and Shell (SHEL) are top fossil fuel players in the energy transition. But recent actions have been dubbed a "green retreat" from the forceful plans they announced a few years ago to embrace renewables and slash emissions.

In February, BP backed off a pledge to cut emissions by 2030, lowering its target from a 35-to-40 per cent reduction, to between 20 and 30 per cent. At the same time, the company deepened its investments in oil and gas.

At Shell, the company's head of renewable generation recently left his role as CEO Wael Sawan pares back green spending. Last month, Shell scrapped its plan to cut oil output by 20 per cent by 2030, opting to keep production steady until the end of the decade, as the company defends its turf as the world's largest LNG firm.

"Oil demand is a really hard thing to make a dent in," said Kevin Krausert, CEO and co-founder of Calgary-based Avatar Innovations, in an interview. "Investors are not going to be happy with oil and gas companies that are basically giving up market share to other players."

Money talks and bullsh** walks. I think that’s what you’re seeing.Canadian public policy consultant Ed Whittingham

The International Energy Agency sees annual oil demand growing marginally over the next few years, before hitting a peak in 2030.

Krausert is an oil field services executive turned venture capitalist who pairs Canadian energy transition startups with some of the biggest firms in the oil and gas sector. He says Canadian producers will struggle to meet Ottawa's industry goal of cutting emissions from operations 42 per cent below 2019 levels by 2030, before hitting net-zero by 2050.

"I think you might see some recalibration. Is it 2030? Is it 2032? Is it 2035?" he said of the interim target. "If it takes us three years to get regulatory approval to build a major [carbon capture] project, and another three years to build it, and we still don't have the fiscal structure in Canada to get some of these projects across the line, you're starting to bump up against 2030."

Kendall Dilling, president of the Pathways Alliance, warns "impractical time frames" for emissions cuts could drive investment away from the industry, reducing production in Canada, while increasing output and emissions in other countries.

The Pathways Alliance, a partnership between Canadian Natural Resources (CNQ.TO)(CNQ), Cenovus (CVE.TO)(CVE), ConocoPhillips Canada, Imperial Oil (IMO.TO)(IMO), MEG Energy (MEG.TO), and Suncor Energy (SU.TO)(SU), is calling for more government financial support for its $16.5 billion carbon capture and storage network. The project, if completed, would be among the largest in the world.

"We can reduce our emissions by 42 per cent from 2019 levels. We have set a goal of net-zero by 2050 from operations. But reaching that as early as 2030 is simply not realistic given current technology, construction and regulatory requirements," he told Yahoo Finance Canada in a statement.

Alex Pourbaix, executive chair of Cenovus' board of directors, calls Shell's shift from green energy to producing more oil a "microcosm" of trends playing out across the industry. Meanwhile, BP is "throttling back their ambition to coincide with the actual ability to decarbonize," he said.

"It's going to be way more challenging, and take a much longer time than I think a lot of people had any idea," Pourbaix said on a July 5 promotional podcast from the right-leaning Canadian news and commentary website, The Hub. "I think a lot of companies and a lot of countries are starting to realize that."

In March, Pourbaix told Yahoo Finance Canada that Ottawa's aim for a 42 per cent drop in operational oil and gas emissions by 2030 is "not feasible by any stretch."

Canadian public policy consultant Ed Whittingham says oil and gas executives are stuck between a rock and a hard place, responding to continued demand for fossil fuels, as well as calls to pivot away from their profitable core business.

"I have a lot of sympathy for these oil and gas CEOs. Investors speak out of both sides of their mouths, saying we want good ESG performance and net-zero, but we want those high returns," he told Yahoo Finance Canada.

"Some of the adjustments you're seeing, especially with the European oil and gas supermajors, are because they made bold statements and promises around diversification from oil and gas, and getting into renewables. They're discovering that's really hard, and they're trying to walk some of that back. But we haven't seen that to the same degree with the Canadian players," Whittingham added.

"Money talks and bullsh** walks. I think that's what you're seeing."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

SCI FI TEK
California Shows Off New $25 Million Carbon Capture Technology Project

David R. Baker
Fri, July 14, 2023 

(Bloomberg) -- A $25 million project at a Calpine Corp. power plant near San Francisco will test a technology that could capture 95% of a plant’s carbon emissions, a process California officials say is critical to the state’s climate fight.

Carbon capture technology provokes fierce criticism from many environmentalists who consider it a license to keep burning fossil fuels rather than switch to cleaner energy sources. But at the unveiling of the Calpine project Friday, California’s top climate change regulator said some fossil fuel plants will still be needed to keep electricity service reliable as the state moves to eliminate its net carbon emissions by 2045.

“Capturing that carbon, starting as soon as possible, will allow us to stop emitting in situations where we absolutely need these plants for reliability,” said Liane Randolph, chair of the California Air Resources Board.

The pilot project at Calpine’s Los Medanos Energy Center in Pittsburg, California, will use a chemical solvent developed by ION Clean Energy Inc. to bind with carbon dioxide in the plant’s flue gas. ION, based in Colorado, says its process should be both more effective and cheaper than previous carbon capture technologies. Funded in part with a $19 million federal grant, the project will not store the captured carbon, instead releasing it back into atmosphere. In future plants, the carbon dioxide could be pumped underground for permanent storage.

Calpine bills itself as the nation’s largest generator of electricity from natural gas and Chief Executive Officer Thad Hill said carbon capture will be critical for the company. “For us, it represents the energy transition and natural gas’s role in it,” he said.