It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, July 01, 2024
Arctic HFO Ban Starts as Activists Say There Are Too Many Loopholes
Three years after the International Maritime Organization (IMO) adopted the regulation, the international ban on transporting or using heavy fuel oil (HFO) in the Arctic went into effect today, July 1, 2024. Shipping authorities are hailing it as a step toward better protection of the Arctic from the dangers of the fuel while environmentalists continue to emphasize it does not go far enough and contains far too many loopholes.
The ban was adopted at the 76th meeting of the IMO’s Marine Environment Protection Committee in June 2021. In the first phase, it targets older ships without double hulls or protected fuel tanks which are now banned from carrying HFO in the regions of the Arctic, but even there it remains up to the individual countries bordering the Arctic. The IMO provision distinguishes ships built after 2010 with protected tanks, but Danish authorities have said they will extend the exemption to older ships that also have protection on their fuel oil tanks.
The full force of the IMO’s regulations does not happen for another five years. Ships qualifying for the exemptions can continue to sail in the Arctic till 2029 according to the IMO’s regulation. The rule was modeled on a similar restriction for HFO in the Antarctic which went into effect in 2011.
“By allowing ships with protected fuel tanks to continue using HFO until 2029, we ensure that shipping can adapt to the new rules in a practical and responsible manner while simultaneously protecting the fragile environment in the Arctic," said Nina Porst, Director of Climate, Environment, and Safety at Danish Shipping. The influential group highlights that it supports the ban and is calling on shipping companies to use the time for an orderly transition.
Some countries, including Norway, however, are not waiting for the IMO regulations. Norway began the ban on HFO in the region around Svalbard in 2022. It recently imposed the first fine on a ship for violating the rules. Other countries such as Finland and the United States are yet to act.
Canada announced that it was imposing its HFO ban effective today, July 1. However, they too provided exemptions including for supply ships to the Arctic communities which can continue to use HFO till 2026. Ships with double hulls are exempt to 2029.
Environmental groups contend that the IMO regulation has significant loopholes. They contend that the IMO left around three-quarters (74 percent) of Arctic shipping unaffected by the ban. The NGO Clean Arctic Alliance argues that the use of diesel fuel along with the installation of particulate filters or precipitators, would reduce emissions of black carbon by more than 90 percent quickly and be a solid first step on the route to decarbonization. They are saying waiting till the end of the decade means the Arctic and Indigenous communities remain exposed to the dangers of a spill.
“Governments and NGOs fought long and hard to achieve the ban on the use and carriage of HFO in the Arctic - yet see that it will be half-implemented is quite simply not good enough,” said Dr. Sian Prior, Lead Advisor to the Clean Arctic Alliance. ”IMO Member States, especially Arctic coastal countries, must go farther than the IMO ban by implementing it in ways that truly protect the Arctic from HFO spills and black carbon emissions - and that means refusing to offer loopholes to the shipping industry.”
Activists point out that carbon emissions from ships operating on HFO are just as dangerous and have a broader impact than the focus on banning the transportation of HFO. The Clear Arctic Alliance is calling for the IMO to make the ban and enforcement immediate without loopholes. They want the IMO to extend the area covered by the ban and to enact regulations to reduce black carbon emissions.
The groups highlight the dramatic growth in the number of ships operating in the Arctic. Russia, which is moving aggressively to expand Arctic shipping and start year-round transits, also has not accepted the ban or taken any steps to enact its provisions.
Disruptions Grow at German Ports as Labor Talks Drag On
Germany’s powerful union Ver.di is continuing to stage a series of “warning strikes” rolling across the main German commercial ports as the union says they are “still far apart” on contract negotiations. The latest effort came yesterday with both the day and night shifts stopping work at Wilhelmshaven.
Carriers are continuing to warn customers of potential impacts on their schedules as Ver.di says that there could be additional strikes before the next round of talks which is not scheduled for nearly two weeks. Maersk issued another update to customers saying that it was “reviewing vessel line ups and schedules, as well as potential impact of the strike action on vessel departures. We are looking into taking additional measures, such as diversions or move count restrictions in order to minimize the impact on onwards vessel schedules, and consequently, delays to our customers’ cargo.”
Yesterday’s action impacted Germany’s deep-water port and one of the primary ports for container operations. Wilhelmshaven’s container terminal is operated by Eurogate. The port has a nearly 60-foot depth permitting it to handle the largest containerships in the world.
Ver.di is seeking a new 12-month agreement for its 11,500 members working at Germany’s North Sea ports. It is calling for an increase in hourly wages of three euros as of June 1, 2024, as well as a corresponding increase in shift allowances, including a catch-up for the missing increase in shift allowances in the 2022 collective agreement. Media report said this would equate to between 10 and 14.5 percent increase depending on current wages. Ver.di cites its concessions in the 2022 negotiations and Germany’s current rate of inflation.
Two years ago, the negotiations stretched to ten rounds before an agreement. Ver.di also staged warning strikes to pressure the Central Association of German Seaport Operators with reports saying port operations were suspended for a total of 80 hours. It caused widespread disruptions and backlogs.
The two sides commenced talks at the beginning of June, with a second meeting on June 6 and a third round on June 17 and 18. The fourth round is not scheduled until July 11 and 12 in Bremen.
Warning strikes have ranged from Hamburg on June 7, to Bremen (June 11), Bremerhaven (June 12), and Emden (June 14). Coordinated to the third round, Ver.di called for the broadest strike which hit Hamburg, Bremen, Bremerhaven, Brake, and Emden along with a coordinated rally in Hamburg where they said 1,500 to 2,000 members were expected. The strike brought container movements to a standstill and caused backups of trucks on major roads around the Hamburg port.
Austal Names Ex-US SECNAV as Chairman Replacing Founder
Austal, a leading defense contractor for the Australian and U.S. navies, has selected former U.S. Secretary of Navy Richard Spencer to replace its retiring chairman and founder John Rothwell. The move comes as the shipbuilder is considered to be “in play” after South Korea’s Hanwha Group proposed an acquisition and several private equity firms are reported considering a bid.
In announcing Rothwell’s retirement as Chairman, the company called it “a significant milestone in the history of Austal,” noting Rothwell has served in the position for 37 years since he founded the company in 1987. He remains the second largest private shareholder in the company owning approximately nine percent behind Australian businessman Andrew Forrest, the non-executive chairman of Fortescue, who owns nearly 20 percent of Austal’s stock.
Under Rothwell’s leadership, Austal grew from a small, privately-owned, West Australian, commercial shipbuilder to a publicly traded, international defense contractor with a multibillion-dollar orderbook. The company reports it has over 4,000 employees and substantial shipbuilding operations in Australia, the United States, and South East Asia.
Rothwell, who is 80 years old, said he believes the timing is right for the transition. He said Austal set out four criteria to select its new chair, including excellent character, strong business acumen, in-depth knowledge of the U.S. defense industrial base, and relationships with the Australian and/or US defense sector.
Richard Spencer was named the 76th Secretary of the U.S. Navy taking office in August 2017 under President Donald Trump. He continued to serve until November 2019 when he was entangled in a dispute with Secretary of Defense Mark Esper, who fired him. Spencer served five years with the U.S. Marine Corps as a Naval Aviator from 1976 to 1981 before going into private industry.
Spencer worked at several investment banks including Goldman Sachs, Donaldson, Lufkin and Jenrette, and Bear Stearns. He also served on the Pentagon Defense Business Board advisory panel and the Chief of Naval Operations Executive Panel. Today, he serves as Global Chairman of Bondi Partners, a U.S./Australia advisory and investment firm, which according to the Australian Financial Review was rumored to be one of the potential suitors for Austal.
Austal has reportedly received attention from investment firms including Cerberus Capital Management and JF Lehman & Company according to the Australian Financial Review. Speaking with the outlet today, Rothwell however said the company continues to think the possible suitors remain very limited due to Austal’s position as Australia’s primary naval builder and its extensive work with the U.S. Navy, including with the nuclear submarine program. Rothwell said that the approach from Hanwha remains stalled due to the company’s view that a deal would not win approval from Australian and U.S. authorities. Austal is demanding an agreement for a breakup fee from Hanwha before letting the Koreans commence a due diligence to ensure that it is a serious bid and not fishing.
A possible takeover of Austal has not been ruled out, but management says its focus is on continuing to grow its role as the leading naval contractor.
Germany is Discussing Financial Bailout for Meyer Werft
The shipyard group Meyer Werft is reportedly facing a growing financial crisis that is going to require refinancing of the company by mid-September as it works to address the downturn in the market after the Covid-19 pandemic and dramatic cost increases in materials. Talks commenced earlier in June with the government in the Lower Saxony region of Germany which will also need to involve the federal government in order to craft a financial guarantee package for the shipyard.
The shipyard highlights that the current challenges are not with its orderbook but instead due to rising costs. It recently delivered the Silver Ray (54,700 gross tons) to the Royal Caribbean Group and has work underway on the Disney Treasure (135,00 gross tons) due for delivery before the end of 2024. Work is also underway on Asuka III (51,950 gross tons) and has also recently started on Disney Destiny, a sistership for Disney Cruise Line. Earlier this year, the Papenburg yard received orders for two 180,000 gross ton cruise ships for Carnival Cruise Line and it has orders for a research ship and platforms for offshore wind. Elsewhere in the group, the yard in Finland is building two more mega cruise ships for Royal Caribbean and the eastern yard is building river cruise ships for Viking while it is also managing the outfitting of the Disney Adventure (ex. Global Dream) acquired from the bankrupt MV Werften.
Government officials and union representatives speaking to the media said the challenge for the yard is the financing structure of shipbuilding. They explained the yard traditionally receives 20 percent of the value of the order upfront and 80 percent at completion, requiring Meyer to finance materials and labor costs during construction. One alternative that has been discussed is raising the upfront portion to 30 or 40 percent of the contract value.
Media reports are suggesting that Meyer is seeking €2.3 billion in loans and an additional €400 million in capital. The Lower Saxony state government is expressing support but the amounts involved are too large for the state to provide alone.
The state and federal governments would need to cooperate for the loan guarantees. One suggestion is that Lower Saxony might become an investor in the company as well. It already holds positions in Volkswagen and steelmaker Salzgitter. The Budget and Finance Committee of the Lower Saxony State Parliament has met to discuss the alternative and expressed support for the company.
One of the concerns for the local government is that Meyer employs 3,300 people with reports suggesting there are as many people employed via contractors and suppliers. The yard supports a broad network of vendors and suppliers in the region that contribute to the construction projects. An interim step has called for laying out 400 people according to the media.
Meyer has brought in a reorganization expert Ralf Schmitz, who is working with the recently named new CEO of the company Bernd Eikens. Patriarch Bernard Meyer has reportedly stepped back and as part of a management reorganization, his son Jan Meyer has shifted to focus on new business development. Tim Meyer is the Managing Director of Meyer Turku in Finland.
The company has independent experts preparing an analysis of the business which is expected to be delivered to the government in mid-July. It will be the basis for the discussions for the rescue package. Other reports indicate that elected officials and the unions are also looking for a further reorganization of the structure of the company. In 2015, the Meyer Group moved its incorporation to Luxembourg. Reports suggest they will be required to reincorporate in Germany which would also require the establishment of a supervisory board, a normal structure for German companies.
Media reports are indicating that currently the situation is “extremely tense,” with employees waiting for word on their future. Local officials view the company as “too big to fail,” but point out that there will be hard discussions over the next months to craft the future.
Mitsui O.S.K. Lines Invests in Regent to Bring Seagliders to Japan
The U.S.-based corporate venture capital firm of Mitsui O.S.K. Lines (MOL) has become the latest to invest in Regent, a U.S. startup company developing ground-effect vehicles as commercial seagliders. MOL Switch, the U.S. VC firm, will support Regent in bringing the vessels to market in Japan and in coastal destinations around the globe.
“This strategic partnership marks a significant step forward for seaglider market adoption in Japan,” said Billy Thalheimer, Co-founder and CEO of Regent. “Having MOL as a maritime champion for seaglider technology underlines Regent’s market-leading traction in the country and paves the way to bring our high-speed, all-electric transportation solutions to coastal communities.”
Having completed its first demonstration flights with a scale model of the vessel in 2022, Regent has drawn broad interest from the maritime and aviation communities. Brittany Ferries announced in 2021 that it would explore the opportunities for an English Channel ferry service with the crafts while many leading aviation companies have also signed commitments for more than 600 seaglider orders which Regent values at more than $9 billion.
The technology has made good progress with BV issuing the first Approval in Principle (AiP) in 2022. Recently, the company also reported the Lloyd’s Register had joined the effort and would provide consulting services and the certification for the 12-passenger Viceroy seagliders.
Japan the companies report represents a strong opportunity for the technology. They highlight that about 80 percent of the Japanese population lives on or near coastal areas. MOL Switch’s strategic investment in Regent is part of the growing interest in seaglider technology in Japan. H.I.S. Group, one of Japan’s largest travel agencies, JapanAirlines Innovation Fund, the venture arm of Japan Airlines (JAL), and YamatoHoldings, Japan’s largest parcel delivery and logistics company, are also strategic investors in Regent.
The company aims to have humans aboard its 12-passenger seaglider prototype this year and it is targeting bringing the first commercial model to market by mid-decade. The 12-passenger version travels at 180 mph and has a range of 180 miles on a single charge for its batteries. It alternately can carry up to 3,500 pounds of payload or cargo. Regent also has concept designs for a 100-passengers Monarch seaglider for which LR will help to define the rules.
Regent highlights the technology combines the speed of an aircraft with the convenience of a boat. The hydrofoiling wing-in-ground-effect vessels utilize existing dock infrastructure similar to seaplanes. However, they fly at low altitudes. The technology has even drawn interest from the U.S. Marine Corps which in 2023 signed an agreement for the company to demonstrate seaglider technology for defense logistics operations.
Regent reports it has raised more than $90 million from investors which also included Lockheed Martin and Japan Airlines.
ALT. FUEL
World's First Hydrogen-Hybrid Research Vessel Awarded Approval in Principle
[By: Glosten]
Naval architecture and marine engineering firm Glosten has been awarded an Approval in Principle (AIP) by the American Bureau of Shipping (ABS) for the design of UC San Diego’s new hydrogen-hybrid Coastal-Class Research Vessel (CCRV). The CCRV will be operated by Scripps Institution of Oceanography and feature an innovative propulsion system that utilizes hydrogen fuel cells for zero-emissions operation.
Glosten and the project’s electrical integrator, Siemens Energy (SE), completed the preliminary design for the CCRV in March 2024. As an uninspected, California Air Resource Board (CARB)- compliant, ABS-classed vessel and an alternative design under SOLAS, the CCRV faced a complex regulatory regime.
“Our challenge was to harmonize the requirements of a modern research vessel with evolving regulations and novel technologies for liquid hydrogen fuel. Ensuring the machinery spaces and hydrogen systems were efficiently and safely arranged without compromising the utility of the vessel was like putting together an intricate puzzle,” said Glosten’s Robin Madsen, the lead marine engineer on the project.
“When it comes to a first-of-its-kind vessel like the CCRV, these are uncharted waters—it was up to our team to tap into our expertise and work with regulators, partners, subcontractors, and equipment providers to determine a sound approach,” said Madsen. “One of Glosten’s greatest strengths as a consultant is our ability to navigate this kind of uncharted regulatory terrain. It’s the difference between paint-by-numbers and a blank canvas—in one case you know what you’ll be getting, in the other you have the potential for something truly unique.”
In 2018, Glosten, Scripps Oceanography, Sandia National Laboratories, and DNV conducted a feasibility study that became the genesis of the CCRV. The study evaluated the technical, regulatory, and economic feasibility of the Zero-V concept, a vessel powered by fuel cells and liquid hydrogen designed to meet performance and environmental criteria established by Scripps. While the study confirmed that technology had advanced enough to make a hydrogen- powered research vessel possible, regulations around the use of hydrogen fuel are still in development. During the CCRV’s preliminary design, Glosten worked closely with the United States Coast Guard (USCG) and ABS to define a regulatory approval framework for the use of liquid hydrogen aboard a research vessel.
“ABS is proud to use our industry-leading insight into hydrogen as a marine fuel to support this project. The CCRV has the potential to make a significant contribution to the wider adoption of hydrogen, a promising alternative fuel for the maritime industry,” said Gareth Burton, ABS senior vice president, global engineering.
Prior to submitting the design for AIP, Glosten successfully completed a week-long risk assessment workshop with the USCG, Scripps, SE, and major equipment providers, Ballard Power Systems and Chart Industries.
AIP shows that the CCRV design meets the technical requirements and safety standards of ABS, but more broadly, it validates the use of hydrogen-fuel-cell propulsion for medium-sized coastal vessels. The CCRV will help Scripps and its researchers study the marine ecosystem along the California coast, running entirely on emissions-free hydrogen fuel cells for 75 percent of its missions.
“Our goal is to produce a fully capable ocean-going research vessel that meets the needs of our scientists and students, and demonstrate that this can be done in a way that absolutely minimizes its impact on our environment," said Bruce Appelgate, associate director of Scripps and head of ship operations and marine technical support. “This will be a world-class oceanographic research vessel that aligns with our institutional values for protecting the planet."
The CCRV will also serve as a vital platform for hands-on learning. As a student-centered, research-focused public university, UC San Diego considers seagoing experiences a cornerstone of educational programs. The vessel will be integral to training the next generation of scientists, leaders, and policymakers.
The project team is currently progressing the CCRV to a functional-level design and assisting Scripps with a request for proposal to begin solicitation for construction.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
COSCO Signed to Start Methanol Conversions for Seaspan and Hapag
A contract signing ceremony took place yesterday, June 26, in China for the first five methanol conversions planned for Seaspan’s containership fleet. COSCO Shipping Heavy Industry will undertake the projects starting in 2026 on vessels operating under long-term charters to Hapag-Lloyd.
Seaspan has already contracted with MAN Prime Serv for the conversion of the current S90 diesel engines into methanol dual-fuel engines. MAN has previously said that it is a straightforward process as its standard, electronically-controlled diesel engines are being constructed as dual-fuel ready making them ready for retrofitting. The project launched in 2023 and calls for an initial phase of converting 15 vessels with options for 45 additional conversions.
After the work is completed, the ships will be capable of operating on green methanol. According to MAN, the conversion will be capable of reducing CO2 emissions by 50,000 to 70,000 tons per year.
Each conversion project is expected to take between 80 to 90 days, with the first ship arriving at the yard in the first quarter of 2026. COSCO is valuing the total project at $120 million.
The ships selected for the project were all built in China in 2014 and each is 1,105 feet (337 meters) in length and 115,000 dwt with a capacity of 10,100 TEU. They are operating under a long-term charter from Seaspan to Hapag. The ships are the Seaspan Amazon, Seaspan Ganges, Seaspan Thames, Seaspan Yangtze, and Seaspan Zambezi.
This project will follow the launch next month of the first conversion of an in-service containership. China’s Xinya Shipyard is preparing for the arrival of the Maersk Halifax which is currently on its final trip and due to reach the yard in early July. The shipyard was contracted in 2023 and reports the conversion and repairs on the vessel will last about three months. Built in 2017, the 178,000 dwt containership is anticipated to be the first of 11 vessels that Maersk will convert. The class of 15,000 TEU ships is slated as the first test for refitting older vessels to methanol.
Another Chinese shipyard recently completed outfitting the first of X-Press Feeders containerships that are being built as methanol-ready to instead enter service methanol-capable. X-Press Feeders delivered the ship directly from the builder’s yard before putting it in service highlighting the rapid advances that are being made in methanol technology and the anticipated growth in the supply to fuel these ships.
Maersk to Test Green Methanol Fuel Cells After Breakthrough Demonstration
The startup Blue World Technologies is reporting it achieved a breakthrough by demonstrating the first high-power maritime fuel cell system to run on green methanol. Maersk is an investor in the company and has committed to the first pilot system installation which is expected in 2026.
The company reports it completed the successful tests of a 200 kW high-temperature PEM fuel cell module at its facility in Aalborg, Denmark. The results are reported to have exceeded performance expectations. Blue World reports that the system provides high-grade waste heat of 150 degrees C and when it reaches the commercial stage it will have an efficiency of up to 55 percent which typically provides a fuel savings of 20 to 30 percent.
“This is a major breakthrough within maritime decarbonization and with the test of our 200-kW system, we are proving that the HT PEM fuel cell technology has the potential of being one of the key technologies to decarbonize the hard-to-abate sectors,” said Dennis Naldal Jensen, Chief Technology Officer at Blue World Technologies. “During the test period, we successfully validated our system setup with the methanol fuel processor, the series connection of the fuel cell stacks, as well as the balance of plant components surrounding the fuel cells”
Blue World reports it will initially supply systems for auxiliary power aiming to replace conventional fossil-based gensets. They also report that the fuel cell system allows for up to 100 percent carbon capture providing for the potential utilization in green fuel production or storage. Blue World expects the maritime system will reach a commercial level in 2027.
Eventually, the company will proceed to supply large multi-megawatt propulsion systems for fuel cell-based propulsion systems. They also note that the system is built with a modular approach, allowing for fuel cell power systems as containerized solutions on deck or integrated on the ship.
“Having worked with fuel cell technology for more than 20 years, it is amazing for us to reach this stage of the technology development, where we with these large systems can provide a strong alternative to an industry that is heavily dependent on fossil-based technologies,” said Anders Korsgaard, Chief Executive Officer and Co-founder at Blue World Technologies.
The first pilot will be a 1 MW system for onboard power production. The system will be installed on one of A.P. Moller – Maersk’s large dual fuel-enabled methanol vessels. They expect the installation will take place during the first half of 2026.
Maersk Growth, the venture arm of A.P. Moller – Maersk, participated at the end of 2023 in an €11 million fundraising. The Export and Investment Fund of Denmark (EIFO), Cycle Group, and other new and existing shareholders also participated in the fundraising.
Canada Starts Test Construction for New Destroyer Class to Modernize Navy
Work began today at the Irving Shipbuilding yard in Halifax, Canada of the first test module for a new class of guided-missile destroyer that is planned to modernize the Canadian Navy and equip it to 2050 and beyond. Canada has ordered 15 River-class destroyers as part of its National Shipbuilding Strategy.
“Today, we launch construction on the largest Canadian shipbuilding project since the Second World War, marking a historic milestone for the Royal Canadian Navy,” said Bill Blair, Minister of National Defence. “The River-class destroyers will provide the Canadian Armed Forces with the tools that they need to defend our national interests for decades to come.”
The class is based on BAE Systems’ Type 26 warship design which is also being built in the United Kingdom and Australia. Canada announced the selection of the design in 2018. The ships will have enhanced underwater sensors, as well as state-of-the-art radar, and modern weapons. The ships are designed for a departure displacement of 8,000 tonnes and a complement of 210. They will be 495 feet (151 meters) with a range of 7,000 nautical miles and a top speed of 27 knots.
The government is currently budgeting between C$56 and $60 billion (US$41 to $44 billion) for the 15 vessels for both design and construction. The vessels are designed to replace four Iroquois-class destroyers now decommissioned and 12 Halifax-class frigates.
At the kickoff ceremony Irving also cut steel for the eight and final patrol ship (Irving)
According to Irving Shipbuilding, the start of the construction of the Production Test Module is an important step toward full-rate production. The government expects to test and streamline processes during this phase and implement lessons learned to enhance full production. The full-rate production is due to start in 2025. Like other major naval projects in the U.S. and elsewhere, Canada reached this point while final designs for the vessel are still being completed.
The first vessel will be named HMCS Fraser and is expected in the early 2030s. Government officials announced today that it will be known as the River-class with the vessels named for Canada’s most important waterways and in tribute to previous Canadian warships of the same name. The next two vessels will be named Saint-Laurent and Mackenzie.
The vessel will be helicopter-capable and the design is fast and maneuverable. They highlight anti-aircraft and anti-submarine capabilities as well as a long-endurance capability. They said the vessels could be used as escort vessels and to provide critical maritime safety.
Analysts highlight that the class is overdue and that the Canadian Navy needs the enhanced capabilities of the class. The Iroquois-class was commissioned in 1971 and 1972 with the last of the vessels decommissioned in 2017. The Halifax-class frigates were commissioned between 1992 and 1996 and remain in active service.
To help bring the new River-class into service and support them throughout their lifecycle, National Defence reports it will build a land-based testing facility at Hartlen Point in Halifax, N.S. Work to determine the building’s specifications is currently underway and the design phase will run until December 2024. It expects construction to begin this summer on early work packages and full mobilization in Winter 2025 with expected completion in 2027.
Canada Makes Progress in Two of its Major Arctic Projects
After long delays, Canada is racing to complete two of its critical Arctic projects, with the country looking to open up and strengthen the infrastructure of the region. Last week, West Kitikmeot Resources (WKR) Corp. refiled for an environment assessment of the Canada’s massive Grays Bay Road and Port (GBRP) project. The proposed infrastructure corridor is situated along the Canadian central Arctic coast in the middle of the Northwest Passage.
WKR is majority owned by the indigenous community group Kitikmeot Inuit Association(KIA), in Canada’s Arctic territory of Nunavut. As the lead developer of the GBRP project since last year, WKR has been working to complete the project’s scope, initially proposed by KIA and the Government of Nunavut in 2017.
WKR refiling for the environmental assessment process marks the restart of the GBRP project, which has stalled for years. The project is a multi-purpose infrastructure corridor designed to link southern Canada and the mineral rich Kitikmeot region in the northern territory of Nunavut.
Notably, the project will see development of Canada’s first deep-water port in western Arctic with two wharfs, designed to load large vessels of the post-Panamax class and an adjacent small craft harbor for community use. In its first phase, GBRP includes a 230-kilometer all-weather road connecting into Slave Geological Province in northwestern Nunavut. The geological area is rich in mineral deposits such as copper, zinc and gold. Most importantly, the road will connect several winter roads to the capital of Northwest Territories Yellowknife, becoming the first road from the central Arctic coast to Southern Canada.
"We've had a typical chicken-and-egg problem," WKR's Brendan Bell told CBC. "World-class discoveries of high grade are made, but they haven't been expanded to understand the scale because there's no infrastructure. We believe with the new momentum behind the infrastructure you'll see a lot of expansion of those resources."
Besides the economic advantages, Grays Bay Port has the potential to become an important deep-water naval facility between Alaska and Greenland. Its location in the middle of the Northwest Passage could not be more critical, with the route recording an increase in the number of commercial vessels as Arctic ice retreats.
Meanwhile, the Canadian Department of National Defense has indicated that the long-awaited Nanisivik naval refueling station in the High Arctic could open as early as this summer. The $84 million naval facility, located on the northwestern coast of Baffin Island, has minimal work remaining before it can begin operations. The naval outpost was to be completed in 2015, but was scaled back for budgetary reasons. It is designed to accommodate Arctic patrol ships and other government affiliated vessels in need of refueling.
Manulife boosts key profit target at investor day in Hong Kong
The Canadian Press
Signage is seen on Manulife Financial Corp.'s office tower in Toronto, Tuesday, Feb. 11, 2020. , THE CANADIAN PRESS/Cole Burston
Manulife Financial Corp. boosted a key profitability target as it emphasized the big changes the company has gone through in recent years.
The insurance giant said Tuesday that it is targeting a core return on equity of at least 18 per cent by 2027, up from its current target of 15 per cent.
Manulife says it has also increased its target for cash generated by its subsidiaries that is passed along to the parent company to $22 billion for the next three years, up from $18.4 billion for the past three.
The updates came at the company's investor day in Hong Kong, its first in the region since 2017.
Chief executive Roy Gori said the higher targets come after significant changes since the company's last investor day in the region, including off-loading risk while looking to capitalize on global trends.
“We have transformed Manulife and we are, as a result of that, a radically different company today to the one we were in 2017.”
The insurer has been working to shed assets with a low return on equity, including in its long-term care coverage.
In December, the company announced a $13-billion re-insurance deal that included what it called the largest long-term care component the insurance industry had ever seen. In March, it announced a deal to reinsure $5.8 billion of universal life reserves that it says was the largest deal of its kind in Canada.
Reinsurance deals involve shifting the risk of existing insurance policies, and a chunk of their premiums, to another company to free up capital by reducing liabilities.
As it cuts its exposure to legacy assets, the company is focusing on growth markets that have higher return potential, including Asia.
Gori said the insurer, which been operating in Asia since 1897, sees tremendous potential in the region as its middle class is set to grow to 3.5 billion by 2030, up from two billion today.
“What is encouraging in Asia is definitely the shift toward more protection business, the focus on that, and focus on health."
He says the company will also benefit from the expected doubling of the global population of people over age 65 by 2050, and the company's scale will allow it to adapt well to the increasing push to consumer digitization.
The company has also been pushing to expand its health side of the business, including its vitality insurance product that offers rewards for healthier living, said Gori.
“We are refocusing our business from one that’s centred on death and claims to one that is about helping customers live longer and healthier lives.”
This report by The Canadian Press was first published June 25, 2024.
Paladin's uranium deal signals M&A push for rich Canadian deposits
Jacob Lorinc, Bloomberg News
Jun 24, 2024
Paladin Energy Ltd.’s $1.14 billion offer to buy Canadian mining firm Fission Uranium Corp. is all about geography.
The all-stock deal will give Australia’s Paladin operational control of one of the most advanced mining projects in western Canada’s Athabasca Basin, a remote area in Saskatchewan that’s loaded with high-grade uranium. Fission’s asset is expected to open in 2029 and produce an annual average of 9.1 million pounds of the metal over a decade.
“The rationale is very compelling,” Paladin Chief Executive Officer Ian Purdy said in a Monday interview. “We see this as a fantastic asset.”
Fission is one of several junior mining firms racing to develop projects in the Athabasca region, along with NexGen Energy Ltd. and Denison Mines Corp. The region has become a hub of mining activity as supply concerns escalate and while countries warm to nuclear power as part of a global push to move away from fossil fuels.
Fission CEO Ross McElroy said that while the region holds high concentrations of uranium, few companies have the expertise to find and develop such projects.
“Having worked the majority of my geology career in the Athabasca Basin, I can tell you that it takes a great deal of expertise to properly explore and make discoveries like this one,” he said in an interview.
Paladin’s CEO said he expects more uranium dealmaking on the horizon. The price of the radioactive metal has more than tripled during the past five years, accelerating after Russia’s invasion of Ukraine sparked a newfound need for alternative sources of the reactor fuel.
“Regardless of where the uranium cycle is or how the industry’s doing, the combination of these two companies just makes fundamental sense,” Purdy said.