UK Government Acquires National Grid's Electricity System Operator

By City A.M - Sep 14, 2024,

• National Grid has agreed to sell its Electricity System Operator (ESO) to the UK government for £630m.
• 
  
• The ESO will transition to public ownership and become the National Energy System Operator (NESO) on 1 October.
• 
  
• The NESO will play a crucial role in ensuring UK energy security, supporting the transition to net zero, and minimizing consumer bills.

National Grid has struck a deal to sell its Electricity System Operator (ESO) to the government for £630m, paving the way for the division to transition into public ownership.

The FTSE 100 utility said on Friday that it expected the transaction to be completed on 1 October, when the government and regulator Ofgem aim to establish the National Energy System Operator (NESO).

National Grid’s ESO operates the control room that balances power supply and demand in real time. Its sale comes after the passage of the Energy Act in October 2023, which will enable the ESO to become a public corporation that will act as the UK’s independent system operator and planner.

The government has said the NESO will “play a vital role in supporting the UK’s energy security, transition to net zero and minimising customers’ bills”.

The corporation is due to be chaired by Paul Golby, the former chief executive of E.ON UK.

National Grid said the final value of the sale of its ESO would be subject to “customary closing adjustments”.

The company operates energy networks on both sides of the Atlantic and earns the majority of its revenue from regulated settlements levied on energy bills.

Energy Secretary Ed Miliband said on Friday: “Today marks a milestone for Britain’s energy system as we bring the system operator into public ownership to provide impartial, whole-system expertise on building a network that is fit for the future.

“The new National Energy System Operator has a huge role to play in delivering our mission to make Britain a clean energy superpower.

“This is another step forward by a government in a hurry to deliver for the British people.”

John Pettigrew, National Grid’s CEO, commented: “We look forward to working together with NESO to continue to drive the UK’s energy transition forward at pace; accelerating the decarbonisation of the energy system for the digital, electrified economies of the future.”

In May, National Grid announced a £7bn capital raise as part of efforts to double its capital spending over the five years to March 2029, ultimately expected to amount to £60bn.

The announcement came alongside a set of full-year results in which the firm declared operating profit dipped eight per cent to £4.5bn, which it attributed to “non-cash exceptional charges.”

By CityAM 

Brazil and Chile Lead Latin America’s Green Energy Revolution

By Felicity Bradstock - Sep 14, 2024, 

• Brazil and Chile are leading Latin America's green energy transition, with renewable energy sources contributing significantly to their energy mix.
• 
  
• Both countries have implemented policies and initiatives to support the growth of renewable energy and reduce their reliance on fossil fuels.
• 
  
• Challenges remain, such as ensuring the reliability of renewable energy and developing transmission infrastructure.
• 
  

While Latin America and the Caribbean have shown the slowest growth in terms of energy transition in the last decade, Brazil and Chile performed extremely well, ranking in the top 20 performers worldwide, according to the World Economic Forum’s 2024 Fostering Effective Energy Transition Report. Both Latin American countries now have a diverse energy mix, with renewable sources contributing significantly to their energy demand. Further growth is expected to be seen in the coming years as both countries continue to develop their renewable energy capacity, with Brazil focusing on a gradual shift away from oil and gas production and Chile supporting the cleantech industry through lithium production. 

Brazil and Chile have approached the energy transition differently but have several overlapping achievements. They both sought to enhance energy security by investing in a diverse mix of energy sources, increase the share of renewable energy, introduce carbon pricing mechanisms, and establish regulatory environments to support an energy transition. 

The report showed that Brazil doubled down on its commitment to hydropower and biofuels to boost its renewable energy capacity, as well as introducing new wind and solar energy capacity. Renewable energy now contributes nearly half of Brazil’s energy demand. As the current president of the G20, Brazil is also supporting efforts to decarbonise hard-to-abate sectors through the Industrial Deep Decarbonization Initiative. Meanwhile, Chile has increased its renewable energy capacity significantly in recent years, with solar and wind power now contributing around 35 percent of the country’s energy demand. Chile’s clean energy agenda has helped drive projects forward, aimed at achieving carbon neutrality by 2050. 

Policy Supporting Brazil’s Transition 

This September, the Senate voted in favour of the fuel of the future (combustível do futuro) bill, which is expected to help accelerate Brazil’s green transition. The bill establishes national programmes for green diesel, sustainable aviation fuel (SAF), and biomethane, aimed at decarbonising hard-to-abate industries. Estimates suggest that the programme could help boost the annual demand for liquid biofuels by an additional 11.7Bl and biomethane by an extra 3.4Bm3, according to the consultancy firm Oliver Wyman. This could lead to an additional $10.4 billion of investment in the sector. 

In March, the government also approved the Paten energy transition programme, which will provide funds from tax and other credits owed to companies by the federal government. The programme will include funding for companies investing in green energy and clean tech. One of the main priorities of the programme will be the expansion of the production and transmission of solar, wind, biomass, biogas, natural gas, and hydroelectric plants of up to 50MW. 

In August, the government voted in favour of a new legal framework for low-carbon hydrogen in Brazil, establishing the National Low-Carbon Hydrogen Policy. It also saw the launch of the Brazilian Hydrogen Certification System and the Special Incentive Regime for Low-Carbon Hydrogen Production (Rehidro), a tax regime designed to encourage technological and industrial development. This is expected to support the deployment of production facilities for low-carbon hydrogen, renewable hydrogen, and green hydrogen. 

Chile’s Transition and Challenges 

In Chile, the government has accelerated the energy transition through the establishment of a stable regulatory framework, the promotion of public-private partnerships, and strong climate policies. In addition to conventional renewable energy sources, Chile has committed to developing its non-traditional green energy sources. 

Chile plans to develop its longest power transmission line to further accelerate its green transition. The line will transport up to 3,000 MW of electricity between the northern province of Antofagasta and the capital city Santiago. Despite rapidly increasing its green energy capacity, Chile’s transmission infrastructure has lagged in recent years. The Kimal-Lo Aguirre transmission project is expected to help connect more renewable energy projects to the grid. 

Chile still faces challenges in establishing greater stability in its renewable energy mix, as it experiences an unequal distribution of clean energy throughout the day. This forces Chile to continue relying on fossil fuels during the hours that renewable energy is not being produced. Ana Lía Rojas, the Executive Director of the Chilean Association of Renewable Energy and Storage (ACERA), explained, “In Chile, we have a very high contribution of renewable energies during “solar hours” due to the large number of solar parks.” Rojas added, “The issue we must address is how to distribute this high percentage of renewable penetration in the rest of the hours of the day.” 

One way in which Chile will tackle the power reliability issues is by developing its utility-scale battery storage capacity. In May, three utility-scale battery energy storage projects were announced, to be co-located with solar plants. Chile is now set to become the second-largest battery market in the Americas, after the U.S. In 2023, Chile opened 12 storage projects, with a total capacity of 1.3 GW. It currently has 85 energy storage projects, totalling 6.4 GW, in various stages of development. 

By Felicity Bradstock for Oilprice.com 

Nippon Steel bid for US Steel faces Sept. 23 review deadline

Reuters | September 13, 2024 | 

Credit: US Steel

A powerful US national security panel reviewing Nippon Steel’s $14.9 billion bid for US Steel faces a Sept. 23 deadline to recommend whether the White House should block the deal, two people familiar with the matter said.


The Committee on Foreign Investment in the United States has until that day to complete its second 90-day review of the Japanese company’s proposed takeover of US Steel, the people said, declining to be named because the matter was not public.

On that date, CFIUS officials could grant a request by the companies to extend the review another 90 days, which would defer the politically sensitive decision until after the Nov. 5 election.

If the panel does not do that, it could approve the deal, possibly with measures to address national security concerns, or it could recommend President Joe Biden block it.

The deal has become a political hot potato and faces high-profile opponents including Biden, Democratic presidential candidate and Vice President Kamala Harris and Republican Donald Trump. They oppose foreign ownership of US Steel, which produces a strategically and symbolically important commodity used to build ships, trains and infrastructure.

“The president’s position is that it is vital for US Steel to remain an American steel company that is domestically owned and operated,” White House adviser Saloni Sharma said.

US Steel is headquartered in Pennsylvania, a crucial swing state in the presidential election. The United Steel Workers union, which endorsed Harris, opposes the deal.

As the clock ticks down to the Sept. 23 deadline, the politics and uncertainty surrounding the deal are in the spotlight. The companies have sought to save the acquisition after the panel said it would harm the security of US steel supplies in an Aug. 31 letter seen by Reuters.

The companies countered in a 100-page letter, also exclusively reported by Reuters, the deal would increase US steel output and asked for an extension to address concerns.

CFIUS and Nippon Steel declined to comment and US Steel did not respond to a request for comment.

A decision is not expected in the coming days, according to a senior administration official. The Washington Post reported on Friday a decision could be postponed until after the election.

Sources said the companies hope recent support for the deal, including a letter from business groups like the Chamber of Commerce raising concerns the transaction is being influenced by political pressure, could turn the tide.

Robust CFIUS reviews take 90 days but it is common for companies to withdraw their filings and resubmit them to give the companies more time to address the panel’s concerns. This resets the 90-day clock.

Nippon Steel and US Steel filed for the review in March, and CFIUS allowed them refile in June, starting a second 90-day clock that runs out on Sept. 23, sources said.

(By Alexandra Alper, Echo Wang, Karen Freifeld, Jeff Mason, David Shepardson and John Geddie; Editing by Cynthia Osterman)

Nippon Steel's Investment Could Revitalize U.S. Steel Industry

By Metal Miner - Sep 12, 2024,

Nippon Steel's proposed acquisition of U.S. Steel has been stalled for nine months due to national security concerns and opposition from labor unions.

The deal could potentially revitalize U.S. Steel through modernization and increased efficiency, but also raises concerns about job security and foreign ownership.

If the deal falls through, U.S. Steel may face limited options, including a potential acquisition by Cleveland-Cliffs or continued struggles to compete with international rivals.


Due to numerous obstacles, Nippon Steel’s $14.9 billion proposed acquisition of U.S. Steel has been on hold for nine months. The agreement is currently under investigation from all angles, with heavy resistance from steel industry labor unions and politicians. For manufacturers and procurement specialists involved in the metal supply chain, comprehending the details of this purchase is crucial.
Why is the Deal Facing Roadblocks?

The main barrier to the accord is worries about national security. U.S. Steel provides essential commodities to the automotive, construction and defense industries. And because United States’ infrastructure depends heavily on steel. Therefore, any transfer of ownership to a foreign company—even one as friendly as Japan—raises concerns about the nation’s dependence on foreign suppliers of crucial resources.?

To further complicate matters, labor unions, particularly the United Steelworkers (USW), have vocally opposed the Nippon Steel takeover. The USW instead continues to back Cleveland-Cliffs’ rival offer, which also targets U.S. Steel. American workers consider Cleveland-Cliffs a safer option because it is a local producer with strong union ties. The union is especially worried about how foreign ownership could affect collective bargaining agreements and job security.

Arguments for Letting the Deal Proceed

Despite the opposition, there are also strong arguments supporting the agreement, as it could potentially benefit U.S. Steel and the greater steel industry. Nippon Steel’s commitment to heavily investing in modernizing U.S. Steel’s outdated mills could offer the business a crucial technological boost. With these cutting-edge production techniques, U.S. Steel could reduce production costs, improve operational efficiency and compete more effectively with major international players like India’s Tata Steel and China’s Baowu Steel.

Furthermore, many steel industry observers think worries about foreign ownership are exaggerated because Japan is a significant ally of the United States. They claim that Japan has a long history of investing in the American economy, especially in fields like technology and the automotive industry.

By contributing financial resources and technological know-how, Nippon Steel might contribute to job security and maintain U.S. Steel’s competitiveness in the worldwide market.

For manufacturers and procurement professionals tracking steel prices and supply chains, the deal’s outcome could significantly impact domestic steel pricing. Increased investment from Nippon Steel could mean higher production capacity and a more efficient supply chain, which could ultimately stabilize prices for critical metal products.
The Path Forward: Uncertainty Looms for the Steel Industry

As of September 2024, the acquisition remains uncertain. Many expect President Biden to comment soon, and the CFIUS has yet to issue a final decision. If the deal is blocked, U.S. Steel may face limited options. Cleveland-Cliffs remains interested in buying U.S. Steel, but antitrust concerns would likely arise due to the potential concentration of steel production in a single company.

In the meantime, U.S. Steel continues to invest in its mini-mill operations, such as the Big River Steel plant, which shows promise for future technological advancements and increased production. However, the firm may struggle to compete with international rivals without significant investments in its aging facilities.
Implications for the Metal Supply Chain

For procurement professionals and industry watchers, the ongoing Nippon Steel buyout saga highlights how global steel market dynamics can significantly impact domestic pricing and supply chains. Whether the deal proceeds or not, the decision will likely have long-term implications for the U.S. steel industry.

A Nippon Steel acquisition could bring needed modernization and efficiency to U.S. Steel, while a blocked deal could open the door to further consolidation with Cleveland-Cliffs. With MetalMiner’s help, steel sourcing companies can prepare for supply chain disruptions or price volatility. See the MetalMiner metal catalog to see if your steel forms and gauges are covered by MetalMiner’s price forecasting.

By the Metal Miner Team

Japan, US face ‘shared challenge’ from China steel, PM hopeful says

September 14, 2024 
By Reuters

Japan's former Environment Minister Shinjiro Koizumi, a candidate in Japan's ruling Liberal Democratic Party's prime minister election, speaks during a debate in Tokyo on Sept. 14, 2024, where he urged the U.S. and Japan to cooperate to compete against Chinese steel.

TOKYO —

Japan and the United States should avoid confrontation about the steel industry and work together amid competition from China, the world's top steelmaker, leading prime ministerial candidate Shinjiro Koizumi said Saturday.

Sources told Reuters Friday that a powerful U.S. national security panel reviewing Nippon Steel's $14.9 billion bid for U.S. Steel faces a September 23 deadline to recommend whether the White House should block the deal.

Koizumi, Japan's former environment minister, said at a debate Saturday that Japan and the U.S. should not confront each other when it comes to the steel industry but to face together the “shared challenge” coming from China's steel industry.

"If China, producing cheap steel without renewable or clean energy, floods the global market, it will most adversely affect us, the democratic countries playing by fair market rules," Koizumi said.

Nippon Steel's key negotiator on the deal, Vice Chairman Takahiro Mori, said last month that his company and other Japanese steelmakers were urging Tokyo to consider curbing cheap steel imports coming from China to protect the local market.

On Sunday, Nippon Steel and U.S. Steel sent a letter to U.S. President Joe Biden about their deal, as Biden, Democratic presidential nominee Kamala Harris and Republican presidential nominee Donald Trump have all opposed the merger.

"We are also in the midst of elections, just like the U.S., and during elections, various ideas may arise. Overreacting to each of these would, in my view, call into question diplomatic judgment," Koizumi said when asked about the deal.

Sanae Takaichi, Japan's minister in charge of economic security and another prime ministerial candidate, also defended the deal during the same debate attended by eight other Liberal Democratic Party's, or LDP, leadership contenders Saturday.

"It appears they are using CFIUS to frame this as an economic security issue," she said, referring to the Committee on Foreign Investment in the United States. "However, Japan and the U.S. are allies, and the steel industry is about strengthening our combined resilience."

The 43-year-old son of former Prime Minister Junichiro Koizumi, the junior Koizumi, is seen as a leading contender in the September 27 race to pick the LDP's new leader, who will become the next prime minister due to the party's control of parliament.

Koizumi said Saturday that he would seek a dialog with the North Korean leadership to resolve the issue over the abduction of Japanese citizens kidnapped by North Korean agents in the 1970s and 1980s. The purported primary goal was to train North Korean agents to impersonate Japanese people.

"We want to explore new opportunities for dialog between people of the same generation, without being bound by conventional approaches, and without preconditions," Koizumi said.

After admitting in 2002 that it had abducted 13 Japanese, North Korea apologized and allowed five to return home. It said eight others had died and denied that an additional four entered its territory. It promised to reinvestigate but has never announced the results.

Japan says North Korea has refused to send the others home because of concern that they might reveal inconvenient information about the country.

Why SMRs Are Taking Longer Than Expected to Deploy

By Felicity Bradstock - Sep 14, 2024

Small Modular Reactors (SMRs) are advanced nuclear reactors with a power capacity of up to 300 MW(e) per unit, offering advantages such as lower costs, faster construction, and enhanced safety compared to conventional reactors.

Despite the potential benefits of SMRs, their deployment has been hindered by challenges such as rising costs, fuel availability issues, and regulatory complexities.

Companies like Terrapower and NuScale are at the forefront of SMR development, with government funding and private investment supporting their efforts to overcome these challenges and bring SMRs to commercialization.



As we go into a new nuclear power era, with public support stronger than it has been in decades, energy companies and startups worldwide are looking for innovative ways to deploy nuclear power faster. While conventional reactors are prohibitively expensive for most companies to build, as well as take decades to develop, there has been great optimism around the use of small modular reactors (SMRs). Several smaller companies, as well as governments, are investing in SMRs to boost the nuclear power capacity, promising companies access to clean nuclear energy without the need to wait decades to get connected. However, most SMR developers are facing challenges that have caused delays to the launch of new nuclear projects, with several issues left to overcome before we see the widespread use of SMRs.

SMRs are advanced nuclear reactors that have a power capacity of up to 300 MW(e) per unit, which is equivalent to around one-third of the generating capacity of conventional nuclear reactors. SMRs, which can produce a large amount of low-carbon electricity, are much smaller than conventional reactors and modular, which allows them to be factory-assembled and transported to site for installation.

As SMRs are much smaller than conventional reactors, they can be used on sites that are not suitable for traditional nuclear energy plants. The fact that they can be manufactured at a dedicated facility before being sent to site means they are much cheaper and faster to construct. Their modular structure means that a company can invest in one SMR and then add additional SMRs later to meet any increase in power demand. SMRs, particularly microreactors, can also be extremely useful in rural areas that are difficult to connect to the main grid.

SMRs are also extremely safe as their design is typically simpler than conventional reactors. They operate at low power and pressure, meaning no human intervention or external power or force is required to shut down systems, boosting safety margins. They require less fuel to power, and power plants based on SMRs only need to be refuelled every three to seven years, compared to every one to two years in conventional plants. All these benefits have made them extremely attractive to energy companies and startups looking to develop their nuclear power portfolio, as well as companies looking to power operations using clean energy sources.

Several energy companies and startups, such as Terrapower - founded by Bill Gates, are developing SMR technology. The founders of Terrapower decided the private sector needed to take action in developing advanced nuclear energy to meet growing electricity needs, mitigate climate change and lift billions out of poverty. Several SMR projects are also being backed by government financing. For example, in the U.S., the Department of Energy announced $900 million in funding to accelerate the deployment of Next-Generation Light-Water SMRs. In addition, many companies, such as Microsoft, have signed purchase agreements with energy companies to use SMRs, or are developing their own SMR strategies, to power operations with clean energy.

While there is huge optimism around the deployment of SMR technology, many of the companies developing the equipment have faced a plethora of challenges, which has led to delays and massive financial burdens. At present, only three SMRs are operational in the world, in China and Russia, as well as a test reactor in Japan. Most nuclear energy experts believe SMRs won’t reach the commercial stage in the U.S. until the 2030s.

NuScale cancelled plans to launch an SMR site in Idaho in 2023 after the cost of the project rose from $5 billion to $9 billion owing to inflation and high interest rates. This is a common issue, as companies must predict the costs of a first-of-a-kind project. Once one SMR site is launched and companies can establish tried-and-tested methods of deployment, a second site is expected to be cheaper and faster to develop. A trend that will continue as companies gain more experience. Eric Carr, the president of nuclear operations at Dominion Energy, explained, “Nobody exactly wants to be first, but somebody has to be.” Carr added, “Once it gets going, it’s going to be a great, reliable source of energy for the entire nation’s grid.”

Another issue is access to uranium. Russia is currently the only commercial source of high-assay low- enriched uranium (HALEU), which companies require to power their reactors. In late 2022, Terrapower announced it would be delaying the launch of its first SMR site in Wyoming due to a lack of fuel availability. However, the U.S. is developing its domestic production capabilities. The Biden administration is expected to award over $2 billion in the coming months to uranium enrichment companies to help jumpstart the supply chain. Meanwhile, Terrapower announced this summer that it is finally commencing construction on its Wyoming SMR site and is working with other companies to develop alternate supplies of HALEU.

By Felicity Bradstock for Oilprice.com


Next-Gen Nuclear Power: Oracle's Solution for Energy-Hungry AI

By ZeroHedge - Sep 13, 2024, 

Oracle is designing a data center that will require over a gigawatt of electricity, which the company plans to source from three small nuclear reactors.

The reactors, still under development, promise faster deployment of carbon-free energy and could be a solution to the extreme energy demands of AI.

Ellison's interest in nuclear power aligns with his support for new energy technologies, and a potential partnership with nuclear startup Oklo could be on the horizon.



Oracle chairman Larry Ellison announced this week that AI's growing electricity demand is pushing Oracle to consider next-gen nuclear power.

During an earnings call, Ellison said the company is designing a data center that will need over a gigawatt of electricity, which would be supplied by three small nuclear reactors, according to CNBC.

Ellison revealed that Oracle's planned data center would be powered by small modular nuclear reactors, which already have building permits. He didn't disclose the location but highlighted the growing energy demand that data centers would need on the earnings call.

The reactors in question, under 300 megawatts, promise faster deployment of carbon-free energy. Though promising, small modular reactors are not expected to be commercialized in the U.S. until the 2030s.

As we noted this summer, Sam Altman-backed nuclear startup Oklo is a Zero Hedge favorite and remains on pace to launch its first reactor by 2027.

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

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

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

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



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

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

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

Ellison is already a well known supporter of new energy in Tesla...could an Oklo and Oracle partnership be in the cards down the road?

By Zerohedge.com

 

Why No Major Oil Company Is Rushing To Drill Pakistan's Huge Oil Reserves

By Alex Kimani - Sep 15, 2024

• Pakistan has discovered potentially massive oil and gas reserves, but experts caution that exploitation will take years and significant investment.
• 
  
• Security concerns and high costs are deterring international oil companies from pursuing exploration in Pakistan, leaving China as the most likely partner for future development.
• 
  
• Despite the discovery, Pakistan continues to face an energy crisis, with Iran reportedly smuggling fuel into the country, further complicating the situation.

A long exploration effort has led to the reportedly massive discovery of oil and gas reserves in Pakistan’s territorial waters, a cache so large that it is said it could change the economic trajectory of the beleaguered country. But no one is rushing to drill in Pakistan, and experts are concerned about jumping the gun. 

According to DawnNewsTV, the three-year survey was undertaken to verify the presence of the oil and gas reserves. “If this is a gas reserve, it can replace LNG imports and if these are oil reserves, we can substitute imported oil,’’ former Ogra (Oil and Gas Regulatory Authority) member Muhammad Arif told DawnTv. 

However, Arif has cautioned that it would take years before the country could be able to exploit its newfound fossil fuel resources, adding that exploration alone required a hefty investment of around $5 billion and it might take four to five years to extract reserves from an offshore location.

Pakistan covers 29% of gas, 85% of oil, 50% of liquefied petroleum gas (LPG), and 20% of coal requirements through imports, according to the Economic Times. Pakistan's total energy import bill in 2023 clocked in at $17.5 billion, a figure projected to rise to $31 billion in seven years, as per an Express Tribune report. The new discovery is no doubt a big boon for the struggling economy. 

Since 2021, Pakistan has been hit with mounting debt and skyrocketing inflation, with inflation hitting nearly 30%. Meanwhile, the economy only expanded 2.4% in 2023, missing the 3.5% target. This has forced the country to rely heavily on foreign aid, which is often elusive. In January this year, Pakistan sought $30 billion for gas production to cut its fuel import bill.

According to Pakistan’s Energy Minister Mohammad Ali, Pakistan has 235 trillion cubic feet (tcf) of gas reserves, and an investment of $25 billion to $30 billion would be enough to extract 10% of those reserves over the next decade to reverse the current declining gas production and replace the import of energy.

The persistently high inflation could push Pakistan over the edge, "There is no precedent in Pakistan’s history of such a long and intense spell of inflation gripping the country," columnist Khurram Husain has written in Dawn.

A Game-Changer? Maybe.

Although Pakistan's hydrocarbon resources are yet to be quantified, some estimates suggest that this discovery constitutes the fourth-largest oil and gas reserves in the world. This could be a potential game-changer in the region’s energy flows. 

Back in July,  S&P Global Commodity Insights reported that four largely unexplored sedimentary basins in India could hold up to 22 billion barrels of oil. In effect,  lesser-known Category-II and III basins namely Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan contain more oil than the Permian Basin which has already produced 14 billion of its 34 billion barrels of recoverable oil reserves. 

Rahul Chauhan, an upstream analyst at Commodity Insights, emphasized the potential of India’s unexplored Oil & Gas sector, "ONGC and Oil India hold acreages in the Andaman waters under the Open Acreage Licensing Program (OALP) and have planned a few significant projects. However, India still awaits the entry of an international oil company with deepwater and ultra-deepwater exploration expertise to participate in current and upcoming OALP bidding rounds and explore these frontier regions," he has declared.

Currently, only 10% of India’s 3.36 million sq km wide sedimentary basin is under exploration. However, Petroleum Minister Hardeep Singh Puri says that that figure will jump to 16% in 2024 following the award of blocks under the Open Acreage Licensing Policy (OALP) rounds. So far, OALP has resulted in the award of 144 blocks covering about 244,007 sq km.  Under OALP, India allows upstream exploration companies to carve out areas for oil and gas exploration and put in an expression of interest for any area throughout the year. The interests are accumulated thrice a year following which they are put on auction. According to Puri, India’s Exploration and Production (E&P) activities in the oil and gas sector offer investment opportunities worth $100 billion by 2030.

So why is no one rushing to Pakistan to drill? 

Shell announced it was selling its Pakistan business stake to Saudi Aramco in June last year, and an auction for 18 oil and gas blocks at the same time last year got a muted response from international bidders, at best. No international companies even bid on 15 of the blocks, according to The Nation. 

In July, the country’s Petroleum Minister, Musadik Malik, told a parliamentary committee that no international companies were interested in offshore oil and gas exploration in Pakistan,and those in the country largely had the exit door in view. 

It comes down to security, and risk versus reward with Malik explaining to the committee that the cost of security is a major deal-breaker because “in areas where companies search for oil and gas, they have to spend a significant amount to maintain security for their employees and assets”. And security is provided by Pakistan, which has not been up to the task. 

In March this year, five Chinese engineers were killed in a suicide attack in Pakistan’s northest, when a vehicle rigged with explosives rammed into a bus transporting staff from Islamabad to the giant Dasu dam project in the Khyber Pakhtunkhwa province. The project is part of the $62-billion China-Pakistan Economic Corridor (CPEC). This incident sparked a series of temporary shut-downs across other projects, as well. 

Earlier that same month, insurgents attacked Chinese assets in Pakistan’s southwest, storming the Gwadar Port Authority complex, which is run by China. The attacks were perpetrated by the Balochistan Liberation Army (BLA), separatists fighting for an independent Balochistan, as reported by the Lowy Institute. 

Essentially, what this means is that it will be China or bust for Pakistan, as state-owned or state-controlled Chinese explorers have a vastly different appetite for risk. And these massive reserves are not likely to get out of the ground without Aramco showing more desire or the Chinese stepping in, for which discussions are already underway, according to Malik. 

In the meantime, Iran is said to be smuggling a billion dollars in fuel into Pakistan every year, as the country’s oil and gas crisis emboldens the black market trade. 

By Alex Kimani for Oilprice.com

UN panel issues guidelines for mining centered on human rights, sustainability

Staff Writer | September 12, 2024 | 

Artisanal miners in Sierra Leone. ( Credit: Pact/ Jorden de Haan.)

A panel of experts convened by the United Nations has issued a set of recommendations and guidelines for governments and mining companies to ensure that human rights, justice and equity are safeguarded during the global pursuit for energy transition minerals.


The panel’s report – Resourcing the energy transition: principles to guide critical energy transition minerals towards equity and justice – identifies ways to ground the renewables revolution in justice and equity, so that it spurs sustainable development, respects people, protects the environment and powers prosperity in resource-rich developing countries, the UN stated in a press release.

UN Secretary-General António Guterres, who helped establish the panel in April, said the report serves as “a how-to guide to help generate prosperity and equality alongside clean power,” noting that it makes recommendations on critical minerals at a crucial time, with their demand expected to almost triple by 2030.

“This report identifies ways to ground the renewables revolution in justice and equity, so that it spurs sustainable development, respects people, protects the environment, and powers prosperity in resource-rich developing countries,” Guterres stated.

The panel’s recommendations range from establishing a high-level expert advisory group housed within the UN to facilitate multistakeholder policy dialogue and coordination on economic issues in mineral value chains, to a global traceability, transparency and accountability framework, to creating a fund to address legacy issues as a result of derelict, ownerless or abandoned mines.

They also include empowering artisanal and small-scale miners to become agents of transformation to foster development, environmental stewardship and human rights, to strengthening material efficiency and circularity.

The recommendations recognize the central role of the Secretary-General and the UN as an honest broker and convener of diverse interests on a complex and challenging set of issues critical to the energy transition and achieving the goals of the Paris Agreement, the UN said in its press release.

As next steps, the Secretary General has asked the co-chairs and panel to socialize the report and its recommendations with member states and other stakeholders ahead of COP29 conference held later this year.

To access the report, the list of panel members, and more, please visit: www.un.org/en/climatechange/critical-minerals.

MYANMAR

Column: Tin supply chain tightens after key mine’s long absence

Reuters | September 13, 2024 | 

Man Maw tin mine. Credit: International Tin Association

It’s been just over a year since the Man Maw tin mine in Myanmar, one of the world’s largest sources of the strategic metal, halted production.


While high raw material and refined tin stocks have so far insulated the market from the full impact, that’s starting to change.

When the Wa authorities, an autonomous ethnic group controlling most of Myanmar’s tin resources, ordered a total suspension of all mining and processing activities in August 2023, most expected the supply hit to last only a few months.

Other smaller mines in Wa territory have since been allowed to reopen. Authorities have also permitted the export of above-ground tin stocks from Man Maw but production remains suspended.

While tin concentrates continue to flow across the border to feed China’s smelters, volumes have fallen sharply in recent months, highlighting the lack of activity at the biggest mine.

Dark producer

The Wa State mines are a statistical black hole in global tin supply data. There are no official production statistics and output can only be inferred from the amount of raw material passing through Chinese customs.

The International Tin Association estimates Myanmar produced around 40,000 metric tons of contained tin in 2022, with Man Maw accounting for around 70% of that.

That makes the Wa State the world’s third largest tin producer after China and Indonesia, with Man Maw itself representing 7-8% of global mine supply.

The Wa authorities said the suspension of activities was needed to allow an audit of the tin sector, which has grown exponentially from what began as informal artisanal operations at the start of the last decade.

In this respect the Wa State is no different from any other resource-rich country looking to take tighter control of their assets.

What’s unclear is why the audit has taken so long.

China tin concentrates imports by origin country

Reduced flows

The impact of the year-long closure is becoming increasingly visible in China’s import flows.

China imported 100,000 tons of Myanmar tin concentrates in the 10 months after the start of the audit in August 2023, compared with 173,000 tons in the prior 10-month period.

Trade flows between the two countries slowed to just 11,300 tons in the second quarter of this year from 43,600 tons in the first quarter, suggesting a depletion of above-surface stocks.

Chinese producers have had only limited success in finding alternative sources with increased imports from Australia, Bolivia and Nigeria not enough to plug the gap.

Total tin raw material imports fell by 26% year-on-year in the first seven months of 2024, LSEG data shows.

Chinese smelters have begun adjusting maintenance schedules and tweaking production plans to compensate.

Yunnan Tin, the world’s largest refined tin producer, shut its Geiju smelter for 45 days of maintenance at the end of August.

Others in the provinces of Yunnan and Jiangxi have been reducing output due to a shortage of feed, according to local data provider Shanghai Metals Market.

Tin stocks on the LME and ShFE

Stock slide

The suspension of tin mining was flagged by the Wa authorities in April 2023, allowing China’s tin sector to build up stocks.

Imports of refined tin accelerated over the fourth quarter of 2023 and Shanghai Futures Exchange stocks rose to an all-time high of 17,818 tons in May.

Registered exchange inventory has been sliding ever since and stands at 9,499 tons. Given domestic production is being constrained by growing raw material shortages, the downtrend is likely to continue for the next few months at least.

LME tin stocks have fallen by 39% to 4,725 tons since the start of the year, although as of the end of July there were another 2,207 tons of shadow stocks sitting in LME warehouses.

The Western supply chain has been more affected by slower Indonesian shipments than by the Man Maw situation. Indonesian exports fell by 44% year-on-year to 24,600 tons in the January-August period due to early-year permitting delays.

LME metals relative performance in 2024

Risk premium

The tin market has been lucky with the timing of Man Maw’s suspension.

Half of global usage is in the form of solder for circuit-boards, meaning demand is highly sensitive to electronic goods sales.

Semi-conductor sales, a useful proxy for tin solder demand, are only now emerging from a prolonged two-year slump, which helps explain why global tin stocks were so high in the first half of 2024.

Tin has still outperformed every other LME-traded metal by some margin. LME three-month tin was trading at $31,770 per ton on Friday, up by 25% from the start of January. The next strongest performer, copper, has year-to-date gains of just 8%.

It’s clear that the tin price contains a Man Maw risk premium and will continue to do so until the Wa authorities permit a return to normal operations.

Only the Wa leadership knows when that will be and they may be focused on other matters.

Although the United Wa State Army is not directly involved in the ongoing civil war raging across Myanmar, Man Maw may not be top of the priority list.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Alexander Smith)

Brazil says it has nearly cleared gold miners from Amazon Yanomami reservation

Reuters | September 14, 2024 | 

Illegal gold mining in the Yanomami traditional territory. (Image by the Brazilian Air Force).

Brazil has almost squashed the illegal gold rush that led thousands of wildcat miners into the Yanomami reservation in the Amazon rainforest and caused a humanitarian crisis of disease and malnutrition, the man in charge of operations said.


The Yanomami, South America’s largest Indigenous group living in isolation, have returned to a normal way of life, cultivating crops and hunting game, Nilton Tubino told Reuters in an interview on Friday.

Tubino runs the government office set up by President Luiz Inacio Lula da Silva to coordinate action by police and military forces, environmental agents and health workers on the reservation the size of Portugal in the remote Amazon, where 27,000 Yanomami live.

“We are seeing many of them bathing in the rivers and out hunting again, and clearings being planted for food,” he said.

In hundreds of operations since March, army and navy troops, backed up by environmental and Indigenous protection agencies, have destroyed mining camps and gold prospects.

They have dynamited 42 clandestine airstrips used by the miners in the rainforest, set fire to 18 aircraft, seized 92,000 liters of diesel, sunk 45 dredging barges, destroyed 700 pumps, and dismantled 90 Starlink dishes that allowed the miners to warn each other about enforcement teams, Tubino said. A radar has been set up in the reservation to monitor clandestine planes.

Tubino said deaths from malaria brought by the miners were down, and malnutrition had been controlled with government food parcels. The government has reopened medical outposts and is planning to build a hospital in Surucucu, a remote village near the border with Venezuela.

A Reuters photographer in Surucucu earlier this month saw evidence of illegal miners inside the reservation still, but with the situation improved from last year.

Junior Hekurari, head of the Yanomami health council Condisi, said the government had evicted the miners and overcome the health crisis, but that the mining had affected their ability to obtain food, with river waters polluted by mercury.

“The waters are poisoned and there are no fish,” he said. “Our people believe the earth has been contaminated and that is why the crops are not growing.”

Shortly after taking office, Lula launched a massive enforcement operation in February 2023 to evict some 25,000 gold miners from the Yanomami territory. With backing from the armed forces, the government action succeeded in expelling 80% of the miners.

But once the military withdrew, miners started to return, joining others who had hidden in the forest.

Tubino said the number of miners remaining is unknown, but this year’s operations had significantly reduced their presence and eliminated more than half the gold prospecting areas.

Work is still needed to shut down the supply line that keeps the miners in business, from fuel and food to the buying of their gold nuggets, Tubino added.

(By Amanda Perobelli, Anthony Boadle and Ricardo Brito; Editing by Rosalba O’Brien)