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 31, 2023
China Launches First 700 TEU Electric Containership for Yangtze Service
China completed the float out of its first 700 TEU pure power containership. The vessel, which is being built for COSCO Shipping Heavy Industry, is part of an effort to use electric-powered vessels throughout the Yangtze region. It is the first of two river containerships being built for the operation.
The ship was floated at the shipyard in Yangzhou on July 26 and is currently being referred to by its hull number of N997. Dry dock assembly began in March 2023 after the project kicked off in December 2022. The ship is scheduled to commence sea trials in late September. It will undergo a thorough verification of the power system.
The vessel is 393 feet in length with a beam of approximately 77.5 feet and 10,000 tons. They will have a design draft of 18 feet to provide good maneuverability along the Yangtze with a carrying capacity of up to 700 TEU. They are designed to sail a route stretching more than 600 miles along the river and to the sea.
The reports are saying the vessels will have the largest installed battery capacity yet placed aboard a ship. They are utilizing a containerized battery approach with 36 replaceable containers as the power source. They will swap batteries along the route with the batteries recharged at stations along the route.
Each of the ships will be powered by two 900 kW main propulsion motors. When the project was unveiled last year, COSCO said the containerized batteries would be the size of a 20-foot container with a capacity of 50,000 kWh.
In addition, they will employ a smart ship management system to increase the efficiency of the operations. It will be able to intelligently adjust energy consumption based on the needs of the ship. It will plan the speed of the voyage according to the arrival time, water flow, battery capacity, and other factors.
Construction on N998, the second vessel of the class, began in May. They will be operated by Shanghai Pan Asia Shipping, a subsidiary of COSCO, on the Yangtze from Shanghai to Wuhan.
During the float-out ceremonies, officials said they were the first batch of green zero-carbon ships and would serve as a pilot for future projects.
Report: China Helps Russia Ship, Insure and Sell its Oil
A top U.S government intelligence agency has accused China of aiding Russia’s war on Ukraine by supplying Moscow with key technology, military hardware and helping the country evade western sanctions, particularly on crude exports.
The Office of the Director of National Intelligence (ODNI) said in a newly declassified report that Beijing pursues a variety of support mechanisms for Russia that reduce both the impact of western sanctions and export supplies.
Apart from supplying Russia with a ready market for its crude, which has largely been locked out of the European market and other parts of the world, China has also opened its financial system for commercial interactions with Moscow, allowing Russian entities to conduct financial transactions without Western interference. Beijing also faces accusations of supplying Russia with key technology and dual-use equipment used in Ukraine.
One area that China has greatly helped Moscow escape the impacts of the sanctions is in oil and gas exports. With Russia’s trade with western countries taking a major nosedive in 20022, the report shows that China has come in handy to close the gap. During the year, total bilateral trade between Beijing and Moscow hit a record high of $190 billion, a 30 percent increase from 2021. Russia’s exports to China increased by 43 percent to hit $114 billion.
Last year, Beijing’s purchase of Russian energy rose to $81 billion compared to $52 billion in 2021. In March this year, crude imports from Russia hit 1.65 million barrels per day, overtaking India as the largest buyer of Russia’s crude. In May, Moscow exported a near record of two million barrels per day to China, an increase of about 25 percent compared to the first quarter of last year and accounting for about 15 percent of China’s demand.
While a majority of Russia tankers have been slapped with sanctions, China continues to aid the transportation of Russia’s Urals crude by providing supertankers and insurance coverage to move the crude to Chinese ports. The report, citing trading sources and tracking data, suggests that as of January this year at least four Chinese supertankers were shipping Russian Urals crude to China. Over the year to date, a total of 18 Chinese supertankers and another 16 Aframax-sized vessels have been used to ship Russian crude. The capacity is enough to transport 15 million tonnes, or about 10 percent of total Urals exports.
The report, citing press investigations, also observes that China has become the main conduit for Moscow’s purchasing of semiconductors, with millions of dollars’ worth of U.S-made or U.S-branded semiconductors flowing to Russia despite sanctions and export controls. During the nine-months period from January 2022 to September 2022, China’s semiconductor exports to Russia increased by 19 percent compared to the same period in 2021.
The report also shows that China has significantly opened up its financial system to Russia based on the increased share of bilateral trade settled in yuan and expansion of use of both country’s domestic payment systems. In fact, the share of Russian exports paid for in yuan rose by 14 percent in September 2022, up from 0.4 percent before the start of the war.
ICYMI, AGAIN
What Happens if the North Atlantic's Circulation Shuts Down?
Amid news of lethal heatwaves across the Northern Hemisphere comes the daunting prospect of a climate disaster on an altogether grander scale. New findings published in Nature Communications suggest the Atlantic meridional overturning circulation, or Amoc, could collapse within the next few decades – maybe even within the next few years – driving European weather to even greater extremes.
The Amoc amounts to a system of currents in the Atlantic that bring warm water northwards where it then cools and sinks. It is a key reason why Europe’s climate has been stable for thousands of years, even if it’s hard to recognise this chaotic summer as part of that stability.
There is much uncertainty in these latest predictions and some scientists are less convinced a collapse is imminent. Amoc is also only one part of the wider Gulf Stream system, much of which is driven by winds that will continue to blow even if the Amoc collapses. So part of the Gulf Stream will survive an Amoc collapse.
But I have studied the links between Atlantic currents and the climate for decades now, and know that an Amoc collapse would still lead to even greater climate chaos across Europe and beyond. At minimum, it is a risk worth being aware of.
Amoc helps keep Europe warm and stable
To appreciate how much Amoc influences the climate in the northeast Atlantic, consider how much warmer north Europeans feel compared to people at similar latitudes elsewhere. The following maps show how surface air temperatures depart from the average at each latitude and highlight patterns of warm and cool spots around the planet:
Surface air temperature departure from 1948-2018 zonal average in January (top) and July (bottom). Marsh & van Sebille, 2021; Data: NCEP/NCAR, Author provided
Most striking in the northern winter (January) is a red spot centred to the west of Norway where temperatures are 20°C warmer than the latitude average, thanks to Amoc. The northeast Pacific – and therefore western Canada and Alaska – enjoys a more modest 10°C warming from a similar current, while prevailing westerly winds mean the northwest Atlantic and northwest Pacific are much colder, as are the adjacent land masses of eastern Canada and Siberia.
The weather and climate of Europe, and northern Europe in particular, is highly variable from day to day, week to week and year to year, with competing air masses (warm and moist, cold and dry, and so on) gaining or losing influence, often guided by the high-altitude jet stream. Changes in weather and climate can be triggered by events located far away – and over the ocean.
How ocean temperatures are linked to weather
Over recent years Europe has witnessed some particularly unusual weather, in both winter and summer. At the same time, peculiar patterns of sea surface temperatures have appeared across the North Atlantic. Across great swathes of the ocean from the tropics to the Arctic, temperatures have persisted 1°C-2°C above or below normal levels, for months or even years on end. These patterns appear to exert a strong influence on the atmosphere, even influencing the path and strength of the jet stream.
To an extent, we can attribute some of these sea surface temperature patterns to a changing Amoc, but it’s often not that straightforward. Nevertheless, the association of extreme seasons and weather with unusual sea temperatures might give us an idea of how a collapsed Amoc would unsettle the status quo. Here are three examples.
Northern Europe experienced successive severe winters in 2009/10 and 2010/11, subsequently attributed to a brief slowdown of the Amoc. At the same time heat had built up in the tropics, fuelling an unusually active June-November hurricane season in 2010.
In the mid 2010s a “cold blob” formed in the North Atlantic, reaching its most extreme in the summer of 2015 when it coincided with heatwaves in central Europe and was one of the only parts of the world cooler than its long-term average.
The cold blob looked suspiciously like the fingerprint of a weakened Amoc, but colleagues and I subsequently attributed this transient episode to more local atmospheric influences.
Spot the blob: temperatures in 2015 – at the time, the warmest year on record – compared to long-term averages. NASA/NOAA
In 2017, the tropical Atlantic was again warmer than average and once again an unusually active hurricane season ensued, although the Amoc was not as clearly involved as 2010. Extensive warmth to the northeast in late 2017 may have sustained hurricane Ophelia, emerging around the Azores and making landfall in Ireland in October.
Based on just these few examples, we can expect that a more substantial reorganisation of North Atlantic surface temperatures will have profound consequences for the climate in Europe and beyond.
Larger ocean temperature extremes may alter the character of weather systems that are powered by heat and moisture from the sea – when and where temperatures rise beyond current extremes, Atlantic storms may grow more destructive. More extreme ocean temperature patterns may exert further influences on tropical hurricane tracks and the jet stream, sending storms to ever more unlikely destinations.
If the Amoc collapses we can expect larger extremes of heat, cold, drought and flooding, a range of “surprises” to exacerbate the current climate emergency. The potential climate impacts – on Europe in particular – should add urgency to our decision-making.
Robert Marsh is a Professor of Oceanography and Climate at the University of Southampton.
This article appears courtesy of The Conversation and may be found in its original form here.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
EU Increases Approved Yards Addressing Current Constraint on Ship Recycling
Pressure continues to mount to address the lack of facilities approved by the European Union to address end-of-life ships. There is a growing concern that companies operating within the EU already face significant constraints on recycling capacity with will only get worse as the industry transitions away from older fossil fuel vessels to address emerging emissions standards.
Analysts highlight that roughly 15,000 ships with a deadweight capacity of over 600 million tonnes are already in line for dismantling over the next decade. While that number will likely increase due to tough decarbonization regulations, Europe lacks the capacity to recycle end-of-life vessels. The challenge is further compounded by the fact that a majority of the yards currently approved have length and draft constraints, meaning it will be difficult for them to handle the larger ships expected to head for recycling in the future.
Responding to some of the concerns, the European Commission has adopted the 11th edition of the European List of ship recycling facilities. They added three new yards, Anadolu Gemi Söküm, BMS Gemi Geri Dönü?üm, and Kiliçlar Geri Dönü?ümlü Maddeler, all in Turkey to the recognized facilities. Three other yards, San Giorgio del Porto in Italy whose authorization had expired on June 6, 2023, and Denmark’s Modern American Recycling Services Europe and Fayard whose authorization was set to expire on August 23, 2023 and November 7, 2023, also had their licenses renewed.
The latest revision increased the number of yards approved to dismantle vessels under strict safety, health, and environmental conditions established by the EU to 48. The revised list includes 38 yards in Europe (EU, Norway, and UK), nine yards in Turkey, and one yard in the U.S., each of which has the mandate to dismantle end-of-life ships.
“As part of the implementation of the EU Ship Recycling Regulation, the Commission will continue and increase the monitoring of compliance of the yards on the European List with the conditions set out in EU legislation, including, when necessary, through unannounced inspections,” the regulators said in announcing the release of the revised list.
Europe, whose shipowners possess around 40 percent of the world fleet, has intensified the crackdown on member states' flagged ships being dismantled outside the approved yards. Specifically, they are targeting yards in Southeast Asia where recycling is performed under conditions that do not meet the EU’s standards for protecting workers’ health and the environment.
Data from the NGO Shipbreaking Platform shows that a total of 443 ocean-going commercial ships and floating offshore units were sold to the scrapyards in 2022. Of these, 292 of the largest tankers, bulkers, floating platforms, cargo and passenger ships ended up on the beaches of Bangladesh, India, and Pakistan, amounting to more than 80 percent of the gross tonnage dismantled globally.
The NGO reports that in 2022 at least 10 workers lost their lives when breaking vessels on the beach of Chattogram, Bangladesh with another 33 severely injured. Another three deaths were documented in India with three injuries occurring in Pakistan. They highlight that some of the accidents took place onboard vessels formerly owned by well-known shipping companies including Berge Bulk, Sinokor, and Winson Oil.
The enactment of the tough EU Ship Recycling Regulations in 2018 has been instrumental in drastically cutting down the number of EU-flagged vessels being dismantled in southeast Asia. The NGO reports that Greece is the main EU member still sending end-of-life ships to the Asian beaches. Yards in Alang, India for example have also been working to improve their standing in order to gain EU certification.
The European list of approved yards is regularly updated to add further compliant facilities or to remove facilities that have ceased to comply with a number of strict safety and environmental requirements. Ship recycling facilities located in other countries and seeking to recycle ships flying a flag of a member state, can only be included in the list following thorough evaluation and checks on their compliance with the regulations.
Also looming over the shipbreaking industry is the pending newly-ratified Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships. After years of lobbying, Liberia and Bangladesh ratified the global standard which will now enter into effect in 2025. It could help to see the Southeast Asian facilities gain broader acceptance but others worry it will only provide a justification for shipowners to continue to use yards that have lower standards for environmental and safety issues.
ECOCIDE
Towing begins of cargo ship ablaze off Dutch coast
This handout photograph taken on July 28, 2023 from the Coast Guard plane and released on July 29, 2023 by the Dutch coastguards, shows a Multrasalvor 4 rescue vessel sailing next to a fire aboard the Panamanian-registered car carrier ship Fremantle Highway. — Picture by Handout / Netherlands Coastguards / AFP
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Monday, 31 Jul 2023 7:59 AM MYT
THE HAGUE, July 31 — Towing began yesterday of a cargo ship packed with electric cars that went up in flames off the Dutch coast following delays due to weather conditions, authorities said, racing to prevent an ecological disaster.
Movement of the smouldering Fremantle Highway — with nearly 500 electric vehicles on board — began in the last afternoon, early five days after the blaze began, the national water management agency Rijkswaterstaat said.
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The ship is slowly being towed some 16 kilometres north of the islands Schiermonnikoog and Ameland, a few dozen kilometres from its last official position.
Saturday’s attempt to salvage the ship was postponed due to high winds that engulfed the rescuing tug in smoke, posing health and safety risks for the crew.
“There was considerably less smoke on the cargo ship this afternoon,” the government agency said, adding the vessel’s stability was constantly being monitored following concerns of it sinking.
The tow could take up to 14 hours depending on weather conditions, smoke and the tide.
The cause of the fire that broke out late Tuesday remains unclear, although the vessel’s owner has said one of the electric vehicles on board may have been the source.
The Fremantle Highway was located in the Wadden Sea at the time of the blaze, raising concerns about the impact of pollutants on the waters and nearby archipelago of ecologically sensitive islands.
One sailor died after he and 22 others were rescued from the burning ship that had forced some crew members to jump overboard.
— AFP
Dutch Salvors Begin Tow of Fire-Ravaged Car Carrier
On Sunday afternoon, the fire aboard the stricken car carrier Fremantle Highway finally subsided enough that the burned-out vessel ceased smoking, allowing salvors to begin a towing operation to bring the hulk to a safe location for damage control and inspection.
The salvage team established a secure tow connection to the vessel's stern on Friday, linking up to the tug Fairplay 30. On Sunday, taking advantage of reduced smoke, salvors made up a tow line to a second tug. The car carrier is now under way with both tugs pulling at about three knots, accompanied by the Kustwacht response vessel Guardian and the pollution control vessel Arca.
Salvors wait for the smoke to die out, July 30 (top) and finally begin the tow (bottom) (Kustwacht)
Once the vessel has been towed to the new temporary location, the tugs will remain connected for control and position-keeping. A periodic airborne watch will monitor for any possible pollution. So far, no releases of oil have been observed.
As soon as the situation aboard the ship allows for a safe tow into port, Dutch maritime authorities would like to bring it alongside a pier to complete salvage operations. The relocation in progress on Sunday is an interim step in the process.
The operation would have started on Saturday, but the wind direction and the continued smoke from the vessel prevented it. The orientation of the tow would have put the tugs in the path of the smoke, increasing risk to the health and safety of the tug crews. The same southwest wind continued Sunday; it was only the eventual cessation of the smoke that allowed the team to proceed.
Based on photos provided by the first responders, the Fremantle Highway has taken on a slight list to starboard. The patterns of paint burn-off cover most of the port side and half of the starboard side, indicating that the fire swept through most of the ship's car decks above the main deck level, from bow to stern. Photos taken Saturday show heavy smoke pouring from the aft-most upper decks, but the paint largely intact; by Sunday afternoon, the paint in this location was gone, indicating that the fire continued to burn at high temperature as late as Saturday night.
Smoke pours from the stern of the Fremantle Highway, July 29 (Kustwacht)
A thorough evaluation of the extent of the damage will have to await a boarding and inspection of the vessel.
The cause of the fire is not yet known for certain, but the presence of electric vehicles has sparked a minor controversy. Initial reports indicated that there were 25 electric cars aboard out of 2,857 total; in an updated report Friday, K Line clarified that there were 498 electric vehicles aboard out of 3,783 total.
Owner Shoei Kisen Kaisha told the Dutch broadcaster NOS that “there is a good chance that the fire started with electric cars.”
Efforts Underway to Begin Towing Burning Fremantle Highway Car Carrier
With the intensity of the fire aboard the car carrier Fremantle Highway continuing to dissipate, Dutch authorities announced late today that they are preparing to reposition the ship in the first of a series of steps that they anticipate will ultimately bring the wreck to a still to be determined port. As they were reporting progress with the fire aboard the ship, a new controversy is developing over the number of electric vehicles and total number of cars aboard the ship, leading to further speculation that EVs are a major contributing factor to the fire that has now burned for four days.
“Rijkswaterstaat and the salvage companies have now started preparations for towing the freighter to an area further east than its current position,” the Ministry of Infrastructure and Water announced shortly before midnight on July 28. They have been working closely with the Dutch Coast Guard and the private salvage company hired by the owners of the car carrier since the fire was reported shortly before midnight on July 25.
The timing of the movement of the hulk will depend on several factors, including the level of smoke coming from the ship and weather conditions. The goal is to bring the ship from its current position approximately 14 miles north of Terschelling to a new position approximately 10 miles north of Schiermonnikoog. It will be a move of about 35 miles to the east that they anticipate will take between 12 and 14 hours to complete.
Rijkswaterstaat consulting with the salvage team believes the move is possible because the Fremantle Highway while showing a list is stable and there are no signs of damage below the waterline. They believe the vessel is not in danger of heeling over at this time, but as a precaution, their oil recovery ship Arca continues to stand by and will accompany the tow.
Once the vessel has been repositioned, they will consider further steps. The goal is to continue to move it from the new temporary position and they expect it will soon be possible to tow the ship to a port.
These developments came as they reported that while the fire is still burning aboard the Fremantle Highway it continues to dissipate. Measurements of the temperature on board the ship showed that it dropped sharply during the day and the level of smoke continues to decline. They reported similar findings yesterday after stopping the cooling efforts. They have however said that they were waiting for the fire to burn itself out.
As the intensity of the fire dissipated today, the salvage team was able to briefly place four of its members aboard the vessel. They were taken to the Fremantle Highway aboard the Multrasalvor 4 and only remains aboard for a short period. While they were aboard, they were able to secure a stronger towline strung the Coast Guard reports from the top of the ship and now attached to the Fairplay 30. The earlier line they had previously said was only capable of being used to hold the vessel in position and was strung from a connection lower on the hull.
The new strong connection will aid in the next phase of the efforts. They are currently using it to hold the vessel in position outside the busy shipping lanes. However, it will also be able to support the planned towing operation.
The authorities continue to caution that the origin of the fire is unknown, but today a spokesperson for the vessel’s charter operator K Line of Japan revised earlier reports about the number of vehicles aboard the ship. The Coast Guard using the available manifests said at the beginning of the incident it believed there were 2,857 cars of which only 25 were electric vehicles.
Both Reuters and Associated Press are quoting a spokesperson for K Line, Pat Adamson, saying the accurate number is 3,783 vehicles. They are saying the number includes 498 battery-electric vehicles.
Previously, both Mercedes and BMW confirmed that they had vehicles aboard the vessel. It is unknown what quantity of vehicles or if they were gasoline or electric. The ship was reportedly carrying both new vehicles and secondhand cars. The AIS signal shows that it was bound for Port Suez while K Line said the destination was to have been Singapore.
A fire is still burning on board a car-carrying cargo ship near a sensitive Dutch bird habitat
Canada Leads North Pacific Mission Against Illegal Fishing
An annual mission to the North Pacific Ocean is now underway designed to tackle the hazard of illegal, unregulated, and unreported (IUU) fishing that is believed to be contributing to a massive decline in fish stocks and destroying marine ecosystems. During the four-month Indo-Pacific voyage, which is part of Operation North Pacific Guard (ONPG), an annual international law enforcement operation that targets illegal fishing on the high seas, the officers will also collect scientific data to enhance understanding of the high seas environment, including the migration range of species of interest including Pacific salmon.
The mission, which for the first time is led by Canada and includes officers from the U.S Coast Guard, will encompass an area of approximately 11 million square miles to conduct patrols, including high seas boardings and inspection operations, to ensure compliance with regulations and to detect illegal and unreported catch. This comes as Canada is raising a red flag that increasing IUU fishing activities are posing a significant risk to salmon populations in the North Pacific Ocean. They highlight the drastic decline in recent years of the salmon population while recognizing that warming ocean temperatures are also a major threat to the species. Scientists project that going by the current rate of overfishing, salmon survival will decline by as much as 90 percent over the next 40 years.
Data by the North Pacific Anadromous Fish Commission show that commercial salmon catches throughout the North Pacific dropped in 2022 to the second-lowest harvest of this century after reaching all-time highs in 2018. In its annual report that tracks salmon populations and catches as reported by its five member countries, Canada, U.S., Japan, Korea, and Russia, the commission asserts that salmon catches during the year amounted to 710,400 metric tonnes or approximately 353.9 million fish.
The Canadian government reports its Pacific Salmon Strategy Initiative (PSSI) is supporting the current mission against IUU whose overall aim is to enhance conservation, protection, and enforcement efforts in high-risk areas for Canada’s Pacific salmon stocks. As part of the PSSI, Fisheries and Oceans Canada (DFO) has committed more than C$46 million (US$35 million) over the next five years to combat IUU fishing in the North Pacific, including the deployment of a high-seas patrol vessel in the region.
Though there are over 1,200 vessels registered to fish in the high seas beyond the 200 nautical mile jurisdiction of the North Pacific under the North Pacific Fisheries Commission, the waters which span from the Canadian coast to Japan have witnessed a significant increase in IUU activities. Analysts believe that the majority of the activities are being conducted by “dark” fishing fleets often with links to China.
IUU fishing has been estimated to account for roughly 30 percent of all fishing activity globally, amounting to as much as 26 million metric tonnes of fish and costing the global economy over US$18 billion annually.
“Pacific salmon is vital to the food security, cultures, and economies of numerous First Nations, as well as the livelihoods of thousands of workers in rural and coastal communities in British Columbia and Yukon. As fish are not bound by borders, we must take decisive action to safeguard these species. This high seas enforcement operation will assist in the rebuilding efforts we are undertaking domestically,” said Joyce Murray, Minister of Fisheries, Oceans and the Canadian Coast Guard.
During the mission, the Canadian Coast Guard will be contributing experts in navigation and small craft operations with advanced levels of emergency medical training while the U.S. Coast Guard will provide experienced boarding officers.
The annual mission has been instrumental in enforcing the United Nations Ban on High Seas Driftnets and in ensuring compliance with regulations that protect against IUU, which is fast emerging as a global menace not only due to its impacts on stocks and ecosystems but also because of undermining the livelihoods of approximately 40 million legitimate fish harvesters.
In a similar mission last year, Canadian officers uncovered incidents of sharks being caught and kept and garbage pollution. They also encountered many vessels with improper identification markings and several cases of harvesters failing to maintain proper catch records, a key element used to calculate sustainable harvest limits.
Albemarle ends early contract deal with Chile supervisors union
Albemarle, the world’s top lithium producer, said on Friday it had closed an early collective bargaining agreement with its union of supervisors at its three locations in Chile.
“This important agreement establishes the conditions, rights and obligations of both parties, in a collective instrument that replaces the previous one, and that comes into force as of June 19, 2024,” Albemarle said in a statement without elaborating.
In late June, the company reached an early deal with another union representing 345 workers across its three sites that will be effective in December. Lithium is essential in electric vehicle batteries.
Miners routinely seek to seal early contract negotiations to avoid the risk of strikes at their operations.
Albemarle andSantiago-based SQM are the only lithium producers in Chile, whose government is seeking state control over the industry.
State-owned Codelco, the world’s largest copper producer, announced in late May the start of formal negotiations to establish a new public-private partnership with a state majority.
Voisey’s Bay nickel mine in labrador. (Image courtesy of Vale)
Canada’s vow to curb foreign investment in its critical minerals sector will face its first major test with Saudi Arabia’s deal to buy into some of the country’s largest nickel mines.
Prime Minister Justin Trudeau’s government introduced new rules in October that added a layer of regulatory scrutiny to investments by foreign state-owned entities. Such deals will only be approved “on an exceptional basis” if they’re considered a “net benefit” to the country.
“The government will give enhanced scrutiny to this type of investment,” Canadian industry ministry spokesperson Sean Benmor said in a Friday statement. “The government takes very seriously its responsibility to protect national security and acts decisively when necessary.”
Vale SA announced Thursday that Saudi Arabia’s Public Investment Fund and Saudi Arabian Mining Co. agreed to buy a joint 10% stake in the Brazilian mining company’s base metals unit. Vale operates Canada’s largest nickel mine, Voisey’s Bay in Labrador, and operations in Sudbury, Ontario.
Canada’s approval process would involve a national security review that can take 200 days or more and would then require sign off from Canadian lawmakers including the federal industry minister. Vale’s chief executive officer Eduardo Bartolomeo dismissed the potential for regulatory hiccups in a Friday interview, pointing to Canada’s recent restoration of diplomatic ties with Saudi Arabia.
“We are the ones who run the show, they are passive partners,” he said in an interview. “Our principles will rule.”
(By Jacob Lorinc and Mariana Durao)
The mining world turns to Saudi cash for critical metal supply
Bloomberg News | July 30, 2023 | Bandar Ibrahim Alkhorayef, Saudi Minister of Industry and Mineral Resources.
A $2.6 billion deal announced last week has set the stage for a potentially landmark shift in the metal and mining investment landscape: the arrival of Saudi Arabia as a pivotal player.
The agreement with Vale SA gives the kingdom a 10% slice in one of the world’s crucial suppliers of nickel and copper — essential metals needed to decarbonize. It’s also held other talks, including with Barrick Gold Corp. about investing in a big Pakistan copper mine, according to people familiar with the matter. Speaking privately, executives at top miners said the value of Thursday’s deal made clear that the Saudis are ready to splash cash around.
The move comes as the question of who controls the commodities needed to both sustain and decarbonize the world’s economies has turned into a global flashpoint, jumping to the top of agendas in the US and Europe.
China has for years been the dominant buyer and a key source of funding, as it sought to secure supply for its rapid industrialization. But as tensions with the West have mounted, the mining industry is now facing increased pressure to look elsewhere.
Saudi Arabia is seeking to take minority stakes in global mining assets that will over time help provide access to supplies of strategic minerals. The country also is looking to build a metals-processing industry that could in turn make it more attractive for international miners to exploit its mineral deposits — a central pillar of Saudi efforts to diversify the economy away from oil.
The kingdom has invested heavily into industrial and financial assets and even turned the world of sport upside down by essentially buying the game of professional golf and piling into soccer. However, the Vale deal announced last week is its first major foray into mining. Manara Minerals, a new venture between the kingdom’s sovereign wealth fund and state mining company, will get a stake in Vale’s base metals business, giving Saudi Arabia an interest in mines from Indonesia to Canada producing copper, nickel and other industrial metals.
For western producers, the kingdom offers access to deep pools of capital, which are appealing as Chinese funds become less politically palatable, but also as some institutional investors have turned less comfortable with mining over environmental concerns.
Investors from the region — Qatar is already a major backer of Glencore Plc — are now likely to become one of the most important financiers for the capital hungry sector, according to serial mine builder Robert Friedland, who spent the last few years developing one of the world’s biggest copper operations, in the Democratic Republic of Congo, with the help of Chinese funds.
“Now, probably, the largest supply of capital to the mining industry will come from the Middle East,” he said in an interview last month.
But Saudi Arabia offers something else beyond cold cash: political backing for companies looking to expand into the Muslim world as deposits in more traditional jurisdictions are depleted.
Canada’s Barrick has been in talks with the Public Investment Fund about a potential stake in its Reko Diq copper project in Pakistan, which is a relatively untouched frontier for the international mining industry, according to people familiar with the matter. Bringing the Saudis on board would not only ease Barrick’s funding burden, but also introduce a partner that has significant political influence in Pakistan, the people said.
Spokespeople for the PIF and Barrick did not comment.
Saudi Arabia’s deep pockets may also present some challenges for the biggest producers who are looking for deals of their own. Keen to get more exposure to copper and nickel, miners have started writing the biggest checks in more than a decade. BHP Group and Rio Tinto Group — the two largest — have just completed multi-billion dollar deals to grow in copper, while Glencore Plc tried to buy Teck Resources Ltd.
For years, the big producers have found themselves repeatedly outbid by Chinese companies when it comes to buying mines. China’s state-owned metal and mining companies have been willing to pay valuations that western firms simply couldn’t match. Saudi Arabia now seems willing to do the same, potentially putting some deals beyond the reach of the industry’s traditional buyers.
Executives at two of the biggest mining companies, which have spent years assessing base metal assets such as those owned by Vale, said privately that they were surprised by the price tag in last week’s deal, which valued the unit at $26 billion (RBC Capital Markets said it was worth about $21 billion.)
Still, unlike Chinese companies, Saudi Arabia is currently more interested in securing stakes — guaranteeing future supply of critical minerals — rather than buying outright and then operating the assets.
Saudi Arabia set down a marker earlier this year when it announced the new firm to invest in mining assets globally, with $3.2 billion for initial investments. The country holds an annual mining conference, which this year featured the CEO of the world’s biggest mining company, BHP’s Mike Henry, as well as the chairman of no. 2 producer Rio Tinto — a major step up from past speakers. CEOs from other top miners are expected to attend next year.
For mining companies looking for funds, the US and Canadian governments’ recent crackdown on Chinese investment in key metals companies has changed the investment landscape. That’s given an opening to Middle Eastern countries like Saudi Arabia to fill the gap.
“Everything’s changed,” said Friedland.
“The American government has an ‘ABC’ policy: Anything But China. So the American government instead goes to rulers in the Middle East and says, “You should be giving the African people an alternative for financing mines in Africa. Recycle some of those petro-dollars.”
(By Thomas Biesheuvel and Jacob Lorinc, with assistance from Mariana Durao, Dinesh Nair, Archie Hunter and Matthew Martin)