Product Developments

The AP ran an excellent investigative article recently about how, three years after California voters passed a ballot measure to raise taxes on corporations and generate clean energy jobs by funding energy-efficiency projects in schools, barely one-tenth of the promised jobs have been created, and the state has no comprehensive list to show how much work has been done or how much energy has been saved.

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Many predicted that the the Clean Energy Jobs Act would be impossible to enforce or track when it was passed by one of California’s distinctive referendums in 2012. Proposition 39 was passed by a wide margin with little actual language in the law to define what a “clean energy job” even was or how the state government would allocate the money generated for those clean energy jobs.


Solar Panel array

Photovoltaic solar array at the National Renewable Energy Laboratory in Golden, Colo.

The clean energy jobs fund was filled by changing tax language in the state code to end breaks for large corporations.

What is a ‘Green Job?’

This is a common problem for green technologies, as that while adoption of proven energy-saving technologies such as solar power generation, has been an unmitigated success in sunny California, what’s been even more successful has been the growth of the cottage industry of green energy consulting.

The federal Bureau of Labor Statistics has defined green jobs either as “jobs in businesses that produce goods or provide services that benefit the environment or conserve natural resources,” or as “jobs in which workers’ duties involve making their establishment’s production processes more environmentally friendly or use fewer natural resources.”

There is quite a debate that could be had about which category actually benefits the environment more. In an economy that is bleeding manufacturing jobs, I would question the logic of subsidizing environmental consulting over the actual creation and sale of proven technologies such as solar panels, wind turbines and geothermal wells.

Schools as a Green Job Incubator

California’s legislature decided to send half the money from the new tax fund to promote clean energy projects in schools, promising to generate more than 11,000 jobs each year. Instead, only 1,700 jobs have been created in the last three years. Even that has not gone smoothly. More than half of the $297 million given to schools so far has gone to consultants and energy auditors, not to install those solar panels, dig geothermal wells or tie school buildings to wind power-producing turbines or newer energy grids that can accept power from clean sources.

A spokeswoman told the AP that the State Energy Commission, which oversees Proposition 39 spending, could not provide any data about completed projects or calculate energy savings because schools are not required to report the results for up to 15 months after completion. Even though three years have passed, many schools have not even begun any actual retrofits or new energy production construction. Of those that have, the results have been, at best, mixed.

No Results Reported

The AP’s review of state and local records found that not one project for which the state allocated $12.6 million has been completed in the Los Angeles Unified School District, which has nearly 1,000 schools.

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Overall, $153 million has gone to consultants and auditors for energy planning, and not toward new generation capacity or the construction. The board created to oversee the project and submit annual progress reports to the Legislature has never met, according to the AP review.

Of these consultations, many have focused on the low-hanging fruit of energy strategy, such as lighting installation. Half of the approved projects have been lighting retrofits which essentially replace light bulbs or building wiring with more efficient, newer light bulbs such as LEDs or compact fluorescent bulbs and better wiring. The light bulb strategy has taken priority over more labor intensive projects such as HVAC system replacement or the design and engineering work required by building integrated or roof-mounted solar panels and geothermal well installation.



Electric Vehicles, or EVs, — despite huge hype, state support and billions of dollars of car makers funds — still only represent a tiny proportion of total sales.

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According to an Economist Intelligence Unit (EIU) article just 0.4% of an estimated 85 million cars sold worldwide last year were EVs. Numbers are rising, but at least here in Europe even free charging points, free road tax, free or discounted parking and exemption from road, tunnel and ferry charges has not been enough to boost participation.

In the UK, grants of £5,000 ($7,700) per vehicle have helped bring the initially quite high cost down to more accessible levels. Life cycle costs are almost certainly lower than gasoline cars now, yet the largest selling EV in the UK, the Nissan Leaf only just passed 10,000 units, and the Leaf commands 2/3rds of the UK EV market. Growth in percentage terms looks significant as this graph from the EIU shows, with the EU now overtaking the US as the fastest growing major EV market but it also suggests incentives play a big part in persuading buyers to choose EV.

Source: EIU

Source: EIU

Range anxiety understandably seems the most significant hurdle. Petrol-Hybrid EVs are proving more acceptable where the fall back of a petrol engine can give a respectable range of over 400 miles in some cases and new models are getting better all the time. The Mitsubishi Outlander PHEV has been popular this year taking an estimated one-fifth share of the European EV market in the first five months of the year.

It will not go on sale in the US until 2016, the article reports, maybe to give the firm a chance to iron out any bugs before the hit the potentially larger US market. Europe is waiting for Tesla’s new offering, the Model 3 that is reported to be able to cover 200 miles on one charge, compared to the Leaf that manages less than 50, in spite of claims of 100.

Clearly, the technology has some way to go before it attracts a mass market and with governments’ enthusiasm waning – incentives are in many countries being reined back – it could be mass take up remains some way off. Modern diesel engines are managing real returns of over 70 miles per imperial gallon and petrol engines of around 50 mpg, the claims for PHEVs become harder to justify. Pure EVs will still prove popular with city planners for pollution reasons, but headwinds remain for the technology.

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A giant robot fight will happen sometime next year. MegaBot MKII from the US will square off against Japan’s Kuratas.

I won’t try and justify this by the metal content — which is interesting in its own right — or by the turn of fortunes that has been created by taking an old repair shop for cargo ships and turning into a new industrial enterprise, admirable as that is, no this posts stands on its own two mechanical feet as pure fun.

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The robot constructors of the American entry are three engineers who basically wanted to live out their childhood fantasies and build a fighting robot. Weighing in at 12,000 lbs. and measuring some 15-ft. tall the MegaBot MKII is everything a child could imagine and more.


We have often noted the funny ways metals are marketed in the overall media here at MetalMiner. Whether it’s steel being touted for its strength, while alloyed with titanium, or zinc being used to galvanize rods in environments where galvanizing won’t help, the the images of strength, resiliency and luxury certain metals hold benefit the sector as a whole.


A major miner announced more layoffs and steel imports were down this month, according to preliminary data.

Anglo-American Layoffs

Global mining company Anglo-American PLC said on Friday it will shed thousands of jobs in the next couple of years and might put up more assets for sale as it battles an accelerating slump in metals prices that has dragged its shares down to a 13-year low.

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The company posted a steep fall in first-half profit after a rout in prices of metals from platinum to iron ore, and said the next six months could be even worse. Anglo-American is the fifth-biggest diversified global mining group by stock market capitalization. The statement said it would cut about 6,000 of its almost 13,000 office-based and other non-production roles globally, 2,000 of which will be transferred through the sale of some assets.

Steel Imports Starting to Fall

Based on preliminary Census Bureau data, the American Iron and Steel Institute (AISI) reported recently that the US imported a total of 3,049,000 net tons (NT) of steel in June 2015, including 2,458,000 NT of finished steel (down 10.3% and 10.7%, respectively, vs. May final data). Year-to-date total and finished steel imports are 21,670,000 and 17,833,000 NT, respectively, up 3% and 14% respectively, vs. the same period in 2014.

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In metal news today, Molycorp, Inc. is sitting a little bit prettier in its chapter 11 reorganization and South Africa’s Lonmin PLC is warning that layoffs could come from mine closures soon.

Molycorp Secures Financing

Molycorp, Inc., the only US-based producer of rare earth minerals, recently moved forward with its chapter 11 bankruptcy reorganization process and received court approval for an improved debtor-in-possession financing package provided by Oaktree Capital Management LP.

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The approved DIP facility of new net financing of $130 million. Molycorp said the new funding will include additional liquidity, reduced costs, and additional time to develop a plan of reorganization that would be in the best interest of all parties.

Lonmin Warns of Layoffs

South African platinum producer Lonmin said on Friday it was planning to close or mothball several mine shafts, putting 6,000 South African jobs at risk, because of depressed metal prices. Platinum’s spot price is at 6-1/2 year lows less than $1,000 an ounce, while power and labour costs in South Africa have risen sharply.
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The US stock market is demonstrating resilience against economic worries such as the Greek Crisis, falling oil prices, weakness in emerging markets and the recent Chinese market sell-off.

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Some argue that the bull market has already run for too long, and that concerns outside the US are putting enough pressure to make the stock market tumble. However, the opposite might be true.

The Tenacity of the US Stock Market

The unwillingness of domestic stocks to fall is a sign of strength and we could see stocks rise even further, especially if things start to calm down globally.

Dow Jones Industrial Average Index 1 year out

Dow Jones Industrial Average Index, one year out. Graph: MetalMiner.

Major market indexes like the Dow Jones Industrial Average, S&P 500 and the New York Stock Exchange remain range-bound since February. We recently pointed out that this trendless period was causing investors to hesitate. It was hard to tell whether the market is going to roll over or continue on its way up. Some new clues are pointing to the latter.

Nasdaq Composite Index 1 year out

NASDAQ Composite Index, one year out. Graph: MetalMiner.

The fact, that US stocks held their values well while Chinese markets plunged proves that Chinese financial news can only weigh on US stocks in the short term. In the longer term, China does not lead the US and its recent troubles do not appear to affect markets here that much.

What This Means for Metal Buyers

Moreover, the NASDAQ (a technology-focused index) recently hit an all-time high. The fact that technology stocks are leading the market is a positive sign. Lower oil and commodity prices are hurting the shares of energy and commodity producers, which helps explain why the other indexes are still range-bound. But, good earnings reports from leading tech companies are increasing the appetite of funds to buy stocks.

In conclusion, the US market is not immune to what happens outside the US. Further bearish news from outside could weigh on US shares, but, so far, things are looking good for US stocks in the second half of the year.

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Gold miners saw their stock values plummet with the price of the yellow metal on Monday. BHP Billiton is investing $240 million in its Western Australia iron ore tug boat and port business.

Gold Sell-Off Hits Miners Hard

The steep sell-off in shares of gold miners, tracking a plunge in the metal’s price, wiped out more than $8 billion from their combined market value on Monday and pushed a global index of gold stocks to a six-and-a-half-year-year low.

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The Thomson Reuters Global Gold index slumped 8.5% to its lowest since late 2008, the biggest one-day percentage drop in two years, after gold prices sank.

BHP Investing in Infrastructure

BHP Billiton said today it will spend $240 million upgrading its marine iron ore facilities in Western Australia. The funds will be used to purchase six tug boats and build a new tug harbor in Port Hedland’s inner harbor, with construction due to be completed in September 2016.

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A quiet revolution is going on in the US power generation market, and it may be giving a lesson for those countries dithering over whether to allow hydraulic fracturing (fracking) of oil and natural gas deposits identified but not yet proven.

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According to the FT, April was the first month in US history that gas-fired electricity generation surpassed coal-fired generation, (although it came close in 2012 when gas prices were also very weak). By comparison, in 2010 coal provided 45% of US power. In April of this year 31% of US electricity was generated by natural gas compared to 30% for coal, and the trend continues.

Watts Up

In gigawatt terms, wind power is growing even faster than natural gas, flattening the latter in the league tables. US coal capacity dropped by about 3.3 GW during 2014, and the US Energy Information Association predicts it will shrink by a further 12.9 GW this year, while wind power capacity rose by 9.8 GW and gas by 4.3 GW.

Source FT

Source: Financial Times

The reasons are more complex than simply low natural gas prices, although that, undoubtedly, is a major factor. The Environmental Protection Agency’s failed attempt to force environmental compliance by the back door this year encouraged some coal-fired utilities to see the writing on the wall and either mothball plants or invest in new technology to accommodate the mercury emission and other pollution targets, raising costs.

Brett Blankenship of Wood Mackenzie is quoted by the FT as saying, “low gas prices mean coal plants are running less, and when they run their margins are typically compressed. So companies find it difficult to make the investments needed to comply with regulations and keep those plants running.”

The Imitation/Substitution Game

It’s a vicious downward spiral in the face of lower-priced and less-polluting competitor fuels. Although natural gas makes a better swing fuel source to balance wind and solar renewables variability, not all utilities are blessed with an abundance of such spare generating capacity so they rely on their coal power plants to step in at times of peak demand. Unfortunately, running a coal plant at anything other than full or near-full load on a continuous basis brings per-gigawatt operating costs up AND per-gigawatt emissions of pollutants.

Not surprisingly, coal producers share prices have fared even worse than shale gas companies. Peabody Energy’s share price, the largest US coal producer, has fallen 98% since April 2011, while those of Arch Coal have dropped 99.2% and of Alpha Natural Resources by 99.6%, while their debt is so devalued it is yielding 17.9% for Peabody suggesting investors are expecting default.

With natural gas prices set to stay low for some years to come and renewable costs falling steadily the writing is on the wall for all but the latest and most efficient coal-powered electricity production. At least the environmental lobby will be pleased and the EPA may have achieved much of what it set out to do, Supreme Court slap down or not.

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There’s no reprieve from the bearish metals environment in this month’s MMI Report.

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With the exception of the very specialized grain-oriented electrical steel (GOES) market and the Renewables MMI®, all of our indexes lost ground in June and could not gain traction amid falling commodity prices and a strong US dollar.

The one index that was steady from last month, which tracks raw material inputs of the renewable energy sector, has been stagnant for two years and, until trends show otherwise, its steadiness is more a measure of a lack of market activity than anything close to a turnaround or a new trend toward increasing prices.

The Stainless MMI is flirting with two-year lows and our Raw Steels index is up against lows not seen in years as well. Weakness in the Chinese stock market has put additional pressure on metals that were already reeling from the effect of the strong dollar. This is bad news for steelmakers, miners, refiners and smelters by itself, but coupled with increased supply in most of the metals we track, it’s become a real deterrent to profitability.

Moreover, both Europe and the US have higher-than-normal inventories of semi-finished products at service centers. Mill lead times remain short suggesting weak demand. Weak demand will continue to place downward pressure on prices.