Author Archives: Sohrab Darabshaw

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An Indian agency has reported evidence that shows the presence of a lithium deposit of about 1,600 tons in the southern province of Karnataka.

It may be a small find. Still, it is important, especially with the world moving away from fossil-fueled vehicles to electric vehicles.

Lithium deposit in India

Initial surveys by the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of India’s Department of Atomic Energy has shown the presence of lithium in igneous rocks of the Marlagalla-Allapatna region of Karnataka, according the Indian Express.

Lithium is a vital ingredient of the lithium-ion rechargeable batteries that power electric vehicles (EVs), laptops and smartphones. Furthermore, they are even used in military products.

The lithium find is comparatively small. Reserves in Bolivia are 21 million tonnes), the Indian Express notes, with significant deposits in Argentina (17 million tonnes), Australia (6.3 million tonnes) and China (4.5 million tonnes).

Nonetheless, it has given hope to Indian authorities as they look to move away from lithium imports, on which the country is now 100% reliable.

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Nobody yet is quite sure whether Australia and China’s spat over coking coal imports will eventually turn out to be a case of bad politics making good economics or bad economic sense making for good politics.

While politics between China and Australia is part of the reason for the former to have completely banned the import of coal from the latter, it has led to churn in the Asian the rest of the global coal markets.

With China not lifting the ban despite it being a new year (as some had anticipated), the volatility in the markets is likely to continue.

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China’s coking coal import ban

In the last quarter of 2020, a verbal ban by China to halt all Australian coke was followed up with a formal one.

Coking coal import prices then declined by 24% from early-October to mid-December. Why? Because market players expected a glut in the global coal market in the medium term.

This game of Chinese checkers is not relegated to only the two players, China and Australia.

Ripple effects

India, Japan, and a host of other Asian and Southeast Asian nations have started to feel the after-effects.

Of late, according to this report by CNBC, major Chinese cities have started suffering power cuts because of the Chinese authorities limiting power usage while citing a shortage of coal.

What’s more, Chinese coal prices have shot up due to the reported shortage.

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The beginning of production at what is now Asia’s deepest offshore natural gas field will increase the share of natural gas India’s energy basket.

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India set to strengthen natural gas production

A few days ago, Reliance Industries Limited (RIL) and BP announced the start of production from the R Cluster, ultra-deepwater gas field in block KG D6 off the east coast of India. RIL and BP are developing three deepwater gas projects in block KG D6: R Cluster, Satellites Cluster and MJ –

Together, RIL said it expects the projects to meet over 15% of India’s natural gas demand by 2023.

What makes the find even more newsworthy is that it is located at a depth of more than 2,000 meters, making R Cluster the deepest offshore gas field in Asia.

Production ramp-up

By the end of next year it is expected to reach plateau gas production of about 12.9 million standard cubic meters per day (mmscmd), per MoneyControl.com.

These projects will utilize the existing hub infrastructure in KG D6 block. RIL is the operator of KG D6 with a 66.67% participating interest. BP holds a 33.33% participating interest.

R Cluster is about 60 kilometers from the existing KG D6 Control and Riser Platform (CRP).

Mukesh Ambani, chairman and managing director of Reliance Industries Limited, said in a press release that production from the natural gas field marked a “significant milestone” in India’s energy landscape for a cleaner and greener gas-based economy.

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Has the time for the “fuel of the future,” green hydrogen, arrived?

Recently, some of the world’s biggest green hydrogen project developers and partners joined hands to launch the “Green Hydrogen Catapult” initiative that aims to drive down costs to below U.S. $2 per kg to help change energy across carbon intensive industries, including steel.

The seven founding partners include the Saudi-based ACWA Power, CWP Renewables, Envision, Iberdrola, Ørsted, Snam and Yara.

The Green Hydrogen Catapult initiative will try to scale green hydrogen 50-fold in the next six years. The initiative will leverage the support of the Rocky Mountain Institute, a U.S.-based nonprofit organization.

The race to zero emissions is aiming for the deployment of 25 gigawatts through 2026 of renewables-based hydrogen production.

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What is ‘green hydrogen?’

Green hydrogen has been regarded for many years as an alternative fuel to decarbonize emissions-intensive heavy industry and supply chains.

It is produced by using renewable energy  — wind and solar — to power electrolysis that splits water into its constituent parts.

With global warming becoming a serious threat, governments have been contemplating the use of hydrogen to “decarbonize” several industries. Those industries include steel, petroleum, transport, industrial heating and others. In addition, they are looking to its role in energy security.

The idea is to have a serious alternative to fossil fuels.

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Keeping future demands in mind, Nippon Steel Corp. has decided to focus more on markets like the United States and India.

At the same time, it is reducing focus on Japan for the medium term.

The aim, according to a top-level executive of the Japanese steel company, is to capitalize on overseas profit which. At present, uptake in the global automobiles sector is largely driving that profit.

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Nippon looks overseas

News agency Reuters quoted Nippon Steel’s Executive Vice President Katsuhiro Miyamoto as saying they were looking at increasing the production capacity overseas, where demand is expected to go up.

Incidentally, Nippon, Japan’s biggest steelmaker and ArcelorMittal, the world’s largest steelmaker, had jointly bought India’s bankrupt Essar Steel, which has an annual capacity of 9.6 million tons.

Miyamoto also told the news agency during his interview that Nippon Steel was actively contemplating a plan to construct an electric furnace at its U.S. joint venture with ArcelorMittal in Calvert, Alabama. It will have a furnace of 1.5 MT of annual output capacity as a first step.

ArcelorMittal announced in September this year it would sell most of its U.S. assets to Cleveland-Cliffs Inc. The sale did not include the Calvert facility.

As for new venture ArcelorMittal Nippon Steel India, he said there are plans to increase capacity to between 12 million and 15 million tons in the future.

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China and India find themselves in some sort of a mini-race in the crude refining business.

(As readers of our Annual Outlook know, the oil sector is one of three key macroeconomic pillars we consider in our analysis of commodities markets, in addition to the Chinese economy and the strength of the U.S. dollar).

China races ahead in crude refining

China, though, is paces ahead of its neighbor. If all goes to plan, China could soon dethrone the present No. 1 refiner, the United States.

Bloomberg quoted the International Energy Agency (IEA), which said that perhaps by next year, China would dethrone the U.S. as the top refining country in the world.

This will be no small feat.

China may become No. 1 following the closure of some refineries in the U.S.

Steve Sawyer, director of refining at energy industry consultancy Facts Global Energy, told Bloomberg in an interview that, in the coming years, China would be putting out an additional million barrels a day, helping it overtake the U.S.

India aims to build crude refining capacity

While China goes about the crude refining business, its neighbor India has also thrown its hat in the ring.

For the last couple of years, India has made no bones of building its domestic refining capacity. The country has added some well-known international petroleum companies to its client list.

India planned to double its current capacity in the next 10 years. However, Prime Minister Narendra Modi wants things done faster.

At present, India’s refining capacity stands at 250 million tons, or a little more than 5 million barrels per day, based on a conversion factor of 7.33 barrels per metric ton of oil. Under an earlier plan, India sought to hike this to 450 million to 500 million tons over the next 10 years.

Now, Modi wants to do it even faster, accomplishing it within five years.

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It took about eight years to negotiate the details, but eventually 15 nations from the Asia Pacific belt signed on the dotted line on the Regional Comprehensive Economic Partnership (RCEP) earlier this week.

Missing from the deal, however, were the United States and India from the agreement. The pact seeks to lower tariffs and open up services trade within the bloc.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

RCEP includes 15 countries, including China

The 15 countries to sign off on the RCEP include China, Japan, South Korea, New Zealand and Australia. Together, they account for a GDP of $26.2 trillion, or 30% of global GDP. The agreement covers a market of 2.2 billion people.

The RCEP is looked upon as a cooperative union where countries are committed to protect member nations from imports of other non-members.

The aim is to give preferential treatment for trade between the member countries. That treatment comes in the form of lower tariffs, preferential market access, customs union or free trade in specific sectors.

India remains out on RCEP

After initial interest, India remains unconvinced by the RCEP.

However, experts in the country have varying opinions as to whether India made the right move.

Pro-RCEP experts said there are advantages of regional trade pacts. These types of pacts often lead to higher foreign direct investments for participating countries as supply chains reorient across the member nations.

Furthermore, signatory nations got access to otherwise closed foreign markets, leading to a higher volume of trade between countries.

India reiterated its arguments against joining this new partnership. External Affairs Minister S. Jaishankar said the effect of past trade agreements had been to deindustrialize some sectors. India had allowed other countries “unfair” trade and manufacturing advantages “in the name of openness.”

According to the Minister, this worked against India in the long run.

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French company Total’s love affair with India’s renewables sector continues.

Already having major joint ventures with India’s Adani Group firms for renewable energy projects, gas distribution, and other projects, Total’s chief executive Patrick Pouyanne said last week that his company aimed to increase its renewable energy portfolio in India to 6 gigawatts by 2025, per VCCircle.

Pouyanne was speaking in an online interview on the sidelines at the India Energy Forum by CERAWeek.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

India’s renewable sector grows

In mid-October, the Competition Commission of India approved a transaction between Adani Green Energy and a subsidiary of Total to transfer 2.1 gigawatts of solar and wind energy assets to a joint venture company. Adani Green Energy and Total’s subsidiary each have 50% holding in the joint venture, Clean Technica reported.

Earlier in the year, Total and Adani Green Energy Ltd (AGEL) created a 50:50 joint venture. Adani transferred its solar assets in operation to the JV. These projects are in 11 Indian states and have a cumulative capacity of over 2 GW.

What’s more, all of them benefit from nearly 25-year power purchase agreements (PPA) with national and regional electricity distributors.

Total also has a 50:50 JV with Adani for a liquefied natural gas (LNG) import terminal. The terminal, located in the Indian province of Odisha, would have a capacity of 5 million tons per annum. It also has a 37.4% stake in Adani Gas Ltd, the publicly traded company for city gas distribution.

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After a period of negative news following the COVID-19 pandemic, there’s finally some cheer for India’s steel industry, particularly related to Indian domestic steel demand.

Domestic steel demand has bounced back to pre-COVID levels. Automotive and white goods sector demand have driven the steel demand recovery.

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Indian domestic steel demand recovers

As per a report by financial firm Motilal Oswal, higher steel prices and lower coking coal prices ensured Indian primary steel producers’ margins remained strong. In addition, the report noted there were signs of domestic steel demand recovering gradually in the country.

The Motilal Oswal report also pointed out that India’s finished steel consumption, too, is recovering gradually. India’s finished steel consumption registered a drop of as much as 85% year over year in April 2020.

Chinese demand boosts Indian steel

What’s more, a renewed demand in the largest steel consuming market in China also boosted the bullish steel market in India.

Steel trade data by China shows demand remains strong there. China’s net steel exports declined to 10-year lows in September 2020. In addition, China saw a spurt in passenger car sales in September.

Because of these developments in China, its fallout was also seen in the Indian markets. Steel prices have also firmed up and have shown consistent increases over the last four months since July.

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Some Indian experts are of the view that the U.S.’s newly imposed import tariff on aluminum sheet products, including on Indian aluminum sheet, will not affect Indian aluminum producers in a major way.

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U.S. slaps anti-dumping duty on Indian aluminum sheet, sheet from 17 other countries

Last Friday, the U.S. imposed fresh tariffs on U.S. $1.96 billion worth of aluminum sheet products from 18 countries, including India.

The U.S. imposed the duty after determining the goods were being dumped, according to U.S. Commerce Secretary Wilbur Ross.

“The Department’s aluminum sheet investigations constitute the broadest U.S. trade enforcement action in two decades,” Secretary of Commerce Wilbur Ross. “We look forward to receiving parties’ comments on the preliminary determinations that aluminum sheet imports from 18 countries have been dumped, and in some cases unfairly subsidized, into the U.S. market.”

Ross added tariffs were being immediately imposed even though the department’s reading was the dumping was preliminary.

“As a result of these decisions, Commerce will instruct U.S. Customs and Border Protection (CBP) to collect cash deposits from importers of common alloy aluminum sheet from the above-named countries based on the preliminary rates noted above,” the Department of Commerce said in a release announcing the preliminary determination.

In addition to India, the other countries on the list are: Brazil, Croatia, Egypt, Greece, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan and Turkey.

The U.S. petitioners in the investigation are the Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Working Group and its individual members.

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