Articles in Category: Environment

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This morning in metals news, the United States Trade Representative will soon consider whether to extend tariff exclusions granted last year for imports of certain products from China, the GFG Alliance is aiming to consolidate its steel operations and make the new consolidated entity carbon-neutral by 2030, and LME copper prices continue to make gains this month.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

USTR to Consider Tariff Exclusion Extensions

Last December, the USTR granted tariff exclusions on $34 billion worth of imports from China.

With those exclusions set to expire later this year, the USTR will soon initiate a process to consider whether or not to extend them.

“The United States Trade Representative (USTR) will commence on November 1, 2019 a process for considering extending for up to twelve months certain exclusions from additional tariffs on Chinese imports that were granted last December and are set to expire on December 28, 2019,” the USTR said.

“In a Federal Register notice to be published this week, USTR will provide details on the process for submitting comments favoring or opposing specified tariff exclusions. The period for submitting comments will run from November 1, 2019 to November 30, 2019.”

GFG Alliance Eyes Carbon-Neutral Future

The GFG Alliance, which includes Liberty House steel plants around the world, is aiming to consolidate its steel production into a single global company: the Liberty Steel Group.

“A single global company with 18 million tonnes of rolled steel capacity annually is to be launched through a consolidation of GFG Alliance’s steel businesses, with an ambition to lead the industry towards a carbon-neutral future,” Liberty House announced Tuesday.

“The family-owned alliance led by Sanjeev Gupta today announces that Liberty Steel Group, which altogether employs 30,000 people in 10 countries, will be incorporated by the end of this year through a merger of GFG’s upstream and downstream steel manufacturing, mining and distribution businesses around the world.”

The new group will aim to be carbon-neutral by 2030.

“At the heart of the group’s mission will be an ambition to build on GFG’s existing GREENSTEEL strategy to aim for net carbon neutral status by 2030 – placing Liberty Steel Group on a pathway to become the first carbon neutral steel company in the world,” the company said. “This will include exploration of the best use of new technologies such as hydrogen generated from renewable power to produce steel.”

LME Copper Rises

The LME three-month copper price, after approaching MetalMiner’s short-term support price in early October, has since made incremental gains throughout the month.

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As of Monday, the LME three-month price rose to $5,910/mt, marking a 2.91% month-over-month increase, according to MetalMiner IndX data.

The Renewables Monthly Metals Index (MMI) slipped one point for an October MMI reading of 98.

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Glencore Signs Cobalt Supply Deal with China’s GEM

Mining giant Glencore has entered into a cobalt supply agreement with China’s GEM Co. Ltd. 

According to the miner, the five-year cobalt hydroxide deal calls for it to supply a minimum of 61,200 tons of cobalt between 2020 and 2024.

“GEM is very pleased to announce this long-term strategic co-operation with Glencore,” GEM Chairman Kaihua Xu said. “This agreement represents a major cornerstone in GEM’s cobalt sourcing strategy as it will support GEM’s continued contribution to the Chinese New Energy Market.

“In an ever-changing and fast evolving cobalt environment, GEM and Glencore have managed to maintain a very strong working relationship.

“By securing a key battery raw material, GEM clearly demonstrates its ability to implement and deliver its vision for an electrified, carbon-free transportation system.”

Nico Paraskevas, Glencore’s head of marketing for copper and cobalt, touted the partnership with the Chinese firm.

“The extension of our long established partnership with GEM further endorses Glencore’s important role in supplying the materials that enable the energy and mobility transition,” Paraskevas said. “Furthermore, this long term partnership provides Glencore with a stable outlet for a significant portion of its expected future Cobalt Hydroxide production.”

Earlier this year, Glencore announced a long-term cobalt supply agreement with the Brussels-based Umicore.

GOES

The GOES MMI, the index tracking grain-oriented electrical steel, fell 13 points for an October reading of 185.

The U.S. GOES price fell 6.6% month over month to $2,565/mt as of Oct. 1.

German steelmaker Thyssenkrupp, a producer of electrical steel, recently announced the mutual termination of the mandate of CEO Guido Kerkhoff, effective Oct. 1. Kerkhoff’s tenure ended after just over a year, having been appointed to the role in July 2018.

The news comes in what has been a challenging year for the German firm, which recently was relegated from the German blue-chip DAX index.

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Actual Metal Prices and Trends

U.S. steel plate fell 7.7% month over month to $736/st as of Oct. 1. Chinese steel plate fell 0.6% to $573.56/mt.

Korean steel plate fell 3.5% to $548.78/mt. Japanese steel plate fell 1.4% to $798.23/mt.

Chinese silicon rose 0.3% to $1,440.89/mt.

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Indian Prime Minister Narendra Modi’s doubling of India’s renewable energy target by 2022 has made global headlines.

At the United Nations Climate Action Summit earlier this week, the Modi said India was now aiming to install 450 GW of renewable energy by 2022, more than double the previously promised 175 GW, The Hindu reported.

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India had committed to creating 175 GW of green energy capacity under the Paris Climate Agreement in 2015. The country has about 77 GW of installed renewable energy capacity, more than double its capacity as of five years ago; projects in the pipeline will add about 60 GW in renewable energy capacity.

Addressing the UN Summit last Monday, Modi reiterated India’s seriousness about doing something concrete on the renewable energy front. He highlighted other promises, including India’s plans to spend about U.S. $50 billion “in the next few years” on the Jal Jeevan Mission to conserve water, harvest rainwater and develop water resources.

In addition, he announced two international initiatives, the first being a platform with Sweden and other countries, for governments and the private sector to work together to develop low0carbon pathways for industry, plus a second initiative called the Coalition for Disaster Resilient Infrastructure. The U.K., Australia and island nations such as Fiji and the Maldives will be part of this coalition.

The Paris Climate Agreement is aimed at strengthening the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

Modi added that India had a capacity of 4 GW and that the country is well on its way of adding 100 GW of solar power by 2022.

India is the world’s third-largest source of greenhouse gases after China and the United States. Experts here point out that while the Indian prime minister’s aims are laudable, there still was a question mark on whether they could be practically achieved or not.

The country has moved on to renewable power over the last five years, banking on solar power to lead the transformation.

A recent report by the International Energy Agency on worldwide energy investment noted renewable power investments in India were much ahead of those for fossil fuel-based power for the third year in a row. Spending on solar energy had also surpassed spending on coal-fired power generation for the first time in 2018.

But India still relies heavily on coal-powered energy and a large chunk of investments are still being made in that sector. There are reports that coal demand in India will nearly double from 2020 to 2040.

The Hindu Business Line newspaper reported environmentalists and experts in India had mixed feelings about the prime minister’s target. The report quoted environmentalist Chandra Bhushan as saying Modi had given a “positive roadmap” for India. He said the promise of increasing renewable energy capacity to 450 GW showed Modi’s seriousness about reducing the carbon emissions.

Others quoted in the report, though, were not so sure, arguing that renewable energy was costly and achieving the target may not be easy to achieve. NGO Social Action for Forests and Environment founder Vikrant Tongad expressed support for the move, but expressed reservations about how money will be raised to actualize the goal.

Environmental activist Gaurav Bansal told the Hindu Business Line that instead of blindly setting a target of increasing renewable energy, the Indian government must look into the concern that it does not harm the environment.

Meanwhile, showing its determination to go ahead with the renewables plan, Modi remotely inaugurated the Gandhi Solar Park at the UN headquarters in New York, the Hindustan Times reported.

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The inauguration came as part of the Gandhi@150 commemorative event marking the 150th birth anniversary of Mahatma Gandhi. The 50 kilowatt hour (kWh) rooftop solar park was built at a cost of U.S. $1 million. Each panel is powered to reach the max of 50 kWh of generation power, which will take the park’s annual output up to 86,244 kWh.

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This morning in metals news, China’s trade activity with respect to aluminum and copper slowed in August, Nucor announced Chairman and CEO John Ferriola will be retiring at the end of the calendar year and residents of an Arizona town expressed staunch opposition to a proposed aluminum recycling plant.

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China’s Aluminum Exports, Copper Imports Fall

China’s imports of copper and exports of aluminum fell in August as the trade war with the U.S. escalated with the most recent exchange of tariffs.

China’s copper imports fell 3.8% in August compared with the previous month, Reuters reported, while aluminum exports fell 4.3% compared with July totals.

Nucor CEO to Retire

Nucor Chairman and CEO John Ferriola will retire at the end of this year, the company reported.

Ferriola has served as chairman since 2014 and CEO since 2013.

Nucor’s Board of Directors elected Leon J. Topalian, 51, to be president and chief operating officer, effective Sept. 5, 2019. Topalian will succeed Ferriola as CEO on Jan. 1, 2020.

Residents Oppose Proposed Arizona Aluminum Recycling Plant

Locals in the Arizona farming town of Wenden have come out in opposition to an aluminum recycling plant proposed for the town, azcentral.com reported.

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According to the report, residents urged officials from the Arizona Department of Environmental Quality not to grant an air-quality permit for the proposed Alliance Metals plant.

Before we head into the Labor Day weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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The U.K.’s Department for Business, Energy and Industrial Strategy (BEIS) has issued a call for evidence to help inform a planned £250 million Clean Steel Fund.

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According to the BEIS, the fund will “support the UK steel sector to move to a decarbonisation pathway compatible with net zero.”

The government is seeking evidence to help it develop the “detailed design” of the fund, including feedback regarding potential “barriers to realising clean steel ambitions” and “the opportunities to be gained in overcoming these.”

The U.K. has set a target to reduce greenhouse gas emissions by 100% — compared with 1990 levels — by 2050, pursuant to the Climate Change Act of 2008.

According to the BEIS, the primary goals of the proposed Clean Steel Fund are to help facilitate the transition to “lower carbon iron and steel production” to help the sector reach net zero emissions (per the Climate Change Act) and to maximize “longevity and resilience” in the sector by “building on longstanding expertise and skills and harnessing clean growth opportunities.”

“We also intend to establish a new £100 million Low Carbon Hydrogen Production Fund, to support the deployment of low carbon hydrogen production at scale,” the BEIS said. “This could enable a pathway to lower carbon steel production and support broader efforts to decarbonise industry.”

UK Steel, an industry group that champions U.K. steelmaking, responded positively to the call for evidence.

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“Today’s announcement of the Clean Steel Fund is extremely positive news for UK steelmakers and the whole of the UK’s decarbonisation efforts,” UK Steel Director General Gareth Stace said. “The fund is a vital step towards further reducing our carbon footprint here in the UK and will cement our position in a future low-carbon world.”

The BEIS’s 22-page call for evidence document can be found here.

Following a decade of hype, there remains huge debate about the viability of carbon capture as a solution to carbon emissions from coal-fired power stations.

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A recent article in the Financial Times lays out both sides of the argument. On the one hand, there is the one put forward by the coal lobby, broadly drawing on the work of coal miners in the form of Coal21, an industry body in Australia backed by 26 mining groups (including BHP, Anglo American and Glencore). On the other hand, there is a more disparate group of academics, research bodies and NGOs who rubbish the miners’ position as untenable.

Coal21, however, is pouring a considerable amount of money into research, lobbying and, most controversially, marketing in an effort to influence the debate in its favor.

The industry club has invested $4 million in advertising to promote the prospects for carbon capture and sequestration (CCS) as a solution to coal’s carbon emissions. That comes in addition to some $400 million BHP has pledged over five years to reduce its emissions and those of its customers.

Meanwhile, Glencore, the world’s largest coal exporter, is building a pilot plant to capture and store carbon emissions from a nearby coal-fired power station in the Surat basin in Australia, funded in part by Coal21. The plan is to capture some 200,000 tons a year of carbon, but commercial projects in Canada and the U.S. are said to be running at 50% efficiency, at best (in one case, little more than 5%). Glencore will need new technology if it hopes to reach the 90% efficiency CCS plants are headlined to achieve.

Even then, grave doubts remain as to their economic viability for coal-fired power generation.

Source: Financial Times

CRU research is cited by the FT estimates the technology is only viable if the carbon dioxide (CO2) can be sold to other industries as a commercial source of CO2. Generally, it is either simply stored underground or used to boost oil field production by pumping sequestered CO2 back into oil reservoirs.

Without the value generated by selling CO2 to other industries, the cost of the technology needs to fall by 50% to make pure CO2 storage economical, the Financial Times reports. Cynics suggest miners’ focus on CCS as a solution has more to do with countering what they see as an increasingly negative view of coal use as the consequences of rising CO2 levels is more widely accepted.

Coal miners may be facing a losing battle, regardless of public perceptions.

The article reports that in many parts of the world, solar, wind and battery storage produces electricity at lower cost than coal, not to mention the advantages of lower CO2 producing natural gas and the latter’s greater flexibility to provide swing production to balance renewables’ lower predictability.

Although huge sums have been poured into CCS research and multiple pilot plants have been set up around the world, the technology is still less efficient than necessary and more expensive to operate than required if it is to be economical (certainly for coal-fired power generation).

But there are other industries where large quantities of CO2 are generated. The arguments for CCS may be on a firmer footing for industries like cement, steel, and oil and gas.

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If the technology can be further refined to reduce emission from these industries, that would be a huge gain — but for coal-fired power stations, CCS looks like a lost cause.

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The Renewables Monthly Metals Index (MMI) fell four points this month for an August reading of 101.

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Glencore Shakes up Cobalt Market

As covered by MetalMiner’s Stuart Burns, Glencore announced it would halt production by the end of the year at the world’s largest cobalt mine: Glencore’s Mutanda operation in the Democratic Republic of the Congo (DRC).

Last week, the miner reported its adjusted EBITDA for the first half of the year came in at $5.6 billion, down 32% on a year-over-year basis, with CEO Ivan Glasenberg citing “a challenging economic backdrop.”

Among the challenges has been a plummeting cobalt price. As a result, the miner announced it will move toward pausing production at its Mutanda copper and cobalt mine.

“However, our African copper business did not meet expected operational performance,” Glasenberg said. “We have moved to address the challenges at Katanga and Mopani with several management changes as well as overseeing a detailed operational review, targeting multiple improvements to achieve consistent, cost-efficient production at design capacity.

“Our teams have identified a credible roadmap towards delivering on the significant cashflow generation potential of these assets, at targeted steady state production levels. At Mutanda, we are planning to transition the operation to temporary care and maintenance by year end, reflecting its reduced economic viability in the current market environment, primarily in response to low cobalt prices.”

So, what kind of impact will the removal of Mutanda’s cobalt — making up a whopping 20% of global supply — have on the market? Burns explained Glencore’s closure of zinc mines in 2015 is credited with the recovery of that market, so there is precedent for the maneuver.

In addition, the electric vehicle (EV) revolution hasn’t taken off perhaps as much as expected.

“Cobalt demand has traditionally been driven by its use as an alloying element, but it is increasingly being seen as part of the lithium battery demand story because of its role in production of advanced batteries,” Burns said. “The electric vehicle (EV) market, though, has failed to match up to its hype this decade. Although both lithium and cobalt prices have risen as a result of battery makers securing their supply chain, the reality is supply is perfectly adequate.”

GOES

Meanwhile, the GOES MMI, which tracks grain-oriented electrical steel, picked up six points for an August reading of 197.

The U.S. GOES price hit $2,719/mt as of Aug. 1, up 3.2% from the previous month.

A.K. Steel, the lone remaining electrical steel producer in the U.S., announced its second-quarter earnings late last month. The firm brought in net income of $66.8 million in 2018, up from $56.6 million in Q2 2018.

Shipments in its stainless/electrical segment were down, however, coming in at 198,400 tons in Q2 2019, down from 221,500 tons in Q2 2018. For the first six months of the year, shipments amounted to 405,000 tons, down from 422,200 tons in the first half of 2018.

Meanwhile, German firm Thyssenkrupp, also a producer of electrical steel (with plants in Germany, India and France), has announced it will continue to move forward with realignment plans amid disappointing quarterly results.

For the quarter ending June 30, 2019, the firm’s adjusted EBIT came in at €226 million, down 32% from the €331 million for the same quarter in 2018.

In addition, the firm revised its full-year 2018-2019 forecast down to €0.8 billion from the previous forecast of €1.1 billion-€1.2 billion.

In addition to improving performance, the firm cited its planned partial IPO of its elevator business in 2019-2020 and efforts to improve organizational efficiency as part of its realignment efforts.

“The most important portfolio measure is the planned partial IPO of Elevator Technology,” the company said. “This will allow thyssenkrupp to sustainably strengthen its capital base and make the value of its elevator business visible. By retaining a majority interest, the Group will also continue to profit from future value growth. With the expected proceeds, the Group will increase its financial leeway for necessary restructuring and securing the future of its businesses.”

Actual Metal Prices and Trends

Japanese steel plate fell 0.4% month over month to $790.22/mt as of Aug. 1. Korean steel plate fell 5.4% to $564.33/mt. Chinese steel fell 1.2% to $611.40/mt.

U.S. steel plate dropped 9.8% to $781/st.

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Chinese neodymium dropped 13.7% to $55,911.60/mt. Chinese silicon fell 0.3% to $1,495.82/mt. Chinese cobalt cathodes fell 0.3% to $96,574.60/mt.

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This morning in metals news, the latest round of U.S.-China trade talks wrapped up Wednesday, steel companies are not reducing emissions fast enough and analysts cut their copper forecast for fourth-quarter prices.

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U.S., China Conclude Talks in Shanghai

Trade negotiators from the U.S. and China wrapped up yet another round of trade talks this week in Shanghai.

In a statement, China’s Ministry of Commerce described the talks as a “constructive and deep exchange on major trade and economic issues of mutual interest,” Reuters reported.

According to the report, the Ministry of Commerce also said the two sides agreed to meet again in September.

Steel Industry and Carbon Regulations

As the global focus on climate change intensifies, steel companies are not reducing their emissions quickly enough, according to a new report by CDP cited by CNBC.

According to the report, steel companies are not doing enough to avoid a rise of 2 degrees Celsius, a fact that could have an impact on their bottom lines.

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In Europe, for example, the carbon price has tripled since last year, according to the report.

Copper Price Forecast

Analysts polled by Reuters were bearish on the copper price this year, recently forecasting an average fourth-quarter LME price of $6,291 per ton.

The fourth-quarter price forecast for copper marked a 5.4% decline from a previous forecast in May.

India’s solar energy production plan seems to be growing stronger, so much so it has even received global recognition.

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The International Renewable Energy Agency (IRENA) said in a recent report that India was producing the cheapest solar power in the world, the India Times reported.

In 2018, India recorded a 27% decrease in solar prices in 2018, plus a drop of as much as 80% in the setup costs between 2010 and 2018, which, according to IRENA, was the most of any country. Canada, on the other hand, had the highest production cost for this form of energy.

Late last month, a delegation from the European Union visited India and, along with the latter’s Ministry of New and Renewable Energy, launched standard operation procedures and monitoring tools for Indian solar parks.

India is banking on such solar parks to achieve its target of 100 GW from solar energy by 2022, according to the Press Trust of India. The E.U. and India have been collaborating to develop climate-friendly energy sources, which includes solar energy.

The standard operating procedures were developed under the E.U. program and have been prepared for development, implementation, construction, operation and maintenance of solar parks (including an operation and maintenance manual and a health and safety manual for solar parks), per the Press Trust of India.

In its onward march on the solar energy front, at least 20 global power and renewable energy companies have shown interest in a 7.5 GW solar power park planned in the Indian province of Jammu and Kashmir. Interested companies include: Siemens, ABB, Power Grid, Adani Transmission, BHEL, and L&T Construction, as well as project developers like Hero Future Energies, Mahindra Susten, and Tata Power Solar.

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India’s consistent investments in renewable energy over the last few years have been geared toward meeting its Paris climate agreement commitment to bring 175 GW of renewable energy online by 2022.