Articles in Category: Environment

The Renewables Monthly Metals Index (MMI) ticked up slightly for this month’s value.

October 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

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Renewables make progress, but coal, oil saw 2021 comeback, IEA says

The International Energy Agency (IEA) recently released its 386-page World Energy Outlook 2021 report, in which it notes positive trends in renewable energy but setbacks in the form of recovering coal and oil use in 2021.

“The rapid but uneven economic recovery from last year’s Covid-induced recession is putting major strains on parts of today’s energy system, sparking sharp price rises in natural gas, coal and electricity markets,” the IEA reported. “For all the advances being made by renewables and electric mobility, 2021 is seeing a large rebound in coal and oil use. Largely for this reason, it is also seeing the second-largest annual increase in CO2 emissions in history.”

The IEA emphasized significant further investment is needed to reach the 1.5 degree stabilization goal laid out in the Net Zero Emissions by 2050 Scenario released in May 2021. The IEA said that transition requires “a surge in annual investment in clean energy projects and infrastructure to nearly USD 4 trillion” by 2030.

In many renewables applications, cost is a major obstacle, particularly for critical minerals or metals.

“Higher or more volatile prices for critical minerals such as lithium, cobalt, nickel, copper and rare earth elements could slow global progress towards a clean energy future or make it more costly,” the IEA added. “Price rallies for key minerals in 2021 could increase the costs of solar modules, wind turbines, electric vehicle (EV) batteries and power lines by 5-15%. If maintained over the period to 2030 in the NZE, this would add USD 700 billion to the investment required for these technologies.”

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This morning in metals news: the Energy Information Administration forecasts natural gas prices will remain elevated this winter; meanwhile, Rio Tinto said it is working on new technology for the production of low-carbon steel; and, lastly, miner BHP and South Korean steelmaker POSCO signed a memorandum of understanding to explore the reduction of greenhouse gas emissions in the steelmaking process.

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Natural gas prices to remain elevated this winter

natural gas tap

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To the chagrin of industrial users and residential consumers alike, natural gas prices are likely to remain high this winter, the Energy Information Administration says.

“In our October Short-Term Energy Outlook (STEO), we forecast that natural gas spot prices at the U.S. benchmark Henry Hub will average $5.67 per million British thermal units (MMBtu) between October and March, the highest winter price since 2007–2008,” the EIA said. “The increase in Henry Hub prices in recent months and in our forecast reflect below-average storage levels heading into the winter heating season and strong demand for U.S. liquefied natural gas (LNG), even though we’ve seen relatively slow growth in U.S. natural gas production.”

However, the EIA forecasts Henry Hub prices will decline after Q1 2022.

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Before we head into the 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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Week of Oct. 4-8

coal pile

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The MetalMiner 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 2022.

Investing $2 trillion over the next decade in sustainable infrastructure can greatly reduce Southeast Asia’s greenhouse gas emissions, according to a new report from Bain & Company, Microsoft and Singapore’s Temasek Holdings.

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Southeast Asia infrastructure needs

Southeast Asia map

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The report, titled “Southeast Asia’s Green Economy: Opportunities on the Road to Net Zero,” emphasized investments in areas such as renewable energy, electric vehicles, and waste management.

According to the report, green investments totaled only U.S. $9 billion last year. The report’s authors said Southeast Asia’s corporate, public, and philanthropic sectors must work together to attain the $2 trillion investment figure, the report noted.

Southeast Asia is highly vulnerable to climate change, as it suffers from disproportionately large numbers of climate disasters.

Road to net-zero

Though fighting COVID-19 currently remains a high priority for most governments, a lot of attention in Southeast Asia last year went to climate actions and thinking about what entails a green economy, according to Dale Hardcastle, co-director of Bain’s global sustainability innovation center.

The report found that about 90% of Southeast Asia’s carbon emissions can be addressed by transitioning away from fossil fuels to cleaner energy sources like wind and solar, valuing nature and making the region’s agricultural production of food more efficient.

“While we are seeing many encouraging changes in Southeast Asia’s Green Economy and the overall trend is positive, there is still much more to be done,” said Dale Hardcastle, a partner in Bain & Company’s Singapore office and co-director of the firm’s Global Sustainability Innovation Center (GSIC). “Southeast Asia presents specific conditions which provide both challenges and opportunities for a full-scale sustainability transformation. The region needs to act now and take three steps to translate these opportunities into tangible results: define its road to Net Zero, catalyze the journey and outcomes together, and unlock capital flows.”

Achieving net-zero as a region demands individual action by businesses, investors, governments, and communities, as well as collective action at an ecosystem level.

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China has previously been cast in a sinister role with respect to restricting the production and export of critical rare earth metals, usually salts, used to produce a host of products. Those products include magnets for consumers electronics and electric cars, defense equipment and advanced ceramics.

But while the country deliberately created a near monopoly position in the global rare earths refining market, it created a horrendous environmental problem in the process.

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Rare earths consolidation and rising prices

rare earths loaded on cargo ship in China

tab62/Adobe Stock

In an effort to clean up its environmental act and to gain better control over what had become a wild west mining and refining landscape, Beijing engineered consolidation in the industry to fewer but larger entities.

However, that’s when the criticism started, as China capped exports, causing a spike in prices.

That was largely short-lived. Prices returned to earth after a spike in 2017. However, prices have been rising strongly again this year due to surging demand, both within China and without.

Prices are up between 20-50% this year alone. Surging demand has fueled a bidding war for supplies in a constrained market. With China holding some 85% of global refining capacity and the only mine to refined products supply chain, it not only has a unique position but a unique responsibility in the market.

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

Cut-to-length adders. Width and gauge adders. Coatings. Feel confident in knowing what you should be paying for metal with MetalMiner should-cost models.

Week of Sept. 20-24 (China’s property market and steel prices, global copper mine production and much more)

Chinese steel factory

fanjianhua/Adobe Stock

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The Renewables Monthly Metals Index (MMI) held flat for this month’s reading.

September 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

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LG Energy Solution signs cobalt, nickel access deal

Last month, LG Energy Solution announced it had signed an agreement that will give it access to nickel and cobalt supply from Australian Mines Ltd.

“LG Energy Solution has secured 100% rights to battery-grade nickel and cobalt materials from Australian Mines Limited amid growing concerns about future supplies of raw materials,” LG said.

“LG Energy Solution announced Monday it has entered into a binding long form offtake agreement with Australian Mines Ltd. for nickel and cobalt, which will be supplied in the form of mixed hydroxide precipitate (MPH) from the Sconi Project in North Queensland.”

The battery maker will have access to 71,000 tonnes of nickel for six years starting from the end of 2024. For cobalt, the total is 7,000 tonnes.

LG said the supply of nickel and cobalt will allow it to manufacture batteries for 1.3 million “high-performance electric vehicles.”

The battery materials will come from Australian Mines’ Sconi Project, which is currently under development.

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This morning in metals news: U.S. import prices declined by 0.4% in August; the Energy Information Administration surveyed the disruption to electricity customers as a result of Hurricane Ida; and, lastly, the European Steel Association commented on the European Union’s proposed Green Deal.

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US import prices fall

imports

nattanan726/Adobe Stock

Running against the recent trend, U.S. import prices fell by 0.4%, the Bureau of Labor Statistics reported.

Import prices had jumped by 0.4% in July and 1.1% in June.

“The August downturn was led by lower fuel and nonfuel prices,” the BLS reported. “In contrast, prices for U.S. exports advanced 0.4 percent in August, after increasing 1.1 percent in July.”

Hurricane Ida impact on electricity customers

After Hurricane Ida made landfall in New Orleans in late August, many were left without power.

According to the Energy Information Administration, the storm caused at least 1.2 million electricity customers to lose power. The outages spread out over eight states.

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While much of the world still depends on fossil fuels, demand for battery metals is surging.

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Battery metal demand on the rise

battery energy storage

Cybrain/Adobe Stock

South African platinum and palladium producer Sibanye-Stillwater said increasing demand for battery metals is already impacting supply.

“While not yet having material impact on internal combustion engine vehicle sales, increasing demand for battery metals to meet requirements for electric vehicle production is already starting to have substantial implications for battery metal supply,” the South African firm said.

In short, the world will need to expand supply in order to meet that rising demand.

Demand for a variety of critical metals needed for the transition to renewables will be significant. Demand for everything from copper to cobalt is set to skyrocket, the IEA explained its in report titled “The Role of Critical Minerals in Clean Energy Transitions.”

Today’s supply and investment plans for many critical minerals “fall well short” of what will be needed, the IEA said.

With demand set to increase many times over in the years ahead, there will need to be additional investment.

“The resultant increased demand for battery metals to support a prolonged expansion of the global battery electric vehicle (BEV) fleet over the next two to three decades, is going to require commensurate increase in the supply of battery metals,” Sibanye-Stillwater added. “Primary expansion of the scale needed to meet BEV growth projected by some market commentators, will be challenging.”

Steps toward the future

South Africa accounts for 70% of global production of platinum, used in catalytic converters to curb harmful emissions from automotive exhaust.

The South African firm touted its various efforts in the battery metals space. The firm acquired an initial stake in the Keliber lithium project in Finland. Furthermore, it made a proposal for the acquisition of the Sandouville nickel refinery in France.

Platinum, palladium output

Sibanye-Stillwater reported platinum and palladium production from its U.S. operations of 298,301 ounces for the six-month period ending June 30, 2021.

The total marked an increase from 297,740 ounces in H1 2020. However, output declined from the 305,327 ounces in H2 2020.

Meanwhile, 4E PGM (i.e., platinum, palladium, rhodium and gold) output in South Africa totaled 894,165 ounces in H1 2021. In H1 2020, 4E PGM output from the firm’s South Africa operations totaled 630,912 ounces.

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This morning in metals news: Sweden’s SSAB has hailed the delivery this week of its first shipment of fossil-free steel; copper prices have been sliding; and, lastly, electricity demand soared last week.

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SSAB ships ‘fossil-free’ steel

SSAB logo

Postmodern Studio/Adobe Stock

Swedish steelmaker SSAB has delivered its first shipment of fossil-free steel this week.

“SSAB has now produced the world’s first fossil-free steel and delivered it to a customer,” the firm said Wednesday. “The trial delivery is an important step on the way to a completely fossil-free value chain for iron- and steelmaking and a milestone in the HYBRIT partnership between SSAB, LKAB and Vattenfall.”

As nations around the world institute carbon emissions targets, steelmaking is among the heavily polluting industries that must reduce its carbon footprint.

As such, this week’s delivery of what it calls the world’s first fossil-free steel marks a significant milestone, SSAB said.

“The first fossil-free steel in the world is not only a breakthrough for SSAB, it represents proof that it’s possible to make the transition and significantly reduce the global carbon footprint of the steel industry. We hope that this will inspire others to also want to speed up the green transition,” SSAB President and CEO Martin Lindqvist said.

Copper price slides

Despite a number of supply-side scares — as MetalMiner’s Stuart Burns explained yesterday — the copper price has been sliding.

The LME three-month copper price closed Wednesday at $9,168 per metric ton and is down 1.41% from the previous month.

The price has cooled significantly since reaching an all-time high on May 10 of over $10,700 per metric ton.

Electricity surge

Amid high temperatures around the country, electricity demand surged last week.

Electricity demand reached a high of 720 gigawatthours on Aug. 12 for the hour ending 5 p.m. EDT. That day, most of the U.S. recorded a daily high temperature above 90°F, the Energy Information Administration reported.

“Our Hourly Electric Grid Monitor shows that hourly electricity demand in the Lower 48 states reached 720 gigawatthours (GWh) for the hour ending 5:00 p.m. eastern daylight time (EDT) on that day, which is the highest reported value for a single hour since balancing authorities (BAs) began reporting hourly electricity demand to us in July 2015,” the EIA reported. “The previous hourly high was 718 GWh reported for the hour ending 6:00 p.m. EDT on July 20, 2017.”

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