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.
As the world moves toward sourcing a larger and larger share of its total energy needs from renewables, the environmental impact of mining for metals needed for renewable energy has come into focus.
In that vein, on May 1 the World Bank announced the launch of a Climate-Smart Mining Facility, dubbed as the “first-ever fund dedicated to making mining for minerals climate-smart and sustainable.”
“The Facility will support the sustainable extraction and processing of minerals and metals used in clean energy technologies, such as wind, solar power, and batteries for energy storage and electric vehicles,” the World Bank said in a release. “It focuses on helping resource-rich developing countries benefit from the increasing demand for minerals and metals, while ensuring the mining sector is managed in a way that minimizes the environmental and climate footprint.”
According to the release, the World Bank is targeting an investment of $50 million over five years toward the goals of sustainable mining.
The new Climate-Smart Mining Facility is inspired by a World Bank reported released in 2017, titled “The Growing Role of Minerals and Metals for a Low-Carbon Future,” which examines the role of mining in a future of low- or zero-carbon energy sources (the full 2017 report is available here). For example, demand for lithium, graphite and nickel is expected to skyrocket in the coming years (by 965%, 383% and 108%, respectively, by 2050).
Paradoxically, attempts to augment renewable energy usage also come with negative environmental impacts stemming from the mining of minerals needed for renewable energy installation.
“While the growing demand for minerals and metals offers an opportunity for mineral-rich developing countries, it also represents a challenge: without climate-smart mining practices, the negative impacts from mining activities will increase, affecting vulnerable communities and environment,” the World Bank said.
“The transition to clean energy solutions presents both a significant opportunity and responsibility for the mining industry, as it provides the materials that make these technologies possible,” Rio Tinto CEO Jean-Sebastien Jacques said.
“We want to be part of the solution on climate change and the best solutions will come from innovative partnerships across competitors, governments and institutions. Our collaboration with the World Bank and many others is aimed at making a real difference by promoting sustainable practices across our industry. We look forward to supporting the Climate-Smart Mining Facility by contributing not just funding but also expertise as a leader in sustainable mining practices.”
Glencore Reports Q1 Cobalt Production Rose 56%
Multinational miner Glencore recently released its Q1 production figures, reporting production of 10,900 tons, up 56% compared with Q1 2018.
However, elevated levels of uranium found in cobalt mined at its Katanga operation in the Democratic Republic of the Congo resulted in no cobalt sales from the mine in Q1.
“From April 2019, the export and sale of a limited quantity of cobalt, complying with appropriate regulations, was allowed to resume,” the company said in its production announcement. “Such resumption of exports remains subject to the relevant DRC export procedures, which include continued monitoring by the relevant authorities.”
Glencore’s full-year 2019 cobalt production guidance came in at 57 kt (+/- 4), up from 42.2 kt in 2018.
Grain-Oriented Electrical Steel
The GOES MMI, MetalMiner’s subindex tracking grain-oriented electrical steel, fell one point this month for a May MMI value of 175.
The GOES price fell 0.5% to $2,412/mt.
In other news, German firm Thyssenkrupp’s proposed joint venture with Tata Steel does not appear likely to receive European Commission approval (Thyssenkrupp is a GOES producer).
In September 2018, the two companies announced plans to merge their European operations, forming what would become Europe’s second-largest steelmaking entity.
In October 2018, the European Commission launched an investigation, citing concerns that the merger might lead to higher prices and fewer choices for consumers in the European market.
“Based on the Statement of Objections published by the Commission, a comprehensive package of remedies was offered covering all the areas of concern highlighted by the Commission,” the firm said. “The remedies offered were developed considering the overall industrial strategy for the proposed joint venture, the integrated and complex nature of the supply chain to service customers and the need to build a sustainable business which would be able to endure the structural challenges faced by the European steel industry. However, the feedback from the Commission based on the market test it has undertaken suggests that it is unlikely to clear the proposal in spite of the significant remedies offered.”
Actual Metal Prices and Trends
Japanese steel plate picked up marginally, hitting $771.83/mt as of May 1. Korean steel plate fell 0.5% month over month to $596.95/mt. Chinese steel plate rose 0.8% to $650.01/mt. After trading flat last month, U.S. steel plate fell 3.5% to $962/st.
The U.S. raised tariffs on a wide variety of imports from China, amounting to approximately $200 billion in goods; the tariff rate on those goods increased from 10% to 25% as of 12:01 a.m. ET Friday, May 10.
Media reports in India say the government is mulling a tender calling for the manufacturing of solar power equipment that doesn’t come with the usual clause requiring electricity generation. The aim is to invoke investor interest and meet the demands of this market.
There’s little doubt in anyone’s mind that to meet the 2022 target, things need to, well, be speeded up.
Of the 175 GW of renewable energy capacity, 100 GW will be from solar, the Business Standard reported. Of this, the government expects at least 40 GW to come from installation of rooftop solar projects.
While the interest in solar power as an alternate has been growing in India, interest from solar equipment makers has been poor, which is now coming in the way of Prime Minister Narendra Modi’s ambitious plans on this front.
According to a report by news agency Bloomberg, India has been “struggling” to push its budding domestic solar equipment manufacturing industry. By one government reckoning, as of now, it can meet about 15% of India’s annual needs; India has already imposed a safeguard duty on cheap Chinese import options.
The same Bloomberg report pointed out that a May 2018 tender was “downsized” and also delayed many times before being scrapped due to poor investor interest. It was replaced by a smaller version in January, for which the bidding deadline has been extended three times — more likely than not, the latest deadline of May 14 will be extended again.
But in a case of the opposite, at least one province in India has decided to halt all new solar projects.
A few weeks ago, the southern Indian state of Karnataka has halted the construction of new solar energy projects, Livemint reported. The Karnataka Electricity Regulatory Commission, a regulatory body, stated there would be no further bidding to procure solar energy from large-scale projects until further orders.
The Karnataka Electricity Regulatory Commission wrote to the state electricity body that because of Karnataka’s power-positive situation, it would have to restrict procurement from high-cost sources. The state’s distribution companies have already contracted to procure adequate power from solar energy sources, enabling them to meet their renewable purchase obligations (RPOs), not just for Fiscal Year 2020, but for another couple of years, as well.
Long advocates of left-wing sympathies, the Beeb — as the BBC is affectionately known in the UK — has for many years also been leading the charge on environmental issues. Not that we have any problem with having an environmental conscience — anyone watching the rapid the bleaching of the world’s barrier reefs can’t help but feel a part of themselves die in the process — but we would much rather see the BBC reporting on sound scientific data than listen to them pushing one political angle, like some mogul-backed, partisan media outlet.
So when a BBC article shouts “UK Parliament declares climate change emergency” you expect it is possibly hyperbole. What does the statement even mean, you may ask. Are we about to be inundated by a monsoon, fry in a heatwave, be washed away in a tsunami or blown away in a typhoon?
Apparently desperate to address something other than Brexit, the British government appears likely to commit the U.K. to an even tougher carbon emissions target than it already has — indeed, tougher than any other major economy in the world.
According to the Financial Times, the proposals build on the 2008 Climate Change Act, which targeted reducing emissions by 80% from 1990 levels by 2050. The U.K. is on track to achieve this, having made steady progress in the interim with emission levels falling more than 40% over the last 29 years.
But the last 20% will be the hardest if the U.K. seeks to achieve zero emissions. The rest of Europe has signed up to similar targets, but exempted certain key industries (such as agriculture, aviation and shipping).
True zero emissions represent a significant challenge, whatever politicians may say.
It will require a sweeping overhaul of energy use from homes to transport to even what we eat. It involves a pledge to phase out diesel and electric cars by 2040, quadruple energy supplies from low-carbon sources such as renewables and supplement a hydrogen economy where natural gas is currently used (80% of British homes are reliant on natural gas for heating and/or cooking).
Heavy carbon-emitting industries will have to adopt carbon capture technology, which has to date proved less than satisfactory and expensive to operate. Nevertheless, the government has already invested some limited funds in pilot projects and has undertaken to do more.
The tough ones will be aviation (an alternative to fossil-fueled jet engines is a long way off), shipping (which is moving to 0.5% low sulfur fuel but still remains a massive source of carbon emissions) and agriculture, which is probably the worst offender.
There is no known trick of science that stops a cow breaking wind and little that can be done about the acres of corn that need to be cultivated to feed that cow. The Committee on Climate Change acknowledges one of the biggest and hardest changes will be to humans’ diets. More plant-based and less animal- and fish-based protein would have a profound impact on carbon emissions but will take a fundamental shift in the wider population’s habits.
Still, some trends are in favor of the needed changes.
Electric cars are predicted to be cheaper to buy and run than petrol- or diesel-fueled vehicles by 2030 (if not before). Wind power is already said to be cheaper than natural gas, the Financial Times says, providing storage costs to achieve continuity are subsidized, but even that may cease to be necessary as battery technology improves and wind turbine costs continue to fall.
The committee’s report suggests the changes needed, spread over the next 20-30 years, need not be onerous or disruptive to growth; indeed, they may present significant opportunities for new technologies and for the industries that exploit these opportunities.
Whether the world has 30 years, none of us knows. The U.N. says we could have just 12 years to effect change before we reach a point of no return; they may, like the BBC, be trying to promote a project fear agenda to effect change (we really don’t know).
“Our comprehensive market engagement exercise has revealed strong support for the LME taking action on this important topic,” LME CEO Matthew Chamberlain said. “The LME’s role is now to appropriately balance the differing views of market stakeholders when implementing our requirements – and we are pleased to have been able to do so in today’s proposals. For example, based on the constructive feedback of civil society organisations, we have enhanced our transparency requirements, and at the same time, we have respected the views of producers who have called for more achievable timelines and a clearly-defined reporting process.”
The proposed rules call for every LME-listed brand to undertake a Red Flag Assessment — which is based on guidance from the Organization for Economic Co-operation and Development (OECD) — by the end of 2020. Brands flagged for potential sourcing issues would then be classified as a “higher-focus brand” and will be audited by the end of 2022.
More attention has been given to ethical sourcing in recent years. For example, much attention has been given to the sometimes murky cobalt supply chain and labor conditions in the Democratic Republic of the Congo (where a majority of the world’s cobalt is mined).
“Global consumers rightly demand action on responsible sourcing – and our industry must listen,” Chamberlain said. “The LME is taking action because it is the right thing to do, but also because the value of our market is based on providing metal which is acceptable to those consumers, and because the metals sector looks to us to provide leadership on these important topics. Our role will necessarily be to forge a consensus between the potentially divergent views of various stakeholders – and this role is never popular. Nevertheless, we are committed to playing our part in this movement.”
In October, the LME released a position paper related to responsible metals sourcing. That paper outlined a timeline for compliance, including specific standards for cobalt and tin.
“For cobalt and tin, chosen standards must be identified by the fourth quarter of 2019 and full compliance with standards will be required by the end of 2020,” the LME announced in October. “For all other higher-focus brands, standards must be identified by the fourth quarter of 2020 with compliance by the end of 2021. Non-compliant brands will be eligible for delisting once the relevant deadlines have been passed.”
This morning in metals news, an analysis by the U.S. International Trade Commission digs into the details of the pending United States-Mexico-Canada Agreement (USMCA), the Congressional Research Service released a report covering economic growth levels around the world and the chairman of Chile’s Antofagasta says the green revolution will be good for copper.
The United States-Mexico-Canada Agreement (USMCA), the proposed trade deal intended to supersede the 25-year-old North American Free Trade Agreement (NAFTA), has not officially gone into effect just yet.
However, government organizations are conducting analyses to see what kind of impact the proposed agreement might have on commerce among the three countries.
The U.S. International Trade Commission released an analysis of the deal this week, concluding it would have broadly positive impacts.
“The Commission’s model estimates that USMCA would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent),” the ITC report, titled “U.S.-Mexico-Canada Trade Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors,” states.
“The model estimates that USMCA would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. U.S. exports to Canada and Mexico would increase by $19.1 billion (5.9 percent) and $14.2 billion (6.7 percent), respectively. U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 percent) and $12.4 billion (3.8 percent), respectively. The model estimates that the agreement would likely have a positive impact on all broad industry sectors within the U.S. economy. Manufacturing would experience the largest percentage gains in output, exports, wages, and employment, while in absolute terms, services would experience the largest gains in output and employment.”
The ITC analysis also highlights likely impacts on the automotive sector.
“USMCA would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements and adding other requirements,” the report states. “USMCA’s requirements are estimated to increase U.S. production of automotive parts and employment in the sector, but also to lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States.”
The USMCA was signed by President Donald Trump, then-Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau during the G20 Summit in Buenos Aires late last year.
The deal must be ratified by each country’s legislature, however, before it can go into effect.
The Office of the United States Trade Representative released its own analysis Thursday, touting the agreement’s potential impacts on the automotive sector.
“One of President Trump’s major priorities in renegotiating and replacing NAFTA was to discourage the outsourcing of American automotive jobs and instead to encourage more investment and manufacturing jobs here in the United States,” United States Trade Representative Robert Lighthizer said in a prepared statement. “Information from all the major auto companies confirms that the new USMCA’s rules of origin will achieve this goal. These much-needed improvements are key to supporting more good-paying manufacturing jobs for American workers.”
The Congressional Research Service released a summary of global growth levels in the years ahead, noting the U.S. — which outpaced other developed economies with a 2.9% growth rate in 2018 — is projected to slow down in 2019 and 2020.
“Some economic indicators suggest the U.S. economy remains comparatively strong, but a deterioration in the economies of major trading partners could negatively affect the U.S. economy and alter these forecasts,” the CRS report states. “Broad financial and economic linkages tie the U.S. and global economies, which means the United States affects and is affected by events in the global economy. These effects are reflected in capital flows, the international exchange value of the dollar, interest rates, and U.S. trade balances.”
The Renewables Monthly Metals Index (MMI) held flat this month, sticking at an MMI reading of 103.
Cobalt in … Missouri?
The St. Louis Post Dispatch reported an EPA agreement could open the door to cobalt mining at the site of an old lead mine.
On April 3, the EPA announced it had reached an agreement with Missouri Mining Investments, LLC, to “perform a removal action at Operable Unit 2 of the Madison County Mines Superfund Site in Madison County, Missouri. Operable Unit 2 consists of the Anschutz Subsite, also known as the Madison Mine.”
“Missouri Mining Investments plans to begin cobalt mining at the mine upon completion of the cleanup,” the EPA said in a prepared statement. “Under EPA oversight, Missouri Mining Investments will conduct supplemental characterization work, prior to developing a more detailed plan to consolidate and cover mine waste and contaminated soil at the site, and remove contaminated sediments from the Metallurgical Pond and other surface water ponds and streams within the property boundary.”
As Fuller notes, 2019 could be a banner year for LME cobalt futures volume.
“The London Metal Exchange (LME) cobalt contract launched in February 2010 and the exchange recently launched a new cobalt contract tied to Fastmarkets’ standard-grade cobalt price (the go-to benchmark on cobalt pricing for industrial buyers),” she noted.
She added that after fluctuations in the early years of the LME cobalt contract, volumes spiked beginning around November 2016.
Nucor Announces $1.3B Investment for Kentucky Steel Plate Mill
In other news, steelmaker Nucor Corporation announced late last month it would make a $1.35 billion investment toward building a new steel plate mill in Brandenburg, Kentucky.
The mill is expected to have an annual capacity of 1.2 million tons, according to a company release, and is expected to be fully operational in 2022.
The GOES MMI, the index for grain-oriented electrical steel (GOES), gained eight points for an April reading of 176.
The GOES coil price rose 4.4% to $2,423/mt.
Actual Metal Prices and Trends
The price of Japanese steel plate fell marginally on a month-over-month basis to $771.64/mt as of April 1. Korean steel plate rose 2.2% to $599.87/mt. Chinese steel plate rose 0.4% to $645.03/mt.
U.S. steel plate held flat at $997/st.
The U.S. grain-oriented electrical steel (GOES) rose 3.1% to $2,432/mt.
The Chinese neodymium price fell 4.8% to $55,490.40/mt, while silicon fell 0.3% to $1,534.37/mt. Chinese cobalt cathodes dropped 0.3% to $99,063.40/mt.
A report released jointly by Global Energy Monitor, Greenpeace India and the Sierra Club said the Indian government continued to support thermal power plants when they were being cut down elsewhere in the world.
Little love is lost between the present dispensation in India and Greenpeace.
Since the 2014 election of current Prime Minister Narendra Modi Government was elected din 2014, it has come down against Greenpeace’s climate campaign that concentrated on coal mining and thermal power generation. In fact, the internationally-known NGO was also labeled “anti-national” for opposing coal mining in Central India forests. In addition, its accounts were frozen twice and its license to operate was revoked.
The report, titled “Boom and Bust 2019: Tracking the Global Coal Plant Pipeline” said there was a 20% drop in newly completed coal plants, a 39% fall in new construction and a 24% cut in plants in pre-construction activity, year on year.
Yet, despite such “unfavorable market conditions for coal power,” the Indian government persisted with investments in new coal-fired plants, The Business Standard report quoted Pujarini Sen of Greenpeace India as saying.
The metal’s price hit an eight-month high this month, helped over the line by the Federal Reserve dropping plans for further interest rate hikes this year.
But much of the rise seems to be on the back of positive investor sentiment over falling LME inventory and the expectation the rise of electric car demand will strain copper supply.
Firstly, those inventories.
Apart from a large delivery earlier this month, copper has been on a steady decline, as the below graph from Kitco illustrates.
Inventory on the CME and SHFE has similarly run down, not surprisingly as the market has been in deficit to the tune of 265,000 tons per annum in 2017 and 387,000 tons last year according to the International Copper Study Group as cited by Reuters.
The World Bureau of Metal Statistics disagrees, however, saying the copper market recorded a surplus of 496,000 tons in January-December 2018, which followed a surplus of 138,000 tons for the whole of 2017.
It just goes to show, statistics are not always the precise game statisticians would have us believe.
Copper’s strength is somewhat harder to fathom when set against the backdrop of generally poor forward indicators.
PMI numbers in the world’s largest consumer, China, fell below 50 into contraction territory in December and stayed there in January, according to Reuters, with those of Germany not looking much better. Both picked up a little in February, but were hardly bullish.
Citibank, though, remains in the bull camp, according to Reuters, espousing the tight market and rising demand for electric vehicles and the infrastructure to support them (notably in China).
The argument goes the introduction of far stricter carbon dioxide emissions limits that will kick in next year in Europe — coming on the heels of consumers turning away from diesel after Volkswagen’s pollution-cheating Dieselgate scandal, which has hit demand for diesel-powered vehicles — means manufacturers have no alternative other than to move into electric cars en masse.
The emission standards alone require manufacturers to reduce emissions the average from 130 grams of carbon dioxide per kilometer to 95 grams of carbon dioxide per kilometer from 2020.
According to Ferdinand Dudenhoffer, head of the Center Automotive Research in Germany, until recently carmakers turned primarily to diesel to bring down their emissions averages, but “there is no going back to diesel, so they have no other choice but to speed into the electrical era.”
Investor sentiment does not have to be accurate to move markets — you just need enough people believing the market is heading in a certain direction to make it move.
Whether copper investors are right about the demand from electric vehicles remains to be seen, as there have been false dawns before.