Articles in Category: Green

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This morning in metals news, China Molybdenum is facing a number of pressures at its copper and cobalt mine in the Democratic Republic of the Congo, Norsk Hydro announced new certifications for several of its aluminum plants and profits have fallen at Australian miner South32 Ltd. amid falling aluminum prices.

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Falling Prices Weigh on China Molybdenum

China Molybdenum, operator of the Tenke Fungurume mine in the Democratic Republic of the Congo, is facing falling prices of both copper and cobalt.

According to Bloomberg, the miner said falling prices and higher taxes and royalties have placed the operation in a “deficit zone.”

Hydro Aluminum Plants Receive ASI Certification

Five Norsk Hydro aluminum plants have been granted Aluminum Stewardship Initiative (ASI) certification.

“This ASI Chain of Custody certification marks a crucial milestone in Hydro’s commitment to certify that aluminum our customers buy from Hydro is manufactured according to industry-leading standards of responsibility and sustainability,” said Eivind Kallevik, Hydro’s executive vice president for primary metal.

According to the firm, it now has 16 ASI-certified plants in six countries.

South32 Profits Down

Australian miner South32 saw its share price fall as much as 5.8% Thursday, Reuters reported, and posted a 25% drop in annual profit.

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The miner has struggled with falling aluminum prices and the fallout from the U.S.-China trade war, according to the report.

Source: The Coca-Cola Company

This morning in metals news, beverage maker Coca-Cola has announced it will shift to aluminum cans for its Dasani water brand, the U.S. Department of Commerce announced it found evidence of dumping of refillable stainless steel kegs from Mexico and China still plans to send trade officials to Washington next month for talks.

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Coca-Cola Announces New Dasani Packaging

In an effort to reduce plastic use and increase the use of recyclable materials, Coca-Cola announced plans to shift its Dasani water brand’s packaging from plastic bottles to aluminum.

“Updates to DASANI’s packaging line-up are designed to reduce plastic waste and increase the use of recycled and renewable materials in the United States, while ensuring that all DASANI bottles continue to be fully recyclable,” the company said.

Under the beverage maker’s proposed “World Without Waste” program, it aims to produce make its bottles and cans with an average of 50% recycled material by 2030. The company will roll out the water brand in aluminum cans in the northeastern U.S. in the fall (and 2020 everywhere else), and aluminum bottles in mid-2020.

U.S. Rules on Stainless Steel Keg Dumping Case

The U.S. Department of Commerce announced it had found evidence of dumping with respect to imports of stainless steel kegs from Mexico.

According to the department, the kegs were sold at less than fair value in the U.S. at a rate of 18.48%.

Last year, imports of the kegs from Mexico were valued at $13.4 million, according to the Department of Commerce.

China to Continue with Planned September Meetings

Despite the recent U.S. announcement of tariffs on an additional $300 billion in Chinese goods, Chinese trade officials still plan to visit Washington in September as planned, Bloomberg reported.

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However, according to a source cited by Bloomberg, China is unlikely to make concessions next month.

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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.

The Renewables Monthly Metals Index (MMI) fell two points this month for a May MMI reading of 101.

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World Bank Launches Climate-Smart Mining Facility

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.

Rio Tinto was among the miners to express support for the initiative.

“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.

On Friday, Tata Steel released a statement indicating approval of the JV is unlikely.

“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.

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The neodymium price fell 9.7% to $50,086.40/mt. Chinese silicon fell slightly to $1,528.56/mt, while cobalt cathodes fell 0.4% to $98,688.70/mt.

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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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Faced with the prospect of perhaps not being able to meet the target of installing 175 GW of renewable energy by 2022, the Indian government has decided to adopt a new tack.

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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.

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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.

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Not surprisingly, the most alarmist headlines were run by the most biased of news channels: the BBC.

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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).

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In the meantime enterprising firms have the opportunity to develop new products and services to meet what is already becoming a relentless process of change.

Every cloud has a silver lining.

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The London Metal Exchange today announced it is launching a formal consultation on proposed rules for “the application of responsible sourcing principles to all LME-listed brands.”

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“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.”

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The consultation is scheduled to end June 30, 2019. More information about the LME’s ethical sourcing proposals can be found on its website.