$1.5 billion US is a lot of money by any measure. However, the reality is that Glencore is making so much in this climate of metal scarcity and elevated prices, they likely won’t have a hard time accommodating the fine. So when metal market news broke of their massive, three nation fine, there was not much reaction. But as we’ll see, the money may not be the real concern.

Glencore is now an FTSE 100 company, which means it is under much more public scrutiny than when it was a freewheeling, privately-owned trader. Of course, that time period is also when much of the culture that led to their current disgrace evolved. Even so, the share price took a small hit from the news, but it is still up substantially on the month. What may be more difficult for Glencore to stomach is the damage the joint US, Brazilian, and UK reprimand will have on their reputation.

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saiko3p/Adobe Stock

A Host of Accusations

According to a report in the Financial Times, the current chair of Glencore, Kalidas Madhavpeddi is not taking the news lying down. “Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred,” he said.

So what exactly were these “unacceptable practices?”

The investigations started back in 2018 and ’19. Since then, the firm has plead guilty to multiple counts of bribery and market manipulation. This included breaking money-laundering laws and the US Foreign Corrupt Practices Act in Nigeria, the Democratic Republic of Congo, and Venezuela. They have since agreed to pay penalties of $700 million for the bribery. To resolve market manipulation investigations, the firm will pay $485 million.

Meanwhile, in the UK, a Serious Fraud Office prosecution charged the company with paying bribes of €10.5 million to influence officials at Société Nationale des Hydrocarbures and the Société Nationale de Raffinage. The goal, according to the UK, was to advantage Glencore’s operations in Cameroon. The company also stands accused of bribing agents to “assist them in obtaining crude oil cargoes or gain an undue favorable price for those cargos”.

Fines have still to be set for the latter cases but are included within the estimated total of $1.5 billion.

Not Exactly “Victimless Crimes”

Many of us have read accounts of how trading companies and their “buccaneering ways” back in the day. In fact, like Robin Hood, some of us may have a degree of admiration for their sheer audacity. However, it’s important to remember that these were not victimless crimes. In many cases, payments were made to corrupt regimes and individuals. This influx of cases only served to tighten the hold despotic governments had over their countries.

In February, the Guardian reported that Glencore had set aside $1.5bn to cover potential fines and costs related to bribery and corruption investigations in the UK, US, and Brazil. Although the settlement is significant, it is still smaller than the $4 billion the company announced it will return to shareholders after record profits.

Whatever happens in the interim, this will not be the end of Glencore’s bad press. Both Dutch and Swiss authorities are reportedly investigating alleged wrongdoing. Some of this is thought to be related to operations in the Democratic Republic of Congo, where Glencore is a major player in cobalt and copper mining.

Nothing New in Metal Market News

In the interest of fairness, Glencore is not an outlier in such shenanigans. While this post has no direct evidence to offer, it’s probable that all the major trading houses engage in such practices from time to time. In many cases, this was the only way to compete with each other for resources and cargoes.

Robin hood allegedly stole from the rich to give to the poor. However, in the case of the trading companies, they kept it for themselves. Not surprisingly, there are now calls for retired senior executives from the time these bribes were paid to be held to account. That said, we recommend you don’t hold your breath.

If you’re the type who likes to follow such unprincipled goings-on, we recommend you read The World for Sale by Javier Blas. If you lived through those years when Glencore was stirring the global financial pot, you’ll enjoy it that much more.

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The Rare Earths Monthly Metals Index (MMI) held flat for a .56 percent change this month. Even so, some rare earths prices have seen significant fluctuation.

Praseodymium Neodymium Oxide is one such example. The allow saw a significant price increase over the past month.

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Supply Issues Continue to Savage Scrap Markets

Supply chain constraints have also wreaked havoc on metal scrap markets. From nickel to steel to rare earths, many points in the scrap supply chain had to reduce or even stop production. According to a recent piece in Shanghai Metals Markets, this was particularly true of small and mid-sized scrap recyclers.

However, rare earths – along with many other metals – have seen weak demand in Chain due to strict COVID-19 lockdowns. Some speculate that prices for RE’s will increase this month as some restrictions are lifted. However, SMM reports that downstream demand remains muted.

Utah’s Rio Tinto Kennecott Mine Officially Beings Mining Tellurium

Kennecott Utah Copper, a division of the Rio Tinto Group, has officially begun the process of recovering one of the world’s rarest elements: tellurium. According to a report from KSL.com, the facility should be able to produce around 20 tons of tellurium a year. This new capacity is all thanks to a $2.9 million circuit build.

This advancement makes the company one of only two US producers of tellurium, which is critical to the production of advanced thin-film photovoltaic solar panels. The element has a rarity comparable to platinum and has no commercially significant source on its own. The most common extraction method is to harness by-products from copper and lead production.

Whether it’s rare earth metals, carbon steel prices, aluminum prices or stainless prices, the MetalMiner weekly newsletter will give you actionable insights to better buy with confidence!

More on Rare Earths Prices

• Prices dropped sharply for Praseodymium Oxide, down 12.84% to 132,416/mt from $151,927/mt.
• Praseodymium Neodymium Oxide also slipped falling 13.68% to $129,783/mt from $150,353/mt.
• Dysprosium oxide also dropped by 8.47% from $427/kg to $391/kg.

Source: MetalMiner Insights 

Japan is reportedly actively considering extending financial support to the US to boost liquefied natural gas (LNG) production. Incidentally, the US is already the world’s 3^rd largest exporter of LNG behind Qatar and Australia. However, the country is set to play an even bigger role in global LNG production and export as the Russian market withers in the wake of the Ukraine crisis.

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Japan and China Turning to the US

According to a report in Nikkei, Japan has been actively trying to reduce energy dependence on Russia following Moscow’s invasion of Ukraine. Of course, doing so would necessitate finding new supplies of oil, LNG, and multiple other commodities. The report added that Tokyo is turning to Washington to figure out ways to fill those gaps.

They are hardly the first Asian country to do so either. After all, China, Japan, and South Korea are the top buyers of LNG in the world. Since the start of the invasion on February 24^th, Chinese buyers have signed several contracts with US suppliers. All in all, this will account for some 7.7 million tons per year in US LNG supply.

China has already surpassed Japan as the world’s top LNG importing nation. However, due to the former country’s ongoing battle against COVID-19, China is currently looking to offload much of its LNG stock. Reports indicate that once the country tackles this latest round of the pandemic, it will return to its standard order quota.

Global LNG Supplies Shifting in the West as Well

Multiple European nations have also joined the effort to ditch Russian LNG in favor of a US-based supply. However, experts believe the US LNG export order book is already full. To meet new long-term demand, the nation will need to start investing in more plants and infrastructure immediately

This is where nations like Japan want to step in and help the US. By getting their new supplier up to speed, they hope to secure a constant flow of much needed energy. In 2021, the US exported around 75 million tons of LNG. And with the additional demand, the country may end up moving up the ranks from the third-largest exporter to #1. The extra production units in Louisiana coming online will certainly help this.

But all is not lost for Russia, it seems.

Reports are coming in that India is purchasing large volumes of Russian LNG at heavily discounted prices. Indeed, according to The Times of India, Gujarat State Petroleum Corp. and GAIL India Ltd. recently bought several LNG spot shipments from Russia at prices well below prevailing market rates. This group is likely to continue to buy even more as long as Russian supplies remain cheap, further adding to market inconsistencies.

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The Renewables Monthly Metals Index (MMI) fell 6.4% with notable drops in steel prices, particularly for plate.

Source: MetalMiner Insights

Biden’s Plan for a More Renewable US

Breaking news in the US Green Energy push. The Biden Administration has released an “action plan” intended to accelerate permitting on new green projects. The goal is to loosen the administrative red tape that keeps infrastructure investments from hitting their time and budget goals. The move is part of the $1.2 trillion Bipartisan Infrastructure Law. So far, this has proved to be one of the administration’s only “wins.”

Back in mid-April, MetalMiner reported that Biden had implemented the Defense Production Act again. This time, it was to boost US production of materials related to large capacity batteries, semiconductors, and critical minerals. The Cold War-era act has so far been used three times by the Biden administration to increase the production of protective equipment, vaccines, and fire hoses.

From Utah: The Desert “Goes Green”

The Advanced Clean Energy Storage Project plans to be the world’s largest industrial green hydrogen facility. The site will be located near Delta, a small town near Central Utah’s Sevier River. This particular part of the state is already home to a hybrid plant combining geothermal and hydropower energy. It is also rich with solar fields, wind farms, and even hog manure natural gas plants.

The Advanced Clean Energy Storage Project will produce and store green hydrogen, which has significantly lower carbon emissions than traditional hydrogen. It is produced by using green energy to power water electrolysis, making it far superior to fossil fuels. In mid-April, the organization received a $500 Million conditional commitment from the US Department of Energy.

The UK is Seeking a New Source of Solar Power: Outer Space

Over in the UK, the green energy conversation is taking a turn towards science fiction. More than 50 British tech organizations, including Airbus, SSTL, and Cambridge University, are currently working with the UK Space Energy Initiative to develop a space-based solar power plant.

The group believes that beaming electricity from space will help the UK meet its greenhouse gas emission targets by the middle of the century. Spokespersons for the project state that all of the technology necessary for such a power plant already exists. The problem, they say, is how to combine them into a project of this size and scope.

While Space.come has already produced a compelling video of what this process might look like, experts say we’re still years away from a workable solution.

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Grain Oriented Electrical Steel Prices Jump 14%.

The GOES MMI, the index for grain-oriented electrical steel, rose 14.1% from April to May.

Meanwhile, the largest grid operator in Texas asked residents to conserve energy during the current heat wave. The directive asked for homes to be set at 78 degrees or higher from 3-8pm over the weekend as well as to lay off the use of heavy appliances. Six power plants tripped offline at one time, costing the grid the energy to power 600,000 homes.

More on Steel Prices: Aperam Takes a Beating from Zacks IR

Back in early May, Zacks Investment Research cut shares of Aperam from “hold” to “sell.” This triggered a brief sell-off that was quickly recovered the next day as investors looked to grab up discounted shares. In the week since, however, the company has seen a steady decline, closing out this Friday at $35.85 a share. This is just shy of the 52-week low of $34.61 and well below the year high of $65.

Aperam S.A. manufactures and markets Stainless steel throughout South America and Europe. It produces both GOES and non-grain-oriented electrical steel and nickel alloys. Other major research firms have maintained the company’s “hold” rating, but price targets are already starting to slip.

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The Automotive MMI (Monthly Metals Index) held flat from April to May. This was largely the result of a number of factors working in concert. Below, we’ll dig deeper into the automotive marketplace to see if we can determine what to expect for the rest of 2022.

Automotive MMI: China Auto Sales, Production Plunge In April

Source: China Association of Automobile Manufacturers

The data resulting from China’s COVID-zero policies continues to look grim. According to the China Association of Automobile Manufacturers, auto sales and production plunged in April. Specifically, the latter index dropped 46.2% month over month, while overall auto sales fell 47.1%

Shockingly, Tesla saw sales throughout mainland China plummet 98% from March. Meanwhile, production for the automaker also took a substantial hit, with Chinese output falling 81% from 55,462 automobiles to 10,757. As lockdowns and other strict policies remain ongoing, experts predict that much of the impact witnessed in April will bleed into May.

There is some good news on the horizon, however. For instance, COVID-19 case counts in Shanghai continue to fall. According to data released on May 11, daily infections managed to drop beneath 1,500 cases, an 18-day low. Meanwhile, around 612,500 people have tested positive for the virus since March 1.

The stark drop in daily infections signals the possibility of an end to lockdowns within the city. However, officials over in Beijing continue to ramp up pressure on the populace. Aside from closing businesses and schools, all residents are now required to work from home.

Are you under pressure to generate metal cost savings? Make sure you are following these five best practices.

Semiconductor Shortage May Not End Until 2024

According to Intel CEO, Pat Gelsinger, the ongoing semiconductor chip shortage will likely persist until at least 2024. This is a tragic prediction considering how much the current shortage is impacting equipment manufacturing.

Gelsinger previously expected the shortage to resolve by 2023. However, in an interview with CNBC’s TechCheck, she revised her estimate, stating, “that’s part of the reason we believe the overall semiconductor shortage will now drift into 2024 from our earlier estimates in 2023. More shortages now hit equipment, and some of those factory ramps will be more challenged.”

So far, the semiconductor shortage has severely impacted global auto production, especially given the slew of other factors at work. In response, AutoForecast Solutions once again lowered its production estimates for 2022.

The company now expects production in North America and the Asia-Pacific region to fall by 2% to 14.82 million and 46.68 million units, respectively. In Europe, Western and Eastern  production estimates now stand at 11.16 million and 6.26 million.

UK Imposes 35% Duty on Russian Palladium, Platinum

Both palladium and platinum prices saw a modest lift following the UK government’s announcement of a new round of sanctions on Russia and Belarus. As part of the package, the UK will raise tariffs on products including platinum and palladium by 35%.

Russia produces around 40% of global mined palladium and almost 16% of global platinum. This makes the country the world’s largest and second-largest producer with respect to both precious metals. As such, the ongoing war in Ukraine and its effects stand as a leading driver for most of this year’s price fluctuations.

Indeed, both metals previously jumped in early April following a decision by the London Platinum and Palladium Market to suspend two major Russian-government-owned refiners.

MetalMiner’s free weekly newsletter provides up-to-date metal price intelligence on the impact of the war in Ukraine on metal prices and the Automotive MMI.

Actual metals prices and trends

• The US scrap steel price rose 1% month over month to $606 per short ton as of May 1. Meanwhile, the US HDG price picked up by 2.36% to $1,906 per short ton.
• US palladium bars rose 2.32% to $2,254 per ounce month over month. Platinum fell 5.25% to $938 per ounce.
• The Korean 5052 coil premium over 1050 declined 4.83% to $4.53 per kilogram.

The UK government recently announced an asset freeze on London-headquartered metal and mining group Evraz. Authorities claim that Evraz is receiving benefits or support from the Russian government to conduct business in strategic and economic sectors. True or not, the freeze has broad implications for global steel production.

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NIZHNY TAGIL, RUSSIA – JANUARY 01, 2014: Night view of the main entrance of the plant NTMK company Evraz. NTMK plant is the main enterprise of the city of Nizhny Tagil

Evraz Investigated for “Threatening” Ukrainian Stability

HM Treasury’s Office of Financial Sanctions Implementation (OFSI) went public with the move against Evraz on Thursday, May 5. As in similar situations, the action was filed under the Sanctions and Anti-Money Laundering Act of 2018.

This specific law allows governments to freeze funds and economic resources of problematic persons, entities, or bodies. In this case, it refers to those involved in destabilizing Ukraine or undermining/threatening the country’s territorial integrity, sovereignty, or independence.

Evraz has steel making assets in Russia that include the Nizhniy Tagil (NTMK) and Western Siberia (Zapsib) plants. The OFSI also noted that the company controls coking coal mines in Raspadskaya and Yuzhkuzbassugol and an iron ore mind at Kachkanarsky.

However, the information made no mention of Evraz’s Mezhegeiugol coking coal mine in eastern Siberia or its vanadium production operations.

Evraz Denies Any Wrongdoing Despite Abramovich Relationship

Freezing the assets of companies like Evraz has played a large role in how Western countries and the EU are punishing Russia for its Feb. 24 invasion of Ukraine. Indeed, back on Mar. 10, the UK’s Financial Conduct Authority officially suspended the group’s shares on the London Stock Exchange.

The earlier move was in response to the national government placing Roman Abramovich on its list of sanctioned individuals. Well known as the owner of Chelsea Football Club, Abramovich holds the single largest stake in Evraz (28.64%).

At that time, Evraz denied any involvement in actions against Ukraine. They have since reiterated claims that they mainly produce materials for construction and infrastructure.

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North American Subsidiaries Still in the Green

Evraz NTMK poured 4.1 million metric tons of crude steel in 2018, from which it rolled about 4.6 million metric tons of finished product. The manufactured items included rails, long products, rings for mechanical engineering, and grinding balls. According to the group’s website, the plant also produced semis for tubular production.

Meanwhile, Zapsib’s product assortment includes long section steel and continuously cast and hot rolled slabs. The plant also produced continuously cast and hot rolled section billets, rails, and downstream products. In 2016, Zapsib produced 6.9 million tons of crude steel and 6.3 million metric tons of steel products.

The OFSI did note that Evraz could continue to operate with its North American subsidiaries. Allotments include “payments to or from those subsidiaries under any obligations or contracts” and “payments to or from any third party under any obligations or contracts.” It also includes the “receipt of payments made by the North American Subsidiaries for audit services.” The OFSI also added that “Evraz North America is permitted to pay for the audit services referred to in the previous sentence.”

One source noted that many Russian companies are trying to put distance between their overseas assets and their owners in Moscow. “Everyone is separating or thinking about spinning off assets abroad into separate divisions,” that analyst added. Only time will tell if their efforts will pay off.

A Major North American Producer

Evraz North America’s headquarters are in Chicago, but the subsidiary has a welded pipe mill in Oregon (Evraz Portland) and a hot end and rail mill in Colorado (Evraz Pueblo).

In total, Evraz North America has six plants spread throughout the United States and Canada. The wholly-owned subsidiary can produce up to 2.3 million metric tons per year of crude steel via electric arc furnaces at Pueblo and Regina alone. The former is located in Colorado, while the latter is situated in Saskatchewan.

Besides having hot ends, the Pueblo plant can roll long products that include rail as well as wire rod and rebar in both coils and seamless pipes. Meanwhile, the Regina plant produces line pipe from its own rolled plate products.

Other Canadian sites, such as Camrose, Calgary, and Red Deer,  produce casings and tubings for Oil Country Tubular Goods (OCTG) as well as straight- and spiral-weld line pipes. Evraz North America’s Portland plant also produces line pipe from the plate and hot coil it rolls on site

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There’s something afoot on the rare earths front in China. Specifically, the country recently decided that it wants to tighten its export control laws. The regulation passed about two years ago to stop importing countries from diverting “Chinese products for non-intended use.” In most cases, the “products” refer to rare earth elements, of which China is the world’s biggest producer.

The announcement comes just a few days after news that an American company may have found the largest reserves of rare earth elements in the US. In fact, US-China relations experts are still trying to connect the “geo-political” dots around China’s latest move and its implications.

Why Rare Earth Metals and Why Now?

A report from nikkei.com stated that going forward, exporters of Chinese products with potential military applications may have to provide documentation as to their intended use. Apparently, the ultimate goal is to “halt the militarization of sensitive tech.”

The article also reported “concerns” that the regulations would be arbitrarily enforced against countries that have poor diplomatic relations with Beijing. Officials did not name the US directly, of course. Still, it’s no secret that trade relations between the US and China have not been healthy since the Trump administration.

In December of 2020, China finally joined many other countries in passing an Export Control Law. The crux of the legislation gave Beijing control over strategic products and even advanced technology items. The move was widely seen as a response to US restrictions on Chinese IT firms like Huawei Technologies Co.

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Reasons for the Further Tightening of Export Control

According to reports, China’s Ministry of Commerce has published its new export proposal with the intent of soliciting public comment. The regulations are also in line with the “total national security outlook” policy of President Xi Jinping. This includes 11 total areas of security coverage: politics, land, military, economy, culture, society, science and technology, information, ecology, resources, and nuclear.

If and when the proposed regulation becomes law, it will empower the Chinese Government to carry out a “risk assessment” of the country or region receiving the exported products. This would factor in both national security interests as well as foreign policy needs. Export licenses for “high-risk destinations” will also be subjected to even stricter screenings.

The Nikkei report went on to say that rare earth metals could be subject to export controls “depending on how authorities interpret the regulations.” Many of these materials feature in the manufacture of high-performance magnets. However, those importers who alter the “end use”  without permission may find themselves on a regulated list. Repeat offenders may end up subjected to embargoes or even a revocation of their export license.

Risk Assessment and the War in Ukraine

Ostensibly, the new law seeks to prevent the export of dangerous products to terrorist outfits or rogue nations. Still, how China plans to assess the risk level of export partners is not yet clear. Currently, China forbids the transfer of regulated products to third parties without the approval of the government. After Russia invaded Ukraine, China had got some flak for allowing the export of chips used in Russian missiles and spy satellites. There were also reports of US chips being used in missiles after being clandestinely exported via Bulgaria.

There’s a major semiconductor shortage in the world today, and the Ukraine conflict has only intensified US-China trade tensions. According to this report, US officials warned they would impose strict export controls on China should the country try to send semiconductors containing US technology to Ukraine. For this reason, the purported move by China was seen as an illegal attempt to help Russia cope with global sanctions.

Xinjiang Rare Metals National Mine Park

The Rare Earth Metals Race

A wide range of industries rely on rare earth minerals, including automobiles, transportation, power generation, and defense. In recent decades, US investment in its homegrown chip industry has decreased. This was largely because Japan, Taiwan, South Korea, and China were making them far cheaper. Now, the US has decided to halt this reliance, especially when it comes to China.

That’s why the initial discovery report from Wyoming comes as such a happy surprise. According to the data, the rocks there have an unusually high content of several “rare earth” elements: Neodymium, Dysprosium, Praseodymium, and Terbium. All of these are essential for making the magnets used in electric vehicle motors and wind turbines.

American Rare Earths, the company conducting the exploration and analyses, also has holdings in Arizona and Nevada. Combined, all of these could ease US dependence on foreign sources of these key metals. Indeed, China controls roughly 87% of the magnets market, a fact that many US officials are desperate to change.

The US has its Own Ideas

US Senators Tom Cotton & Mark Kelly recently introduced legislation that would establish a rare earth stockpile via the Department of Defense. It would also require defense contractors to stop buying rare earths from China by 2026. This follows an earlier bill introduced by senators Marco Rubio and Cindy Hyde-Smith. The latter’s goal was to provide Department of Energy funding that could support domestic manufacturing of finished rare earth products.

Clearly, for the US, the supply-chain mess, the pandemic, and the Ukraine conflict have served to highlight the importance of rare earth independence. Now, we need only wait to hear the final word on China’s counter-move.

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At least two Ukraine steel manufacturers are ready to restart production amid the ongoing conflict with Russia. Sources indicate this is because the areas where the mills are located have seen less impact from the invasion. Global investors greeted the announcement with much fanfare. After all, the renewed export of Ukrainian steel will undoubtedly have a significant impact on European markets.

A Major Steel Producer Comes Back Online

Luxembourg-based ArcelorMittal Kryviy Rih, a longs producer in the country’s second-largest city, is set to bring Blast Furnace No. 8 back online on May 2. This is according to CEO Mauro Longobardo, who made the announcement in the April 8 issue of the plant newspaper, Metallurg. Longobardo went on to say that Blast Furnace No. 6 will resume operations “in the coming days.”

ArcelorMittal Kryviy Rih also expressed plans to return rolling production to the “highest possible level” by May 10. At the same time, the company plans to resume exports of iron ore concentrates. However, Longobardo made it clear that these actions are contingent on both logistics and the military situation. Currently, the plan is to dispatch finished products to Poland via train.

“It used to go by sea, but now we will transport it by rail first to Poland and from there to our customers,” Longobardo added.

MetalMiner Insights currently publishes a full range of American, European, Japanese, Chinese and Korean steel prices. 

Ukraine Steel is Crucial to the Country’s Economy

When Russia invaded back on February 24, Arcelor Mittal announced it would slow down production at Kryviy Rih to a technical minimum. However, AMKR is located in Ukraine’s Dnipropetrovsk region, which has so far not experienced much fighting. Though the war appears far from over, many Ukranian businesses are eager to get the economy rolling again.

The Ukrainian steel industry typically comprises around 15% of the country’s economy. This is meaningful, as the World Bank estimated that the war will shrink Ukrainian GDP by as much as 45%. Altogether, mills in Ukraine can produce about 20 million metric tons of finished and semi-finished steel products. Before the war began, some 70% of this amount was exported. Were exports to continue, it might help alleviate wartime financial problems.

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Indeed, Arcelor Mittal alone can produce around 6 million metric tons per year of crude steel via the BF/BOF Route. Its steel is mainly cast into billets. These are then rolled into long products, such as wire rods, rebar, and merchant bar.

Metinvest Joining the Fight to Boost Steel Production

On April 12, Metinvest, an international mining and steel enterprises company, announced that it had restored operations at its sinter plant. The company also said that it was in the process of blowing in two of the four blast furnaces at its Zaporizhstal joint venture.

Zaporizhstal, located in the southeast, is Ukraine’s fourth largest steelmaker. “Gradually, with the production of hot metal by the blast furnaces, subsequent links in the production chain will be put into operation as well,” the group stated. They later added that Zaporizhia Coke and Refractory have also resumed operations.

Metinvest reports a 49.9% stake in Zaporizhstal. However, one source told MetalMiner that this is closer to 100%. This is because the remaining stake originally belonged to “a group of Russian investors.” Of course, since the war began, the Ukrainian government has started confiscating all Russian-owned assets.

kasarp/Adobe Stock

Zaporizhstal Represents Significant Metal Output

Zaporizhstal lies some 550 kilometers southeast of Kyiv. According to Metinvest representatives, the site’s four blast furnaces can produce up to 3.8 million metric tons (mmt) of pig iron annually. Meanwhile, its seven open-hearth furnaces and single bath furnace can pour around 4 mmt of crude steel.

Zaporizhstal’s Mill 1680 can also make up to 3.6 mmt per year of hot-rolled sheet and coil in multiple gauges and widths. Further downstream, the plant has an annual capacity of 1 mmt for cold-rolled coil. In this case, Rolling Shops #1 and #3 produce gauges of 0.2-5 mm gauges and 850-2,300 mm.

Ukraine Steel Production Rolls on in Some Areas

Another Metinvest operation is Kamet Steel. The company acquired it back in June 2021, when it was known as Dneprovsky Iron & Steel Integrated Works. Situated near Dnipro, this longs producer has managed to operate as normal virtually the entire war.

Kamet Steel site can pour up to 3.5 million metric tons of crude steel per year. The company casts nearly all of this into square and round billet. It then makes these billets available for commercial sale. They can also roll the billet into roughly 1.8 million metric tons of long products or ship them to Metinvest’s Promet subsidiary in Bulgaria.

The fact that Metinvest and ArcelorMittal Kryviy Rih are restarting production is undoubtedly good news. What effects will renewed steel export have on Ukraine’s overall economic situation? It’s hard to tell . However, European investors are undoubtedly eager to see anything returning to “normal.”

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India’s Hindalco Industries Ltd. (a major aluminum and copper producer) recently earmarked CAPEX totaling US $7.2 billion. According to recent news reports, Hindalco management is seeking to expand the company’s aluminum production over the next five years. This includes commitments to boost aluminum resources in both North America and Germany.

In a recent presentation to investors, Hindalco reps remarked on how global supply shortages have pushed aluminum prices to new levels. In response, they’re pouring resources into new investments. The plan includes US $4.8 billion for its subsidiary, Novelis Inc., which will help increase distribution to the US, Brazil, Asia, and Germany. This move comes fresh on the heels of several other major expansions.

All in all, Hindalco has decided to use about 75% of its cash flow towards growth CAPEX. Of the total new investments until 2027, US $2.4 billion has been earmarked for spending in India.

 

Spending in All the Right Places

Most analysts and industry experts welcomed Hindalco’s announcement with open arms. After attending the presentation earlier this month, Edelweiss reported that Hindalco’s CAPEX plan should strengthen its competitive position in chosen markets. Better yet, it will still allow the company to concentrate on the high returns segment in India.

In its main points, the presentation referred to the company assessing and setting up the first greenfield mill in the US 20 years ago. It also reminded attendees of how Hindalco concentrated on US beverage can and automotive markets and limited Brownfield Al smelter expansion to 180ktpa.

The Edelweiss team went on to report that concentration in the US and on alumina in India was a step in the right direction. The former represents some 65% of total Novelis spending. The latter represents some 32% of all spending on the subcontinent.

Expanding US Automotive Recycling

Aluminum is the key ingredient in countless products, including everything from auto parts to beverage cans. Earlier this month, aluminum prices jumped to an unprecedented high of $4,000 a ton. This was largely the result of Russia’s war against Ukraine, which raised apprehensions about stifled supply.

Back in January, Novelis announced plans to construct a US $365 million recycling center next to its automotive finishing plant in Guthrie, Kentucky. According to a report in Recycling Today, the center would bring its carbon emissions down by over one million tons a year. At the same time, it would help expand the company’s closed-loop recycling program. Even better, the center would also be able to process aluminum from end-of-life vehicles.

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Committed to a Sustainable Aluminum Resources

Last October, Novelis announced plans to invest approximately US $130 million in upgrades to its aluminum mill in Oswego County, New York. Even then, Hindalco was eager to need a growing demand for sustainable, aluminum at rolled products. According to the report, the upgrades would allow the facility to boost hot mill capacity by 124,000 metric tons.

When completed, the new recycling center in Kentucky will feature advanced shredding and sorting technology. It will also boast several energy-efficient innovations intended to support Novelis’ sustainability goals. Among them is a commitment to reduce energy intensity by at least 10 percent before 2026.

Plans for Europe Still Forthcoming

While the company explained its India and North American expansion plans in some detail, its plans for the German operation were less thorough. Of course, Novelis is well recognized as a key player in the German automotive market. Along with the likes of Thyssenkrupp AG, & BASF SE, the company helps manufacture lightweight materials for electric vehicles.

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In our ongoing coverage of the Russia-Ukraine war and its impact on metal prices, the Financial Conduct Authority, the UK’s financial regulator, has suspended trading of Russian steelmaker Evraz’s shares on the London Stock Exchange.

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The move follows the government’s addition of Roman Abramovich to its list of sanctioned individuals.

The MetalMiner team will continue to break down the Russia-Ukraine war and its impact on metals markets during this month’s webinar session scheduled for Wednesday, March 30. 

UK suspends trading of Russian steelmaker Evraz

The suspension became effective from 11:00 a.m., London time, “in order to protect investors pending clarification of the impact of the UK sanctions,” the LSE said on March 10.

A notice from HM Treasury’s Office of Financial Sanctions Implementation stated that Abramovich exercises effective control in Evraz, given his large shareholding in the company as well as those of his associates, whom Abramovich could direct.

Abramovich holds the largest stake in Evraz at 28.64%. Evraz’s non-executive chairman, Alexander Abramov, holds 19.32%. Non-executive director Alexander Frolov holds 9.65%.

“Evraz PLC is or has been involved in providing financial services, or making available funds, economic resources, goods or technology that could contribute to destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine – which includes potentially supplying steel to the Russian military which may have been used in the production of tanks,” HM Treasury also stated.

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