August Newsletter – 15.08.2022
- Coal giants are making mega profits as climate crisis grips the world
- Obama ban on coal leasing on public lands reinstated by judge
- China has encroached on Canada’s critical minerals industry, with almost no obstruction from Ottawa
- Why Australian iron ore could save Taiwan as China ponders the economic ramifications of invasion
- Glencore cuts off Chinese trader caught up in missing copper scandal
- UK coal mine dilemma pits energy crisis against green goals
- Saudi Arabian Mining Co. emerges as TASI’s 5th-best performer
- Mining and quarrying drives Saudi Industrial Production Index up 21% in June
Coal giants are making mega profits as climate crisis grips the world
Glencore’s Cerrejón coal mine in Colombia.
The globe is in the grips of a climate crisis as temperatures soar and rivers run dry, and yet it’s never been a better time to make money by digging up coal.
The energy market shockwaves from Russia’s invasion of Ukraine mean the world is only getting more dependent on the most-polluting fuel. And as demand expands and prices surge to all-time highs, that means blockbuster profits for the biggest coal producers.
Commodities giant Glencore Plc reported core earnings from its coal unit surged almost 900% to $8.9 billion in the first half — more than Starbucks Corp. or Nike Inc. made in an entire year. No. 1 producer Coal India Ltd.’s profit nearly tripled, also to a record, while the Chinese companies that produce more than half the world’s coal saw first-half earnings more than double to a combined $80 billion.
The massive profits are yielding big pay days for investors. But they will make it even harder for the world to kick the habit of burning coal for fuel, as producers work to squeeze out extra tons and boost investment in new mines. If more coal is mined and burned, that would make the likelihood of keeping global warming to less than 1.5 degrees Celsius even more remote.
Wyoming coal strip mine
Coal leasing is temporarily banned once again on public lands after a federal judge on Friday reinstated an Obama-era moratorium.
The ruling reinstates a 2016 order by then-Interior Secretary Sally Jewell banning coal leasing on federal lands pending further environmental review because of coal’s contribution to climate change. That order was scrapped in 2017 by Ryan Zinke, the Trump administration’s first Interior secretary.
Judge Brian Morris of the US District Court for the District of Montana ruled Friday that a Bureau of Land Management environmental assessment of Zinke’s order was insufficient and violated the National Environmental Policy Act.
A more comprehensive environmental review of Zinke’s revokation of the coal leasing moratorium must be completed before the bureau can start coal leasing again, Morris ruled.
Morris’ order reinstates Jewell’s coal leasing moratorium until the land bureau completes the review.
Federal land leased for coal mining has declined steadily since 1990, from about 730,000 acres under lease to 435,535 acres in 2020, mostly in Wyoming, Utah, Colorado, New Mexico, and Montana, according to Bureau of Land Management data. The most recent land bureau coal lease sale was scheduled for January 2020 in North Dakota.
China has encroached on Canada’s critical minerals industry, with almost no obstruction from Ottawa
The Tanco Bernic Lake mine in January 2021. Tanco is now the only operating lithium mine in Canada
For the past two decades, China has built up a powerful position in Canada’s critical minerals and mining sector, with little oversight from Ottawa
Three years ago, Sinomine Resource Group Co., a Chinese company, quietly bought the Tanco mine in Manitoba. At the time, Tanco was one of the world’s few sources of the critical mineral cesium, a key input in atomic clocks and radiation detectors. The mine had previously produced lithium, a battery metal used in electric cars.
Even though Tanco was owned by an American chemicals company, Cabot Corp., Canada’s federal government had the authority to block the acquisition on national security grounds. But far from blocking the deal, Ottawa appears not to have given it a second glance.
Earlier this year, under its new Chinese ownership, the Tanco mine started producing lithium and shipping it back to China, where it is fed into the country’s massive domestic electric car industry. Tanco is now the only operating lithium mine in Canada, and Sinomine has plans to expand production over the next few years.
“It’s known for having the world’s highest grade lithium. The grade is so high that nobody had the technology to process it,” said mining investor and activist shareholder Peter Clausi. “And the morons let it go.”
Mining is one of the most capital-intensive industries on the planet, and so historically it made sense for Canadian miners to turn to China as a source of funding. But in recent years China has emerged as a clear national security threat.
Why Australian iron ore could save Taiwan as China ponders the economic ramifications of invasion
As the dark clouds of war gathered over north-east Asia in 1938, a curious battle took place at home which forever tainted the memory of Liberal Party founder Sir Robert Menzies and that could be a portend of what lies ahead.
Then-Attorney General in the Lyons government, Menzies became embroiled in a fight with waterfront unions in Port Kembla over the loading of a British steamer, the SS Dalfram, with BHP produced pig-iron bound for Japan.
The Lyons government had embargoed iron ore exports to Japan after its brutal invasion of China and the 1937 massacre in Nanking but, inexplicably, had allowed pig-iron — a crude processed form of iron — to be shipped.
Menzies decreed that only the government had the right to decide on relationships with foreign powers and goods to be traded. After a 10-week deadlock, it forced the unions to load the ship.
It was an event that caused the future prime minister to be dubbed ‘Pig Iron Bob’ and — after the 1941 attack on Pearl Harbour that saw Australia at war with Japan — he was taunted by jibes that he’d shipped iron ore to Japan before the war only to have the Imperial Army send it back in the form of bombs and bullets.
Glencore cuts off Chinese trader caught up in missing copper scandal
Global commodity traders including Glencore (LON: GLEN) and IXM have halted shipments to Chinese metals merchant Huludao Ruisheng after nearly half a billion dollars’ worth of copper went “missing” at a storage site in the country’s north.
Thirteen Chinese trading companies —12 of which are state-owned — were financing the storage site in Qinhuangdao, which was found to hold only one-third of the 300,000 tonnes of copper concentrate.
The firms are facing potential losses of as much as 3.3 billion yuan ($490 million) from the missing concentrate and have sent a team to Qinhuangdao to investigate and determine appropriate legal action, the Financial Times reported on Friday.
“It’s not the first time we’ve had the problem with material going missing in China,” Colin Hamilton, managing director of commodities research at BMO Capital Markets wrote. “Onshore financing in China for any foreign bank or trading house will become harder.”
Glencore transferred some of its existing metal stocks from Qinhuangdao to alternatives such as Qingdao in an effort to avoid similar problems, FT reported, citing a trader.
UK coal mine dilemma pits energy crisis against green goals
In the far northwest corner of England, coal mining was so finished that the local museum paying tribute to the industry shut a few years ago after running into financial trouble.
Yet at the dormant Haig Pit in Whitehaven, there are signs that an activity long considered dead wants to come back to life. Next to the mine shaft tower and red-brick building that housed the exhibit space is the office of West Cumbria Mining Ltd., which plans to open the UK’s first deep coal mine in more than three decades.
After years of opposition from environmental groups and political wrangling, the UK government delayed a decision on whether the mine should go ahead, following the July resignation of Prime Minister Boris Johnson. It’s been pushed back again, with a ruling due by Nov. 8. But whatever happens, the controversial project has highlighted the broader dilemma facing the next leader over how to balance the country’s green goals with the upheaval of fuel supplies in the wake of Russia’s war in Ukraine.
The proposed mine shocked climate activists and collided with the UK’s promises to lead on climate action — and “consign coal to history” — when it hosted the COP26 summit in November in Glasgow, Scotland. Britain’s last deep coal mine, in Yorkshire, closed at the end of 2015.
The chair of the government’s independent climate watchdog said in June the plans were “absolutely indefensible” and would blow a hole through the nation’s mid-century net zero pledge. The mine was approved by the local council in 2020 before the government intervened to hold a public inquiry after concerns were raised that it contradicted the country’s legally binding goal to reach net-zero emissions by 2050.
For a lot of people in Whitehaven, the pit would mean welcome jobs and investment.
Saudi Arabian Mining Co. emerges as TASI’s 5th-best performer
RIYADH: Saudi Arabian Mining Co., known as Ma’aden, ranked fifth among the top share price gainers this year on the Saudi stock index TASI buoyed by strong results and a thriving mineral sector.
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