July Newsletter – 05.07.2022

  • Fossil fuels surpass renewables as EU’s top power source: Eurostat
  • India’s Coal Crisis Is Far From Over
  • The World Can’t Wean Itself Off Chinese Lithium
  • Commodities hit July storm with Putin and Powell stirring fear
  • French President says deep-sea mining must not go ahead
  • Zijin adds China mine in race to join lithium’s global top tier
  • A new mining project could make Rajasthan India’s next uranium hub
  • Australia sees commodities boom lifting exports to fresh record

Fossil fuels surpass renewables as EU’s top power source: Eurostat

June 30 (Reuters) – Fossil fuels have surpassed renewables to become the European Union’s largest source of power generation as use of natural gas reached its highest point in a decade, the bloc’s statistics office said on Thursday.

Renewable sources had briefly taken the top spot during the first year of the coronavirus pandemic, Eurostat said, but an economic rebound saw the region’s electricity supply climb 4% in 2021, powered by coal, oil and natural gas.

Use of natural gas, which is mostly imported from abroad, rose by nearly 4% in 2021, the data showed, even amid spiraling prices in the second half of the year.

Prices have continued to rise this year following Moscow’s invasion of Ukraine, as the EU levered sanctions against Russia which had been set to boost supplies through a new pipeline to Germany.


India’s Coal Crisis Is Far From Over

India is facing a “severe and protracted” power crisis due to the price inflation of coal, which the country uses to generate as much as 75 percent of its power, Indian media report, citing S&P Global Commodity Insights.

India found itself in the middle of a power shortage as several factors combined, including rising coal prices, which discouraged imports, leaving stockpiles at critically low levels, and a heat wave that pushed demand earlier this year much higher.

The country is working on boosting its domestic production, and this went up by 28.6 percent in financial 2021/22, which ended on May 31. This was a record high, at 777 million tons. However, boosting domestic coal production to a level of self-sufficiency will take a long time, which coal is needed now to power the economy.

Meanwhile, the country was hit by a series of blackouts as a result of insufficient coal supplies, both domestic and imported. The situation became so grave that now the Indian authorities are threatening utilities that refuse to pay higher prices for imported coal to cut their access to local coal, according to S&P Global Commodity Insights.


The World Can’t Wean Itself Off Chinese Lithium

China dominates the global supply chain for lithium-ion batteries. Now rival countries are scrambling for more control over “white oil.”

THE INDUSTRIAL PORT of Kwinana on Australia’s western coast is a microcosm of the global energy industry. From 1955, it was home to one of the largest oil refineries in the region, owned by British Petroleum when it was still the Anglo-Persian Oil Company. It once provided 70 percent of Western Australia’s fuel supplies, and the metal husks of old tanks still dominate the shoreline, slowly turning to rust in the salt air.

The refinery shut down in March 2021, but it isn’t just oil below the region’s red soil: Australia is also home to almost half of the world’s lithium supply. The trucks and machinery are humming once again, but now they’re part of a race to secure the clean energy sources of the future—a race being dominated by China.

Over the past 30 years, lithium has become a prized resource. It’s a vital component of batteries—for the phone or laptop you’re reading this on, and for the electric vehicles that will soon rule the roads. But until recently, the lithium mined in Australia had to be refined and processed elsewhere. When it comes to processing lithium, China is in a league of its own. The superpower gobbled up about 40 percent of the 93,000 metric tons of raw lithium mined globally in 2021. Hundreds of so-called gigafactories across the country are churning out millions of EV batteries for both the domestic market and foreign carmakers like BMW, Volkswagen, and Tesla.

China’s share of the market for lithium-ion batteries could be as high as 80 percent, according to estimates from BloombergNEF. Six of the 10 biggest EV battery producers are based in China—one of them, CATL, makes three out of every ten EV batteries globally. That dominance extends through the supply chain. Chinese companies have signed preferential deals with lithium-rich nations and benefited from huge government investment in the complex steps between mining and manufacturing. That’s made the rest of the world nervous, and the United States and Europe are now scrambling to wean themselves off Chinese lithium before it’s too late.


Commodities hit July storm with Putin and Powell stirring fear

Commodities are careering into a second-half that promises as much turmoil as the first, with the world facing an escalating energy crisis, copper plunging on Fed-fueled recession fears, and Russian President Vladimir Putin delivering a shock for Shell Plc.

Russia’s move to reshuffle ownership of the Sakhalin-2 gas plant spells trouble for Shell’s plan to offload its stake. An analyst in Japan warned it “could even trigger a panic” in liquified natural gas markets  — although Moscow said Putin’s decree isn’t a threat to supplies and isn’t nationalization.

Energy crises and central bank moves to crush inflation present powerful headwinds across markets, underscored by copper’s collapse Friday below $8,000 a ton. Next week’s minutes of the last Federal Reserve meeting should give more detail on the bank’s thinking. There’s also the United Nations’ annual report on food security, which comes ahead of an important month for the war-torn wheat market.


French President says deep-sea mining must not go ahead

French President Emmanuel Macron said on Thursday a legal framework was needed to stop deep-sea mining from going ahead and urged countries to put their money on science to better understand and protect the world’s oceans.

There is growing international interest in deep-sea mining but there is also pressure from some environmental groups and governments to either ban it or ensure it only goes ahead if appropriate regulations are in place.

Deep-sea mining would involve using heavy machinery to suck up off the ocean floor potato-sized rocks, or nodules that contain cobalt, manganese, and other rare metals mostly used in batteries.

“We have … to create the legal framework to stop high sea mining and to not allow new activities putting in danger these ecosystems,” Macron said at an event on the sidelines of the UN Ocean Conference in Lisbon.

“But at the same time we need to promote our scientists and explorers to better know the high seas… we need to better understand in order to protect,” Macron added.

Although he expressed concerns about deep-sea mining, France holds an exploration contract through the Institut Francais de Recherche pour l’Exploitation de la Mer, valid until June 2026, for a 75,000-square-kilometre (28,958-square-miles) area in the Clarion-Clipperton Zone in the North Pacific rich in polymetallic nodules.


Zijin adds China mine in race to join lithium’s global top tier

Zijin Mining Group Co. is stepping up efforts to become a major player in the global lithium rush, adding a mine-revival project in China to acquisitions from Africa to South America.

The group, which is mainly known as one of China’s top copper and gold miners, plans to pay 1.8 billion yuan ($269 million) for a 71% stake in a company mining for lithium in Hunan province. Zijin wants to be China’s third-biggest producer of the battery material, and among the world’s top 10, it said on its Wechat account.

Chinese companies are at the forefront of a global race to extract and process the vast supplies of lithium, cobalt and other metals that will be needed for the battery industry in the coming decades. Tianqi Lithium Corp. said last week it plans to raise $1.7 billion in one of Hong Kong’s biggest listings of 2022.

Zijin’s target is Hunan Houdao Mining Co., which is restarting a retired polymetallic mine to feed “the explosive growth of new energy metals like lithium,” it said in a statement. The project will initially produce 60,000 to 70,000 tons of lithium carbonate equivalent a year, and Zijin will build refining facilities at the site.


A new mining project could make Rajasthan India’s next uranium hub

India may be a step closer to expanding its uranium production.

Rajasthan, a state in the western part of the country, is hoping to mine the rare mineral, according to a report in Business Standard. India’s department of atomic energy first found uranium deposits in the state in 2012.

Officials project the deposits to be as much as 12 million tonnes, the Hindustan Times reported yesterday (June 27). The project is expected to be worth 3,000 crore rupees ($380 million). Currently, the states of Jharkhand, Telangana, and Andhra Pradesh have India’s largest uranium mines.


Australia sees commodities boom lifting exports to fresh record

Open-cut coal mine in Australia’s Hunter Valley.

Australia’s minerals exports are set to reach unseen heights for a second year, as a global crunch lifts the value of the nation’s coal and natural gas.

Unprecedented income from liquefied natural gas and coal as Russia’s invasion of Ukraine roils energy markets will more than offset waning earnings from top export iron ore, the Australian Department of Industry, Science, Energy and Resources said. The nation will ship A$419 billion ($286 billion) of metals and energy commodities in the year to June 30, 3.5% more than in the prior period and 13% more than estimated in its previous quarterly report.

In a world bereft of readily available energy supplies — and increasingly disruptive volatile weather — the price for thermal coal has rocketed to a record just as global economic activity rebounds from Covid-related slowdowns. The loss of some Russian supply from world markets has compounded the outlook, in which prices are expected to drift down but remain, on average, at relatively high levels, the department said.



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