News of the Day:
Metals price rally could hamper switch to green energy — IEA
Cecilia Jamasmie, Mining.Com, May 5, 2021
Soaring metals prices may be good for miners, but they risk the ongoing transition to clean energy as batteries, solar panels and wind turbines need considerable amounts of copper, nickel, cobalt, lithium and other minerals to be manufactured, a report warns.
According to The International Energy Agency (IEA), reaching the goals of the Paris climate agreement would result in a quadrupling mineral demand by 2040. Yet a lack of investment in new mines could substantially raise the costs of clean energy technologies, the IEA said on Wednesday.
“The data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions,” IEA chief Fatih Birol said in the report.
“Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly – and therefore hamper international efforts to tackle climate change,” he added.
Low-carbon technologies typically require more critical minerals than their fossil fuel counterparts. An electric vehicle (EV), for instance, requires six times the amount of critical minerals as an internal combustion engine (ICE) car, according to the IEA.
Prices for many of the metals tied to emerging green technologies have already seen major price jumps over the past year. Strong demand from China has met supply disruptions caused by the coronavirus pandemic. Other metals, such as copper, have seen strong speculative action as investors have bet big on the energy transition by investing in the metals that will power it.
Copper prices traded on the London Metal Exchange rose above $10,000 a tonne for the first time since 2011 last week. Prices for lithium in China have jumped more than 100% so far this year, according to Benchmark Mineral Intelligence. And they are likely to keep climbing, the IEA said, as demand needs to grow by more than 40 times if countries want to meet the goals of the Paris agreement.
With governments rolling out green stimulus packages, EVs sales climbed by 41% last year, with about three million sold globally.
Supply of some critical metals is also heavily concentrated in a few countries, raising security concerns, the IEA said.
The agency, created in the 1970s to ensure global oil supplies in the wake of the first Arab oil embargo, said critical minerals have taken the centre stage.
“Concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system,” it said.
The Democratic Republic of Congo, for instance, produces about 70% of the world’s cobalt. China, in turn, is responsible for 60% of the rare-earth elements.
The processing of critical metals is even more concentrated, the IEA warns, with China accounting for over 80% of rare-earth processing, around 60% of lithium and cobalt processing, and 40% of copper processing, the IEA said.
More supplies are needed, but the slow pace of new mining projects and caution from investors poses problems, the agency warned.
New mining projects take on average 16 years to go from discovery to production and that timeline is unlikely to shorten unless governments show investors, they support the development of new mines by making clear that they are serious about the energy transition, the IEA concluded.
In connection with ConocoPhillips’ first-quarter 2021 earnings announced yesterday, ConocoPhillips Alaska (COPA) reported the following 2021 earnings facts.
- ConocoPhillips Alaska reported a net income of $159 million in the first quarter of 2021, as reported in ConocoPhillips’ earnings supplemental information.
- During the first quarter of 2021, the company incurred an estimated $227 million due to the State of Alaska in the form of production taxes, royalties, property taxes and state income tax.
- Additionally, the company invested $235 million in capital in the State of Alaska, which represents approximately 20 percent of the corporation’s global capital spend.
- It should also be noted that the company has invested nearly $2 million in Alaska communities year-to-date, with almost 200 employee volunteer hours. Forecasted annual spend is approximately $4-5 million and volunteer hours average about 2,000 annually.
- At the Alaska Support Industry Alliance’s annual Meet Alaska meeting in March, Erec Isaacson, president of ConocoPhillips Alaska, presented on how ConocoPhillips Alaska is getting back to work. “Last year’s response to the pandemic called for shutting down almost all drilling and Ballot Measure 1 was up for a vote,” noted Erec. “With the defeat of the ballot measure and our COVID-19 protocols in place, we are planning on a significant investment program in 2021,” he said.
- By end of 2021, the company plans to have four operated rigs and one non-operated rig drilling.
- Since 2007, ConocoPhillips Alaska has paid over $38 billion in taxes and royalties to the State of Alaska and the federal government. Of that amount, about $30 billion went directly to the State.
Anglo American CEO: “45% of the world’s economic activity is driven by the mining sector”
Alisha Hiyate, Canadian Mining Journal, May 3, 2021
Tasked with talking about the role of mining in society as part of the opening plenary at this year’s virtual CIM convention, Anglo American(LSE: AAL) chief executive Mark Cutifani didn’t mince words.
With a world population of 7.6 billion that’s growing toward 9 billion, “the simple fact is that the world cannot survive without mining and our contribution to literally every aspect of modern life,” Cutifani said.
Cutifani noted that other critical sectors, including energy, food production, construction, transportation, renewables infrastructure and communications all rely on mining. “In fact, 45% of the world’s economic activity is driven by the mining sector,” he said, counting both direct commodities sales and mining’s support of other industries (including the productivity improvements that come with mechanized farming, for example).
Not only that but compared to agriculture’s footprint – which takes up 50% of the world’s habitable land – mining only takes up 0.04%.
That is “literally the smallest footprint relative to our economic contribution than any other industry.”
However, there remains a gulf between the public perception of mining and the reality of mining.
“Even with all the contributions we make, people tend to see us an industry that takes more than it gives,” he said noting that the mining industry bears some responsibility for that. “One of the things we don’t do well as industry is talk about what we do.”
The role of mining and mining companies’ relationships with local communities is also changing, in step with advances in technology and the increasing focus on sustainability.
For example, as part of its sustainability goals – which revolve around supporting a healthy environment and thriving communities and being a trusted corporate leader – Anglo has committed to support the creation of five jobs offsite for everyone onsite.
“When we talk about life-of-mine plans, we’re also now starting to focus on life-of-community plans and how we can create 100 years future for those communities based on the infrastructure that we can bring as part of our mine development,” Cutifani said.
The company’s microfinancing programs in South Africa and South America have supported the creation of 137,000 jobs, he noted. And the development of a reverse osmosis water purification facility in South Africa has opened up new opportunities for agriculture and for locals to enter new industries that rely on clean water.
“We understand the impact of technology and future of work will have. . . so we understand that we have to be a catalyst in those local communities for new jobs.”
As the focus on sustainability and climate change increase, those pressures are already starting to reshape mining.
“Ten years ago, we used to define ourselves as a mining company, and for most, that created an image of a company digging holes,” Cutifani said. “In 2018, we redefined our own conversation about ourselves and took the way our customers were describing us – and that is as a metals and minerals company.”
Looking another 10 to 20 years into the future, Anglo (which currently mines everything from iron ore to precious and base metals to diamonds and more) sees itself becoming a “materials solutions company.” That vision incorporates an understanding of how the company will support the circular economy (including more recycling) and efforts against climate change, and the need to adjust its portfolio to the needs of society.
The goal, Cutifani said, is to understand where the world is going and become a catalyst to get there quicker.
“We need to help people understand what we do and how critical we are – we need to be a partner in society in creating a new future,” he said. “We are the key to decarbonization and creating a long-term sustainable planet.”
Cutifani also urged miners “to take the time to understand our role in society and make sure we’re creating the future; we’re not becoming a victim of the future.”
His remarks came during a panel, which was moderated by Jerrod Downey, president of Crownsmen Partners, and included Jody Kuzenko, president and CEO of Torex Gold Resources (TSX: TXG), David Cataford, president and CEO of Champion Iron (TSX: CIA; ASX; CIA), and Denise Johnson, group president of Caterpillar.
The wider theme of the plenary session was “resilient and thriving,” with the discussion touching on diversity and inclusion in mining, sustainability and ESG, and the impact of covid-19 on the industry.
Special session increasingly likely to resolve federal COVID-19 relief, and potentially the PFD
Sean McGuire, KTUU, May 4, 2021
With the constitutional deadline for the regular session just over two weeks away, it’s increasingly likely that the Alaska Legislature will need to convene a special session to decide how to spend from the latest federal COVID-19 relief package.
The same special session, or perhaps another one, may be needed to debate the 2021 Permanent Fund dividend if one does not pass before May 19. It could also focus on the long-term future of the PFD.
A meeting among legislative leaders on Tuesday saw Sen. Bert Stedman, R-Sitka, argue that a delay in deciding how to use American Rescue Plan Act funds would allow legislators to spend more wisely from the $1 billion package.
“There’s some of it that could go out right away,” he said, explaining some of that money would be included in the operating budget. “I also feel that we should take probably half of it and carry it forward until next year.”
A priority for Stedman, who oversees the operating budget in the Senate, is quickly disbursing another $1 billion allocated to Alaska in non-flexible federal funding.
Part of the challenge for legislators has been waiting until May 10 for official guidance from the federal government on how the flexible funding can be spent. That would see legislators potentially scrambling to come to an agreement on how to spend $1 billion before the regular session ends just nine days later.
Senate President Peter Micciche, R-Soldotna, said a summer special session on the federal funds is not a certainty, but hearing from Alaskans could ensure that the money is better targeted to help businesses and Alaskans who really need it.
Legislators say lessons have been learned from a previous federal COVID-19 relief package that went out quickly last year
“I think everyone can argue that that money could have been spent more carefully, more efficiently,” Micciche said.
There is a strong desire across the board to pass an operating budget before the end of the regular session. Even that could be a challenge with the budget stalled in the House of Representatives.
“The calendar is turning against us,” Stedman said. “We’re expressing point blank that it’s going to be very difficult to get our budget done unless we get things moving, and things aren’t moving too fast.”
Senate Minority Leader Tom Begich, D-Anchorage, argues the Legislature has the ability to pass a budget and design a spending plan for the American Rescue Plan Act funds before May 19. Begich says the Senate minority will push for that.
One big outstanding question is the 2021 Permanent Fund dividend with the Legislature more divided than ever on what size it should be.
“The dividend will not be resolved in the next two weeks,” Begich said, “And that will be the special session.”
Another outstanding question is what should happen to the PFD in the long term.
Micciche and Begich both said separately that Gov. Mike Dunleavy has expressed an interest to them in holding a special session to debate the long-term future of the dividend. Dunleavy has proposed changing the formula that calculates the PFD as long as that change is supported by an advisory vote.
Micciche is advocating for an “all-in” approach to fix the state’s structural deficit with everyone giving a little. But he said the dividend has been “the elephant in the room” for the past several years and that resolving it is critical.
“I think it’s imperative that we get together and think about that issue and nothing else,” Micciche said, advocating for a dividend-focused special session.
There is broad agreement that the Legislature does not have the two-thirds of legislators necessary to call their own special session on any topic. If that is the case, the governor would need to step in and call one himself for the PFD, how to spend the federal funds or potentially for an annual procedural vote needed to keep state accounts full.
The governor’s office would not confirm that a PFD special session would take place. Corey Young, a spokesperson for the governor, said any decision on special sessions would take place after the regular session ends.
Two Climate Plans: One Based on Common Sense, the Other Rooted in Fantasy
Heather Reams, Real Clear Energy, May 2, 2021
Washington marked Earth Day by unveiling two, starkly different visions for America’s immediate, clean energy future.
First up, House Republican Leader Kevin McCarthy (R-CA) introduced the GOP’s “Energy Innovation Agenda,” a climate change plan rooted in conservative principles, limited government and unleashing innovation. Later in the week, President Biden hosted a climate summit of world leaders where he pledged to reduce our country’s emissions by at least 50 percent by 2030.
Two plans: one filled with affordable, rational and reliable solutions that are good for America and for the planet, and one based in fantasy that will drive up energy prices, replace American jobs with empty promises, and hand over our prosperity directly to our adversaries in the Middle East, Russia, and China. (Whose promises to reduce emissions look pretty weak next to the number of coal plants they’re opening.)
For several years, America has led the world in reducing emissions, in good years and bad. But President Biden’s promise will require Americans to cut emissions at a rate that we’ve only ever seen in bad years. To fulfill his promise, we will have to reduce emissions four times more than our average reduction during years of economic growth.
Based on currently available technology, there is simply no way to halve America’s emissions by 2030 without delivering a crushing blow to small businesses, creating record unemployment for years and disproportionately hurting working families and disadvantaged communities. Further, since U.S. fossil fuels are much cleaner than the rest of the world’s, pulling that energy from the global markets simply shifts our exports to other countries with dirtier fuel – pushing global emissions up even as we lower ours.
Sorry, President Biden, but your plan just doesn’t add up.
Luckily, there is a formula that will work: Cut energy costs, not energy choices. Export American innovation, not American jobs. Reduce our emissions, not our economy.
This isn’t a novel concept. Our economy has grown even as we have succeeded in reducing emissions because we’ve embraced an all-of-the-above approach that gives consumers more choices while also making energy more affordable.
Now we need to accelerate this trend over the long term, which means we must continue innovating. That’s the goal of Leader McCarthy’s Energy Innovation Agenda, which consists of nearly three dozen bills introduced by Republicans in Congress, all aimed at environmental innovation, clean energy infrastructure, and natural conservation solutions.
But energy innovation will only be possible if America can fix our convoluted permitting process for construction projects. We cannot afford to let bureaucratic red tape stymie new clean energy projects and cleaner, modern replacements for our aging infrastructure. Reforms like the BUILDER Act, a foundational policy of the Energy Innovation Agenda, will dramatically improve the permitting process so that we can quickly reduce our emissions, save taxpayer money, and create “Made in America” jobs.
Greenhouse gas emissions aren’t just a U.S. problem – this is a global threat that will require affordable, reliable solutions that will ultimately work just as well for India as they do for Indiana.
Reintroduced in the U.S. House and Senate last week by an impressive roster of bipartisan sponsors and co-sponsors, the Growing Climate Solutions Act will help American farmers access carbon credits for crops farmed using climate-friendly practices. The domestic emissions cuts would likely be modest, but that isn’t the point. According to the World Bank, while only one percent of the U.S. population works in agriculture, 28 percent of the global population works in agriculture, including 56 percent in the least-developed countries. So, proving such concepts at home is significant because exporting it abroad could have an exponentially greater impact over decades.
Meaningfully addressing climate change is a marathon, not a sprint. Yes, there is an urgent need, but it will require not just trillions of dollars but next-generation technology and innovative practices we haven’t perfected yet. Most importantly, it will depend on buy-in from American consumers, and eventually, people around the world.
Such goodwill is best gained incrementally, through thoughtful measures like the GOP put forth last week – not by imposing sudden, arbitrary goals that will be economically painful to achieve. We must be mindful that overreaching or unrealistic targets may do more harm than good as our commitments could be viewed with skepticism abroad while causing lasting economic damage at home.