Usibelli Reclamation Rocks! Commodity Giant Bullish on Oil.

In News by wp_sysadmin


Usibelli tops mine reclamation standards
Shane Lasley, North of 60 Mining News, September 24, 2021

Reclamation is more than a regulatory requirement for Usibelli Coal Mine Inc., a family-owned company that began restoring the natural landscape at its Interior Alaska coal mining operation before there were federal laws requiring it.

Now that there are reclamation regulations in place, mining companies must post a bond that ensures the land gets restored – either by the company that will get the money back upon successful completion or a third party that will use the bond money to finish the job.

Before Usibelli began mining coal in the Poker Flats area just outside the Interior Alaska town of Healy nearly 40 years ago, the company promised one day to restore the land to near pre-mining conditions and backed that pledge with a $2.5 million bond.

The Alaska Department of Natural Resources has verified that the reclamation at Poker Flats has been completed to standards that exceed the requirements for phase III bond release, which means the restoration has been fully completed. As such, DNR has released $411,000 of the Poker Flats phase III bond.

“In successfully achieving phase III bond release, Usibelli has demonstrated the fundamental strength of our state’s mineral development system,” said DNR Commissioner Corri Feige. “We can develop our land to produce resources to meet the state’s energy and economic needs, then restore the land to provide healthy habitat for people and wildlife, in perpetuity. This Alaska company continues to set a great standard for responsible mining, and they deserve congratulations on achieving this important milestone.”

Alaska coal mining laws and regulations establish a three-phase process for releasing reclamation bonds after mining operations have been completed. Once the mined land has been backfilled and reshaped back to roughly the original contours, the mining company is eligible to have 60% of its bond released. Another 20% is released once phase II requirements are met, which involves the establishment of vegetative cover over the reshaped land.

Achieving phase III reclamation bond release in Alaska, however, takes a bit more patience.

After waiting for around 10 years for grass, shrubs, trees, or other vegetation to become reestablished, the mine must hire an independent contractor to perform extensive inspections and recommend phase III bond release to DNR, which must then verify the contractor’s work.

DNR conducted its own final inspections in June, drawing on data from satellite sensing, unmanned aerial vehicle surveys, and on-the-ground observations to verify the evaluation work by Alaska environmental services firm ABR, Inc.

In a report published on Sept. 17, DNR recommended phase III bond release for 367 acres at the Poker Flats site. However, additional minor reclamation of the remaining mining acres, including removal of shops, offices, and roads, will be necessary before the rest of the land will be eligible for phase III bond release.

Russ Kirkham, a senior DNR geologist and member of the agency’s reclamation inspection team, said Usibelli has worked diligently with DNR and University of Alaska officials to design an effective approach revegetating the land and returning it to nature after producing more than 25 million tons of coal over its operating life.

“Usibelli Coal Mine has worked very hard and waited patiently to achieve this recognition,” Kirkham said. “For this bond release, they met the requirements of very stringent state oversight for the permit, and the results of their work went beyond what was required.”

This is not a surprise for a company owned by a family that has called this area home for more than 75 years and has pioneered mine restoration in Alaska.

Usibelli begins reclamation before it ever starts mining – taking inventory of the variety and abundance of natural vegetation found in the proposed mining area and the conditions necessary for its growth.

When mining is done, and the land recontoured, the company seeds the area with a carefully researched mixture of grasses and several plants indigenous to northern regions. Since 1970, the mine has reclaimed more than 5,500 acres and planted more than 500,000 seedlings. Over a period of years, native Alaskan vegetation invades the area, returning the mined land to its natural appearance.

Many species of Alaskan wildlife, such as Dall sheep, moose, and caribou, feed on revegetated areas throughout the mine where heavy equipment once operated.

The abundance of wildlife on Usibelli reclaimed lands is something DNR inspectors are all too familiar with.

“They did a real good job at reclaiming this land,” said Kirkham. “Now, DNR inspectors won’t go into the area without carrying bear spray. There’s lots of good browse and habitat that attracts moose, bears and other wildlife – pretty soon you’d be hard-pressed to tell there ever was mining here.”

The Poker Flats area is only the second mining area in Alaska to achieve phase III bond release. The first was the Gold Run Pass coal mine, another Usibelli operation.


Commodity Giant Trafigura Paints Bullish Outlook for Oil and Gas
Javier Blas, Bloomberg, September 27, 2021

The world faces higher oil and gas prices this winter and beyond as supply struggles to catch up with fast-rising demand, according to Trafigura Group, one of the world’s largest commodity trading houses. 

“We’re going to see higher oil prices,” Ben Luckock, Trafigura’s co-head of oil trading said in an interview. 

Luckock said the market was mis-pricing forward oil contracts for the next couple of years because traders hadn’t yet woken up to the fact the supply-demand balance will remain tight for some time.

“Deferred crude, particularly for December 2022 and 2023, is cheap,” he said. Brent crude for delivery in December 2022 is currently changing hands at around $70 a barrel, but Lukic said it wouldn’t be surprised if Brent has risen to about $100 a barrel by then.

“I struggle to see anything but higher prices going forward in the next two years,” he said. 

On Monday, Brent crude for immediate delivery surged toward $80 a barrel, setting its highest price in nearly three years. 

Trafigura is the world’s second-largest independent oil trader, behind industry leader Vitol Group, giving the company a privileged view of global energy flows. 

On natural gas, he said prices could shoot up sharply this winter if cold weather forces demand higher in Europe and Asia. 

The bullish outlook comes as oil demand fast recovers toward its pre-pandemic level, with most traders expecting that consumption will reach the 2019 by early-to-mid 2022. As demand rebounds, supply has struggled to keep up: U.S. shale companies have kept a lid on spending, preferring to pay dividends to shareholders. With U.S. shale reacting slowly to higher prices, the OPEC+ oil cartel has been able to keep control of the market. 

“The U.S. shale industry is showing very strong discipline. Oil prices are roughly double what they were a year ago and despite that we’re not seeing a huge increase in drilling,” Luckock said.

Luckock said that it was difficult to see lower natural gas prices this winter in Europe, despite the commodity trading at a record high already. 

“If it’s a cold winter in Europe or Asia, we have a big problem,” he said. “If it’s cold, and on top, it isn’t windy, then we have a much bigger problem. We will face shortages.”

Natural gas prices in Europe have surged past $25 per million British thermal unit, more than 400% higher than the 2010-2020 average, and significantly higher than in the U.S., where the commodity trades at around $5 per million Btu. In Asia, liquefied natural gas has recently changed hands at around $27 per million Btu, a seasonal record high. 

“If the weather is normal, prices could drop a bit lower; if the weather is bad, prices will rise a lot higher,” Luckock said. 

Luckock said he was skeptical that Russia, the biggest gas supplier to Europe, was intentionally tightening the market for political gain, suggesting that Moscow was already pumping as much gas as it could right now. 

“It’s easy to say that’s politically motivated, but I think it’s simpler than that: Russia is facing maintenance in many gas fields, very low domestic inventories, substantially increased flows to Turkey, and Gazprom is struggling to increase production,” he said. 


U.K. suspends competition law to address fuel shortages
Axios, September 27, 2021

The British government is temporarily suspending competition law and considering sending in the army to help supply gas stations amid a nationwide fuel shortage, per the BBC.

Why it matters: Petrol Retailers Association chair Brian Madderson told Sky News on Monday that two-thirds of its roughly 5,500 independent gas stations had ran out of fuel, with the remainder “partly dry and running out soon.”

  • BP, the second-largest fuel retailer in the United Kingdom, said Sunday that nearly a third of its gas stations had run out of main grades, citing panic buying as a cause for the shortage.

The big picture: Gas prices have surged globally, but the U.K. also faces a shortage of truck drivers, which the Conservative government has sought to blame on a “manufactured situation” and panic-buying.

  • Prime Minister Boris Johnson said Saturday the government would issue short-term work visas for foreign truck drivers and poultry workers to help firms address staffing shortages, which Bloomberg noted were “exacerbated by the post-Brexit clampdown on immigration from the European Union.”
  • Elizabeth de Jong, director of policy for Logistics U.K., said the country had “lost 72,000 drivers between the second quarter of 2019 and the same period in 2021,” in part because of workers returning to EU countries after Brexit, per the BBC.


China to form two rare earth giants to strengthen pricing power
Bloomberg News, September 24, 2021

China is planning to create two rare earth mining giants in an effort to gain better pricing power in global markets, according to people familiar with the matter.

The government is aiming to eventually consolidate all its rare earth miners and processors into the two huge firms, one in the north and one in the south, the people said, asking not to be identified discussing a private matter.

The one in southern China will oversee medium-to-heavy rare earths, and the other in the north will control all light rare earths, the people said. It’s unclear when the merger will be completed. 

Related Read: Automakers look to hedge against China’s rare earth dominance

Beijing has been restructuring the industry for years into six large state-controlled groups. By consolidating, it hopes to maintain its dominance in the production of the strategic metals, of which it controls 70%, as the U.S. and Europe look to develop their own production and supply chains and diversify away from China. 

Several state-owned miners, including Aluminum Corp. of China, will restructure their assets, China Minmetals Corp.’s rare earth unit said in a filing to the Shenzhen Stock Exchange on Thursday evening. That’s the first step toward the consolidation into two giant entities, the people said.

The State-owned Assets Supervision and Administration Commission of the State Council, which oversees some of the miners, didn’t respond to a fax seeking comment. Questions faxed to the Ministry of Industry and Information Technology, which is in charge of rare earths management, also went unanswered. 

While details of the first stage in the restructure are scant, the parties involved own stakes in four out of the six dominant rare-earths producers. The importance of the materials, ubiquitous across a range of applications from consumer goods to military gear, was thrust into the spotlight in 2019 as China mulled whether to use its position as the world’s dominant supplier as a counter in its trade war with Washington. 

Beijing’s decision almost 30 years ago to make rare earths a strategic material and ban foreigners from mining them helped pave the way for China to elbow aside the U.S. as the world’s leading producer. The minerals’ biggest usage is in permanent magnets, which include the NdFeB variety, found in everything from phones to computers to cars.

Demand for rare earths — a broad group of 17 elements — is rising, driven by growing need for permanent magnets. Prices of neodymium and praseodymium, — or NdPr, two of the 17 rare earth elements that are used in NdFeB magnets — surged to the highest in a decade this summer.


World’s largest companies make major carbon-cutting pledges
Ben Geman, Axios, September 27, 2021

Carbon-cutting pledges of many of the world’s largest companies would together take a big bite out of global greenhouse gas output, a new tally shows.

Driving the news: BloombergNEF analyzed the pledges of 111 companies with net-zero targets on the “focus” list of companies held by Climate Action 100+, an investor network that pushes corporations on climate.

Why it matters: Through August, 111 companies of the 167 companies on the list had targets that would cut 9.8 billion metric tons of CO2 equivalent by 2050, or roughly one-fourth of global emissions today.

Yes, but: While ambitious long-term pledges have become the coin of the realm in big companies’ boardrooms, the degree of tangible steps that follow these targets is uncertain.

  • “As more net-zero targets are set by corporations, the conversation will change from one focused on quantity to one around quality,” said Kyle Harrison, BloombergNEF’s head of sustainability research.