News and analysis

HOUSTON (ICIS)–US subsea mineral exploration company Odyssey Marine Exploration announced it has been awarded $37.1 million in its arbitration with Mexico under Chapter Eleven of the North American Free Trade Agreement (NAFTA). Odyssey said it has received notification from the International Centre for Settlement of Investment Disputes (ICSID) of the arbitral award on the claims involving Odyssey and its subsidiary, Exploraciones Oceanicas (ExO) related to a planned offshore phosphate project. The company took legal action in 2018 over the rejection of an environmental permit in 2016. Finding it difficult to resolve, Odyssey said it took the NAFTA action after it determined it needed to commence the arbitration to protect its shareholders’ investment. The award orders Mexico to pay the fine for breaching its obligations under NAFTA, plus interest at the one-year Mexico Treasury bond rate, compounded annually, from 12 October 2018, until paid in full as well as the arbitrators’ fees and ICSID administrative costs. The company said the amounts awarded are net of Mexican taxes and Mexico may not tax the award and that it expects most, or all will be used to satisfy its litigation financing obligations. Odyssey said ExO is also once again challenging the decision of the environmental agency before Mexico's highest federal administrative court, the Tribunal Federal de Justicia Administrativa. It did not reveal when it expects a decision. Company officials said the ruling validates their position that the environmental agency wrongfully denied the permit despite it having received extensive input to determine not only an economically feasible development plan but one which is environmentally responsible. “The project remains strategically significant and commercially viable,” said Mark Gordon, Odyssey Marine Exploration CEO. “We are poised to continue advancing our projects globally, while also collaborating with nations interested in exploring their underwater mineral resources to meet the escalating demand for critical minerals. “ “Our focus remains on minerals that offer solutions to pressing global challenges, such as mitigating carbon emissions through renewable energy adoption and enhancing fertilizer accessibility to support an ever-growing global population.”

19-Sep-2024

SINGAPORE (ICIS)–Thai conglomerate Siam Cement Group (SCG) plans to use ethane imported from the US as feedstock for its Long Son Petrochemical (LSP) complex in Vietnam to boost the project’s long-term competitiveness. Storage, supporting facilities for ethane to be built on site Ethane targeted as major feedstock for LSP cracker; C2 market “turbulence” expected LSP commercial operations start October SCG is in talks with a contractor for the new ethane storage project, with construction of the facilities expected to take about three years to complete, the company said in roadshow presentation on 16 September. “The site is equipped with a central utility system, ready for the installation of ethane gas storage tanks and pipelines,” the company said in a separate statement on 16 September. SCG has yet to finalize the capital expenditure for the project, and the prospective US ethane supplier for LSP was not disclosed. The $5.4bn LSP project in Ba Ria-Vung Tao province is Vietnam’s first integrated petrochemical complex and is 100%-owned by Thai conglomerate SCG. The mixed-feed cracker at the site currently uses propane and naphtha feedstocks imported from Qatar under a long-term supply deal. The cracker can produce 950,000 tonnes/year of ethylene; 400,000 tonnes/year of propylene; and 100,000 tonnes/year of butadiene (BD). SCG said that LSP is already operating flexible gas cracker which can use a variety of feedstocks, including ethane, propane, and naphtha. Ethane imported from the US is currently cheaper by $200-400/tonne than existing feedstock, SCG said, noting that the average price of ethane has been around 40% lower than that of naphtha and propane over the past three years. The feedstock derived from shale gas also provides greater price stability as it is linked to US natural gas prices, unlike naphtha, which is influenced by oil price fluctuations. FEEDSTOCK DIVERSIFICATION The enhancement to LSP's feedstock flexibility is part of SCG's efforts to bolster its chemicals business in the face of global oversupply, low demand and oil price volatility, SCG said. For ethylene (C2), the company expects "future turbulence" in the market, especially in 2027-2028 amid a wave of new global cracker additions, especially in China. Global ethylene supply is projected by SCG to grow at a slower average rate of around 3-4% in 2025-2030, compared with 5% in 2019-2024. China will comprise around 53% of new ethylene supply additions in 2025-2030, it noted. SCG expects an "extended chemicals trough with low margin" in 2025-2030 amid continued naphtha price volatility. “The current global situation and the future outlook over the next 2-5 years will be marked by increased volatility,” SCG CEO and president Thammasak Sethaudom said on 16 September. “All SCG businesses are moving forward with strategies that align with these dynamics while also reducing carbon dioxide emissions…to ensure long-term competitiveness.” LSP COMMERCIAL OPERATIONS START OCTOBER The LSP complex has completed performance test runs in September and is on track to start commercial operations next month, according to SCG. Its utilization rate following start-up will be "determined by global demand dynamics", it said. LSP’s downstream plants include a 500,000 tonne/year high density polyethylene (HDPE) unit; a linear low density PE (LLDPE) unit of the same capacity; and a 400,000 tonne/year polypropylene (PP) unit. The cracker had an outage in February due to a technical issue and resumed normal operations in August. It had declared a force majeure in February due to issues at the cracker that also shut its downstream PE and PP units. Credit ratings agency Fitch Ratings in a note on 17 September said that it expects LSP to ramp up its utilization rate to 70-80% in 2025, “supported by its cost competitiveness versus imports and the flexibility to use both propane and naphtha as feedstock”. Imports currently fulfil nearly all of Vietnam's petrochemical requirements. Focus article by Nurluqman Suratman Thumbnail photo: Aerial view of SCG's Long Son Petrochemical Complex in Vietnam (Source: SCG)

19-Sep-2024

HOUSTON (ICIS)–Mineral development company First Phosphate announced it has the results of its initial mineral resource estimate for its Begin-Lamarche project, located in the Saguenay-Lac-St-Jean Region, Quebec. The MRE was undertaken by P&E Mining Consultants and it showed favorable results with there being an inferred pit-constrained mineral resource of 214 million tonnes at a phosphate grade of 6.01%, with an indicated pit-constrained mineral resource of 41.5 million tonnes with a grade of 6.49%. First Phosphate said the Begin-Lamarche deposit also presents the potential for recovering two additional primary mineral products which are a magnetite concentrate, iron and an ilmenite concentrate, titanium. It added that it contains very low levels of potentially deleterious elements. “We have demonstrated that the company benefits from a substantial strategic phosphate deposit located at only 70 km from the deep-sea port of Saguenay and Canadian Air Forces NATO Base Bagotville,” said John Passalacqua, First Phosphate CEO. “Our goal will be to bring this mineral resource into preliminary economic assessment later this year to then be able to evaluate the commencement of a feasibility study.”

18-Sep-2024

HOUSTON (ICIS)–Singapore-based SACL has identified sites in Australia where three biofuel plants could be built that would use process technology provided by Comstock, the US-based company said on Wednesday. A site in southeastern Australia could accommodate a 250,000 tonne/year renewable refinery, Comstock said. One in northwestern Australia could be home to another 250,000 tonne/year renewable refinery, the company said. The eastern coast of northern Australia could have a 750,000 tonne/year renewable refinery, Comstock said. If built, the three refineries would have total costs of $2.4 billion and produce 160 million gallons/year (606 million liters/year) of gasoline, sustainable aviation fuel (SAF) and other renewable fuels from biomass as well as 140 million gallons/year of renewable fuels from vegetable oils. SACL also signed an exclusive marketing agreement for Comstock's processes in Australia and New Zealand. Comstock's process technology works as follows: It digests and fractionates biomass. Cellulose is converted into ethanol. Lignin is converted into mixture of hydrocarbons that Comstock calls Bioleum. The Bioleum is converted into a deoxygenated oil by using hydrogen. The oil is refined into fuel. Gas-to-liquids emissions are captured and converted into fuel.

18-Sep-2024

HOUSTON (ICIS)–RWE Supply & Trading announced it has signed a memorandum of understanding (MoU) with AM Green Ammonia (AMG) for the long-term supply of green ammonia from its plants based in India. The terms outline the supply of up to 250,000 tonnes/year of green ammonia to be sourced from AMG's production sites in Kakinada and Tuticorin, India. Deliveries from AMG’s sites are expected to start by 2027 with a subsequent offtake agreement between RWE and AMG forthcoming which will detail the contractual provisions. The plan is that initially there will be 50,000 tonnes coming from the Kakinada site, with the remaining volume of up to 200,000 tonnes to be sourced from the Tuticorin facility. AMG's ammonia manufacturing facilities will be powered entirely by carbon-free energy sources such as solar, wind, and hydroelectric power and the produced ammonia will meet standards for Renewable Fuels of Non-Biological Origin (RFNBO). AMG’s facility in Kakinada has already been pre-certified for RFNBO compliance. Pre-certification for other facilities is underway. “RWE is committed to investing in hydrogen and its low-carbon derivatives to help industries achieve their climate goals. For this end, we are building strong supply chains with partners globally. Partnering with AMG allows us to secure green ammonia capacities at an early stage,” said Costas Papamantellos, RWE Supply & Trading Head of International Hydrogen Investments.

18-Sep-2024

HOUSTON (ICIS)–Australian Potash Limited (APC) announced it has reached a land access agreement for exploration with Tjamu Tjamu for the Nexus project located in West Arunta. Tjamu Tjamu has agreed, subject to APC complying with the terms, to allow access to their native lands and for the conducting of exploration activities. The Nexus project is comprised of three exploration licenses and is described by the company as an early-stage exploration opportunity surrounded by globally significant and emerging rare earth and critical mineral element deposits. APC said the agreement recognizes the existence of native title rights and interests in the whole of the determination area, which covers large areas of the West Arunta region of Western Australia including the Nexus site. Officials said the West Arunta area has drawn increased interest in undertaking high value exploration over the past couple of years, and it expressed gratitude to the traditional owners for generously giving their time to review the exploration proposal. APC said the next step involves proposing work programs for heritage clearance assessment. “We have been working with our geophysics consultants to plan air-borne magnetic and ground-based gravity surveys, and with our geological consultants to plan our initial on-ground, non-intrusive mapping and rock chipping program,” said Matt Shackleton Australian Potash Limited managing director and CEO. “We look forward to updating our shareholders as we progress through the heritage clearance assessment and move into unlocking the potential of our tenements in the highly sought after West Arunta region.”

18-Sep-2024

HOUSTON (ICIS)–The Federal Reserve lowered its benchmark interest rate by a half point to 4.75-5.00% on Wednesday, and the central bank could lower it by an additional half point by the end of the year. The following table summarizes the current and past forecasts for rates, inflation and GDP by members of the Federal Reserve. 2024 2025 2026 Fed funds 4.4% 3.4% 2.9% June forecast 5.1% 4.1% 3.1% GDP 2.0% 2.0% 2.0% June forecast 2.1% 2.0% 2.0% Core PCE Inflation 2.6% 2.2% 2.0% June forecast 2.8% 2.3% 2.0% Source: Fed If the forecasts hold true, the US economy will achieve a soft landing, with inflation falling to the Fed's long-term goal of 2% without triggering a recession. FED NOTES WEAKER JOB MARKET, INFLATIONThe Fed said that the job market had slowed since the last time it voted on rates at the end of July. Inflation has moved closer to the Fed's goal but remains somewhat elevated. Unlike its previous statement in July, the Fed said it "has gained greater confidence that inflation is moving sustainably toward 2%". In addition, the Fed stressed its commitment to support maximum employment. Its last statement in July lacked such a statement. CHEMS WILL WAIT BEFORE RATES TRIGGER RECOVERY IN DURABLESChemical producers will have to wait before lower rates cause a recovery for demand in durable goods and housing. Both are key end markets for polymers such as polypropylene (PP), nylon, acrylonitrile butadiene styrene (ABS) as well as chemicals used to make polyurethanes, such as isocyanates, polyols and propylene oxide (PO). Huntsman said the lag is typically about two quarters. Ultimately, mortgage rates will need to approach 5% before markets for homes and durable goods can recover, according to Dow. Higher rates had made housing and durable goods like furniture and appliances less affordable. Because fewer consumers are buying homes and moving, they are purchasing fewer durable goods. LOWER RATES TEND TO BOOST OIL, CHEM PRICESTypically, prices for oil and other dollar-denominated commodities tend to rise as US interest rates fall. A rise in oil prices typically causes those for petrochemicals to increase. Margins for US-based producers benefit from higher oil prices because their plants predominantly rely on gas-based feedstock. By contrast, much of the world relies on oil-based naphtha, giving US producers a cost advantage. FIRST CUT IN MORE THAN FOUR YEARSThe last time the Federal Reserve lowered interest rates was in March 2020, during the COVID-19 pandemic. Lockdowns, government stimulus and recovery caused a surge in inflation, which led the Federal Reserve to begin raising the benchmark rate two years later in what became the most aggressive tightening campaign in more than 40 years. The Fed stopped raising the rate in July 2023. A year later, inflation started showing signs of approaching the Fed's target of 2%. At the same time, the labor market began cooling off and returning to more normal levels. Focus article by Al Greenwood Thumbnail shows money. Image by ICIS.

18-Sep-2024

BRM East exchange to roll out spot gas trading platform Platform launch comes as trading liquidity picks up in the country Activity likely to increase from next year amid organised market trading obligation for large consumers LONDON (ICIS)–Moldova is expecting to launch its spot gas market at the end of September, as trading liquidity on forward wholesale and retail platforms has been building up. The spot platform operated by BRM East, the Moldovan branch of the Romanian commodities exchange BRM, has received its final approvals from the Moldovan ministry of finance and is due to launch between 25-30 September. Ionut Lupulescu, executive director of BRM East said the exchange will now reach to the existing 14 counterparties, currently trading on the other retail and forward wholesale gas platforms to get their signatures. “The platform is ready to launch, we just had to wait for relevant approvals,” he said, noting that the number of participants could increase once it becomes available. Companies will be able to trade day-ahead and intra-day products from Monday to Friday between 10:00 – 15:00 hours, local time. The limitations are dictated by a contractual agreement between BRM East and the local gas grid operator, VMTG, a company majority-owned by Romania’s Transgaz. BRM East rolled out the retail and forward platforms in April, offering forward contracts ranging from standardised week-ahead and month-ahead products to Year+1 contracts plus bespoke contracts. “Since we launched, a total of 6TWh changed hands on the wholesale platform and around 80GWh on retail,” he said. Activity is expected to pick up from next year as large industrial consumers are required under law to buy volumes on organised markets.

18-Sep-2024

SINGAPORE (ICIS)–Tropical Storm Pulasan is approaching China’s eastern coast and is expected to make landfall in Zhejiang province in the afternoon of 19 September At 8:00 hours Beijing time (01:00 GMT) on Wednesday, the storm was moving in the northwest Pacific Ocean, about 570 kilometers southeast of Naha City in the Ryukyu Islands of Japan. Pulasan is moving at a speed of 45 kilometers/hour toward the northeast and forecast to enter the East China Sea on Wednesday evening. It is expected to strengthen into a typhoon and make landfall along the Yuhuan and Xiangshan regions in Zhejiang in the afternoon of 19 September, according to China’s National Meteorological administration (NMA). Zhejiang's Ningbo City – which is a petrochemical hub – initiated Level IV typhoon emergency response – the lowest of four levels – at 9:00 hours on Wednesday. Pulasan would be the second storm to hit east China in a week. On 16 September, Typhoon Bebinca made landfall in China’s financial hub of Shanghai, causing severe damage to infrastructure and businesses. It weakened as its moved inland with its remnants still affecting the provinces of Anhui and Henan on Wednesday.

18-Sep-2024

HOUSTON (ICIS)–US conservation groups have announced the reaching of an agreement with phosphate mining company P4 Productions which will result in millions in payments and other measures to benefit the conservation of sage grouse and other wildlife. Under the agreement, P4, which is a subsidiary of Bayer AG, has agreed to pay $5.1 million to a trust fund for sage grouse habitat restoration and conservation and $2.43 million to acquire land to protect wildlife habitat connectivity. There will be an additional $300,000 provided for sage grouse population surveys. The company also agrees to operational restrictions of its Caldwell Canyon phosphate mine in southeast Idaho to minimize the mine’s impact on sage grouse. Some of those measures includes refraining from rail traffic to or from the mine prior to 27 April each year and evaluating then implementing selenium dust mitigation measures at the ore handling and storage area. This agreement resolves a 2021 lawsuit filed by the Center for Biological Diversity, Western Watersheds Project and WildEarth Guardians. In that action, the parties were challenging a decision by the Bureau of Land Management (BLM) to approve approximately 1,559 acres to be strip-mined for phosphate of what it deemed as ecologically important land which is essential to the sage grouse and other species. Once numbering in the millions the sage grouse populations is estimated to have declined by as much as 93% and the conservation groups say that phosphate mining has had a serious negative impact, especially on the birds in this portion of Idaho. “Phosphate mines have greatly reduced the ability of many species, including grouse, to move within and through southeast Idaho to connect with other populations,” said Chris Krupp, WildEarth Guardians a public lands attorney. “This agreement can be a first step in a much-needed larger effort to reconnect wildlife and their habitat in the region.” The groups said the BLM is now reviewing a newly proposed mine and reclamation plan and will be issuing a new decision. “I’m glad this agreement will help conserve greater sage grouse and curb the harms of this mining project,” said Lori Ann Burd, Center for Biological Diversity’s Environmental Health Program director. “This case helped make clear that the federal government can’t simply ignore the environmental harms of phosphate mining. This is a great start, but we’ve got to do much more to confront the mining industry’s threats to sage grouse and other imperiled animals and plants.”

17-Sep-2024