FT: Europe faces critical shortage of metals needed for clean energy

 The Financial Times writes: 

Europe faces a critical shortage of clean-energy metals and needs to decide urgently how it will bridge the looming supply gap or risk new dependencies on unsustainable producers. 

 That is the conclusion of a new study commissioned by Eurometaux, an industry group that represents some of the region’s biggest metal producers, including Glencore and Rio Tinto.

  The report, written by Belgium’s Katholieke Universiteit Leuven, marks the first attempt to provide some EU-specific numbers around last year’s warning from the International Energy Agency of supply challenges owing to the amount of metals needed for batteries, solar panels and wind turbines. 

 It comes as the EU, which is aiming to be carbon neutral by 2050, looks to reduce its dependence on imported Russian energy and make a quicker switch to renewable energy.

 “There is a risk . . . with the geopolitical developments we are seeing round the world that Europe . . . will not have the metal for its climate programme,” said Mikael Staffas, president of Eurometaux and chief executive of Boliden, one of Europe’s biggest metals and mining companies. He was speaking before the launch of the study in Brussels.

You can read the rest of the piece via the below link:

https://www.ft.com/content/72400b96-4c67-4a7f-9a98-53371f5ab421?fbclid=IwAR1UsPYM-oQNYFWHwUxkkBA10T2vOMrWTR_xoNpwwpl71F3sAZO7lIdMnx4

Europe: Countries of the bloc sound out strategies to avoid the commodities trap

 After the rude awakening caused by the military aggression by Russia on Ukraine and the assessment of the overwhelming dependency of countries - especially Germany - on gas supply from Russia, thinktanks in the EU reflect about how not to repeat the same mistake with other commodities such as rare earths, titanium or graphite, writes WELT:

The Ukraine war and the gas crisis are causing politicians to view Europe's heavy dependence on a few raw material suppliers with greater concern than before. When it comes to mining and processing strategically important raw materials, countries such as China hold quasi-monopolies – and of all things when it comes to the materials on which the European energy and mobility transition depends.

The business-oriented think tank Center for European Politics (CEP) has now investigated how dependent the EU is on such raw materials. Germany and other European economies are therefore too dependent on raw materials from a few countries for future key technologies and should end this dependency as quickly as possible. "The chances of survival of the European economic and social model are also decided on the international commodity markets," says the unpublished study, which is available to WELT.

For the study, the researchers specifically identified resources that are indispensable for future technologies, but whose supply situation is critical. To do this, they brought together two analyses: on the one hand, a study by the German Raw Materials Agency (DERA), which identifies groups of raw materials that are essential for the energy transition and digitization, and on the other hand, a list from the European Commission of 30 raw materials for which there are supply risks.

The researchers have identified twelve substances that are equally promising and supply-critical. The list includes materials such as lithium, cobalt and rare earths, which also dominate the public debate about the scarcity of raw materials. However, substances such as titanium, graphite and more exotic substances such as scandium and vanadium also appear.

They are in wind turbines, solar systems, batteries for electric cars, fuel cells, electric motors or in microchips, displays and fiber optic cables. And for all the substances examined, a few or even just individual countries dominate the global supply.

"Not only is a large part of the relevant raw material deposits outside of one's own sphere of influence," says study author André Wolf. “The global markets are currently also predominantly dominated by countries that represent strategic rivals or that do not share the environmental and social standards that are essential for the EU’s self-image. The move away from fossil resources threatens to replace old dependencies with new, unwanted ones.”

The dominance of China is particularly striking: The country was the most important sponsor of eight of the twelve substances examined in 2020. If one also takes into account the processing of raw materials, China's dominance is likely to be even greater.

And the leadership in Beijing has shown in the past that it is willing to use this power. At the end of 2010, China had stopped exports of rare earths to Japan because of a diplomatic dispute in order to extort concessions from Tokyo.

The realization is not new, but Brussels and national capitals have been alarmed since Russia invaded Ukraine. The fact that geopolitical upheavals are jeopardizing the supply of raw materials is suddenly no longer an abstract danger.

“Russia is blackmailing us. Russia uses energy as a weapon,” said Ursula von der Leyen, President of the European Commission recently. There is concern in her authority and in the national capitals that such a scenario could happen again.

Because geopolitically the world threatens to split into two blocs again: on the one hand the western world, on the other hand countries like Russia, China and other authoritarian systems. Against this background, the EU states want to secure the supply of critical raw materials and end one-sided dependencies.

Two years ago, Industry Commissioner Thierry Breton's staff presented an action plan on raw materials, but it was relatively non-binding. Since the outbreak of the Ukraine war, the agency has tightened its course. In March von der Leyen announced a law on critical raw materials. The draft should be available by the end of the year.

One of the things discussed in Brussels is that companies or even states should build up strategic stocks of important raw materials. The increased mining of critical raw materials in Europe should also make the EU more independent from the rest of the world.

However, the CEP experts warn that the Commission's plans could overshoot the mark. In particular, the scientists consider plans to mine critical raw materials in Europe to be misleading. "Massive state support for the mining of future raw materials in the EU area would be a questionable strategy from an economic policy point of view," says the study.

The EU does have significant deposits of lithium and rare earths, for example. States like China are not only so dominant on the raw materials markets because of the deposits there, but also thanks to state subsidies, low wages and low environmental standards. “The EU cannot and should not copy such a strategy.”

Instead, in the short term, Europe should look around for new sources of raw materials in friendly countries that have large deposits, good infrastructure and share Europe's values. Norway, Canada and the USA in particular are ideal partners.

In fact, the EU is striving for such strategic raw material partnerships, but so far it has only agreed on two: with Canada and, of all places, Ukraine. However, a sense of proportion is required for the agreements, after all, new one-sided dependencies must not arise.

In the long term, the EU must expand the recycling of strategically important raw materials in order to secure supplies, write the CEP researchers. The EU Commission is also in favor of this. According to a study by the authority, the recycling rate for cobalt and platinum metals, which are mainly used for electric motors, was 20 percent in the EU in 2020. In the case of iridium or lithium, however, the quotas would be close to zero.

Russia accepts payment for gas supply only in rubles

 WELT:

In the future, customers in Germany and other EU countries will have to pay in rubles for gas deliveries from Russia. Russian President Vladimir Putin on Wednesday instructed the government to stop accepting payments in dollars or euros. Deliveries would continue to be fully guaranteed, the Kremlin chief assured in a government video conference that was broadcast on state television.

The "unfriendly states" blacklisted by Russia are affected. This includes Germany and all other EU countries, but also the USA, Canada and Great Britain.

The announcement promptly strengthened the Russian currency, which is under massive pressure. The move could therefore also aim to support the ruble exchange rate. Gas companies would first have to buy rubles on the foreign exchange market.

The central bank and the Russian government now have a week to determine the modalities for switching from foreign exchange to ruble payments, Putin said. The West itself has devalued its currencies by freezing Russian assets abroad.

"Escalation of the Economic War"

"This is an escalation of the economic war," Jens Südekum, a member of the scientific advisory board of the Federal Ministry of Economics and Technology, told the Reuters news agency. "Not many expected this broadside."

For Südekum, this represents a clear breach of contract. "There are long-term contracts for gas supplies that are denominated in dollars," said the professor at the Institute for Competition Economics at Heinrich Heine University in Düsseldorf. "If Putin now declares that he only accepts rubles, he is breaking these contracts." The West will now have to react in some way. "An embargo on energy imports from Russia has now become more likely."

If the West followed Russia's request, it would have to circumvent its own sanctions over the war against Ukraine and take rubles from the Russian central bank. "But it was actually sanctioned," said Südekum. "That's why you can't actually do that."

As a reaction to the sanctions imposed by the West, the Russian government had already decided at the beginning of the month that its own financial obligations to "unfriendly states" would only be settled in rubles. These include Ukraine, Switzerland and Japan.

Gas: Spain positions itself as gas hub; wants to revitalize MidCat pipeline

 In view of the war in Ukraine and the sudden turnaround in gas procurement Spain positions itself as gas hub. Indeed it has a direct gas pipeline to Algeria (Medgaz) and has also the biggest LNG stocking capacity in Europe. Spanish government suggest the reconsideration of the MidCat pipeline (planned from Portugal, through Spain and the Pyrenees to France) that was abandoned in 2019 to compensate the unwelcomed gas from Russia, Le Monde:

While Europe seeks to reduce its dependence on Russian gas, Spain intends to position itself as a strategic "hub" to diversify the continent's supply sources. "We can be an alternative to Russian gas," insisted the Ministry of Foreign Affairs, from the beginning of February, even before the invasion in Ukraine. The idea has since caught on. “With its great energy capacity and its great experience in renewable energies, Spain can and will play an important role in supplying Europe, finally confirmed the President of the European Commission, Ursula von der Leyen, on a visit to Madrid. , March 5. And, for this, we must work in the interconnections between the Iberian Peninsula and the rest of the European Union [EU]. »

LNG: discordance about the export of US LNG

As an appendix to this article,  oilprice.com writes:

Just as U.S. exports of liquefied natural gas (LNG) serves as the main cog in helping keep the lights on and homes heated in Europe in this windless winter, a group of Democratic senators sends a letter to Energy Secretary Jennifer Granholm urging her and the Biden administration to take action to limit U.S. LNG exports.

In their letter, these 10 senators "...urge the Department to conduct a review of LNG exports and their impact on domestic prices and the public interest, and develop a plan to ensure natural gas remains affordable for American households. Until such a plan is completed, the Department should consider halting permit approvals of U.S. LNG export facilities."

There are several problems with this approach. The first is that, as stated above, Europe is in desperate need of U.S. LNG this winter and likely beyond as its wind industry fails to deliver on its promises. Second is the fact that, despite record levels of LNG exports in recent months, U.S. natural gas production continues to enjoy a steady surplus over demand for it. The U.S. price, currently standing at about $4.80 per Mmbtu at the Henry Hub, is not connected to prices for international natural gas, which in Europe is currently selling for upwards of 6 to 7 times the U.S. price.

The U.S. proven resource of natural gas is equal to hundreds of years of current consumption. Shouldn’t we as a nation should celebrate our ability to pitch in a small sliver of what we produce to help avoid a looming humanitarian catastrophe across the European continent? That crisis was brought on by the wrong-headed energy policies adopted by governments who share the general energy outlook of Granholm, Biden, and this group of senators.

You can read the rest of the piece via the below link:

https://oilprice.com/Energy/Natural-Gas/Democrat-Senators-Are-Trying-To-Limit-US-LNG-Exports-For-All-The-Wrong-Reasons.html

LNG: The US are a new player in the european gas game

 In view of the tensions between Russia and Ukraine and the menace of a natural gas cut off from Russia and the increased will of several european countries to turn away from russian gas, us-american companies take the baton as a supplier of LNG to Europe, writes french newspaper Le Monde:

It was December 2021 when it appeared that Russia was amassing its troops on the doorstep of Ukraine. Suddenly, the Minerva Chios, an LNG carrier from Louisiana, turned around, while it was in the middle of the Indian Ocean. Direction Europe, via the Suez Canal, with its cargo of American liquefied natural gas (LNG). It was the same for the Maran Gas Vergina, coming from Delaware, which was approaching the Strait of Malacca: it turned around to unload in Turkey. The Marvel Crane, which was going to use the Panama Canal for Asia, headed for Spain. The Old Continent, so dependent on Russian gas, suddenly became attractive and shipowners diverted their cargoes to the best buyers.

EU: France and Germany strike deal on future usage of nuclear in Europe

 In an emergency summit of EU- energy secretaries, which was convened to work out responses to the high energy prices the participants agreed that nuclear will still be part of the european energy mix. The french government got its way against detractors of nuclear energy in other goverment of the Bloc writes WELT:

The subject was not on the agenda, but the advocates of nuclear power did not allow themselves to be dissuaded. At the emergency summit of the EU energy ministers, a show event at which the high energy prices should be publicized, the camp of the pro-nuclear countries spoke up anyway.

"Many delegations" have demanded that Brussels take a quick position on nuclear power, said the Slovenian Minister of Infrastructure Jernej Vrtovec on Tuesday afternoon after the meeting.

Egypt: oil export from Sumed pipeline suffers from lack of demand

"The destruction of European lifting of crude from Sumed was particularly pronounced in June and there has been a slight revival in July. Demand may be helping. Data from the TomTom Traffic Index show congestion remaining well below normal levels in cities in Spain and Italy, key markets for Sumed crude, but a slow pick-up in run rates at the region’s refineries is beginning to draw more crude from the pipeline."

writes Bloomberg.

You can read the rest of the piece via the below link:

https://www.bloomberg.com/news/articles/2020-07-27/egypt-s-giant-oil-pipeline-toward-europe-slows-to-a-trickle

Nord Stream 2 pipeline project under pressure from different actors

The controversial Gazprom-dominated pipeline project Nord Stream 2 faces hardship on the final sprint before completion.

Denmark has denied the route through its territorial waters and also rejects a permission of an alternative route through the exclusive economic zone.

The swiss subsidiary of  Nord Stream 2 has also filed a lawsuit against provisions of EU directive 2009/73/EC concerning common rules for the internal market in natural gas because it regards some previsions as discriminatory, for instance the incompatibility of the status of pipeline-operator and gas supplier.
 The outcome of the lawsuit is yet to be known.

Lastly the US Senate committee on foreign relations has drafted a bill, the Protect European Energy Security Act, that would allow sanctions  against swiss and italian companies providing ships for the underwater construction works of the pipeline.

Those developments make the completion of the Nord Stream 2 pipeline questionable. 

https://www.bild.de/bild-plus/politik/ausland/politik-ausland/nord-stream-2-warum-es-fuer-putins-neue-ostsee-pipeline-noch-richtig-eng-wird-63692948,view=conversionToLogin.bild.html 

Growth of LNG trade are increasing the options for Europe’s gas importers

The increase in global natural gas production, the buildup of new gas transport infrastructure, the decrease in natural gas prices, the growth of liquefied natural gas (LNG) trade are all already increasing the options for Europe’s gas importers and reducing the influence of the Russian energy giant Gazprom. That, in turn, will transform Europe’s energy security in the coming years.  

says Reuters in the commentary: "As Russia’s gas market gets weaker, Europe gets stronger."

LNG rings the bell of a new era in gas business in Europe

The first LNG-carrier from Sabine Pass at the border between the states of Texas and Louisiana landed in April 2016 in Portugal and could break the russian domination of gas business in Europe says german newspaper "Die Welt".

You can read the peace vie the below link:

https://www.welt.de/wirtschaft/article155249235/Das-Schiff-das-ein-neues-Gas-Zeitalter-einlaeutet.html