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Andy Home: US Aluminium smelters compete with Big Tech to get scarce power.
In the United States, it's been 45 years since anyone has built a primary aluminum smelter. Alumax opened the Mt Holly plant, in South Carolina, in 1980. The country now had 33 smelters with a combined capacity of nearly five million metric tonnes of aluminium per year. Six is the number today. Two have been completely curtailed. Mt Holly and two other plants are operating below capacity. The annual production has dropped to 700,000 tonnes. Emirates Global Aluminium is hoping to turn the tide in Oklahoma with a new facility. The new plant joins Century Aluminum which received federal funding from the Joe Biden Administration for a "green" low carbon smelter in the Ohio/Mississippi River Basins. Both projects are facing the same problem. The high power prices have killed most of the country's metal smelters, and the lack of affordable power has discouraged anyone from building a smelter since the turn of the century. The fact that tech companies are willing to pay anything for their data centres, which consume a lot of electricity, makes it difficult for any smelter projects to compete with them for power. No power, no metal Since ancient times, aluminium compounds have been used as dye fixers by the Egyptians and for pottery by the Persians. It wasn't until early in the 19th century, however, that someone figured out how to refine it into metal. Even then, it was still a costly curiosity. In 1869, the global production of aluminium was only two tons and it was worth more than gold. Charles Martin Hall, in the United States, and Paul Heroult, in France, independently discovered the solution by using electrolysis to alumina, an intermediate product. Hall-Heroult is the dominant process for producing metals that are ubiquitous in vehicles, buildings and consumer packaging. It also requires a large amount of power. According to the U.S. Aluminum Association, it takes 14,821 Kilowatt-hours to produce a ton aluminium. A modern-size aluminum smelter that has an annual capacity of 750,000 tonnes needs more electricity than a Boston-sized city. It's a huge challenge for primary aluminum producers in the United States, given that the Energy Information Administration has estimated the country to be facing a deficit of energy of 31 million megawatt hours by 2030, and 48 million by the year 2035. ALUMINIUM VERSUS AI Matt Aboud is Senior Vice President for Strategy & Business Development, Century Aluminum. He says that the power to build a U.S. aluminum smelter is now available. He explained the problem at the CRU Aluminium Conference held in London last week. It is that there is no fixed price for a long time, and a smelter would need that to secure its profitability, as well as pay off construction costs which will reach billions of dollars. According to the Aluminum Association, a new U.S. aluminum smelter needs a minimum of a 20-year contract for power at a cost not exceeding $40 per MWh in order to be financially viable. Every smelter is competing with Big Tech. They are both on the hunt for energy in order to power their next-generation artificially intelligent data centres. According to a report released by the Aluminum Association on rebuilding U.S. Supply Chain Resilience, tech companies are "not limited in what they will pay" for reliable 24/7 electricity. Microsoft reportedly paid Constellation Energy $115 per megawatt hour in order to restart Three Mile Island Nuclear Plant in Pennsylvania. It warned that even reactivating idle aluminium lines would be difficult, given the average 2023 power price of $73.42 per megawatt hour in the four U.S. States hosting smelters. "WHERE the wind sweeps down the plain" EGA has not yet signed a deal to provide electricity for its 600,000-ton smelter project in Oklahoma. According to the Memorandum of Understanding, signed by the state governor Kevin Stitt, the final go-ahead depends on an agreement "power solution framework" based on a Special Rate Offer from Public Service Company of Oklahoma. According to the EIA, Oklahoma produces almost three times as much energy as it consumes. In 2023, natural gas will account for around half of the electricity generated in Oklahoma. Wind power will make up another 42%. Oklahoma is actually the third-largest wind power state, after Texas and Iowa. To run an aluminum smelter using intermittent wind power, it would require a large amount of grid storage, so gas would be a part of the energy mix. It's better than coal, but it isn't ideal for an industry that collectively tries to reduce its carbon footprint in order to produce "greener" aluminium. DO NOT CHANGE IT! Even if EGA is able to secure a long-term, viable power deal, it will take until the end of this decade for the project to produce its first hot metal. According to projections by the Aluminum Association, 14 new remelt facilities are expected to be operational in 2020, bringing the U.S. scrap aluminum demand to 6.5 millions tons. Recycling uses much less energy, usually around 5%, than it does to produce new metal. It also has a lower capital cost. The shortage of scrap is the main obstacle to growth in secondary production in the United States. Only 43% of beverage cans are recycled in the country. This equates to 800,000 tonnes of aluminum thrown away every year. Also, it exports large amounts of scrap aluminium. Exports will increase by 17% annually to 2.4 millions tons in 2024. Most of these are destined for China which is hungry for recyclable materials. To reduce import dependence of a metal classified by all U.S. government agencies as critical, capturing more recyclable material and sending less abroad is a complementary approach. This is also more cost-effective and faster than waiting to find out if EGA or Century will win the fight with Big Tech to get enough power for a new primary melter. These are the opinions of the columnist, who is also an author. Mark Potter edited this article
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Bond sales continue as US House passes Trump’s 'big beautiful tax bill'
Bond vigilantes continue to monitor global debt markets, keeping dollar and stock prices subdued as the U.S. House of Representatives passes President Donald Trump's 'big beautiful' tax bill with a single-vote. Wall Street was expected to open slightly higher on Thursday after it fell on Wednesday, when the lackluster sales of long-term U.S. government bonds and Japanese debt highlighted the growing unease over rising government debt. This reinforced the "Sell America' narrative in the minds of investors after Moody's became the last major credit rating agency to strip the U.S. from its coveted Triple-A status last week. The yields on the benchmark German 20-year bond reached their highest level in two months, as global yield curves steepened. Figures showed that the British government borrowed more in April than was expected, and euro zone businesses unexpectedly returned to contraction. The stock markets of London, Paris and Milan were all between 0.75% to 1% lower. The dollar's strength against the Japanese yen was its lowest in two weeks. Bitcoin reached a new high as investors looked for alternatives to U.S. investments. The Committee for a Responsible Federal Budget, a non-partisan organization, estimates that the U.S. Bill, which extends Trump's 2017 tax cuts and boosts military spending as well as other expenditures, will add $3.8 trillion to the U.S. debt of $36 trillion in the next decade. Michael Metcalfe, State Street Global Markets, said: "It is good news that fiscal stimuli are coming because markets were worried about recession risks. But there is also concern about fiscal stability." I think that the dollar is a bellwether here. It shows that the confidence in U.S. policies has been affected if it doesn't respond to higher yields. The 30-year Treasury bond yields - which are a proxy of super-long-term U.S. borrowing costs – reached 5.13% - their highest level since October 2023 - and the yield on 20-year Treasury bonds hit 5.14% - its highest level since November 2023. Japan's bond market has also been under scrutiny, given its high debt-to GDP ratio. The 30-year JGB's yield was hovering at 3,169%, which is not far off the record high of 3.185% hit the previous session. After Wall Street's tumble on Wednesday, stocks in Asia also fell. MSCI's broadest Asia-Pacific share index outside Japan finished 0.6% lower while Japan's Nikkei dropped 0.8% due to the stronger yen. Francesco Pesole is a FX strategist with ING. Pesole said that the theme of "Sell America" is clearly negative for the dollar. TRADE DEAL PROGRESS The oil price dropped by more than 1.5% after a report that the OPEC+ countries are planning to increase production for July. Brent futures in Europe fell $1 or 1.5% to $63.98 per barrel, while U.S. West Texas intermediate crude fell 97 cents or 1.58% to $60.60. Investors are also nervous about the slow progress made to date in trade agreements. The Group of Seven's meeting in Canada was also a focus of attention. Finance ministers there had given a positive spin to discussions to reach a consensus on a communique that would largely cover non-tariff matters. Investors are looking for any hint that currency markets may be included in trade negotiations. But Thai and Japanese officials claimed that currency markets were never discussed. Bitcoin was not concerned about such things. It reached a record high of $111,862.98, which is a 3.3% rise from the Wednesday close. The move comes amid the hope that soon to be finalised U.S. stabilcoin regulations will continue to bring cryptocurrency assets into mainstream. Standard Chartered's Geoff Kendrick stated that "my official Bitcoin forecasts are 120k by the end of Q2, 200k by 2025, and 500k by 2028."
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Profits of Indian jeweller Tribhovandas Bhimji Zaveri fall due to sluggish market demand
Tribhovandas Zaveri, an Indian jeweller, reported its first profit drop in ten months on Thursday. The surge in bullion prices has led to a higher demand for investment gold instead of jewellery. The fourth-quarter net profit of the company fell by 24.7%, to 94.9 millions rupees ($1.10million). The price of gold increased by almost 17% in the first quarter of the year, and 10 grams of 24-carat rose to more than 90,000 rupees (1,052.26 dollars) by the end March. According to a World Gold Council report, India, which is the second largest gold consumer in the world, saw 7% growth in demand for gold investment. The total amount of gold sold in India in the third quarter jumped to 46,7 tons. The report stated that the demand for jewellery fell by 25%, to 71.4 tons, which is the lowest figure since 2009. Tribhovandas Bhimji Zaveri’s total revenue rose by 4.5% last quarter to 5.29 billion rupies, compared with a 9% increase in the same period a year earlier. The cost of raw materials increased by 34%, which pushed up expenses 4.8%. Kalyan Jewellers and Titan, the larger rival of Tribhovandas Bhimji Zaveri, both posted higher profits for the quarter earlier this month. The shares of the company closed 1.4% ahead of results. ($1 = 85.9250 Indian rupees) (Reporting by Meenakshi Maidas in Bengaluru; Editing by Savio D'Souza)
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Iran warns Israel and the US against any attack on their nuclear sites
Abbas Araqchi, the Foreign Minister, said that the United States would be legally responsible in case of an Israeli attack against Iranian nuclear facilities. This was after a CNN report stating that Israel could be involved. Prepare for strikes Iran Iran and the U.S. - Israel's closest allie - will hold their fifth round of talks in Rome on Friday amid a deep disagreement about uranium enrichment in Iran. Washington claims that this could lead to the development of nuclear bombs. Iran denies such intent. CNN, citing intelligence sources on Tuesday, said it was unclear whether Israel had reached a final military decision and that U.S. official disagreed on whether Israel would decide to attack. In a letter to UN Secretary-General Antonio Guterres, Araqchi warned that Iran would respond firmly to any act of adventurism or illegality by Israel's Zionist regime. Araqchi stated that Iran would consider Washington a "participant in such an attack" and Tehran would need to take "special measures" if the threats continued. The International Atomic Energy Agency (IAEA) would then be informed about such actions. Araqchi, the adviser to Iran's Supreme leader, did not mention what measures are being considered. In April, Tehran could suspend its cooperation with IAEA, or transfer enriched materials to secure and unreported locations. In a separate release on Thursday, Iran’s elite Revolutionary Guards warned Israel that it would face a “devastating and definitive response” if they attacked Iran. Alimohammad Naini, the spokesperson for the Guards, said: "They're trying to scare us with war. But they're miscalculating because they don’t realize the massive popular and military backing the Islamic Republic will be able to muster under war conditions." Diplomats claim that a collapse in the U.S. and Iran negotiations, or a new deal on nuclear energy which does not ease Israeli concerns over Iran developing nuclear weapons by enrichment, could lead to Israeli attacks against its regional arch enemy. Ayatollah Ayatollah Khamenei, the Iranian Supreme Leader, said on Tuesday that U.S. demands for Tehran to stop refining its uranium are "excessive" and "outrageous," and expressed doubt about whether negotiations over a new nuclear agreement will succeed. Tehran claims that its nuclear energy program is solely for civil purposes. Iran and Israel exchanged direct fire in April and in October last year, increasing the likelihood of regional conflict.
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Rubio: Oil license expiring in Venezuela on May 27
The U.S. Oil License in Venezuela expires on May 27, said Secretary of State Marco Rubio in a late-night post on his X account. The license of the U.S. company Chevron to operate in Venezuela was due to expire on May 27. Rubio wrote that "the pro-Maduro Biden #Venezuela oil license will expire on Tuesday, May 27 as scheduled." Requests for comments on Rubio’s post were not immediately responded to by the State Department or Treasury Department. Richard Grenell is the envoy of Donald Trump, U.S. president. Two sources said that Jorge Rodriguez, head of Venezuela's ruling party allied legislature and the person responsible for the release of the American who had been detained in Venezuela for several months, met with him in Antigua. Sources said Grenell offered to extend the wind-down phase for a license that allows the U.S. oil giant Chevron to work in the country by 60 days. The license was set to expire May 27. Chevron did not respond immediately to a comment request. The U.S. Treasury Department as well as the State Department would have to approve any 60-day extension.
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EU labels only four countries as "high-risk" under deforestation laws
Kate Abnett, Charlotte Van Campenhout, and Bart H. Meijer BRUSSELS (May 22) - The European Union's new anti-deforestation legislation will place the most stringent checks on commodities from only four countries. Brazil and Indonesia, two major forest nations, are exempted. In a legal document published on Thursday by the European Commission, it was stated that the law will categorise imported goods from Belarus, Myanmar and North Korea as having a “high risk” of fuelling the deforestation. Brazil and Indonesia will be labeled as "standard risks" because they have among the highest deforestation rates in the world. This means that their goods will be subject to lighter compliance checks when exported to Europe. This law, which is a world first, will require companies to perform due diligence before placing certain products on the EU market, including cocoa, beef, palm, wood, soy, coffee, and chocolate. Brazil and Indonesia have been vocally against the law, claiming that it is costly and burdensome. The main difference between these groups is that EU member states will have to conduct compliance checks on 9% of exporters from high-risk nations, 3% for countries with standard-risk and 1% from low-risk nations. The U.S. is one of the countries that was labelled "low-risk". This means its companies still have to collect information about their supply chains but cannot assess or address deforestation risk. Companies in countries with high and standard risks will have to provide information on when and where commodities were produced, and "verifiable” proof that they weren't grown on deforested land after 2020. Campaigners criticized the EU's decision to only impose strict checks on four nations. However, they said that even countries with lower risks would be subjected to some due diligence obligations, although these might be simpler. In practice, it shouldn't affect the ability of this law, which is a non-profit organization, to save forests, said Giulia bondi, a campaigner with Global Witness. The Commission claimed that it had classified countries on the basis of scientific data and evidence. The EU law applies to large firms from the end 2025, and small businesses from June 2026. A company could be fined up to 4% its turnover in the EU if it fails to comply. (Reporting and editing by Bart Meijer, Jan Harvey and Charlotte Van Campenhout)
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Iran's Revolutionary Guards warn Israel of any attack
The Revolutionary Guards of Iran warned Israel on Thursday that it would face a "devastating response" if they attack Iran. This came days after CNN reported U.S. Intelligence suggesting Israel was preparing to strike Iranian nuclear sites. According to state media, the Guards spokesperson Alimohammad Naini stated that "they are trying to scare us with war. But they are miscalculating because they are unaware of how powerful the popular and military backing the Islamic Republic will be in war conditions." Tehran and Washington are set to hold their fifth round of talks in Rome on Friday amid a strong disagreement about uranium enrichment in Iran. The U.S. claims that this could be a path towards developing nuclear weapons. Iran denies such an intent. CNN, citing U.S. intelligence officials, added that it was unclear whether Israeli leaders had made a final military decision and that there were disagreements within the U.S. Government about whether Israel would decide to attack in the end. Diplomats claim that a collapse in the U.S.-Iran nuclear negotiations or a nuclear agreement which does not ease Israeli concerns over Iran developing nuclear weapons may motivate Israel to strike its regional archrival. State media reported that Ayatollah Khamenei, the Iranian Supreme Leader, said Tuesday that U.S. demand for Tehran to stop enriching Uranium is "excessive" and "outrageous." He expressed doubts about whether negotiations on a new nucleus deal will be successful. Tehran claims that its nuclear energy program is solely for civil purposes. Iran and Israel exchanged direct fire in April and in October last year, increasing the risk of a regional conflict. Mark Heinrich edited the Dubai Newsroom report.
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US House narrowly approves Trump's tax-cutting bill and sends it to the Senate
The Republican-controlled U.S. House of Representatives passed by a single vote a sweeping tax and spending bill that would enact much of President Donald Trump's policy agenda on Thursday and saddle the country with trillions of dollars in debt. The bill would deliver on many of Trump’s populist campaign promises, including new tax breaks for car loans and tips. It would also boost spending on border security and the military. According to the nonpartisan Congressional Budget Office, it will add $3.8 trillion over the next decade to the $36.2 trillion federal debt. Trump's "one, large, beautiful bill" was passed by a vote of 215-214, with two Republicans and all the Democrats voting against it. A third Republican did not vote for or against this bill. The vote was held after two nights of marathon debating by lawmakers as House Speaker Mike Johnson tweaked the bill to please various factions in his party. Johnson, with a 220-212 narrow majority, could not afford to lose any more votes than that. Johnson stated that the House had passed legislation which would shape our nation for generations to come. The bill now heads to the Republican-controlled Senate, where it will likely be changed further during weeks of debate. The 1,000-page bill would extend the corporate and individual tax breaks passed in 2017, during Trump's inaugural term, and cancel many green energy incentives passed by Democratic ex-President Joe Biden. It would also tighten eligibility requirements for food and health programs for poor people. The bill would also fund Trump's crackdown against immigration by adding border guards in the tens-of-thousands, and creating a capacity to deport as many as 1 million people per year. Moody's downgraded the United States' highest credit rating last week due to growing concerns about the U.S. Debt, which reached 124% GDP. Every year since the beginning of this century, both Republican and Democratic administrations have failed to align spending with revenues. According to the CBO, interest payments made up 1 dollar out of 8 dollars that the U.S. Government spent last year. This was more than what they spent on the military. This share will grow to one out of six dollars in the next 10 year as the costs for health care and pensions rise due to an aging population. Investors are becoming increasingly nervous about the U.S. fiscal situation and Trump's tariffs. They are selling dollars and other U.S. financial assets, which form the foundation of the global system. U.S. Stock Futures rose slightly following the passage of the bill, while yields for U.S. Treasury Bonds increased. We're not rearranging the deck chairs of the Titanic this evening. "We're putting the coal in the boiler, and setting the course for the Iceberg," said Kentucky Representative Thomas Massie, one of two Republicans who voted against the bill. The deadline for debt ceilings Republicans are under pressure to pass this bill because of the growing debt. It would raise the debt ceiling for the federal government by $4 trillion. This would avoid the possibility of a default that officials warned could happen this summer. Republicans also argue that failing to pass the bill will result in an effective tax increase for many Americans as Trump's tax cuts from 2017 are set to expire by the end of this year. Republicans on the right of the party had called for deeper cuts in spending to reduce the budget impact. However, centrists were opposed because they feared that it would be too burdensome on the 71 millions low-income Americans who are enrolled in Medicaid. Johnson, in response to conservative concerns, made changes, bringing forward the new work requirements for Medicaid beneficiaries to end 2026 two years earlier. CBO estimates that this would result in the expulsion of several million people from the program. This bill would also penalize future Medicaid expansions in states. Johnson expanded the deduction for state and local taxes, which was also a priority of a few centrist Republicans from high-tax states such as New York and California. Democrats said the bill disproportionately benefited the wealthy, while cutting benefits to working Americans. CBO determined that it would decrease incomes for the bottom 10% of U.S. household and increase incomes for the top 10%. Jim McGovern, Democratic Representative, said: "This bill is a swindle, a tax swindle designed to steal money from you and your fellow Americans and give it to Trump's billionaire and millionaire friends." (Reporting and writing by David Morgan and Bo Erickson, Editing and proofreading by Scott Malone and Jamie Freed; Saad Sayeed, Toby Chopra, and Scott Malone)
REFILE-Iraq set to resume own pipeline as Kurdish talks stall
Baghdad is repairing a pipeline that could enable it to send out 350,000 barrels per day ( bpd) to Turkey by the end of the month, an Iraqi deputy oil minister said on Monday, a step most likely to rile oil foreign business and the Kurdistan Regional Federal Government (KRG).
The reopening of the Kirkuk-Ceyhan pipeline, which has actually been shut for a decade, would provide a competing path to a pipeline from the Kurdistan region that has been shut for a year as talks in between Baghdad and the KRG on resuming exports have actually stalled.
Baghdad considers production-sharing arrangements between the Kurds and foreign companies utilizing the KRG's pipeline unlawful.
The federal government in Baghdad will need oil companies to negotiate with it to offer their oil through the revived pipeline to Turkey, potentially outraging the Kurds who depend on nearly totally on oil profits.
Exports via the 960 km (600 mile) pipeline were halted in 2014 after repeated attacks by Islamic State militants. It once managed about 0.5% of global supply.
Repairs are ongoing and a significant crude pumping station with storage centers has been completed. The pipeline is likely to be operational and prepared to reboot flows by the end of this month, Basim Mohammed, Iraqi deputy oil minister for upstream affairs, informed .
Fixing damaged sections inside Iraq and finishing one vital pumping station will be the first phase of operations to bring the pipeline back to complete capability, he said.
The KRG's pipeline was halted on March 25, 2023, after an arbitration court ruled it violated provisions of a 1973 treaty by assisting in oil exports from the semi-autonomous Kurdish area without Baghdad's approval.
Negotiations to reboot it have failed as Turkey, the KRG and the federal government have made conflicting needs.
2 Iraqi oil officials and a government energy advisor, speaking on condition of privacy, stated Baghdad had actually balked at a. Kurdish demand that the federal government pay a $6 per barrel. transit cost to Russian oil firm Rosneft, which partially owns the. pipeline.
Iraqi oil ministry authorities told the Kurdish negotiating. group they consider the arrangement in between KRG and Rosneft prohibited. and a violation of legitimate Iraqi laws, stated Kurdistan. region-based energy adviser Bahjat Ahmed who was informed about. the talks.
A KRG spokesman did not respond to ask for remark.
MUTUAL REQUIREMENT
In spite of tensions between the Kurds and Baghdad, the 2. sides require each other. Kurdish parties have actually assisted Iraqi. political leaders to come to power and Baghdad has actually contributed to the. incomes of Kurdish civil servants and fighters.
KRG exports circulation through a KRG pipeline to Fish-Khabur on. the northern Iraqi border, where the oil goes into Turkey and is. pumped to the port of Ceyhan on the Mediterranean coast.
Three sources from the state-run North Oil Business (NOC). stated crude test pumping began early last week to inspect the. parts of the pipeline that run inside Iraqi territories and. found leakage in some sections.
Iraqi technical NOC teams have accelerated repair work operations. to repair the broken areas that run from Kirkuk through the. provinces of Salahuddin and Mosul to the border area with. Turkey.
The 2 Iraqi oil authorities and a government energy adviser. said the agreement between Baghdad and Ankara on the Iraq-Turkey. oil pipeline (ITP) operations was extended in 2010 for 15 years. and will expire in mid-2025.
The resumption of operations at the old pipeline will be. talked about as part of talks to extend the (ITP) agreement, the. federal government energy adviser stated.
(source: Reuters)