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Steel company Kloeckner Bets on Defence Growth amid Rising Demand
After reporting its third-quarter results, German steel processor Kloeckner & Co stated that it would be focusing its efforts on expanding its defense footprint on its domestic market. In March, Germany relaxed its strict debt rules to allow for an exemption on defence spending. It plans to increase this to 3.5% by 2029 - above the NATO target 2%, which was only achieved in 2024. Guido Kerkhoff, the CEO of Kloeckner, said that the company has experienced an increase in demand for its products from the defense industry. Kloeckner is also active in Germany and in the U.S.A., particularly in the shipbuilding sector. Kerkhoff stated that the defence industry would play a larger role in the future. He added that, while the demand for the sector was not as high as other industries, such as the automotive, orders were increasing. In the first half of this year, Kloeckner expanded its defence portfolio with the acquisition by Cologne-based Ambo-Stahl. This company specializes in high-tensile, wear-resistant special steels and ballistic steels. Kerkhoff stated that "Defence is a good niche because we excel at metalworking, and can expand it beyond the current small batch production." The company announced that it received official certification to process armour materials for German Federal Armed Forces on its Kassel site and was preparing large-scale orders for defence from all over Europe. The metals and steels processor reported that its third-quarter shipments increased by 1.9%, to 1,144 million metric tons. This was primarily due to growth in the Kloeckner Metals Americas division. The company reported an adjusted core profit (EBITDA), which was 50 million dollars, for the quarter that ended September 30. This is a double-digit increase from the previous year. Kloeckner Metals Europe reported in a earnings presentation that it had made the first positive contribution to EBITDA for the market since 2023.
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Can Africa benefit from the critical mineral wave?
Africa is home to 30% of the world's minerals Africa is looking for more profits as global demand surges African leaders want to drive value for money at the COP30 Clar Ni Chonghaile & Kim Harrisberg To capitalize on this burgeoning market, the continent needs to address the power shortages and skills gaps. It also has to tackle trade barriers, industrial capacity limitations, and the lack of skilled workers. Hany Besada is a senior fellow and professor at Wits School of Governance, as well as a senior fellow at London School of Economics' Firoz Lalji Institute for Africa. Africa's mineral resources, which include cobalt and lithium, are around 30% of those in the world. The International Energy Agency predicts that the demand for lithium will grow fivefold between 2040 and 2050, and graphite and Nickel demand will double. Demand for cobalt and other rare earth elements is expected to rise by 50-60% by 2040. Besada stated that Africa must "build local value chain integrations of mining, refining, manufacturing and innovation" to help the continent achieve a greener economy. Zimbabwe, Africa's largest lithium producer, is encouraging mining companies to process minerals in its country to boost its economy. Zhejiang Cobalt, a Chinese company with a $400 million investment in Zimbabwe, announced in October that it would begin producing lithium sulphate in the first quarter 2026 at its new plant. African countries are hoping to gain support from the Global South at the United Nations COP30 Climate Talks in Brazil, in November. They want to make sure that the demand for minerals to fuel the digital economy, and the clean energy transition, translates to growth, jobs, and development. Ibrahima Aidara is the deputy Africa director of the National Resource Governance Institute. He said that Africa wants to be an active participant in the green economy and a beneficiary. "This means an industrial strategy that creates jobs and protects rights, and allows countries to climb up the value chain instead of being stuck at the bottom." What is blocking the way? Aidara cited the Democratic Republic of Congo as an example of where mineral wealth led to child labor, displacement, and armed conflict. In Africa, the barriers to mineral processing, also known as beneficiation, include a lack electricity, high tariffs among African countries, infrastructure problems and cumbersome procedures. "Removing trade barriers is crucial... Besada stated that if you don't, your efforts to (mineral) beneficiation industrialisation and industrialisation will remain aspirational. Regional cooperation, such as the African Continental Free Trade Area(AfCFTA), is essential. It aims to unite all 1.4 billion citizens in over 50 countries into one market. The AfCFTA could gain momentum with the imposition of tariffs by Donald Trump, the U.S. president. It was launched in 2021 and has less than 50% of its members actively trading within the framework. The African Union’s Green Minerals strategy, launched in this year, as well as the Lobito Corridor Railway, which connects Zambia’s copper belt with Angola’s Atlantic Coast, are both examples of how cooperation can make Africa more than just a supplier. The minerals boom in West Africa has led to a revival of resource nationalism. Countries, and particularly military regimes such as the one that governs Guinea's bauxite rich Guinea, have imposed conditions on foreign mining firms, forcing them to add value. Aidara, however, said that this approach may not bring lasting benefits to local communities. "This problem is bigger than any one country." We think that at the national level, we need well-defined and evidenced-based strategies in order to leverage minerals and create economic and industrialisation possibilities. Listening to Gen Z Africa's streets are also calling for a better use of the resources. In the last year, protests by so-called Gen Z from Kenya to Madagascar saw young Africans express frustration about everything from corruption and power cuts. In October, protests in Madagascar led the country's president to resign. "There is a hunger for change among civil society groups, large populations and young people alike. "With the digital proliferation, people see how much things have changed in neighboring countries," Besada stated. Even dictatorial governments are aware that this engaged populace may not accept that only wealthy elites, foreign or local, can benefit from the national resources. The growing middle class in Africa also plays a part. They pay taxes and have a greater interest in the way economies are run. "They have more to loose if things don't go well, and governments know this," Besada added. The COP30 agenda will include a discussion on how to make sure that the energy transition is beneficial for local communities. Amnesty International, as well as rights groups from Brazil to Indonesia and more than 100 civil societies groups want the government to place transition minerals and communities affected by mining at the forefront of climate action. They called on the United Nations, governments, and indigenous peoples to work together with civil society and other stakeholders to improve governance in the sector.
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India's Grasim reports higher profit on chemical strength; Paint unit CEO resigns
India's Grasim Industries announced a higher profit for the second quarter on Wednesday. This was due to a greater demand for its chemical products. The Aditya Birla Group company posted an 8.05 billion rupee ($91.59 millions) profit for the period July-September, up from 7.21 milliards rupees the previous year. Revenue rose by 23% to 96.10 trillion rupees. Grasim’s chemicals business, which accounts for about a quarter, grew to 23,99 billion rupees in revenue, an increase of 17% from a previous year. The company's standalone numbers do not include earnings from its subsidiaries UltraTech Cement or Aditya Birla Capital. Grasim has seen its margins squeezed by its investments in "Birla Opus" - the paints brand it launched last year - as well as increased competition. Grasim’s earnings before interest tax, depreciation, and amortization margins dropped to 4.06%, from 4.52% a few years ago, as its total expenses grew by 26.5%. RakshitHargave who was the CEO of the paints division and left the company in December 5 will also resign from his position as CEO. The company said that while Grasim searches for Hargave’s successor, Himanshu Kapania, an insider, will be overseeing the business until a new leader is found. ($1 = 87.8950 Indian Rupees) (Reporting and editing by Krishna Chandra Eluri in Bengaluru, Hritam Mukherjee from Bengaluru)
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Dollar pause, gold rises by more than 1% in risk-off mood
Gold prices rose more than 1% in Wednesday's trading, driven by a slightly lower dollar and broader risk-off sentiment. By 0845 GMT, spot gold had risen 1.3% to $3,981.27 an ounce. U.S. Gold Futures for December Delivery rose 0.8%, to $3.991.90 an ounce. Carsten Menke, Julius Baer's analyst, said that the recent shift in risk-off sentiment on financial markets is helping to stabilize gold after its decline from record highs. European shares fell to their lowest level in two weeks as investors around the world continued to be nervous about equity valuations. Gold became less expensive to other currency holders after the dollar index eased by 0.1%. Investors are looking for clues about the U.S. rate path as the U.S. shutdown approaches the record-breaking length. The ADP National Employment Report, due on Wednesday, is one of the non-official reports that investors will be focusing on. Last week, the U.S. Federal Reserve lowered interest rates. Chair Jerome Powell said it could be the final reduction of borrowing costs this year. CME's FedWatch Tool shows that market participants see only a 72% probability of a December rate cut, compared to over 90% prior to Powell's comments. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. Menke, a Julius Baer spokesperson, said: "We continue to see a strong demand for gold from those seeking monetary safety. This is also the case with emerging market central bankers." The gold price has risen by 52% in the past year. It reached a high of $4,381.21 at the end of October, boosted by economic and geopolitical uncertainty, bets on rate cuts, and central bank purchases. Silver spot gained 1.6%, to $47.87 an ounce. Platinum gained 0.7%, to $1.546.21, and palladium rose 1.3%, to $1.408.99. (Reporting and editing by Alexander Smith in Bengaluru, Brijesh Patel from Bengaluru)
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Congo Republic sells its first Eurobond in almost 20 years
According to a Monday statement, the Congo Republic has issued its first eurobond in almost two decades. The central African oil company has been working on easing its debt burden and servicing costs. Proceeds from the bond will be used for refinancing part of the domestic debt maturing between February 2026 and November 2025. In a press release, Finance Minister Christian Yoka stated that "This operation demonstrates the new Congolese energy: that of a nation combining fiscal discipline with exemplary governance and ambition." The bond has a coupon of 9.875% and will mature in November 2032. Yoka said that Brazzaville's debt to GDP ratio: a solution The most important issue was managing the local currency debt, which was 96% in the beginning of the new year. It implemented a regional exchange of debts last year that led rating agencies such as S&P Global Ratings or Fitch to reduce its local currency ratings to selective default. Yoka said that the country was also working on diversifying its economy to include agriculture and tourism in order to reduce its reliance upon oil.
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Starlink rival Eutelsat surprises with a CFO change before fund raising
Eutelsat announced on Wednesday that Sebastien Red has been appointed as its new finance director, just weeks before the satellite operator plans to raise additional funding to compete with Space X’s Starlink. Rouge, who is currently the finance director at minerals group Imerys, and was previously CFO at semiconductor materials firm Soitec will assume his new role on February 20, 2026. Eutelsat announced that he will replace Christophe Caudrelier who is retiring after three years. Eutelsat is currently raising 1,5 billion euros (1,75 billion dollars) in a capital injection spearheaded by the French Government. The capital increase will help reduce the company's debt, and finance new satellites to be used in its Low Earth Orbit constellation (LEO), OneWeb. This is the only LEO network available outside of Elon Musk's Starlink. Eutelsat The company is looking to expand its investor base beyond the anchor investors, including APE (the French state-owned shareholding agency) and the British government. Aleksander Peterc of Bernstein said that "Christophe Caudrelier's departure was a bit unexpected," adding that "it was a bit surprising" to see him leave "literally weeks before the right issue." The shares of Eutelsat, listed in Paris, fell by 3.5% at the opening of trading. This is the second worst performance on France's SBF120 equity index for major companies.
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Gunvor CEO: Western sanctions have resulted in an unprecedented amount of oil being stored on ships.
The CEO of Gunvor Group said that Western sanctions against Russia and Iran have led to record oil storage onboard ships, which prevents a global supply glut. The European Union (EU), United Kingdom (UK) and the United States (US) have all imposed sanctions on Russia for its involvement in the war in Ukraine. Last month, the US embargo targeted Russia's top two oil producers, Rosneft & Lukoil. Torbjorn Tornqvist of the Swiss commodities trader Gunvor Group told the ADIPEC conference in Abu Dhabi that the surplus oil supply had cushioned the effect of the trade disruptions due to the sanctions. This has kept markets stable and reduced price volatility. He added that sanctions had also caused "enormous amounts" of oil to be dislocated, some of which is now being stored on tankers. The size is unheard of. Tornqvist stated that if sanctions were to disappear, the market would be oversupplied. The global oil price fell for a third consecutive month in October, as OPEC and its allies increased production while non-OPEC producers' production was increasing. Marco Dunand, CEO and cofounder of Mercuria, said that oil supply could surpass demand by two million barrels a day next year. However, he added that Western sanctions are still a wildcard in curbing the supply. Dunand stated that "that probably means we are moving more from the 2 million barrels per day surplus to the 1 million barrels per day surplus." It is true that (global) oil inventories are low. The oil in the water is very high. This means that the glut (of supply) is slowly forming and will probably hit the market within the next few weeks. Reporting by Yousef Abdallah, Nayera Abadallah, Tala Ramadan and Jana Choukeir. Writing by Florence Tan. Editing by Muralikumar Anathraman, Kim Coghill, Christian Schmollinger.
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No buyback clause in potential Lukoil deal, Gunvor CEO says
Torbjorn Tornqvist, CEO of Gunvor Group, said on Wednesday that any potential deal for the purchase of foreign assets from Russia's second largest oil company Lukoil would not include a buyback provision. Lukoil has accepted Gunvor's offer to purchase its foreign assets, after Washington imposed sanctions against it last month. Tornqvist, speaking on the sidelines the ADIPEC Energy Conference in Abu Dhabi Tornqvist has ruled out any possibility of a Buyback Clause that would allow Gunvor the ability to sell back the assets to the Russian Oil Major if sanctions were lifted. When asked by whether such a provision could be included in a final agreement, he replied "Absolutely Not". Bloomberg News reported that Gunvor, a Swiss company based in Geneva, has started talks with regulators about the planned acquisition. In the 2000s, the company became the largest trader of Russian oil in the world. The company has benefited from the rise in oil and natural gas prices, which began after the start of the Ukraine war and Europe's decision to reduce its dependency on Russian energy. Gunvor, Vitol, and Trafigura all used their profits to buy assets from oil refineries to wind farms and power plants. (Reporting and writing by Sarah El Safty and Yousef Taba; editing by Tom Hogue, Joe Bavier and Nayera Abdballah)
LME brand name approval cements Indonesian nickel ascendancy: Andy Home
The London Metal Exchange ( LME) has actually authorized the listing of the very first Indonesian brand of refined nickel.
DX-zwdx isn't the most remarkable of historic markers but the brand-new brand name's inclusion on the LME excellent shipment list represents a watershed moment for the worldwide market.
Five years ago Indonesia produced simply 600,000 metric tons of nickel and shipped the majority of it as unprocessed ore to China, where it was alloyed into stainless steel.
Last year the country mined 2.03 million tons of consisted of metal, representing over half the world's production. It now exports a spectrum of nickel items, consisting of refined metal of a pureness appropriate for LME shipment.
For Indonesia it's a vindication of its policy of forcing miners to move downstream by banning ore exports from 2020.
For the LME it's a welcome liquidity booster as it aims to restore its nickel contract after the crisis of 2022.
For everyone else, however, the conversion of Indonesian production power to market power might be more bothersome.
NEW NICKEL POWERHOUSE
Indonesia's ban on the export of unprocessed ore didn't go down well with other nations. The European Union won a case against the nation at the World Trade Company in 2022.
President Joko Widodo shook off the judgment with an it's. fine. An appeal was quickly lodged. The export ban stays in. location.
Although questionable, the policy has been undoubtedly. successful, not just in regards to straight-out nickel production but. also in regards to product mix.
Nickel manufacturers, much of them Chinese, have actually worked out how. to convert Indonesia's reasonably low-grade nickel resource into. kinds of the metal that can be utilized in electric car. batteries.
The brand-new DX-zwdx brand, grading a minimum 99.8% pure. nickel, is the culmination of that technical evolution. PT CNGR. Ding Xing New Energy, a joint endeavor in between Chinese battery. materials group CNGR Advanced Material Co. and a. local business, can produce 50,000 tons of full-plate metal to. that requirements every year.
Other operators will likely follow as Indonesia's ruthless. drive to capture an ever majority of the battery materials. worth chain rolls on.
ALTERING EXPORT STREAMS
Indonesia's moving role in the international nickel supply chain. is recorded by the country's trade with China, its main nickel. customer.
Back in 2018 the circulation of nickel between the 2 nations. was exclusively in the type of ore or nickel pig iron (NPI), the. first stage of procedure upgrade needed by the Indonesian. government.
China's imports of Indonesian ore dried up after the 2020. restriction however imports of Indonesian ferronickel, a custom-mades code that. consists of NPI, have mushroomed from 600,000 heaps to 7.9 million. in 2023.
As Chinese gamers have actually opened up brand-new processing paths to. battery-grade nickel sulphate, ever more items are showing up. in the two countries' trade.
China imported no nickel matte from Indonesia before 2022. since no-one in Indonesia produced it. Imports in 2015. totaled up to 301,000 lots.
Imports of intermediate items such as mixed hydroxide. precipitate have grown from nothing to 830,000 lots over the. exact same time-frame.
Now Indonesia is exporting both nickel sulphate and improved. nickel to China.
Circulations of sulphate only started early in 2015 and totaled up to. 60,000 lots. Volumes were currently above 40,000 heaps in the very first. three months of this year.
The very first shipments of Indonesian refined metal to China. begun last December and grew to 4,250 heaps in the first. quarter of 2024. Indonesia has actually been China's second biggest. provider of refined nickel after Russia so far this year.
STRUCTURAL SHIFT
Not that China needs much refined nickel nowadays.
It is importing increasing quantities of Indonesian. intermediate products and producing ever more of its own.
China's net imports of refined nickel fell from 256,000 heaps. in 2021 to 133,000 heaps in 2022 and to simply 55,000 loads in 2023.
The country's exports outstripped imports in March for the. very first time considering that 2014.
CNGR Advanced Product Co. likewise produces refined nickel on. home soil. Its CNGR brand, produced at a yearly rate of. 12,500 lots, was listed by the LME in February.
Huayou Cobalt, which has actually invested heavily in. Indonesia's nickel sector, has actually likewise gotten LME approval for. two of its Chinese brands.
The LME, eager to attract physical liquidity to its contract. after needing to suspend trading in 2022, has actually authorized 5 new. Chinese brands with deliverable annual production capacity of. 79,100 loads.
Or 129,100 heaps if CNGR's Indonesian plant is consisted of.
EASTWARDS WANDER
The emergence of a Sino-Indonesian production center of. high-purity Class I nickel has actually come at a beneficial time for the. LME.
The current sanctions package prohibits the LME from. accepting shipments of metal produced after April 12 by. Russia's Norilsk Nickel.
With yearly production of over 200,000 lots, Norilsk has. traditionally been a huge liquidity provider to the Class I. sector of the nickel market.
Russian metal accounted for a 3rd of LME nickel stocks at. completion of April. However the amount of Chinese nickel in the system. has grown from zero in August in 2015 to 12,096 tons.
Partly thanks to deliveries of the brand-new Chinese brand names LME. inventory has risen gradually this year, hitting a two-year high. of 84,090 heaps last week.
The composition of LME stocks, though, is starting to drift. eastwards. It will continue to do so since the LME-delivery. capacity of the Class I market is also wandering eastwards.
This puts a great deal of possible trading power in the hands of. the Chinese business developing out fine-tuned metal capability in. both China and Indonesia.
And it's only going to grow.
Indonesia's nickel production boom reveals no signs of ending. whenever soon. The country's mined output grew by another 19%. year-on-year in the very first three months of 2024, according to the. International Nickel Study Hall.
Inbound president Prabowo Subianto has actually said he will follow. his predecessor's ambition of leveraging the country's nickel. resource into a global electrical car center.
The outgoing administration has actually simply added 16 programmes to. its list of strategic projects that will receive state support,. including five industrial parks for nickel processing.
There's a lot more Indonesian nickel still to come. And some. of it may well be pertaining to the LME.
The opinions expressed here are those of the author, a. writer .
(source: Reuters)