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LBMA calls the White House's tariff update on gold bar a 'welcome' development
The London Bullion Market Association stated on Wednesday that the White House's update to its tariff schedule was a "welcomed development" following challenges caused by a U.S. Customs decision on gold bars. The executive order issued by Donald Trump on 5 September updates the tariff schedules for some goods, including gold products. The White House called them reciprocal tariffs. The update will see gold bars imported into the United States from countries that are "aligned partners" under certain codes in the Harmonized Tariff schedule of the United States, including 7108.11.00 and 7108.12.50. It also includes 7108.13.10 7108.13.55 7108.13.70 7108.20.00, which will be subject to a 0% duty on all entries after September 8, 2025. The LBMA described the move as a "significant and beneficial step for the industry", following the uncertainty created by a recent U.S. Customs and Border Protection decision. CBP's website had suggested earlier in August that gold bars commonly traded could be subjected to country-specific duties, which led some traders to suspend shipments into the U.S. until further clarification. On August 11, Trump tried to calm the markets by posting on his Facebook page that "Gold won't be Tariffed!" He did not provide any further information. The association stated that it would continue to monitor developments, and will provide updates as necessary. It noted ongoing discussions with its members, market infrastructure providers, and authorities in Europe, the U.S. and the UK regarding tariffs on silver. The LBMA clarified that kilobars are classified under REACH, the UK's chemical regulation. According to the LBMA and the UK Health and Safety Executive, kilobars imported into the UK as investment products can be classified as "articles" and exempted from registration. LBMA stated that kilobars used for jewellery manufacturing, or other industrial purposes, can still be classified as chemical substances.
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US court is inclined to reject motion to disqualify Elliott's bid for Citgo parent
In a Wednesday filing, Judge Leonard Stark stated that a Delaware court was inclined to deny the motion filed by Gold Reserve last month to disqualify an affiliated hedge fund Elliott Investment Management's bid to purchase Citgo Petroleum, a Venezuelan-owned refiner. Next week, the court will begin the final hearing in the court-organized sale of shares to pay creditors who have been owed money for expropriations or debt defaults that Venezuela has made. The hearing follows the selection of the $5,9 billion bid by Elliott's Amber Energy affiliate as the best offer in the auction. This choice was met with objections by several parties, and Gold Reserve filed a motion to strike. The court officer who oversees the auction did not recommend a competing bid by Gold Reserve affiliate Dalinar Energy, even though it had been raised to $7.9 Billion last month. Gold Reserve, Venezuelan lawyers and other creditors objected to Amber's bid. They said that an agreement to pay $2.1billion to holders of Venezuelan bonds in default would deprive certain creditors of auction proceeds. The judge stated in his filing that parties attending the hearing should "focus instead on the merits" of the Amber Energy bid and its objections, as well as the Dalinar offer. During the four-day hearing that begins on Monday, experts, creditors and witnesses will present arguments in support of or against the bids. The court has said that a second set of testimony could be presented by October.
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ADNOC close to finalising EU remedies for Covestro deal, sources say
People familiar with the situation said that ADNOC, Abu Dhabi's state oil company, is preparing remedies to deal with an EU investigation on subsidy allegations in its bid of 14.7 billion euros ($17.2 billion) for Germany's Covestro. It will likely convert a proposed capital increase of 1.2 billion euros into a shareholder loan. This is ADNOC’s largest acquisition ever and the largest foreign takeover of an EU-based company by a Gulf State. The European Commission (the EU's competition watchdog) has warned that ADNOC could be benefiting from subsidies, such as a guarantee that is unlimited, and that foreign aid may also be involved with the capital increase at Covestro. ADNOC is likely to convert the Covestro equity increase into a shareholder loan, at rates of the market. People familiar with the matter said that the company plans to address EU concerns regarding unlimited state guarantees, just as UAE telecoms group e& did last year to gain EU approval for certain parts of Czech Telecoms Company PFF. e& has agreed to remove the unlimited state guarantee it had provided by ensuring its articles of incorporation do not differ from UAE bankruptcy law. People said that ADNOC would likely pledge to keep Covestro’s technology and intellectual properties in Europe. The Commission, which is currently investigating the deal in its Foreign Subsidies Regulations (FSR), targeting unfair foreign assistance for companies, has declined to comment. A spokesperson for XRG (the international investment arm of ADNOC) said that it would not comment on current discussions. ADNOC's Chief Executive Sultan Ahmed Al Jaber spoke with EU Antitrust chief Teresa Ribera via phone on Friday, according to the sources. ADNOC slammed EU regulators last week for their disproportionate and intrusive requests for information, which it warned could jeopardize the deal. (Reporting and editing by Foo Yunchee)
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Barrick's executive advises Mali president on gold dispute
An official from the mines ministry said on Wednesday that a senior Barrick Mining executive, who was representing the company during tense talks with Mali’s government, has now switched sides and is now an advisor to Mali’s president. Hilaire Diarra, formerly the general manager of Barrick’s Tongon Gold Mine (Ivory Coast), was appointed special counsellor by Mali’s president through a decree that was signed late August. On Wednesday, an official from the Mines Ministry confirmed that the document was authentic. This move is a blow to the Canadian company's attempts to negotiate control of the Loulo-Gounkoto complex of gold mines, which is one of the highest-profile examples in West Africa of resource nationalism by military governments who want to control their gold and uranium resources. Diarra and Barrick's spokesperson didn't respond to comments immediately. Since 2023, the Mali government has been in negotiations with Barrick over the implementation a new code of mining that increases taxes and gives government a larger share of the gold mines. Former Barrick executives have been recruited to try and outmanoeuvre Barrick. In June, a Malian court appointed provisional administrator took over the Loulo-Gounkoto complex six months after Barrick had suspended operations at the site due to an impasse in negotiations. Samba Toure, a former Barrick executive, is now part of the provisional management running operations at the complex. Barrick's financial reports show that Loulo-Gounkoto will produce 578,000 ounces gold by 2024. Since the provisional administrator has taken control, 1 metric tonne of gold or 35,274 pounds, have been sold. A source with knowledge of the situation said that current production levels are around 25% of normal output. Diarra, who is a Malian national and began his mining career in Loulo, flew to Bamako this year from Ivory Coast to negotiate for the Canadian miner. This source, along with two others, confirmed the information. Reporting by Portia Crowe and Divya Raagapal Editing Robbie Corey Boulet, Veronica Brown, and David Goodman
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Africa aims to raise $50 billion a year through a new climate solution initiative
A draft declaration following a climate summit of leaders in Addis Ababa on Wednesday showed that Africa aims to secure $50 billion per year for a continental climate solutions initiative. The initiative is sponsored by Ethiopian Prime Minister Abiy Ahmad. The 54-nation African continent, which was ravaged by landslides and floods, wants to continue with its climate commitments despite the United States withdrawing from the Paris Climate Agreement. In the draft declaration, it was stated that the push is to establish the Africa Climate Innovation Compact (African Climate Facility) and the Africa Climate Facility in order "to mobilize $50 Billion annually in catalytic financing for climate solutions". Ethiopian officials didn't respond to requests for more information immediately, but Abiy said at the opening ceremony of Monday's summit that the initiative should be aimed at delivering 1,000 solutions by 2030 to combat climate challenges. Ethiopia's tree-planting campaign, which began in 2019, as well as a new mega hydroelectric dam that was launched on Tuesday are evidence of Africa’s ability to lead the way in economic development and ecosystem protection. African leaders presided at the opening of this summit over an agreement between African development financiers (ADF) and commercial banks, to mobilize $100 billion in investments for green energy generation. The draft declaration of the summit stated that Africa needs more than $3 trillion by 2030 to achieve its climate goals, but has only received $30 billion between the years 2021 and 2012. The report called for greater international commitments and partnerships in order to close the funding gap. It also emphasized the importance of grants to enable adaptation to climate changes. Reporting by Duncan Miriri, Dawit Endeshaw and Alexandra Hudson
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EU unlikely to increase tariffs against India and China on Trump's request
EU sources say that the European Union will not impose tariffs on India and China, which are the two main buyers of Russian crude oil, as the U.S. president Donald Trump has asked the bloc to. This week, an EU delegation including the EU's Russia sanction chief flew to Washington to discuss the ways in which the two sides could coordinate sanctions against Russia for its full-scale invasion into Ukraine. Officials have said that Trump has urged the EU, to hit India and China up to 100% with tariffs to put pressure on Russian president Vladimir Putin who depends on energy revenues for his country's conflict in Ukraine. The European Commission has not responded to a comment request. The European Union has placed extensive sanctions against Russia In its last package, published in July, it also included two Chinese banks and a major Indian refinery. Sources said that the EU does not treat tariffs the same as sanctions, and only imposes these after a lengthy investigation to establish a legal basis. So far, the bloc has only imposed tariffs on Russian and Belarusian farm products and fertilizers in response to the Ukraine War. It was argued that the tariffs were necessary to avoid creating a dependency which could be exploited, and to protect EU fertiliser producers. An EU diplomat stated that there has been no discussion about possible tariffs with India or China. The EU is also in the process of finalizing a trade agreement with India that the bloc will not want to compromise. Trump's position towards India appeared to soften by Wednesday when he stated that he wanted to reset the trade relations with New Delhi. A second EU source stated that such tariffs are risky, and they could be too broad. It is easier to sanction certain entities and to open the door for them to be delisted if they stop doing business with Russia. Until now, the EU has only listed small, unknown entities that are often shell companies, used by Russia to funnel military goods or dual-use products to its military. The EU plans to list Chinese refineries and banks from two countries in central Asia in its 19th set of sanctions, which could come as early as Friday. (Reporting and editing by Ros Russell, Philip Blenkinsop and Julia Payne)
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US oil stocks rise as crude exports drop and fuel demand falls, EIA reports
The Energy Information Administration reported on Wednesday that U.S. crude oil and fuel stocks rose during the past week, despite a drop in demand and exports. The EIA reported that crude stockpiles increased by 3.9 millions barrels, to 424.6million barrels for the week ending September 5. This was compared to analysts' expectations of a drawdown of 1 million barrels. The EIA reported that crude stocks at Cushing, Oklahoma's delivery hub, fell by 365,000 barges in the past week. U.S. crude oil exports dropped by 1.1m barrels per day, to 2.8m bpd. Meanwhile, net crude imports increased by 668,000 barrels a day. "A substantial drop in crude exports, coupled with a slight drop in refining activities, has encouraged a good build in crude inventories." The implied demand for gasoline and distillates has been weaker, said Matt Smith of ship tracking firm Kpler. The surprise increase in oil inventories has slowed the gains made by oil futures. Brent crude futures, the global benchmark, were trading at $67.02 per barrel at 11:02 am EDT (1502 GMT), up 62 cents. U.S. crude was up 63 cents to $63.25. Refinery crude rundowns fell by 51,000 barrels per day, but utilization rates increased by 0.6 percentage points to 94.9%. Total product supply, which is a proxy of demand, decreased by 871,000 Bpd, to 19.8 Mbpd. Gasoline consumption fell by 609,000 bpd and reached 8.5 million bpd. Distillate product supply was down by 391,000 bpd at 3.4 million. John Kilduff is a partner at Again Capital. He said, "We're waiting to see just how much the gasoline demand will drop after summer driving in the U.S., and it appears that it will be significant." He added that given the recent economic data, which showed a marked slowdown in the labor markets, the weak gasoline demand could also be an indicator of a slowing U.S. economy and global potential. The EIA reported that gasoline stocks increased by 1.5 million barrels during the week, to 220 millions barrels. This was in contrast with the expectation of a 243,000 barrel draw. ? The data revealed that distillate stocks, which includes diesel and heating oil rose by 4.7 millions barrels last week, versus the expectation of a 35,000 barrel increase. (Reporting from Liz Hampton in Denver, and Georgina Mccartney in Houston. Editing by Marguerita Choy)
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Sources say that Russia has increased September oil exports to western ports by 11%.
Two industry sources and calculations show that Russia revised its September crude export plans from western ports up to 2.1 millions barrels per day, an 11% increase over the initial schedule. This is due to drone attacks on domestic refining plants reducing local demand for crude. The preliminary plan had estimated 1.9 million barrels per day (bpd) and the August exports were 2.0 million bpd. It is anticipated that the increase in Urals crude production will meet an extra demand for spot in India. Purchases of this grade fell in August but are still strong despite Western sanction. Nirmala Sitharaman, the Indian Finance Minister, said last week that Indian oil companies will continue to buy Russian oil. Indian Oil Corp's head of finance, who is the top refiner in the country, stated earlier this week that the spot supply of Russian crude oil has not changed since earlier. Since late August, a number of Russian facilities have suffered damage, including Rosneft’s Ryazan refinery in early September, and Kuibyshevsk, which stopped operations on 28 August. Recently, fires broke out in the Afipsky refinery and Krasnodar after drone attacks by Ukraine. Reporting by Kirsten Doovan; Editing by Kirsten Doane
The Indonesian nickel slump puts pressure on coal miners hit by declining exports
The Indonesian coal producers find themselves in a difficult situation, as their exports are falling and the demand for fuel from nickel smelters is at an all-time high. This creates a conundrum of growth.
Indonesia's largest export is coal, which will generate $30.49 billion by 2024. A decline in revenues would have an adverse effect on Southeast Asia's largest economy, which is heavily dependent on commodities.
Lower profit margins and falling share prices point to coal's future woes, which include a reduction in workforce, a slowdown in production, and less money going into government coffers, at a time that President Prabowo is launching ambitious spending plans.
The fastest-growing demand for Indonesian coal has been from electricity-hungry smelters that process nickel.
According to the Indonesian Coal Miners Association, (ICMA), the demand for nickel will reach a peak of 84.2 million tonnes by 2026, and then fall to 78.6 millions tons in 2027 due to overcapacity of the nickel industry and possible implementation of stricter emission regulations.
Kpler data showed that Indonesian coal exports were down 12.6% by volume compared to a year ago, while government data indicated a 19.1% drop in value.
Chinese data show that exports to China, which is the largest coal buyer in the world, dropped by 30% compared to a year ago. The country relies more on its domestic production and uses low prices to import coal of higher quality from other countries.
Manish Gupta is a senior analyst at Wood Mackenzie for Asia thermal coal. He said that Indonesian coal miners were diversifying their businesses to protect themselves against the steeply declining demand for low to mid-grade coal.
He said that he did not expect to see the increase in the number of captive plants, which are power plants linked to nickel smelting facilities.
According to Global Energy Monitor's coal plant tracker, Indonesia's nickel smelting sector has led to a threefold increase in Indonesian coal-fired power capacity from 5.5 gigawatts in 2019 to 16.6 GW by 2024.
As nickel prices fell due to increased overcapacity, and China's lower stainless steel imports, some Indonesian smelters idled their facilities.
Data from geospatial analysis firm Earth-i revealed that in June, Indonesian nickel pig-iron operations experienced a 9% increase in smelting activity compared to a year ago, which was the highest level in the past two years. This is primarily because the country's largest nickel producer, Tsingshan, likely stopped production at its joint-venture plants in Morowali Industrial Park.
H. Kristiono is the deputy chairman of ICMA which includes Adaro Bayan Bukit Asam and foreign traders Adani Global Trafigura. He still expects that the coal-fired capacity of the smelter sector will grow despite underutilisation.
The nickel industry will continue to use coal as its primary power source due to difficulties in switching to alternative sources, the slow progress of connecting sites to national grids and Indonesia's opposition to more stringent regulations.
Global Coal Monitor reports that the Global Coal Monitor estimates that Central Sulawesi, North Maluku and Central Sulawesi provinces are expected to have a combined capacity of 6 GW, or 46%, of all coal-fired plants currently under construction in Indonesia. These two provinces are where the nickel processing industry is concentrated.
Companies are squeezed
Indonesian coal producers are being squeezed by a combination of lower exports, slower growth in captive power demand and higher government payments.
LSEG data revealed that the profit margins of Bayan, a major miner in Indonesia, have been falling for three years. Bukit Asam has also seen its first-quarter margins fall below averages every year since 2010. This is due to higher royalty payments and increasing machinery costs.
The shares of Indonesia's five largest coal producers by production are down between 1% and 18% in this year. This is below the broader market growth rate of almost 7%. Adaro has fallen 18% while Golden Energy Mines, Bukit Asam and Bukit Asam lost over a tenth since the start of this year.
Requests for comment from the companies were not answered.
Indonesia announced in April new rates of royalty for nickel, coal and other minerals, to help Prabowo increase his spending. Some coal miners experienced a drop in their royalty rates, while others saw an increase of 1 percentage point.
According to the Energy Shift Institute, based in Australia, by 2024 royalties will account for 16% of average coal producers' cost structures, making them the most expensive among the major commodities produced in Indonesia.
Jakarta also considers export duties on coal for certain price levels in order to bolster state coffers. This is at a moment when miners are already facing higher fuel prices due to the removal biodiesel subsidy.
Analysts say that some coal miners are looking at diversification as a way to survive the current downturn, but they have made little progress. Bukit Asam said, for instance, in May that it was considering an investment of $3.1 billion in a facility to convert coal into synthetic natural gas.
Gupta, of Wood Mackenzie, said that producers are looking at a combination of downstream options, renewables, or investment in alternative commodities. (Reporting and editing by Christian Schmollinger, Ashitha Shivaprasad, Hongmei LI, Fransiska Nanangoy; Additional reporting by Sudarshan Varadhan).
(source: Reuters)