India expects coal capacity to swell by a fifth in three years

Chief Engineer at the country’s Federal Power Ministry, Ghanshyam Prasad, said coal capacity is likely to reach 238GW by 2022

India expects coal-fired power capacity to grow by 22% in three years. That’s according to the Chief Engineer at the country’s Federal Power Ministry, Ghanshyam Prasad, who Reuters reported as stating coal capacity is likely to reach 238GW by 2022.

India’s Coal Minister, Pralhad Joshi previously said annual coal demand rose by 9.1% during the year ending March 2019, noting the figure hit 991.35 million tonnes, driven primarily by utilities, which accounted for three-quarters of total demand.

Courtesy Wikepedia

India’s electricity demand rose by 36% in the seven years up to April 2019, while coal-fired generation capacity during the period rose by three-quarters to 194.44GW.

In 2040 It’s Coal, Gas and Oil with Renewables Hardly Making a Difference

The vast expenditure on renewables during the past decade has seen installed capacity equivalent to a mere 2% of global energy demand. The world remains and will remain dependent on fossil fuels well into the 21st century if not beyond.

A new report by Woods MAckenzie forecasts that coal, oil and gas will still contribute about 85 per cent of primary energy supply by 2040, compared with 90 per cent today, jeopardising efforts to contain the worst impacts of climate change.

Energy consultancy Wood Mackenzie said 1 TW of installed solar and wind capacity makes up around 8 per cent of total power generation as of 2019. This equates to just a fraction of total energy consumption.

The deamnd for energy is not coming from teh developed western economies, it is the emergining economic playing catch-up in Asia and Africa that will see an increase in energy deamnd of 25% though 2040.

If the World was to aggressively pursue compliance with the PAris accord and the Green New Deal, developing countries would be forever remain in energy deficit and the wealth transfer that is renewable subsidies would continue to enrich the top 1%.

Renewables have a role to play where they can be supported by economics, particularly in remote areas lacking energy infrastructure, but for much of the world, fossil fuels will remain the energy source of choice for at least the next 50 years.

Does “Gordon Gekko” Target Female CEOs?

Gordon Gekko from the film “Wall Street” Courtesy 20th Century Fox/The Everrett Collection

Do activist investors target female CEOs.

WSJ’s John D Stoll seems to believe they may well do so. He reports that academics have started to take a look at potential bias after a string of prominent women leaders—including Marissa Mayer ( Yahoo ), Mary Barra (GM), Meg Whitman (HP), Indra Nooyi ( Pepsi ) and Sandra Cochran (Cracker Barrel)—had battles with activists, who are almost exclusively men. But was the activism targetted towards women seen either as easy targets of under-performers in a rough and tumble corporate world?

Although women make up half of the nation’s workforce, only 5 percent of Fortune 1000 companies have female chief executives. Now, new research from Arizona State University reports that female CEOs are far more likely to be pressured and second-guessed by shareholders than men occupying the same leadership position.

A recent study from Arizona State University’s W. P. Carey School of Business examined “shareholder activism,” which occurs when shareholders seek to affect a corporation’s behavior by exercising their rights as owners. Though shareholders don’t run a company, there are ways for them to influence the board of directors and top management.

Reported in the 2016 paper, “The Glare of the Spotlight: Female Leadership and Shareholder Activism,” Christine Shropshire, associate professor of management at the W. P. Carey School of Business, noticed that a disproportionate amount of shareholder activism was aimed at companies with women in charge. The research examined shareholder proposals at Fortune 1000 companies during the time period 2003 to 2013.

“Controlling for other reasons investors target certain firms, our models show that gender alone explains significant activism specifically toward female CEOs,” Shropshire said. “All else held equal, female CEOs have a 27 percent likelihood of facing activism, while their male counterparts have a near zero predicted likelihood of being targeted.”

Christine Shropshire, associate professor of management at the W. P. Carey School of Business

If I were an activist investor keen to maximise profit I would certainly consider the temperament of the CEO and the BoD, as public corporate activism is risky and expensive. That said more than likely women CEOs with less M&A experience might indeed make a target corporation with unrealized shareholder value more attractive.

Gordon of course will deny any bias, indeed Gordon will deny just about everything!

Leeches, they are some of the sweetest tucker you’re ever likely to find when lost in the outback

Leeched Courtesy BBC

Here is an excellent read (with the occasional typographic error) for anyone who ventures in the wilds. The US Navy SEAL Survival Handbook.

Some years ago together with a colleague I was doing geological traverses across the Earaheedy Basin in the deserts of Western Australia – in January. Mapping along a traverse and only navigating with a compass in the early morning, I walked across the stratigraphy and then reversed course to locate the vehicle parked in thick scrub. My colleague was several kilometres away exploring access options to the west.

Counting paces (before portable GPS) I returned on the reverse compass bearing but could not locate the vehicle. Given that midday temperatures were in the high 40s I quickly realised that this was a potentially life threatening event. Important in this situation not panic. I sat down had a cup of tea and a biscuit and developed a strategy. I very carefully walked to the east 400 metres – no vehicle. I retraced my steps and traversed a mere 100 metres to the west to locate the vehicle.

An excellent read with entertaining anecdotes and much useful information. The overarching message, go prepared and when faced with a challenge avoid panic, sit and have a cup of tea and a biscuit.

The leeches comment is on page 218.

36 Million User Accounts Used to Study Corporate Misconduct – Is Yours?

Ashley Madison Home Page

Remember back in 2015 when the dating site, Ashley Madison (AM), was hacked and 36 million user details were posted online, causing some level of personal angst for those named? Finance faculty members John M. Griffin and Samuel Kruger from the McCombs School of Business at The University of Texas at Austin published a study yesterday, using the AM data and public records, of the relationship between spousal infidelity and corporate misconduct in the Proceedings of the National Academy of Sciences. There was a surprisingly strong correlation within the data.

Griffin and Kruger examined professional behavior in 4 groupings totalling more than 11,200 individuals: Chicago police officers with substantial complaints, financial advisors engaging in misconduct, US Securities and Exchange Commission (SEC) white-collar criminals, and CEOs and CFOs of firms that engage in misconduct. In all 4 settings, they measured the relation between professional misconduct and personal usage of AM by matching data on individuals in the professional setting to AM transaction data. The first 3 settings demonstrated a link between personal AM usage and professional misconduct. The fourth setting goes a step further by linking the personal conduct of CEOs and CFOs to corporate outcomes. Detailed firm-level data allowed the researchers to examine this last setting most thoroughly.

They concluded that police officers and financial advisors who use the infidelity website are significantly more likely to engage in professional misconduct. Results are similar for US Securities and Exchange Commission (SEC) defendants accused of white-collar crimes, and companies with chief executive officers (CEOs) or chief financial officers (CFOs) who use the website are more than twice as likely to engage in corporate misconduct.

“This is the first study that’s been able to look at whether there is a correlation between personal infidelity and professional conduct,” Kruger said. “We find a strong correlation, which tells us that infidelity is informative about expected professional conduct.”

“More broadly, our findings suggest that personal and professional lives are connected and cut against the common view that ethics are predominantly situational. This supports the classical view that virtues such as honesty and integrity influence a person’s thoughts and actions across diverse contexts and has potentially important implications for corporate recruiting and codes of conduct. A possible implication of our findings is that the recent focus on eliminating sexual misconduct in the workplace may have the auxiliary effect of reducing fraudulent workplace activity”.


Read the Paper
We study the connection between personal and professional behavior by introducing usage of a marital infidelity website as a measure of personal conduct. Police officers and financial advisors who use the infidelity website are significantly more likely to engage in professional misconduct. Results are similar for US Securities and Exchange Commission (SEC) defendants accused of white-collar crimes, and companies with chief executive officers (CEOs) or chief financial officers (CFOs) who use the website are more than twice as likely to engage in corporate misconduct. The relation is not explained by a wide range of regional, firm, executive, and cultural variables. These findings suggest that personal and workplace behavior are closely related.


The final moments of Deepwater Horizon

On April 20, 2010, in the Gulf of Mexico on the BP-operated Macondo Prospect, a catastrophic failure on the Deepwater Horizon platform resulted in a massive oil spill considered to be the largest marine oil spill in the history of the petroleum industry and estimated to be 8% to 31% larger in volume than the previous largest, the Ixtoc oil spill, also in the Gulf of Mexico.

The U.S. Federal Government estimated the total discharge at 4.9 million barrels (210 million US gal; 780,000 m3). After several failed efforts to contain the flow, the well was declared sealed on September 19, 2010.

The ultimate cause of the blow-out was a poor cement job, undetected because a Bond Log was not conducted. This resulted in ingress of formation fluids into the well-bore when heavy drilling mud was circulated out and replaced with sea-water, placing the well in an under-balanced situation, prior to planned well suspension as a producer.

This should not have produced the uncontrolled flow to surface however and the BOP should have been capable of controlling flow. This video examines the failure of the BOP and does so well. Differential pressure between the tubing and annular pressures resulted in flexing of the drill-string out of the path of the blind-shear rams which would normally have sheared the drillpipe and contained the well.

However, there was one decision that ultimately lead to the inability of the crew to control the well. In their haste to de-mob the rig, instead of circulating out the drilling mud to monitored mud tanks on the rig, the crew elected to dump the mud directly off-rig to a waiting barge. The barge had no ability to accurately monitor mud volumes. If the mud tanks on the rig had been used the crew would have quickly seen that the volumes being reported to the mud tanks were increasingly greater than the volumes of seawater being circulated into the well. The crew would immediately have realised that they had a well control issue, would have circulated heavier mud weights and would likely have controlled the well.

The US Government reports on the Deepwater Horizon investigation are available below.

Deepwater Horizon Final Report
Volume I – US Coast Guard Report
Volume II – US Department of the Interior Report 

Deepwater Horizon Report Appendices

The Internal BP investigation report on the Deepwater Horizon accident can be viewed and downloaded below.


complex copper concentrates

Copper concentrates come in two “flavours” – Clean and Complex.

Clean copper concentrates have more than 20% copper and possibly gold and silver and low levels of the deleterious elements As, As, Bi, Cd, Cl, F, Pb, Hg, U and Zn. In addition, asbestos (referred to as fibre) is present in a small number of mine product streams. The Complex Concentrates have high levels of one or more deleterious elements. Each of the deleterious elements will have a threshold level in the offtake contract where the smelter will charge a penalty in addition to the treatment and refining charges. The penalty accommodates the increased costs of disposal and safe disposal.

Typical copper concentrate penalties.  Courtesy, AME Group
Typical copper concentrate penalties. Courtesy, AME Group

There is frequently an upper limit for some deleterious elements, above which the smelter may refuse to accept the concentrate. 

The most common deleterious element in copper concentrates is arsenic. Globally 65% of copper concentrates have less than 0.1% As. Above 0.2% arsenic, copper concentrates are considered to be Complex Concentrates and will be charged penalties. In the last decade, as new mine copper production has slowed the quantities of Complex Concentrates entering the market increased significantly while smelter capacity for these concentrates has declined.

Complex concentrates from Marcapunta in Peru (8% As), Chelopeche in Bulgaria (6% As) and Chuquicamata in Chile (1.2% As) have been the main producers. They have been joined more recently by production form Toromocho in Peru (1% As) and Ministro Hales in Chile (4% As).

Smelting Treatment Options

Prior to the 1990s there were many smelters that would accept copper concentrates with high deleterious element concentrations. However due to environmental concerns, liability concerns, tightening regulations and smelter closures at La Oroya in Peru, San Luis de Potosi in Mexico, Tacoma in the USA, Rönnskär in Sweden, PASAR in the Philippines and Kosaka in Japan, the number of smelters that will now regularly accept Complex Concentrates has declined very significantly.
Smelters that will now accept Complex Concentrates include Tsumeb in Namibia, Altonorte in Chile, Guixi in China and Horne in Canada. For complex concentrates that contain more than 1% arsenic, the Dundee Precious Metals smelter in Namibia at Tsumeb is now the only smelting option.

Altonorte is a custom copper smelting operation located near the port of Antofagasta in northern Chile. The smelter has the capacity to process 1,160,000 tonnes of copper concentrate per year. This operation is supplied with copper concentrates by third parties
Altonorte is a custom copper smelting operation located near the port of Antofagasta in northern Chile. The smelter has the capacity to process 1,160,000 tonnes of copper concentrate per year. This operation is supplied with copper concentrates by third parties

Most of the smelters which would previously accept high arsenic concentrates utilised roasters to fume of the Arsenic to produce arsenic trioxide (for which there is a limited market) and calcined copper with much reduce arsenic levels. Only Tsumeb still operates such a process facility.

Codelco installed an Outotec Partial Roaster (a fluid bed roaster) at its Ministro Hales mine
Codelco installed an Outotec Partial Roaster (a fluid bed roaster) at its Ministro Hales mine

Codelco installed an Outotec Partial Roaster (a fluid bed roaster) at its Ministro Hales mine in 2013 to reduce the as content of the copper concentrates. It is located close to Codelco’s Radomiro Tomic and Chuquicamata operations. Initially the project comprised an open pit mine, a 50 kt/d mill to produce 163 kt/a Cu and 287 t/a silver over a 14-year mine life. The ore contains a significant amount of arsenic (around 1.6-1.9% As) that results in production of concentrate with arsenic content just above 4%. To reduce the arsenic levels, a 550 kt/a fluid-bed roaster was constructed to safely process copper concentrate and recover arsenic for further confinement. In addition to calcine and sulphuric acid, the roaster produces flue dust (around 4% volume) containing 22% Cu.

Hydrometallurgical Treatment Options

There are a number of hydro-metallurgical treatment options (few of which have achieved commercial success) which do not involve roasting where the objective is to produce a residue containing arsenic in a form which is stable within a tailings dam. These process routes include atmospheric leaching, bio-oxidation and pressure leaching. Dundee Precious Metals prior to its acquisition of the Tsumeb smelter had attempted to permit a pressure oxidation circuit at its Chelopeche mine in Bulgaria but faced opposition for the usual socialist “ecological” groups.

Chelopeche Mine, Bulgaria
Chelopeche Mine, Bulgaria

Teck Aurubis have trialled their proprietary high pressure oxidation technology, CESL, on concentrates with up to 10% arsenic and report greater than 99% deportment of arsenic to leach residues.  Arsenic components in the residue have been identified as ferric arsenate and scorodite – both of which are considered the most stable forms for arsenic fixation. Teck Aurbis have achieved >97% copper and >90% Au and Ag recovery, LME grade copper cathode and gold and silver Dore production.

CESL residue stability test Courtesy: Teck Aurbis
CESL residue stability test Courtesy: Teck Aurbis

Blending Options

Due to the limited capacity and high costs of the smelters capable of accepting high arsenic concentrate, blending of clean and complex concentrates to produce a product that is below the smelter deleterious element thresholds has become a significant business opportunity. Generally, this is below the 0.5% Chinese threshold and the main blended concentrate target is Chinese smelters.

In 2014 Codelco set up a strategic alliance with Ocean Partners to blend high-As copper concentrate from its Ministro Hales mine with clean third-party concentrate bought in by both companies, at Ocean Partners’ concentrate blending facility in Taiwan.

In the near term it appears likely that the percentage of concentrates subject to arsenic penalties will increase, as will the percentage of Complex Concentrates in the market. In response to this Glencore has opened a new copper concentrate blending facility in Taiwan and a number of Chinese smelters are looking at locating blending and scrap processing operations in the region.

copper concentrate markets surprise

While copper futures trade in largely directionless, trading in a tight range there has been considerable action in the concentrate markets.

Reuters reports that the 10-member China Smelters Purchase Team (CSPT) has set treatment and refining charges at $55.00 per tonne and 5.5 cents per lb respectively for third-quarter deliveries. This is a significant move down from $92 and 9.2 cents in Q1 2019. This suggests considerable tightness on the copper concentrate supply side and could spell some grief and likely closures for higher cost smelters.

According to the International Copper Study Group (ICSG)  the issues with the supply side are the dearth of new mine production combined with lower head grades in Chile and markedly lower output at Grasberg where the operation is in the process of transition from open pit to underground.

Mine Production

ICSG in its latest study concludes that world mine production declined by about 1% in the first four month of 2019, with concentrate production declining by 0.5% and solvent extraction-electrowinning (SXEW) by 2.5%:ICSG in its latest study concludes that:

  • What little growth there was during the period was offset by declines in Chile and Indonesia;
  • Chilean production declined by 3.2% due to lower head grades;
  • Indonesian concentrate production declined by a massive 50% due to a transition from open pit to underground operations are the Freeport McMoran operations in Irian Jaya;
  • While DRC and Zambian production staged significant 11% production growth in 2018, production in the reporting period only managed 2.8%;
  • Production in Peru, Australia, China and Mongolia increased in response to improved grades and recoveries;
  • Mine production increased by 3% in Africa, 2% in North America and 6% in Oceania but declined by 4% in Asia , 1.5% in South America and 3% in europe.

Refined Production

ICSG in its latest study concludes that world refined production remained unchanged in the first four month of 2019 with primary production (electrolytic and electrowinning) declining by 0.2% and secondary production (from scrap) increasing by 0.5%. The decline in world production was due to:

  • A 33% decrease in Chilean electrolytic refined output due to temporary smelter shutdowns whilst undergoing upgrades to comply with new environmental regulations;
  • A decline of 33% in India’s production that was negatively impacted by the shutdown of Vedanta’s Tuticorin smelter in April 2018;
  • A 23% decrease in Zambian refined output due to power supply interruptions, smelter outages and the introduction on 1st January 2019 of a 5% custom duty on copper concentrate imports;
  • Reduced output in major producing countries including Germany, Japan, Peru and the United States due to smelter maintenance shutdowns.

Refined copper declines during the period were offset by growth in Chinese output and increases in Australia, Brazil, Iran and Poland . These declines during the period were offset by growth in Chinese output and increases in production due to recovery from production constraints in 2018.

ICSG concludes that:

  • World refined copper balance in the first 4 months of 2019 saw a 150,000 deficit;
  • China’s bonded stocks are thought to have increased by 140,000 tonnes, compared with the same period in 2018;
  • Copper stocks held at LME, COMEX and SHFE totalled 417,600 tonnes an increase of 19% over the prior period
  • The average LME price was down 2.7% from the may average

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