Connect with us

Markets

Hull proposed as site of Europe’s first processing plant for rare earths

Published

on


Europe’s first rare earth processing plant could be built in Hull to supply the booming offshore wind industry.

Pensana Rare Earths has submitted a planning application for the US$125m facility, which will create 100 direct jobs. The company will produce rare earth oxides, which are used to manufacture the powerful magnets that drive the motors of offshore wind turbines and electric vehicles.

Paul Atherley, chairman of Pensana, said the company chose Hull because of its port and world-class infrastructure. Referring to the shared workspace company, he described the Saltend chemical park as a ‘WeWork’‘ for processing companies, with power, chemical supplies and waste disposal all available. The site is already home to BP Chemicals, Ineos and Air Products.

Hull is also near the Dogger Bank offshore wind farm, one of the world’s largest. The FT reported in November that GE is in talks to build a wind turbine factory in the area.

The UK government plans to increase the locally made content of turbines as part of its £12bn “green industrial revolution”.

China controls 80 per cent of global supply of the 17 main rare earth metals. The UK and EU are keen to support alternative sources of these materials that are vital to the low carbon economy.

The plant in Hull will process neodymium and praseodymium from a proposed mine in Angola. Pensana hopes to attract manufacturers of turbines and cars by providing a more expensive but ecologically sound alternative to Chinese suppliers of rare earths and their oxides, Mr Atherley said. 

“The UK and EU understand you cannot build a green economy on unsustainable raw materials. European companies do not want to depend on one source for 90 per cent of their supply,” he said, adding that he believed Pensana could capture 5-7 per cent of the market in wind turbines, then move into vehicles.

Pensana is UK listed and worth around £200m but Mr Atherley said raising the money through bonds should nevertheless be straightforward.

Innovate UK, a government agency, awarded funding in November to Less Common Metals (LCM), a rare earth alloys producer, to conduct a feasibility study into establishing a fully integrated supply chain for rare earth permanent magnet production in the UK.

LCM, based in Ellesmere Port near Liverpool, is the only rare earth magnet alloy producer in Europe and is also moving into metal production — plugging a gap in the magnet supply chain.

Hull is bidding for free port status which would reduce taxes as well as import and export costs. But Mr Atherley said he believed the oxides would be able to enter the EU tariff free under the post-Brexit trade deal because of the processing involved.

The EU is setting up a European Raw Materials Alliance to establish a sustainable supply and processing capacity of rare earths. It is using €3bn of the EU post-Covid recovery fund for its development.

However, rare earth processing produces toxic waste and environmental groups could oppose the plant. Lynas, the Australian company that is China’s main competitor, has struggled with regulatory approval for a facility in Malaysia because of the issue. 

Mr Atherley has been defeated by environmental activists before. In 2019 he quit as chief executive of Berkeley Energia, which has faced years of delay trying to get approval for an opencast uranium mine in Spain.



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Markets

European stocks stabilise ahead of US inflation data

Published

on

By


European equities stabilised on Wednesday after a US central banker soothed concerns about inflation and an eventual tightening of monetary policy that had driven global stock markets lower in the previous session.

The Stoxx 600 index gained 0.4 per cent and the UK’s FTSE 100 rose 0.6 per cent. Asian bourses mostly dropped, with Japan’s Nikkei 225 and South Korea’s Kospi 200 each losing more than 1.5 per cent for the second consecutive session.

The yield on the 10-year US Treasury bond, which has dropped in price this year as traders anticipated higher inflation that erodes the returns from the fixed interest securities, added 0.01 percentage points to 1.613 per cent.

Global markets had ended Tuesday in the red as concerns mounted that US inflation data released later on Wednesday could pressure the Federal Reserve to start reducing its $120bn of monthly bond purchases that have boosted asset prices throughout the Covid-19 pandemic.

Analysts expect headline consumer prices in the US to have risen 3.6 per cent in April over the same month last year, which would be the biggest increase since 2011. Core CPI is expected to advance 2.3 per cent. Data on Tuesday also showed Chinese factory gate prices rose at their strongest level in three years last month.

Late on Tuesday, however, Fed governor Lael Brainard stepped in to urge a “patient” approach that looks through price rises as economies emerge from lockdown restrictions.

The world’s most powerful central bank has regularly repeated that it will wait for several months or more of persistent inflation before withdrawing its monetary support programmes, which have been followed by most other major global rate setters since last March. Investors are increasingly speculating about when the Fed will step on the brake pedal.

“Markets are intensely focused on inflation because if it really does accelerate into this time near year, that will force central banks into removing accommodation,” said David Stubbs, global head of market strategy at JPMorgan Private Bank.

Stubbs added that investors should look more closely at the month-by-month inflation figure instead of the comparison with April last year, which was “distorted” by pandemic effects such as the price of international oil benchmark Brent crude falling briefly below zero. Brent on Wednesday gained 0.5 per cent to $69.06 a barrel.

“If you get two or three back-to-back inflation reports that are very high and above expectations” that would show “we are later into the economic recovery cycle,” said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management.

He added that the pandemic had sped up deflationary forces that would moderate cost pressures over time, such as the growth of online shopping that economists believe constrains retailers’ abilities to raise prices. Widespread working from home would also encourage more parents and carers into full-time work, he said, “increasing the labour supply” and keeping a lid on wage growth.

In currency markets on Wednesday, sterling was flat against the dollar, purchasing $1.141. The euro was also steady at $1.214. The dollar index, which measures the greenback against a group of trading partners’ currencies, dipped 0.1 per cent to stay around its lowest since late February.



Source link

Continue Reading

Markets

Potash/grains: prices out of sync with fundamentals

Published

on

By


The rising tide of commodity prices is lifting the ricketiest of boats. High prices for fertiliser mean that heavily indebted potash producer K+S was able to report an unusually strong first quarter on Tuesday. Some €60m has been added to the German group’s full year ebitda expectations to reach €600m. Its share price has gone back above pre-pandemic levels.

Demand for agricultural commodities has pushed prices for corn and soyabeans from decade lows to near decade highs in less than a year. Chinese grain consumption is at a record as the country rebuilds its pork herd. Meanwhile, the slowest Brazilian soyabean harvest in a decade, according to S&P Global, has led to supply disruptions. Fertiliser prices have risen sharply as a result.

But commodity traders have positioned themselves for the rally to continue for some time to come. Record speculative positions in agricultural commodities appear out of sync even with a bullish supply and demand outlook. US commodity traders have not held so much corn since at least 1994. There are $48bn worth of net speculative long positions in agricultural commodities, according to Saxo Bank.

Agricultural suppliers may continue to benefit in the short term but fundamentals for fertiliser producers suggest high product prices cannot last long. The debt overhang at K+S, almost eight times forward ebitda, has swelled in recent years after hefty capacity additions in 2017. Meanwhile, utilisation rates for potash producers are expected to fall towards 75 per cent over the next five years as new supply arrives, partly from Russia. 

Yet K+S’s debt swollen enterprise value is still nine times the most bullish analyst’s ebitda estimate, and 12 times consensus, this year. Both are a substantial premium to its North American rivals Mosaic and Nutrien, and OCI of the Netherlands, even after their own share prices have rallied.

Any further price rises in agricultural commodities will depend on the success of harvests being planted in the US and Europe. Beyond restocking there is little that supports sustained demand.

Our popular newsletter for premium subscribers Best of Lex is published twice weekly. Please sign up here.



Source link

Continue Reading

Markets

Amazon sets records in $18.5bn bond issue

Published

on

By


Amazon set a record in the corporate bond market on Monday, getting closer to the level of interest paid by the US government than any US company has previously managed in a fundraising. 

The ecommerce group raised $18.5bn of debt across bonds of eight different maturities, ranging from two to 40 years, according to people familiar with the deal. On its $1bn two-year bond, it paid just 0.1 percentage points more than the yield on equivalent US Treasury debt, a record according to data from Refinitiv.

The additional yield above Treasuries paid by companies, or spread, is an indication of investors’ perception of the risk of lending to a company versus the supposedly risk-free rate on US government debt.

Amazon, one of the pandemic’s runaway winners, last week posted its second consecutive quarter of $100bn-plus revenue and said its net income tripled in the first quarter from the same period a year ago, to $8.1bn.

The company had $33.8bn in cash and cash equivalents on hand at the end of March, according to a recent filing, a high for the period.

“They don’t need the cash but money is cheap,” said Monica Erickson, head of the investment-grade corporate team at DoubleLine Capital in Los Angeles.

Spreads have fallen dramatically since the Federal Reserve stepped in to shore up the corporate bond market in the face of a severe sell-off caused by the pandemic, and now average levels below those from before coronavirus struck.

That means it is a very attractive time for companies to borrow cash from investors, even if they do not have an urgent need to.

Amazon also set a record for the lowest spread on a 20-year corporate bond, 0.7 percentage points, breaking through Alphabet’s borrowing cost record from last year, according to Refinitiv data. It also matched the 0.2 percentage point spread first paid by Apple for a three-year bond in 2013 and fell just shy of the 0.47 percentage points paid by Procter & Gamble for a 10-year bond last year.

Investor orders for Amazon’s fundraising fell just short of $50bn, according to the people, in a sign of the rampant demand from investors for US corporate debt, even as rising interest rates have eroded the value of higher-quality fixed-rate bonds.

Highly rated US corporate bonds still offer interest rates above much of the rest of the world.

Amazon’s two-year bond also carried a sustainability label that has become increasingly attractive to investors. The company said the money would be used to fund projects in five areas, including renewable energy, clean transport and sustainable housing. 

It listed a number of other potential uses for the rest of the debt including buying back stock, acquisitions and capital expenditure. 

In a recent investor call, Brian Olsavsky, chief financial officer, said the company would be “investing heavily” in the “middle mile” of delivery, which includes air cargo and road haulage, on top of expanding its “last mile” network of vans and home delivery drivers.



Source link

Continue Reading

Trending