Everything you need to know about #Cryptocurrencies by Adam Ludwin #Bitcoin #Ethereum #cryptoassets

This is probably one of the best descriptions of crypto-assets I have read. 

It's already several months old (from October 16), yet as relevant today as when it was written.
https://blog.chain.com/a-letter-to-jamie-dimon-de89d417cb80

A Letter to Jamie Dimon

And anyone else still struggling to understand cryptocurrencies

ChainOct 16

Dear Jamie,

My name is Adam Ludwin and I run a company called Chain. I have been working in and around the cryptocurrency market for several years.

Last week you said a few things about Bitcoin:

Bloomberg. https://twitter.com/joelight/status/918899226771427328

It's easy to believe cryptocurrencies have no inherent value. Or that governments will crush them.

It's also becoming fashionable to believe the opposite: that they will disrupt banks, governments, and Silicon Valley giants once and for all.

Neither extreme is true.

The reality is nuanced and important. Which is why I've decided to write you this briefing note. I hope it helps you appreciate cryptocurrencies more deeply.

Let me start by stating that I believe:

• The market for cryptocurrencies is overheated and irrationally exuberant
• There are a lot of poseurs creating them, and some scammers, too
• There are a lot of conflicts of interest, self-serving hype, and obfuscation
• Very few people in the media understand what's going on
• Very few people in finance understand what's going on
• Very few people in technology understand what's going on
• Very few people in academia or government understand what's going on
• Very few people buying cryptocurrencies understand what's going on
• It's very possible I don't understand what's going on

Also:

• Banks and governments aren't going away
• Traditional software isn't going away

In short: there's a lot of noise. But there is also signal. To find it, we need to start by defining cryptocurrency.

Without a working definition we are lost. Most people arguing about cryptocurrencies are talking past each other because they don't stop to ask the other side what they think cryptocurrencies are for.

Here's my definition: cryptocurrencies are a new asset class that enable decentralized applications.

If this is true, your point of view on cryptocurrencies has very little to do with what you think about them in comparison to traditional currencies or securities, and everything to do with your opinion of decentralized applications and their value relative to current software models.

Don't have an opinion on decentralized applications? Then you can't possibly have one on cryptocurrencies yet, so read on.

And since this isn't about cryptocurrencies vs. fiat currencies let's stop using the word currency. It's a head fake. It has way too much baggage and I notice that when you talk about Bitcoin in public you keep comparing it to the Dollar, Euro, and Yen. That comparison won't help you understand what's going on. In fact, it's getting in the way. So for the rest of this note, I will refer to cryptocurrencies as crypto assets.

So, to repeat: crypto assets are a new asset class that enable decentralized applications.

And like every other asset class, they exist as a mechanism to allocate resources to a specific form of organization. Despite the myopic focus on trading crypto assets recently, they don't exist solely to be traded. That is, in principle at least, they don't exist for their own sake.

To understand what I mean, think about other asset classes and what form of organization they serve:

• Corporate equities serve companies
• Government bonds serve nations, states, municipalities
• Mortgages serve property owners

And now:

• Crypto assets serve decentralized applications

Decentralized applications are a new form of organization and a new form of software. They're a new model for creating, financing, and operating software services in a way that is decentralized top-to-bottom. That doesn't make them better or worse than existing software models or the corporate entities that create them. As we'll see later, there are major trade-offs. What we can say is simply that they are radically different from software as we know it today and radically different from the forms of organization we are used to.

How different? Imagine the following: you grew up in a rainforest and I brought you a cactus and told you it was a tree. How would you react? You'd probably laugh and say it's not a tree because there's no point in a tree being a stumpy water tank covered in armor — after all, water is abundant here in the rainforest! This, roughly, is the reaction of many people working in Silicon Valley to decentralized applications.

But I digress. I owe you an important explanation:

What is a decentralized application?

A decentralized application is a way to create a service that no single entity operates.

We'll come to the question of whether that's useful in a moment. But first, you need to understand how they work.

Let's go back to the birth of this idea.

This is a joyless bubble Anyone questioning whether financial markets are in a bubble should consider what we witnessed in 2017

John Mauldin shows us the absurdity of this market. 

• A painting (which may be fake) sold for $450 million.

• #Bitcoin (which may be worthless) soared nearly 700% from $952 to ~$8000 (Nb : since this was written 2 weeks ago, it's now more than double that...).

• #QE: The Bank of Japan and the European Central Bank bought $2 trillion of assets.

• Global #debt rose above $225 trillion to more than 324% of global GDP.

• US corporations sold a record $1.75 trillion in bonds.

• European #highyield bonds traded at a yield under 2%.

• #Argentina, a serial defaulter, sold 100-year bonds in an oversubscribed offer.

• Illinois, hopelessly insolvent, sold 3.75% bonds to bondholders fighting for allocations.

• Global stock market capitalization skyrocketed by $15 trillion to over $85 trillion and a record 113% of global GDP.

• The market cap of the #FANGs increased by more than $1 trillion.

• S&P 500 #volatility dropped to 50-year lows and Treasury volatility to 30-year lows.

• Money-losing @Tesla Inc. sold 5% bonds with no covenants as it burned $4+ billion in cash and produced very few cars.

This is a joyless bubble, however. It is accompanied by political divisiveness and social turmoil as the mainstream media hectors the populace with fake news. Immoral behavior that was tolerated for years is finally called to account while a few brave journalists fight against establishment forces to reveal deep corruption at the core of our government (yes, I am speaking of Uranium One and the Obama Justice Department). In 2018, a lot of chickens are going to come home to roost in Washington, D.C., on Wall Street, and in the media centers of New York City and Los Angeles. Icons will be blasted into dust as the tides of cheap money, cronyism, complicity, and stupidity recede. Beware entities with too much debt, too much secrecy, too much hype. Beware false idols. Every bubble destroys its idols, and so shall this one

5 Charts That Show We Are on the Brink of an Unthinkable Crisis 

John Mauldin on LinkedIn

https://www.linkedin.com/pulse/5-charts-show-we-brink-unthinkable-crisis-john-mauldin/?trackingId=qUJdwx9ncMByruIbcLugRg%3D%3D

#Guggenheim Partners faces allegations of self-dealing @FT

Top executives at Guggenheim Partners carried out a series of deals with companies close to the Wall Street firm’s leadership that have triggered concerns over possible favouritism and self-dealing from its own internal compliance, auditing and investment teams, a Financial Times investigation has found.



The deals saw the $240bn Wall Street asset manager invest at least $1bn of client money in companies where Guggenheim’s top officers and biggest shareholders had personal ties, transactions that were in some cases red flagged by the firm’s own compliance department for a lack of due diligence.



The investments have prompted inquiries by the US Securities and Exchange Commission, which received a whistleblower complaint in February 2016 alleging Guggenheim’s business culture encouraged senior executives to put themselves ahead of clients and prompted compliance to look the other way or face retaliation, according to people briefed about the complaint’s contents. 



Guggenheim faces allegations of self-dealing

Stel­lar smashups are the source of #gold, #plat­inum, #uranium & other heavy el­e­ments found through-out the uni­verse

Quite incredible.  Now the question is, how do they go from there to depositing themselves throughout the earth in different geologic conditions and settings?

Can someone explain?

"As­tronomers scan­ning rip­ples in space-time have de­tected the col­lision of two neu­tron stars for the first time—and, by an­a­lyz­ing the flare from the cat­a­clysmic crush, dis­cov­ered such stel­lar smashups are the source of gold, plat­inum, uranium and other heavy el­e­ments found through-out the uni­verse."

https://www.wsj.com/articles/a-clash-of-neutron-stars-forges-gold-1508162400

#Argentina pushes #lithium #mining investments as it aims to produce half the world’s lithium by 2020

http://www.latinfinance.com/Article/3747286/Argentina-pushes-lithium-mining-investments.html?ArticleId=3747286#/.Wax-99GxXmq

Argentina pushes lithium mining investments

Sep 1, 2017

The world's lightest metal is likely to be in great demand in the near future. As it aims to supply half of global lithium demand, Argentina is courting junior miners and global investors

Mick Bowen

Keywords: argentina lithium macri

As the world's electric car manufacturers and renewable energy firms invest heavily in battery development and manufacturing facilities, Argentina has emerged as an important future source of a crucial ingredient, lithium. With several projects set to begin construction, Argentina's Ministry of Energy and Mining expects the country to produce half the world's lithium by 2020.

South America's "lithium triangle," which straddles northwest Argentina, north Chile and southwest Bolivia, contains more than half of the world's identified lithium deposits, mostly in high-altitude salt flats called salares. But while Bolivia has committed to maintaining government control and Chile has opted for a quota system and public-private partnerships, Argentina has opened up its deposits to foreign junior mining companies (small cap mining exploration companies) with an appetite for risk.

Pointing to the "numerous interesting prospects" currently under development by mining exploration companies, Gabriel Rubacha, president of South American operations for Lithium Americas, notes: "Brine projects can be expensive to set up but have very attractive operational costs." In contrast to hard-rock lithium projects, common in North America and Australia, lithium brine is a liquid that can be pumped up, much like oil or water. 

Lithium Americas, through a joint venture with Chilean lithium miner Sociedad Química y Minera (SQM), is developing the Cauchari-Olaroz brine deposit in northern Argentina. The estimated project costs for the lithium carbonate mine are $425 million, but the operating costs are expected to be $2,495 per ton, compared with the $4,000 per ton operating costs typical of hard rock lithium projects. In late 2016, SQM signed lithium carbonate contracts at a price of $12,000 per ton.

Three other projects, owned by Canadian, Australian and French companies, aim to add nearly 100,000 tons to Argentina's production levels within three years, and Australia's Orocobre plans to double capacity at its existing 17,500-ton Salar de Olaroz facility. Those projects alone would boost production in Argentina to 165,000 tons from 29,000 tons in 2016.

But more junior miners are also looking to stake ground in Argentina, encouraged in part by the policies of President Mauricio Macri. "Argentina is recovering the confidence it had lost under the previous administration," says Mario Capello, the undersecretary of mining development. "Much of the focus has been on lithium, and it is the government's duty to develop the potential of these resources."

Light at the end of the tunnel

As Capello explains, more than 30 companies have undertaken lithium exploration projects in the past year, investing over $200 million so far. With research firms predicting that global lithium demand could triple to 750,000 tons annually by 2025, the more advanced projects could benefit from being early movers.

But they could face challenges to access financing. Until now, lithium developers have tended to partner with strategic investors higher up the value chain. For example, in January 2017, Lithium Americas, which is listed on the Toronto Stock Exchange, sold a 19.9% stake to China's Ganfeng Lithium for 64 million Canadian dollars ($48.3 million) and $125 million in debt financing. As part of the deal, Ganfeng's offtake agreement entitles it to 70% of Lithium Americas' share of production from the Cauchari-Olaroz project.

"As a junior company developing a half-a-billion-dollar project, we needed a strong strategic partner that understood the product and the market," says Rubacha. "Both parties agreed to the offtake contract at market prices as the most convenient solution."

Also in January, Lithium Americas sold a 16.4% stake to BCP Innovation, a subsidiary of Thailand's Bangchak Petroleum, for $112 million and another $80 million in financing. BCP's offtake agreement calls for 15% of Lithium Americas' share of production at market prices. 

But would-be lithium miners may soon have to cast a wider net to find financing, according to Chris Berry, founder of the research firm House Mountain Partners. "A small number of development-stage projects looking for major financing will need to rely on more than just strategic investors to attain adequate capital and meet the strong demand forecasts," he says.

Banks and hedge funds have shown interest in funding some projects, but Berry says lithium production involves unique operational risks and lower equity and debt prices could attract varied sources of capital.

Lithium miners in Argentina could also learn lessons from the first lithium boom of 2008 to 2012, when many companies rushed to find financing. Orocobre, for one, became the most shorted stock on the Australian Stock Exchange after it admitted that a "spreadsheet error" had overestimated the concentration of brine at its Olaroz project. Galaxy Minerals, which is also developing a project in Argentina, narrowly escaped bankruptcy after its Chinese processing factory racked up huge losses.

"As much as we'd like to, these projects can't be rushed," Berry says. LF

#Chile’s geography offers an embarrassment of riches for #RenewableEnergy

From today's NY Times

https://www.nytimes.com/2017/08/12/world/americas/chile-green-energy-geothermal.html?smid=tw-nytimesworld&smtyp=cur

Chile's Energy Transformation Is Powered by Wind, Sun and Volcanoes

By ERNESTO LONDOÑOAUG. 12, 2017

The first geothermal energy plant in South America is in Cerro Pabellón, Chile, 14,760 feet above sea level, surrounded by volcanoes. Meridith Kohut for The New York Times 

CERRO PABELLÓN, Chile — It looks and functions much like an oil drilling rig. As it happens, several of the men in thick blue overalls and white helmets who operate the hulking machine once made a living pumping crude.

But now they are surrounded by snowcapped volcanoes, laboring to breathe up here at 14,760 feet above sea level as they draw steam from the earth at South America's first geothermal energy plant.

With the ability to power roughly 165,000 homes, the new plant is yet another step in Chile's clean energy transformation. This nation's rapidly expanding clean energy grid, which includes vast solar fields and wind farms, is one of the most ambitious in a region that is decisively moving beyond fossil fuels.

Latin America already has the world's cleanest electricity, having long relied on dams to generate a large share of its energy needs, according to the World Bank.

But even beyond those big hydropower projects, investment in renewable energy in Latin America has increased 11-fold since 2004, nearly double the global rate, according to a 2016 report by the International Renewable Energy Agency, an intergovernmental organization. Chile, Mexico and Brazil are now among the top 10 renewable energy markets in the world.

So as Latin America embraces greener energy sources, government officials and industry executives in the region have expressed a sense of confusion, even bewilderment, with the Trump administration's decision to withdraw from the climate change commitments contained in the Paris Agreement, declare an end to the "war on coal" and take aim at American environmental regulations.

"It's irrational, like someone has been asleep for 10 years and refuses to wake up," said James Lee Stancampiano, the head of business development for South America at Enel Green Power, an Italian company that has played a leading role in overhauling Chile's energy sector. "We see renewables as a train that nobody can stop."

A worker inspecting solar panels in the Atacama Desert in Chile, one of the driest and sunniest places on Earth. The sun is so strong there that workers must wear protective suits and slather on thick layers of sunscreen. Meridith Kohut for The New York Times 

Even Argentina, something of a laggard in Latin America when it comes to clean energy, last year invited foreign companies to bid on renewable energy projects and declared 2017 to be the "year of renewables," setting a goal of relying on clean sources for 20 percent of its electricity needs by 2025, up from the current 2 percent.

Mexico is striving to rely on clean energy for 35 percent of its electricity demand by 2024, up from about 21 percent today. By 2050, it hopes to have a grid that runs on at least 50 percent clean energy.

Chilean officials have an even more ambitious projection, saying the country is on track to rely on clean sources for 90 percent of its electricity needs by 2050, up from the current 45 percent.

The country's expanding green energy infrastructure has significantly reduced the cost of producing electricity here, helping to turn a nation once dependent on energy imports into a renewables powerhouse with the potential to help its neighbors keep the lights on.

Wind turbines in the Atacama Desert and other turbines along Chile's 2,653-mile coast contribute power to the national grid. Meridith Kohut for The New York Times 

Part of the reason for the push, said Gabriela Elizondo, a senior energy analyst at the World Bank, is that severe weather events like droughts and floods have made hydropower plants less reliable, leading governments in the region to diversify their power sources.

"This is the main reason nonconventional renewables, meaning wind, solar and geothermal, have started to take off, especially in the last five years," Ms. Elizondo said. "They've taken off in a really spectacular way."

A decade ago, several leaders in the region became concerned that their energy sectors were buckling. After an era of sustained economic growth, during which millions joined the middle class, energy consumption shot up. Few nations were as vulnerable as Chile, which has almost no domestic sources of fossil fuels and was left in a lurch in 2007 when Argentina abruptly cut off natural gas shipments.

"We had a sector with very few actors, little competition and high prices," said Chile's energy minister, Andrés Rebolledo.

Workers watched a soccer game and ate fajitas during their time off at the base camp for the Cerro Pabellón geothermal plant, which has the ability to produce electricity for about 165,000 homes. Meridith Kohut for The New York Times 

The scale of the problem became apparent to President Michelle Bachelet during her first term, which ended in 2010. But it wasn't until she returned to office in 2014 that the government set in motion a plan to embrace renewables and open up the energy market to the private sector.

By then, in addition to the high cost and uncertainty of the energy supply, there was another pressing incentive to change course: Chile was experiencing a prolonged drought that turned once-arable land into desert.

"I am convinced that climate change is a reality, a complete and absolute reality," Ms. Bachelet said in a recent interview. "We think it's essential for our economic development to have cleaner energy because we want this planet to last."

Last August, Chile awarded dozens of contracts to local and foreign companies in a large auction that outsourced about 23 percent of its expected energy needs over the next decade. A new auction is scheduled to take place in November.

Vicuñas and flamingos on the edge of a lake in the Antofagasta Region in northern Chile. The geography of Chile is favorable for the creation of renewable energy. Meridith Kohut for The New York Times 

It doesn't hurt that Chile's geography offers an embarrassment of riches for renewable energy.

A constellation of solar fields built in the Atacama Desert in the north, one of the driest and sunniest places on Earth, has made Chile one of the most promising markets for producers of solar panels. The sun is so strong there that workers at remote solar fields must wear protective suits and obsessively slather on thick layers of sunscreen.

Scores of wind farms in the northern desert and along the country's 2,653-mile coastline are now feeding into the national power grid. And while output from solar and wind sources is irregular, geothermal plants offer round-the-clock power, albeit at a higher cost, making the overall grid less vulnerable to disruptions.

At geothermal plants built in volcanic areas, steam dredged from deep inside the earth is turned into electricity. After passing through a cooling station, the steam is pumped back into the earth using injection wells.

"It's not invasive," said Guido Cappetti, the general manager of the project, a joint venture between Enel and Chile's state-owned National Petroleum Company. "The environmental and social impacts are minimal."

A family in Ollagüe, Chile, watching television and making tea during a recent evening. Sergio Arancibia, a site manager at the Cerro Pabellón geothermal plant, said his job is particularly gratifying because it has brought power to remote, poor population centers. "It guarantees or minimizes the possibility that these small towns will succumb or disappear with time," he said. Meridith Kohut for The New York Times 

Sergio Arancibia, the site manager here at the Cerro Pabellón geothermal plant, said he got his professional start at Venezuela's state oil company. Then he moved to Peru, Argentina and Colombia, always chasing new fossil fuel discoveries that created boomtowns.

While much of the technology from that era is applicable to running the plant at Cerro Pabellón, he said his latest job is particularly gratifying because it has brought power to remote, poor population centers.

"It guarantees or minimizes the possibility that these small towns will succumb or disappear with time," he said. "These indigenous towns that have few revenue sources and jobs, the natural tendency is that they disappear when the last elder dies."

While Latin America's enormous hydropower projects have resulted in calamitous floods, large-scale displacement of local populations and environmental damage, the region's wind, solar and geothermal projects have encountered little resistance from neighboring communities.

Rosmary Mamani, right, and her daughter visiting with neighbors in Ollagüe while standing in front of their home, which has a solar panel on its thatch roof. Meridith Kohut for The New York Times 

Ollagüe, a tiny town along Chile's border with Bolivia, has seen a renewal since residents began getting electricity 24 hours a day last year from a bank of solar panels and wind turbines that charge a large battery.

"This was a town that used to lose power at 1 a.m.," said the mayor, Carlos Reygadas Bavestrello. "It would become a town of darkness. Being able to count on electricity has improved people's quality of life considerably."

Steady electricity has brought about both trivial and profound changes, he said. It's possible to have ice cream now. More significantly, students used to be sent to larger cities to continue their education after eighth grade. But soon, the village will have a high school.

"Our community no longer feels as isolated as it once was," he said. "It's not unusual anymore to see residents from indigenous communities with a laptop and a smartphone in hand connected with the rest of the world."

The Cerro Pabellón geothermal energy plant draws steam from surrounding snowcapped volcanoes, including San Pedro, left, and San Pablo. Meridith Kohut for The New York Times

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World @GoldCouncil H1 #Gold demand down 14%;slower #ETF inflows offset stronger consumer demand @MasterMetals

MasterMetals: World @GoldCouncil H1 #Gold demand down 14%;slower #ETF inflows offset stronger consumer demand



The MasterMetals Blog

@MasterMetals

Growth-Starved #Utilities Have Found a New Way to Make $$ #Wind

https://www.bloomberg.com/amp/news/articles/2017-07-26/aep-to-spend-4-5-billion-on-the-largest-wind-farm-in-the-u-s

Growth-Starved Utilities Have Found a New Way to Make Money

More stories by Chris MartinJuly 26, 2017, 5:10 PM EDT

A wind turbine stand on property used by the Alliant Energy Corp. Whispering Willow Wind Farm in Iowa Falls, Iowa, U.S., on Thursday, Sept. 15, 2016. Wind energy, the fastest-growing source of electricity in the U.S., is transforming low-income rural areas in ways not seen since the federal government gave land to homesteaders 150 years ago.

Photographer: Daniel Acker/Bloomberg

There's a new model emerging for growth-starved utilities looking to profit from America's solar and wind power boom.

American Electric Power Co. is using it for a $4.5 billion deal that'll land the U.S. utility owner a massive wind farm in Oklahoma and a high-voltage transmission line to deliver the power. NextEra Energy Inc.'s Florida unit is using it to build solar farms. And in April, the chief executive officer of Xcel Energy Inc. said he'd use it to help add 3.4 gigawatts of new wind energy over the next five years.

Here's how it works: Some utilities that for years contracted to buy electricity from wind and solar farm owners are now shifting away from these so-called power purchase agreements, or PPAs. They're instead seeking approval from state regulators to buy the assets outright and recover the costs from customers through rates. While the takeovers are being branded as a cheaper way of securing power, saving ratepayers millions in the end, they also guarantee profits for utilities.

"We keep wondering why utilities are always signing PPAs that pass the cost through to customers," said Amy Grace, an analyst at Bloomberg New Energy Finance. "If you put it in your rate base, you can get a guaranteed return on it. There's a big upside to ownership."

With the cost of building solar and wind farms sliding and electricity demand weakening, owning renewables is a more attractive proposition than ever for utilities.

"The price of wind has come down enough that it's going to be competitive with anything else you're probably going to propose to build out there," Kit Konolige, a New York-based utility analyst for Bloomberg Intelligence, said by phone Wednesday.

Biggest Hurdle

The catch, of course, is regulatory buy-in. AEP will need approval from Arkansas, Louisiana, Oklahoma, Texas and federal regulators to purchase the 2,000-megawatt Wind Catcher farm from developer Invenergy LLC, build a 350-mile (563-kilometer) transmission line and bake the costs into customer rates. The company expects to file these plans with regulators on July 31.

American Electric wants regulatory approvals by April, Chief Executive Officer Nicholas Akins said on the company's second-quarter earnings call Thursday. Central to the project are $2.7 billion of U.S. tax credits for wind production. No rate increase will be needed, he said.

...

Benjamin Fowke, chief executive officer of Minneapolis-based Xcel Energy, said in April that the company would seek approval to add 3.4 gigawatts of new wind energy and bill customers for as much as 80 percent of that investment through rates. He said at the time that wind energy is now the cheapest new form of generation.

For more on Fowke's plans for Xcel Energy, read this story based on an exclusive interview.

NextEra has already gotten Florida's go-ahead to recover the costs of the solar farms its Florida utility is building through customer rates.

Read The Whole story here: https://www.bloomberg.com/amp/news/articles/2017-07-26/aep-to-spend-4-5-billion-on-the-largest-wind-farm-in-the-u-s

Divine intervention? #ChurchOfEngland #fund becomes top world performer

Being contrarian is often a precursor to being right,”



Return on assets of 17.1% boosted by investment in global equities and private equity. At a time of all the mania with passive investing, the fund remains actively managed.



Read the article here: Church of England fund becomes top world performer

Physical #Gold: U.K. @RoyalMint’s Sales Surge 20% In Q1

The demand for physical metal continues unabated. Those in Pound sterling who had gold saw the insurance hedge work well when the pound took a dive last year. Same for the Russians, Venezuelans, etc. 

http://www.kitco.com/news/2017-04-13/U-K-Royal-Mint-s-Sales-Surge-20-In-Q1-Report.html?sitetype=fullsite

Johnny come late: After $SPX is up 200% since 2009, it's only now that investors are pouring into #ETF's

Here's an interesting chart: Investors' inflow into ETF's.

 

Attachment 1

 

The crowd is pouring into exchange-traded

funds these days, clearly placing bets that

the market isn't getting too toppy to deliver

more profits. Nearly three months into this

year, fund flows have surpassed money

invested in the past few years by a large

margin (attachment 1).

 

The question is: Where have investors been

since 2009. Since March 2009, the S&P 500

Index gained over 200% (attachment 2).

 

Attachment 2

#Mining accounts for 60% of #LatinAmerica’s #solar PV market: Embracing #Renewables

Mining industry is expected to represent nearly two-thirds of energy usage by the region's top 21 solar plants

http://nextbillion.net/energy-urgency-why-the-global-mining-industry-is-embracing-renewables/

nextbillion.net

Energy Urgency: Why the Global Mining Industry is Embracing Renewables

Joseph Kirschke

Editor's note: Throughout 2017, NextBillion is organizing content around a monthly theme, dedicating special attention to a specific sector alongside our broader coverage. This post is part of our focus on the environment for the month of March.

In recent months, events across three continents showed how clean energy use by the mining industry, which consumes 11 percent of global energy, can mitigate climate change on a planet where 2,000 mechanized mines struggle with fuel prices, carbon emissions and ever-increasing logistical challenges.

Moreover, Hindustan Zinc Ltd. in India, Redavia Solar and IAMGOLD Corp. in Africa and Chile's copper mining giants underscored how a business that also represents 15 percent of all electricity use – making our way of life possible through metals and minerals – can prioritize the $13.5 trillion in commitments made at the Paris Climate Conference (COP21) while helping ensure energy security for 1.2 billion people.

Mining for anything requires enormous amounts of energy – from base metals like copper, lead, nickel, zinc, tin, aluminum and iron ore to precious metals like platinum, gold and silver or fertilizers like phosphate or fossil fuels like coal. Given the complexity of mining, with its intricate equipment and heavy machinery at depths and trajectories necessary for extraction, energy costs – especially in remote areas – can account for up to 30 percent of balance sheet costs.

In isolated spots, worker safety and profits render reliable, high-voltage power an urgent priority – while making renewables an opportunity to save billions through energy efficiency.

In 2011, the industry first began economizing with solar and wind just before the crash of a 13-year emerging-market commodities boom which sent people, equipment and infrastructure deep into some of the most far-flung corners of the world scouring for metals and minerals. By 2022, Navigant, a consultancy, forecasts the use of clean energy by miners will grow to 8 percent – or $3.9 billion – from 1.8 percent today.

This month, IAMGOLD, a mid-sized Canadian firm, made news by signing a $20 million, 15-year power purchase agreement for a solar installation at its 15-megawatt power (MWp) off-grid Essakane mine in Burkina Faso. Elsewhere in Africa, German-based Redavia Solar, the largest ground-mount solar company in Tanzania, announced its solar photovoltaic (PV) expansion at Shanta Mining Company Ltd.'s New Luika gold asset. The 609 kilowatt (Kw) installation will yield 950 Kw hours (Kwh) annually; on completion, the entire project will generate 1,040,000 Kwh each year.

Thanks to strong domestic and international support, India is witnessing a clean energy renaissance for communities, businesses and industries – and mining is no exception. Key participants include coal firms like state-run Coal India Ltd., which plans to install 600 Mw of solar nationwide, along with Neyveli Lignite Corp., which tendered for 260 Mw of grid-connected solar PV in two states. On Dec. 1, Hindustan Zinc joined the group by announcing the solar deployment of 115 Mw; the company already generates 474 Mw of thermal power and 274 Mw of wind.

More than 16,000 miles away, Chile, one of the world's greenest economies and its largest copper producer, is getting a huge clean energy boost from its red metal mines. As elsewhere, plummeting solar prices combined with technological advances mean that – from the sun-baked Andes Mountains thousands of feet above sea level to blustery southern Patagonia – solar panels and wind turbines are fast replacing the need to truck diesel fuel to these harsh, distant places – a costly and unreliable enterprise.

In December, for example, reports emerged that interest among Chile's copper miners in renewables has ballooned so quickly that traditional energy suppliers must now diversify their portfolios. By July, Chile further plans to install 1,000 Mw of solar – mostly in mining regions – while Chile's Association for Renewable Energy has projected 100 percent of the national grid could be powered by renewables as of 2050.

Meanwhile, a 1,900-mile transmission line is being constructed to expand the power distribution system by connecting mines to the national grid. This has hemispheric implications: Mining already accounts for 60 percent of Latin America's solar PV market, while the industry is expected to represent nearly two-thirds of energy usage by the region's top 21 solar plants.

In other parts of the world the subsector has shown myriad benefits, too. These include shareholder demands for climate change transparency and – especially – the bedrock community relations, or "social license to operate," essential to any mining operation. These installations create jobs while unlocking revenue for mining companies to invest in local schools, agriculture and medical clinics along with small- and large-scale infrastructure.

IAMGOLD, the largest private-sector employer in Burkina Faso, for instance, created 120 jobs with the initial installation of a 15-Mw solar plant at its West African mine. In South America, the Toronto-based firm also created more than 100 jobs with the deployment of Suriname's first and largest solar farm with 5 Mw at its Rosebel gold asset. In all, IAMGOLD seeks to use 15 percent renewable energy company-wide by 2020.

Many such solar installations will be left behind for local use once the mine is closed. These also open the door for "anchor-tenant solutions," whereby operating mines share electricity with far-off local communities. This is important for places like Africa, where 80 percent of new mines will be clean energy-dependent by 2026, according to the International Finance Corp., and where 600 million people live without electricity.

Global institutions have taken note. The World Bank, in its 2015 report "Power of the Mine: A Transformative Opportunity for Sub-Saharan Africa," for instance, notes mining's appetite for power in sub-Saharan Africa will triple between 2000 and 2020 to reach more than 23,000 Mw.

One of the most significant examples lies in Queensland, Australia, where Anglo-Australian multinational Rio Tinto operates a bauxite mine with an 18,000-panel PV farm installed by Arizona-based First Solar, which shares electricity with a nearby township. Rio, the world's second-largest mining company, has recently announced plans to expand the project.

Also of major importance is the prospect of further greening some of the world's largest industrial-scale infrastructure projects associated with mining. These include "pit to port" capacities ranging from smelters, water and other processing systems to conveyor belts, roads and railways along with port and shipping facilities.

Given that 90 percent of energy demand will come from emerging markets by 2035, requiring $1 trillion in investments, according to the International Energy Agency (IEA), the potential synergies are endless. The UN's "Sustainable Energy for All" (See4All) initiative, for example, seeks to create universal energy access by 2030, while Power Africa, a U.S.-led public-private partnership, has sought to double energy access to 60 million, partly through renewables, across the continent.

Amid IEA reports that $40 trillion is needed for for global energy supplies to become completely renewable by 2050, impact investors are best poised to push mining companies into the gap. One of the most notable may be the Rockefeller Foundation, which has the largest anchor-based network of its kind encompassing telecoms towers to spread clean energy to 1,000 villages in rural India this year.

More recently, the Rockefeller Brothers Fund provided $10 million in project financing to Irish clean energy provider Mainstream Renewable Power to kick-start a larger $1.9 billion alternative energy push across Africa, along with larger institutions like the International Finance Corp.

November's elections have given the 2015 Paris agreement unprecedented urgency, as 194 signatories race to keep temperatures below 2 degrees Celsius. Yet COP21's enduring challenge for investors – scaling climate-resilient industries in the developing world – remains elusive.

Multifaceted and challenging, our planet's mines are innovation and energy-intensive ecosystems brimming with solutions just below the surface. We ignore them at our peril.

Joseph Kirschke, a consultant for mining firms with clean energy deployments and sustainable development initiatives, is a former editor at Mining Media International, a Jacksonville-based publishing house.

Photo: California-based Solarreserve's Concentrated Solar Power-Photovoltaic (CSP-PV) installation at a mine in Northern Chile.