Britain’s electricity away from fossil fuels

Britain’s electricity away from fossil fuels

Britain has shifted 30% of its electricity away from fossil fuels in just nine years

File 20190109 32133 1e3lkxq.jpg?ixlib=rb 1.1
By Joe Dunckley / shutterstock

Grant Wilson, University of Birmingham and Iain Staffell, Imperial College London

Nine years ago, Britain generated nearly 75% of its electricity using natural gas and coal. In 2018, this dropped to under 45% – a remarkable transition away from fossil fuels in under a decade.

As energy efficiency improved, demand fell, and the UK generated less electricity than at any point since 1994. Our own analysis below looks at the past year, using similar data for Great Britain (as Northern Ireland has a separate power system), and we include net imports from France, the Netherlands and Ireland as an overall part of electrical generation. Here are a few things we found:

In 2018, Britain was coal-free for a record 1,898 hours – that’s up from just 200 hours in 2016. Coal generation fell for the sixth year in a row, and the country now has substantial periods without coal power (the longest stretch was just over three days straight).

For comparison, the 5% of electricity generated from coal was a broadly similar level to the combined total of solar and hydro (see table at end of the article). Wind increased its output to 17% of the total, and combined with solar these two renewables generated more electricity than nuclear – another significant milestone.

However, low levels of coal generation averaged across the year mask its importance at times when the electrical demand is particularly high. For example, over the week of the Beast from the East cold snap in February 2018, the gas system experienced significant stress and coal stepped in to provide nearly a quarter of Britain’s electricity. As coal generation is set to be phased out by 2025, the electrical system needs to continue to find alternative power sources to cope during extreme weather events.

Our analysis shows that annual renewable generation has increased by 27 terawatt hours (TWh) over the three years since 2015. This is particularly impressive considering the Hinkley Point C nuclear plant will produce a similar annual amount of electricity but will take three times as long to build (from contract signing).

Challenges ahead

But what about the decade ahead? Could Britain repeat its success since 2010 and reduce its coal and natural gas generation by a further 30 percentage points? Under this scenario, the country would then generate just a sixth of its electricity from fossil fuels.

It’s definitely possible, but the next decade will be more challenging for two main reasons: the demand for electricity is expected to rise rather than fall, and incorporating ever greater levels of variable renewable generation will need additional flexibility.

To achieve this, new renewable generation – new solar panels, new turbines, new hydro, tidal, marine and biomass generation – will have to replace an estimated 100 TWh per year (about four Hinkley Point Cs) from fossil fuels. That would require a build programme that was broadly 50% greater than the previous nine years.

Given the continued development of offshore wind in particular, this seems challenging but achievable. Solar and wind prices keep falling, which will help. Indeed, the UK’s business and energy secretary Greg Clarke recently said that “it is looking likely that by the mid 2020s, green power will be the cheapest power. It can be zero subsidy”.

What if all these cars were electric?
Jaroslaw Kilian / Shutterstock

However, at some point over the next decade, electrical demand will stop falling as electric vehicles gain market share from fossil fuel vehicles, and electrical heating for homes becomes more popular. As an indication of the scale of the transport demand, in 2017 UK cars and taxis travelled 254 billion miles. If all those journeys were taken in electric vehicles about as efficient as the latest Hyundai or Tesla then total electrical demand would increase by a quarter (over 80 TWh).

These vehicles would need the equivalent of three Hinkley Point Cs to charge them over the year.

This is also a similar level to current generation from renewables. The UK also needs to consider how to fill the gap that would be lost from fuel duty, which is forecast to raise around £28 billion this financial year.

If charging these vehicles adds to electrical demand at peak times, there would be substantial new infrastructure costs (more pylons, stronger electrical sub-stations). If Britain adopts a smarter system, fleets of electric vehicles could provide network support by changing their times of charging or even providing electricity back to the grid. This could provide a massive new form of flexibility that is needed to accommodate greater levels of weather dependent renewable generation. This is not an easy task, though, and needs better communication between vehicle, owner and power companies.

Steady progress

Overall, 2018 saw steady progress for low carbon generation, including record months for wind, biomass and, mid-heatwave, solar:

Great Britain’s renewables – percent of monthly generation.
Dr Grant Wilson

Looking to 2019, with more renewable capacity being installed, it is possible that solar could overtake coal, and renewables could generate more than nuclear for every single month. They could also generate more than coal and gas combined over a month for the first ever time. If any of these do happen, it will be yet another indication of the speed at which Britain’s electricity system is changing.


The electrical generation data is from Elexon and National Grid. Data from other analyses (such as BEIS or DUKES) will differ due to methodologies and additional data, particularly by including combined heat and power, and other on-site generation which is not monitored by Elexon and National Grid.
Renewables in this analysis = wind + solar + hydro + biomass.

The Conversation

Grant Wilson, Lecturer in Chemical Engineering, University of Birmingham and Iain Staffell, Lecturer in Sustainable Energy, Imperial College London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Algeria’s Gold reserves virtually unchanged since 2008

Algeria’s Gold reserves virtually unchanged since 2008

Algeria’s gold reserves virtually unchanged since 2008, according to the World Gold Council report 2017 where it is shown that the gold reserves held by Algeria are 174 tonnes the World Gold Council, a very slight increase compared to the period 2008/2017.
In several contributions on this subject between 2009 and 2017, I had estimated it to be $9 billion in late 2008 and between six and seven billion Dollars between 2015 and 2017.

According to the report of the World Gold Council (WGC) in 2016, the total reserves of the top 100 countries were estimated to 32,813 tons, almost equivalent data (32,702 tonnes) by the WGC in its report of 2017 which lists the gold reserves held by central banks.
According to a study (2017) by Geological Survey, there would still be about 50,000 tons left to extract. For 2017, according to the WGC, world demand for gold declined by 7% to reach 4,071.7 tons. The annual influx of gold-backed stock exchange funds added 202.8 tonnes to world demand in 2017, but this accounted for only about one third of the influx of 2016. The global demand for ingots and gold coins has also fallen from 2% to 1,029 tonnes while U.S. retail investment has reached their lowest level in the last ten years, according to the report. On the other hand, the year 2017 has experienced the first annual growth in the demand for jewellery since 2013 thanks to the stable prices of gold and the improvement of economic conditions. The demand for gold in the technology sector increased by 3% to reach 333 tonnes, ending a decline for six consecutive years.
According to the WGC report for 2017, the first 10 (ten) countries are as per the chart below:

However, in several contributions back in 2009 and 2017 following the various reports of the WGC, I noted that Algeria in 2009, was ranked between 25th and 22th, with 173.6 tons of gold.
Within the Arab world, in 2017, it was second in gold reserves, see the chart below.

Per the 2016 report, referring to the African area, Algeria being 25th at world level is top, first rank on the African continent, as shown below.


To determine the intrinsic value of the 1 gold ingot kilogram, multiply the price of the gold ounce by 32.15, then apply the Euro/Dollar exchange rate. Depreciation of the monetary value converted into gold Dollars between 2009/2017 contributed to a loss of more than $2.5 billion to its monetary value of the Algerian gold stock, which I had estimated, in 2009, at $9.75 billion. On May 28th, 2018, an ounce of gold is $1304.84. This gives an average for the gold stock of Algeria, not including in the foreign reserves, about $7 billion representing 7.21% of foreign exchange reserves that were closed at $97 billion as at end of 2017.
Where is the additional production of gold mined at Amesmessa in the province of Tamanrasset, this having been active for years with significant investments?
The gold-producing company is a company that can either sell to the Bank of Algeria to increase its stock of gold or export it or sell it directly to jewellers.
The first option seems to have been discarded since the gold stock has virtually remained unchanged since 2009. Recall that on January 30, 2010 in a statement to the Algerian Press Service the Director general of ENOR, the gold mining company had officially declared: “The deposit of Amesmessa, located 460 km west of Tamanrasset, will benefit from a development plan with the objective of gradually increasing its gold production to three tons of gold annually.”
And for this period, as regards the company’s exports between 2009/2010, they were in the order of 848.49 kg of gold, while the local market consumed only 208.78 kg of gold. In February 2018 according to the Minister of Industry and Mines, the mining company, that is a subsidiary of SONATRACH Group should have in 2018, a gold production that should reach 286 kg, against 286 kg in 2016, or a significant regression of more than 560 kg compared to 2009/2010, which explains the structural deficit of this company which according to the Minister of Industry would have been 1.4 billion of Dinars (DZD) in 2016, DZD600 million in 2017 with a forecast of DZD400 million by end of 2018.
However, avoiding misinterpretation and to specify that the stock of gold or currencies in general do not create wealth, these are merely a means of exchange. In the past, tribes of Australia used salt bars because of their scarcity as a means of exchange. On the contrary, hoarding and speculation in refuge values such as gold, certain currencies or raw materials is harmful to any economy. Having foreign exchange reserves or gold is not necessarily the wealth of a Nation. There are countries with little or no foreign exchange reserves held by central banks but with significant development, with capital being transformed into productive capital. This is a necessary condition but not sufficient to secure the investment and especially for the rentier economies countries to avoid a greater slippage of the value of the Dinar compared to the currencies where there is a correlation of approximately 70% between the present value of the Dinar, and this stock of currencies via the oil revenues annuity. With exchange reserves of $20 billion, the official Algerian Dinar would float to more than 200 Dinars a Euro and 250/300 Dinars a Euro in the informal market. It is thus far from being a sufficient condition for sustainable development and above all from an ephemeral annuity based on hydrocarbons. The central problem for Algeria is to transform this virtual wealth into real wealth through a non-hydrocarbon development based on enterprise and knowledge, all conditioned by a new governance both central and local that adapts to the new global geo-strategic mutations.

ademmebtoul@gmail.com

The myth of raw materials as a Miracle for Development

The myth of raw materials as a Miracle for Development

Several television shows and some dailies, between 2016 and 2017, have got me worried. These involved some so-called experts who affirmed, without restraint and without numerical analysis, that from the exports of phosphate, and / or iron ore in their crude or semi-crude condition, or cement, the country might earn sufficient revenues. Could Algeria currently facing low oil prices, rely on the myth of raw materials as a miracle for development be a real palliative for its incomplete run for its economy diversification.

Unconsciousness or demagoguery? Why then mislead both public opinion and policymakers?

To avoid the myth of raw materials as a miracle solution for development as I have had to demonstrate on several occasions, particularly in my latest Algeria and Its Illusory Raw Material Annuity, for phosphate mining exploitation, all depends on marketing within all environmental constraints, the country’s internal strategic management, etc. The ore’s content, hence key factor determining the cost of exploitation. The growth of the global economy, being by far the greatest influencing factor is expected to experience a significant change in its structure with the advent of the fourth economic and social revolution between 2020 and 2040. The purpose of this contribution is to analyze the case of iron mining.

The case of iron mining in Algeria

For iron, global reserves are valued by international agencies at 85 billion tons (MT). Algeria not quoted in international statistics has, according to Algerian data, reserves (exploitable deposits) that vary between 1500 and 2000 MT, a minister having given the figure of 2500 MT on December 5th, 2015.

World iron production amounts to 3.32 billion MT, and by far, China is the first producer, followed by Australia and Brazil. China however on its on concentrates about 50% of the steel market, both in terms of supply and demand. The price of iron ore fluctuates and in February 2018, the price of iron was $77 per ton. If we stick to the statistics of the European Union in terms of imports, and reported last April 2018, the prices have evolved as follows: $100 per MT in January 2009, $140 in January 2012, $102 in January 2013, $116 in January 2014, $70 in January 2015, $58 in January 2016.

SCOTIA, a Canadian Bank, which specializes in the evolution of commodity prices, provides, in a business note dated July 6, 2016, an international price between $48 and $50 /MT for 2018, depending on the revival of China’s economy, whose steel mills absorbed 70% of the world’s iron ore demand between 2014 and 2017.

With iron ore going at $60 /MT, exports of 3 million of MT/year, giving a turnover of $180 million to which must be subtracted 40% of charges, would leave $108 million to share following the 49/51% rule, between all partners, leaving less than $55 million for Algeria.

With exports of 30 million MT/year, the net profit for Algeria would not exceed $600 million/year. It is that the exploitation of the iron of Gara Djebilet will require large investments estimated by the government in 2013 to about $15 billion in power plants, transport networks, rational use of water, resolution of the remoteness issue of supply sources, environmental protection measures and, above all, all human resources required training.

Only processing into products can therefore provide a higher value added to exports. If we take a few products, with a high added-value, controlled by a few multinational firms, from both the technological and commercial point of view, we have the following prices fluctuations.

  • In February 2018, copper was established at $7,007 per ton, down 0.8% over a month and up 17.9% over a year. At the end of April 2018, the price of copper per kilo was $7.01.
  • In February 2018, the price of stainless steel that depends on various alloys including carbon, chromium and nickel can fluctuate between $2,000 and $2,500 per ton.
  • The price of aluminum was $2,182 per ton, down 1.3% over one month and up 17.3% over one year.
  • In February 2018, the price of lead was $2,581 per ton, down 0.1% over one month and up 11.7% over one year.
  • In February 2018, the price of zinc was $3,533 per ton, up 2.7% over one month and up 24.2% over one year.

In March 2018, the price of all metal ground scrap (type E40) averaged €285 per ton, up 6% over a month and down 33% on a Year. For the Price of steel is very fluctuating and was $620 per tonne on July 22, 2016 compared to $580 per tonne on July 19, 2016. In April 2018, the price of steel in average, is established to $857 per ton.  The prices of the different categories of steel, are for the MM20 steel at $816 / ton, the MM50 at $750 / ton and the MM100 at about $635 / ton.

In the meantime, steel imports costed Algeria in 2016, around $10 billion a year due to mainly its growing domestic demand from a drive to modernize infrastructures coupled with engaging into developments of subsidized housing schemes. In fact, Algeria imports most of the goods it needs due to insufficient domestic production caused by a lack of investment in its non-energy industries, including of course mining of all those abundant and near the surface resources.

In summary, far from being or sounding utopian, it was in 2017 and certainly is still for 2018, the case of all hard currency inflows come, whether directly or indirectly and for 97/98% from only hydrocarbons and their derivatives. Non-hydrocarbon exports would be conditioned by profound structural reforms that far from the Keri vision, would certainly not be a matter of administrative decisions, but rather of the adopting of all necessary policies that would enable the setting up and running of competitive productive companies in terms of, amongst many things, optimal cost/quality ratios, etc.  Within this context, it must be mentioned that from inception, negotiations, maturation, and finally realization and up to its gaining some cruising speed, a project would require in Algeria a minimum of five years.

That is definitely too long, even if in this day and age, heavy mining cum industrial undertakings are still onerous and weighty to come along. Due to their oligopolistic structure, for the mining industry, the only solution is a win/win partnership with reputable firms that could find it difficult to accept the restrictive rule of 49/51% with its unnecessarily bureaucratic burdens; flexibility and real-time decisions being the rule in international trade rather the exception. Ademmebtoul@gmail.com

Algeria and its illusory raw material annuity

Algeria and its illusory raw material annuity

The Minister of Energy whilst proceeding with the installation of an inter-sectorial Steering Committee of the mega-partnership project for phosphate exploitation and the development of petrochemical industries, said in a communiqué that this will enable Algeria to “become a global exporter of phosphate fertilizers and its derivatives”. This contribution is about Algeria and its illusory raw material annuity potentialities with a particular look at the case of phosphate mining and exploiting.

This strategic mega-project’s objective is to achieve a production of phosphates of nearly 11 million Tons/year compared to 1 to 1.5 million of Tons/year currently.

Unlike euphoria such as stated by the former Minister of Industry in 2014 – 2015 that thanks to the exports of phosphate, iron and cement, Algeria would not be negatively impacted by the recent oil prices drop. However, for both phosphate and iron (crude or semi-crude) and cement, marketing depends so much on the constraints of the international strategic environment management, the content of these ores that determines the cost of exploitation, and above all the growth of the world economy whose future structure with the fourth industrial revolution that gradually sets in by 2018 through 2030.

In these internationalized segments, some multinational firms control the techniques and distribution channels. We should avoid the mistakes of the past that have been estimated at billions of Dollars’ worth of losses and approach these for some mutual understanding.

Phosphate is a key element in the composition of fertilizers which are of crucial importance for world food security, but paradoxically the prices between 2015 to 2018 have been oriented downward.

For phosphate reserves, by order we have Morocco 50000 MT, China 3700, Algeria 2200, Syria 1800, South Africa 1500, Russia 1300, Jordan 1300, Egypt 1250, Australia 1030, The USA 1100 and Saudi Arabia 950. As far as production is concerned, we have for 2015, 223 million metric tons (MT) including China 100 MT, Morocco 30 MT, USA 27.6 MT, Egypt 5.5 MT, Tunisia 4 MT, Saudi Arabia 3.3 MT, Israel 3.3 MT, Australia 2.6 MT, Vietnam 2.6 MT, Jordan 2.5 MT and Algeria 2.6 MT. The price of crude phosphate has been divided by three since its peak in the year 2008; Having fallen by 43.2% since the year 2011. The world price of raw phosphate remained stable at around US $115 per MT, on a monthly average of 2015. According to a forecast of the World Bank, the general and medium-term trend of prices of phosphate products would remain down; crude phosphate would negotiate in 2020 at about of $80 – 85 per MT, that of DAP around $377.5 /MT and the TSP to nearly $300 /MT.  In a new analysis, the world rating agency estimates that the prices of phosphate ore will remain on average at 100 per tonne (toll-free), in 2018 and the prices of the ton of phosphate ore (no charge on board) would reach $105 in 2019 and possibly $110 in the long-term

Crude phosphate price is this month approximately $86 per ton compared to $84 for the same period in 2017. So, if Algeria exports 3 (three) million ton of raw phosphate annually at an average price of $100 between 2018 through 2020, we could have a turnover of about $300 million and for ten million tons a billion Dollars.

All related costs in this sector being relatively high, of notably depreciation and wages at a minimum of 40%, the resulting net profit would be, for 10 (ten) million tons about $600 million. In the event of an association with a foreign partner using the unavoidable 49/51% rule, the net profit of Algeria would be slightly more than $300 million. We are therefore, far from the profits generated from the oil fields.

To increase net profit, it is therefore necessary to embark on highly intensive processing units with heavy and profitable investments in the medium term with an export of as diverse products as possible. Thus, in a market as competitive as that of  the European Union, all fertilizer / Urea products were sold at more than $423 per ton in 2014 and was quoted on an annual average in 2017 at $327 per ton and on April 24th, 2018 to €247 per ton.

The price of Ammonia is a function of the price of gas on the international market. For instance, when the price of gas is $4 / MBTU, the cost of Ammonia is about the current rate of $140 / ton. When the gas price is $7 per MBTU, the cost price is $242.

In the world market, prices fluctuated between $338 / ton in August 2017 and $404 as quoted at the beginning of February 2018. But for large exportable quantities, this requiring heavy investments in the medium term would bring any profit not before 2020 – 2022 if the project was in operation as of 2018. And for large exportable quantities, this would require going through some partnership notably because of the world market being controlled by some firms. Moreover, for Algeria, it will be necessary to solve the problem of the price of the transfer of gas which cannot be aligned with that of the market and avoid the numerous disputes. In this context, I recommend, following many experts, that petrochemicals be attached to the Ministry of Energy / SONATRACH for greater coherence and efficiency, even if it is to establish a State Secretariat for Petrochemical Industries.

Focusing only on the country’s higher interests, it must be recognised that there is a lack of strategic vision. I would like to think that, as a word of warning against all visions of utopias of the past, should be left behind.

All this raises the problem of the limits of all public expenditure via the annuity and refers, for Algeria, to the mastery of strategic management to at least avoid all mismanagement, ignoring the new global mutations and / or initiation of non-mature projects that may go bankrupt in between time. A pertinent example is this drift towards all those automotive assembly plants where we ended up with more than thirty manufacturers, thing unknown anywhere in the world.  Hence the importance of understanding the new mutations of these internationalised channels in perpetual technological change.

 

Algeria needs a Vision within which all industrial policies should be coordinated (institutions, financial system, fiscal, customs, federal, socio-educational systems, labor market, land use, etc.), in order to adapt to the new world in perpetual evolution driven by innovation. Without this necessary adaptation to the new world in perpetual change, referring to a clear political will to accelerate the reforms, thus to a cultural revival generalized to the society as a whole, Algeria having all the required potentialities to go beyond the current status quo, it is futile to penetrate any world market. Algeria still dependent for long years on hydrocarbons, all other raw materials would only help make it possible to realize just an average profit,

In short, a win-win partnership with companies that control international circuits is the only way to value phosphate and to bring more value-added because exporting the raw material per say would not be as vitally important especially in a heavily devalued currency.

Let us avoid the illusion of an eternal annuity via some raw materials related exports revenues, as I recall in my previous contributions, no country in the world that has focused solely on raw materials has achieved sustainable development. As we must avoid this myth of the power of capital-money as a means. If we take the oil exporting countries of the MENA region that have had hundreds of billions of Dollars in the last three decades, none have achieved at least an emerging country status.

Since the world is world, and this proves truer with the forthcoming fourth world economic revolution, the prosperity of different civilizations has always been based on good governance.

Ademmebtoul@gmail.com 

 

The new ‘Renewable Superpowers’

The new ‘Renewable Superpowers’

There is a worldwide gradual and irrevocable change in all energy sources procurement. This is so obvious that a new world order is consequently being established before our very eyes.  Andrew Barron, of Swansea University brings our attention to the new ‘Renewable Superpowers’ that are nations that took steps in that direction much earlier than most and are now as it were bearing the fruits. He concludes by saying that :

The ConversationA country that creates green energy infrastructure, before political and economic control shifts to a new group of “world powers”, will ensure it is less susceptible to future influence or to being held hostage by a lithium or copper giant. But late adopters will find their strategy comes at a high price. Finally, it will be important for countries with resources not to sell themselves cheaply to the first bidder in the hope of making quick money – because, as the major oil producers will find out over the next decades, nothing lasts forever.

The picture above is that of  George Mentz JD MBA @GeorgeMentz titled China Moly to help BHR acquire stake in Congo’s Tenke copper mine

Meet the new ‘renewable superpowers’: nations that boss the materials used for wind and solar

File 20180216 50530 qcy2au.jpg?ixlib=rb 1.1

Blue Planet Studio / shutterstock

Imagine a world where every country has not only complied with the Paris climate agreement but has moved away from fossil fuels entirely. How would such a change affect global politics?

The 20th century was dominated by coal, oil and natural gas, but a shift to zero-emission energy generation and transport means a new set of elements will become key. Solar energy, for instance, still primarily uses silicon technology, for which the major raw material is the rock quartzite. Lithium represents the key limiting resource for most batteries – while rare earth metals, in particular “lanthanides” such as neodymium, are required for the magnets in wind turbine generators. Copper is the conductor of choice for wind power, being used in the generator windings, power cables, transformers and inverters.

In considering this future it is necessary to understand who wins and loses by a switch from carbon to silicon, copper, lithium, and rare earth metals.

The countries which dominate the production of fossil fuels will mostly be familiar:

The list of countries that would become the new “renewables superpowers” contains some familiar names, but also a few wild cards. The largest reserves of quartzite (for silicon production) are found in China, the US, and Russia – but also Brazil and Norway. The US and China are also major sources of copper, although their reserves are decreasing, which has pushed Chile, Peru, Congo and Indonesia to the fore.

Chile also has, by far, the largest reserves of lithium, ahead of China, Argentina and Australia. Factoring in lower-grade “resources” – which can’t yet be extracted – bumps Bolivia and the US onto the list. Finally, rare earth resources are greatest in China, Russia, Brazil – and Vietnam.

Salt flats in South America contain much of the world’s lithium. Guido Amrein Switzerland / shutterstock

Of all the fossil fuel producing countries, it is the US, China, Russia and Canada that could most easily transition to green energy resources. In fact it is ironic that the US, perhaps the country most politically resistant to change, might be the least affected as far as raw materials are concerned. But it is important to note that a completely new set of countries will also find their natural resources are in high demand.

An OPEC for renewables?

The Organization of the Petroleum Exporting Countries (OPEC) is a group of 14 nations that together contain almost half the world’s oil production and most of its reserves. It is possible that a related group could be created for the major producers of renewable energy raw materials, shifting power away from the Middle East and towards central Africa and, especially, South America.

This is unlikely to happen peacefully. Control of oilfields was a driver behind many 20th-century conflicts and, going back further, European colonisation was driven by a desire for new sources of food, raw materials, minerals and – later – oil. The switch to renewable energy may cause something similar. As a new group of elements become valuable for turbines, solar panels or batteries, rich countries may ensure they have secure supplies through a new era of colonisation.

China has already started what may be termed “economic colonisation”, setting up major trade agreements to ensure raw material supply. In the past decade it has made a massive investment in African mining, while more recent agreements with countries such as Peru and Chile have spread Beijing’s economic influence in South America.

Or a new era of colonisation?

Given this background, two versions of the future can be envisaged. The first possibility is the evolution of a new OPEC-style organisation with the power to control vital resources including silicon, copper, lithium, and lanthanides. The second possibility involves 21st-century colonisation of developing countries, creating super-economies. In both futures there is the possibility that rival nations could cut off access to vital renewable energy resources, just as major oil and gas producers have done in the past.

On the positive side there is a significant difference between fossil fuels and the chemical elements needed for green energy. Oil and gas are consumable commodities. Once a natural gas power station is built, it must have a continuous supply of gas or it stops generating. Similarly, petrol-powered cars require a continued supply of crude oil to keep running.

In contrast, once a wind farm is built, electricity generation is only dependent on the wind (which won’t stop blowing any time soon) and there is no continuous need for neodymium for the magnets or copper for the generator windings. In other words solar, wind, and wave power require a one-off purchase in order to ensure long-term secure energy generation.

The shorter lifetime of cars and electronic devices means that there is an ongoing demand for lithium. Improved recycling processes would potentially overcome this continued need. Thus, once the infrastructure is in place access to coal, oil or gas can be denied, but you can’t shut off the sun or wind. It is on this basis that the US Department of Defense sees green energy as key to national security.

The ConversationA country that creates green energy infrastructure, before political and economic control shifts to a new group of “world powers”, will ensure it is less susceptible to future influence or to being held hostage by a lithium or copper giant. But late adopters will find their strategy comes at a high price. Finally, it will be important for countries with resources not to sell themselves cheaply to the first bidder in the hope of making quick money – because, as the major oil producers will find out over the next decades, nothing lasts forever.

Andrew Barron, Sêr Cymru Chair of Low Carbon Energy and Environment, Swansea University

This article was originally published on The Conversation. Read the original article.

 

ENOR the Algerian gold mining Company is Profitable

ENOR the Algerian gold mining Company is Profitable

The Minister of Industry and Mines has declared on February 8th, 2018 that Algeria’s held gold reserves are 173 tons, as unchanged from 2009, but with a decrease in the production of ENOR, the state-owned gold mining company in 2017, by more than 800 kg compared to 2008/2010. For purposes of answering whether ENOR the Algerian gold mining Company is Profitable status, and in several of my contributions on this subject between 2009 and 2017-(please Google Mebtoul in Arabic-English-French) depending on the fluctuations in the price of the gold ounce, I had estimated it to be $9 billion in late 2008 and between six and seven billion between 2015 and 2017.

According to the World Gold Council (WGC) annual report, the annual world gold demand amounted to 4071.7 tons in 2017, down 7% from 2016. According to this report, the total reserves in 2016 of the top 100 holding countries were estimated at 32,813 tons. According Cheatssheet.com Business, the ten countries with the most important reserves of gold in descending order are as follows:

  • India officially holds 557.7 tons of gold, this represents 6.7% of its reserves.
  • The Netherlands owns 612.5 tons of gold, which represents 55.2% of its reserves.
  • Japan has 765.2 tons of gold, which represents 2.4% of its reserves.
  • Switzerland has 1040 tons of gold which represents 7.7% of its reserves.
  • China has 1054.1 tons, which represents only 1% of its reserves. But according to the same website, other sources advance between 2000 to 3000 tons of gold.
  • Russia has 1208.2 tons of gold which represents 12.2% of its reserves.
  • France has 2435.4 tons of gold which represents 65.6% of its reserves.
  • Italy has 2451 tons of gold which represents 66.6% of its reserves.
  • Germany has 3384.2 tons of gold which represents 67.8% of its reserves and finally,
  • The United States that abolished the gold standard in 1971, has nearly 8133.5 tons, representing 72.6% of its reserves.

This data for all sorts of reasons could differ slightly for those of some countries.

Algeria ranked 25th worldwide and 3rd amongst the Arab countries in its gold reserves estimated in 2016 to be 173.6 tons, and according to the WGC unchanged from 2009. It is behind Saudi Arabia’s 322.9 tons and Lebanon’s 286.8 tons.

In Africa, Algeria is first, ahead of South Africa (29th), Libya (31st), Morocco (59th) and Tunisia (77th).

To determine the intrinsic value of the 1 kilogram of gold ingot, we must multiply the price of an ounce of gold by 32.15, then apply the Euro/Dollar exchange rate.

The monetary value of gold as converted into Dollars between 2009 and 2017 caused the loss of more than $2.5 billion of its monetary value to the Algerian stock, which I had estimated, in 2009, at $9.75 billion.  On February 8th, 2018, an ounce of gold is quoted at $1314.10, and with the average value, this stock could be about $6 billion, that represents 6.25% as at end of 2017 giving the exchange reserves between $96/97 billion.

Then, one would wonder where is the additional production of the Amesmessa gold mine? 

With this recent data in mind, Algerian opinion needs to be enlightened, about the stock of Algerian gold reserves, which has not moved since 2009, while Algeria has embarked on gold mining in Amessmessa.

The gold-producing company can either sell to the central Bank of Algeria to increase its stock of gold or export it or again sell it directly to jewelers. The first option was discarded. Since the gold stock has remained unchanged since 2009.

On January 30th, 2010 in a statement to the Algerian Press Service, the Director of the ENOR, the gold mining company had officially declared: “The Amessmessa deposit, located at 460 km west of Tamanrasset, will benefit from a development plan with the objective of gradually increasing its gold production to three tons of gold annually.” 

The partnership with the  Australian company Gold Mining Algeria (GMA), having left Algeria,  it was not conclusive to produce under the contract between 3000 and 4000 kg annually;  I quote the statement made in London in January 2007 from the CEO of GMA : “The Tirek and Amesmessa mines can produce about 28.5 grams of gold per ton of soil.” 

However, for this period, the company’s exports between 2009 and 2010 were in the order of 848.49 kg of gold, while the local market consumed only 208.78 kg of gold. Today in February 2018 according to the Minister of Industry and Mines, ENOR, a subsidiary of the SONATRACH Group should have in 2018, a gold production which should be up to 286 kg, compared to 137 kg in 2016.  

An important regression of more than 800 kg between domestic consumption and exports in 2009/2010, which explains the structural deficit of this company which according to the Minister of Industry would have been to 1.4 billion Dinars (DZD) in 2016, DZD600 million in 2017 with a forecast of DZD400 million by end of 2018.

Recently, according to the Minister, the Government had decided to clear DZD2 billion of debts in favour of ENOR and to allocate it a long-term investment credit of DZD3 billion despite the wage costs far exceed the revenue.

However, it is necessary to avoid misinterpretation, to specify that the stock of gold or currencies in general do not create wealth, these are a means of exchange.

On the contrary, hoarding and speculation in refuge values such as gold, certain currencies or raw materials is harmful to any economy. Having foreign exchange reserves or gold is not necessarily the wealth of a Nation. There are countries with little or no foreign exchange reserves held by central banks but with significant development, with capital being transformed into productive capital. This is a necessary condition but not sufficient to secure the investment and especially for the rentier economies countries to avoid a greater slippage of the value of the Dinar compared to the currencies where there is a correlation of approximately 70% between the present value of the Dinar, and this stock of currencies via the oil rent. With exchange reserves of $20 billion, the official Algerian Dinar would float to more than DZD200 a Euro and DZD250/300 a Euro on the informal market. It is thus far from being a sufficient condition for sustainable development and above all from an ephemeral hydrocarbons-based rentier economy.

The central problem for Algeria is to transform this virtual wealth into real wealth through a non-hydrocarbon development based on business and knowledge, all conditioned by a new governance model.

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