Gapping up
In reaction to earnings/guidance:
- TTI +3.8% (guidance)
Other news:
- RIVN +5.9% (Amazon (AMZN) rolls out first electric delivery vans from Rivian in Europe)
- DWAC +5.8% (disclosed agreement in principle with the staff of the SEC's Division of Enforcement)
- NIU +4.8% (reports Q2 sales volumes)
- CCCC +3.9% (receives FDA Clearance of Investigational New Drug Application for CFT8919)
- RIG +3.6% (announced that six one-well options have been exercised for the Transocean Encourage in Norway)
- AXTI +3.1% (Addresses China's Announcement of New Export Control Regulations)
- EVO +3.1% (awarded second contract from U.S. Department of Defense under accelerated antibodies program)
- DHT +2.6% (provides share buyback update)
- AEL +2.4% (Brookfield Reinsurance to acquire AEL in $4.3 billion transaction)
- INCY +1.5% (MHRA grants marketing authorization for Opzelura cream for the treatment of non-segmental vitiligo with facial involvement in adults and adolescents)
- USO +1% (rising with crude futures)
Early premarket gappers
- Gapping up:
- AXTI +10.3%, DWAC +6.2%, RIVN +3.7%, UROY +2.5%, AEL +2.4%, DHT +1.7%, VXX +1.5%, USO +1.1%, INCY +0.7%
- Gapping down:
- VRTX -1.1%, LNW -1.1%, QQQ -0.5%, C -0.5%, SPY -0.4%, DIA -0.4%, IWM -0.4%
>>> Up
* BioMarin Raised to Outperform at BMO; PT $102
* Continental Raised to Outperform at BNPP Exane; PT 90 euros
* Gooch & Housego Raised to Buy at Numis; PT 750 pence
* Kooth Raised to Buy at Canaccord; PT 565 pence (+)
* Neste Raised to Buy at Jefferies; PT 45 euros
* Neste Raised to Buy at Jefferies; PT 45 euros
* Netflix Raised to Neutral at Goldman; PT $400
* Nucor Raised to Outperform at BNPP Exane
* Schindler PT Raised at JPMorgan; Sees Orders Ahead of Consensus (+)
* Transocean Raised to Buy at Citi
* Vopak Raised to Overweight at Morgan Stanley; PT 45 euros
* Wetteri Oyj Raised to Reduce at Inderes; PT 60 euro cents (+)
>>> Down
>>> Down
* Abrdn plc Cut to Hold at Panmure Gordon; PT 276 pence
* Adyen Cut to Neutral at UBS; PT 1,641 euros
* Hexagon Cut to Hold at Handelsbanken
* Lumentum Cut to Underweight at Barclays
* Lumentum Cut to Underweight at Barclays
* Restore Cut to Hold at Panmure Gordon; PT 250 pence (+)
* Steel Dynamics Cut to Neutral at BNPP Exane
* U.S. Steel Cut to Neutral at BNPP Exane
* Voestalpine Cut to Neutral at BNPP Exane
>>> Initiation
>>> Initiation
* Apax Global Alpha Rated New Equal-Weight at Barclays
* Augmentum Fintech/Fund Rated New Overweight at Barclays
* Catana Rated New Buy at TP ICAP Midcap; PT 9.40 euros (+)
* Chrysalis Investments Rated New Equal-Weight at Barclays
* EssilorLuxottica Assumed Overweight at Morgan Stanley
* EssilorLuxottica Rated New Buy at Intesa Sanpaolo; PT 209 euros (+)
* Getlink Rated New Overweight at JPMorgan; PT 19 euros
* Getlink Rated New Overweight at JPMorgan; PT 19 euros
* HarbourVest Global Rated New Overweight at Barclays
* HgCapital Rated New Equal-Weight at Barclays; PT 426 pence
* ICG Enterprise Rated New Overweight at Barclays; PT 1,490 pence
* Kooth Rated New Buy at Liberum; PT 457 pence (+)
* Molten Ventures Rated New Overweight at Barclays; PT 430 pence
* Nexi Rated New Buy at UBS; PT 10 euros
* Noble Corp. Rated New Buy at Citi
* Oakley Capital Investments Ltd Rated New Overweight at Barclays
* Pantheon Rated New Overweight at Barclays; PT 340 pence
* Princess Private Equity Rated New Underweight at Barclays
* Seadrill Rated New Neutral at Citi; PT 505 kroner
* Valaris Rated New Buy at Citi
>>> Call
>>> Call
* Adyen Downgraded at UBS on E-Commerce Slowdown; Nexi New Buy
* AO World FY Results Show Success of Profit Pivot, Jefferies Says (+)
* Barclays’ Cau Sees Stock Boost From Peak Rates, Resilient Growth (+)
* Citi Has Positive Catalyst Watch on Abrdn, Man; Jupiter Negative (+)
* Citi Sees Extended Drilling Super Cycle; Noble, Valaris New Buys
* Continental Raised at BNPP Exane as ‘Stars Align’ for Tiremaker (+)
* EssilorLuxottica Overweight at Morgan Stanley, Now Top Pick
* Getlink Rated Overweight at JPMorgan on ‘Superior’ Pricing Power
* LEG Immo, TAG Immo, Vonovia Cut at Stifel on High Rates Outlook (+)
* Liberum Strategists Don’t Expect New Lows for Stocks on Earnings (+)
* Neste Upgraded at Jefferies on Margin Accretive Renewables
* Vopak Raised to Overweight at Morgan Stanley on Supportive Macro
Taiwan’s Impossible Choice: Be Ukraine or Hong Kong
Taiwan draws two opposite lessons from Russian invasion of Ukraine
TAIPEI, Taiwan—People in Taiwan have been following every twist of the war in Ukraine. But, while their sympathy for the Ukrainian cause is near-universal, the conclusions for the island’s own future widely diverge.
To some, the takeaway is that even a seemingly invincible foe can be defeated if a society stands firm, an inspiration for Taiwan’s own effort to resist a feared invasion by China. Others draw the opposite lesson from the images of smoldering Ukrainian cities.
Anything is better than war, they say, and Taiwan should do all it can to avoid provoking Beijing’s wrath, even if that means painful compromises.
These two competing visions will play out in Taiwan’s presidential elections, slated for January, and shape how the island democracy revamps its defenses as China’s military might expands. The soul-searching inside Taiwan, and the determination with which it will strengthen its armed forces, is also bound to affect the extent to which the U.S. will get involved militarily should Beijing try to capture the island, home to 24 million people—and most of the world’s advanced semiconductor production capacity.
While Taiwan has been living under a threat of invasion ever since China’s Communist Party took control of the mainland in 1949, the Russian thrust into Ukraine drove home to many Taiwanese that war can erupt with little notice.
Chinese leaders have intensified their rhetoric around Taiwan, repeating that they won’t rule out using force to achieve what they call “national reunification.”
Beijing has also ramped up naval and air probes around the island that wear out Taiwanese defenses. The U.S. Central Intelligence Agency estimates that Chinese leader Xi Jinping has set 2027 as the deadline for his military to be ready to take the island.
“What Ukraine has underscored is that it’s not a remote possibility that an aggressive neighbor can unilaterally decide to take action against you. It’s a wake-up call,” said Enoch Wu, founder of the Forward Alliance, a nongovernmental organization that has started training Taiwanese civilians in emergency response and first aid. “The threat that we face is an existential one, and so our defense mission has got to involve the entire society.”
Taiwan’s President Tsai Ing-wei has already moved to increase the length of compulsory military service starting next year, to one year from four months, and is boosting military spending as Taipei purchases new weapons from the U.S., such as hundreds of Harpoon antiship missiles.
While Tsai isn’t eligible to run again, the presidential candidate from her ruling party—current Vice President Lai Ching-te—has similarly pledged to safeguard the island’s autonomy and resist Beijing’s growing intimidation.
“I don’t think anybody rational could look at this and say dialogue is going to change Xi or the CCP,” said Vincent Chao, a former national-security official and Lai’s spokesman, referring to China’s Communist Party. “They see the subjugation of Taiwan as part of their national rejuvenation, as something inherently connected to their political legitimacy. It’s incumbent upon any candidate to be realistic about the situation.” Ukraine, he added, has given Taiwan a “brilliant lesson” in how to defend itself—and how to build coalitions with like-minded democracies.
The main opposition Nationalist Party, known as the Kuomintang, holds a different view.
“We want to talk to the Chinese. We believe that we can have a dialogue with the Chinese. That will certainly de-escalate the tension, to make sure no accidental war, and for sure no intentional war, happens,” Kuomintang vice chairman Andrew Hsia said in an interview before departing on a trip to China in June, his second this year.
Ukraine’s tragedy has made an outreach to Beijing even more vital, he added: “In the past we talked about war, but now for the first time we saw in our living rooms, on television, all this destruction. Are we ready for that? I don’t think we are, I don’t think we are that resilient.”
The Kuomintang’s presidential candidate, Hou Yu-ih, pledged this week that he would return the compulsory military service length to four months after improving ties with Beijing.
While the Kuomintang performed well during local elections last fall, opinion polls so far show Lai in the lead, though the presidential race is too volatile to call. A third candidate, Ko Wen-je, the centrist former mayor of Taipei, is also polling high, further confounding predictions.
Chinese leaders have watched with alarm how the Russian military stumbled in Ukraine, suffering high casualties and a series of setbacks that helped trigger the brief mutiny by the Wagner paramilitary group last month. But there is no indication that Xi, who has already squelched the autonomy and civil liberties enjoyed by Hong Kong, has become less determined to take Taiwan because of Russia’s difficulties, U.S. officials say.
A formidable natural barrier—more than 80 miles of water—separates Taiwan from the Chinese mainland, making any invasion far more complicated than Russia driving columns of tanks across the Ukrainian border in February 2022.
Chinese troop-carrying ships and planes would be targeted by Taiwanese missiles, and initial casualties of any invading force are likely to be high.
The fact that Taiwan is an island, however, also makes securing ammunition and vital supplies, such as fuel to power its electricity plants, more complicated. The island’s small size—it occupies merely 6% of Ukraine’s surface area—provides little strategic depth should the Chinese military succeed in establishing some beachheads, as most wargames forecast will happen.
“For Taiwan, the situation is like David facing Goliath,” said Maj. Gen. Sun Li-fang, the spokesman for Taiwan’s military. “But this is our home country here, and the lifestyle of democracy and freedom is part of our values. We will protect it with whatever it takes.”
While the U.S. has no binding obligation to defend Taiwan and has long maintained a policy of strategic ambiguity on the issue, President Biden repeatedly cautioned that, unlike in Ukraine, the U.S. military would intervene directly should China attempt to seize the island by force.
Before American troops deploy, however, the island would have to resist the first blows on its own. So far, despite recent improvements, it is far from ready, many U.S. officials and analysts say.
“The Taiwanese have to be committed 100%, because if they are not, there is no reason for the U.S. or any other nation to come to their aid,” said ret.
U.S. Air Force Lt. Gen. David Deptula, dean of the Mitchell Institute for Aerospace Studies in Arlington, Va.
“There needs to be a sense of urgency. America is not going to spill the blood of her sons and daughters over Taiwan if the Taiwanese are not willing to wholeheartedly prosecute the defense of their island and their people.”
While augmented over the past year, Taiwan’s military budget is still only 2.4% of the GDP—compared with well over 3% for the U.S., Poland’s 4% and about 5% in Israel.
The professionalism and motivation of Taiwan’s military are a particular concern, Western officials say. The island’s main officer training school was originally established as Whampoa Military Academy in southern China in the 1920s, with heavy reliance on Soviet instructors. Outdated Soviet-style military culture and doctrine still persists in the ranks, defense analysts say.
Despite the recent increase in the length of conscription, education deferrals mean that most draft-age Taiwanese won’t serve the entire year until 2028—and it remains unclear to what extent the current training of draftees, which according to many soldiers produces few useful skills, will be modernized.
Currently, most draftees spend their time cleaning floors and picking weeds rather than learning how to repel Beijing’s People’s Liberation Army, said ret.
Adm. Lee Hsi-min, a former chief of Taiwan’s military who has become a vocal critic of the island’s military preparedness.
“If you just do the same things for a year instead of four months, then you have a problem and a bad reputation,” he said. “The problem is the training content, not the training period. How you do it is much more important than how long you do it.” The military says it is working to improve the training.
Taiwan has also had trouble retaining its professional troops, including highly trained Air Force pilots. Taiwan’s defense ministry said in a recent report that roughly 20% of its career soldiers over the past five years have decided to leave the military before their contracts were scheduled to end. Just last year, more than 3,700 soldiers asked to quit, according to the report.
“A lot of young people who signed up for the four-year volunteer force decided to pay a penalty and dropped out early because they say they had come for the money—not to fight and not to die,” said Alexander Huang, the Kuomintang’s director of international affairs.
Taiwan’s troubled history with its own armed forces is part of the reason.
The Kuomintang-led army and government led by Chiang Kai-shek escaped to Taiwan when Mao Zedong’s Communist forces ousted them from the Chinese mainland in 1949.
Chiang’s military dictatorship attempted to suppress Taiwan’s sense of identity, seen as tainted by decades of Japanese rule over the island, and engaged in decades of what has since been called a “White Terror,” during which thousands of dissidents were killed.
President Tsai’s Democratic Progressive Party, in power since 2016, emerged from the pro-democracy campaign against the Kuomintang’s rule in the 1980s, appealing in part to the Taiwanese sense of being distinct from the people of the mainland.
“In the past, Taiwan’s civilians were not very close with our military because our old military came from the outside, didn’t derive from inside the country. There was a giant gap between civilian people and military guys,” said DPP lawmaker Wang Ting-yu, a senior member of the Taiwanese parliament’s defense committee.
“But I have to say this is an old situation,” he added, saying that, under Tsai, Taiwan’s civilian-military relationship has transformed: “She made the military realize you need to defend democracy.” The government, he said, has increased pay for the troops and is modernizing the training programs, in part by bringing in foreign instructors and sending some Taiwanese units for exercises in the U.S.
These changes, however, have yet to translate into new attitudes among the general public, where service in the armed forces holds little prestige or appeal. Wang Chung-wei, a draftee who is heading to the military in the coming weeks, said that he, like most young Taiwanese men, wasn’t looking forward to the experience. “Not at all. It will be a total waste of time,” he said, adding he would rather stay home and work in the family business. “It doesn’t matter to me if China takes over. Our families have arrived here from China anyway.”
Phil Pi, 21, who served in Taiwan’s army last year, said he learned next to nothing during his stint. Because of Covid rules, the conscripts didn’t even go for a run since exercise with masks was deemed to be too grueling, he said. The men did, however, practice shooting at a range a handful of times.
“It was not a very useful experience. I was not trained to fight,” Pi said, adding that he and his friends won’t volunteer to go to the front line should China invade: “There would be no hope.”
Several other young people interviewed in Taipei’s Ximending shopping district echoed the sentiment, saying they saw little point in sacrificing their lives given China’s immense power.
“The young people are the ones who don’t want unification with China,” said ret. Lt. Gen. Chang Yan-ting, a former deputy commander of Taiwan’s air force. “But if you want independence, you need to fight, and they also don’t want to fight. Therein is the conflict.”
Yi-hao, a student in Taiwan’s National Defense University, was an exception. “Before the war in Ukraine, we were taught that Russia’s military power is stronger than China’s, and Taiwan’s military was stronger than Ukraine’s,” he said.
“If they were able to resist this long, Taiwan will definitely be able to hold out.”
He didn’t want his surname used because he wasn’t authorized by the military to speak.
Lai Yi-chi, who became a lieutenant after graduating from the Naval Academy in June, said that she had been inspired by the bravery and resilience of Ukrainian soldiers, something often discussed in her classes. “We should also embody such spirit and determination,” she said.
Bypassing the official armed forces, some volunteer groups have decided to act on their own, preparing fellow citizens for a possible war. One such group is Kuma Academy, which received a $100 million donation from Robert Tsao, the founder of the United Microelectronics, one of the world’s biggest semiconductor companies.
“We don’t intend to build up a private army,” Tsao said.
“But I think their effort will probably increase the resilience of Taiwan’s society.
If we know how to hide, how to help each other, how to retain communication, we can pretty much reduce the damage in wartime.” Some of the students also like to learn more martial skills, such as shooting, Tsao said, but Taiwan’s strict gun laws make it difficult. Some 25,000 Taiwanese have been trained at Kuma.
Nico Li, a 60-year-old retired musician attending a Kuma class, said she was unnerved by growing risks coming from China, and wanted to arm herself to avoid being a burden to her children. “Taiwan is an island of treasure. I don’t want to hand it over to others without a fight,” Li said, referring to what she sees as the Taiwanese values of freedom and democracy. “If I have the ability, I would even go and fetch a gun if necessary.”
At another training session, run by the Forward Alliance, dozens of Taiwanese practiced how to stop arterial bleeding with tourniquets and stabilize major wounds. “There is a sense of impending doom, of feeling very hopeless,” said one of the students, Eric Lin. “So, instead of sitting at home and browsing the negative news, I wanted to come here—so that I would be able to do something.”
- Nexi (N0XA TH) +1.8%
- Nexi Rated New Buy at UBS; PT 10 euros
- Evotec SE (EVT TH) +1.4%
- Evotec Biologics awarded second contract from U.S. Department of Defense
- Continental (CON TH) +1.3%
- Continental Raised to Outperform at BNPP Exane; PT 90 euros
- Rio Tinto (RIO1 TH) +0.9%
- Watch Europe Miners as Iron Ore, Copper Fall on Demand Outlook
- SocGen (SGE TH) +0.6%
- SocGen, Deutsche at 0.3x Book, €110 Billion Loss Reflect Unease
- Covestro (1COV TH) -0.9%
- Thyssenkrupp (TKA TH) -0.9%
- Hexagon (HXG TH) -1.2%
- Hexagon Cut to Hold at Handelsbanken
- Vestas (VWSB TH) -1.3%
- Nel (D7G TH) -1.3%
- OMV (OMV TH) -1.4%
- Abu Dhabi, OMV in Talks to Form $30 Billion Chemicals Giant (3)
- Vonovia (VNA TH) -1.5%
- Santander (BSD2 TH) -1.6%
- European Banks’ Bond Issuance May Slow in 2H; Deposits Wild Card
- Adyen (1N8 TH) -2.2%
- Adyen Downgraded at UBS on E-Commerce Slowdown; Nexi New Buy
- LEG Immobilien (LEG TH) -2.5%
DAX:
- Continental (CON TH) +1.3%
- Continental Raised to Outperform at BNPP Exane; PT 90 euros
- Covestro (1COV TH) -0.6%
- Abu Dhabi, OMV in Talks to Form $30 Billion Chemicals Giant (3)
- SAP (SAP TH) -0.6%
- Deutsche Bank (DBK TH) -0.7%
- Deutsche Gains in Australia All Asset Underwriting
- Daimler Truck (DTG TH) -0.8%
- Vonovia (VNA TH) -1%
MDAX:
- Evotec SE (EVT TH) +2.8%
- Evotec Biologics awarded second contract from U.S. Department of Defense
- TAG Immobilien (TEG TH) -1.6%
- LEG Immobilien (LEG TH) -1.7%
SDAX:
- Varta (VAR1 TH) +4.2%
- Grenke (GLJ TH) +2%
- Grenke 2Q Factoring New Business Vol EU205.4M Vs. EU191.5M Y/y
- Deutsche Beteiligungs AG (DBAN TH) +1.2%
- United Internet (UTDI TH) +0.8%
>>> Up
* BioMarin Raised to Outperform at BMO; PT $102
* Continental Raised to Outperform at BNPP Exane; PT 90 euros
* Gooch & Housego Raised to Buy at Numis; PT 750 pence
* Neste Raised to Buy at Jefferies; PT 45 euros
* Neste Raised to Buy at Jefferies; PT 45 euros
* Netflix Raised to Neutral at Goldman; PT $400
* Nucor Raised to Outperform at BNPP Exane
* Transocean Raised to Buy at Citi
* Vopak Raised to Overweight at Morgan Stanley; PT 45 euros
>>> Down
>>> Down
* Abrdn plc Cut to Hold at Panmure Gordon; PT 276 pence
* Adyen Cut to Neutral at UBS; PT 1,641 euros
* Hexagon Cut to Hold at Handelsbanken
* Lumentum Cut to Underweight at Barclays
* Lumentum Cut to Underweight at Barclays
* Steel Dynamics Cut to Neutral at BNPP Exane
* U.S. Steel Cut to Neutral at BNPP Exane
* Voestalpine Cut to Neutral at BNPP Exane
>>> Initiation
>>> Initiation
* Apax Global Alpha Rated New Equal-Weight at Barclays
* Augmentum Fintech/Fund Rated New Overweight at Barclays
* Chrysalis Investments Rated New Equal-Weight at Barclays
* EssilorLuxottica Assumed Overweight at Morgan Stanley
* Getlink Rated New Overweight at JPMorgan; PT 19 euros
* Getlink Rated New Overweight at JPMorgan; PT 19 euros
* HarbourVest Global Rated New Overweight at Barclays
* HgCapital Rated New Equal-Weight at Barclays; PT 426 pence
* ICG Enterprise Rated New Overweight at Barclays; PT 1,490 pence
* Molten Ventures Rated New Overweight at Barclays; PT 430 pence
* Nexi Rated New Buy at UBS; PT 10 euros
* Noble Corp. Rated New Buy at Citi
* Oakley Capital Investments Ltd Rated New Overweight at Barclays
* Pantheon Rated New Overweight at Barclays; PT 340 pence
* Princess Private Equity Rated New Underweight at Barclays
* Seadrill Rated New Neutral at Citi; PT 505 kroner
* Valaris Rated New Buy at Citi
>>> Call
>>> Call
* Adyen Downgraded at UBS on E-Commerce Slowdown; Nexi New Buy
* Citi Sees Extended Drilling Super Cycle; Noble, Valaris New Buys
* EssilorLuxottica Overweight at Morgan Stanley, Now Top Pick
* Getlink Rated Overweight at JPMorgan on ‘Superior’ Pricing Power
* Neste Upgraded at Jefferies on Margin Accretive Renewables
* Vopak Raised to Overweight at Morgan Stanley on Supportive Macro
Asian shares declined Wednesday as growth in China’s services industry slowed, underscoring concerns over the tepid recovery in the world’s second-largest economy. A region-wide gauge of equities dropped 0.5%, as stocks also fell in Japan, South Korea and Australia. Futures for benchmarks in the US and Europe edged lower. Initial losses in Chinese equities deepened and the offshore yuan reversed an advance after the Caixin China services purchasing managers’ index was weaker than expected. The yuan’s drop came despite the central bank earlier maintaining its support for the currency in its daily fix. “This brings focus back on slowing growth momentum and the recent step-up in geopolitical angst,” said Charu Chanana, market strategist at Saxo Capital Markets. In Japan, Rakuten Group Inc. shares fell after news that the e-commerce company took a step to list its online brokerage arm. The stock dropped as much as 2.9% amid market concerns over its debt levels, before inching back into positive territory. The yield on the two-year Treasury fell around four basis points to 4.9% as trading resumed on Wednesday following the Independence Day holiday in the US. The 10-year yield hovered around 3.84%.
The two-year yield on Monday exceeded the 10-year rate by the largest amount since March, when the key 2s10s segment of the yield curve became the most inverted since the 1980s. The yen steadied on Wednesday on the stronger side of the 145 level versus the dollar after a bout of weakness that’s triggered unease among policymakers in Tokyo. The Australian dollar, which is sensitive to China’s outlook, slipped following the release of the PMI data. Oil weakened after rallying more than 2% Tuesday on Saudi Arabian and Russian output cuts. Traders are waiting for potentially critical commentary from Saudi energy minister. Gold was little changed.
Nikkei -0.37% Hang Seng -1.34% CSI -0.63% Shanghai -0.54% Shenzen -0.61%
Eur$ 1.0876 CNH 7.2388 CNY 7.2308 JPY 144.51 GBP 1.2706 CHF 0.8975 RUB 89.7097 TRY 25.9956 WTI$ 70.87 +1.55% Gold 1,926 +0.10% BTC 30,837 +0.10% ETH 1,937 -0.26%
S&P -0.08% Nasdaq -0.13% EuroStoxx -0.20% FTSE -0.09% Dax -0.15% SMI -0.03%
Macro :
- UK Watchdog to Set Up Trading Tape for Bonds Ahead of Equities
- Monday Was the Hottest Day Ever as Global Temperatures Rise
- Oil Drifts Lower as Traders Take Stock of OPEC+ Supply Curbs
- BOE Weighs Plan for Foreign Banks to Set Up UK Subsidiaries: FT
- German Commercial Property Deals Tumble 50% to Five-Year Low
Keep an eye on :
Keep an eye on :
- ADP FP : Greece Plans IPO for 30% of Athens Airport Early Next Year
- AGN NA ; La Banque Postale, Aegon AM Extend Partnership Until 2035
- AIR FP : Airbus Presses Chinese Airlines to Act as Widebody Slots Fill Up
- AKERBP NO : Aker BP 2Q Net Production 480,700 Boepd Vs 452,700 Boepd in 1Q
- ANIM IM : Anima Says Unit Exercised Option to Acquire Entirety of IBCMED
- BX US : CVC, Blackstone No Longer Bidding for Center Parcs: Times
- CO FP : Casino Presents Details of Rival Bids From Kretinsky, Niel’s 3F
- CBK GY : Commerzbank Seen Returning Significant Levels of Capital: KBW
- 1COV GY : Covestro Pares Losses as Abu Dhabi Reported Still Interested
- GLJ GY : Grenke 2Q Factoring New Business Vol EU205.4M Vs. EU191.5M Y/y
- HEIA NA : Business Day.za: Remgro increases its holding in Heineken Beverages to 18.8%
- IPEL LN : Impellam Confirms Talks With Headfirst Global on Possible Offer
- IPEL LN : Impellam Confirms Talks With Headfirst Global on Possible Offer
- PRY IM : Prysmian Gets €85m Payment for UK High Voltage Cable Link
- STLA IM : Stellantis CEO Rules Out Production of Cheaper EVs in France
- SKAB SS : Skanska Signs Contract to Build Hospital in Florida for SEK1.1B
- TE FP : Selected by Aramco for the project management consultancy (PMC) contract to develop the master plan for Ras Al Khair, a new industrial city in the Eastern Province of Saudi Arabia; No terms disclosed
- TMO US : Thermo Fisher Said to Be Lead Bidder for Audax’s CorEvitas
How China Came to Dominate the World’s Largest Nickel Source for Electric Cars
Chinese firms mastered a process that unlocked Indonesia’s ore for use in making EV batteries
Across the Indonesian archipelago, new industrial plants are going up to process chunks of nickel ore for use in electric-car batteries.
Five years ago, there were none.
What changed? Chinese firms had a breakthrough.
They tamed a refining process that was once unwieldy, unlocking Indonesia’s expansive deposits for the nickel-hungry EV industry. In doing so, they established Chinese dominance over what has grown into the world’s largest source of the commodity.
That gives China a leg up in the global race to secure minerals that are critical to the energy transition and is a blow to U.S. efforts to lessen American firms’ dependency on China. The Biden administration is pushing hard to diversify energy supply chains.
But with nickel, Chinese companies are tightening their grip.
Beijing’s recent decision to impose export restrictions on gallium and germanium—two metals with key uses in semiconductors—underscores the potential risks of relying on China for crucial inputs.
Firms from China have set up at least three EV-focused processing plants in Indonesia in recent years and others are on the way. One planned facility drew investment from Ford Motor earlier this year, while another is being built by South Korean steel giant Posco Holdings. Both involve Chinese companies.
Indonesia has gone from being a marginal supplier of nickel for vehicle batteries in 2017 to the top source, accounting for around half of global supply in 2022, according to CRU, a commodities business-intelligence firm based in London.
That number is likely to rise.
The archipelago nation holds one of the world’s largest nickel reserves. Millions of years ago tectonic plates collided in what is now the country’s east, thrusting the mineral-rich ocean floor to the surface and producing the nickel bounty. Indonesia’s variety of nickel ore—known as laterite—was considered difficult to process for use in EVs, and was refined mainly for stainless steel production in decades past.
Chinese firms changed that. The method they use, known as high pressure acid leach—or HPAL—had been around for decades, but earned a reputation for being more trouble than it was worth. It relies on extreme heat and pressure, which frequently damaged equipment and required laborious repairs.
Earlier projects in Australia, New Caledonia in the South Pacific and other places—led by Western and Asian firms alike—faced substantial delays and cost overruns.
A Chinese-run plant in Papua New Guinea was no major exception at first. But China ENFI Engineering, which designed the plant, and its production partners made gradual tweaks and fixes as problems arose. Their changes, while incremental and involving only minor innovations, nevertheless helped stabilize the plant, creating a new template for how such facilities can be run without major breakdowns, mining analysts said.
Advertisement - Scroll to Continue
Other Chinese companies replicated that model, in part by bringing experienced technical support staff from the Papua New Guinea site to Indonesia, said Martin Vydra, head of strategy for Nickel 28, a Canadian company that owns a stake in the Papua New Guinea facility.
“The big thing was the Chinese ability to transfer skills and knowledge,” he said.
Among the beneficiaries was China’s Lygend Resources and Technology, which in 2018 joined with an Indonesian mining firm, Harita Group, to build what would become Indonesia’s first HPAL plant for EV materials. It worked with ENFI, the designer of the Papua New Guinea facility, said an executive familiar with Harita’s operations.
ENFI and Lygend didn’t respond to requests for comment. In April, ENFI, which is a subsidiary of a state-owned company, said on its website that its success in HPAL technology had been transformational for Chinese companies.
“With these advancements, large-scale development of lower grade laterite is made possible, and Chinese enterprises are endowed with better access to resource development opportunities,” it said.
Other Chinese-led ventures sprung up. Given HPAL’s spotty record, mining analysts at first braced for a bust. Instead, the projects ramped up quickly.
“The usual phases of development, namely feasibility, approval, construction and commissioning have taken place in record time,” Angela Durrant, an analyst at energy research firm Wood Mackenzie, wrote in an April note. “China could ‘do’ HPAL quicker and cheaper than the west.”
Environmental analysts warn of significant risks. HPAL facilities are carbon intensive and produce lots of waste that is difficult to safely store in rainy, earthquake-prone countries like Indonesia. Untreated solution from the Papua New Guinea plant was in 2019 found to have contaminated nearby waters.
Harita says the company stores its waste safely on land. Indonesia’s government says it doesn’t allow HPAL waste to be deposited in the ocean.
For Western automakers, the flow of Indonesian nickel assures the steady supply of a mineral that they need in spades. But in an increasingly contentious geopolitical environment, it also brings potential complications.
President Biden’s signature clean-energy policy, the Inflation Reduction Act that passed last year, ties electric-car subsidies to mineral-sourcing requirements.
That means it matters more than ever where a mineral is extracted and refined—and by whom.
To qualify for certain subsidies, the law requires that EV batteries will soon have to largely contain minerals from the U.S. or a country with which the U.S. has a free-trade agreement.
That excludes Indonesia.
Chinese firms’ heavy involvement in Indonesia’s nickel operations is also likely to attract scrutiny under its provisions.
Non-Chinese companies have been more cautious. For a decade, the local unit of Brazilian miner Vale worked with Japan’s Sumitomo Metal Mining to develop a nickel project on Sulawesi island in eastern Indonesia. The plan called for Vale to mine while Sumitomo would process the ore at an HPAL facility.
The project hit snags, including debates about where waste would be dumped and who would be liable if there were problems storing it, according to a former Vale employee who was involved in it. Vale executives grew frustrated with the slow progress at a time when Chinese companies were forging ahead and dealing with problems as they arose, the former executive said.
SHARE YOUR THOUGHTS
How should the U.S. respond to China’s dominance in the EV nickel market? Join the conversation below.
Sumitomo withdrew in April 2022, saying the Covid-19 pandemic delayed permits and that it had learned that Vale had begun to seek an alternative. Two days later, Vale signed an agreement to develop a facility with China’s Zhejiang Huayou Cobalt.
A Sumitomo spokesman said that as a mining company, it was “inevitable to be reasonably cautious” to avoid accidents during construction and beyond. The project was scrapped because of differences in “time scheduling,” he said. A Vale spokeswoman said the company joined with Huayou because its project was larger.
In March, Ford announced it was investing in the plant.
“Like other global automakers, our supply chain draws from the best available technologies, processes and minerals around the world, including from Chinese companies,” a Ford spokeswoman said.
How Germany plans to slam on its debt brake again
Big squeeze
Over the past three years, Germany abandoned its strict rules on spending to deal with Covid and the energy crisis arising from the Ukraine war. Today marks a belated return to fiscal orthodoxy, writes Guy Chazan.
Context: Weeks of tense negotiations over the 2024 budget stretched unity in Chancellor Olaf Scholz’s three-party coalition to breaking point. Scholz himself had to intervene as cabinet ministers balked at finance minister Christian Lindner’s proposed spending cuts.
Lindner will appear before journalists in Berlin this afternoon to present the result.
A key goal for the fiscally hawkish leader of the Free Democrats (FDP) was to reinstate the Schuldenbremse or “debt brake” — a constitutional cap on new borrowing. In that, Lindner succeeded.
The federal government will take on just €16.6bn of debt next year, compared with €45.6bn this year, €115.4bn in 2022 and a whopping €215.4bn in 2021.
But to get Germany back on to the path of fiscal rectitude, Lindner had to squeeze government spending till the pips squeaked. All the ministries except defence will have to make savings. The health ministry, for example, will see its budget cut by a third.
In view of the Ukraine war, defence was the only ministry whose budget increased, from €50bn to €51.8bn.
Finally, Germany will be able to reach Nato’s target for military spending of 2 per cent of GDP.
Much of the extra budgetary spending will, however, go towards higher personnel costs arising from a tariff agreement made with unions this year.
Spending is finally coming down after the profligacy of the past few years, but it remains high compared with pre-pandemic levels.
In 2019, the year before the Covid crisis, the federal government spent €356bn.