Monday, July 31, 2023
Evening News with MarkZ 07/31/2023
"Bolivia has the World's Largest Lithium Reserves. Is it Worth Investing In?" BY IVAN CASTANO, 31 JULY
Bolivia has the world’s largest reserves of lithium, the new ‘white gold’ Tesla (TSLA) and rivals such as General Motors (GM) or BMW (BMW) are rushing to procure to make increasingly-demanded electric vehicles (EVs).
With 80 million metric tons (MT), the impoverished nation’s troves of the silver-white metal trump neighbors Chile and Argentina’s own reserves. These three countries, which comprise the so-called Lithium Triangle, hold more than two thirds of global reserves. Chile is the world’s second largest producer with 39,000 annual tons, ranking just behind Australia. Argentina, in turn, makes 6,000 tons, according to the U.S. Geological Survey.
Bolivia, however, has failed to catch up, hurt by political turbulence and technological setbacks. It currently makes just 600 tons a year through a pilot plant held by state-owned producer Yacimientos de Litio Bolivianos, though it plans to boost it to 15,000 tons in the coming year.
Global EV giants, however –notably China’s battery supplier Contemporary Amperex Technology, which counts Tesla and Ford (F) as customers – are set to plough billions into Bolivia to help it churn out 300,000 tons of lithium between 2025 to 2030. This as demand for the silver-white metal, also used to make cell phones and laptops, is set to rise five-fold by 2030, according to consultancy Li-Bridge.
CATL will build two facilities in the fabled Uyuni salt flats, home to the bulk of Bolivia’s reserves but also a major tourist attraction and the set of past Star Wars films. It plans to initially produce 100,000 tons, then ramp up with additional investment. On top of this, China’s government-backed Citic Guoan Group and Russian state energy firm Rosatom will earmark $1.4 billion to extract another 100,000 tons of the world’s lightest metal.
Eyeing opportunities
For starters, they can invest in a slew of publicly-traded companies including CATL but also Chile’s Sociedad Quimica Minera (SQM) and Australia’s Albemarle (ALB) and Lion Town Resources (LINRF), all of which are rushing to mine lithium in Bolivia, South America and around the world.
“The best thing investors can do right now is to invest in Chile and Argentina” where mining firms are also allowed to own state lithium resources unlike Bolivia where the constitution bans it, said industry expert and Texas A&M University professor Diego Von Vacano. “You have SQM and Albemarle who are major global companies with proven businesses all over the world. Then there is Lake Resources, which is working to unearth 50,000 tons from Argentina by 2030, pitting itself against the likes of Rio Tinto which is also looking to muscle in the country.
EnergyX’s Bet
Von Vacano, who advised Bolivia’s President Luis Arce on his latest lithium investment initiatives, also likes U.S.’s EnergyX which recently completed a pilot project to obtain lithium through a new technology called direct lithium extraction (DLE). The site, located in Uyuni, had 94% “recovery rates,” a term used to describe the purity of the metal as extracted from brines or deposits, using much less energy and water than competing facilities. EnergyX raised $50 million in April through a GM-led funding round.
“Of the 9 firms that bid for Bolivia’s projects, EnergyX was the only one that actually had a viable project for Bolivia. They had very good results and they plan to replicate the project in Chile and Argentina,” added Von Vacano.
Regarding the future, he expects Bolivia will schedule a second bidding round in the next 12 to 18 months to enable U.S. and/or European entities to develop lithium projects. Next time, however, the process should be more competitive as the government is expected to approve a much-awaited law to govern the industry.So how can investors profit from Bolivia’s EV ambitions?
Legal Framework
Called the Law of Lithium and Evaporitic Resources, the bill is expected to provide greater clarity on how much lithium, if any, foreign entities will be allowed to own. Simultaneously, it will outline how much Bolivia’s different regions (such as Uyuni’s home, the Potosi Department) will receive in royalties.
Von Vacano expects the bill to clear Congress early next year, possibly allowing foreign firms to strike joint ventures with the government where the former will own 49% and the latter 51%, a similar structure that’s been used in the breadwinning natural gas industry.
Institutional investors, such as Aegon Asset Management, say Bolivia must do more before they can consider backing its lithium ambitions.
“It’s not something I am looking at,” said Jeff Grills, who heads EM debt for the New York-based firm, adding that the fledgling projects won’t have a near-term benefit on the nation’s economy or worsening debt profile.
He added, “I haven’t even tried to look at Bolivia’s lithium potential because it’s very hard to get information and future return projections. I am more concerned about the country’s economic projections and debt ratings. Bolivia is a country with high debt, very little liquid reserves and a large fiscal deficit.”
Grills expressed concerns about whether the landlocked nation will be able to pay its nearly $2 billion in debt as $1 billion and $850 million in sovereign bonds comes due in spring 2028 and 2030.
"US AMBASSADOR ANNOUNCE SUCCESS OF HER MEDIATION BETWEEN CBI & US TREASURY", 31 JULY
The US ambassador in Baghdad announces the success of her mediation between the Iraqi Central Bank and the US Treasury
Coffee with MarkZ 07/31/2023
"PROCEDURES TO LIMIT THE RISE IN THE EXCHANGE RATE OF USD AGAINST IQD", 31 JULY
Starting Procedures To Limit The Rise In The Exchange Rate Of The Dollar Against The Dinar
The Iraqi Trade Bank decided to expand the scope of the external financial transfer process for merchants. The media expert of the bank, Aqil Al-Shuwaili, said in a statement: “Based on the directions of the Presidency of the Council of Ministers and the Central Bank of Iraq to limit the rise in the exchange rate of the dollar against the dinar in the local markets, and to support the import process in accordance with the legal frameworks and correct and sound contexts to ensure the safety of financial transfer operations, which are positively reflected.” On individual merchants and shop owners, the Trade Bank of Iraq (TBI) decided to take the initiative to expand the scope of the external financial transfer process.
He explained, "This will be done by allowing the aforementioned groups to import consumer goods at the exchange rate of the Central Bank of Iraq 1320 dinars per one dollar, provided that the value of the external transfer for each individual trader per month does not exceed ($100,000 only one hundred thousand dollars)," indicating, "It will be Work on this matter, starting with the bank’s branches in the capital, Baghdad, and the work will be expanded in other branches outside Baghdad soon, according to the instructions of the Iraqi Trade Bank.
Below are the requirements for opening an account for individual merchants and shop owners as follows:
1- Identification documents: Civil status identity, Iraqi nationality certificate or unified national card, housing card, Iraqi passport, or submitting an undertaking to provide us with the passport as soon as it is issued.
2- Submitting what shows the deposited sources of income (sale receipts or contracts for periods not exceeding the previous six months) or any other documents that show that.
3- Submit proof of work address (lease contract or real estate deed).
4- Fill in the Know Your Customer (KYC) form.
5- A valid Chamber of Commerce ID (if any).
6- Provide evidence of the merchant's activity.
7- Submitting an undertaking that the individual trader will not own a company registered now or in the future. https://www.radionawa.com/all-detail.aspx?jimare=35227
The Decline In The Exchange Rate Of The Dollar In Iraq
Economy | 10:56 - 07/30/2023 Baghdad - Mawazine News Today, Sunday, the exchange rates of the dollar recorded a decline in the local markets in Iraq.
The selling price of the dollar was 151,000 dinars per 100 dollars, while the buying price of the dollar was 150,000 dinars per 100 dollars. https://www.mawazin.net/Details.aspx?jimare=232333
Adviser To The Prime Minister: Measures To Stabilize The Dollar Exchange Rates
Economy | 02:13 - 07/30/2023 Baghdad - Mawazine News Today, Sunday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, announced a movement to stabilize the dollar exchange rates, stressing the provision of soft financing operations for importers at the official exchange rate.
Saleh said, "The foreign trade of small traders constitutes the highest number in the import commercial market activity, and its rate may reach 60 percent of the local market's needs for imported goods."
He added, "With the aim of dismantling the monopolistic financing trade ring to finance foreign trade and the entirety of external transfer operations resulting as dangerous mediating forces that carry a lot of colored noise between the small trader and the financing of trade in foreign currency, whether in the position of international compliance or the disposal of foreign currency outside the stability controls,
in addition to its danger in spreading A dangerous pricing pattern based on floating the prices of goods and services at the parallel market exchange rate, which leads to a dangerous transfer of inflation from the exchange market to the general level of prices and endless price disturbances.
Therefore, the Iraqi Trade Bank works with direct openness in providing soft financing operations for small importers and at the official exchange rate outside the loop. the monopolist".
He pointed out, "This matter will lead to providing a flexible commodity supply and help to establish stability in the parallel exchange market, in addition to removing the forces of commercial monopoly from the most dangerous mediation process between small traders and the exchange market, in a way that achieves stable competitiveness in which the parallel exchange rate matches the official exchange rate." gradually". https://www.mawazin.net/Details.aspx?jimare=232351
"Seize the Sustainable Investing Opportunity With These ETFs" BY Todd Shriber, 31 JULY
Investors often conflate environmental, social and governance (ESG) with sustainable investing. That confusion stands to reason because these styles are often joined at the hip, particularly in mainstream financial media coverage.
However, these are two distinct styles. Where the confusion often arises is by virtue of the fact that sustainable investing encompasses ESG pillars – namely the “E” and the “S” in an effort to analyze how a company’s investment behavior affects the environment and society at large and whether or not those actions have tangible effects on investors.
“Most companies in the world are incrementally improving the environmental sustainability of their operations – for instance, by emitting fewer greenhouse gases or consuming less energy,” according to VanEck research. "Other companies are taking the transition a step further by fundamentally changing their behavior to improve the sustainability of their operations."
Owing to the broad expanse of sustainable investing and still lingering fluidity in defining applicable methodology, investors may want to considering put their sustainable-focused investing values to work via exchange traded funds. Here are a few to consider.
SPDR MSCI USA Gender Diversity ETF (SHE)
The SPDR MSCI USA Gender Diversity ETF (SHE) is one of the pioneers in gender lens investing ETF space, making it relevant in broader discussions on sustainable investing. SHE, which is more than seven years old and follows the MSCI USA Gender Diversity Select Index, focuses on companies with above-average percentages of women on boards of directors, C-suite positions and throughout upper management.
For investors new sustainable investing, they might need to be convincing that gender lens investing is credible and potent. Data confirm it is.
“Companies with women in executive management repeatedly outperform companies that have no women in senior roles. This is the same case for companies with women on their boards,” according to the Gender Impact Investing Network (GIIN). “With 50% of the world’s population being women, this group is underrepresented in the workforce. This represents an underutilized pool of talent, and limits diversity within an organization.”
VanEck Green Bond ETF (GRNB)
The VanEck Green Bond ETF (GRNB) is the original ETF dedicated to green bonds –a former of debt issued to fund environmentally friendly projects. In other words, GRNB is a fixed income idea for sustainability inclined to investors looking to focus on the “E” in ESG.
GRNB, which follows the S&P Green Bond U.S. Dollar Select Index, is unique among bond ETFs not only because green bonds are young in the fixed income space, but also because the fund features a mix of corporate and sovereign debt. It also sports a tantalizing 30-day SEC yield of 5.30% without subjecting investors to significant credit risk. Additionally, the green bond market is taking off in terms of size.
“Global issuance of new green bonds, the largest category of sustainable debt by amount, reached $163.9 billion in the first quarter, breaking a previous record of $143.1 billion set in the last three months of 2021, according to data compiled by Bloomberg,” reported David Caleb Mutua for Bloomberg. "Sales of the bonds are up 32% year-on-year, the data shows."
Calvert International Responsible Index ETF (CVIE)
The Calvert International Responsible Index ETF (CVIE) is one of the newer additions to the ESG/sustainable ETF fray, having debuted in January. It could be a good one, too, owing to Calvert’s experience with ESG investing and the point that international equities are finally showing signs of life.
CVIE follows the Calvert International Responsible Index and focuses on companies whose management teams are showing “effective management of key environmental, social and governance (ESG) risks and opportunities.”
Moreover, CVIE is relevant at a time when many ex-US firms have increasingly global revenue streams, which could lead to better long-term performance.
“Globalizing revenue sources have likely contributed to equity markets moving in lockstep. Developed markets, which are the most globalized, are more correlated with each other than emerging markets are with developed markets,” notes Morningstar Indexes strategist Dan Lefkovitz. “To bring this concept to life, think about biopharma companies. Whether they’re based in the U.S., France, Switzerland, or Japan, they are exposed to many of the same forces.”
https://www.nasdaq.com/articles/seize-the-sustainable-investing-opportunity-with-these-etfs
"Golden Opportunity: Iraq to Benefit from Regional Calm?", 31 JULY
Following the recent thaw in relations between Iran and Saudi Arabia, Iraq is strengthening its ties with GCC states. European countries should support this development, which could help Iraq address its domestic challenges
For decades, Iraq has been caught in the crossfire of tensions between neighbouring Iran and Saudi Arabia. But following the recent thaw in relations between Tehran and Riyadh – which Baghdad helped to facilitate – it now stands to be a key beneficiary of regional calm. After a decade of intense polarisation, key regional players are now more focused on economic prosperity than gaining the geopolitical upper hand, which could bring direct and much needed benefits to Iraq. Against this backdrop, Iraq’s prime minister, Mohammed al-Sudani is strengthening ties with members of the Gulf Cooperation Council (GCC). European countries should actively support these developments, after years of trying to stabilise Iraq following the 2003 invasion.
Arab Gulf states have shown hostility towards Iraq for years, considering Iraq’s Shia politicians, including its premiers, as Iranian proxies. Much to the frustration of Iraqi politicians, many countries – GCC members included – have long viewed their foreign policy towards Iraq as an extension of their Iran file. When Sudani first assumed power in October 2022, GCC capitals considered him as strongly allied to former Iraqi prime minister Nouri al-Maliki and, by extension, Iran.
In reality, the level of Iranian control over Iraqi political structures is complex, varying by institution, issue, and geographic location. However, Iraqis have learnt the hard way that this presumed association with Iran affects GCC states’ foreign policy towards Baghdad. Iraqi politicians have long understood that the country’s relations with the Arab world would only improve if its neighbours de-escalated tensions with Iran. This is why Baghdad seized the opportunity to turn these links into an asset, brokering back-channel talks between Iran and Saudi Arabia over the past years, which culminated in the diplomatic breakthrough that was announced in China earlier this year.
Iraq’s post-2003 prime ministers have often attempted to foster stronger tieswith the GCC states – seeking to draw on the region’s economic wealth to help stabilise the country. Some analysts have also championed the idea that the GCC states should strengthen ties with Baghdad precisely to offset Iranian influence. But Iraq only achieved a breakthrough on this under Prime Minister Haider al-Abadi, re-establishing diplomatic relations with Saudi Arabia in 2015. In 2022, Iraq also finished paying reparations to Kuwait for its 1990 invasion.
Given his perceived ties to Iran, it may come as a surprise that Sudani is pushing for closer ties to the Gulf. But he is the prime minister of a large coalition of powerful parties which all have good relations with Iran. Diversifying his portfolio and bringing in the Gulf not only empowers him within his coalition, but also strengthens his wider position by securing economic benefits for the country. Iraq clearly also benefits from not being used as a battleground for proxy warfare between regional states. Accordingly, Sudani attended the Arab League Summit in Saudi Arabia in 2023, a task normally assumed by Iraq’s president. Sudani also pledged to host the Arab League in Baghdad in 2025, sending a clear signal of commitment to the broader Arab world.
Iraq’s political system, which has been in place for two decades now, has shown its resilience to major crises such as terrorism, secessionist movements, and large-scale protests. The GCC states seem to have finally acknowledged that despite its many challenges, this system is not going anywhere anytime soon. Following Iran’s and Saudi Arabia’s rapprochement, Riyadh is no longer as resistant to increasing the pace of its engagement with the Shia-dominant government in Iraq.
The generational transition of power in Saudi Arabia has replaced leaders with entrenched sectarian beliefs with younger ones with new political ideas and priorities. As Saudi Arabia’s population grows, leaders are concerned with the economic wellbeing of their citizens in a transforming, and less oil reliant, world. Saudi Crown Prince Mohammad bin Salman wants to focus on domestic reform, which regional instability in countries such as Iraq and Yemen could complicate, particularly given the perception that the United States will no longer guarantee the kingdom’s security, as the latter continues to work with Russia.
Leaders are concerned with the economic wellbeing of their citizens in a transforming, and less oil reliant, world
One crucial reason for Baghdad’s persistent outreach to Saudi Arabia is Iraq’s need for Arab investment, including to help wean it off dependence on Iran and Turkey. Trade between Turkey and Iraq now stands at an unprecedented $20 billion. Meanwhile, despite US sanctions, Iraq is Iran’s second biggesttrading partner, importing $8.9 billion from Iran in 2022. Iraq would benefit from diversifying its trade partners, especially in the energy sector.
Currently, Iraq buys gas from Iran to produce its electricity. Due to US sanctions, Iraq currently pays Iran into an account at the state-owned Trade Bank of Iraq. Iran, however, cannot access this money in US dollars due to US regulations. This has led to disputes between Iran and Iraq, with Tehran regularly cutting off gas exports to Iraq, leading to long hours of electricity shortages in hot summer months. In July, Iraq signed a $27 billion deal with France’s TotalEnergies that will increase domestic oil production and capture gas which is otherwise wastefully burnt, thereby decreasing Iraq’s reliance on Iranian gas. TotalEnergies will benefit from the potential of the Iraqi market, as will QatarEnergy, which has a 25 per cent stake in the deal.
GCC countries are also investing their own money into Iraq. For example, Saudi Arabia and the United Arab Emirates recently allocated $6 billion to be invested in the country. Such investments, whether in retail, hospitality, or energy, are likely to grow as the GCC countries’ relationships with Iraqi politicians develop. For the Iraqi government, this could help address urgent – and often destabilising – economic needs such as providing sufficient jobs and state services to its young population.
This new opening also offers opportunities for Europeans, who should welcome it as an important way to help stabilise the country. European countries should now encourage and support the GCC and Iraq to widen their engagement to other key areas including security and climate cooperation. Rather than seeing this as a means to reduce Tehran’s influence, Europeans should welcome opportunities to draw Iran into cooperative regional frameworks that help cement wider regional de-escalation and address urgent common challenges such as those posed by climate change.
Iraq will need to continue to carefully balance relations with its neighbours, even as Iran and Saudi Arabia warm up to one another. This will not always be an easy task. Both sides will continue to press Baghdad in ways that risk disrupting its balancing act. The presence of paramilitary groups allied with Iran, which often take a more hardline approach than Tehran, as well as the risk of wider regional escalation linked to US and Israeli tensions with Iran, also pose threats to the sustainability of this path. But ultimately, a more regionally connected Iraq will be better positioned to meet its own internal challenges and mitigate the impact of these external pressures. Europeans should do what they can to strengthen this opportunity.
https://ecfr.eu/article/a-golden-opportunity-how-iraq-can-benefit-from-regional-calm/
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