Another Smelter Quits Europe

The reaper has come for another European aluminum smelter. Germany's Speira Gmbh will shut its Rheinwork aluminum smelter this year due to the energy crisis, adding to the obstacles faced by European politicians seeking to stem the tide of deindustrialisation.

“While power prices have retreated sharply from last year’s peaks, Speira Gmbh will shut its Rheinwork plant in Germany this year due to challenges in the energy market, the company said Thursday. That follows a 50% cut in aluminum production announced in September as soaring power and gas prices plunged Europe’s energy-intensive metals industry into an existential crisis,” reports Bloomberg.

European production capacity for aluminum has decreased by over half since the outset of the energy crisis. While some plants have slashed production, others like Norsk Hydro ASA's Slovalco plant in Slovakia and Alcoa Corp.'s San Ciprian plant in Spain have ceased production altogether. Aluminum is highly energy intensive to produce, which is why it has suffered so gravely.

This turn of events has put Europe in a defensive posture. The European Commission is aiming to produce at least 40% of its annual consumption of strategic raw materials by 2030 to shore up local supplies as global supply chains become more fragile.

SVB: A Climate Bank Goes Bust

The recent collapse of Silicon Valley Bank has significantly impacted the climate-tech sector.

“[M]ore than 60 percent of community solar financing nationwide involved SVB in some capacity, the bank claimed on its website,” reports Heatmap. “The bank also published influential annual reports on the climate-tech sector, and it sponsored events for climate VCs and startups — including one at the Lake Tahoe Ritz Carlton as recently as last week.”

SVB held cash for dozens of climate and energy-tech companies and issued billions of dollars in loans to support hefty, one-off projects. It provided more than half a billion dollars in revolving credit to Sunrun, the country’s largest residential solar company among others.

But SVB’s problems were not linked to its climate-tech or startup lending. Its core vulnerability was a lack of diversification away from the startup sector and Bay Area economy, which left it unprotected from Silicon Valley’s volatility and fragility in a more troubled economy.

Many startups are now caught in a long line to get their money back—a potential death knell for early-stage companies. SVB is the largest bank failure since 2008 and the extent of the fallout will only be revealed in time.

Texas Calls For Gas Market Transparency

Texas’s natural gas market is notoriously opaque. After 2021’s Winter Storm Uri, during which natural gas failures were general and prices high, Texans no longer find that acceptable. Texas state legislators have introduced bills aimed at increasing transparency and oversight in the state's natural gas market.

“Senator Charles Schwertner, a Republican, introduced a bill that would scrap confidentiality provisions in contracts between pipeline operators and natural gas shippers. Another would require more disclosure from certain natural gas utilities,” reports Bloomberg. “A third, sponsored by Senator Nathan Johnson, a Democrat, would require companies to report to regulators after they’ve claimed force majeure on their contracts. Johnson also introduced a bill that would require that regulators ensure ‘just and reasonable rates’ for customers in areas without market competition.”

Consumer groups have called for more regulation. CirclesX, which acquired individual claims from residents and businesses affected by Uri, filed a lawsuit in February alleging natural gas market manipulation. Some energy law experts are skeptical of CirclesX’s claim.

Kansas is pursuing a lawsuit alleging market manipulation during the storm. Oklahoma, which also saw sky-high natural gas prices during Uri, is keeping a close eye on how Kansas’s lawsuit plays out.

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Conversation Starters

1. Senator Joe Manchin will keep gumming up the works for Biden over his administration’s implementation the Inflation Reduction Act. “Manchin said he would no longer support the Biden nominee for assistant Interior secretary for land and minerals management. Laura Daniel-Davis has been waiting to be confirmed since mid-2021. Republicans view Daniel-Davis as decidedly anti-fossil fuels. Her chances of being confirmed now, without Manchin’s support, have been labeled by some as less than zero,” reports Oilprice.com. “Manchin became disgruntled with the Biden Administration’s handling of Alaskan energy affairs, after last Friday, an internal memo was accidentally posted on the BOEM website that rejected cutting royalty rates for oil and gas development in Alaska by the minimum amount established by the Inflation Reduction Act, even though the BOEM’s own research discovered that a discount could spark more drilling, increasing Alaska’s revenues and quenching a fuel shortage in Anchorage.”

2. Saudi Arabia and Iran have resumed diplomatic ties with China’s help. “Iran and Saudi Arabia agreed Friday to reestablish diplomatic relations and reopen embassies after seven years of tensions. The major diplomatic breakthrough negotiated with China lowers the chance of armed conflict between the Mideast rivals — both directly and in proxy conflicts around the region,” reports the Associated Press. “The deal, struck in Beijing this week amid its ceremonial National People’s Congress, represents a major diplomatic victory for the Chinese as Gulf Arab states perceive the United States slowly withdrawing from the wider Middle East. It also comes as diplomats have been trying to end a long war in Yemen, a conflict in which both Iran and Saudi Arabia are deeply entrenched. The two countries released a joint communique on the deal with China, which brokered the agreement as President Xi Jinping was awarded a third five-year term as leader earlier Friday.”

3. Canada is banning Russian metals. “Canada will ban imports of aluminum and steel products from Russia to hold the Russian government accountable for its continued war with Ukraine, Canadian Minister of Finance Chrystia Freeland said March 10, the same day the US' previously announced 200% tariff on Russian aluminum took effect. For aluminum, the import ban will include unwrought, sheet and finished products such as containers and household items,” reports S&P Global. “For steel, the ban will impact iron and non-alloy steel, semi-finished products, and finished products such as tubes and pipes. In 2021, Canada imported C$45 million (about $32.5 million) of aluminum and C$213 million of steel products from Russia, according to the statement.”

Nuclear Barbarians: Feedstockland ft. Darius Mortazavi

Darius Mortazavi of the new chemical engineering Substack, Feedstockland, joined me to talk about the industrial chemical processes, the newsletter game, industry comms, energy realities, and more!

Crom’s Blessing