Welcome to Grid Brief! Here’s what we’re looking at today: the European Union’s gas inventories are close to full, India joins a wave of mineral protectionism, US uranium production rose last year, and more.

EU Gas Inventories Hit 90%

The EU’s gas inventories are riding high, but that doesn’t mean it has enough to make it through winter.

“The continent’s storage levels hit 90.1% capacity on Aug. 16, according to the latest data from industry group Gas Infrastructure Europe. That’s the highest on record for the time of year, and well ahead of the European Union’s Nov. 1 goal of reaching that marker,” reports Bloomberg. “However, inventories weren’t meant to provide all of the region’s winter gas supplies, and a storm of risks is brewing. Potential worker strikes in Australia threaten to tighten the global market for liquefied natural gas. Europe is still coping with lower flows from Russia amid the war in Ukraine. And prolonged outages in Norway recently have led to price spikes, a reminder of the market’s fragility.”

In short, Europe’s energy crisis isn’t over. The gas market remains testy; volatility is expected. Though prices are lower than last year and inventories better stocked, prices are already starting to climb.

“The pre-winter seasonal rally of LNG tanker charter prices has started earlier than in previous years amid expectations of high demand for the winter and uncertainties over a potential strike in Australia that could curtail 10% of global LNG supply,” reports Oilprice.com. “Spot LNG charter rates for the Pacific broke on Thursday the threshold of $100,000 per day for the first time since early January, Spark Commodities, a firm tracking price assessments from LNG shipbrokers, said.”

Germany has warned that volatility risks look to remain in place until 2027. Labor actions in Australia’s LNG sector could also disrupt supplies.

Europe’s inventory can cover up to one third of demand during heating season, which stretches from October to March.

Mineral Nationalism Comes to India

India has joined the wave of countries who’ve begun to nationalize their mineral resources in response to the mining-hungry energy transition.

To secure India’s self-sufficiency in critical minerals, the government is considering slapping an export ban on four key metals—lithium, beryllium, niobium, and tantalum.

“The government is planning to introduce a ban on the export of these minerals because of their importance in powering sectors critical to national security and technological advancements,” a senior official said.

India’s move puts it on a deepening roster of countries with similar policies. Ghana has also thrown its shoulder behind a national commitment to lithium mining. Chile, the world’s second largest lithium producer, wants to put lithium profits into funding schools and hospitals. Mexican President Andrés Manuel López Obrador has voiced his conviction that lithium has become too strategic a commodity to leave to the private sector alone.

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US Uranium Production Rose in 2022

Fueled by soaring uranium prices, U.S. uranium production skyrocketed almost tenfold in 2022 compared to the previous year. However U.S. uranium production still lingered around historic lows.

“In the 1940s and 1950s, the United States introduced financial incentives, procurement programs, and trade policies to help spur domestic uranium production. Domestic U₃O₈ production significantly declined in the 1980s as production incentives and subsidies ended, trade barriers were removed, and uranium prices fell. Since then, most of the uranium material supplied to U.S. nuclear plants has been imported,” reports the Energy Information Administration. “The uranium material used in U.S. nuclear power reactors is largely imported because it’s more abundant and cheaper to produce in other countries. In 2022, 95% of the uranium purchased by U.S. nuclear power plant operators originated in other countries. Canada, which has large, high-quality uranium reserves, was the largest source of uranium purchased by U.S. nuclear power plants in 2022 at 27%. Kazakhstan was the second-largest source at 25%, followed by Russia at 12%.”

While the United States sanctioned Russian oil, natural gas, and coal as a response to Russia's complete invasion of Ukraine in February 2022, uranium managed to escape sanctions.

The U.S. Department of Energy has unveiled its goal of boosting domestic uranium output to lessen dependence on imports. In 2020, Congress established a strategic uranium reserve—a cache of domestically sourced uranium that acts as a backup supply for U.S. nuclear power plants and encourages local uranium production. At the end of last year, the U.S. Department of Energy granted the inaugural uranium supply contracts for the reserve, with one of them being awarded to Energy Fuels, which operates White Mesa.

Conversation Starters

• Big Solar gets slapped with tariffs for skirting Chinese duties. “The United Commerce Department will finalize a decision on Friday to impose import duties on solar panel manufacturers who made their products in Southeast Asian nations in a bid to avoid tariffs on Chinese-made goods. The Commerce probe found that units of Chinese companies BYD, Trina Solar, Longi Green Energy and Canadian Solar were dodging U.S. tariffs on Chinese solar panels by finishing their products in Cambodia, Malaysia, Thailand and Vietnam before shipping them to the U.S. market,” reports Oilprice.com. “The U.S. has had anti-dumping duties for a decade now on Chinese-made solar products after the government determined that Chinese companies were receiving unfair government subsidies that made it hard for U.S. panel manufacturers to compete. The tariffs will hurt buyers of solar panels that rely on cheap products from China and Asia to make their projects competitive. However, the tariffs are bound to be music in the ears of the small U.S. solar manufacturing industry, which has long struggled to compete with Chinese goods.”

• China Evergrande has filed for Bankruptcy in New York. “China Evergrande Group filed for bankruptcy in New York on Thursday, seeking to protect its U.S. assets from creditors as it undergoes restructuring. The move comes as concerns grow over indebtedness among property developers in China and the potential for their financial woes to damage growth in the world's second-largest economy,” reports Nikkei Asia. “Evergrande filed for Chapter 15 protection, which is meant for insolvency cases involving non-U. S. companies and other cross-border parties. According to the filing, the company is also in the process of restructuring in Hong Kong, and the Cayman Islands. Evergrande subsidiary Tianji Holdings also filed for Chapter 15 protection with the New York Southern District bankruptcy court in Manhattan on Thursday.”

• America’s rig count fell. “The total number of active drilling rigs in the United States fell by 12 this week, according to new data from Baker Hughes published Friday. The total rig count fell to 652 this week. So far this year, Baker Hughes has estimated a loss of 136 active drilling rigs. This week’s count is 54 fewer rigs than the rig count at the beginning of 2019 prior to the pandemic,” reports Oilprice.com. “The number of oil rigs fell by 5 this week to 520, down by 101 so far in 2023. The number of gas rigs fell by 6 to 117, a loss of 39 active gas rigs from the start of the year. Miscellaneous rigs fell by 1. The rig count in the Permian Basin stayed the same—18 rigs below this same time last year. The rig count in the Eagle Ford also stayed the same, and is now 19 fewer than this time last year.”

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