Day: December 5, 2018

OPEC and Russia moved closer on Wednesday to agreeing cuts in oil production from next year despite pressure from U.S. President Donald Trump to reduce the price of crude.

OPEC meets on Thursday in Vienna, followed by talks with allies such as Russia on Friday. OPEC’s de facto leader, Saudi Arabia, has indicated a need for steep output reductions from January, fearing a glut, but Russia has resisted a large cut.

“All of us including Russia agreed there is a need for a reduction,” Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy told reporters after a ministerial committee that groups Saudi Arabia, Russia and several other producers met on Wednesday.

Exact volumes were still being discussed, he said. The cuts would take September or October 2018 as baseline figures and last from January to June.

Two OPEC delegates said Russian Energy Minister Alexander Novak was flying back to Moscow on Wednesday to get a final agreement from President Vladimir Putin.

Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to curb output by at least 1.3 million barrels per day, or 1.3 percent of global production.

Riyadh wants Moscow to contribute at least 250,000-300,000 bpd to the cut but Russia insists the amount should be only half of that, OPEC and non-OPEC sources said.

Russia’s TASS news agency quoted an OPEC source as saying OPEC and its allies were discussing the idea of reducing output next year by reverting to production quotas agreed in 2016.

Such a move would mean cutting production by more than 1 million bpd. Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports due to new U.S. sanctions.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry. Trump raises pressure

Oil prices have fallen by almost a third since October to around $62 per barrel after Saudi Arabia raised production to make up for the drop in Iranian exports. Washington also gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

“Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!” Trump wrote in a tweet on Wednesday.

Possibly complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

“How can the Saudis cut substantially if Trump doesn’t want a big cut?” said Gary Ross, chief executive of U.S.-based Black Gold Investors and a veteran OPEC watcher.

“Trump is worried about the Fed and inflation. So he wants low prices now. Also if Saudis are obnoxious with a deep output cut, it will spur the Democrats in Congress to go more actively for the Nopec legislation and the withdrawal of U.S. support for the Saudi-backed forces in the war in Yemen,” Ross said.

The Nopec legislation being discussed by U.S. lawmakers could make it possible to sue Saudi Arabia and other OPEC members for price fixing.

Bob McNally, president of U.S.-based Rapidan Energy Group, said OPEC was stuck between a rock and a hard place given pressure from Trump on one hand and the need for higher revenues on the other.

“We think OPEC will try to come up with a fuzzy production cut … It won’t be called a cut but will effectively mean a cut, which will also be difficult to quantify,” McNally said.
…

A new study estimates 164 million people are migrating to foreign countries in search of work, an increase of 9 percent since 2013.

The majority of migrant workers are men between the ages of 25 and 64, according to the International Labor Organization’s second edition of Global Estimates on International Migrant Workers. While the number of migrant workers in upper-middle-income countries has grown, the report finds the vast majority head for richer countries in North America, Europe and the Arab region, particularly the Gulf States.

Manuela Tomei, director of the ILO Conditions of Work and Equality Department, tells VOA most of the people who migrate for work are low skilled, and employed in fields such as construction, agriculture, the hospitality industry or as domestic help.

She says migrant workers are a key factor in boosting the economies and development of rich countries and in the higher brackets of upper-middle-income countries.

“Their main contribution is through the work, the services that they provide to host communities in sectors and occupations, in jobs in which often nationals are not interested to work any longer,” Tomei said.

Unfortunately, she noted, the influx of migrants into foreign countries often creates a backlash. Instead of welcoming the workers as being beneficial to their societies, host communities often react with hostility.

In coming years, she said, these workers increasingly will be needed because of demographic trends and rapidly aging populations. Labor migration is a long-term trend, she added, urging governments to learn how to manage workers for their mutual benefit.
…

U.S. President Donald Trump, who rattled global markets Tuesday after declaring himself “a Tariff Man,” predicted in a series of tweets Wednesday the United States and China would negotiate a new trade deal.

Trump said China is planning to resume buying U.S. soybeans and natural gas, which he said confirms his claims that China had agreed to start “immediately” buying U.S. products.”

Trump said he believes “President Xi (Jinping) meant every word of what he said” at their meeting recently in Argentina, including “his promise to me to criminalize the sale of deadly Fentanyl coming into the United States.”

The president’s optimistic comments came one day after stock prices around the world plunged in response to a series of tweets he posted on Tuesday, warning a fragile accord between the two countries could crumble.

Stocks in the U.S., Europe and Asia fell sharply after Trump declared himself “a Tariff Man” who wants “people or countries” with intentions to “raid the great wealth” of the U.S. “to pay for the privilege of doing so.”

Trump and President Xi, leaders of the world’s two biggest economies, agreed Saturday in Argentina to not impose any new tariffs on each other’s exports for the next 90 days while they negotiate a detailed trade agreement.

White House economic adviser Larry Kudlow said earlier this week the U.S. won Chinese commitments to buy more than $1 trillion in American products.

The U.S. had a $335.4 billion trade deficit with China in 2017.

Late Sunday, Trump tweeted that “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently, the tariff is at 40 percent

On Monday, Kudlow said there was an “assumption” that China would eliminate auto tariffs, not a specific agreement.

China’s ministry of foreign affairs said Monday the Chinese and U.S. president had agreed to work toward removing all tariffs.

The 90-day truce in the escalating trade war between the U.S. and China came during a dinner meeting between the two presidents following the G-20 summit of the world’s industrialized and emerging economies in Buenos Aires.  For months, the two countries have engaged in tit-for-tat increases in tariffs on hundreds of billions of dollars of exports flowing between the two countries.

Trump, speaking to reporters on Air Force One after the plane departed Argentina, said his agreement with Xi, will go down “as one of the largest deals ever made… And it’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers — every type of product.”

Trump agreed he will leave the tariffs on $200 billion worth of Chinese products at 10 percent, and not raise it to 25 percent as he has threatened to do Jan. 1, according to a White House statement.

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement.
…

In the 1870 Jules Verne classic “20,000 Leagues Under the Sea,” underwater explorer Captain Nemo predicted the mining of the ocean floor’s mineral bounty – zinc, iron, silver and gold.

India is catching up with that only now, as it prepares to unearth treasures down below, aiming to boost its economy.

The floor of the world’s seas is scattered with vast beds of black potato-shaped polymetallic nodules comprising copper, nickel, cobalt, manganese, iron and rare earth elements.

These natural goodies are key to making modern gadgets, from smartphones and laptops to pacemakers, hybrid cars and solar panels.

As expanding technology and infrastructure fuel global demand for these resources – whose supply is dwindling fast onshore – more and more countries, including manufacturing powerhouses India and China, are eyeing the ocean.

“We have to depend on ocean resources sooner or later … there is no other way,” said Gidugu Ananda Ramadass, head of India’s deep sea mining project at the National Institute of Ocean Technology (NIOT) in the southern city of Chennai.

“For the future of mankind … the ocean is the only hope,” he told the Thomson Reuters Foundation.

India, Asia’s third-largest economy, is going full steam ahead in anticipation of the International Seabed Authority (ISA) – a U.N. body that oversees mining on the high seas – giving the green light for commercial exploitation.

Captain Nemo appeared to get one thing wrong, however, in asserting deep sea minerals “would be quite easy to exploit.”

Over the next decade, the Indian government plans to pump in more than $1 billion to develop and test deep sea technologies like underwater crawling machines and human-piloted submarines, according to the earth sciences ministry.

If it works, the equipment will be able to reach depths of up to 6 km (3.7 miles), where metals can be 15 times more concentrated than in land deposits.

The ISA allows India to explore an area in the Indian Ocean of 75,000 square kilometers (about 29,000 square miles), equal to roughly 2 percent of the country’s size.

Moon, Mars…and the Ocean

Once thought to be too costly and difficult, industrial-scale sea mining could begin as early as 2019.

Canada’s Nautilus Minerals is on track to become the first company to start operations, which it plans to launch near the Pacific island nation of Papua New Guinea, according to a company statement.

All countries are as yet in the experimental or exploratory phase, and the ISA is still hammering out regulation and royalty terms for commercial mining.

The prospect has excited India, which depends heavily on China, the world’s biggest producer of elements.

China provides about 90 percent of rare earths, which are used in aviation and defense manufacturing.

It has four of the 29 licenses awarded by the ISA, and Beijing controls more exploration areas in the high seas than any other country, according to the Jamaica-based intergovernmental agency.

Experts say India is most interested in copper, nickel and cobalt, as it ramps up clean power generation.

Cobalt, also produced in Democratic Republic of Congo, is used to make batteries that can store energy from renewable sources, including solar and wind.

“These metals are not widely available in India, so they have strategic importance,” said Ramadass, whose team is set to trial mining at a depth of 5,500 meters by 2022.

India’s goal is to become self-reliant in the minerals, and it is “not in a race with anybody,” he added.

“We are exploring Mars, we are exploring the moon, why don’t we explore our own oceans?” he said.

‘Final Frontier’

Experts warn that in the absence of a clear international charter, deep sea mining operations could cause irreversible damage to a little understood ecology.

Indian environmentalist Richard Mahapatra fears private players could sound the death knell for Earth’s “final frontier,” which he said has been explored only 0.0001 percent.

The seabed is home to a unique ecology where colonies of organisms and creatures have evolved over millions of years, free of wild currents, sunlight, vibrations and noise which mining would bring, said Mahapatra, managing editor of the New Delhi-based science and environment magazine Down To Earth.

According to a 2017 study by Britain’s National Oceanography Centre, mining experiments at seven sites in the Pacific Ocean showed the amount and diversity of marine life was reduced “often severely and for a long time.”

Sediment plumes and disturbance caused by mining could wipe out habitats for slow-growing corals and fish, Mahapatra said.

It could also have long-term effects on how the ocean, which absorbs carbon dioxide and heat, regulates the world’s climate.

While the 1982 U.N. Convention on the Law of the Sea (UNCLOS) already includes regulation of mineral-related activities, environmentalists say the rules are not good enough.

Mahapatra urged countries to put vested interests aside in agreeing the new ISA framework, given the damage humans have already done to the planet’s atmosphere, land and surface water.

“Deep sea mining will be pure commerce, but there are certain situations where you cannot put profit before people,” he said. “We should not rush it, otherwise we will head towards another disaster (environmental damage).”

Marine-friendly technology?

India’s deep ocean exploration program dates back more than two decades, during which it has been surveying the sea floor and testing environmental impacts, according to the National Institute of Oceanography (NIO) in the western state of Goa.

NIO scientist N.H. Khadge said the upcoming ISA guidelines, which its 168 member states will sign up to, would require contractors to “plan minimum disturbance” at the sea floor.

B.K. Thakur, a senior scientist at New Delhi’s Ministry of Earth Sciences, said compared to land mining, seabed operations would be the lesser of two evils.

Sediment kicked up by underwater mining would dissolve and resettle, and there would be no carbon emissions, unlike on land, he noted.

“There would be no need to build roads, infrastructure or … relocate communities – nothing major like we see on land,” he added.

But some experts warned even minor alterations could cause substantial harm to marine habitats and sea creatures.

“Mining for nodule resources on the seafloor is likely to be highly destructive in the mined area, with long-lasting impacts,” said Daniel Jones, author of the NOC report.

Minimizing India’s mining footprint is a challenge, said NIOT’s Ramadass, adding its technology would be as “environmentally friendly” as possible.

With the plan only to scoop up mineral nodules rather than digging into the sea floor, flora and fauna would not be destroyed, he believes.

But there would be some disturbance, he conceded. “We cannot avoid that,” he said.
…

Vimla Yadav, a farmer from India’s Haryana state, says agriculture costs, such as fertilizers and seeds, have soared, yet produce prices have plunged, leaving her family of 10 with virtually no profit from their four-acre farm. “We don’t even get the fruits of the labor that the entire family puts in on the farm, although we slog day and night,” she laments.

Yadav is one of the tens of thousands of angry farmers from around the country who poured into the Indian capital recently, demanding a special session of parliament to discuss their demands:better prices for farm produce and a waiver by the government from repaying loans taken from banks.

The protest highlighted the deepening distress among the population in the countryside, where there is growing concern about diminishing agricultural profits because many are being driven into debt.

In a country where half the population of 1.3 billion depends on agriculture, low farm profits have long been a challenge and prompted promises by Prime Minister Narendra Modi to double rural incomes by 2022. But the growing disenchantment among the farming community could pose a challenge to Modi as he seeks re-election next year.

According to the government, the average income of a farmer is about $100 a month. But many make less, said Yogendra Yadav, one of the main leaders of the protest and founder of the farmers group Jai Kisan Andolan. The Yadavs are not related.

“For a majority of them, the income is probably less than $50 a month. That is the level at which they survive. And one of the principal reasons for that is that they don’t get enough price for their crops,” Yogendra Yadav said.

Low prices for crops are not the only problem: increasingly erratic weather patterns pose a new challenge in a country where nearly half the farmers lack access to irrigation.

In eastern Orissa state, for example, back-to-back droughts over the past two years have brought widespread distress.

“There has been very little rain this year,” said Lakhyapati Sahu, a farmer who traveled from Orissa, one of India’s poorer states. “We face a massive problem due to successive droughts.”

According to various studies, nearly half of Indian farmers have said they want to quit working on the land but cannot do so because of a lack of alternate livelihoods.

Despite the challenge of finding work, Parul Haldar, a farmer from West Bengal, said she wants to migrate with her entire family to the city. “I will give up farming and go to Kolkata and look for work to make a living. There is no money to be earned from the farm,” she added.

Although the rural crisis has been festering for many years, economists partly blame the deepening crisis on a sweeping currency ban that led to widespread cash shortages two years ago and affected their incomes.

“Many farmers lost working capital, they had to borrow money from the banks or from the local moneylenders at high interest rates, so their costs went up,” economist Arun Kumar said. “So if costs go up and revenue comes down, then income gets squeezed.”

Protests by farmers have intensified in the past two years as they try to draw attention to the usually forgotten countryside — their recent march was their fourth and largest to Delhi so far this year. They have also held marches in other cities like Kolkata and Mumbai. In June, farmers in several parts of the country threw their produce on the streets to highlight low prices. And last year, farmers from southern India protested in New Delhi with skulls to draw attention to suicides by farmers.

“Farmers are saying enough is enough, now something needs to be done,” Yogendra Yadav said. “Both the economic and ecological crisis is leading to an existential crisis, farmers are committing suicide, they are quitting farming.”

Political analysts also said the growing rural anger could erode support for Prime Minister Modi in the countryside ahead of next year’s scheduled elections. Farmers make up an important voting bloc.

“Opposition to Modi is growing. Unless you have rural support, no party can win on [the] basis of urban support only,” said Satish Misra, of the Observer Research Foundation in New Delhi. “The distress is real. The agriculture issue needs to be addressed in a very focused manner.”
…

President Donald Trump insists his new trade agreement with Mexico and Canada will address the exporting of U.S. manufacturing jobs overseas. That pledge, however, comes on the heels of auto giant General Motors’ announcement of the layoff of 14,000 employees in five factories in the United States and Canada.

Despite the president’s optimistic pronouncements, the General Motors announcement indicates broader market shifts in the automotive industry that are unlikely to be reversed.

General Motors justified the decision as a result of shifting economic trends that have seen consumer preferences shift away from mid-sized vehicles and toward sport utility vehicles (SUVs) and electric cars. The company said the move “is transforming its global workforce to ensure the right skill sets for today and the future.”

Those moves toward increased efficiency also include a 25 percent cut of the executive workforce.

But in Lordstown, Ohio, workers whose livelihoods have depended on jobs in GM factories struggled to understand the move.

Mid-sized autos

The Lordstown plant manufactures the Chevy Cruze, one of the mid-sized cars auto manufacturers no longer see as profitable. Trump specifically addressed the impact on the Lordstown plant shortly after GM’s decision, saying, “They say the Chevy Cruze is not selling well. I say, ‘Well, get a car that is selling well and put it back in.'”

Workers are holding on to that hope with the Lordstown plant in an “unallocated status” that leaves open the possibility of GM moving in another product. Local union leader Dave Green acknowledged that issues with the Chevy Cruze were part of an overall industry trend away from smaller cars. 

“They’re not building cars, sedans anymore, but people are still buying cars,” Green told VOA. “Part of it is that they need to be priced right and they need to be priced fair. If I can go into a dealership and lease an SUV cheaper than a Chevy Cruze — you know, most Americans want more for less. So they’re going to get the bigger, the better, the more for less and it is what it is. I think the car was priced a little out of its range.”

The 6.2-million-square-foot Lordstown plant is well-placed in the center of the country, with easy access to major highway artery Interstate Highway 80 and an infrastructure of secondary plants.

Green said 80 percent of the plant’s production is sold within a 600-mile radius. “GM would be foolish to walk away from it,” he said.

The 1,600 workers anticipating a March 2019 layoff from the Lordstown plant certainly hope that’s the case. They earn $30-40 an hour compared to the next best option in the area, $10 an hour at the aluminum factory.

Lordstown is part of the broader Warren-Youngstown, Ohio, area that once thrived on the presence of steel mill manufacturing. When those plants shut down in the 1970s and ’80s, the auto industry became the lifeblood of the local economy.

“That’s is the largest plant that we have,” said Trish Williams, owner of the Ice House restaurant in Austintown, Ohio. She has several family members and friends who have worked at the GM plant in the past and present.

“That keeps this town going. Our steel mills are gone. Our factories are gone. [Hewlitt] Packard is closed. General Electric is gone. Chrysler is gone and GM was it. GM was what kept this here — it may turn into a ghost town,” Williams said.

‘Don’t sell your house’

Trump visited Youngstown in July 2017, telling workers, “Don’t sell your house. Don’t sell your house. Do not sell it. We’re going to get those values up. We’re going to get those jobs coming back. And we’re going to fill up those factories, or rip them down and build brand new ones.”

Many residents said they do not hold Trump responsible for GM’s decision, a move that could devastate the local economy.

“The president doesn’t own GM,” waitress Lisa Miller said. “Nor can he say you can’t do this, you can’t do that. We are a free country. I believe the president will push with all his might — as we’ve already seen him doing — to keep them here and to change things, but this was something that was out of his hands.”

Just days after the GM announcement, Miller said she was already noticing a drop in sales and an end to the usual lunch to-go orders from GM workers.

Some of those workers will be able to transfer to other plants around the country based on their seniority within GM. But many workers expressed concern to VOA about the number of temporary employees — who earn far lower rates per hour — working in those plants. They are also aware of GM’s plant in Mexico that builds the Chevy Blazer, an SUV.

“Why is our plant not getting the Blazer?” asked Rebecca Zak, an 18-year veteran of the Lordstown GM plant. “Why is it being built in Mexico? It’s mind-blowing. I heard in Ramos, Mexico, they get paid $2.65 an hour.”

Zak said she sees the decision as part of a trend toward corporations enriching themselves at the expense of the worker.

“We’re the ones that build this car, we are the ones that got this company this far and who are the ones who are suffering? The worker, not corporate America. Six billion dollars in the third-quarter and they can justify laying off 14,000 people,” she said.

GM workforce

Those 14,000 people represent just 7 percent of GM’s 180,000-person workforce, a strategic shift for a company in a competitive automotive market. What remains to be seen is whether that strategic shift will include places like Lordstown.

But as Lordstown employee Dan Smith said, “Any industry is cyclical. Gas could go up to $5 a gallon and then, poof, there goes the truck-SUV market. And they’re going to need small cars. It’s something we went through, my dad’s worked there.”

Smith said he was shocked by the decision but did not entirely fault GM for operating a plant in Mexico with lower-paid labor.

“Business-wise that makes sense, but then to sell it here in the United States doesn’t make much sense for American people to buy an American car that’s built in another country,” he told VOA.

For Williams, waiting to see how the decision impacts her community and her business, the equation seemed simple.

“Smaller cars, bigger cars — they all have four wheels,” she said. “They’ve made other cars off that line — why not bring another car back?”

Watch Related Video Story:
…

Right-wing President-elect Jair Bolsonaro said on Tuesday he plans to tackle the overhaul of Brazil’s fiscally burdensome pension system with piecemeal reforms that can pass Congress, starting with an increase in the minimum age of retirement.

He said reforms should start with the public social security system and advance gradually to make sure they pass Congress.

“The idea is to start with the (minimum) age, attack the privileges and take it forward,” Bolsonaro said at a news conference, warning that the problem with the cost of the pension system was growing every year.

“We cannot allow Brazil to reach the situation that Greece reached to do something about it,” he said.

Brazil’s next president said he planned to start by raising the minimum age of retirement for everyone by two years, but keeping the gender age gap, building on a proposal made by incumbent President Michel Temer. He gave few details.

Currently, Brazilian men can retire after 35 years of contributions and women after 30 years. Men can also retire by age 65 and women at 60 as long as they have contributed for at least 15 years.

Generous pensions are a major cause of Brazil’s gaping budget deficit and growing public debt, an unsustainable situation that is becoming more acute as the population ages and more people retire.

Investors and credit rating agencies are watching Bolsonaro’s commitment to pension reform closely as it is key to reducing the deficit and restoring confidence in Latin America’s largest economy as it recovers slowly from a two-year recession.

The pension reform proposal by Temer’s outgoing government never gained enough traction in Congress.

Bolsonaro, who takes office on Jan. 1, began meetings with political parties on Tuesday to see how he can build support for his agenda that includes tax reform and the easing of gun laws.
…