By Peter Tchir of Academy Securities

The Fed and Powell

The statement added language highlighting that the Fed would take into consideration the cumulative amount of hikes and the lag effect of hikes. That was viewed positively by myself and markets. It was the first nod to the “lag effect” we’ve seen, which was taken to mean the Fed is dialing back on their hikes.

The press conference was used to disabuse the market of that notion. The press conference was taken as hawkish for a few reasons:

• Potentially higher terminal rate (this was new).

• Higher rates for longer (not sure this was new).

• Willingness to overshoot because they can cut if needed (this was new).

• Little progress on inflation (from the group that transitory all of last year).

• Mention of CPI (which is highly likely to overstate rent for the coming months because of how it was calculated and concerns those of us who don’t like reliance on data that seems out of sync with what is occurring in real time).

Powell killed the rally, took stocks and bonds down hard and we are seeing that continue overnight and into the morning session.

What Now?

The “buy everything” rally has pulled back, with the S&P 500 back to 3,745 (where it was on 10/21. The 10-year yield is back to 4.2%, just below the 4.22% on 10/21.

We will get more Fed speakers. They will “clarify” the message.

The “hope” for bulls (and I am still in that camp, though having to re-think it after yesterday’s reversal which highlighted positioning that wasn’t extremely bearish) is data dependence.

Bulls need to see progress on the inflation front in the official data.

Getting weaker than expected inflation data is my base case. While the Fed doesn’t see it, many economists and companies see it.

Whether that can show up in the data the Fed watches most closely is the question as OER for example, incorporates old data and is catching up to the rent inflation it missed from almost a year ago.

The least concerning issue is that Powell isn’t seeing inflation as his track record on predicting inflation has been mediocre at best. (difficult not to wonder what things would look like had that cut QE last spring and started hiking last fall, but no use crying over spilled milk).

Most concerning is the renewed pressure on the Euro and the Yen. FX volatility is gut wrenching for investors, companies and even countries. Some viewed yesterday’s changes in the statement as a subtle sign that the Fed was paying attention to concerns from other countries that the strong dollar policy was hurting them. Well, we are right back to that.

With yields back to their highs and threatening to break into uncharted territory, aided by potential foreign selling and it all being so fresh in our minds that we went weeks without treasuries catching a bid on their march higher, it is difficult to be bullish anything here.

On the other hand, for the first time since Jackson Hole, the Fed seems data dependent and is not on a pre-set course, which should be bullish (but is concerning that it hasn’t been bullish since the presser).

Basically leaves me licking some wounds, reducing position size, and trying to re-evaluate whether there is hope for the everything rally? I think there is, but price action is telling me to tread extremely carefully.

Walmart Inc. announced that a basket of Thanksgiving items at retail stores would have prices rolled back to 2021 levels through the holiday season amid the worst inflation in forty years. 

“Saving money is a top priority for our customers right now, so this year, we’re removing inflation on an entire basket containing traditional Thanksgiving items,” Walmart wrote in a press release. 

The items to be rolled back to last year’s prices include the following: “… turkey, ham, potatoes and stuffing … convenience items are there too, like ready-to-heat mac and cheese or freshly made pumpkin pie.” 

“We’re proud to offer customers this year’s Thanksgiving meal at last year’s price so families don’t need to worry about how they’ll set their holiday table,” the largest retailer in the country said. 

These deals will only last through Dec. 26, and the company offered a link to a landing page on their website titled “This year’s meal at last year’s price*.”

Dozens of items were rolled back by the retailer. One of the most significant rollbacks was 50% off whole turkeys. 

“Our approach this holiday helps make sure customers don’t have to compromise on what matters: we’re keeping prices low and our assortment strong to serve them all season long,” Walmart concluded. 

In the latest inflation report, Headline and Core CPI printed hotter than expected — both remain at four-decade highs. 

Food inflation has been one of the most shocking increases over the past year. 

High inflation has crushed household finances as real wages are negative for the 18th consecutive month…

Meanwhile, the personal savings rate has tumbled to multi-decade lows at 3.1%, just shy of the record low of 3.0%…

And some experts are concerned about the pace of growth in consumer credit as debt loads for households soar as their wages can’t cover added costs of food, shelter, and energy. 

The stimulus checks are long gone. Savings are being depleted. And the largest retailer in the country is rolling back food prices for the holiday season because it knows consumers are immense financial pressures. 

But, but, the economy is “strong as hell”? 

By Michael Every of Rabobank

The party is ending / The Party is starting

First, the important good news: the Ukraine grain deal is back on after Russia backed off. As our grains maven Michael Magdovitz comments, the Kremlin phone was probably ringing off the hook… and not from the West, but from hungry Russian allies. Now to the bad news.

The party is ending…

…and all those expecting the Fed to shift in a dovish direction yesterday are being shown up as a bunch of pivots.

The Fed raised 75bp to 4.00% yesterday, as expected. There was an initial market attempt to rally at language suggesting they were aware policy acts with a lag, which sounded pivot-y. Then Powell spoke, and crushed those hopes. True, he flagged the pace of rate hikes might slow from its breakneck pace: but he made it abundantly clear smaller rate hikes would continue for longer than many expected. Moreover, when a journalist pointed out to him that stocks were rising after his latest move, he deliberately underlined that if the FOMC had known in September what it knows now, it would have plotted its dots higher for where Fed Funds will peak. That means a higher terminal rate ahead –the market’s assumption is now 5.10% vs. 4.85% recently– and a deliberate attempt to jawbone markets lower, not higher.

You can make the argument that this is about a wage-price spiral, which Powell said he doesn’t see, despite the ADP report yesterday suggesting nominal wage growth is up to 7.7% y-o-y; or that this is about overheating; or that Powell is wrong, because things are cooling fast; or that he hates financialisation and loves the industrial economy – as the FT flags that the US will be sucking in EU industry crippled by rising power bills; or, relatedly, that this is about the geopolitics of power, and of commodities vs. the global role and value of the US dollar; or any combination of the above. It actually doesn’t matter, because the key conclusion is still the same:

Powell doesn’t want to see financial conditions ease. He doesn’t want to see higher equities. He doesn’t want to see lower bond yields. He doesn’t want to see a weaker dollar. The old party paradigm is over, much as markets refuse to accept it.

The Party is starting…

…and all those expecting a shift in a bullish stimulus direction are also being shown up as a bunch of pivots.

Speaking earlier yesterday at Hong Kong’s financial shindig, the UBS CEO stated he doesn’t read the US press, only the Chinese, and that global banks are “very pro-China” despite the 20th CCP Congress reiterating its belief in a Marxism-Leninism which says, “The Capitalists will sell us the rope with which we will hang them.” One also has to wonder, if global banks are pro-China, but Western politicians are increasingly not, where does that logically leave said politicians vis-à-vis global banks?

True, money-over-ideology worked nicely for both sides for years. Yet it also did under Lenin’s New Economic Policy in the USSR in the 1920s until that ended with Stalinism, as Joe saw the 1940s coming, and decided to prepare. As unaware of that history as CEOs but perhaps indirectly echoing it, Bloomberg’s Shuli Ren bewails in ‘Hong Kong Bankers Fear for Their Careers’ that: “Xi, for one, doesn’t see bankers offering much value. Six of the 13 new members of the Politburo have backgrounds in science and tech. He Lifeng, widely tipped as the next economic tsar, is not a member of the Politburo Standing Committee, China’s most powerful decision-making body. For decades, financiers in Hong Kong have been China’s biggest cheerleaders and its bridge to developed nations. They advocated for economic growth and argued for a better relationship between the two superpowers when no one else was. Even they’re losing faith in Xi’s China.”

Indeed, Leland Miller of the China Beige Book notes despite screenshots(!) about Covid-Zero being zeroed (as fresh lockdowns hit Shanghai and the world’s largest iPhone factory), past high GDP growth is not coming back – for ideological reasons. “It is over because the Chinese government has identified a continuation of this economic growth model as a vulnerability to CCP rule,” he states. They know the model, which they actually borrowed or co-opted from the West, no longer works; they fear what happens if they add yet more debt, or try outright QE, or monetisation. The result is the structural growth slump we now all see, and few saw coming.

It is true that Soviet economies, and China pre-reform, had soft budget constraints, monetised debts, and repressed inflation. However, today’s China reads history and Marx carefully. Contrary to common misperception, Marx was opposed to the inflation of fiat currency as well as the stupidity and revolution-inducing inequality of “fictitious capital”, preferring the gold standard. Lenin ran dual currency systems in the USSR, one gold backed, one fiat, with dual circulation (external, internal): the gold one won out as long as Lenin was around.   

China doesn’t want to see more financialisation or higher house prices. It doesn’t want to see higher equities for equities’ sake. It doesn’t want to see lower bond yields for bonds’ sake. It won’t be able to see a stronger CNY. The old Party paradigm is returning, much as markets refuse to accept it.

The Social Democrat party is starting to end…

…and Germans look like a bunch of pivots regarding a shift towards China.

Despite our new geopolitical era, Berlin still wants to do more trade with Beijing. Chancellor Scholz, now in China, not only ignored an open letter from 186 Chinese intellectuals and dissidents asking him not to go, but has stressed he is looking to “collaborate” wherever possible. There was a waiting list of 100 top German firms wanting to tag along – a dozen did. In the eyes of critics, including the EU Chamber of Commerce in China, this makes Germany look like a particularly stupid dinosaur gawping up at a falling meteor and wondering if it wants to be friends.

Germany’s problem is not just what is happening in China, which it takes a “global bank” view of, but what is happening in an EU looking at this latest mercantilism with very mixed feelings after Berlin’s self-serving energy-price subsidies and relative lack of action re: Ukraine.

Moreover, the US selling Germany LNG and protecting it is watching too. Do you think there might be more or less desire to pull German industrial supply chains into the cheap-energy US economy now? Or to prevent German capital stock in China exporting back to the US? USTR Tai just made an offer to the EU to join them in green industrial policy, subsidies, and presumably future tariffs against China. Say no and see what happens. And meanwhile the Fed is ensuring global demand for German goods tanks – just as the Germans don’t have any of their own tanks.

The Social Democrat Party paradigm is over, much as it refuses to accept it.

The Twitter party is ending…

…and the latest headline in a never-ending sequence from this bunch of pivots is that we’ll get an edit button – and half of all jobs there are to go. Hey! That means lower US rates, right?!

Via SchiffGold.com,

Proving that most people have no idea what causes inflation, the majority of Americans in a recent poll said they want the federal government to hand out stimulus checks to combat inflation.

In the poll commissioned by Newsweek, 63% of the respondents said they agreed that the feds should issue new stimulus checks to tackle inflation. Forty-two percent said they “strongly agree” while only 18% disagreed. Fifteen percent said they neither agreed nor disagreed.

The results of this poll reveal the effects of redefining “inflation.”

Properly defined, inflation is an increase in the money supply. Rising consumer prices are one symptom of inflation. But the government has effectively redefined inflation as “rising prices.” In effect, most people think a symptom of inflation is inflation. As a result, most people have no clue where inflation comes from.

This was on purpose.

Of course, when you accurately define inflation, it becomes crystal clear who is to blame — the Federal Reserve and the US government.

Economist Ludwig von Mises explained exactly why this redefinition of inflation is so pernicious.

People today use the term `inflation’ to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.”

Today, people aren’t even asking the government to fight inflation. They just want Uncle Sam to hand them money in order to mitigate the pain of rising prices.

Ironically, stimulus during the pandemic is one of the factors causing the high prices today.

The Federal Reserve pumped over $3 trillion into the economy after the 2008 financial crisis through quantitative easing.

It also stimulated credit creation with 0% interest rates that lasted more than a decade. During the pandemic, the Fed doubled down, pumping nearly $5 trillion more into the economy and dropping rates to zero again.

The federal government exacerbated the situation during the pandemic by handing out three rounds of stimulus money, along with trillions in other aid.

This enabled consumers to keep spending even though they were sitting at home playing Xbox and not producing anything. With more dollars chasing fewer goods and services, a massive spike in consumer prices was entirely predictable.

And that’s exactly what we got. And it hasn’t abated. October CPI came in at 8.2% on an annual basis.

Meanwhile, wages aren’t keeping up with rising prices. Real average hourly earnings decreased by 3.0% from September 2021 to September 2022.

It’s no wonder people are clamoring for more stimulus. But it will only make the situation worse. In the first place, it will put more dollars in consumers’ hands without any corresponding increase in the supply of goods and services. That’s a recipe for even more price increases.

Furthermore, the US government doesn’t have any money to hand out. It just ran a $1.3 trillion budget deficit. In order to give everybody stimmy checks, the government would have to borrow more money. The Treasury market is already reeling due to rising interest rates. Ultimately, the Federal Reserve would almost certainly have to monetize that new debt with more quantitative easing. The only other alternative would be to let interest rates soar, making the interest payment on the debt even higher.

Stimulus checks might provide a little temporary relief, but they would ultimately make inflation worse and prices would rise even higher in the future. But most Americans don’t understand that. They don’t understand inflation. They just know they’re struggling and they want government to “make it better.”

The problem is the government never makes it better. It always makes things worse. And it’s important to remember you never get more government for free. You always pay.

You’re paying for your COVID stimmy checks today through the inflation tax. If you get another stimmy check tomorrow, that will mean an even bigger inflation tax increase down the road.

With Twitter set to Thanos half its employees tomorrow, the axe is now swinging hard across Silicon Valley, where moments ago Bloomberg reported that one of the world’s most valuable startups, Stripe, will cut 14% of its entire workforce, some 1000 jobs returning headcount to the almost 7,000 total from February, as the company seeks to slash costs during the coming recession. The news was shared with the rest of the company in an email from co-founders Patrick and John Collison who vowed to trim expenses more broadly as they prepare for “leaner times.”

“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” the Collison brothers said in the email. “We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”

The Collisons said the headcount changes wouldn’t evenly impact the business, noting that the recruiting business would be disproportionately impacted since the company plans to hire fewer people next year. Departing employees will receive at least 14 weeks of severance, and the brothers vowed to pay annual bonuses and unused paid time off for all workers affected by the cuts.

Stripe and its money-losing publicly traded peers have seen their valuations crater as the growth in online spending slowed in the aftermath of the pandemic, just as supply-chain disruptions and once-in-a-generation inflation also hurt activity. According to Bloomberg, the company in July told staffers that an internal valuation for the company dropped to about $74 billion, compared to the $95 billion it received in its most recent fundraising.

“Stripe is not a discretionary service that customers turn off if budget is squeezed,” the Collisons said. “However, we do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is.”

Translation: here’s a pink slip, consider it for the “greater good”. As for the November and December payrolls report, it will take some seriously seasonal adjustment magic to avoid a -200K (or worse) print.

There’s no more fitting forum for Elon Musk to be trolling Rep. Alexandria Ocasio-Cortez than his newly purchased social media platform, Twitter. 

Yesterday, AOC took to the platform (ironic, right?) to voice her opinion about Musk’s planned changes to the company’s business model. Putting aside the fact that Twitter is now a private company and AOC has both zero knowledge of the laws of economics as well as zero say on how the business can and should operate, new “Chief Twit” Elon Musk decided to entertain her critiques nonetheless. 

The beef started Tuesday, when AOC Tweeted in response to Elon Musk’s plan to charge $8 per month for Twitter Blue. “Lmao at a billionaire earnestly trying to sell people on the idea that “free speech” is actually a $8/mo subscription plan,” she wrote.

To which Musk, whose Twitter bio has now labeled him as “Twitter Complaint Hotline Operator” and his location as “Hell”, dryly responded: “Your feedback is appreciated, now pay $8.”

Twitter will still be free for most users, but Musk is implementing changes (among massive layoffs) that will see customers charged the monthly fee in order to maintain the current benefits of Twitter Blue and keep their blue “verification” checkmarks.

“One guy’s business plan for a $44 billion over-leveraged purchase is apparently to run around and individually ask people for $8. Remember that next time you question yourself or your qualifications,” AOC Tweeted out yesterday in response to Musk.

Musk then took a jab at AOC for selling $58 sweatshirts on her campaign website. 

🤔 pic.twitter.com/XuJdfMTTi1

— Elon Musk (@elonmusk) November 2, 2022

AOC responded: “Proud of this and always will be. My workers are union, make a living wage, have full healthcare, and aren’t subject to racist treatment in their workplaces. Items are made in USA.”

Shortly thereafter, AOC complained about her Twitter notifications “conveniently” not working: “Also my Twitter mentions/notifications conveniently aren’t working tonight, so I was informed via text that I seem to have gotten under a certain billionaire’s skin.”

“Just a reminder that money will never by [sic] your way out of insecurity, folks,” she wrote shortly thereafter.

We think this one Musk response says it best…

pic.twitter.com/kGncG7Hs3M

— Elon Musk (@elonmusk) November 2, 2022

Authored by Charles Hugh Smith via OfTwoMinds blog,

Central bank gaming of Finance is the source of instability.

The era of all-powerful central banks is over for a simple reason: they failed: they failed their citizens, their nations, and they failed the world.

Their policies have pushed wealth and income inequality to extremes that have destabilized the planet’s social, political, economic and environmental spheres.

As I have endeavored to explain for many years, this is the only possible outcome of central bank dominance. 

Once Finance becomes the primary mover of everything else, then it distorts everything into a skimming machine that benefits the few with access to central bank funding at the expense of everyone else.

Once finance dominates, then both the “market” and government become servants of finance. 

I say “markets” because once markets have been financialized, they serve the interests of cartels and monopolies and cease to be markets at all.

Government, regardless of the advertised “brand”, becomes an auction where the highest bidder gains control of governance and regulation, which are bent to serve the interests of the few with access to central bank largesse.

As the charts below illustrate, this is the top 0.1%, with a substantial “trickle down” to the top 1% and top 10%.

The bottom 90% have lost ground not just economically but also politically and socially.

The way central banks create and distribute credit/money results in the dominance of Finance and this dominance has led to the distortion and ruination of the economy and society. 

Vast inequality is the norm everywhere, because the central bank system is everywhere.

Central banks are the source of destabilizing inequality; they can’t fix inequality. 

As long as Finance dominates “markets” and governments, they won’t be able to fix inequality, either.

Central bankers and government authorities are aware that the system is unraveling due to the extremes of inequality they’ve created. They are attempting to to reconcile this contradiction– Finance turns the entire world into a skimming machine that can only exacerbate inequality–with, yes, what else? Finance.

So central banks are preparing to deposit new “money” directly into checking accounts and governments are pondering windfall taxes, wealth taxes, etc. to claw back some of the wealth that accumulated in the top tier to fund social programs designed to keep the masses compliant.

Central bank gaming of Finance is the source of instability. 

Reining in central banks’ free money for financiers and cronies is the necessary first step to unseating Finance as the dominant force in markets, governance and the planetary skimming machine Finance has created.

Either power is taken from central banks or the vast inequality that is the result of central bank dominance will unravel the entire system. Take your pick, but the distortions are accelerating, and time is running short.

*  *  *

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century. Read the first chapter for free (PDF)

Become a $1/month patron of my work via patreon.com.

US Productivity growth barely rebounded in Q3 (+0.3% QoQ vs -4.1% QoQ in Q2), but this was slower than the 0.5% QoQ expected, after two quarters of huge weakness…

Source: Bloomberg

On a YoY basis, US Productivity is down for the 3rd straight quarter (and 4th quarter of the last 5)…

Source: Bloomberg

On the mirror image of productivity, unit labor costs rose 3.5% QoQ (a notable slowing from the 8.9% QoQ growth in Q2). This was the 6th quarter in a row of rising unit labor costs (but was less than the +4.0% QoQ expected)…

However, on a YoY basis, that is the fastest growth since Q3 1982…

Source: Bloomberg

Simply put, we can’t have job growth and solid productivity when you make up numbers all the time.

Authored by Tsvetana Paraskova via OilPrice.com,

• Large nickel producer Indonesia sees merit in the formation of an OPEC-like cartel for battery metals.

• Indonesia has not yet contacted other nickel-producing countries to discuss the idea of a cartel.

• An Indonesia-led cartel for battery metals would likely face opposition from the EU, and the U.S.

The world’s largest nickel miner, Indonesia, is considering the idea of forming a cartel to manage the supply of nickel and some other key battery metals, similar to what OPEC does for oil.   As demand for battery metals such as nickel, lithium, copper, and cobalt is expected to soar in the coming decades to meet the surge in battery demand for electric vehicles and energy storage, the idea that some resource-rich countries would take advantage of their mineral deposits and look to control part of the future market doesn’t sound outrageous. 

“I do see the merit of creating Opec to manage the governance of oil trade to ensure predictability for potential investors and consumers,” Indonesia’s Investment Minister Bahlil Lahadalia told the Financial Times in an interview published this week. 

“Indonesia is studying the possibility to form a similar governance structure with regard to the minerals we have, including nickel, cobalt and manganese,” Lahadalia added. 

Indonesia has not yet contacted other nickel-producing countries to discuss the idea of a cartel, the investment ministry told FT, adding it was still working on a governance structure of a future alliance that it could propose to other producers. 

Easier Said Than Done 

Yet, replicating an OPEC-like cartel for the so-called energy transition metals is easier said than done. Unlike the oil resources of OPEC’s producers, the mining operations in Indonesia and other major nickel producers are controlled by various private companies or Chinese entities. Moreover, the biggest producers and holders of nickel deposits are a diverse group of countries with very different political and market conditions and unlikely to have common ground and interests in forming a cartel. Apart from Indonesia, producers of nickel include Russia, Canada, Australia, and the United States, although the U.S. doesn’t have a lot of resources or output compared to Indonesia, the Philippines, Russia, or Australia.   

Indonesia and Australia hold the world’s largest nickel reserves, each with around 21 million tons, according to the U.S. Geological Survey. Indonesia, however, is the top nickel producer, followed by the Philippines and Russia. 

But Russia accounts for almost 20% of the global supply of Class 1 nickel, which is the grade needed for batteries, according to the International Energy Agency (IEA).  

Nickel is found primarily in two types of deposits – sulphide and laterite. Sulphide deposits – mainly located in Russia, Canada, and Australia – typically contain higher-grade nickel which is more easily processed into Class 1 battery-grade nickel. Indonesia, as well as the Philippines, have the laterite deposits of nickel, which is lower-grade and requires additional energy-intensive processing to become battery-grade nickel, the IEA said in a July 2022 report, Global Supply Chains of EV Batteries. 

“Although Indonesia produces around 40% of total nickel, little of this is currently used in the EV battery supply chain. The largest Class 1 battery grade nickel producers are Russia, Canada and Australia,” the IEA said. 

Indonesia aims to develop its downstream nickel industry and banned exports of nickel ore in 2020. This move prompted an EU complaint with the World Trade Organization (WTO) against Indonesia’s decision to ban exports of raw materials used in the production of stainless steel.  

Imagine what reaction an Indonesia-led cartel for battery metals would receive in the EU, the U.S., Canada, and Australia, for example. 

The Indonesian ban has also prompted Chinese firms to invest in Indonesia’s nickel supply chain. Chinese companies have invested and committed some $30 billion in the Indonesian nickel supply chain, with Tsingshan’s investments in the Morowali and Weda Bay industrial parks being the most prominent examples, the IEA said in a report on the role of critical minerals in the energy transition. 

Unlike OPEC producers, it’s not one state-owned entity in Indonesia that controls the production of nickel. Tsingshan of China and Brazil’s Vale are major producers of nickel in Indonesia.  

Moreover, a unit of China’s battery giant CATL signed earlier this year a $6 billion agreement with Indonesian firms to cooperate on the Indonesia EV Battery Integration Project, which includes nickel mining and processing, EV battery materials, EV battery manufacturing, and battery recycling. 

Environmental Concerns

Indonesia and its policies will be pivotal for the quality and quantity challenges in nickel supply, according to the IEA. 

Most of the nickel production growth in the coming years is set to come from the regions with vast amounts of laterite resources, such as Indonesia and the Philippines, according to the IEA. These resources need more energy and emission-intensive processed to produce battery-grade nickel. High Pressure Acid Leach (HPAL) is gaining traction as a way to produce Class 1 products from laterite resources, and several such projects are being developed in Indonesia. But such projects have track records of large cost overruns and delays and require additional costs for acid production facilities. 

There are also concerns about the environmental impact of HPAL as it often uses coal or oil-fired boilers for heat, thus emitting up to three times more greenhouse gas emissions than production from sulphide deposits, the IEA says. 

Due to concerns over the environmental impact of the nickel industry in Indonesia, dozens of U.S. and Indonesian environmental organizations sent in July an open letter to Elon Musk and the shareholders of Tesla, urging them to “Terminate Tesla’s planned investment plan in Indonesia’s nickel industry due to potentially devastating impacts on the environment and the lives of Indonesian people.”  

Suitcases full of cash being flown around the world...stop us if you’ve heard this one before. 

Officials for commodity mining and trading giant Glencore were found to have been involved in a “web of bribery and corruption” orchestrated by the company’s London oil trading desk, wherein company representatives boarded private jets to deliver cash to officials in West Africa, a new report by Bloomberg BNN reveals. 

The company has admitted to seven counts of bribery, the report says. An investigation found that more than $28 million in bribes were paid to secure access to oil cargoes. Bribes were paid to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and Republic of Congo. 

The Serious Fraud Office alleged that Glencore “paid for preferential access to oil, including increased cargoes, valuable grades of oil and preferable dates of delivery, between 2011 and 2016.”

Prosecutors alleged: “Corruption was condoned at a very senior level within the company generally and the west African trading desk specifically.”

The SFO then detailed a scheme to cover up the payments and “give the illusion” that they were for legitimate services. The company used a “cash desk” in its Swiss headquarters and private jets in Africa to carry out the illicit payments, the report says. 

More than $4 million was found to have been paid and disguised as service fees. As many of 11 of the company’s previous staff are under investigation for wrongdoing, the report notes. 

The company has already disclosed this year that it expects to pay about $1.5 billion to resolve the investigations in the US, UK and Brazil. It has provisioned $410 million for a fine in the UK, the report says. Investigations in Switzerland and the Netherlands are ongoing.