2024-05-29 09:13

PARIS, May 29 (Reuters) - (This story has been corrected to fix a quote to make clear that it isn't a question of adjusting provisions, but postponing them, in paragraph 4) The European Union "could and should" delay the implementation of certain bank capital rules if the U.S. drags its feet too long on fully implementing the Basel III rules, ECB policymaker Francois Villeroy de Galhau said on Wednesday. President Emmanuel Macron and other French officials have long complained that U.S. banks are not applying the Basel III post-financial crisis capital rules, putting their European rivals at a competitive disadvantage. Villeroy, who is head of the French central bank, said U.S. regulators had committed as recently as this month to "fully and faithfully" implement the Basel III international minimum bank capital rules. "If, unfortunately, the delays and/or differences in content are too great, Europe could and should ... postpone the entry into force ... of certain provisions, in particular those concerning market risks," Villeroy said. An EU package of bank regulations adopted in December allows for a delay even if that would not be the best option, Villeroy said, speaking at a news conference of the ACPR French financial regulator, which he also heads. The Basel III rules, which would apply to banks with over $100 billion in assets, would overhaul the way the biggest banks manage their capital, with knock-on implications for their lending and trading activities. Macron called last month for a revision of how the EU applies the rules, saying "we cannot be the only economic zone in the world that applies them". Sign up here. https://www.reuters.com/business/finance/eu-should-delay-implementing-some-bank-rules-if-us-drags-feet-villeroy-says-2024-05-29/

2024-05-29 08:36

Reuters poll graphic on ECB deposit rate forecasts - BENGALURU, May 29 (Reuters) - A European Central Bank interest rate cut on June 6 appears certain, according to all 82 economists polled by Reuters, a majority of whom predicted two further reductions in September and December. But financial markets are pricing only two ECB rate cuts in total in 2024, a sharp pullback from six expected at the start of the year, presenting an uncommon situation where economic forecasters expect more rate reductions than traders. Despite encouraging signs on inflation, a recent pickup in wage growth has raised questions over how fast the ECB may be able to lower rates. It has all but pre-announced a June cut through multiple hints from policymakers over recent months. All 82 economists in a May 21-28 Reuters poll predicted the ECB would reduce its deposit rate by 25 basis points to 3.75% on June 6. But debate over how much room the ECB has to cut has become more heated with the U.S. Federal Reserve remaining non-committal on the timing of its first cut, now set to come in September at the earliest and priced for November by markets. Still, an over two-thirds majority of those polled, 55 of 82, expected the ECB's Governing Council (GC) to cut twice more this year, in September and December. That was up from just over half in an April survey. The majority view for three cuts in 2024 comes as some economists have scaled back their rate cut calls from 100 basis points or more this year. Only 22% now see the deposit rate at 3.00% or lower by end-2024, compared with nearly 40% last month. "Faced with elevated uncertainty and activity accelerating faster than anticipated, we now think the GC will move more gradually this year," said Mariano Cena, senior European economist at Barclays. "This would take place even if risks to the inflation outlook beyond this year are more symmetric and even potentially to the downside," said Cena, who recently shifted a follow-up cut in July to September. Asked what was more likely for ECB rate cuts this year, nearly three-quarters of economists, 25 of 34, said fewer than they expected rather than more. Of 77 common contributors in this and last month's surveys, over one-quarter, 20, now see fewer rate cuts. The median of 35 responses to an additional question also showed the ECB, which hiked rates by 450 basis points between July 2022 and September 2023, would reduce the deposit rate by a modest 150 basis points in the upcoming cutting cycle to 2.50%. But with wage growth expected to remain above 3% - the level the ECB sees as consistent with its 2% inflation target - until at least 2026, inflation could remain elevated for longer. Inflation is expected to rise to 2.5% this month from 2.4% in April, a separate Reuters poll showed. It was not expected to fall to target until Q3 2025. "The ECB has recently put a lot of emphasis on wage growth coming down as a condition for rate cuts and the question is how much this unexpected increase will startle it ahead of the June meeting," said Bert Colijn, senior euro zone economist at ING. "While the euro zone economy has been performing sluggishly for some time and inflation has fallen back towards target faster than expected, enough uncertainty remains to not expect a traditional rate cutting cycle to emerge." The euro zone economy, which grew a better-than-expected 0.3% last quarter, will also expand 0.3% this quarter and next, the poll showed. Economic growth was seen averaging 0.7% this year, an upgrade from the last poll. (For other stories from the Reuters global economic poll:) Sign up here. https://www.reuters.com/markets/rates-bonds/june-ecb-rate-cut-done-deal-majority-expects-cuts-sept-dec-too-2024-05-29/

2024-05-29 07:52

LITTLETON, Colorado, May 29 (Reuters) - The operator of the Texas power system, one of the largest in the United States, is on track to smash generation records from both clean and fossil fuel sources in 2024 as total power needs continue to grow. The Electric Reliability Council of Texas (ERCOT) clean power generation total through May 27 was a record 3.35 million megawatt hours (MWh), according to LSEG. That tally marks a 7.5% advance over the same period in 2023, and highlights the rapid pace of power sector decarbonization efforts in key markets across the United States. However, over the same period ERCOT output from fossil fuels expanded by nearly 9% to 3.73 million MWh, which is also a new high and underscores the challenge facing power producers to continue to lift overall supplies while reducing system emissions. CLEAN PROGRESS The ERCOT system uses four main sources of clean power: nuclear reactors, hydro dams, solar parks and wind farms. Wind farms are by far the largest source of clean power, and accounted for around 29% of total generation year-to-date. Nuclear plants have historically been the second largest clean power producers, accounting for around 9% of total power this year. Solar parks are the third largest source of clean power, and by far the fastest growing source in the ERCOT system, so far in 2024 accounting for around 8.9% of total generation. Hydro dams account for only around 0.1% of total power, LSEG data shows. Combined sources of clean power accounted for a 47.4% share of total generation so far in 2024, which is down slightly from a 47.7% share over the same period in 2023. However, total clean generation looks set to climb during the peak solar output period over the summer. In 2023, solar output increased by 28.6% from May's total to the monthly output peak in August. If solar output expands by the same degree in 2024, solar generation in August will top 190,000 MWh, setting a new monthly record for ERCOT solar production and handily overtaking nuclear that month to become the second largest clean power source in the ERCOT system. However, ERCOT generation from wind farms tends to decline sharply over the summer as wind speeds slow, which means that drops to wind output could offset the expected increases in generation from solar assets, and may leave total clean generation levels largely flat. FOSSIL FOUNDATION To accommodate the volatility in clean power output levels, ERCOT operators maintain large volumes of fossil fuel-based power round-the-clock. So far this year, natural gas has been the primary power source in the ERCOT system, with the 2.9 million MWh of gas-fired generation through May 27 a new system record for that period, and marking an 11.6% gain over the same period in 2023. Natural gas accounted for around 41% of the total power generation so far this year, which is the highest share in at least three years. Coal-fired plants have accounted for around 11.6% of the total through May 27, which is the smallest coal share since at least 2021 and marks a 0.2% decline in total generation from the same period in 2023. But given the likelihood of a decline in output from ERCOT wind farms this summer, power producers will likely need to dial up output from both coal and gas plants over the coming months, when high temperatures boost use of power-hungry air conditioners and lift overall power demand to annual highs. In 2023, ERCOT gas-fired power generation increased by 54% from the total generated in May to the peak generation month in August, while coal-fired generated increased by a third. If output patterns follow the same path in 2024, ERCOT gas-fired output could easily top 1 million MWh in August, while coal-fired generation could add another 200,000 MWh or more. Power sector emissions in Texas tend to peak during summer in response to the higher use of fossil fuels during that period, and in August 2023 neared 24 million metric tons of carbon dioxide and equivalent gases, according to think tank Ember. Emissions tallies this summer could scale even higher levels if gas and coal-fired output hit new combined records. But those emissions totals would be higher still were it not for the recent rapid expansions in clean power generation, which have outpaced growth in fossil generation in the ERCOT system in recent years. Continued growth in total electricity demand in the ERCOT system means that both fossil and clean power output will likely keep climbing over the coming years, until a planned combination of renewables plus storage systems can set the stage for a gradual decline in fossil-based output. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/texas-set-smash-clean-dirty-power-output-records-2024-2024-05-29/

2024-05-29 07:12

JAKARTA, May 29 (Reuters) - The office of Indonesia's attorney general (AGO) has identified a former official in the mining ministry as a suspect in an investigation into illegal tin-mining, officials said on Wednesday. The inquiry centres on an alleged deal between state tin miner PT Timah (TINS.JK) New Tab, opens new tab, the world's fifth largest producer of the refined metal, and fake miners who illegally produced ores from Timah's own concession and sold them to the company. The official, Bambang Gatot Ariyono, is suspected of not following proper procedure in expanding a miner's 2019 output quota by more than two-fold to "facilitate the illegal activity," an AGO official, Kuntadi, told reporters. Kuntadi goes by one name, like many Indonesians. A former director general of minerals and coal in the ministry, Bambang did not immediately respond when asked for comment. The alleged illegal activities caused state losses running into billions of dollars, Attorney General Sanitiar Burhanuddin told reporters, including some due to environmental damage. Suspects number 22 so far in the case, which dates between 2015 and 2022, among them a former chief executive, a former finance director at Timah, and executives of other tin mining firms. Long the world's largest exporter of the metal, Indonesia's shipments to global market have been interrupted several times in the past when the government tightened production and export rules. Last year's exports of 78,000 metric tons of refined tin are equivalent to about a fifth of global demand. Sign up here. https://www.reuters.com/world/asia-pacific/indonesia-says-former-senior-official-suspect-illegal-tin-mining-probe-2024-05-29/

2024-05-29 06:40

Anglo reiterates BHP offer difficult to execute, erodes value BHP offers guarantees on South African jobs, ownership costs LONDON/JOHANNESBURG/MELBOURNE, May 29 (Reuters) - Mining group BHP Group (BHP.AX) New Tab, opens new tab on Wednesday walked away from its $49 billion plan to take over rival Anglo American (AAL.L) New Tab, opens new tab, which rejected a last-ditch request for more time, ending for now its six-week pursuit. BHP's aim was to secure Anglo's prized copper assets in Latin America and increase access to a metal central to the global shift towards clean energy and electric vehicles. But the structure of BHP's deal, which required Anglo to unbundle its South African platinum and iron ore businesses, was a major reason for its collapse. Anglo had granted BHP a one-week extension until 1600 GMT on Wednesday to its original May 22 deadline to submit a binding offer, after rejecting a third takeover proposal. Under UK rules, BHP cannot return for at least six months, unless there is another offer for the London-listed miner. "While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost," BHP said. "We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa," it added. Anglo said on Wednesday after BHP's statement it was fully focused on delivering plans it has set out to increase value to shareholders. Anglo has outlined a plan to divest less profitable assets and focus on expanding copper output. Anglo's shares closed 3% lower at 24.80 pounds. "While we believe an acquisition of Anglo would be a longer term positive for BHP, the fact that BHP is being disciplined in its approach is a near-term positive for its shares," Jefferies analyst Christopher LaFemina said. "That said, we are surprised BHP did not have a plan to overcome the clear structural issues relating to this deal." London-listed Anglo had agreed to talk with BHP to try to iron out concerns over the deal's structure. In an earlier statement, BHP said it needed more time to engage with Anglo, while outlining commitments to minimise regulatory risk in South Africa and saying it would offer a break fee if the deal failed to gain regulatory approvals. Those commitments included job security for employees in South Africa. BHP also said it would shoulder the costs of increased South African employee ownership that is expected to be required in any demerger. But Anglo said those commitments were not enough. "BHP continues to restate its belief that the risks of its complex structure are not material, yet has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks," Anglo said in its statement. Anglo was founded in Johannesburg in 1917 and employs more than 40,000 South Africans, so any withdrawal would be a further economic blow to the country whose miners have been cutting jobs and investment as platinum especially falls out of favour. South Africans are voting in an election on Wednesday, with polls suggesting the African National Congress could lose its majority after 30 years in power, in part due to anger about high unemployment and a stagnant economy. JP Morgan analysts have estimated a takeover of Anglo by BHP could lead to outflows of $4.3 billion from South Africa and weaken the rand. A source close to Anglo's thinking said its investors shared its reservations about BHP's proposal. "The majority of the Anglo shareholders fully understand the concerns that are being expressed and I don't believe that they feel that the risks in the structure and the price are fully taken into consideration by BHP," the source said. BHP's latest proposal had valued Anglo at 29.34 pounds per share or 38.6 billion pounds ($49 billion). "I'm not surprised it was rejected really by Anglo ... because there wasn't really a lot in the statement from BHP ... it didn't seem that compelling," said George Cheveley, portfolio manager at Ninety-One, which holds a stake of about 2% in Anglo. Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of artificial intelligence. Sign up here. https://www.reuters.com/markets/commodities/anglo-american-rejects-bhps-last-ditch-attempt-continue-takeover-talks-2024-05-29/

2024-05-29 06:39

SYDNEY, May 29 (Reuters) - Papua New Guinea Prime Minister James Marape on Wednesday blamed "extraordinary rainfall" and changes to weather patterns for multiple disasters in the Pacific Island nation this year, including a landslide last week which may have killed thousands. Parts of a mountain in the Maip-Mulitaka area in Enga province in PNG's north collapsed in the early hours of last Friday and Marape said more than 2,000 people are estimated to have died, with up to 70,000 people living in the area impacted by the disaster. "Our people in that village went to sleep for the last time, not knowing they would breathe their last breath as they were sleeping peacefully. Nature threw a disastrous landslip, submerged or covered the village," Marape told parliament on Wednesday. Natural disasters have cost the country more than 500 million kina ($126 million) this year, before the landslide at Enga, he said. "This year, we had extraordinary rainfall that has caused flooding in river areas, sea level rise in coastal areas and landslips in a few areas," Marape said. "We have faced extraordinary weather patterns and changes from dryness to wetness," he added. Deputy Prime Minister John Rosso said: "The climate change effects that are here now is not just in Enga, for the last two months we have seen unprecedented disasters throughout the country." Defence Minister Billy Joseph arrived in Enga on Wednesday with relief supplies including food, water, blankets and tents provided by Australia on two Australian military aircraft. Australia's High Commissioner John Feakes said in Enga more plane loads, with supplies and Australian rescue personnel and technical teams would arrive in coming days, the PNG Post-Courier reported. The United States has pledged 2 million kina ($506,800.00) for emergency shelter and logistics support, its embassy said. Authorities have raised concerns about the outbreak of diseases amid warnings of further landslides. Thousands of people have been ordered to evacuate amid further earth slips in the mountain. SLOW RESCUE Rescue teams have been slow to reach the site because of the treacherous terrain and tribal unrest in the remote area, forcing the military to escort convoys of relief teams. The landslide had hit a section of highway near the Porgera gold mine, operated by Barrick Gold (ABX.TO) New Tab, opens new tab through Barrick Niugini Ltd, its joint venture with China's Zijin Mining (601899.SS) New Tab, opens new tab. The miner said its operations were not affected. Marape said the government was working with Barrick to reopen the road. Barrick said it had offered the government more heavy equipment at the slip site. The United Nations, in its latest update, said a bridge had collapsed on Tuesday on the main road toward the disaster area, potentially delaying rescue teams reaching the site. The U.N. migration agency has warned of an outbreak of infectious diseases if immediate steps are not taken. "Every passing minute, bodies buried under the debris are decaying, with water squeezed between the ground and the vast debris covering an area of three to four football fields is continuing to leak, this is posing a high health risk," Serhan Aktoprak, the chief of the agency's mission in Papua New Guinea said in an emailed statement. ($1 = 3.9463 kinas) Sign up here. https://www.reuters.com/world/asia-pacific/papua-new-guinea-leader-marape-says-extraordinary-weather-causing-disasters-2024-05-29/