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VW idles Brazil auto plants as floods hit parts supply

  • Spanish Market: Metals
  • 14/05/24

Persistent heavy rains in Brazil's Rio Grande do Sul led Volkswagen to announce collective vacation for workers in three of its local plants as the automaker struggles with a lack of parts made in the flood-hit state.

The Anchieta, Taubate and Sao Carlos facilities, in southeastern Sao Paulo state, will have collective vacation starting 20 May as floods forced auto part suppliers to stop production.

"Due to the heavy rains affecting the state and people of Rio Grande do Sul, some Volkswagen do Brasil parts suppliers, with factories installed in the state, are unable to produce at this time," the company said on Tuesday.

Volkswagen declined to comment on which auto parts suppliers were affected by the floods.

Volkswagen's Sao Jose dos Pinhais facility, in Rio Grande do Sul, will remain operating, the company said.

Heavy rains that began flooding Rio Grande do Sul in late April persisted over the weekend, continuing to wreak havoc in the state.

Rains reached an accumulated 123mm (4.8in) on 10-12 May in the state capital Porto Alegre, according to Brazil's national meteorological institute Inmet. Some areas experienced around 80mm of rain on 12 May alone, according to the US National Oceanic and Atmospheric Administration.

Showers lessened but continued on 13 May, reaching 35mm in some parts of the state.

The extreme weather has left 148 dead and 124 missing, according to the civil defense. Over 538,000 people are displaced.


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02/07/25

US vehicle sales hit 10-month low in June

US vehicle sales hit 10-month low in June

Houston, 2 July (Argus) — Domestic automotive sales in June were at their lowest level in nearly a year, as consumers continued to pull back on purchasing with US tariffs raising costs for vehicle importers and domestic manufacturers. Sales of light vehicles — trucks and cars — fell to a seasonally adjusted annual rate of 15.3mn units in June, down from 15.6mn in May, the Bureau of Economic Analysis reported Wednesday. Last month's total was above June 2024's annualized rate of 15mn but the lowest since last August's 15.1mn pace. Consumers began to realize the full effect of US tariffs targeting foreign-made automotives and parts in June, as prices for new vehicles have increased because of the extra 25pc duties on imports. Adding to cost pressures were high interest rates on auto loans, as borrowing costs have remained elevated following the US Federal Reserve's decision to leave its target interest rate unchanged at 4.25-4.5pc at its June meeting. The Fed has kept the rate flat so far in 2025 after making three cuts late last year. Fed policymakers have said they will wait to assess the impact of US president Donald Trump's tariffs and other policies on the domestic economy before making any adjustments to monetary policy. Trump has repeatedly publicly berated Fed chief Jerome Powell for ignoring Trump's demand to lower borrowing costs. Sales of trucks in June dropped by 1.6pc on the month to a 12.8mn unit annual rate, while car sales fell by 2.3pc to a 2.5mn unit rate in the same timeframe. Domestic vehicle production in May surged to a seasonally adjusted annual rate of 10.92mn from an upwardly revised 10.18mn in April, according to US Federal Reserve data. That compares with 10.51mn in May 2024. Auto assemblies are reported with a one-month lag to sales. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Nippon adopts terms for US Steel purchase


02/07/25
02/07/25

Nippon adopts terms for US Steel purchase

Houston, 2 July (Argus) — Japanese steelmaker Nippon Steel adopted all regulatory conditions tied to its acquisition of US Steel, outlining the terms of the "golden share" for the US government. Nippon Steel agreed to 10 limitations from the US government related to its acquisition of US Steel, according to a recent filing with the Securities and Exchange Commission (SEC), giving President Donald Trump or a designated official control over several aspects of production, pay, and operations to various degrees. Issuing a "golden share" was a key part of the National Security Agreement (NSA) between Nippon Steel and the US government, allowing Nippon to acquire US Steel for $14.1bn. Chiefly, Nippon agreed not to close, to idle, or to sell the Granite City facility before 18 June, 2027 or any other US Steel production location before 18 June 2035, outside of a temporary idling or force majeure event. Nippon must follow US government guidance on all trade actions to avoid sourcing changes that undermine domestic production. The company also is prohibited from independently reducing, waiving or delaying planned capital investments into facilities. As part of the acquisition agreement, Nippon must invest $10.8bn into several facilities by 2028, including $3bn at Big River in Arkansas, $3.1bn at Gary Works in Indiana, $2.4bn at Mon Valley in Pennsylvania, $800mn at the Keetac/Minntac mines in Minnesota, and $500mn at Fairfield Works in Alabama. Nippon will also invest $1bn to open a new mini mill at a still to-be-determined location. These investments will peak in 2028 with a cumulative $4.2bn spent on the new mini mill, Big River, Gary Works, and Mon Valley that year alone, the filing states. The agreement further limits Nippon from cutting spot sales prices below 85pc of a six-month rolling average for each steel product based on indexed prices. Nippon also agrees not to make "material changes" to existing raw materials and steel sourcing strategies. The only exceptions allowed would be if the changes benefit the company or its operations; the company lacks steel making raw materials or inputs in quantity or quality; or if the changes permit the company to accelerate technology transfer or the commissioning of facilities built in the US. Lastly, the agreement also ensures that US Steel will keep its name and headquarters in Pittsburgh, Pennsylvania. By John E. Huber Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU plans measures to support exports in CBAM sectors


02/07/25
02/07/25

EU plans measures to support exports in CBAM sectors

London, 2 July (Argus) — The European Commission said today that it intends to present plans by the end of the year to reduce the risk of carbon leakage for goods exported from the EU in sectors covered by the bloc's carbon border adjustment mechanism (CBAM). The proposal will be designed to provide equal treatment for all goods, "whether produced and sold in the EU, imported into the EU or exported", the commission said. The measure would be set up for a "defined period" and then reviewed in light of the planned 2026 revision of the EU emissions trading system (ETS). No further details were provided. Industries have long raised concerns about risks to competitiveness for products in CBAM sectors exported from the EU, given that they must still pay carbon costs while the mechanism only applies an effective carbon price on goods imported into the bloc. German industry federation BDI warned earlier this year that CBAM provides "no answer" to the problem of exports, while European cement and steel associations have called for export provisions under the mechanism. But there are concerns that introducing export protection measures could put CBAM at odds with World Trade Organisation (WTO) rules. Russia has already raised a CBAM dispute at the WTO , contending that the calculation of existing free ETS allocations for industry — which includes the value of exports — counts as an "alleged export subsidy" in contravention of the General Agreement on Tariffs and Trade 1994, the Agreement on Import Licensing Procedures, and the Agreement on Subsidies and Countervailing Measures. While deeming the measure an "important step", non-governmental organisation Bellona Europa today criticised the lack of information in the commission's initial proposal, which it said "was not presented with sufficient detail and does not provide a clear pathway for a long-term solution to the risk of carbon leakage from exports". "If rebates are the chosen path, they must be conditional on effective and serious decarbonisation commitments," Bellona said. The commission launched a separate consultation this week on whether to extend CBAM's scope to some downstream products to limit carbon leakage from the measure. It is seeking views on whether CBAM causes carbon leakage downstream, and whether extending its scope could reduce this risk or incentivise the take-up of low-carbon EU goods. It also asks respondents whether such an extension would increase costs for EU manufacturers or consumers, the extent of the administrative burden it would entail for EU importers, or non-EU producers and exporters, as well as the potential costs of related reporting requirements. The consultation also seeks views on whether CBAM in its current form poses circumvention risks, including via widely varying embedded emissions under the same goods categories, or resource shuffling, where companies choose to export their cleanest products to the EU without reducing their overall emissions. The consultation closes on 26 August. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

SQM-Codelco deal at risk after primaries, vote


02/07/25
02/07/25

SQM-Codelco deal at risk after primaries, vote

Sao Paulo, 2 July (Argus) — The public-private partnership agreement between Chilean mining giants SQM and state-owned Codelco to extract and produce lithium salts in 2031-2060 faces mounting obstacles based on the results of Chile's presidential primary election and a congressional vote against the deal. Chileans in the 29 June vote thrust far-left candidate and former labor minister Jeannette Jara — the primary's winner — into second place in the polls with 16pc of the votes, trailing only far-right candidate Jose Antonio Kast, with 24pc. Right-leaning Evelyn Matthei ranks third at 10pc after polls showed her losing nine percentage points in the last four weeks. She spent several weeks as the front runner for the presidential elections, scheduled for November. The primary consolidates Jara as the candidate for left-leaning parties, while right-wing votes are still split but would likely consolidate in any eventual run-off election. All three contenders oppose the SQM-Codelco deal that would allow the companies to jointly extract lithium from 2031 to 2060. Since Codelco is state-owned, the president can advise in favor of cancelling the deal and opening a new public bidding process. Jara used her celebratory speech to cast doubt on the agreement, pledging to review it if it is not finished by the time she is elected. "If I take over the presidency and the deal is already done, I am going to honor it because this is a democratic country," she said. "But if it is not, I am going to look for alternatives." She has previously called the deal an "inheritance of [dictator] Augusto Pinochet," citing SQM's historical ties to his regime and criticizing the agreement for being negotiated behind closed doors without a public bidding process. SQM was led by Pinochet's son-in-law for more than 30 years before he resigned because of corruption claims in 2015. Now, his daughter runs SQM's top shareholder, the Pampa Group. Kast, who is leading polls, shares a similar stance. He has called the agreement a "mistake," pleading to review the deal if it is not done before he is elected. The far-right candidate also wants a "transparent" process to take place and is a long-time critic of SQM following the company's 2015 corruption scandal . Matthei is the deal's most vocal opposition. She has campaigned against it for the past four months because of the lack of transparency in the process, asking for a thorough review and a new, public bidding process. Congress slams deal On top of the opposition from the likely presidential candidates, a federal investigative commission set up by the Chilean government voted on 30 June overwhelmingly against the agreement between SQM and Codelco. The commission head recommended that President Gabriel Boric advise the state-owned miner to cancel the deal. The commission voted 96-2 against the deal, with 17 abstentions. The lawmakers also agreed that a public bidding process should take place to select a new partner for Codelco as soon as possible. Cristian Tapia, a congressman leading the commission, criticized the deal, saying it was made without a public bidding process because of threats that SQM made to Codelco. "Codelco says that a bidding process was impossible at the time because SQM threatened to leave the brine evaporation pools empty by 2030 if it did not get the deal," Tapia said, pointing out that the contract between both parties begins in 2031. This week the commission cast doubt on SQM's credibility for the second time , claiming it got the concession for free despite owing more than $1bn in mining taxes. SQM's chief executive Ricardo Ramos said in a board meeting that it will pay nothing for this, according to Tapia — and from 2031 onward, they will take 50pc of the lithium production in Salar de Atacama, he said. The congressman said that the deal is unfair to Albemarle — which "pays all its taxes" — and Rio Tinto, which recently acquired two mining concessions in Chile through a public bidding process. SQM would be entitled to 165,000 metric tonnes (t)/yr of lithium carbonate without paying anything based on the terms of the deal, according to findings from the commission. "Rio Tinto paid $6.7bn for the same amount of lithium, but SQM is getting it for free," Tapia said. "We cannot let another $6.7bn slip away just like that." Codelco scrambles to get deal done before elections The state-owned miner is focused on getting the deal fully approved by late September, hoping that Boric — who supports the agreement — helps keep the joint venture in place before the elections. One day after Jara won the primaries and congress voted against the deal, Codelco and SQM received a landmark approval by Chile's nuclear agency CChEN, allowing the company to extract up to 2.5mn t of lithium metal equivalent (LME) in 2031-2060, with a potential increase to 3.02mn t pending updated resource evaluations and environmental approvals. The joint venture still needs to clear community consultations with the indigenous people that its operations will affect and an approval from China's antitrust body because Chinese company Tianqi Lithium is a major SQM shareholder. A government-approved contract also needs to be drafted, according to Tapia — the lack of one makes the deal easier to reverse but harder for the parties to close a contract before the new administration is sworn into office. "It is just an agreement," he said. "There is still no contract because everything was made behind closed doors, with no bidding process." By Pedro Consoli Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Quad grouping backs critical minerals co-operation


02/07/25
02/07/25

Quad grouping backs critical minerals co-operation

Sydney, 2 July (Argus) — The four-member alliance of the US, Australia, Japan and India — known as the Quadrilateral Security Dialogue (Quad) grouping — has pledged to collaborate on securing and diversifying critical mineral supply chains, following a meeting of foreign ministers in Washington. The launch of the Quad Critical Minerals Initiative is a reflection of how the countries have become "deeply concerned" about the future reliability of critical minerals supply chains, especially non-market policies and practices for critical minerals, certain derivative products and mineral processing technology. Reliance on any single nation for critical minerals and derivative goods could enable economic coercion, price manipulation, and supply chain disruptions harming security, the Quad said. Guaranteeing access to ores and having the ability to process and refine such inputs to useable material is critical for all technologies and for all industries, US secretary of state Marco Rubio said. Progress needs to be made on a "diverse and reliable global supply chain" of critical minerals, he said. The official statement from the meeting did not identify which minerals the Quad is focusing on. Australia has identified 31 such minerals in its own policy, while a 2022 list from the US Geological Survey named 50 critical minerals . Capacity to secure supply of 36 of the 50 was discussed as part of the Quad meeting, Australian foreign minister Penny Wong said, without giving more details. The meeting comes three years after the Quad pledged to build supply chains for clean energy systems to counter supply chain dominance by China. Australia has attempted to use critical minerals access as a bargaining chip to avoid the Trump administration's planned tariffs on Australian steel and aluminium, but no deal has yet been reached on exemptions. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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