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EGRNF Stock: What Is Evergrande? Why Is It Dragging the Market Down Today?

If you follow any type of financial markets, chances are you’ve seen the name Evergrande (OTCMKTS:EGRNF) in many headlines recently. Formally referred…

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This article was originally published by Investor Place

If you follow any type of financial markets, chances are you’ve seen the name Evergrande (OTCMKTS:EGRNF) in many headlines recently. Formally referred to as The Evergrande Group or Evergrande Real Estate Group, the company is China’s second-largest property development corporation as defined by annual sales. It is also ranked No. 122 on Fortune’s most current Global 500 List. Founded in 1996, it has grown steadily, although recent events have called into question how sustainable that growth has been. EGRNF stock has plunged China’s entire financial system has plunged into chaos.

Source: hxdbzxy / Shutterstock.com

What’s Happening With EGRNF Stock?

Evergrande bills itself as a real estate development corporation, but its holdings span many more industries, ranging from wealth management to food and beverage production. According to BBC, its portfolio includes 1,300 projects across more than 280 Chinese cities. However, it is also one of China’s most indebted companies.

Last week, news emerged that Evergrande is severely lacking in liquidity and was therefore unable to make timely payments on many of its debts. The market has been quick to react. China’s Hang Seng index experienced its worst decline in months, almost instantly falling by 3.3% as Chinese’s financial service sector, spanning everything from big banks to other real estate developers, was slammed. These shockwaves weren’t confined to the Asia. U.S. and European markets also saw noticeable declines. The chaos has continued into this week as many stocks across international markets began this week in the red. This is especially true for stocks with ties to China.

Why It Matters

This impending collapse represents a real challenge to China’s financial system. If Evergrande does go down, investors and economists across the world will be forced to reconsider how strong China’s economy truly is. Significant declines for EGRNF stock will be the least of China’s problems.

For the many companies who have invested in Evergrande through partnerships, the consequences of a collapse could be dire. Building, design and manufacturing firms stand to take significant loses if the company goes bust or is bought out by a competitor. Evergrande’s investment partners have already taken steep losses and that trend is likely to continue as the crisis unfolds. Chinese electric vehicle producers for example, are seeing shares decline already.

These warning signs point directly to a credit crunch, where obtaining a business loan becomes more difficult as banks curb their lending habits. All such trends will most directly impact China, but we’ve already seen that the consequences are global. The more shockwaves are sent through China’s economy, the more they will be felt in markets across the globe.

What’s Next for Evergrande?

As of now, there’s no way to be completely sure. As of this morning, EGRNF stock is continuing to fall.

For as long as China’s “Evergrande contagion” continues, though, all companies with ties to China will need to remain on high alert. This includes any company whose business involves any type of importing or exporting. Investors should note that China is one of America’s largest trading partners.

During the 2018 trade war, we saw what can happen when the U.S. and China’s trade relationships are compromised. This has the potential to be worse for stock markets.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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The post EGRNF Stock: What Is Evergrande? Why Is It Dragging the Market Down Today? appeared first on InvestorPlace.

Energy & Critical Metals

New joint venture to boost UK’s energy storage pipeline by 3GWh

A new partnership will enable the UK to expand its portfolio of energy storage capacity, a vital ingredient to accelerate the energy transition.
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A new partnership will enable the UK to expand its portfolio of energy storage capacity, a vital ingredient to accelerate the energy transition.

A joint venture between battery storage projects developer Penso Power and maritime company BW Group will build 3GWh of energy storage capacity in the next three to five years.

BW Group will provide the capital required to implement the projects as well as acquire a stake in Penso Power.

Richard Thwaites, CEO of Penso Power, said: “We consider energy storage to be a key enabler of the energy transition. We view the deal – considerably larger than anything else seen in the UK to date – as transformational for ourselves and indeed the UK market.”  

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The development comes at a time the UK is exploring various avenues to expand its energy storage deployment, a development that will help accelerate the use of renewable energy and unlock the benefits of demand-side management and flexible energy for grid reliability and a carbon-neutral energy system.

During the Global Investment Summit, Boris Johnson, the UK’s prime minister struck a deal with billionaire Bill Gates which will see £400 million ($551.1 million) being invested in technologies including energy storage and hydrogen to speed up the energy transition.

Johnson, said such technologies “have massive potential but are currently underinvested in, by comparison with some others.”

Partnerships such as the one between the UK government and Bill Gates and between BW Group and Penso Power are vital to speed up the shift from traditional energy technologies to modern and smart solutions to mitigate climate change.

According to research firm Deloitte, increasing the availability of financial incentives for storage projects will help boost deployment.

In its Net Zero Strategy launched this week, the UK government committed an extra £500 million ($689.1 million) in incentives towards innovation projects that aim to develop green technologies such as energy storage.

However, Deloitte states that factors including lack of standardisation, incomplete definition of energy storage and outdated regulatory policy and market design will hinder the growth of the energy storage market.

We can’t wait to see you in Milan

Enlit Europe will bring the energy community together during the live event in Milan (30 November – 2 December 2021). Register here

The post New joint venture to boost UK’s energy storage pipeline by 3GWh appeared first on Power Engineering International.

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Energy & Critical Metals

Firefinch powers ahead with Goulamina DFS update and demerger plans for Leo Lithium

Special Report: Firefinch has received all regulatory approvals for its Goulamina JV lithium project in Mali with Jiangxi Ganfeng Lithium … Read More
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Firefinch has received all regulatory approvals for its Goulamina JV lithium project in Mali with Jiangxi Ganfeng Lithium and is ready to kick off a major drilling program to support its expansion plans.

A definitive feasibility study (DFS) update is on track for later this year which will consider a 75% increase in production capacity from 2.3 million to 4 million tonnes per annum in a phase 2 expansion.

This would mean spodumene concentrate production would increase from 450,000 tonnes per annum in line with throughput upgrade – placing Goulamina among the largest producers globally.

Firefinch (ASX:FFX) is planning a major drilling program to support its expansion plans – as well as expanding resources and reserves – and expects a final investment decision (FID) for the project to be made in late 2021.

 

Proposed demerger of Leo Lithium

The company is planning to demerge Leo Lithium Pty Ltd into Leo Lithium Ltd – a standalone company which will hold a 50% interest in the JV with Ganfeng.

It’s all part of Firefinch’s strategy to advance Goulamina by completing all commercial, technical and regulatory work so that Leo can seek a listing on the ASX in the March 2022 quarter with an updated DFS complete, FID made and all funding received from Ganfeng.

“Considerable progress has been made advancing Goulamina over the past few months,” Firefinch managing director Dr Michael Anderson said.

“The key takeaway is that following the proposed demerger in 2022, Goulamina will be substantially funded, with engineering and procurement well progressed and 50km of drilling already underway.

“Importantly, Goulamina will be on a quick path to production, expected in 2023, and in an enviable position to take advantage of prevailing very strong lithium market conditions.”

The company is also undertaking an entitlement offer to existing shareholders to fund working capital, costs of the demerger and permit flexibility to accelerate expenditure at Goulamina.

 

 

Major drilling program planned

Ganfeng and Firefinch will undertake a major, two-year, US$6 million RC and diamond program comprising almost 50km of drilling at the project.

The drilling will target:

  • Converting inferred mineral resources to indicated mineral resources;
  • Defining extensions to Sangar at depth and to Danaya along strike and down dip;
  • Testing the gap between the Danaya and Sangar Zones;
  • Sterilisation of planned infrastructure areas; and
  • Reviewing other exploration opportunities within the tenement.

The inferred mineral resources at the project total 43.7 million tonnes at 1.35% lithium and the company expects significant conversion to indicated resources and ore reserves – which would rank Goulamina even higher among the largest global lithium projects and is expected to support a multi-decade mine at a higher rate of production.

 

Final investment decision by year-end

Ganfeng will contribute US$130 million in cash to the JV and the first tranche of equity – US$39 million – is expected to be deposited into an escrow account shortly.

Once the JV subsidiaries have been restructured and the exploitation licence transferred, the cash will be released from escrow.

And when the DFS update is finalised, the companies will consider a FID for the project.

The FID is one of the pre-conditions for Ganfeng to make its second tranche of cash investment of US$91 million, and assistance with up to US$64 million of debt funding.

 

Firefinch share price today:


 

This article was developed in collaboration with Firefinch Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Firefinch powers ahead with Goulamina DFS update and demerger plans for Leo Lithium appeared first on Stockhead.

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Energy & Critical Metals

China’s Magnesium Shortage Could Spell More Trouble For Global Car Industry 

China’s Magnesium Shortage Could Spell More Trouble For Global Car Industry 

While a shortage of semiconductors has plagued the global auto…

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China's Magnesium Shortage Could Spell More Trouble For Global Car Industry 

While a shortage of semiconductors has plagued the global auto automotive industry this year, the market is now turning its focus to magnesium, a hardening agent of aluminum. Such a shortage could paralyze the aluminum billet production used to make engine blocks, gearboxes, frames, body panels, and rims, among other critical items for automobiles in Europe and the Americas. 

 "A magnesium shortage could trigger a shortage of aluminum, which in turn could also hit car production.

"We stress at this point that such a scenario is not yet included in our estimates. The issue has just emerged and no carmaker has yet warned about it," BofA Securities analyst told clients in a note. 

The source of the shortage is China's monopoly on global magnesium production. Production curbs of energy-intensive smelters have reduced the industrial metal's output, resulting in dwindling stockpiles in Europe and North America. 

Barclays analyst Amos Fletcher told clients in a note that "there are no substitutes for magnesium in aluminum sheet and billet production." He warned if "magnesium supply stops," the entire auto industry will grind to a halt. 

The latest warning of magnesium shortages materializing was last week's warning from S&P Global Platts who obtained a letter from Matalco Inc. President Tom Horter warning customers, "in the last few weeks, magnesium availability has dried up, and we have not been able to purchase our required magnesium units for all of 2022." 

Matalco is North America's largest producer of aluminum billet. Horter's warning continued: 

"The purpose of this note is to provide this advanced warning that, if the scarcity continues, and especially if it becomes worse, Matalco may need to curtail production in 2022, resulting in allocations to our customers." 

For a stunning wake-up call to just how concentrated the complex global supply chain is, 85% of the world's magnesium production comes from China. Much of it comes from one town in Shaanxi province, Yulin, where the government has curbed output at 70% of all magnesium smelters this year due to energy conservation ahead of the Northern Hemisphere winter. 

European industry groups have sounded the alarm. WV Metalle, Germany's non-ferrous metal trade association, warned:

"It is expected that the current magnesium reserves in Germany and throughout Europe will be exhausted in a few weeks at the end of November 2021 at the latest," the group said. "In the event of a supply bottleneck of this magnitude, there is a risk of massive production losses."

European Aluminium, whose members include Norsk Hydro, Rio Tinto, and Alcoa, said, "the current magnesium supply shortage is a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports. The EU's industrial metals strategy must be strengthened." 

Aluminum futures on the London Metal Exchange have broken out to a new high as concerns of magnesium supply mount. 

The critical question is if Beijing will allow magnesium smelters to restart operations by the end of the year or early next year to replenish supplies. If that's not the case, expect the automotive industry to be dealing with a twin crisis of not just a lack of semiconductors but also crucial aluminum.  

Tyler Durden Tue, 10/19/2021 - 21:05
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