Australia's Power Paradox

By Andy Home, Senior Metals Columnist

Hello Power Up readers!  Today we look at how Australia risks missing out on the renewable energy transition despite having vast resources of the minerals that will be needed to replace fossil fuels.  

Also in today's issue, the implications of drought in the western United States, Chevron's share price challenge and why both the clean energy sector and U.S. liquefied natural gas exporters are wary of the U.S. presidential elections.   

Currently unavailable after BHP closed its Nickel West division, REUTERS/Melanie Burton

Australia should be one of the countries best placed to reap the rewards of the clean energy revolution. The country boasts large resources of key energy transition minerals such as lithium, copper and manganese and has a rich mining history.  

But the reality is that the country is struggling to live up to its potential. BHP's nickel operations in Western Australia, for example, were billed as a future energy metals hub but they are currently mothballed with any restart decision not expected for a couple of years.  

One problem is the collapse in pricing for many energy transition metals. This is due both to oversupply, particularly Chinese oversupply, and weaker than expected demand. The road to electrification is proving a bumpy ride for global automakers as car buyers opt for hybrid vehicles over pure battery models. The rise of the hybrids has changed the demand dynamics for many battery inputs, not least lithium.  

However, another big problem is that Australia doesn't have enough green energy to produce the metals that will power the green transition. Reuters columnist Clyde Russell attended this week's International Mining and Resources Conference (IMARC) in Sydney, where the country's power paradox was the big talking point.  

Everyone can see the energy transition potential for Australia but turning vision into reality is proving a formidable challenge.  

Drought across much of the western United States has caused U.S. hydropower generation to drop to a 23-year low so far in 2024. The sharp reduction in dispatchable clean power has forced suppliers to deploy record volumes of natural gas to balance electricity systems. Reuters columnist Gavin Maguire runs the numbers on hydro's falling share of the energy mix. 

U.S. exporters of liquefied natural gas (LNG) could face new hurdles if Republican Trump wins the presidential election despite the former president's sympathetic stance on fossil fuels. Curtis Williams in Houston reports on fears that proposed tariffs on China could backfire on domestic LNG producers.  

The U.S. election is also causing unease in the new energy sector of the stock market. After bubble-like euphoria in 2021-2022 alternative energy funds have been in retreat ever since. The prospect of a win for Donald Trump, who has promised more investment in conventional fossil fuels, is fuelling worries there may be more trouble ahead for the sector, as Danilo Masoni writes here.  

The Panama Canal has seen transit volumes of LNG drop 65% over the last couple of years as U.S. exporters switched shipments to Europe. The Canal's administrator, Ricaurte Vazquez, gave an exclusive interview to Reuters reporters Marianna Parraga and Elida Moreno, explaining how Panama plans to recover the lost volumes.  

Chevron CEO Michael Wirth is under pressure as the oil and gas company's share price underperforms that of rival Exxon Mobil. Reuters reporters in Houston and London look at the reasons why Wirth has fallen out of favour with Wall Street.   

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