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Only a quarter of BP’s 10,000 job cuts to be voluntary By Reuters



© Reuters. FILE PHOTO: File photograph shows a sign is outside BP’s North Sea Headquarters in Aberdeen

By Dmitry Zhdannikov and Ron Bousso

LONDON (Reuters) – BP (NYSE:) is set to make around 7,500 compulsory redundancies after roughly 2,500 staff – or just over one in ten of those eligible – applied for voluntary severance, according to an internal memo seen by Reuters and company sources.

The oil major announced plans in June to lay off almost 15% its 70,000-strong workforce as part of Chief Executive Bernard Looney’s plan to cut costs and “reinvent” the business for a low carbon future.

Many layoffs will come from office-based staff including BP’s core oil and gas exploration and production division, where thousands of engineers, geologists and scientists are set to leave. They will not impact frontline production facilities.

A BP spokesman confirmed the voluntary redundancy figure.

“We are continuing to make progress towards fully defining our new organisation … We expect the process to complete and for all staff to know their positions in the coming months,” BP said in a statement.

The oil industry is facing one of its biggest ever crises, with a collapse in demand and oil prices due to the COVID-19 pandemic and pressure from activists and investors to help battle climate change.

In an internal memo this week, BP said that out of 23,600 people eligible for voluntary redundancy, some 2,500 had applied, including about 500 people in senior roles.

“This means around a quarter of the headcount reduction that Bernard outlined in June, will be voluntary,” the memo said.

“We know that for some people for various reasons they feel that now is the right time for them to leave BP – but for many it will still have been a difficult decision,” the memo said.

Looney has promised to cut oil and gas output by 40% by the end of this decade, a radical pledge for an energy company, as he seeks to dramatically expand renewables production such as offshore wind and solar.

Investors have praised the drive, but also questioned the financial viability of the plan as renewables generate much lower returns.

BP’s shares currently trade at their lowest since 1995, when it was a much smaller company, and its dividend yield stands at a staggering 13%.

Its shares were up 1.5% at 1125 GMT.

BP said voluntary redundancies were offered to people in offices across 21 countries. Its biggest offices are in London and Aberdeen in Britain, Houston in the United States, Baku in Azerbaijan, Luanda in Angola, and Oman and Trinidad and Tobago.

Two BP sources said the company considered more than 10% of those eligible accepting voluntary redundancy as a good turnout. Employees were typically offered one month’s salary for every year of service.

Forced redundancies will now be based on internal scores and rankings.

“Losers get a package and will walk out by the end of the year … Staff choice is brutal,” one of the sources said.

A second source said the biggest challenge would be for the long timers to try to fill new roles requiring skills and knowledge of the renewables business.

“If you are an oil reservoir engineer chances are just minimal that you can be retrained as a solar panel engineer,” the second source said.

Speaking to Reuters earlier this week, Gordon Birrell, BP’s head of operations, which includes oil and gas production and refining, said many of the jobs cuts would come from his division.

“The transformation of production and operations is significant, very significant – 10,000 people will leave the company and we’re in the midst of the process –  a significant proportion of the overall number are from production and operations,” Birrell said.

Rival Shell (LON:) also plans to cut up to 9,000 jobs.

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Gold Up, Poised for $1,900, on US Election Jitters, New Stimulus Hope By




© Reuters.

By Barani Krishnan – Gold prices rose Friday, appearing poised to return to the key $1,900 level, as the safe haven crowd leveraged on uncertainty over next week’s U.S. election and that the winner will attempt to undertake a new major Covid-19 stimulus for the economy.

New York-traded settled at $1,879.90, up $11.90, or 0.6% on the day. For the month, however, the benchmark U.S. gold contract was down 1.3%, accounting for losses occurring mostly in mid-October as a surge in risk appetite then had weighed on safe-havens.

, which reflects real-time trades in bullion, was up $10.26, or 0.6%, at $1,878.12 by 4:00 PM ET (20:00 GMT).

“Haven buying is expected to increase in the coming days,” Jeffrey Halley, analyst for OANDA in New York, said, adding that gold could attempt to try and get over $1,900. “It should be enough to at least, temporarily, stop the rot until the U.S. election passes.”

Democrat Joe Biden is attempting to wrest the U.S. presidency from Republican Donald Trump in the Nov. 3 election, with polls showing the challenger in the lead. Both Biden and Trump have promised to issue an economic stimulus as quickly as possible after the election to help the country deal with the threat of Covid-19.

Gold is a hedge against fiscal expansion and political uncertainty and typically rises in such circumstances.

Democrats, who control Congress, reached agreement with the Trump administration in March to pass the Coronavirus Aid, Relief and Economic Security (CARES) stimulus, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.

Since then, the two sides have been locked in a stalemate on a successive relief plan to CARES. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.

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Consequences of Trump’s steel tariffs hurt two Pennsylvania mills




The same fire that melts the butter hardens the egg.

That “same fire” in Western Pennsylvania, the birthplace of American steel, was President Trump’s Section 232 tariffs. They hardened the barrier against steel imports while melting the aspirations of steelmakers who were relying on imports.

Western Pennsylvania is home to US Steel, the iconic steelmaker that in its early years was known simply as “The Corporation.” It was America’s biggest steel producer for virtually the entire 20th century.

USS and other large integrated steelmakers welcomed Trump’s 25% across-the-board tariffs in March 2018, which would serve to tighten domestic supply, paving the way for higher steel prices and improved profit margins.

Two other Western Pennsylvania steelmakers didn’t fare so well. Allegheny Technologies Inc. (ATI), once America’s largest stainless steel producer, and NLMK USA’s Pennsylvania mill, the former Sharon Steel.

Both made strategic plans to use imported slabs – semi-finished steel – to roll into sheet steel, and had foreign partners to do so. ATI teamed up with China’s Tsingshan Group in 2017 for a Pennsylvania rolling mill project dependent on stainless steel slabs from a Tsingshan mill in Indonesia.

NLMK’s offshore slab supplier was its Russian owner.

Trump’s tariffs made it uneconomical for them to import slabs. There was an appeal process for exceptions to the tariffs, but despite their critical needs – and the fact that they also employed American steelworkers who the tariffs were expected to help – they got the cold shoulder.

Commerce rebuffs exemption requests

Ironically, mills that benefited from steel imports being effectively blocked were still able to get the foreign-produced slabs they needed despite the tariffs, via government exceptions. Importing slabs was not as essential to their business models as it was for ATI and NLMK, but was a great help to mills trying to balance their own production with market demand.

Sometimes it’s better to import semi-finished steel in instead of melting your own – like buying a cake mix instead of making the cake from scratch. It gives large integrated mills flexibility and convenience. Availability of foreign slabs also helps US mills weather their expected and unexpected mill outages.

US section 232 steel tariffs timeline

Semi-finished steel, mostly slab, comprises roughly 30% of all US steel imports and the importers are US mills themselves. It may be a little-known fact in Washington DC that US steelmakers as a group are likely the largest importers of steel.

So while USS and its large mill peers were having their cake and eating it too, fellow Keystone Staters, NLMK USA and ATI, got the proverbial pie in the face.

In March, ATI announced plans to idle operations at its 50% owned A&T Stainless joint venture with its Chinese partner in Midland, Pennsylvania, as the Section 232 tariffs made the operation unsustainable. The Department of Commerce denied the company’s first round of tariff exemption requests in April 2019, even though its two-year old venture was required to source its slabs exclusively from Tsingshan’s Indonesian mill under the terms of their JV agreement.

Since March 2018, A&T Stainless has paid over $37 million in tariffs. An ATI spokeswoman told S&P Global Platts that operations at Midland’s Direct Roll Anneal and Pickle (DRAP) Line have been idled since July. “I am not aware of any plans to file another request for exclusion,” she said on Oct. 28.

US hot rolled coil steel prices

While announcing the closure, ATI CEO Robert Wetherbee said in a statement: “While we firmly believe we meet the criteria for an exclusion, we cannot wait any longer. Without a tariff exclusion, we have no choice but to idle the Midland operations.”

NLMK USA filed a complaint with the US Court of International Trade (CIT) against Commerce’s refusal to exclude its slab imports from the Section 232 tariffs. NLMK said US steelmakers AK Steel, Nucor and US Steel filed objections to NLMK’s exemption requests, despite their inability or unwillingness to supply the volumes and types of slabs needed by NLMK’s US mills.

NLMK asked the CIT to find Commerce’s denials of slab exclusions unlawful and recognize NLMK’s right for a refund of the tariffs. NLMK owns and operates three steel mills in Indiana and Pennsylvania. The company said it has invested over $800 million in the facilities following their acquisition and employs 1,200 workers in the US.

NLMK is expecting a CIT ruling before the end of the year.

Steel and politics

Pennsylvania’s status as a battleground state, meanwhile, has only strengthened this election cycle, with speculation that the results of the presidential election could come down to voters in Pennsylvania and Florida. Western Pennsylvania was a stronghold of support for Trump during his 2016 presidential campaign, however the region is still seen as being in play this time around, with almost daily campaign stops from both candidates’ campaigns in the last days leading up to the Nov. 3 election.

Polling of likely voters in Pennsylvania has been tight, with the outlook for the race uncertain, just days away from the election.

As of Oct. 27, democratic nominee Joe Biden was showing a lead of 5.1 points in Pennsylvania, according to FiveThirtyEight, which noted that polls in 2016 were off by 4.4 points in the state, with Trump winning Pennsylvania by only 0.7 points.

“So with a 2016-style polling error in Pennsylvania, Biden would be cutting it awfully close, perhaps even so close that court rulings on factors like ‘naked ballots’ swing the outcome,” FiveThirtyEight said.

In late September, US steelmakers participating in a “virtual town hall” event hosted by the Association for Iron and Steel Technology said they expect continued bipartisan support for their industry regardless of who is elected president.

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Ethanol Looks Beyond Trump-Biden Bluster to Biofuel Reset By Bloomberg




© Reuters Ethanol Looks Beyond Trump-Biden Bluster to Biofuel Reset

(Bloomberg) — Donald Trump and Joe Biden are scrambling to secure Farm Belt victories with sweeping promises to protect corn-based ethanol’s place in the U.S. fuel mix.

The industry has reasons to be wary of both presidential candidates.

The winner will oversee a “reset” of the congressional mandate to blend biofuels with gasoline. This new phase of the Renewable Fuel Standard, created in 2005 to curb oil consumption and greenhouse gases, could determine ethanol’s role alongside oil in a low-carbon energy economy.

“The RFS is at a critical point,” said Neelesh Nerurkar, a ClearView Energy Partners analyst and former energy adviser to the Obama administration. “Whoever is in power and making the rules two years from now matters a lot.”

Unless lawmakers come up with new policy, the Environmental Protection Agency will begin calling the shots on yearly biofuel-gasoline blend quotas in 2023. The law outlines annual targets only through 2022.

The RFS, which will fall far short of its original goal of requiring 36 billion gallons of biofuels blended with gasoline in 2022, has taken on an almost mythic quality as an economic engine for Iowa and other Midwest states that produce corn, soybeans and the renewable fuels made from them.

‘Peak Ethanol’?

Yet the law’s benefits increasingly flow away from the Heartland, as refineries nationwide are converted to renewable diesel plants and some oil companies get in the business of selling biogas harvested at landfills and wastewater-treatment facilities. And even as they battle Big Oil for share of a shrinking gasoline market, biofuels producers also face the threat of electric vehicles eating into fuel demand.

“The U.S. has basically reached peak ethanol demand,” Iowa State University rural economist David Swenson said. “We are driving more energy-efficient automobiles, we are using electric vehicles and some of our younger generation doesn’t bother to drive at all.”

Biden, who is scheduled to campaign in Iowa on Friday, has promised to accelerate that trend and put more electric cars on the road — a vow that spooks some farmers and ethanol makers. Biden leads Trump by 1.2 points on average in Iowa polls, according to RealClearPolitics.

“We’ve got big concerns about Biden’s focus on electric vehicles,” National Corn Growers Association Chairman Kevin Ross said.

Former Iowa Governor Tom Vilsack, who served as Obama’s agriculture secretary, says worrying about electric cars filling up the highways anytime soon is not realistic.“We’re talking about generations that will pass before we have a vehicle fleet that is even remotely close to being all electric,” Vilsack said in an interview, adding that he sees opportunity to expand ethanol to ships and planes.

Big Unknown

Still, Biden is seen as “a big unknown,” according to Todd Becker, chief executive officer of ethanol producer Green Plains (NASDAQ:) Inc.

Biden has touted “advanced” biofuels on the campaign trail, a phrasing that feeds fears his focus is on next-generation alternatives that are still being developed, rather than traditional corn starch-based ethanol.

How aggressively Biden might get behind a call for a national low-carbon fuel standard is also a question.

A push in Congress for a low-carbon fuel policy is likely if Democrats win back control of the U.S. Senate. Some Democrats want to use the RFS reset as a chance to replace explicit biofuel-usage targets with a broader low-carbon fuel standard, using California as a guide. The state’s program brings together renewable fuel and electricity stakeholders in its goal to reduce vehicle emissions 20% by 2030.

The policy has gained acceptance among ethanol producers in recent years.

“If one is truly technology- and feedstock-neutral and doesn’t favor one technology or vehicle system over another, we feel very good about ethanol’s ability to compete in that sort of policy framework,” Renewable Fuels Association President Geoff Cooper said in an interview.

Waiver Requests

Trump earns points in the Corn Belt for pro-biofuel rhetoric and fulfilling some key promises, such as allowing year-round sales of 15% ethanol fuel blends, or E15. But even the president’s fans are critical of EPA over its handling of waivers that would exempt some oil refineries from biofuel quotas.

“The president delivers on his promise and his EPA undermines him at every turn,” Green Plains CEO Becker said, adding that “there has not been a president in modern times with more love for the U.S. farmer.” Becker said he’s hopeful Trump would be “more forceful with the EPA” if re-elected.

The EPA recently rejected many refinery petitions after months of outcry from the industry and a push by Iowa Republican Senator Joni Ernst. The agency still hasn’t ruled on all waiver requests, nor has it followed through on some ethanol policy goals. Ernst has used her tough re-election contest to extract pro-ethanol commitments from Trump.

“So many ethanol promises — promises to do right by this industry — have collected dust,” Brian Jennings, chief executive of the American Coalition for , said on a call with reporters last month.

Ethanol prices, which plunged earlier this year as pandemic lockdowns across the U.S. kept cars off the road, slipped 2.2% in Chicago this week, according to data compiled by Bloomberg.

Meanwhile, corn futures in Chicago are heading for the biggest weekly slump since June as the coronavirus outbreak worsens. More than a third of U.S. corn goes into making ethanol fuel.

No Returns

Trump in Des Moines, Iowa, earlier this month ribbed the crowd about never returning to Iowa if he doesn’t win its six electoral votes November 3.While he appeared to be joking, Trump said out loud what some have been silently wondering.

“There are a lot of people in our industry that are concerned about what would happen after the election if Trump is re-elected and he doesn’t have to campaign in Iowa again,” Iowa Renewable Fuels Association Executive Director Monte Shaw said.

Regardless of who wins next week, the industry will continue to have “bipartisan champions” as well as “detractors from the far fringes of both parties,” Shaw said.

“No matter which party is in charge of the House, Senate, or White House, we have our work cut out for us.”

(Adds background in 14th paragraph; ethanol and corn prices starting in 23rd.)

©2020 Bloomberg L.P.


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