Biden easing up on Cuba would boost Canadian miner, CEO says

While Elon Musk’s plea for miners to produce more nickel lifted prices, California-based automaker Tesla couldn’t buy from Sherritt without violating …

Joe Biden’s victory in the US Presidential election marks a potential new chapter for one of Cuba’s biggest foreign investors.

Sherritt International’s top executive calls the result of the vote good news for his company, given the steady tightening of sanctions under President Donald Trump. Sherritt produces nickel and cobalt in Cuba for the global market, and has a growing energy business on the Caribbean island.

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“We were prepared for whatever the outcome would be,” CEO David Pathe said last week. “Certainly seeing a Biden outcome was more positive for us over the next few years than a reelection of the Trump administration.”

While Sherritt doesn’t make decisions based on assumptions about the direction of US policy, the election still leaves its CEO feeling hopeful.

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Known as a proxy for Cuba ever since Pathe’s predecessor gambled on partnering with Havana’s communist government in the 1990s, Sherritt was pushed to the brink during Trump’s tenure. Its market value sunk to a record C$29.8-million ($22.8-million) in March from its 2008 peak of C$4.8-billion, becoming a penny stock.

Pathe said he’s now looking to the future with optimism.

Sherritt closed a debt restructuring in August tied to exiting a costly project in Madagascar. Eliminating C$300-million in debt and pushing out loan payments due next year to 2026 leaves the Toronto-based firm ready “to turn the page and put what has been years of debt restructuring and balance-sheet management behind us,” he said.

The stock has nearly quadrupled from its March low, tracking rising prices of metals used in electric-vehicle batteries amid heightened global demand. Pathe said he intends to continue selling metals to longstanding customers in Asia and Europe, and hasn’t inked any new deals with carmakers despite increasingly bold bets being made on electrification by companies and governments worldwide.

‘INFLECTION POINT’

While Elon Musk’s plea for miners to produce more nickel lifted prices, California-based automaker Tesla couldn’t buy from Sherritt without violating the US embargo on Cuba.

“We are expecting to see a bit of an inflection point in nickel prices,” Pathe said, adding the attention Musk is drawing “is good for the industry as a whole, including us.”

A reversal of Trump policies on Cuba, as Biden pledged during the campaign, would add to Sherritt’s momentum.

Early last year, the White House began ramping up sanctions on Cuba, which it blames for propping up Nicolas Maduro’s regime in Venezuela. Trump enacted a never-used section of the law codifying the embargo that allows US citizens to file lawsuits over property confiscated during the 1959 revolution that brought Fidel Castro to power.

A claim against Sherritt’s mine in eastern Cuba was the third-largest of nearly 3 000 certified by the US government, with the asset valued at more than $88-million before interest. The facility was owned by a subsidiary of what is now Freeport-McMoRan before it was nationalised.

Tighter US sanctions – including bans on dealing with the dozens of State-owned companies with ties to Cuba’s military that dominate the island’s economy – and Covid-19’s shutdown of international tourism made hard currency even more scarce.

Sherritt sells electricity it produces in Cuba to government-owned utilities that haven’t been able to pay up. A deal for monthly payments struck at the start of the year was derailed by the pandemic. Outstanding receivables totaled $159-million in the third quarter.

“It’s been a bit more ad hoc,” Pathe said. “They have been able to throw us money here and there to keep the businesses running.”

Sherritt also halted oil exploration off Cuba’s north coast due to cashflow. “The prospect is still a good one” and the company could resume drilling if it finds a partner willing to invest, Pathe said. For now, the focus is on metals.

“Our nickel business there certainly does have opportunities for further expansion,” he said.

Spearmint Hits Claystone in Every Drill Hole on its Now Completed 10-Hole Drill Program on the …

Ever since the comments Elon Musk made about Tesla’s intention to enter the lithium mining business in Nevada (on Tesla’s battery day September …
Bloomberg

China to Take Oil-Refining Crown Held by U.S. Since 19th Century

(Bloomberg) — Earlier this month, Royal Dutch Shell Plc pulled the plug on its Convent refinery in Louisiana. Unlike many oil refineries shut in recent years, Convent was far from obsolete: it’s fairly big by U.S. standards and sophisticated enough to turn a wide range of crude oils into high-value fuels. Yet Shell, the world’s third-biggest oil major, wanted to radically reduce refining capacity and couldn’t find a buyer.As Convent’s 700 workers found out they were out of a job, their counterparts on the other side of Pacific were firing up a new unit at Rongsheng Petrochemical’s giant Zhejiang complex in northeast China. It’s just one of at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity, equivalent to the U.K.’s entire fleet.The Covid crisis has hastened a seismic shift in the global refining industry as demand for plastics and fuels grows in China and the rest of Asia, where economies are quickly rebounding from the pandemic. In contrast, refineries in the U.S and Europe are grappling with a deeper economic crisis while the transition away from fossil fuels dims the long-term outlook for oil demand.America has been top of the refining pack since the start of the oil age in the mid-nineteenth century, but China will dethrone the U.S. as early as next year, according to the International Energy Agency. In 1967, the year Convent opened, the U.S. had 35 times the refining capacity of China.The rise of China’s refining industry, combined with several large new plants in India and the Middle East, is reverberating through the global energy system. Oil exporters are selling more crude to Asia and less to long-standing customers in North America and Europe. And as they add capacity, China’s refiners are becoming a growing force in international markets for gasoline, diesel and other fuels. That’s even putting pressure on older plants in other parts of Asia: Shell also announced this month that they will halve capacity at their Singapore refinery.There are parallels with China’s growing dominance of the global steel industry in the early part of this century, when China built a clutch of massive, modern mills. Designed to meet burgeoning domestic demand, they also made China a force in the export market, squeezing higher-cost producers in Europe, North America and other parts of Asia and forcing the closure of older, inefficient plants.“China is going to put another million barrels a day or more on the table in the next few years,” Steve Sawyer, director of refining at industry consultant Facts Global Energy, or FGE, said in an interview. “China will overtake the U.S. probably in the next year or two.”Asia RisingBut while capacity will rise is China, India and the Middle East, oil demand may take years to fully recover from the damage inflicted by the coronavirus. That will push a few million barrels a day more of refining capacity out of business, on top of a record 1.7 million barrels a day of processing capacity already mothballed this year. More than half of these closures have been in the U.S., according to the IEA.About two thirds of European refiners aren’t making enough money in fuel production to cover their costs, said Hedi Grati, head of Europe-CIS refining research at IHS Markit. Europe still needs to reduce its daily processing capacity by a further 1.7 million barrels in five years.“There is more to come,” Sawyer said, anticipating the closure of another 2 million barrels a day of refining capacity through next year.Chinese refining capacity has nearly tripled since the turn of the millennium as it tried to keep pace with the rapid growth of diesel and gasoline consumption. The country’s crude processing capacity is expected to climb to 1 billion tons a year, or 20 million barrels per day, by 2025 from 17.5 million barrels at the end of this year, according to China National Petroleum Corp.’s Economics & Technology Research Institute.India is also boosting its processing capability by more than half to 8 million barrels a day by 2025, including a new 1.2 million barrels per day mega project. Middle Eastern producers are adding to the spree, building new units with at least two projects totaling more than a million barrels a day that are set to start operations next year.Plastic DrivenOne of the key drivers of new projects is growing demand for the petrochemicals used to make plastics. More than half of the refining capacity that comes on stream from 2019 to 2027 will be added in Asia and 70% to 80% of this will be plastics-focused, according to industry consultant Wood Mackenzie.The popularity of integrated refineries in Asia is being driven by the region’s relatively fast economic growth rates and the fact that it’s still a net importer of feedstocks like naphtha, ethylene and propylene as well as liquefied petroleum gas, used to make various types of plastic. The U.S. is a major supplier of naphtha and LPG to Asia.These new massive and integrated plants make life tougher for their smaller rivals, who lack their scale, flexibility to switch between fuels and ability to process dirtier, cheaper crudes.The refineries being closed tend to be relatively small, not very sophisticated and typically built in the 1960s, according to Alan Gelder, vice president of refining and oil markets at Wood Mackenzie. He sees excess capacity of around 3 million barrels a day. “For them to survive, they will need to export more products as their regional demand falls, but unfortunately they’re not very competitive, which means they’re likely to close.”Demand TrapGlobal oil consumption is on track to slump by an unprecedented 8.8 million barrels a day this year, averaging 91.3 million a day, according to the IEA, which expects less than two-thirds of this lost demand to recover next year.Some refineries were set to shutter even before the pandemic hit, as a global crude distillation capacity of about 102 million barrels a day far outweighed the 84 million barrels of refined products demand in 2019, according to the IEA. The demand destruction due to Covid-19 pushed several refineries over the brink.“What was expected to be a long, slow adjustment has become an abrupt shock,” said Rob Smith, director at IHS Markit.Adding to the pain of refiners in the U.S. are regulations pushing for biofuels. That encouraged some refiners to repurpose their plants for producing biofuels.Even China may be getting ahead of itself. Capacity additions are outpacing its demand growth. An oil products oversupply in the country may reach 1.4 million barrels a day in 2025, according to CNPC. Even as new refineries are built, China’s demand growth may peak by 2025 and then slow as the country begins its long transition toward carbon neutrality.“In an environment where the world has already got enough refining capacity, if you build more in one part of the world, you need to shut something down in another part of the world to maintain the balance,” FGE’s Sawyer said. “That’s the sort of environment that we are currently in and are likely to be in for the next 4-5 years at least.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Bitcoin is surging like it’s 2017 — up 225% since March

A lot of people are buying, not because they believe in blockchain technology or crypto, but because they want to get rich quick. For investors who are …

The price of bitcoin is up 225 per cent since the recent March lows and is getting close to overtaking the 2017 all-time high.

At these prices, many are wondering if the current trend is just getting started or if it’s a bubble that is about to burst?

To help answer this question let’s review what happened in 2017.

In 2017, the price of bitcoin went from $1,000 US in January to almost $20,000 US by December.

It seemed that everyone wanted a piece of this transformative technology, or at least they wanted to profit from it.

Greed flooded the market on the back of forecasts predicting $50,000, $100,000 and even $1 million bitcoin valuations.

When the forecasts failed to materialize, greed was replaced with doubt and fear, the bubble burst and bitcoin dropped to $3,300 US in just a couple of months.

Compared to 2017, when most holders of bitcoin were either speculators or drug dealers, cryptocurrencies are now more “mainstream” with several large fund managers, companies and governments preparing to launch their own or use existing coins.

Companies such as Fidelity Investments, J.P Morgan and many others are investing heavily in the crypto space.

For many crypto bulls, the real game-changer is PayPal’s announcement that their clients will soon be able to transact in bitcoin. It’s a pivotal step on the way to widespread public crypto adoption which, if it happens, would make the value of bitcoin soar.

Bitcoin is also acting as digital gold. In theory, the more that the central banks print money, which they are doing in the trillions, the more valuable bitcoin should become.

With bitcoin prices surging higher, it feels like déjà vu. A lot of people are buying, not because they believe in blockchain technology or crypto, but because they want to get rich quick.

For investors who are considering entering this crypto market at these prices, it’s important to learn from the past and understand that extreme greed and emotional buying increases volatility and leads to booms and busts.

Jillian Taylor/CBCJillian Taylor/CBC
Jillian Taylor/CBC

Currently, bitcoin has momentum on its side, but the true test is whether it can exceed the previous all-time high of $20,000 US. If it does, and does so with authority, that’s a sign that bitcoin will keep increasing, however, if the momentum fades at the $20,000 US ceiling, it’s a warning that the trend could reverse.

While bitcoin is back in the spotlight, it is far from the frenzy that we experienced in late 2017.

At that time many of my neighbours, my daughter’s hockey teammates’ parents, and so many others were talking about bitcoin — which is a strong indicator that we were nearing the peak.

My feeling now is that it is going higher, potentially much higher over time if it breaches the $20,000 US mark, but it won’t go up in a continuous straight line. There will be plenty of boom and bust periods along the way.

Try not to give in to FOMO (fear of missing out) but, if you are interested in crypto and understand the risks, gradually enter the market over the next year as opposed to going “all in” today.

I own some bitcoin and invest in blockchain and crypto infrastructure but, due to the risk and volatility, it isn’t a huge part of my overall portfolio, although the weighting has increased over the past year.

As I already have some crypto, I’m not planning on buying any more at these prices — nor am I planning on selling. If you are considering entering the crypto market a good starting point is to read my article “The epic rise and fall of crypto currency.”

It was written last year when the price of bitcoin out of the spotlight was selling for $8,000 US.

This column is part of CBC’s Opinion section. For more information about this section, please read our FAQ.

DLT Partners with IBM, Microsoft to Distribute Advanced Technology

Cloud Paks integrate with IBM Watson. In fact, DLT is authorized to offer all of IBM’s software-based solutions. Microsoft Offers. Microsoft’s offers will also …

DLT, a Tech Data subsidiary, has partnered with IBM and Microsoft to distribute advanced technology. The solutions aggregator announced on Thursday that it’s bringing IBM’s open hybrid cloud, AI, security and other software solutions, to the U.S. public sector. On Wednesday, DLT partnered with Microsoft to bring more than half-dozen Azure and Modern Workplace offers to government entities.

DLT is a premier government solutions aggregator with access to more than 50 in-house contract vehicles and dedicated channel and enablement services.

IBM's Jay Bellisimo

IBM’s Jay Bellisimo

“We’re seeing organizations increase their investments in hybrid cloud and AI as they accelerate their digital transformations,” said Jay Bellissimo, general manager for the U.S. public and federal market at IBM. “This collaboration with Tech Data and DLT will expand our platforms’ footprint further into the partner ecosystem and with clients in the U.S. government and education markets, which ultimately will provide them with the flexibility, security and innovation of IBM’s open hybrid cloud and AI solutions.”

Here’s a closer look at the DLT-IBM deal. DLT will extend the channel’s reach to help U.S. public sector customers’ journeys to the cloud. Through Cloud Navigator, DLT’s partner network, partners can assess cloud readiness, provide government customer cloud migration support. This will help ensure that organizations maintain visibility, gain actionable intelligence and achieve automation and accountability across their cloud investments.

Via the new agreement DLT will offer IBM Cloud Paks, containerized and integrated suites of software that run on Red Hat OpenShift and are hosted on IBM Cloud. Cloud Paks integrate with IBM Watson. In fact, DLT is authorized to offer all of IBM’s software-based solutions.

Microsoft Offers

Microsoft’s offers will also be available through DLT’s Cloud Navigator program. It will include enhanced International Traffic in Arms Regulations (ITAR)-compliant support through DLT’s Confirmed Stateside Support offering.

The Microsoft Azure and Modern Workplace solutions include: Azure Commercial Cloud, Azure Government; Azure Government Secret, Azure Infrastructure as a Service (IaaS), Azure Platform as a Service (PaaS), Azure Software as a Service (SaaS), and Modern workplace applications such as Microsoft 365, Microsoft Dynamics 365 and the Microsoft Power Platform.

DLT Solutions' Chris Wilkinson

DLT Solutions’ Chris Wilkinson

“Migrating workloads to the cloud is an important step on the pathway for digital transformation and IT modernization for government organizations, said Chris Wilkinson, president of DLT Solutions. “By distributing Microsoft’s Azure and Modern Workplace solutions to the U.S. public sector, DLT and our partners will be able to help these organizations accelerate their modernization goals and mission objectives with an expanded set of cloud portfolio solutions.”

Roblox files for IPO, a first for user-generated game platforms

The company most recently raised $150 million in venture funding from Andreessen Horowitz in a deal announced in February. Its valuation at that …

User-generated game platform Roblox publicly disclosed its filing to go public on the U.S. stock market today.

The company did not say how much it is raising nor its valuation. CNBC previously reported that the company could go public early next year at an $8 billion valuation.

Roblox said earlier that it filed a confidential draft registration statement with the U.S. Securities and Exchange Commission for a public offering of common stock.

The company most recently raised $150 million in venture funding from Andreessen Horowitz in a deal announced in February. Its valuation at that time was $4 billion.

The game industry is one of the few economic sectors that is doing well during the pandemic. Game engine maker Unity raised $1.3 billion at a $13.6 billion valuation in an IPO on September 18, even though it is losing money. Unity’s shares are up more than 60% since trading began.

Above: Dave Baszucki, the CEO of Roblox.

Image Credit: Roblox

Skillz, which turns games into skill-based cash reward competitions, is planning to go public at a $3.5 billion valuation through a special public acquisition company (SPAC).

CEO Dave Baszucki and Erik Cassel founded Roblox in 2004, enabling just about anyone to make Lego-like characters and build rudimentary games. Before that, in 1989, Baszucki and Cassel programmed a 2D simulated physics lab called Interactive Physics, which would later on influence the approach for Roblox.

Financial results

The company has grown to more than 31.1 million daily active users. The platform now has nearly seven million active developers. As of September 30, developers had created more than 18 million different experiences (or games) on Roblox, and the community visited more than 12 million of those experiences.

For the period ended September 30, Roblox had 31.1 million daily active users, compared to just 17.6 million in 2019 and 12 million in 2018. The hours engaged was 22.2 billion for the nine months ended September 30, compared to 10 billion in the same period in 2019 and 9.4 billion in 2018.

Measurement firm Sensor Tower said that since 2014, Roblox has seen 447.8 million installs and $2 billion in consumer spending on mobile.

Dean Takahashi wanders through the JDRF area inside Roblox.

Above: Dean Takahashi wanders through the JDRF area inside Roblox.

Image Credit: Roblox

For the nine months ended September 30, revenue was $588.7 million, compared with $349.9 million a year earlier and $488.2 million in 2018. Bookings (which include revenue that will be recognized later) were $1.2 billion for the nine months ended September 30, up 171% compared to $458 million a year earlier. The company attributed that growth in part to demand from users stuck at home during the pandemic.

The company reported a loss of $203.2 million in the nine months ended September 30, compared to a loss of $46.3 million a year earlier. Cash from operations was $345.3 million for the nine months ended September 30, compared with $62.6 million a year earlier.

Roblox shares revenues with its game creators, enabling high school students and young adults to make money. For the 12 months ended September 30, more than 960,000 developers earned Robux, or virtual cash that can be converted into real money, on Roblox. There were 1,050 who earned more than $10,000, and nearly 250 who earned more than $100,000. When users exchange Robux for money, Roblox takes a 30% share of the transaction.

About 34% of sales comes from the Apple App Store and 18% comes from Google Play. The average lifetime of a paying Roblox user is about 23 months. Among the risk factors Roblox faces is ensuring a civil environment for children online, which isn’t easy given all the different ways online systems are attacked.

Baszucki is a big fan of the metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One. At our GamesBeat Summit event in April, Roblox’s Matt Curtis talked about the tools the company is building in order to make its version of the metaverse happen. Baszucki is speaking at our metaverse event on January 27.

In a letter, Baszucki said, “As I sit here writing this letter, I can’t help but reflect on the last 15 years and how they have gone by so quickly. It seems like only yesterday when Erik Cassel and I launched the first version of Roblox from a small office in Menlo Park. From the start, we imagined the possibilities of bringing people together through play. Our goal was to create an online community where people could do things together in virtual worlds. We hoped that by sharing experiences, our users would connect, learn, and have fun with one another.”

By 2011, Roblox players were asking Baszucki for his autograph at company events.

“When we talk about ‘creators’ we do so in a general sense, because creating experiences on Roblox taps a broad range of skills,” Baszucki wrote. “Our creator community includes people specialized in coding, 3D experience design, avatar and clothing design, sound design, community management, moderation, live ops, production, and business. We believe that experience creation will become a growing field of employment.”

The metaverse is the same goal that Epic Games, maker of Fortnite, is reportedly chasing after as well, as are numerous other companies. But Roblox is doing just fine as a platform for user-generated content. Many of its top-10 games are getting billions of plays. As of September 30, Roblox had 830 employees, up 275 from a year earlier. It also has 1,700 trust and safety agents across the world.

For 2019, Baszucki received $4.5 million in compensation. He holds about 1.7% of the Class A shares and 100% of Class B shares, for a total of about 12% of the outstanding stock and 70.7% voting control. Anthony Lee, the lead independent director and a vice president at Altos Ventures, holds 21.3% of the stock and 7% of voting control.

The underwriters include Goldman Sachs, Allen & Co., Morgan Stanley, BofA Securities, J.P. Morgan, and RBC Capital Markets.

Small details

Among the small details, Roblox uses the Lua scripting language and Amazon Web Services for its cloud infrastructure. About 67% of daily active users and 32% of bookings are from outside the U.S.

In China, Roblox said it success will be dependent on Tencent’s ability to obtain a license for Luobulesi, the name of the Roblox platform in China. As of September 30, Roblox had 18,000 servers around the world.

Developers can share their creations via the Studio Marketplace. As of September 30, that market had more than 30 million models and other creations available. Roblox said it has more than 45 U.S. patents.