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February
Japan Utilities Boost Efforts to Cut Coal Import Costs, Improve Energy Security
Written by Nur Yasmin
Japanese power utilities are stepping up efforts to cut thermal coal import costs by switching to lower quality grades and widening import sources, company officials said, as Tokyo looks to fight inflation and boost energy security.
The measures include burning more of cheaper low-to-mid-grade coal and seeking new suppliers in Africa and South America, they said, as the world's No. 3 coal importer has sharply reduced imports from Russia, sanctioned for its invasion of Ukraine.
The disruption in Russian energy exports squeezed energy supplies globally and drove prices of coal and liquefied natural gas to record levels last year, hitting nations hard.
Seven major regional utilities have already applied to raise electricity prices from April or June as the industry takes a hit from elevated costs of imported fuels, exacerbated by the weak yen.
Prices of high-grade Newcastle thermal coal futures surged to all-time highs of more than $400 per tonne last year, tripling Japan's import value of the fuel in 2022.
Although the prices have eased by 39% so far this year, utilities are concerned the market may rally again as top importer China recovers from COVID-19 lockdowns and will resume Australian coal imports from February.
"Among various measures to improve efficiency, cutting fuel cost is the most important thing as it's so big," Hokkaido Electric Power (9509.T) President Yutaka Fujii said last month.
Possible cost-cutting measures include using more low-grade coal, widening supplier sources and jointly purchasing coal with other companies, he added.
ALTERNATIVES TO AUSTRALIA
Japanese utilities rely mostly on high-grade coal like that from Australia to maintain a heat level consistent with the installed boilers, but have been slowly increasing the use of cheaper coal since the liberalisation of the local power market in 2016 boosted competition.
Japan bought 73% of thermal coal from Australia and 7% from Russia in 2022, against 73% and 12% in 2021, the country's trade data shows. As the price spread between Australian and European coal is wide, Japanese companies plan to increase imports from South Africa, a Tokyo-based coal trader said.
"We are looking into diversifying supply sources in areas (outside of Australia) such as Africa and South America," Kazuhiro Ikebe, president of Kyushu Electric, said last month.
JERA, Japan's biggest power generator, has modified some equipment at its coal power plants so that it can burn a wider variety of coal, which has already helped bring down the fuel cost by about 26 billion yen ($202 million) in the nine months ended Dec. 31, Tetsuo Yoshida, the head of finance, said.
Hokuriku Electric Power (9505.T), which like other Japanese utilities posted a record net loss in the nine month period ended Dec. 31 because of soaring import costs, will continue to seek high-grade coal "as much as possible," a company official said.
"But (we) will also use medium-grade coal in which the cost reduction benefit outweighs higher consumption volume and ash handling costs," the official added.
REPLACING RUSSIA
Coal imports from Russia have been in sharp decline since mid-2022 and preliminary broker data suggests they have fallen close to zero for February, according to Henning Gloystein, director of energy, climate and resources at Eurasia Group.
To replace Russian coal, Japan has increased coal imports from several sources, including Indonesia, Australia, South Africa and even occasional cargoes from the Americas, including Canada, Colombia, and the United States, he said.
Japan's biggest coal-fired power generator, Electric Power Development Co Ltd (9513.T), is considering buying coal from South Africa to diversify procurement sources, a spokesperson said. (reuters)
February
U.S. Opens Embassy in Solomon Islands, Blinken Says
Written by Nur Yasmin
The United States has opened an embassy in the Solomon Islands after a 30-year absence as it seeks to boost diplomatic relations in the Pacific as a counter to China.
Secretary of State Antony Blinken announced plans to open a diplomatic mission in the Pacific island nation during a visit to the region last year. The last U.S. embassy in the Solomons closed in 1993 amid post-Cold War budget cuts and the United States was represented there by an ambassador based in Papua New Guinea.
In a statement on Wednesday, Blinken said the State Department informed the Solomon Islands' government that the opening of the new embassy in the capital Honiara became official as of Jan. 27.
"The opening of the embassy builds on our efforts not only to place more diplomatic personnel throughout the region, but also to engage further with our Pacific neighbors, connect United States programs and resources with needs on the ground, and build people-to-people ties," he said.
The U.S. move comes amid concerns among Washington and its allies about Beijing's military ambitions in the Indo-Pacific region after it struck a security pact with the Solomon Islands last year.
In September, U.S. President Joe Biden hosted Pacific island leaders in a Washington summit at which he pledged to help stave off China's "economic coercion" and promised to work harder with allies and partners to address islanders' needs.
A joint declaration between Washington and 14 Pacific island states resolved to strengthen their partnership and said they shared a vision for a region where "democracy will be able to flourish."
Those endorsing the document included the Solomons Prime Minister Manasseh Sogavare, whose government had earlier indicated it would not sign, heightening concerns about his ties to China.
On Monday, the remote atoll nation of Kiribati said it would rejoin the Pacific Islands Forum, ending a split that had threatened unity at a time of increased superpower tensions in the strategically located region.
Kiribati switched diplomatic recognition from self-ruled but Chinese-claimed Taiwan to Beijing in 2019, as did the Solomons.
The reopening of the embassy in the Solomons comes as Washington has been negotiating the renewal of cooperation agreements with three key Pacific island nations, the Marshall Islands, the Federated States of Micronesia and Palau.
Under Compacts of Free Association (COFA) first agreed in the 1980s, Washington retains responsibility for the islands' defense and exclusive access to huge swaths of the Pacific.
Washington said it signed memorandums of understanding last month with the Marshall Islands and Palau and had reached consensus with them on terms of U.S. future economic assistance, but has not provided details. (Reuters)
February
White House: U.S. Has No Hostile Intent Toward North Korea
Written by Nur Yasmin
The White House on Wednesday rejected North Korean accusations that joint military exercises in the region are a provocation and said the United States has no hostile intent toward Pyongyang.
"We have made clear we have no hostile intent toward the DPRK (North Korea) and seek serious and sustained diplomacy to address the full range of issues of concern to both countries and the region," said a spokesperson for the White House National Security Council.
The White House comment came after North Korea's Foreign Ministry said that drills by the United States and its allies have pushed the situation to an "extreme red-line" and threaten to turn the peninsula into a "huge war arsenal and a more critical war zone."
The statement, carried by state news agency KCNA, said Pyongyang was not interested in dialogue as long as Washington pursues hostile policies.
The White House statement reiterated a U.S. willingness "to meet with DPRK representatives at a time and place convenient for them."
"We reject the notion that our joint exercises with partners in the region serve as any sort of provocation. These are routine exercises fully consistent with past practice," the official said.
"The United States is continuing to work closely with allies and partners to ensure peace and stability in the region. At the same time, we will continue to work with allies and partners to fully enforce UN Security Council resolutions that reflect the will of the international community and to limit the DPRK’s ability to advance its unlawful weapons programs and threaten regional stability," the official said. (reuters)
February
Pakistan Says Mosque Bomber Wore Police Uniform, Breached Security on Motorbike
Written by Nur Yasmin
The suicide bomber who killed more than 100 people at a mosque in a police compound in the Pakistan city of Peshawar this week wore a police uniform and entered the high security area on a motorbike, a provincial police chief said on Thursday.
The bomber behind Monday's attack had been identified as a member of a militant network, Moazzam Jah Ansari, police chief of Khyber Pashtunkhwa province, told reporters without giving further details.
"I admit this was a security lapse. My men could not stop it. This is my fault," Ansari said.
The bombing was the deadliest in a decade to hit Peshawar, a northwestern city that has suffered decades of Islamist militant violence and is located near the restive Pashtun tribal lands bordering Afghanistan.
It took place as hundreds of worshippers gathered for noon prayers at a mosque that was purpose built for the police and their families inside the high-security Police Lines district.
Ansari said the CCTV footage showed the bomber, wearing a helmet and a mask, riding his motorbike through the main checkpoint of Police Lines. He then parked his bike, asked directions to the mosque and walked there, Ansari added.
"The police guards at the main entrance thought he was a member of the force; they didn't check him," Ansari said.
A day earlier, the police chief said investigators were not ruling out that the attacker could have had "internal assistance". Several suspects were in police custody, he said.
All but three of those killed were police officers, making it the worst attack on Pakistani security forces in recent history.
Police Lines is a colonial-era, self-contained encampment in that houses middle- and lower-ranking police personnel and their families in the provincial capital. Hundreds of police staged demonstrations across the province to protest the attack.
The most active militant group in the area, the Pakistani Taliban, also called Tehreek-e-Taliban Pakistan (TTP), has recently increased attacks on police in the northwestern province as part of its campaign against the government in Islamabad.
The TTP has denied responsibility for the mosque attack.
Pakistani officials say they suspect a breakaway faction of the TTP called Jamat-ul-Ahrar was involved.
Jamat-ul-Ahrar has claimed responsibility for several major attacks in the region over the years, including the twin suicide bombings at All Saints Church that killed scores of worshippers in September 2013, in what remains the most deadly assault on the country's Christian minority. (reuters)
February
Hong Kong says 'Hello' to Woo Back Visitors after COVID Isolation
Written by Nur Yasmin
Hong Kong leader John Lee unveiled on Thursday a promotion campaign that will include 500,000 free flights to lure visitors, businesses and investors back to the financial hub after more than three years of tough COVID-19 curbs.
The "Hello Hong Kong" campaign launched with dancers and flashing neon lights in the city's main convention centre beside its famous harbour, with a backdrop carrying the slogan in various languages, including Russian and Spanish.
Lee, speaking in English, said the campaign would show the city was open for tourism and was aimed at boosting business and investment in the Chinese special administrative region.
"Hong Kong is now connected to mainland China and the whole international world, and there will be no isolation, no quarantine and no restrictions on experiencing ... enjoying the hustle and bustle of Asia's world city," he added.
Officials from the city's tourism, trade and aviation departments also attended the launch.
Hong Kong was largely sealed off behind closed borders for much of the past three years in a bid to ward off COVID, with mandatory quarantine of up to three weeks for arrivals, as well as intensive testing and screening.
The former British colony closely followed China's zero-COVID policy until the middle of 2022, when it began to gradually unwind its rules.
Hong Kong dropped most of the rest in December, but mask-wearing remains mandatory except during exercise, along with daily rapid antigen testing for students.
There remains a quota system for travellers between the mainland and Hong Kong and a COVID test requirement. Three of Hong Kong's border checkpoints with China have remained closed.
In December, China said it would scrap most of its COVID curbs and in January, it reopened its borders to the world, despite a surge in infections.
Many in Hong Kong deplored the COVID rules as threatening the city's competitiveness and standing as an international financial centre, especially after a period of political tension over pro-democracy protests.
"GOOD STORIES"
Lee said Hong Kong would host sports and cultural events and highlight attractions such as the Palace Museum and M+ museum, as well as a revamped Peak Tram with special vouchers.
Upcoming events include the Clockenflap music festival, Hong Kong marathon and the Rubgy Sevens tournament.
Hong Kong celebrities, officials and business executives featured in promotional videos streamed during the ceremony that would be used to promote the city, Lee said.
"We have to let outsiders know that Hong Kong has a unique status, especially when the ‘one country, two systems’ principles will be implemented in Hong Kong for a long time," he added.
Airlines Cathay Pacific (0293.HK), Hong Kong Express and Hong Kong Airlines will receive free flight tickets to be distributed to overseas visitors for six months from March 1, officials said. (reuters)
February
Lebanon to Devalue Currency by 90% on Feb. 1, Central Bank Chief Says
Written by Nur Yasmin
Lebanon will adopt a new official exchange rate of 15,000 pounds per U.S. dollar on Feb. 1, central bank governor Riad Salameh said, marking a 90% devaluation from its current official rate that has remained unchanged for 25 years.
The shift from the old rate of 1,507 to 15,000 is still far off the parallel market, where the pound was changing hands at around 57,000 per dollar on Tuesday.
The change will apply to banks, Salameh said, leading to a decrease in the equity of the institutions at the centre of the country's 2019 financial implosion.
Analysts expect the shift to have less impact on the wider economy, which is increasingly dollarized and where most trades take place according to the parallel market rate.
The pound has lost some 97% of its value since it began to split from the 1,507 rate in 2019.
Salameh told Reuters that commercial banks in the country "will see the part of their equity that is in pound decrease once translated into dollars at 15,000 instead of 1,500."
In order to ease the impact of this shift, banks would be given five years "to reconstitute the losses due to the devaluation," he said.
Salameh said the change to 15,000 was a step towards unifying multiple exchange rates, in line with a draft agreement Lebanon reached with the International Monetary Fund last year that set out conditions to unlock a $3 billion bailout.
Several rates remain, including the official rate, the central bank's Sayrafa exchange platform rate which currently stands at 38,000 pounds per U.S. dollar, and the parallel market rate.
'FIVE-YEAR RUNWAY'
The IMF has favored an immediate unification of rates and has said Lebanese authorities should deal upfront with an estimated $70 billion in financial sector losses - widely viewed as the result of decades of profligate spending, corruption and mismanagement.
But draft government plans have proposed a more long-term approach. One analyst, Mike Azar, said the five-year period to reconstitute losses was inconsistent with the IMF's view that the losses must be dealt with quickly.
Without a comprehensive bank restructuring framework, banks would have to raise capital from shareholders to cover their losses or pass losses on to depositors by allowing them to withdraw from dollar accounts in local currency, he said.
"They can't do that immediately, so the central bank is giving them a five-year runway to do it," said Azar, a former economics professor at Johns Hopkins University.
The IMF deal is widely seen as the only way for Lebanon to begin restoring confidence in its financial system and recover from the collapse.
The change in the exchange rate is not expected to ease one of the most debilitating aspects of the crisis for ordinary Lebanese - the inability to freely access their dollar savings.
While capital controls have never been formally imposed in Lebanon, banks since 2019 have imposed their own controls, severely limiting withdrawals in dollars and Lebanese pounds. (Reuters)
February
U.S. Readies $2 Billion-Plus Ukraine Aid Package with Longer-Range Weapons
Written by Nur Yasmin
The United States is readying more than $2 billion worth of military aid for Ukraine that is expected to include longer-range rockets for the first time as well as other munitions and weapons, two U.S. officials briefed on the matter told Reuters on Tuesday.
The aid is expected to be announced as soon as this week, the officials said. It is also expected to include support equipment for Patriot air defense systems, precision-guided munitions and Javelin anti-tank weapons, they added.
One of the officials said a portion of the package, expected to be $1.725 billion, would come from a fund known as the Ukraine Security Assistance Initiative (USAI), which allows President Joe Biden's administration to get weapons from industry rather than from U.S. weapons stocks.
The USAI funds would go toward the purchase of a new weapon, the Ground Launched Small Diameter Bomb (GLSDB) made by Boeing Co (BA.N), which have a range of 94 miles (150 km). The United States has rebuffed Ukraine's requests for the 185-mile (297-km) range ATACMS missile.
The longer range of the GLSDB glide bomb could allow Ukraine to hit targets that have been out of reach and help it continue pressing its counterattacks by disrupting Russia further behind its lines.
Reuters first reported on Boeing's proposal to field GLSDB for Ukraine in November. At the time it was expected GLSDB could be in Ukraine by spring.
GLSDB is made jointly by SAAB AB (SAABb.ST) and Boeing. It combines the GBU-39 Small Diameter Bomb (SDB) with the M26 rocket motor, both of which are common in U.S. inventories.
GLSDB is GPS-guided, can defeat some electronic jamming, is usable in all weather conditions, and can be used against armored vehicles, according to SAAB's website. The GBU-39 - which would function as the GLSDB's warhead - has small, folding wings that allow it to glide more than 100km if dropped from an aircraft and hit targets as small as 3 feet (1 meter) in diameter.
The USAI funds would also be used to pay for more components of HAWK air defenses, counter drone systems, counter artillery and air surveillance radars, communications equipment, PUMA drones, and spare parts for major systems like Patriot and Bradley, one of the officials said.
There was also a significant amount of medical equipment - enough to equip three field hospitals being donated by another ally, the official added.
The White House declined to comment. The contents and size of aid packages can shift until they are signed by the president.
In addition to the USAI funds, more than $400 million worth of aid was expected to come from Presidential Drawdown Authority funds, which allows the president to take from current U.S. stocks in an emergency.
That aid was expected to include mine-resistant ambush-protected vehicles (MRAPs), guided multiple launch rocket systems (GMLRS) and ammunition.
The U.S. has sent approximately $27.2 billion worth of security assistance to Ukraine since Russia's February 2022 invasion. Russia calls the invasion a "special operation". (Reuters)
February
NATO, Japan Pledge to Strengthen Ties in Face of 'Historic' Security Threat
Written by Nur Yasmin
NATO chief Jens Stoltenberg and Japanese premier Fumio Kishida pledged on Tuesday to strengthen ties, saying Russia's invasion of Ukraine and its growing military cooperation with China had created the most tense security environment since World War Two.
The comments came in a statement issued during Stoltenberg's trip to Japan following a visit to South Korea on which he urged Seoul to increase military support to Ukraine and gave similar warnings about rising tension with China.
"The world is at a historical inflection point in the most severe and complex security environment since the end of World War II," the two leaders said in the statement.
It also raised concerns about Russia's nuclear threats, joint military drills between Russia and China near Japan, and North Korea's development of nuclear weapons.
Stoltenberg told reporters a Russian victory in Ukraine would embolden China at a time when it is building up its military, "bullying its neighbours and threatening Taiwan".
He added, "This war is not just a European crisis, but the challenge to the world order.
"Beijing is watching closely, and learning lessons that may influence its future decisions. What is happening in Europe today could happen in East Asia tomorrow."
China's foreign ministry did not immediately respond to a request for comment on Stoltenberg's latest remarks.
Responding to similar comments Stoltenberg made during his Seoul visit, China on Monday said it was a partner to countries, not a challenge, and that it did not threaten any nation's interests or security.
While the North Atlantic Treaty Organisation groups 30 countries in Europe and North America, Stoltenberg has said its members are affected by global threats.
Kishida and South Korean President Yoon Suk-yeol became the first leaders from their countries to attend a NATO summit last year, joining as observers.
China has previously criticised NATO's efforts to expand its alliances in Asia. Russia, which calls its invasion of Ukraine a "special operation", has repeatedly cast NATO's expansion as a threat to its security.
In December, Japan unveiled sweeping plans to beef up its defence capabilities, changes once unthinkable for a pacifist country that will make it the third-biggest military spender after the United States and China.
Bolstering its cooperation with NATO in areas from maritime security and arms control to cyberspace and disinformation will further help to respond to the changing strategic environment, the statement added.
The meeting comes as Japan prepares to host the annual Group of Seven (G7) summit in May, when Russia's invasion of Ukraine is expected to be a major topic of discussion.
Kishida is considering visiting Kyiv in February to reinforce his support for Ukraine in the conflict, domestic media have said. (Reuters)
February
Austin's Manila Visit to Bring Deal on Expanded Base Access - Philippines Official
Written by Nur Yasmin
U.S. Defense Secretary Lloyd Austin's visit to the Philippines this week is expected to bring an announcement of expanded U.S. access to military bases in the country, a senior Philippines official said on Wednesday.
Washington is eager to extend its security options in the Philippines as part of efforts to deter any move by China against self-ruled Taiwan, while Manila wants to bolster defense of its territorial claims in the disputed South China Sea.
Austin arrived in Manila on Tuesday night, and will meet his Philippine counterpart and other officials on Thursday "to build on our strong bilateral relationship, discuss a range of security initiatives, and advance our shared vision of a free and open Pacific," he said on Twitter.
On Wednesday morning, Austin visited U.S. troops stationed at a Philippine military camp in the southern city of Zamboanga, according to Roy Galido, commander of the Western Mindanao Command.
"Our working relationship to them is very strong," Galido told reporters, adding that U.S. troops help in counter terrorism, and humanitarian and disaster response missions.
U.S. officials have said Washington hopes for an access agreement during Austin's visit, which began on Tuesday, and that Washington has proposed additional sites under an Enhanced Defense Cooperation Agreement (EDCA) dating back to 2014.
"There's a push for another four or five of these EDCA sites," the a senior Philippines official said. "We are going to have definitely an announcement of some sort. I just don't know how many would be the final outcome of that."
The official declined to be named because of the sensitivity of the matter.
Manila and Washington have a mutual defense treaty and have been discussing U.S. access to four additional bases on the northern land mass of Luzon, the closest part of the Philippines to Taiwan, as well as another on the island of Palawan, facing the disputed Spratly Islands in the South China Sea.
EDCA allows U.S. access to Philippine bases for joint training, pre-positioning of equipment and building of facilities such as runways, fuel storage and military housing, but not a permanent presence. The U.S. military already has access to five such sites.
The Philippines official said increased U.S. access needed to benefit both countries.
"We don't want it to be directed to just for the use of the United States purely for their defense capabilities ... it has to be mutually beneficial," he said.
"And obviously, we want to make sure that no country will see ... anything that we're doing ... was directed towards any conflict or anything of that sort," he added.
Manila's priorities in its agreements with Washington were to boost its defense capabilities and interoperability with U.S. forces and to improve its ability to cope with climate change and natural disasters, the official said.
He said that after cancelling an agreement for the purchase of heavy-lift helicopters from Russia last year, Manila had reached a deal with Washington to upgrade "a couple" of Blackhawk helicopters that could be used for disaster relief.
"The deal with Russia was very attractive because for a certain budget we were able to get something like 16 of these heavy-lift helicopters," the official said. "Now with the United States, obviously their helicopters are more expensive, so we're looking at how we can fit in the budget that we've had."
Gregory Poling, a Southeast Asia expert at Washington's Center for Strategic and International Studies think tank, said access to sites in northern Luzon would help U.S. efforts to deter any Chinese move against Taiwan by putting the waters to the south of the island within range of shore-based missiles.
He said the U.S. and Philippine marines were pursuing similar capabilities with ground-based rockets, with Manila's particular interest being to protect its South China Sea claims.
The Philippines is among several countries at odds with China in the South China Sea and has been angered by the constant presence of vessels in its exclusive economic zone it says are manned by Chinese militia. China is also Manila's main trading partner. (Reuters)
February
Macau Casino Revenues Surge in Jan After COVID Rules Lifted
Written by Nur Yasmin
Macau posted an 82.5% year-on-year rise in gambling revenue to 11.6 billion patacas ($1.4 billion) in January, after the world's biggest gambling hub had nearly half a million visitor arrivals over the week-long Lunar New Year holiday.
The crowds were the biggest in more than three years, but January's revenue was still less than half of the Lunar New Year period in 2019 prior to the COVID-19 outbreak, according to data released by Macau's government on Wednesday.
Still investors took cheer, sending shares in Macau casinos up between 3% to 5%, while executives and analysts said it was an encouraging sign of a solid recovery to come.
A special administrative region of China, Macau has seen a resurgence of tourists from the mainland since Jan. 8 after the territory dropped all COVID-19 testing requirements for inbound travellers from the mainland, Hong Kong and Taiwan.
Tens of thousands of tourists streamed daily into Macau's casinos and picturesque cobbled streets over the Lunar New Year holiday from Jan. 21, a stark contrast to the dearth of visitors into the former Portuguese colony since 2020.
Macau is the only place in the country where gambling in casinos is legal. It had closely followed China's zero-COVID strategy since 2019 and re-opened alongside the mainland.
January's revenues were the first for Sands China (1928.HK), Wynn Macau (1128.HK), MGM China (2282.HK), Galaxy Entertainment (0027.HK), MGM China (2282.HK) and SJM Holdings (0880.HK) under new 10-year contracts.
The casinos had launched under 20-year contracts in 2002, raking in billions of dollars and turning a sleepy fishing village into a glitzy boomtown.
The new contracts, with more government oversight and control, were struck after COVID-19 restrictions decimated Macau's gambling revenues and sent net debt soaring. The industry had its worst revenue performance on record in 2022.
The city's once lucrative VIP industry has also collapsed following several arrests in Macau's junket industry. A Macau court on Jan. 18 sentenced Alvin Chau, one of the city's most well-known figures, to 18 years in prison.
NEW ERA
Casinos have committed to investing a total of $15 billion in the coming decade, 90% of which must be spent on developing non-gaming plans that include an indoor waterpark, health and wellness centres, art exhibitions and a large garden attraction by Sands, similar to Singapore's Gardens by the Bay.
Stakes are high as to whether they can successfully deliver on a government mandate to increase non-gaming revenues to more than 30% versus of the total versus an average of 5% pre-COVID.
In Las Vegas, around 50% of revenues are non-gaming.
Rob Goldstein, chairman and chief executive of Las Vegas Sands (LVS.N), majority owner of Sands China, said the company was seeing a very strong recovery in Macau since the lifting of COVID restrictions.
"We're just thrilled to be open and making money and seeing demand like we're seeing," he told an analysts call last week.
However, labour shortages are becoming apparent as resorts and retail stores rush to boost staff to keep up with demand, and a Sands executive said it was not operating some hotels at full capacity as a result. (reuters)