Gallimaufry

NORFOLK, Va., Oct. 5 /PRNewswire-FirstCall/ -- Norfolk Southern handled one of its largest cargo loadings of the last 20 years at its Pier 6 coal transloading facility at Lamberts Point in Norfolk.

On Sept. 29, Norfolk Southern loaded 152,681 net tons (138,512 metric tons) of coal into the M/V Linda Dream, destined for ThyssenKrupp Steel in Flushing, the Netherlands. The coal came from Integrity Coal and Mechel in 1,475 railroad coal cars. T. Parker Host Inc. was the ship agent/broker.

The Linda Dream loading was one of the largest since Pier 6's 1989 loading of 151,773 net tons for the Nord Atlantic, the 1991 loading of 153,263 net tons for the Doceserra, and the 1998 loading of 157,645 net tons for the M/V Irongate.

"Such a large transfer is exciting, but the real story is the continuing effectiveness of the partnership between Norfolk Southern, coal suppliers, and agents," said Danny D. Smith, NS senior vice president energy and properties. "We are proud to serve with them in the competitive transportation chain that brings the raw materials essential for making steel to the world."

Jeff G. Yates, terminal superintendent at Pier 6, praised the ability of the railroaders there. "They exemplify safe, reliable transportation," he said. "Wherever steel is used, wherever the lights come on, that's a reminder of the skill they bring to bear for our customers."

At 948 feet long and 147 feet and eight-inches wide, the Linda Dream is one of the larger vessels to call at Pier 6, though the recent length record is held by the Hyundai Continental (1,014-feet) and the recent beam record is held by the Nord Atlantic and the Venture (both 176 foot and one-inch).

Norfolk Southern has been transferring coal and coke from railroad cars into ocean-going export and domestic vessels in the Lamberts Point area since 1884, when it opened Pier 1. In the first half of the 1900s, new Piers 2-5 featured improvements in speed and capacity and even loaded coal into a number of famous vessels, such as those used in Admiral Byrd's 1933 Antarctica expedition.

Pier 6 opened for business in 1962 as the hemisphere's largest, fastest, and most efficient transloading facility. In 1999, Pier 6 dumped its billionth ton of coal and became the only facility in the world to have reached that milestone.

Most of the coal moving through Pier 6 originates in Southwest Virginia, Southern West Virginia, Eastern Kentucky, Pennsylvania, and Alabama. It is shipped to several dozen countries as well as to coastwise domestic receivers. Pier 6 is situated with access to Hampton Roads' deep 50-foot channel, which allows modern vessels to make productive use of their large holds.

Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.

Click to expand...

Oct. 6 (Bloomberg) -- Charlie, a cigarette-smoking chimpanzee, died in a South African zoo at the age of 52, the South African Press Association reported, citing Qondile Khedama, a spokesman for the Manguang municipality in the country’s Free State province.

Chimpanzees lived on average 36 to 40 years, the Johannesburg-based news service said, citing Khedama. Charlie, who had been receiving a special diet that included protein shakes and vitamin and mineral supplements, succumbed to old age yesterday, it said.

Click to expand...

Oct. 6 (Bloomberg) -- Vanguard Group Inc. cut fees for almost 2 million investors as it seeks to attract clients from higher-cost competitors and extend its lead as the largest U.S. mutual-fund company by assets.

Vanguard reduced the minimum account balances required to get the lowest fees for 52 funds, the Valley Forge, Pennsylvania-based company said today in a statement. The changes will cut fees on $90 billion of assets by about $100 million annually, Rebecca Katz, a Vanguard spokeswoman, said today in an interview.

Vanguard this year unseated Fidelity Investments as the biggest mutual-fund company by assets, largely on deposits made by investors into low-cost index funds. Assets in even cheaper exchange-traded funds have also surged. Vanguard, which popularized passive investing under founder John Bogle, manages $764 billion, or about 58 percent of its assets, in index funds, according to Katz.

“It certainly puts some heat on Fidelity,” Dan Wiener, editor of Independent Adviser for Vanguard Investors, a New York-based newsletter, said in an interview. Indexing “is really the new funds battleground.”

Fidelity has sought to win clients from Vanguard, saying on its website that three of its five largest index funds are cheaper when matched against Vanguard equivalents and industry averages. At least two of those funds are more expensive for clients investing in the least-expensive Vanguard share classes.

Lower Rate
Vanguard said clients with at least $10,000 in one of 17 index funds will now get the lower rate. Previously, that fee applied only to investors with at least $100,000 in a fund.

Calls to Fidelity’s media hotline weren’t returned immediately.

Passively managed funds account for 20 percent of all U.S. equity funds, up from 15 percent in 2000, according to according to research firm Morningstar Inc. in Chicago.

Vanguard also reduced the low-fee threshold to $50,000 for actively managed funds.

Its funds pulled in an estimated $48.8 billion in net deposits this year through August, according to Morningstar. That compares with net withdrawals at its two largest rivals, Los Angeles-based Capital Group Cos., manager of the American Funds, and Fidelity Investments of Boston.

Vanguard ETFs have drawn a net $22.6 billion this year to reach $113 billion, compared with $13.1 billion attracted by BlackRock, whose iShares ETF series has nearly three times as much in assets as Vanguard ETFs.

The average asset-weighted expense ratio for Vanguard’s lowest-priced mutual fund share class is 0.16 percent, compared with 0.17 percent for its exchange-traded funds. Investors in the next cheapest share class of mutual funds pay an average 0.27 percent.

Click to expand...

Oct. 6 (Bloomberg) -- An attack by a virus and a fungus may be the cause of a mysterious honeybee disease that has killed billions of the pollen-gathering insects and threatened the U.S. agricultural industry, University of Montana researchers say.

The virus, Invertebrate Iridescent Virus, or IIV6, seems to work together with a common fungus called Nosema to kill the bees, said the researchers, Colin Henderson and Jerry Bromenshenk, in findings published today in the online science journal PLoS ONE. The bee disease known as Colony Collapse Disorder first appeared in 2006 and causes entire hives to die off without explanation.

Honeybees pollinate $15 billion of U.S. crops each year, according to the U.S. Department of Agriculture, and companies such as General Mills Inc. and Clorox Co. use pollinated crops in their products. Scientists had looked toward viruses and fungal infections as a cause of the disorder. The disease has been reported in at least 35 states and been found in Europe, Asia and South America.

“We have a strong suspect, I’m convinced we have what it is,” Henderson, an associate professor at the university’s College of Technology, said in a telephone interview.

Since the first outbreak in 2006, the disorder has showed up in 26 percent to 36 percent of hives each year, according to a survey released in April by the Department of Agriculture. The primary indication of colony collapse is whether hives were found empty. The disorder is characterized by a massive flight of bees, which don’t return to their hives to die.

Pollinated Products
Bees are essential for the health of pollinator-dependent crops such as almonds and blueberries. Fruit-pollinated products are found in items such as Haagen-Dazs ice cream from Minneapolis-based General Mills. Lip balm made by Burt’s Bees Inc., a unit of Oakland, California-based Clorox, contains wax from the honeycombs of beehives.

Henderson and Bromenshenk began looking into the cause of the bee disorder in 2006, when the first cases appeared. They found Nosema, a single-celled fungus that was already well known, and uncovered a suspicious DNA virus, IIV6, that “nobody had looked for,” Henderson said.

“That pattern of those two showed up about 100 percent in the first infected colonies that we found,” Henderson said. When a second outbreak of the mysterious illness hit, the scientists collected more samples, and again the virus and the fungus appeared in the dead bees.

Close to Home
Then came more evidence. One of the bee colonies kept by the University of Montana researchers got the disease, and for the first time, scientists we were able to track the malady from beginning to end, Henderson said.

The tool to dig up the surprise virus from the dead bees came from a U.S. Department of Defense program meant to monitor disease outbreaks in people, specifically ones from biological weapons.

The Defense Department technology essentially took ground up bee parts and pulled out chains of proteins, some of which may have been the virus that was infecting the bees. Henderson and Bromenshenk compared the discoveries against a giant database of known proteins funded by the National Science Foundation.

“We just looked for everything,” Henderson said. What they found was IIV6, a virus that was common in moths though it wasn’t known to exist in bees.

Testing the Theory
Having identified the virus and the fungus, the researchers tested bees in the lab. First they infected the bees with the fungus alone, and some died, though not as many as with Colony Collapse Disorder. Then they infected some with just the virus, with the same result. When the combination of virus and fungus was used, the results resembled the deadly disorder that had been wiping out hives across the country, the researchers said.

The next step will be to test the theory in the field to see if it proves true, Henderson said.

“The real closure of the circle for us is to take the two pathogens to inoculate a colony, see it collapse, then pull out the pathogens again,” he said. That will allow scientists to be sure they have identified the cause, he said.

“We’re eight-tenths of the way there, in my opinion,” Henderson said.

Click to expand...

Oct. 8 (Bloomberg) -- Nassim Nicholas Taleb, author of “The Black Swan,” said investors who lost money in the financial crisis should sue the Swedish Central Bank for awarding the Nobel Prize to economists whose theories he said brought down the global economy.

“I want to make the Nobel accountable,” Taleb said today in an interview in London. “Citizens should sue if they lost their job or business owing to the breakdown in the financial system.”

Taleb said that the Nobel Prize for Economics has conferred legitimacy on risk models that caused investors’ losses and taxpayer-funded bailouts. Sweden’s central bank will announce the winner of this year’s award on Oct. 11.

Taleb singled out the Nobel award to Harry Markowitz, Merton Miller and William Sharpe in 1990 for their work on portfolio theory and asset-pricing models.

“People are using Sharpe theory that vastly underestimates the risks they’re taking and overexposes them to equities,” Taleb said. “I’m not blaming them for coming up with the idea, but I’m blaming the Nobel for giving them legitimacy. No one would have taken Markowitz seriously without the Nobel stamp.”

Markowitz, a professor of finance at the Rady School of Management at the University of California, San Diego, didn’t return a phone call seeking comment. Miller, who was a professor at the University of Chicago, died in 2000 at the age of 77.

“People used the theory and assigned numerical forecasts to the algebra,” said Sharpe, a professor of finance, emeritus, at the Graduate School of Business at Stanford University, in a telephone interview. “But I’m not going to take the blame for the numbers they put in.”

Probability Models
In his 2007 bestseller “The Black Swan: The Impact of the Highly Improbable,” Taleb described how unforeseen events can roil markets. He warned that bankers were relying too much on probability models and disregarding the potential for unexpected catastrophes.

“If no one else sues them, I will,” said Taleb, who declined to say where or on what basis a lawsuit could be brought.

The Nobel prizes in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite who died in 1896. The first awards were handed out 1901. The Swedish Central Bank founded the economics award in 1968 in memory of Nobel. Previous winners of that prize include Milton Friedman, Amartya Sen, Paul Krugman, Robert Merton and Myron Scholes.

A former derivatives trader, Taleb is a professor of risk engineering at New York University and advises Universa Investments LP, a Santa Monica, California-based fund that bets on extreme market moves.

Click to expand...

Oct. 12 (Bloomberg) -- John Browne, the former chief executive officer of BP Plc asked to review U.K. university funding, rejected the option of a graduate tax and proposed removing the current cap on tuition fees.

His report, which isn’t binding on the Conservative-Liberal Democrat coalition government, proposed students should repay government-backed loans at a rate of 9 percent of any income above 21,000 pounds ($33,300) a year, up from the current 15,000 pounds. Interest rates, currently subsidized, would be pegged to the cost of government borrowing with a rebate for low earners. Any balance would be written off after 30 years.

The proposals published in London today were welcomed by universities, which expect to see the amount of money they get from the government fall as the coalition seeks to eliminate the record budget deficit. They present a problem for Liberal Democrat Deputy Prime Minister Nick Clegg, who fought the May 6 election calling for the abolition of tuition fees and may struggle to stop his lawmakers voting against the plan.

“Under our proposals, the bottom 20 percent of earners will pay less than today and only the top 40 percent will pay back close to the full amount,” Browne said in a statement setting out why he preferred his proposals to a graduate tax, as proposed by some. “The money will follow the student who will follow the quality.”

‘Remain Competitive’
The existing cap on fees, set at 3,290 pounds a year, should be lifted, Browne said. Universities that charge more than 6,000 pounds a year should pay a levy to help support the poorest students, and those charging more than 7,000 pounds should have to demonstrate that this was justified to government.

“Different courses in different places need different amounts of money to remain competitive,” Browne told BBC television.

The Russell Group, which represents 20 leading British universities including Oxford, Cambridge and Edinburgh, welcomed the proposals. “These recommendations could make or break our world-class universities,” Director-General Wendy Piatt said. “That’s because, bluntly, our leading institutions will not be able to compete with generously funded universities in other countries if they are not able to secure extra funding.”

The National Union of Students, which had campaigned for a graduate tax, attacked the report. “Browne’s review would hand universities a blank check and force the next generation to pick up the tab for devastating cuts to higher education,” Aaron Porter, its president, said on the NUS website. “The only thing students and their families would stand to gain from higher fees would be higher debts.”

Cable Response
Business Secretary Vince Cable, a Liberal Democrat whose department oversees universities, will give a response to the report at 3.30 p.m. in London today. “We think the report is broadly on the right lines,” Cable told BBC radio today. “All parties have had difficulty with this issue.”

On Oct. 9, Cable e-mailed members of the Liberal Democrats, telling them that while a graduate tax was “superficially attractive,” it “fails both the tests of fairness and deficit reduction.”

The opposition Labour Party, which introduced tuition fees under Tony Blair, has since moved away from the idea with its newly elected leader, Ed Miliband, backing a graduate tax under which higher earners pay more. Business spokesman John Denham said in a statement today that Browne’s report implies a two- thirds cut in government funding to higher education.

“The system must be fair, progressive, sustainable, and ensure that students can choose the course most suited to them and not be forced to shop around for the cheapest course,” Denham said. “We are concerned that many graduates will be shackled by debt for the majority of their working lives; that those on middle incomes in typical graduate jobs may pay more than their fair share and the highest earners will pay less and be free of debt much earlier.”

Click to expand...

Oct. 14 (Bloomberg) -- When Peter Malyshev was a graduate student with a part-time job at the Commodity Futures Trading Commission in 2001, he’d walk into the red-brick building near Washington’s Dupont Circle and find the lobby almost deserted.

Now an attorney for Winston & Strawn LLP who represents clients including Goldman Sachs Group Inc., Malyshev said he’s more likely these days to encounter a small regiment lining up for visitor badges. Lawyers, bank executives and hedge fund managers are seeking to influence the biggest rewrite of Wall Street rules since the Great Depression.

The CFTC is no longer the “sleepy little agency” its then-chairwoman, Mary Schapiro, branded it in the 1990s. With power from Congress to oversee the previously unregulated $615 trillion market for over-the-counter derivatives, it has become one of the hottest lobbying spots in town.

“These companies investing in these markets have to look at the CFTC because now they have jurisdiction,” said Malyshev, 44. The firms want to “make sure the rules are right,” he said.

The fight in Congress over how to increase transparency and reduce risk in the swaps market nearly derailed the Dodd-Frank regulatory bill and it took a contentious all-night session to reach agreement on the outlines. Lawmakers left many specifics to the CFTC and the Securities and Exchange Commission, with the first drafts of some rules to be published by the end of 2010.

Since President Barack Obama signed the law July 21, calling its passage a triumph over “the furious lobbying of an array of powerful special interest groups,” those same groups have turned to regulators to try to blunt the impact on profits.

Avoiding Margin
Hedge funds have lobbied the CFTC to be excluded from categories that entail increased scrutiny and higher capital requirements. Airlines and manufacturers who use derivatives to hedge their commodity costs, as well as the dealers who arrange the hedges, want an exemption from having to post cash margin on their trades. Wall Street banks have sought to avoid caps on the number of derivatives a trader can hold.

“The number of people that have come in requesting to be exempt from the law, or to have the law delayed has literally shocked me,” said Bart Chilton, 50, a Democrat who has served as one the agency’s five commissioners since 2007. “A lot of folks are having problems coming to grips with the fact that they do have a new law, and will have to change their business models.”

In one case, Chilton said, he found himself confronting the same lobbyist representing three different companies in the space of two weeks. With each meeting, the attorney argued that his client was exempt from the law, or that implementation ought to be put off, said Chilton, who declined to name the lawyer.

‘Unprecedented’
“The volume and intensity of the lobbying is unprecedented in my experience at the agency,” Chilton said. “They all have an ask. The types of loopholes that people are suggesting exist are either non-existent or very farfetched.”

After the Dodd-Frank bill passed, CFTC Chairman Gary Gensler announced that the commission would post the names of anyone who came to discuss the rules. According to the agency’s website, there were more than 230 meetings from July 26 through Oct. 8. Among the firms were Cargill Inc., Vitol Group, JPMorgan Chase & Co.,Morgan Stanley, and Bloomberg LP, parent company of Bloomberg News, which has a swaps trading platform, according to testimony and documents the companies have provided to the CFTC.

In September alone, participants included 14 people from Morgan Stanley, 18 from Goldman Sachs and about a dozen from the Air Transport Association, the airline trade group.

Lobbying Began Early
The lobbying began before the legislation was passed as firms anticipated new rules. As of early August, the commission had met with 126 different companies this year, according to lobbying records examined by the Washington-based Center for Responsive Politics. That was the highest since the center began tracking the records in 1998, 20 percent higher than in all of 2009 and 68 percent higher than in 2008.

Consumer advocates said they hoped the regulators would fulfill the intent of lawmakers and not weaken oversight. “It would send a message that the rulemaking process isn’t for sale to the highest bidder,” said Barbara Roper, director of investor protection at the Consumer Federation of America, who has met with the CFTC to discuss business conduct standards.

Commissioner Scott O’Malia, 42, a Republican who was appointed last year, said the agency invited the input. “People have an interest in how the market turns out. They are businesses, and we get that,” he said. Still, he said, “If anyone is coming in trying to change the statute through rulemaking, they are fooling themselves.”

‘How Did You Get That Client?’
Not all participants are pleased to have their visits posted on the Web. Malyshev said the publicity interferes with attorney-client privilege. “People are calling me asking, ‘Hey, how did you get that client?’” said Malyshev, who according to the CFTC site also represents Barclays Plc and MarkitServ, a company that processes derivatives trades.

Derivatives are financial instruments based on the value of another security or benchmark. Congress took aim at the industry after soured trades on mortgage derivatives tipped the U.S. economy into the deepest recession since the 1930s. The legislation was named for its primary authors, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and House Financial Services Chairman Barney Frank, a Massachusetts Democrat.

The law gives the CFTC jurisdiction over commodity, interest rate and some credit default swaps, the largest share of the derivatives markets. The financial stakes are high. U.S. commercial banks held derivatives with a notional value of $223.4 trillion in the second quarter, according to the Office of the Comptroller of the Currency. Those banks reported trading revenue of $6.6 billion in the quarter, a gain of 28 percent from the same period a year earlier.

Morgan Stanley Visit
Morgan Stanley, which holds a notional $44 billion in its commercial bank’s derivatives portfolio, sent a team of four to the commission on Oct. 4, according to the CFTC website. The subject was how regulators should define broad terms in the law, including “major swap participant.” Companies put in that category would face more regulatory scrutiny and higher capital requirements.

Morgan Stanley met with three CFTC staff members and five staff members from the SEC, arguing that the decision on whether a firm is a major swap participant shouldn’t turn on whether it is highly leveraged, a standard that Congress wrote into the law.

“No single leverage test is appropriate due to vast differences in business models,” the bank said, according to the Sept. 20 comment letter filed with the SEC and CFTC and posted online as materials used during the meeting.

Rulemaking Teams
Most of the rules must be completed by July, including public comment periods that last 30 days or more plus the months it will take the commission’s staff to review comments from industry. To manage the schedule, the commission has created 30 rulemaking teams, Gensler told the Senate Banking Committee on Sept. 30.

Gensler has asked Congress to increase the agency’s budget by 69 percent next year to $286 million and predicts the agency’s budgeted staff of about 650 will need to grow to more than 1,000 to meet its new demands.

Roper of the Consumer Federation, who celebrated the enactment of the law, said she sees danger in the endgame.

“Every single provision in the bill is dependent on regulators doing well, which is exactly what regulators did very badly in the run-up to the crisis,” she said. “There really is a question as to whether we can do anything differently this time.”

Click to expand...

In 1993, the EPA published a report claiming that SHS [sometimes known as Environmental Tobacco Smoke - ETS] causes 3000 deaths from lung cancer every year.

Anyone doubting this result has been subject to attack and depicted as a toady of the tobacco lobby. The attacks have been led by a smear blog called “DesmogBlog,” financed by a shady Canadian PR firm of James Hoggan, and have been taken up with great enthusiasm by a self-styled “science historian,” Professor Naomi Oreskes.

The ultimate purpose of these attacks, at least in my case, has been to discredit my work and publications on global warming. I’m a nonsmoker, find SHS to be an irritant and unpleasant, and have certainly never been paid by Phillip Morris and the tobacco lobby, and have never joined any of their front organizations, like TASSC [The Advancement of Sound Science Coalition].

So what is the truth about SHS and lung cancer? I’m neither an oncologist nor a chemical toxicologist, but I do know some statistics, which allows me to examine the EPA study without bias [I personally believe that SHS cannot be healthy].

I can demonstrate that the EPA fudged their analysis to reach a predetermined conclusion – using a thoroughly dishonest procedure. They made three major errors: 1) They ignored publication bias, that is, studies that do not produce significant results are seldom published, 2) They shifted the confidence intervals, 3) They drew unjustified conclusions from a risk ratio that was barely greater than 1.0. My opinions are independently confirmed by the Congressional Research Service [CRS-95-1115], and by a lengthy judicial analysis by Judge William Osteen [all available on the Internet].

1) Since none of the epidemiological studies provided a clear answer, EPA carried out a “meta-analysis”. Unfortunately, this approach ignores “publication bias”, i.e., the tendency for investigators not to publish their studies if they do not give a positive result.
2) The EPA in order to calculate a risk ratio, moved the confidence intervals from 95% to 90% — and said so openly.
3) Even so, their risk ratio was just a little above 1.0 – whereas epidemiologists ignore any result unless the RR exceeds 2.0.

To sum up, while we cannot give specific answers for lung cancer cases or other medical issues connected SHS, we can state with some assurance that the EPA analysis is worthless.

Click to expand...

Oct. 19 (Bloomberg) -- German Vilimelis heard about Spain’s solar gold rush from his brother-in-law in 2007.

Across the plains around Lerida, the northeastern Spanish town where they spent weekends, farmers were turning over their fields to photovoltaic panels to capitalize on government solar- energy subsidies. Vilimelis persuaded his father, Jaume, who made a living growing pears on 5 acres (2 hectares) of land in Lerida, to turn over a portion of his farm for the project, Bloomberg Markets reported in its November issue.

Vilimelis, 35, a procurement manager for a consumer goods company, pooled his family savings and mortgaged his apartment to obtain a loan of more than 400,000 euros ($558,500) to cover the investment. Within nine months, the family’s 80-kilowatt generation unit -- 500 solar panels on seven racks angled toward the sun -- was feeding power into the national grid.

Solar investors such as Vilimelis were lured by a 2007 law passed by the government of Prime Minister Jose Luis Rodriguez Zapatero that guaranteed producers a so-called solar tariff of as much as 44 cents per kilowatt-hour for their electricity for 25 years -- more than 10 times the 2007 average wholesale price of about 4 cents per kilowatt-hour paid to mainstream energy suppliers.

Thanks to the incentives, the family met the monthly cost of the loan and even earned a small profit. Once the debt was paid off in 2018, Vilimelis looked forward to making even more money during the 15 additional years of subsidies guaranteed under Spanish law.

‘You Feel Cheated’
Now Vilimelis and more than 50,000 other Spanish solar entrepreneurs face financial disaster as the policy makers contemplate cutting the price guarantees that attracted their investment in the first place.

“You feel cheated,” he says. “We put our money in on the basis of a law.”

Zapatero introduced the subsidies three years ago as part of an effort to cut his country’s dependence on fossil fuels. At the time, he promised that the investment in renewable energy would create manufacturing jobs and that Spain could sell its panels to nations seeking to reduce carbon emissions.

Yet by failing to control the program’s cost, Zapatero saddled Spain with at least 126 billion euros of obligations to renewable-energy investors. The spending didn’t achieve the government’s aim of creating green jobs, because Spanish investors imported most of their panels from overseas when domestic manufacturers couldn’t meet short-term demand.

Stark Lesson
Spain stands as a lesson to other aspiring green-energy nations, including China and the U.S., by showing how difficult it is to build an alternative energy industry even with billions of euros in subsidies, says Ramon de la Sota, a private investor in Spanish photovoltaic panels and a former General Electric Co. executive.

“The government totally overshot with the tariff,” de la Sota says. “Now they have a huge bill to pay -- but where’s the technology, where’s the know-how, where’s the value?”

U.S. President Barack Obama highlighted solar energy as part of his plan to create green jobs this month with a decision to install photovoltaic panels on the roof of the White House. The government also approved the first large-scale solar-power projects on public land. Dublin-based utility NTR Plc and Chevron Corp. will build plants in California generating enough electricity between them to power about 600,000 homes.

Sun Surplus
At first glance, Spain appears to be the perfect incubator for a solar-energy revolution. Thanks to its location in southern Europe, the country’s land mass receives 900,000 terawatt-hours of irradiation from the sun each year, according to the European Commission -- more than 3,000 times the power used annually by its citizens. In contrast, Germany, Europe’s largest economy, receives less than half that amount of irradiation. (A terawatt-hour streams enough power to run 1 billion washing machines for 60 minutes.)

The challenge for Spain was to transform that free resource into an industry that made economic sense and attracted investors. The first problem lawmakers encountered was price. Solar power, like wind and other renewable-energy sources, can’t yet compete on price against electricity generated from natural gas or coal.

Power from the most-efficient photovoltaic plants costs utilities about $275 per megawatt-hour to produce compared with about $60 for a coal-fired plant, according to Bloomberg New Energy Finance. The cost of electricity from coal is held down in part by a plentiful supply of the mineral from established mines.

Miscalculation
Spanish policy makers reasoned that generous subsidies would help the country meet its goal of 400 megawatts of installed solar power by 2010 as well as spur the development of a manufacturing industry.

The feed-in tariff proved too successful in luring investors. By the end of 2007, solar installations had exceeded the government’s target, three years early, and the following year, investors pumped 16.4 billion euros into Spain’s solar industry, quintupling power capacity to 3,500 megawatts from 700 megawatts.

“They underestimated the technology -- how cheaply panels could be installed and how quickly they could be installed,” says Jenny Chase, Zurich-based chief solar analyst at New Energy Finance. “When you have 40 megawatts of photovoltaic panels, you don’t think that if you get it wrong, you’ll end up with 3,500 megawatts.”

Panel Demand
At the same time, Spanish installations triggered a spike in panel demand. The benchmark price of crystalline silicon panels rose to a record $4.13 per watt in the second quarter of 2008, according to BNEF, a 28 percent increase from the same period in 2004. Most of the panels installed in Spain came from China and Germany.

Renewable-energy subsidies may not help to create companies that can operate on their own, says Annie Petsonk, international counsel at the Environmental Defense Fund. Policy makers need to plan for the long term when setting up tax breaks and grants, she says.

“Attempting to stimulate the deployment of a practical technology needs to be very carefully done,” Petsonk says. “When the economy turns downward, the pressure to get rid of the subsidies can bring you crashing down.”

Zapatero’s Plan
Zapatero’s predecessor, Jose Maria Aznar, laid the foundation for Spain’s development of renewable energy. In 2004, his government shifted to revising renewable-energy subsidies every four years instead of annually, which meant project revenue estimates were stable enough to raise financing, according to Tomas Diaz, spokesman for the Spanish Photovoltaic Industry Association in Madrid.

When Zapatero came to power in April of the same year, his Socialist Party pushed green energy as a new source of economic growth. Under his program to create “the sustainable economy,” he funneled 6.3 billion euros into developing renewable energy and embarked on a 250 billion-euro transport plan that aims to complete a 10,000-kilometer (6,000-mile) high-speed rail network by 2020.

He also introduced subsidies of up to 20,000 euros for buyers of electric vehicles as part of a 4 billion-euro package of tax deductions, grants and subsidized loans to spur the modernization of the country’s auto industry.

‘Poster Child’
In 2007, the Spanish parliament approved Zapatero’s plan to introduce a feed-in solar tariff -- called that because it fixed the price at which producers can sell their power to the grid -- for photovoltaic plants at 10 times the wholesale rate. Spain’s number crunchers failed to anticipate the spiraling cost of an open-ended incentive, says Charles Yonts, a renewable- energy analyst at CLSA Ltd. in Hong Kong.

“Spain is the poster child of how things can go badly awry,” he says. “Far too much money was being paid out.”

Chinese panel manufacturers, thanks to their lower labor costs and ability to step up production, are best placed to benefit from any solar revolution, Yonts says.

Four of the five best-performing solar stocks this year are headquartered in China, including Qidong-based panel manufacturer Solarfun Power Holdings Co., according to data compiled by Bloomberg.

In November 2007, Zapatero unveiled a solar plant at his official residence in Madrid, with photovoltaic panels made by Spain’s Isofoton SA.

“We are a world power in this field, we are capable of exporting our technology and competing across five continents and we are today at the forefront of the renewable-energy industry,” he said.

Investment Surge
The surge in investment put Spain at the center of the solar-energy business just as Bilbao-based power company Iberdrola SA became the world’s largest producer of wind power, using turbines produced in Spain by Gamesa Corporacion Tecnologica SA. Iberdrola is the largest shareholder in Gamesa, with a 15 percent stake.

As the state’s renewable-energy costs spiraled, Zapatero reduced the subsidy for new solar parks by about a quarter starting on Sept. 30, 2008. The move virtually eliminated any new solar investment in 2009, according to the Photovoltaic Industry Association.

Isofoton, the panel maker Zapatero deployed as a symbol of the Spanish solar industry, suffered an 83 percent sales slump and its losses almost tripled to 226 million euros in 2009. In June of this year, the closely held company was taken over by Madrid-based Affirma Energy Engineering & Technology SL and South Korea’s TopTec Co., which invested 50 million euros to strengthen the company’s balance sheet.

Germany, U.S.
Zapatero said Spain’s clean-power industry employed 180,000 in 2007. During the next three years, jobs fell by a third to 116,000, according to a study by the Madrid-based Trade Union Institute of Work, Environment and Health.

Lawmakers in Germany may be repeating some of Spain’s mistakes, Chase says. New solar-generating capacity in Germany reached 713 megawatts in the first quarter, almost 10 times the amount installed in the year-earlier period, thanks to government subsidies, she says.

In the U.S., Obama has rolled out a more modest program of inducements for clean-energy investors. The U.S. economic stimulus package included about $67 billion in loans, loan guarantees, grants and tax credits for clean energy.

When Zapatero took a delegation to the White House on Oct. 13, 2009, Obama praised Spain as a model of green-energy-driven economic transformation.

‘Worldwide Leader’
“We have enormous commercial ties between our two countries, and we pledged to work diligently to strengthen them, particularly around key issues like renewable energy and transportation, where Spain has been a worldwide leader,” Obama said at a press conference.

Miguel Sebastian, the minister responsible for Spain’s industry and energy policy, traveled two weeks later to the Solar Power International trade fair in Anaheim, California, with a group of executives to boost Spain’s renewable-energy exports.

In private encounters on the trip, Sebastian was criticized by Spanish executives for gyrations in the government’s energy policy, according to Carlos Navarro, chairman of Siliken SA, Spain’s biggest solar panel maker, who was part of the delegation.

“You’re whiners,” Navarro says Sebastian told executives. Sebastian declined to be interviewed for this article; a spokesman for Zapatero declined to comment on criticisms of the government’s solar-subsidy policy.

‘Sinking’ Solar Investors
Navarro told Sebastian that the industry needed a stable set of rules to help match production to the level of demand in the market. Siliken, which is aiming to trade on the Madrid Stock Exchange by 2012, suffered a 61 percent sales slump in 2009 after Zapatero cut solar subsidies. Overseas revenue will fuel the company’s recovery this year, Navarro says.

“Sebastian was telling people that photovoltaic was a priority, while at home they are sinking us,” Navarro says during an interview at Siliken’s solar-module assembly plant near Valencia. “I’ve developed a bit of a motto: If the Socialist government says they’re going to help you, run!”

In April, after the budget deficit ballooned to 11.2 percent of GDP, Industry Ministry officials announced that the government was considering cutting the subsidies for existing solar facilities -- even though the law guaranteed those rates for 25 years.

Investor Uncertainty
The suggestion triggered outrage among the owners and operators of photovoltaic systems and caused investors to flee solar energy investments.

Because of lack of investor interest, Renovalia Energy SA and T-Solar Global SA postponed initial public offerings that aimed to raise about 300 million euros. Solar Opportunities SL suspended 1 billion euros of investment in Spanish photovoltaic plants. The price of panels fell to $1.90 per watt by the second quarter of this year.

Foreign investors also joined in on the criticism, saying that rewriting the rules would jeopardize confidence in all Spanish assets. HgCapital, Hudson Clean Energy Partners and Impax Asset Management Group Plc wrote to Zapatero on May 27 saying the move would wipe out 400 million euros of client funds they had invested in the Spanish solar industry.

“The mere discussion of such a change at high government levels is already undermining confidence in Spain as a place for foreign direct investment,” the letter said.

40 Percent Cut
In June, Sebastian told solar executives he intended to reduce subsidies to existing photovoltaic plants by almost 40 percent, according to Photovoltaic Industry Association Chairman Javier Anta, who attended the meeting.

That news plunged German Vilimelis into despair. Sacrificing about 10 tons of profitable pear production a year to turn over the 1-acre plot to solar power made sense under the original pricing system, especially as the panels required almost no maintenance. The cut would require his family to kick in their own cash every month to avoid defaulting on the loan.

“Banks are unforgiving,” he says. “It would mean no more holidays. We’d have to cut back on everything.”

Across Lerida, solar construction has stopped dead. Vilimelis and his partners face more months of uncertainty as the government keeps postponing a final decision on the subsidy levels. Should Zapatero push through the cuts, he may find that foreign investors are equally unwilling to forgive.

Click to expand...

Major combat operations in the American Revolution ended 229 years ago on Oct. 19, at Yorktown. For that we can thank the fortitude of American forces under George Washington, the siegecraft of French troops of Gen. Jean-Baptiste Donatien de Vimeur, the count of Rochambeau - and the relentless bloodthirstiness of female Anopheles quadrimaculatus mosquitoes.

Those tiny amazons conducted covert biological warfare against the British army. Female mosquitoes seek mammalian blood to provide the proteins they need to make eggs. No blood meal, no reproduction. It makes them bold and determined to bite.

Some anopheles mosquitoes carry the malaria parasite, which they can inject into human bloodstreams when taking their meals. In eastern North America, A. quadrimaculatus was the sole important malaria vector. It carried malaria from person to person, and susceptible humans carried it from mosquito to mosquito. In the 18th century, no one suspected that mosquitoes carried diseases.

Malaria, still one of the most deadly infectious diseases in the world, was a widespread scourge in North America until little more than a century ago. The only people resistant to it were either those of African descent - many of whom had inherited genetic traits that blocked malaria from doing its worst - or folks who had already been infected many times, acquiring resistance the hard way. In general, the more bouts you survive, the more resistant you are.

Malaria was all over the American South but especially prevalent in the warm, humid coastlands from Georgia to Maryland, where the climate suited mosquitoes and there were plenty of people (and other mammals) to bite.

In 1779 the British chose a "southern strategy" in their war against rebellious Americans. Since 1775, they had fought inconclusively, with the British controlling the main ports but unable to hold the countryside. To break the deadlock, they sent an army of 9,000 men, British and German (known as Hessians to the Americans) to besiege Charleston, S.C. A few victories in the South, they hoped, would inflame Southerners loyal to King George III, causing them to rise up and allow London to "Americanize" the war.

But in the South, A. quadrimaculatus were more numerous and more determined than Loyalists. South Carolina's irrigated rice plantation economy had made good mosquito country better by creating excellent breeding habitat. Every summer, hungry mosquitoes injected malaria parasites many times into almost everyone in the Lowcountry. As one German visitor put it, "Carolina in the spring is a paradise, in the summer a hell and in the autumn a hospital." The death rates, especially among small children, spiked every year from August to October as a result of malaria. Those who survived to adulthood were highly resistant.

The British army, commanded by Gen. Charles Cornwallis, consisted of lads from Britain and Germany. Very few had grown up with malaria. Most were highly susceptible. Cornwallis's army, although a superior fighting force, suffered from a malaria-resistance gap.

Eating spiders

Doctors and medicine were little help. To treat malaria, military physicians normally recommended venesection - draining 20 ounces of blood, about 10 percent of an adult's supply - sometimes supplementing that with doses of mercury or opium, and in one case applying freshly killed pigeons to the soles of patients' feet.

Fortunately, doctors were almost as scarce as hen's teeth. On their own, soldiers could try English folk remedies for ague (as malaria was known) such as eating cobwebs and spiders, drinking one's urine or tying one's hair to a tree trunk and yanking one's head so violently as to leave their hair - and illness - with the tree. These measures did no good but surely did less harm than venesection or a swig of mercury.

Only one thing 18th-century doctors prescribed against malaria did any good: bark. Powdered bark from the cinchona tree, found only on the eastern slopes of the Peruvian Andes, contained alkaloids that checked malaria. But the bark was expensive, and by 1779 it was increasingly hard for the British to get: Spain controlled the supply and had entered the war against Britain. The bark was a strategic good.

Cornwallis's army won most of its battles but suffered heavily from malaria in the summer and fall of 1780. After recovering their health in the winter, the British fled the Carolinas in April 1781 for Virginia, a move that Cornwallis believed might allow him to "preserve the troops from the fatal sickness, which so nearly ruined the Army last autumn."

He headed for healthier upland regions, but his commander in New York ordered him to the Tidewater - malaria country. Cornwallis objected, wondering about the logic of occupying a "sickly defensive post in this Bay." But orders were orders, so Cornwallis started to dig in around Yorktown in midsummer.

A speedy surrender

By late September he was besieged by a Franco-American army, recently arrived from New York and New England. After 21 days, Cornwallis surrendered a quarter of the British forces in North America, quashing British hopes in the war. A British fleet arrived five days later - too late. Cornwallis explained to his superiors that with his "force daily diminished by sickness," he could not resist the siege. He claimed that half his men were too sick to stand duty.

Why didn't the French and Americans fall ill, too? Some did, but far fewer and too late to matter. With malaria it takes about a month between infectious bite and the onset of symptoms. The British had been absorbing the parasite since June, but the Franco-Americans arrived in the Tidewater only in September. So malaria had two extra months to work its mischief in British ranks.

Moreover, most of the Americans had grown up with malaria. Those who had not suffered heavily in the week before the surrender. Malaria felled French soldiers, too, most of whom were just as vulnerable as the redcoats, but mainly after Oct. 19.

Once committed to Yorktown, Cornwallis faced a biological warfare campaign he could not counter. Mosquitoes helped the Americans snatch victory from the jaws of stalemate and win the Revolutionary War, without which there would be no United States of America. Remember that when they bite you next Fourth of July.

Click to expand...

Oct. 20 (Bloomberg) -- Lithium demand may triple in the next decade as consumers buy more portable electronics and battery-powered vehicles, said James D. Calaway, chairman of lithium miner Orocobre Ltd.

Global lithium demand of about 110,000 metric tons may double by 2020 solely from existing applications such as mobile phones and glass making, Calaway said yesterday in an interview at Bloomberg headquarters in New York. Sales to electric-vehicle battery makers will add 10,000 tons by 2015 before increasing more rapidly, he said.

“You could very easily see by 2020 the need to triple production or even more just to accommodate the auto sector,” Calaway said.

Orocobre will begin producing lithium in 2012 at its first project, Salar de Olaroz, atop salt flats in Argentina’s Jujuy province, he said. The company should become profitable the next year when output reaches 15,000 tons of lithium and 36,000 tons of potash fertilizer, he said. The Brisbane, Australia-based company may start pumping lithium-rich water from a second mine in Argentina in 2014, said Calaway, 53.

The second project, called Salar de Salinas Grandes, will boost Orocobre’s total annual lithium production to as much as 40,000 tons, making it the world’s fourth-biggest producer, Calaway said.

Toyota Partnership
Toyota Tsusho Corp., an affiliate of Toyota Motor Corp., is financing the $100 million to $120 million cost of Salar de Olaroz in exchange for a 25 percent stake in the project. Toyota also may market the mine’s lithium for Orocobre to Asian manufacturers, he said. Salinas Grandes may cost as much as $150 million and will be financed from cash generated by the first mine or with partners such as Toyota, Calaway said.

Prices for lithium carbonate, the processed form of the mineral used in lithium-ion batteries, are likely to remain in a range of $4,000 to $6,000 a ton, Calaway said. Prices fell last year as much as 20 percent from a peak of about $6,500 in 2008, and have climbed back to about $6,000, he said.

Prices may drop through 2015 if capacity increases faster than demand, Calaway said.

“We are managing our business with the assumption that it’s going to be fairly tough” through 2014, Calaway said. “And then I think we get into a fairly substantial period where you get very strong firming of prices. From 2015 through 2025, it is going to be a wonderful time to have low-cost lithium production.”

Orocobre’s cost of production will be less than output from lithium rock mines, primarily in Australia, that comprise 35 percent of global output, he said.

Orocobre fell 20 cents, or 8 percent, to C$2.29 yesterday in Toronto Stock Exchange trading.

Click to expand...

Oct. 20 (Bloomberg) -- Mike Render, an engineer who has worked for Caterpillar Inc. since the 1970s, has spent the last three years trying to break with the company’s past.

Render suggested his employer partner with a supplier to design a component that cuts emissions, rather than dictate specifications and choose the cheapest vendor. His team ended up working with 12 counterparts from catalytic-converter manufacturer Tenneco Inc. at Caterpillar’s Mossville, Illinois, engine center, where they created a mock production line to work out kinks in the manufacturing process. Output of the component at a Tenneco plant in Nebraska cut Caterpillar’s costs on the item by 20 percent.

The collaboration is a cultural shift for Caterpillar, whose suppliers in the past have complained about a lack of consultation, said Stephen Volkmann, an analyst at Jefferies & Co. in New York.

“It was, ‘Give me what I want when I want it, and the rest is your issue to manage,’” said Volkmann, who doesn’t own Caterpillar stock and has a “buy” rating on the shares. “The big change in attitude is from the servant-master relationship to more of a team-type relationship.”

Caterpillar, the largest maker of construction and mining equipment, expects the Tenneco collaboration to become a benchmark, says Chief Executive Officer Doug Oberhelman, who succeeded Jim Owens in July. It’s dramatically shrinking the number of suppliers to 6,000 from 9,000 and working more closely with 200 companies identified as critical to future growth.

Improving the supply chain is a key piece of Oberhelman’s strategy to pull 25 cents of profit from each new dollar of sales as demand in emerging markets surges. He plans to apply engineering and quality-control expertise from suppliers inside Caterpillar factories to build the company’s signature yellow- and-black machines more efficiently.

Not Prepared
His efforts come at a time when Caterpillar shares have risen 38 percent this year, leading the Dow Jones Industrial Average for the first time since 1993. That year rising home construction helped the company become profitable after two years of losses.

Caterpillar wasn’t prepared for the last increase in demand, from 2006 to 2008, and the mistake proved costly. Sales rose 24 percent in that period while profit was little changed as the company paid more for raw materials and faster delivery of parts from suppliers.

“In the next cycle, Caterpillar wants to have a better playbook,” Larry De Maria, an analyst for brokerage Sterne, Agee & Leach Inc. in New York, said in an interview Sept. 9. “It’s critical that they have wheels, tires, bearings and everything else, which is essential to maximizing returns to shareholders, return on capital and operating margins.”

Toyota, Honda
Oberhelman says he’s targeting earnings of $8 to $10 a share in 2012 on sales of close to $60 billion. Caterpillar, based in Peoria, Illinois, has forecast profit this year of $3.15 to $3.85 a share on sales of $39 billion to $42 billion. The company will report third-quarter earnings results tomorrow.

“The supply chain and supplier collaboration is a big piece of our future profit pull-through plan,” Oberhelman, 57, said in an interview at Bloomberg News headquarters in New York.

“We are still a bit behind in our supply chain efficiency,” he said. “If we get that right, the profit pulls through pretty quickly.”

Oberhelman appointed an outsider with a “deep background in supply chain collaboration” as his new chief procurement officer. Frank Crespo, who held that post at Honeywell International Inc., started work in August.

Dominant Position
Caterpillar may not have needed to focus on collaborating with suppliers in the past because of its size and dominant position in the industry, said John Henke, president of Birmingham, Michigan-based Planning Perspectives Inc. Henke has advised manufacturers on supplier relationships for more than 20 years.

“Competition is going to be based on the supply chain, not an individual company,” said Henke, who has developed an index that quantifies buyer-supplier relations. “Toyota and Honda are good because of their supply chain and great supplier relations.”

Honda Motor Co. was the leader in Planning Perspectives’ ranking for supplier relations this year, followed by Toyota Motor Corp. and Ford Motor Co. General Motors Co. is in the lower half of the survey and Chrysler Group LLC has been the lowest ranked since 2008.

Henke said improving relations with suppliers entails communication and engendering trust that would spur vendors to give manufacturers their best technology.

Middle Ground
Still, working closely with suppliers can present pitfalls. Boeing Co. in August postponed the first delivery of its 787 Dreamliner aircraft to early 2011 partly because of Rolls-Royce Group Plc’s inability to supply an engine for flight tests. Boeing is also working through quality issues in sections built by Finmeccanica SpA’s Alenia Aeronautica.

Caterpillar’s collaboration model isn’t “the absolute Japanese definition,” Oberhelman said. “It’s not the American automotive supplier collaboration, where it’s price cuts, costs down, and then you go bankrupt together. We are trying to find a spot in the middle.”

Tenneco’s experience building parts that reduce emissions for the automotive industry has benefited Caterpillar, Render said. The partners reduced the complexity of the device they worked on. They made two versions of a part used to burn soot in the emission-reduction device for Caterpillar’s various machines, compared with the 43 versions made by Caterpillar just for truck engines in 2007.

‘Rubik’s Cube’
“It’s a bit like playing a Rubik’s cube,” said Render, a Caterpillar product manager. “If we do this, what will happen? If we do that, what will happen? They helped with the innovation. Tenneco has given us a model to collaborate.”

The device Caterpillar and Lake Forest, Illinois-based Tenneco worked on to reduce diesel emissions, as required under federal law from next year, will be used in about 100 Caterpillar models including various types of excavators, backhoes, wheel loaders and bulldozers.

“When we come up with what we think is a pretty great technical innovation, the first guys we talk to are the guys at Caterpillar,” said Brent Bauer, 54, a senior vice president who oversees the project for Tenneco. “When you have everybody in the same room, there are some magical things that happen. We get great products. We optimize costs and we add speed.”

Click to expand...

The Russian government has approved a plan to privatize a wide range of state property from energy to agriculture and banking to transportation in the next five years, First Deputy Prime Minister Igor Shuvalov said.

For the first time in its history, the government may offer a quarter of Russian Railways monopoly for sale in 2013-2015 and 50 percent minus one share of the country's largest shipping company, Sovcomflot, in 2011-2013. If all company shipyards are loaded fully, the government may sell a controlling stake in Sovcomflot before 2015, Shuvalov said late on Wednesday.

In the oil sector, the government will offer up to 15 percent of the country's top oil company, Rosneft, from 2012 to diminish its controlling stake by 2015 via asset swaps. After 2015, the state's stake will continue falling to zero.

However, sales of oil transportation monopoly Transneft and Zarubezhneft, Russia's overseas oil projects operator, is not on the government's agenda, Shuvalov said.

He said Russia may sell almost eight percent of its largest hydropower producer, RusHydro, before 2013 and lower the state's stake in the company to 25 percent plus one share before 2015. The state may also sell 4.11 percent of the Federal Grid Company of Unified Energy System (FGC UES), if the share price grows to 50 kopecks per share.

In agribusiness, Russia will sell 50 percent minus one share of agricultural leasing company Rosagroleasing in 2013-2015 and 100 percent of the United Grain Company grain operator before 2013. The government will also sell a quarter of Russian Agricultural Bank, the core creditor of agriculture.

In the banking sector, Shuvalov said the government would try to complete a deal to sell 10 percent of the country's second largest bank, VTB, to a pool of investors led by TPG fund this year. It will sell another 10 percent in 2011 and 15 percent in 2012. In the future, the government plans to diminish its stakes to below a controlling share.

The government suggested the central bank cut its stake in the country's top bank, Sberbank, to control in 2011-2013. But it sees no prospects in privatizing the Agency for Housing Mortgage Lending.

Shuvalov said the government was ready to privatize Sheremetyevo International Airport in Moscow and cut its stake below a controlling share in the country's flagship airlines Aeroflot.

Click to expand...

Oct. 22 (Bloomberg) -- A British nuclear-powered submarine, HMS Astute, has run aground off Scotland’s Isle of Skye, the defense ministry said.

The 97-meter (318-foot) submarine, which was on sea trials, “grounded a rudder” at Kyle of Lochalsh shortly after 8 a.m. local time, Robert Mead, a ministry spokesman, said in a telephone interview. No other vessel was involved.

No crew members have been injured, “no part of the nuclear propulsion system has been damaged and the reactor is safe,” Mead said. The submarine will be floated at the next high tide, which is due at around 6 p.m., he said.

Astute, which was commissioned into the Royal Navy on Aug. 27, is “the U.K.’s most powerful attack submarine,” the ministry said on its website. Built by BAE Systems Plc, it is quieter than other submarines in the fleet, even though it is 50 percent bigger, and can circumnavigate the world without surfacing.

“A highly complex feat of naval engineering, she is at the very cutting-edge of technology,” First Sea Lord Admiral Mark Stanhope said on Aug 27, adding that Astute would undergo a “series of demanding seagoing trials testing the full range of the submarine’s capabilities.”

The Marine and Coastguard Agency has sent a tug to the scene to help with the salvage operation, which is being led by the navy, MCA spokesman Mark Clark said in a telephone interview.

Another submarine, HMS Trafalgar, was damaged when it ran aground during a training exercise in November 2002. An inquiry found the incident was a result of “human error.”

Click to expand...

Oct. 27 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said it found “large accumulations” of oil in a well named Barra in the Sergipe- Alagoas Basin.

http://www.brasil-rounds.gov.br/arquivos/mapas/SEAL_site_jul10.pdf

The quality of the oil is similar to that found in deepwater Campos Basin wells, Petrobras said in a regulatory filing today. The discovery has larger volumes of oil than found in the Guaricema and Dourado fields, Petrobras said. Tests indicate the presence of light oil, Petrobras said.

Click to expand...