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Exclusive-After pressure from Toyota chief, Japan emphasised support for hybrids

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© Reuters. FILE PHOTO: Toyota Motor Corporation President Akio Toyoda speaks at a briefing on the company’s strategies on battery EVs in Tokyo, Japan December 14, 2021. REUTERS/Kim Kyung-Hoon

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By Makiko Yamazaki

TOKYO (Reuters) – Toyota Motor (NYSE:TM) Corp’s chief lobbied the Japanese government to make clear it supported hybrid vehicles as much as battery electrics or face losing the auto industry’s support, a senior lawmaker told a ruling party meeting.

The lobbying by Akio Toyoda, president of Toyota and chairman of the Japan Automobile Manufacturers Association (JAMA) industry group, comes as the automaker has faced increased scrutiny from green investors who say it has been slow to embrace battery-electric vehicles and pressed governments to slow a transition to them.

Akira Amari, a former industry minister and a veteran member of the Liberal Democratic Party (LDP), requested changes to the government’s annual economic policy roadmap at a June 3 meeting, saying he had spoken with Toyoda a day earlier, according to notes and audio of the meeting reviewed by Reuters.

The final version of the document included a reference to “so-called electric-powered vehicles” and appeared to put fossil-fuel burning hybrids on equal footing with zero-emission battery vehicles, even though environmentalists say there is a vast difference.

“I spoke with Chairman Toyoda yesterday and he said that JAMA cannot endorse a government that rejects hybrids,” Amari told the policy meeting of LDP lawmakers, according to the notes and audio.

Use of synthetic fuel, such as from hydrogen, would make hybrids “100% clean energy” cars and the policy document should make that explicit, Amari said.

“If we don’t make that clear, JAMA will push back with all its might,” Amari said, according to the notes and audio.

“If we don’t say that hybrids are included in the category of electric vehicles, that won’t look good,” he said, adding that a reference to electric-powered vehicles should be changed to “so-called electric-powered vehicles”.

Amari confirmed to Reuters that he asked for the inclusion of “so-called” to make clear that electric vehicles were not limited to battery-electric vehicles and included hybrids. He said he asked for no other changes.

He confirmed that he had spoken to Toyoda.

“What Mr. Toyoda is trying to say is that hybrids running with synthetic fuels are good for the environment because they are extremely fuel efficient. He said he would be extremely unsatisfied if hybrids were rejected. That’s what he told me. He asked if the LDP were rejecting hybrids and I said that we were doing no such thing.”

Amari told Reuters that by developing synthetic fuels automakers would be able to produce zero-emission internal combustion engines. Such fuels could also be used in aircraft, which can’t run on battery power, he said.

In a statement to Reuters, JAMA said the auto industry was making every effort toward its goal of becoming carbon neutral by 2050. Since the goal was carbon neutrality, it was important to broaden options and not be limited to specific technologies, it said.

It was also necessary to respond to various situations and customer needs in each country and region, it said.

A Toyota spokesperson referred Reuters to JAMA.

NO LONGER A FOOTNOTE

The final version of the document, available online, refers to Japan’s 2035 target of all new domestic car sales being “so-called electric-powered vehicles,” and specifically mentions in the main text that such vehicles include hybrids.

An earlier draft from May 31, also available online, shows the reference to hybrids only in a footnote. The main text refers to the 2035 target as having all new car sales being “electric-powered vehicles”.

The annual policy document is of major importance for the government and serves as a framework for its future policy.

Toyota, the world’s biggest automaker by sales, has said fossil fuels, not internal combustion engines, are the problem. As well as the hybrids it popularised more than two decades ago with the Prius, it also champions hydrogen technology, although that has so far not caught on the way battery-electric cars have.

Hybrids, including plug-in hybrids, accounted for almost 44% of the new passenger cars sold in Japan last year, while battery electric vehicles accounted for less than 1%, according to data from the Japan Automobile Dealers Association.

That doesn’t include mini cars, trucks or buses.

Energy and climate think-tank InfluenceMap has rated Toyota the worst among major automakers for its lobbying record on climate policy, which includes public statements and interaction with governments.

It has been criticised by its own investors, including pension funds, over its lobbying. Denmark’s AkademikerPension has sold down most of its stake in Toyota over the last year.

Toyota last year committed 8 trillion yen ($60 billion) to electrify its cars by 2030, with half of that slated to develop battery electric vehicles. Still, it expects annual sales of such cars to reach only 3.5 million vehicles by the end of the decade, or around a third of current sales.

On Thursday, Toyota said it recalled more than 2,000 of its first mass-produced electric vehicle, the bZ4X SUV, less than two months after rolling the vehicle out, because of a risk the wheel could come loose.

It says hybrids make sense in markets where infrastructure isn’t ready to support a faster move to battery vehicles, and that customers should have more choices for cleaner technology.

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Bankman-Fried’s FTX seeking path to buy Robinhood – Bloomberg News

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© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company’s IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly

(Reuters) – Sam Bankman-Fried’s FTX crypto exchange is exploring whether it might be able to acquire Robinhood Markets Inc (NASDAQ:HOOD), Bloomberg News reported on Monday, citing people with knowledge of the matter.

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Refining Tightness to Persist, Even in a Recession – Piper Sandler

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© Reuters. Refining Tightness to Persist, Even in a Recession – Piper Sandler

By Sam Boughedda

Piper Sandler Senior analyst Ryan Todd said in a research note Monday that they believe refining tightness will persist, even through a recession.

With rising investor concerns of a recession and, to a lesser extent, fear of potential adverse policy impacts, U.S. refining stocks have pulled back by 25% since June 8th, said the analyst.

“PSC’s macro view suggests a high chance of recession in early 2023, and the historical ‘playbook’ would tell you to stay away from refiners in a recession, we see the dynamics as unique today, with margin strength driven by supply constraints, rather than demand strength,” wrote Todd. “Given system tightness, even in a severe recession (2.0 Mb/d+ of demand destruction), global utilization rates would merely approach pre-Covid ‘mid-cycle’ levels.”

As a result, the analyst reiterated HF Sinclair Corp (NYSE:DINO) as a top pick while lowering Valero Energy (NYSE:VLO) to a peer discount.

“As we have highlighted repeatedly over the last 6-9 months, global refining capacity is VERY tight, with 2022 utilization likely ~84%, well above the 5yr/10yr averages of 82%/81%,” added Todd. “Only in the case of 2.0 Mb/d of demand destruction would global refining utilization levels fall to ‘mid-cycle’ levels (81.9% vs. 82.3% 5-yr pre-Covid average). The reality is that we need some amount of demand destruction to prevent 2023 margins from surpassing 2022.”

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Mining firms poised to lead capital raisings in Canada, TSX CEO says

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© Reuters. FILE PHOTO: Visitors to the BHP (formerly known as BHP Billiton) booth speak with representatives during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren/File Ph

By Divya Rajagopal

TORONTO (Reuters) – Mining companies seeking to accelerate exploration of scarce critical minerals are set to lead capital raisings in Canada this year, the chief executive officer of the Toronto Stock Exchange said on Monday, as sectors such as technology take a back seat amid market volatility.

A big source of capital for the critical minerals sector this year is coming from large corporations like BHP Ltd and Rio Tinto (NYSE:RIO), which are throwing their weight behind junior miners to help expedite exploration projects.

Junior miners are encouraged by the Canadian government’s plan, announced in this year’s budget, to allocate C$4 billion ($3.1 billion) to critical minerals.

“I do think we are going to see a bit of a renaissance in mining that we haven’t seen in years, just given what’s happening with global demand, supply,” Toronto Stock Exchange (TSX) CEO Loui Anastasopoulos told Reuters, pointing to the focus on investments in critical minerals.

The raising of capital on the TSX by mining companies will bolster Canada’s prospects of developing its vast deposits of critical minerals, including cobalt, lithium, nickel and copper, which are key to achieving the transition away from carbon-based energy. It could also help reduce the reliance on China for critical minerals. The Asian economic superpower is home to about 50% of the global critical minerals deposits.

So far this year, mining companies listed in Canada have raised C$3.1 billion, accounting for 25% of the total capital raised on the TSX and the TSX Venture Exchange (TSXV), compared to 18% in the same period last year, TSX data shows, while overall raising of funds has dropped by about 54%. Last year, technology companies led the way among equity sectors with C$13.8 billion in funds raised, followed by mining at C$10 billion and financial services at C$6.9 billion.

The TSX is betting that mining companies looking to add critical minerals to their portfolio will help make up for some of the shortfall in capital raisings this year.

Calgary-based Lithium Chile and Toronto-based Northern Graphite Corporation lead capital raising in 2022 with a total of C$51 million through private placements. Anastasopoulos said at least six more mining companies are expected to list on the TSX this year.

‘CAUTIOUSLY OPTIMISTIC’

Investment bankers also expect the trend of large mining companies injecting capital into junior miners to continue after BHP and Rio Tinto announced their plans to invest in explorers.

In June, Rio Tinto agreed to pay C$10 million for a 10% stake in British Columbia-based Nano One Materials Corp , which is engaged in the production of cathode materials used in lithium batteries. In February, BHP bought a 5% stake in Vancouver-based copper-gold explorer Filo Mining for C$100 million.

Lauren Bermack, a partner and national deals mining leader at consulting firm PwC Canada, said when sentiment is down it becomes difficult to raise capital in mining as compared to blue-chip companies.

But since the outlook for critical minerals is strong, investors with risk appetite are looking to invest in assets that are trading at reasonable prices, she added.

Anastasopoulos of the TSX also sees upbeat sentiment for the mining sector.

“We are cautiously optimistic … but something quite interesting will happen in the mining space over the next 12 to 24 months,” he said.

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