Category Archives: Markets

Canada and its Nuclear Waste

Leave a reply

Since the 1960s,  Canada’s nuclear power plants have generated more than two million bundles of highly radioactive used fuel. And they’re all still stored on the sites of the plants that produced them.But the pace of finding a site to store Canada’s most potent radioactive waste permanently is about to pick up.  Twenty Canadian communities have said they’ll consider volunteering to host the storage site.  That list is about to close. The Nuclear Waste Management Organization, whose job it is to find and build the site, will stop taking new names on Sept. 30, 2012.  The impending cut-off is ratcheting up the pressure on the technocrats charged with selecting a site; on the boosters who want to snare the multi-billion-dollar repository for their community; on the activists who harbour deep suspicions about safety; and on the aboriginal leaders who say they’ve been cut out of the process….

A fuel bundle for a Candu nuclear power reactor is about the size of a fireplace log. As of June 30, 2011, Canada had 2,273,873 used fuel bundles stored at its nuclear plants in Ontario, Quebec and New Brunswick.  Another 85,000 or so have been added since then.  In total, they’d fill about six NHL hockey rinks, stacked up as high as the boards.

The Nuclear Waste Management Organization, formed by the three electric utilities that run nuclear reactors, wants to bury the waste deep underground in caverns excavated from stable rock, where it can lie undisturbed forever.  The depth will probably depend on the site’s geology. A facility proposed to hold less-potent radioactive waste at the Bruce nuclear site near Kincardine will be 680 metres deep. By comparison, the CN Tower is 553 metres tall.  The NWMO is looking for a “willing” community to agree to take the $16-to-$24-billion project. The host community itself will decide how to define “willing.” Candidate communities will have multiple opportunities to withdraw if they get cold feet, the NWMO says.  As it moves through a nine-stage selection process, the NWMO hopes to have narrowed the field to one or two communities by 2015, then spend until about 2020 deciding on a specific site within the chosen community.  After that, it will take three to five years to do an extensive environmental assessment of the site. The proponents will also have to satisfy the Canadian Nuclear Safety Commission that their plan makes sense, and obtain a license to construct and operate the facility.  Then, it will take six to 10 years to build. The NWMO doesn’t expect the first bundles to be stored until 2035.  The plan is to seal the waste in sturdy, radiation-proof containers and store it deep in a stable rock formation where — even if the containers were to crack and leak — there’s be no danger of contaminating groundwater used by humans. (Although that’s the current strategy, the NWMO says it would consider a different plan if compelling evidence emerged that another technique is superior.)

Current designs call for surface buildings and facilities to cover about 100 hectares (250 acres), says the NWMO’s Michael Krizanc.  “As well, there may be a need to limit activities in the immediate area surrounding the surface facilities in order to meet regulatory or other requirements.”  Underground, the excavated caverns will cover an area of about 2.5 kilometres by 1.5 kilometres. That’s 375 hectares, or 930 acres.  “The NWMO would need to have rights to the land above the repository,” says Krizanc, but “alternative uses could be considered, with the community, for portions of the land.”….

Meanwhile in Saugeen Shores, a lively battle is under way as members of a citizens group dubbed save Save Our Saugeen Shores, or SOS, fights what they see as an attempt to impose the waste site on their community on the shore of the Great Lakes….SOS also worries that U.S. power plants might be able to force Canada to take U.S. nuclear waste in a Canadian waste site, through terms of the free trade agreement between the countries…..Up in Elliot Lake, contractors Stephen Martin and Marc Brunet can’t wait for the project to start….Elliot Lake has been identified with uranium since its founding, he shrugs: “We’re the uranium capital of the world…. This thing will be a tourist attraction. I think it’s the best thing that could happen.”

John Spears, Nuclear waste seeks a home, Toronto Star, Sept. 1, 2012

Oil, Somalia and the Fnal Frontier

Leave a reply

Canadian oil and gas exploration company Horn Petroleum said  it had encountered only water in a well it drilled in Somalia’s semi-autonomous Puntland region earlier this year, the first to be sunk in the country since civil war erupted two decades ago.  The well, Shabeel North-1, reached a total depth of 3,945 metres and is now being plugged, Horn said.  Because there were no shows of oil and gas, Horn Petroleum determined a second well it drilled earlier in the year, Shabeel-1, also was dry and said the company would not test it further for hydrocarbon potential

“While we were disappointed that we were not able to flow oil from the first two exploration wells in our Puntland (Somalia) drilling campaign, we remain highly encouraged that all of the critical elements exist for oil accumulations, namely a working petroleum system,” Horn’s chairman Keith Hill said in a statement.  While there has been speculation about finding oil in the anarchic Horn of Africa country for decades, it has no proven hydrocarbon reserves. The prospect of oil beneath Dharoor’s sandy, arid plains has elicited excitement among officials of the impoverished region. The companies estimated there could be as much as 300 million barrels of recoverable oil in the northern part of Somalia.  Somalia, mired in conflict since warlords in the early 1990s and then Islamist militants reduced the government to impotence, represents one of the final frontiers in Africa to be explored.

Horn Petroleum’s Somali wells come up dry, Reuters, Aug. 28, 2012

UNESCO World Heritage: Failed States and Kleptocratic Elites

Leave a reply

UNESCO’s World-Heritage regime began life 40 years ago, when dozens of countries signed up to the idea that the world’s cultural and natural patrimony was under threat not only from “traditional causes of decay” but also because of “changing social and economic conditions”. Among those who endorsed the principle was the Republican administration of Richard Nixon, which gave remarkably high priority to conservation and the environment. (Since then, America has had a stormy relationship with UNESCO; it cut off payments to the agency last year, under a law which denies funding to any body that admits Palestine.)

In many poorer countries which host heritage sites, the biggest changes since 1972 have been exploding populations and a huge rise in global tourism, combined with a lack of the governance needed to cope with both phenomena. Angkor Wat, a temple complex in Cambodia, and the Inca fortress of Machu Picchu in Peru (pictured above) are often cited as places of world-historical importance where a vast influx of tourists may be causing serious damage. By recognising and thus publicising individual sites, UNESCO and other cultural watchdogs risk harming the cause of conservation, which would be better served if visitors to the country were spread around a broader range of places.

But there are no easy ways to maintain heritage sites in relatively poor countries; it requires delicate balancing acts, much local diplomacy and long-term engagement, according to organisations that work in that field. Even a well-functioning state, be it democratic or authoritarian, will fail to conserve monuments unless local people see an interest in maintaining their heritage and using it rationally, says Vincent Michael, new chairman of the Global Heritage Fund (GHF), based in California. The effort will collapse if cultural heritage is seen either as a pesky impediment to making money, or as something to be exploited for short-term gain. Nor should local economies ever be too reliant on tourism, which can fall as rapidly as it rises….

But in many places where sites are at risk, government either does not operate at all, or functions only in the interest of a kleptocratic elite. In some such places, so-called non-state players (from warlords to private firms to religious leaders) are about the only things that really function at all…

One of the biggest global challenges to conservation, says the WMF’s president, Bonnie Burnham, is that national agencies which control precious places (culture ministries, for example) often have no say over what goes on—in terms of development, transport or sanitation—in the surrounding areas. That is one of the obstacles to conserving Inca sites in Peru…

As part of her agency’s [UNESCO] effort to stop the traffic in stolen art, Ms Bokova  [UNESCO’s director-general]has started a dialogue—a constructive one, she says—with commercial auction houses. Perhaps she should also be talking more to tour operators, and even darker forces, from the conservationists’ viewpoint, like road-builders and mining companies.

Excerpts, The Heritage Debate: Living Treasure, Economist, July 14, 2012, at 73

Indigenous Peoples Rights and Energy Projects: the Inter-American Court of Human Rights

Leave a reply

Deep in the rainforest, the village of Sarayaku is two days by river from the nearest town. But its 1,200 Kichwa Indians are now in the spotlight. On July 25th the Inter-American Court of Human Rights ruled that Ecuador’s government had ignored the rights of Sarayaku’s residents when granting permission for an energy project—putting governments in the Americas on notice that big physical investments are not legal until the indigenous people they affect have had their say.

The dispute began in 1996 when Petroecuador, the state oil firm, signed a prospecting deal with a consortium led by Argentina’s Compañía General de Combustibles (CGC). Much of the area it covered was the ancestral land of Sarayaku’s residents, who were not consulted. CGC later offered locals medical aid for their consent. Some villages signed up, but Sarayaku held out.  Nonetheless, by early 2003 CGC had drilled 467 boreholes around the town for seismic surveying, and packed them with 1,433kg of high explosives. They were never detonated, and remain buried in the forest. As well as felling trees and destroying a sacred site, the company ruined some of Sarayaku’s water sources. Work ceased in 2003, and CGC’s contract ended in 2010.

The court found that the state had breached the villagers’ rights to prior consultation, communal property and cultural identity by approving the project, and that CGC’s tests had threatened their right to life. It ordered the government to pay damages, clear the remaining explosives and overhaul its consultation process. In future affected groups must be heard in a plan’s “first stages…not only when the need arises to obtain the approval of the community.” However, the judges did not ban prospecting on Sarayaku lands. The right to consultation does not grant a veto.

The ruling will be studied closely in the myriad Latin American countries struggling to balance big investments with local rights. A narrow reading of the decision suggests that governments must tiptoe around indigenous concerns, but can act more boldly when other groups protest, since the ruling was based partly on the International Labour Organisation’s Indigenous and Tribal Peoples Convention.

The ruling also shows that the regional justice system has not lost its mettle. In 2011 the Inter-American Commission on Human Rights, which litigates cases at the court, asked Brazil to halt work on the huge Belo Monte dam because its neighbours were not given a sufficient chance to speak up. Brazil’s government, which had authorised the dam only after a long public debate, saw this as a violation of its sovereignty. It did not comply, and stopped contributing money to the commission.  The commission was weakened by angering the region’s biggest country and by the criticism that it had exceeded its mandate. After Brazil presented new evidence in the case, the commission reversed its stance on Belo Monte. Moreover, last month the Organisation of American States voted to draft a reform plan for the commission, which some fear could strip it of important powers. Ecuador was among the commission’s loudest critics.

The Sarayaku case was not as heated as Belo Monte, since Ecuador’s government had already promised to pay damages. However, the court’s decision did strongly reassert its right to intervene in development cases. Moreover, Ecuador’s government plans to tender a big chunk of the Amazon for oil exploration later this year, despite indigenous opposition. If neither side backs down and the protesters appeal, the court’s next ruling on development in Ecuador may be far more contentious.

Indigenous rights in South America: Cowboys and Indians, Economist,July 28, 2012, at 32

For the Fear of Iran: The Nuclear Power in the Gulf

Leave a reply

Saudi Arabia is pressing ahead with its ambitious plans to develop nuclear power to meet rising electricity demand and save oil for export.  But the outlook for other Arab states is less promising because of political turmoil and a lack of financial resources.  The Saudis have built a foreign assets cushion of around $500 billion from oil exports. It has used this immense wealth to buy its way out of trouble; for instance, heading off pro-democracy protests with massive social spending in recent years.  But, the Middle East Economic Digest observed, “a more serious set of challenges now faces the kingdom that threaten to be even more destabilizing.  “Inefficient and wasteful energy consumption, coupled with a rising population, is leading the kingdom to burn even more of its natural resources at home rather than selling them abroad and adding to the proceeds of the half-trillion-dollar cash pile.  “Unless action is taken, the kingdom could find it needs the oil price to be $320 a barrel by 2030 just to balance the budget,” the weekly, published in the United Arab Emirates, warned.  Nuclear power is seen as the solution. But, as MEED stressed, “time is of the essence.”

For one thing, Saudi Arabia and other Arab states, including the United Arab Emirates, Kuwait, Qatar and Egypt, have no wish to lag any further behind Iran and Israel in developing nuclear technologies.  In 2010, the King Abdallah Center for Atomic and Renewable Energy, known as KAcare, was established to oversee the gulf state’s nuclear program under its president, Hashim bin Abdullah Yamani, who was accorded ministerial powers.  KAcare consultant Ibrahim Babelli said in 2010 it took 3.4 million barrels of oil equivalent a day — known as boe/d — to power electricity generation. This is expected to more than double by 2028 to 8.3 million boe/d.

The aim of the Saudis’ $100 billion nuclear program is to achieve an electricity output of 110 gigawatts by 2032.  The Financial Times reports that in 2009, the latest data available, Saudi electricity capacity was 52GW from 79 power stations.  At least 16 nuclear reactors, each costing around $7 billion, are planned, with the first producing by 2019.  Some estimates state the kingdom, the world’s largest oil exporter, will burn as much as 1.2 million barrels of oil daily on electricity production, almost double the 2010 total, to meet domestic and industrial demand.  This is crucial, as the Saudis are driving to build an industrial infrastructure to sustain the economy when the oil fields run down. Some have already begun to decline.  For total reliance on nuclear power, Babelli says, 40-60 reactors would be needed by 2030. That’s four-six reactors per year from 2020.  “That’s stretching it,” he said. “The answer is an energy mix.”

That means fossil fuels will still be needed, probably as the primary energy source, while wind, solar and nuclear power capabilities are developed. KAcare is developing solar power projects that MEES estimates should produce 41GW within 20 years with geothermal and waste-to-energy systems providing 4GW.  The Emirates, which launched its nuclear energy program in 2009, is the most advanced in the Arab world, with Saudi Arab running second.  The United Arab Emirates’ $30 billion program — $10 billion more than originally planned — is smaller in scale than that in Saudi Arabia.  Both states benefit from political stability and vast financial reserves. Other regional states are less fortunate.

Bahrain, Qatar, Kuwait, Egypt and Jordan all have announced plans to invest in nuclear energy to crank up electricity generation but all have lagged behind or scrapped their programs because of lack of funds or foreign investment.  “Kuwait has the cash,” MEED reported, “but it’s been through eight governments in the past six years.”  Sunni-ruled Bahrain, an island state neighboring Saudi Arabia, “continues to face destabilizing protests by its majority Shiite population and its budget is already in deficit.”  Egypt remains convulsed by the political turmoil that ensued following the February 2011 overthrow of President Hosni Mubarak, its economy sagging dangerously.  In Jordan, heavily reliant on foreign aid, parliament recently scrapped nuclear plans as “hazardous and costly.”  Failure to start boosting electricity generation for burgeoning populations in the coming decades almost certainly will mean more political upheavals.

Saudis, Emirates push nuclear power plans, UPI,July 26, 2012

The Essence of Imperialism: Australia in the Pacific

Leave a reply

Nor is it the first time Vanuatu has clashed with the Australian Federal Police (AFP). In 2004 its government closed down the AFP offices in the capital, Port Vila, and expelled officers, after allegations that they were spying and interfering with domestic politics. The AFP’s main concerns in Vanuatu have been over the country marketing itself vigorously as an international tax haven, and over the risk posed by the volatile Vanuatu Mobile Force, the paramilitary wing of the local police force. Protecting Australia’s national interests under the guise of so-called capacity-building can quickly lead to tensions.

The AFP’s activities in Vanuatu have been part of a broader expansion over the past decade of Australian policing across the Pacific. Peacekeeping missions to Timor-Leste since 1999 and to the Solomon Islands, beginning in 2003, boosted police numbers. In the past decade, the AFP has trebled in size and increased its budget fivefold. The AFP commissioner now has an influential role on the Australian cabinet’s national-security committee. In Australia most domestic policing is carried out by state police forces, leaving the federal force largely free, outside aboriginal communities in the Northern Territory, to focus on international deployments.

Their efforts have often led to accusations of heavy-handedness. In 2005 a mission to Papua New Guinea was abandoned after that country’s Supreme Court ruled that legal immunities granted to AFP officers were unconstitutional. In 2006 the Solomon Islands’ police chief, Shane Castles, an Australian, was sacked and declared an “undesirable immigrant” after a raid by his police officers on the office of the prime minister. That raid was connected with the AFP’s long-standing pursuit of the Solomon Islands’ then attorney-general, Julian Moti, on charges of sex with an underage girl. Mr Moti was deported to Australia in 2007, arrested and brought before the courts. In December 2011 the High Court threw the case out, finding that Australian officials had colluded in Mr Moti’s illegal deportation.

The Australian Federal Police in the Pacific: Booting out big brother, Economist, May 19, 2012, at 49

Resuscitating Collapsed Fisheries: catch shares

Leave a reply

For American fish, this is a good time to be alive. On May 14th, 2012 the National Oceanic and Atmospheric Administration (NOAA) reported that a record six federal fisheries returned to health last year. After a decade of similar progress, 86% of America’s roughly 250 federally monitored commercial fish stocks were not subject to overfishing; 79% were considered healthy…

In the late 1980s cod fisheries in the Gulf of Maine and Georges Bank collapsed. This led to efforts to improve the fishery act, in 1996 and 2006, which forced the eight regional bodies that manage federal fisheries to introduce science-based quotas and ten-year recovery programmes for depleted fisheries. The recent recovery of species, including New England scallops, mid-Atlantic bluefish and summer flounder and Pacific lingcod, is the result. This signals another truth: given a break, the marine environment can often replenish itself spectacularly.

America’s fisheries are probably now managed almost as well as the world’s best, in Norway, Iceland, New Zealand and Australia. Yet there is plenty of room for improvement. State-run fisheries, which tend to be close to shore and dominated by small-scale and inefficient fishermen, are less well funded and well managed and much poorer for it. New England groundfish stocks, including cod, have also not recovered: they account for 13 of the remaining depleted populations. This appears to be partly the result of environmental change, climatic or cyclical.

And the politicians are still interfering. On May 9th the House passed legislation forbidding NOAA from developing an innovative means of apportioning fishing quotas, known as catch shares. These are long-term, aiming to give fishermen a stake in the future of their fisheries; market-based, since they can be traded; and, in practice, good for fish. Sadly, the two Republican congressmen behind the ban consider they have been designed “to destroy every aspect of American freedom under the guise of conservation”.

Fish stocks: Plenty more fish in the sea, Economist, May 26, 2012, at 32

What is In-Q-Tel? Technology Branch of CIA

Leave a reply

Throughout its lifetime, the CIA has operated at the cutting edge of science and technology. From the U-2 spy plane to the CORONA satellite, CIA’s “wizards of Langley” earned a reputation for bold innovation and risk taking, working in advance of the private sector and other branches of government. Much of CIA’s technology success was a result of identifying gaps and opportunities.  By the late 1990s, the pace of commercial innovation had overtaken the ability of government agencies to develop and incorporate new technologies. Private industry represented technical insights and innovation far too important to ignore. Driven by private sector R&D investment, these commercial technologies addressed many of the same information technology, biotechnology, communications, and energy challenges that faced the Intelligence Community.

In 1998, CIA identified technology as a top strategic priority, and set out a radical plan to create a new venture that would help increase the CIA’s access to private sector innovation. In-Q-Tel was chartered in February 1999 by a group of private citizens at the request of the Director of Central Intelligence and with the support of the U.S. Congress. IQT was tasked with building a bridge between the Agency and a new set of technology innovators.

From the website IQT (2012)

Industrial Revolution in Genetic Engineering: Military

Leave a reply

From DARPA’s Website: Living Foundries

Current approaches to engineering biology rely on an ad hoc, laborious, trial-and-error process, wherein one successful project often does not translate to enabling subsequent new designs. As a result, the state of the art development cycle for engineering a new biologically manufactured product often takes 7+ years and tens to hundreds of millions of dollars (e.g. microbial production of artemisinic acid for the treatment of malaria and the non-petroleum-based production 1,3-propanediol).

[DARPA Goal]

Transforming biology into an engineering practice would enable on-demand production of new and high-value materials, devices and capabilities for the Department of Defense (DoD) and address complex challenges that today have no or few solutions.

The Living Foundries Program seeks to create the engineering framework for biology, speeding the biological design-build-test cycle and expanding the complexity of systems that can be engineered. The Program aims to develop new tools, technologies and methodologies to decouple biological design from fabrication, yield design rules and tools, and manage biological complexity through abstraction and standardization. These foundational tools would enable the rapid development of previously unattainable technologies and products, leveraging biology to solve challenges associated with production of new materials, novel capabilities, fuel and medicines. For example, one motivating, widespread and currently intractable problem is that of corrosion/materials degradation. The DoD must operate in all environments, including some of the most corrosively aggressive on Earth, and do so with increasingly complex heterogeneous materials systems. This multifaceted and ubiquitous problem costs the DoD approximately $23 Billion per year. The ability to truly program and engineer biology, would enable the capability to design and engineer systems to rapidly and dynamically prevent, seek out, identify and repair corrosion/materials degradation.

Accomplishing this vision requires an approach that is more than multidisciplinary – it requires a new engineering discipline built upon the integration of new ideas, approaches and tools from fields spanning computer science and electrical engineering to chemistry and the biological sciences. The best innovations will introduce new architectures and tools into an open technology platform to rapidly move new designs from conception to execution.  Performers must ensure and demonstrate throughout the program that all methods and demonstrations of capability comply with national guidance for manipulation of genes and organisms and follow all guidance for biological safety and Biosecurity.

A Broad Agency Announcement (BAA) solicitation for phase one, Advanced Tools and Capabilities for Generalizable Platforms (ATCG), closed in November, 2011. The BAA called for the development of the advanced, translatable tools and capabilities that will make up an end-to-end technology platform for rapidly, safely and predictably engineering biological production systems. The goals of these advanced tools and capabilities are to compress the biological design-build-test cycle by at least 10x in both time and cost while increasing the complexity of the systems that can be designed and executed by orders of magnitude. These advancements should enable the ability to rapidly design and build new systems to create novel capabilities and to address complex challenges.

Kamikaze Drones: Shortening the Kill Chain

Leave a reply

The 2-foot-long Switchblade drone [unmanned aerial vehicle (UAV)] is so named because its wings fold into the fuselage for transport and spring out after launch. It is designed to fit into a soldier’s rucksack and is fired from a mortar-like tube. Once airborne, it begins sending back live video and GPS coordinates to a hand-held control set clutched by the soldier who launched it.  When soldiers identify and lock on a target, they send a command for the drone to nose-dive into it and detonate on impact. Because of the way it operates, the Switchblade has been dubbed the “kamikaze drone.”

The Obama administration, notably the CIA, has long been lambasted by critics for its use of combat drones and carelessly killing civilians in targeted strikes in Pakistan, Afghanistan, Iraq, Yemen and Somalia. In 2010, a United Nations official said the CIA in Pakistan had made the United States “the most prolific user of targeted killings” in the world.

The Switchblade drone appears to be an improvement as an alternative to traditional drone strikes, in terms of minimizing civilian harm, but it also raises new concerns, said Naureen Shah, associate director of the Counterterrorism and Human Rights Project at Columbia Law School.  She pointed out that when a drone strike is being considered there are teams of lawyers, analysts and military personnel looking at the data to determine whether lethal force is necessary. But the Switchblade could shorten that “kill chain.”  “It delegates full responsibility to a lower-level soldier on the ground,” she said. “That delegation is worrisome. It’s a situation that could end up in more mistakes being made.”  Arms-control advocates also have concerns. As these small robotic weapons proliferate, they worry about what could happen if the drones end up in the hands of terrorists or other hostile forces.

The Switchblade “is symptomatic of a larger problem that U.S. military and aerospace companies are generating, which is producing various more exotic designs,” said Daryl Kimball, executive director of the Arms Control Assn. “This technology is not always going to be in the sole possession of the U.S. and its allies. We need to think about the rules of the road for when and how these should be used so we can mitigate against unintended consequences.”

The Switchblade is assembled in Simi Valley by AeroVironment Inc., the Pentagon’s top supplier of small drones, which include the Raven, Wasp and Puma. More than 50 Switchblades will be sent to the war zone in Afghanistan this summer under a $10.1-million contract, which also includes the cost of repairs, spare parts, training and other expenses. Officials would not provide details about where the weapons would be used, how many were ordered and precisely when they would be deployed.  AeroVironment, based in Monrovia, developed the weapon on its own, thinking the military could use a lethal drone that could be made cheaply and deployed quickly by soldiers in the field, said company spokesman Steven Gitlin.

“It’s not inexpensive to task an Apache helicopter or F-16 fighter jet from a base to take out an [improvised explosive device] team when you consider fuel, people, logistics support, etc.,” he said.

About a dozen Switchblades were tested last year by special operations units in Afghanistan, according to Army officials, who said the drone proved effective.  The Army is considering buying $100 million worth of the drones in a few years under a program called the Lethal Miniature Aerial Munition System, Nichols said. The Air Force and the Marine Corps have also expressed interest in the technology.

AeroVironment is not the only company pursuing small, lethal drones. Textron Defense Systems is also working on a small kamikaze-style drone. Named the BattleHawk Squad-Level Loitering Munition, the drone is being tested at an Army facility in New Mexico.

Excerpts, W.J. Hennigan, Pentagon to soon deploy pint-sized but lethal Switchblade drones, LA Times, June 11, 2012

Drug Markets, Patents and the Developing World

Leave a reply

Sales of antiretroviral drugs in America and the five biggest European markets reached $13.3 billion in 2011, according to Datamonitor, a research outfit…. Publicly funded research has played a larger role in developing drugs for HIV than for other diseases. A study published last year in Health Affairs found that HIV drugs were three times as likely to involve a patent from the public sector. HIV also has special status among regulators. America’s Food and Drug Administration (FDA) created a faster way to review HIV drugs, allowing them on the market before the most expensive stage of clinical trials.

In total, public and private investment has yielded more than two dozen HIV drugs. In 1987 Burroughs-Wellcome (now part of GlaxoSmithKline) introduced the first one, tackling an enzyme that helps the virus progress inside human cells. In 1995 Hoffmann-La Roche, a Swiss drug firm, launched the first protease inhibitor, which interrupts the virus at a later stage of replication….One company stands out: Gilead, of California. A late entrant to the HIV race, Gilead quickly took the lead. Its strategy was simple: the more convenient the treatment, the better. In 2004 Gilead launched Truvada, a once-a-day, one-pill combination of two drugs. In 2006 it introduced Atripla, a once-a-day, one-pill combination of Truvada and another treatment. Atripla’s average wholesale price in America is nearly $25,000 per patient, per year. In 2011 its global sales reached $3.2 billion.  More good news for Gilead has come in recent weeks. An FDA panel recommended Truvada for preventive use: ie, to protect healthy people from contracting the virus. Another FDA panel endorsed Gilead’s new Quad pill, which is the simplest, most effective combination drug to date.

If the process for developing HIV drugs has been unusual, selling them has been even more so. America is the rich world’s biggest market, with 841,000 patients diagnosed—ten times as many as in Britain. More than 60% of HIV drugs in America are bought with public money. Insurers give HIV special treatment: patients are rarely pressed to buy the cheapest pills, as they might be if they had another disease.

Distributing drugs in poor countries is harder. A decade ago, hardly any poor people could afford them. At first, drugs firms handled this badly. In 1998, 39 big Western firms sued South Africa to protect their HIV patents. Global uproar ensued; the firms backed down in 2001.  Then two things changed. First, rich countries started donating vast sums to fight AIDS in poor ones. In 2000 there was less than $2 billion for HIV programmes each year; by 2010 there was $15 billion, thanks to the Global Fund to Fight AIDS, Tuberculosis and Malaria and George Bush junior’s President’s Emergency Plan for AIDS Relief (PEPFAR).

Second, the price of AIDS drugs plunged. In May 2000 a year’s “triple cocktail” therapy cost $10,000 or so. By 2011 the same pills sold for $62 in poor countries. PEPFAR cash buys generic versions of patented drugs, which may be supplied only to poor countries. Last year two drugmakers won most of PEPFAR’s contracts: Aurobindo, an Indian firm, and Matrix, an Indian firm acquired in 2007 by Mylan, an American one. PEPFAR’s bidding system keeps margins slim even by the standards of the generics industry, says Rajiv Malik, the president of Mylan. But volumes are huge.

Can treatment expand further? Despite the subsidies and the plunge in prices, less than half of those infected with HIV take HIV drugs. Those who do, however, live a long time, and they have to keep taking the pills. What’s more, new studies show that it helps to start treating patients early, so demand is sure to rise.  Alas, aid dipped in 2009 and 2010, thanks to the financial crisis. To make matters more complicated, there is a trade-off between more drugs and better ones. Most patients in poor countries get outdated pills, according to Médecins Sans Frontières. Allowing generics firms to copy yet more patented drugs might help. Since 2006 Gilead has licensed drugs to generics firms for 5% royalties. Last year it went further, agreeing to license drugs to a “patent pool” to centralise royalty deals for a range of firms. So far, however, Gilead is the only Western company to join….

There are two distinct HIV markets. In rich countries, many good treatments jostle for market share. The best will generate fat profits, since patients have to take their pills every day. But Datamonitor predicts that growth will slow after 2017, as many drugs lose patent protection and prices crash. In poor countries, by contrast, Big Pharma makes very little money but the most efficient copycats thrive. Meanwhile, the world still waits for a cure.

The business of HIV: Battling the virus, Economist, June 2, 2012,at 80

China and its Collaborators in Africa

Leave a reply

Congolese critics accuse Sassou-Nguesso [President of Congo] of using the Chinese-backed building boom to move from his ‘authoritarian-authoritarian’ model to something nearer the ‘developmental authoritarian’ style of Rwanda’s President Paul Kagame. However, Sassou-Nguesso was in triumphant mode as he inaugurated a spate of Chinese construction projects in the country’s hinterland on 14-18 May. These projects are intended to bring the benefits of oil-backed growth to regions previously isolated from the bustling cities of Brazzaville and Pointe-Noire.  Now known locally as ‘The Cutter of Ribbons’, Sassou-Nguesso is using oil money and plans to develop Congo-Brazzaville’s mineral resources to shape a new relationship with China. Once a key commercial and diplomatic ally of France, Sassou-Nguesso’s headlong rush to Beijing coincides with the election of President François Hollande. Hollande’s African policy team promises to break with the old Françafrique networks. Among their advisors is the activist lawyer William Bourdon, who has been pursuing a case against Sassou-Nguesso in France for stealing Congolese state assets…..

From fibre-optic installation and new dams to more than 1,000 kilometres of paved roads, companies like China Road and Bridge Corporation and China State Construction Engineering Corporation have quietly landed most of the major contracts issued by the Brazzaville government.  That means large profits and more deals to come.

Congo-Brazzaville, for so long the preserve of European companies, is drawing serious attention from China. The two countries have signed deals to develop special economic zones, build a new oil port and revamp an ageing refinery. For the Chinese investors, the lure is Congo-Brazzaville’s rich but under-exploited resource base. Having relied for decades on offshore oil riches and forestry, the country has until recently made little effort to exploit its mineral deposits, develop its more remote regions or diversify the economy into commerce and services. That could change if the new Asian relationships live up to their billing. For Sassou-Nguesso, the big attraction is an engagement based purely on economic and financial criteria, with a partner who does not impose awkward governance or human rights conditions.

This is not Congo’s first encounter with Asian investment. South Korean and Malaysian companies, via the Consortium Congo Malaisie Corée, had proposed a huge resources-for-infrastructure deal that would build new rail lines in exchange for access to forestry and mining permits in 2008. That deal didn’t work out but the Chemin de Fer Congo Océan received part of its order of engines and cars from Korail in August 2011. Malaysian investors have looked at opportunities in the hydrocarbons sector and – building on their experience of rural Congo in the timber business – palm oil production. In 2010 Atama Plantation agreed to invest $300 million in new oil palm plantations and processing capacity.

The most recent interest from Chinese entities takes the engagement a step further. Alain Akouala Atipault, a Minister in the Presidency, was China’s guest at an international infrastructure and investment forum in Macau where, on 24 April, he signed an agreement with the China Friendship Development International Engineering Design and Consult Corporation (FDDC) – an offshoot of the Trade Ministry in Beijing.  FDDC will seek out Chinese investors interested in setting up operations in four special economic zones, which Congo plans to establish in Brazzaville, Pointe- Noire, Ouesso and the Oyo-Ollombo area. FDDC will also help to mobilise financing for the zones, build their infrastructure and carry out feasibility studies……

China’s engagement in Congo is typical of its strategy elsewhere in Africa. Beijing often takes a long-term view of whether projects will generate an economic return. Viability is seen in broad terms, encompassing not just the specific project’s concerns but also the wider trade and political benefits of partnership and the political goodwill that could open up access to valuable natural resources. Congo has both major reserves of high-value timber – a sector where Congo Dejia Wood Industry, Jua Ikié, Million Well Congo Bois, Sino-Congo Forêt and Société d’Exploitation Forestière Yuan Dong are already active – and reserves of minerals such as iron ore and potash, which are largely untouched.

China National Complete Plant Import & Export Corporation is developing the potash reserves at Mengo with Canada’s MagIndustries; Australia’s Sundance Resources relies on finance and expertise from Hanlong Mining and other Chinese infrastructure companies to make its designs on iron-ore projects in Cameroon (Mbarga) and Congo-Brazzaville (Nabeba) viable. Sundance is waiting for final approvals from Yaoundé and Brazzaville and expects all the paperwork to be signed before the end of 2012.

Beijing’s policy of ignoring questions of democracy and human rights is certainly helpful to Sassou-Nguesso’s regime – which has a poor human rights record, is marred by widespread corruption and remains fundamentally authoritarian despite the trappings of a multiparty system.

Excerpt, Congo-Brazzaville: Sassou Draws in Beijing,AllAfrica.com, June 2, 2012

Chevron and Amazon: the $18 billion Ecuador Liability

Leave a reply

The D.C. Circuit Court of Appeals  on June 12, 2012  (pdf) dealt another setback to Chevron over its $18 billion Ecuador liability, reversing a lower court decision that allowed the oil giant access to documents from a prominent consulting group for the Amazon rainforest communities that sued the company.