Monthly Archives: December 2015

Worst Environmental Disaster 2015: the Toxic Sludge of Vale/BHPBilliton Dam

the village after the disaster. Collapse of Bento Rodrigues dam maintained by BhpBilliton and Vale

The Bento Rodrigues Dam in Brazil collapsed on November 5, 2015...The dam had been used to store water and mineral waste from a nearby iron-ore mine. It had no alarm system and no good emergency plan or designated evacuation routes. According to the villagers, nobody was warned about the breach. “If the dam had collapsed at night, everyone would have died,” said Duarte Júnior, the mayor of the city that includes Bento Rodrigues.The dam was operated by Samarco, a joint venture between two multinational mining companies: Brazil’s Vale and the Anglo-Australian BHP Billiton. More than a month after the dam collapsed, it is unclear how long it will take for the ecosystem — and the economy — to recover. And two more dams in the area are at risk of collapsing.

After flooding the village, the wave of approximately 2.2 billion cubic feet of mud and mineral residue, enough to fill about 25,000 Olympic-size swimming pools, made its way to the Doce River. The river, which passes through 228 municipalities, is crucial to the region’s economic life. The mineral-waste sludge has devastated the area. Several companies had to suspend operations. Local fishermen are among the most severely affected. The water supply for Governador Valadares, a city of 300,000 people, had to be cut off for a week.

The companies involved insist that the muck poses no threat to human health. But two United Nations environmental experts declared that the mud contained “high levels of toxic heavy metals and other toxic chemicals.” A report from the Institute for Water Management, a government agency in the state of Minas Gerais, found that the water’s arsenic levels were 10 times above the legal limit. Other samples collected at different points along the river contained high levels of mercury, iron, aluminum and manganese.

According to Ibama, Brazil’s environmental protection agency, the Doce River is home to 80 fish species, of which 11 are endangered and 12 are found nowhere else in the world…. The mud’s brown route across Brazil’s waterways is visible in NASA satellite images. Sixteen days after the dam broke, the tide reached the Atlantic Ocean, more than 400 miles downstream. It also spread into the Comboios Biological Reserve on the coast, a spawning area for loggerhead sea turtles and critically endangered leatherback sea turtles.  “The steps taken by the Brazilian government, Vale and BHP Billiton to prevent harm were clearly insufficient,” the United Nations environmental experts said in a statement, adding that it was unacceptable that it took three weeks for information about the water’s toxicity to surface. “The government and companies should be doing everything within their power to prevent further harm, including exposure to heavy metals and other toxic chemicals,” they said.

The exact cause of the breach has not yet been determined. Samarco’s chief executive officer suggested that a seismic tremor near the mine may have caused it, but public prosecutors suspect negligence by the company. Brazil’s press is criticizing the federal government in Brasília for failing to monitor the dam. The National Department of Mineral Production employed only four people in the whole state of Minas Gerais to inspect 735 dams.

Excerpt from  Vanessa Barbara, Brazil’s Toxic Sludge, NY Times, Dec. 17, 2015

What’s in a Currency: dollar v. yuan

dollar yuan

China’s new pledge to depeg its currency from the U.S. dollar underscores a difficult fact for Beijing: the U.S. Federal Reserve could blunt its efforts to rekindle Chinese growth.The Fed is widely expected to raise rates this week amid signs of a strengthening U.S. economy. Meanwhile, China’s economy is going the other direction, with Beijing cutting interest rates and making other moves to loosen monetary policy and spur slowing economic growth.

A U.S. rate increase could hinder that effort. It would likely make the dollar stronger, forcing China to intervene in currency markets to maintain the peg. That means buying yuan, often from Chinese banks, which effectively takes money out of China’s financial system at a time when Beijing is trying to make more available to its businesses and consumers.Already, credit remains tight for many Chinese borrowers, especially small and private companies, despite six interest-rate cuts and looser bank-reserve requirements enacted over the past 13 months.

On December 11, 2015, China’s central bank signaled its hope to break up that dynamic by pegging the yuan to a basket of currencies — including the dollar, euro, yen and 10 other currencies — instead of the U.S. dollar alone. That would give the yuan room to fall against the dollar…

But the move has also set off selling of the yuan both within China and in what is known as Hong Kong’s offshore market amid investor expectations that a currency basket means a weaker yuan…In a bid to calm the jittery markets, the PBOC said in an editorial posted on its website on December 14, 2015  that China’s still-high growth rate, ample foreign-exchange reserves and rising foreign demand for Chinese assets should work together to keep the Chinese currency at a reasonable equilibrium.

It is far from clear that China will depeg its currency from the dollar — something it has said it would do in the past only to retreat. Decoupling risks a loss of investor confidence in the yuan’s stability, which could lead to more money leaving China, according to Chinese officials and advisers to the central bank.

“Abandoning the peg would be an important step toward achieving monetary-policy independence, but destabilizing capital outflows could hold the central bank back from doing that,” one of the advisers said.  In early 2009, four years after it said it would divorce the yuan from the dollar, China hitched the value of its currency to the greenback again to keep the yuan from falling in the midst of the global financial crisis.

The peg has “complicated domestic macroeconomic policy management as economic prospects between the U.S. and China have diverged,” said Eswar Prasad, a Cornell University professor and former China head of the International Monetary Fund.

Some economists blame the yuan’s strength for some of the problems. They say an overvalued yuan relative to its purchasing power has led Chinese companies to cut prices and lower wages to stay competitive. Also, China’s exports to countries like Japan and those in Europe in recent months have declined faster than its sales to the U.S.”The overvaluation of the renminbi is a root cause of China’s economic ills these days,” said chief economist Lu Zhengwei at Industrial Bank Co., a large national bank in China.

Excerpts from China’s Pledge to Divorce Yuan From Dollar Faces Fed Test,  Dow Jones Business News, Dec. 14, 2015

 

Nuclear Waste in the Seabed, Sweden

SFR disposal nuclear waste. Two disposal sites (gray existing, blue proposed) and their connection with above-the-ground facilities. image from http://www.skb.com/our-operations/sfr/

Sweden keeps its radioactive operational waste SKB’s Final Repository for Short-Lived Radioactive Waste is located at Forsmark in the municipality of Östhammar. The facility started operating in 1988 and was then the first of its kind in the world.  The radioactive waste deposited in the SFR is low and medium level waste. This means that unlike spent nuclear fuel it does not have to be cooled and is relatively short-lived.  The SFR is situated 50 metres below the bottom of the Baltic and comprises four 160-metre long rock vaults and a chamber in the bedrock with a 50-metre high concrete silo for the most radioactive waste.  Two parallel kilometre-long access tunnels link the facility to the surface.  Except from http://www.skb.com/our-operations/sfr/

The Beauty of Platform Capitalism

keep calm and love data

Hardly a day goes by without some tech company proclaiming that it wants to reinvent itself as a platform. …Some prominent critics even speak of “platform capitalism” – a broader transformation of how goods and services are produced, shared and delivered.   Such is the transformation we are witnessing across many sectors of the economy: taxi companies used to transport passengers, but Uber just connects drivers with passengers. Hotels used to offer hospitality services; Airbnb just connects hosts with guests. And this list goes on: even Amazon connects booksellers with buyers of used books.d innovation, the latter invariably wins….

But Uber’s offer to drivers in Seoul does raise some genuinely interesting questions. What is it that Uber’s platform offers that traditional cabs can’t get elsewhere? It’s mostly three things: payment infrastructure to make transactions smoother; identity infrastructure to screen out any unwanted passengers; and sensor infrastructure, present on our smartphones, which traces the location of the car and the customer in real time. This list has hardly anything to do with transport; they are the kind of peripheral activity that traditional taxi companies have always ignored.

However, with the transition to knowledge-based economy, these peripherals are no longer really peripherals – they are at the very centre of service provision.There’s a good reason why so many platforms are based in Silicon Valley: the main peripherals today are data, algorithms and server power. And this explains why so many renowned publishers would team up with Facebook to have their stories published there in a new feature called Instant Articles. Most of them simply do not have the know-how and the infrastructure to be as nimble, resourceful and impressive as Facebook when it comes to presenting the right articles to the right people at the right time – and doing it faster than any other platform.

Few industries could remain unaffected by the platform fever. The unspoken truth, though, is that most of the current big-name platforms are monopolies, riding on the network effects of operating a service that becomes more valuable as more people join it. This is why they can muster so much power; Amazon is in constant power struggles with publishers – but there is no second Amazon they can turn to.

Venture capitalists such as Peter Thiel want us to believe that this monopoly status is a feature, not a bug: if these companies weren’t monopolies, they would never have so much cash to spend on innovation.  This, however, still doesn’t address the question of just how much power we should surrender to these companies.

Making sure that we can move our reputation – as well as our browsing history and a map of our social connections – between platforms would be a good start. It’s also important to treat other, more technical parts of the emerging platform landscape – from services that can verify our identity to new payment systems to geolocational sensors – as actual infrastructure (and thus ensuring that everybody can access it on the same, nondiscriminatory terms) is also badly needed.

Most platforms are parasitic: feeding off existing social and economic relations. They don’t produce anything on their own – they only rearrange bits and pieces developed by someone else. Given the enormous – and mostly untaxed – profits made by such corporations, the world of “platform capitalism”, for all its heady rhetoric, is not so different from its predecessor. The only thing that’s changed is who pockets the money.

Excerpt from Evgeny Morozov, Where Uber and Amazon rule: welcome to the world of the platform, Guardian, Nov. 15, 2015