The copper market is so tight that spot contracts traded at the biggest premium over futures in at least 27 years in London.

The spread between cash and three-month futures surged to over $1,000 a ton on the London Metal Exchange on Monday, a premium not seen since at least 1994. The spread has been widening since early October as demand outpaced supply amid dwindling global exchange inventories.

Freely available inventories have shrunk by more than 90% over the past two months in LME-monitored warehouse after a surge in orders. And with stockpiles also declining quickly in China and the U.S., physical traders are firmly bullish on the fundamental outlook for the metal, even as macroeconomic headwinds loom.

The copper market is seen as a bellwether for economic growth because of the metal’s central role in construction, wiring and electronic goods. Dwindling global supplies and a widening price gap between cash prices and contracts for future delivery signal that buyers are accelerating efforts to lock in supplies.

“The LME notes recent price activity in the copper market,” te exchange said in an email to Bloomberg. “We will continue to closely monitor the situation, and have further options available to ensure continued market orderliness if these are required.”

(By Yvonne Yue Li, with assistance from Jack Farchy)

Mongolia is concerned about Rio Tinto’s management of the Oyu Tolgoi copper and gold mine in the Gobi desert in the southern part of the country, a government official told CNBC.

“We have concerns about the transparency and we also have concerns whether this mine is being operated efficiently,” Solongoo Bayarsaikhan, deputy chief of the Mongolian government’s cabinet secretariat, said Friday on CNBC’s “Squawk Box Asia.”

The open-pit and underground mining project is being jointly developed by the government, which owns about 34% of Oyu Tolgoi, and Rio Tinto’s Canadian subsidiary Turquoise Hill Resources that has a 66% stake in it.

The Anglo-Australian miner owns nearly 51% stake in Turquoise Hill Resources.

What happened?

Oyu Tolgoi’s underground expansion has been hamstrung by delays, development issues and cost overruns for years.

Rio Tinto and Turquoise Hill Resources signed a development and financing plan with Mongolia in 2015 that provided basis for funding the project — but six years on, production has yet to begin in a sustainable way.

Once the underground expansions are completed, Oyu Tolgoi is expected produce more than 500,000 tonnes of copper per year.

Initial projections estimated that the mine would be able to sustainably produce copper from 2021 onwards.

However, last December, Rio Tinto pushed the timeline back and said “sustainable production” was expected to commence in October 2022. The miner also said the underground expansion would cost $6.75 billion, higher than previous estimates.

On Friday, Rio Tinto again delayed that forecast and said sustainable production will happen “no earlier than January 2023.”

The company cited the impact of Covid-19 and outstanding issues around caving operations. It warned that Mongolia’s additional Covid restrictions this year to tackle community transmission is set to add an estimated $140 million to the budget as of the end of September.

While Rio Tinto blamed the delays and rising costs on challenging ground conditions, an independent review this year contradicted that explanation.

The Independent Consulting Group’s report, commissioned by Rio Tinto’s partners on the project, concluded that poor management was the main reason the mine’s underground expansion was running almost two years late and $1.45 billion over budget, the Financial Times reported.

Mongolia reacts

Rio Tinto reportedly challenged the findings of the report in a letter to Mongolia’s justice minister and said the review did not fully recognize the full impact of weaker-than-expected conditions that forced the mine to be redesigned.

“We asked Rio Tinto to explain the discrepancies between the independent review report and Rio Tinto’s position,” Bayarsaikhan told CNBC on Friday.

“We didn’t find the letter satisfactory, in terms of responding to our specific queries and specific concerns over why there is a cost overrun and scheduled delays, why there’s very different conclusions in the independent review report,” she said. “Rio Tinto didn’t provide sufficient responses.”

Bayarsaikhan explained that the Mongolian government wants to find a “mutually beneficial solution” and avoid further surprises in terms of further cost increase and delays.

Russia’s Energy Ministry signed an agreement this week with India’s Steel Industry Ministry aimed at increasing Russian coking coal supply to India to 40 million tons per year.

The deal was inked at the Russian Energy Week Forum, held from October 13-15 in Moscow.

According to Russian Energy Minister Nikolay Shulginov, Russia currently supplies around eight million tons of all types of coal to the South Asian country.

The agreement is also meant to stimulate enterprises in Russia and India in the development of coal deposits, the development of coal logistics and infrastructure, the promotion of R&D in production, as well as education and training for the coal industry.

The world’s third-largest coal importer, India, is currently struggling with coal shortages. Coal accounts for around 70% of the nation’s electricity generation. Most of India’s coal-fired power plants have critically low levels of inventory amid growing electricity demand.

A widening gap between soaring international and domestic coal prices has also seen imports decline sharply in recent months.

Next year, Danish wind turbine manufacturer Vestas will put up a gargantuan prototype - a 15-megawatt (MW) wind turbine that will be powerful enough to provide electricity to roughly 13,000 British homes.

It will be the biggest such turbine in the world, though potentially not for long. Wind turbines just keep getting bigger - and it's happening faster than almost anybody predicted.

Chinese firm, MingYang, recently announced plans for an even more powerful device clocking in at 16MW, for example. Just four years ago, the maximum capacity of an offshore turbine was 8MW.

"It's happening quicker than we would wish, in a sense," says Aurélie Nasse, head of offshore product market strategy at Vestas. The firm is one of a handful that have led the development of super-sized turbines - but headaches associated with building ever larger machines are beginning to emerge.

"We need to make sure it's a sustainable race for everyone in the industry," says Ms Nasse, as she points out the need for larger harbours, and the necessary equipment and installation vessels required to bring today's huge turbine components offshore.

Then there's the hefty investments required to get to that point. "If you look at the financial results of the [manufacturers], basically none of us make money anymore," explains Ms Nasse. "That's a big risk."

Yet the wind industry's willingness to push limits is one of its greatest strengths, she adds. A double-edged sword, or turbine blade, if you will. And there are few signs that the race to 20MW turbines and beyond is about to slow down.

"It's just astonishing," says Guy Dorrell, a spokesman for Siemens Gamesa, referring to the fact that a single offshore wind farm can now power a million homes. By the end of this year, his firm plans to install an onshore prototype of a 14MW offshore turbine that can be boosted to supply 15MW.

"We've worked out that a single turn of a 14MW turbine would power a Tesla Model 3 for 352km (218 miles)," he says. Besides heightened power output, one of the advantages of bigger turbines is that they are more efficient in terms of installation time and cost - clearly, you only need one base structure and set of cables for a 14MW turbine versus two for a pair of 7MW machines.

The UK currently has about 10.5 gigawatts (GW) of offshore wind capacity and this is set to quadruple by 2030. But that still isn't enough to deliver net-zero electricity by 2035, according to researchers at Imperial College, London.

Whatever happens next the demand is there and you can bet that bigger turbines will become more commonplace, says Christoph Zipf, a spokesman for Wind Europe, an industry body.

Twenty years from now, 15MW turbines will be viewed as "average", he predicts.

It may happen even sooner than that. The UK's newest offshore wind projects, planned for Dogger Bank in the middle of the North Sea, are already set to use 13 and 14MW turbines.

But surely there are limits to how large these structures can get? They are already mind-boggling. Each blade on Vestas' 15MW turbine is 115.5m (379ft) long - nearly as long as London's Centre Point tower is high. The turbine itself has a rotor diameter of 236m (London's tallest building, The Shard, is 310m tall).

"There has to be a physical limit although nobody has yet put a number on that," says Simon Hogg, at Durham University. Prof Hogg holds the Ørsted chair at the university, which is funded by energy firm Ørsted.

Instead, it's the practicalities of putting these machines in place and maintaining them that might first become problematic.

Prof Deborah Greaves at Plymouth University says of super-sized offshore turbines, "There are still open questions around the cumulative environmental impact and the capacity of the marine environment."

Wind turbines do have some negative effects on wildlife but the extent of this, at scale, is difficult to measure. Plus, very large wind farms at sea must be sited carefully to avoid conflict with shipping lanes.

Prof Hogg adds that the cost of maintaining hundreds of very large turbines, miles offshore could go up over time. "Something like that, may be the defining driver as to how big offshore wind turbines can actually get," he says.

Then there are the technical niggles. The really big turbines tend to be positioned far away from land but that means the electricity they generate must travel huge distances.

When transmitted using alternating current (AC), some power ends up getting lost. Converting to direct current (DC) is much more efficient but using DC at very large scales requires significant advances in engineering, says Prof Hogg.

Plus, the tip of a very long turbine blade travels faster than the tip on shorter blades rotating at the same rate - given it has a longer distance to cover in the same amount of time.

However, current turbine designs have a maximum speed for the blade tip of around 90m/s, or 324km/h (201mph), says Prof Hogg, which has a "big effect on the overall aerodynamics of the blade."

He adds that blades are also twisted slightly near the tip to ensure good performance, although there is a limit on how much they can be twisted. That means there is a limit on a blade's size and speed of rotation.

In short, while building a wind turbine significantly bigger than today's giants may be possible from a manufacturing standpoint, it could be the practicalities and costs of installing, maintaining and operating them that really challenge their seemingly unstoppable growth in the future.

As Ms Nasse says, "We need to be a little careful of the pace."

On October 18, Chairman of the General Election Commission P.Delgernaran announced that candidates of the ruling Mongolian People’s Party E.Batshugar and Ts.Iderbat have won by majority votes following the by-election re-polling.

The commission convened today and approved a resolution acknowledging the victory of candidates Ts.Iderbat (received 17,264 votes or 73.03 percent of voters that participated in the by-election polls in Khentii aimag) and E.Batshugar (received 28,537 votes of 51 percent of voters in capital city’s Songinokhairkhan district) in the parliamentary by-election. The resolution has been presented to the parliament today on October 18. All the votes received through the polls had been hand-counted.

As there was low voter turnout in the parliamentary by-election polls that took place on October 10, it was decided to organize re-polling in the two constituencies on October 16 to involve those who did not cast their votes. The final numbers for the voter turnout of the by-election re-polling was 48.89 percent in Songinokhairkhan district, and 46.65 percent in Khentii aimag. According to the Law on Elections, there are no requirements for voter turnout in re-polling. Thus, the candidates that received the most votes in constituencies are considered to have won the election, and presented to the State Great Khural (parliament). As such, the rights of candidates E.Batshugar and Ts.Iderbat as parliament members will fully come into effect once the results have been introduced to the parliament and the two candidates have taken their oaths.

In 2020, candidate from Mongolian People’s Party D.Sumiyabazar was elected as a parliament member, representing the capital city’s Songinokhairkhan district. Sumiyabazar was dismissed from the legislative position at his own request on October 23, 2020 and he has been serving as Governor of the Capital City and Mayor of Ulaanbaatar city since October 26, 2020.

From the same political party, candidate U.Khurelsukh was also elected as a parliament member. However, he later had a victory in the 2021 presidential election, making it necessary to organize a by-election to fill the office that became vacant.

On October 15, the third meeting of the Mongolia-China joint council on mineral resources, energy, and infrastructure cooperation took place virtually.

The meeting was chaired by Minister of Mining and Heavy Industry G.Yondon from the side of Mongolia, and Vice Chairman of the National Development and Reform Commission Ning Jizhe from the side of the People’s Republic of China.

The two sides introduced opportunities for joint projects in the sector of mineral resources, energy, and infrastructure during the meeting. They also discussed accelerating the works to be carried out for some large-scale projects that have been previously discussed. For instance, the Mongolian officials expressed interest in jointly implementing projects on constructing a complex to produce and export renewable energy based on solar and wind in the southern region of Mongolia, constructing a highway and light rail transit route in Ulaanbaatar city, and constructing transmission lines and a substation that are necessary to fully utilize the capacity of the Baganuur Thermal Power Plant.

The Mining Minister also noted how it is possible for Chinese entities to cooperate by participating in bids for tender that are openly announced for projects in the sector.

He then continued to express that the side of Mongolia is ready to provide support in establishing long-term commercial agreements for coal export, and put forth the suggestion to increase the container transportation of coal through the border checkpoints of Gashuunsukhait and Shiveekhuren, and accelerate corresponding works to connect the two countries’ border checkpoints in four routes (through Gashuunsukhait, Bichigt, Khangi, and Shiveekhuren border checkpoints) by railroads.

In turn, the Chinese side expressed that special attention is being paid to increasing coal trade and quickly organizing its transport, and corresponding measures are being taken in the framework of the agreement made between the government heads of the two countries.

As the two countries’ corresponding entities have agreed on the border point for the railroad at Gashuunsukhait-Gantsmod checkpoint, both sides also noted the importance of urgently having the agreement confirmed through the Foreign Ministries, and actively cooperating in the infrastructure construction.

Pledging that the matter regarding the acceleration of infrastructure projects reflected in the Mongolia-Russia-China economic corridor program will be focused, they came to the decision to develop a protocol on the meeting’s results and organize biannual meetings to discuss its implementation.

Mongolia reports 1,131 new cases of COVID-19 for the past 24 hours, the Health Ministry said on Oct 18.

731 cases were confirmed in Ulaanbaatar city, 400 cases in rural regions.

The total number of confirmed COVID-19 cases in Mongolia has reached 339,536.

14 new COVID-19 related deaths have been reported, raising the country’s death toll to 1,483.

18,804 people are receiving hospital treatment for COVID-19 whilst 59,603 people with mild symptoms of COVID-19 are being isolated at home.

6,146 patients have recovered per day.

North China’s Inner Mongolia Autonomous Region on Saturday launched a large-scale photovoltaic power construction project in the Kubuqi desert. It is estimated that it will realize a total installed capacity of approximately 2 GW.

Located in the city of Ordos, the project is expected to cover approximately 6,700 hectares and achieve its full grid-connected power generation capacity before the end of 2023.

With photovoltaic panels, the new base will integrate planting and breeding industries with green power generation, aiming to restore the local ecosystem while promoting rural revitalization.

Nearly 12 billion yuan (about 1.86 billion U.S. dollars) will be pooled for the project in a bid to better utilize and restore the desert, safeguard the ecological security of the Yellow River basin, and help the country achieve its carbon peak and carbon neutrality as promised.

The project will log an annual average of more than 4.1 billion kilowatt-hours (kWh) of on-grid electricity, thus helping save over 1.25 million tonnes of standard coal or slash 3.4 million tonnes of carbon dioxide emissions.

Situated in the Kubuqi desert, China’s seventh-largest desert, the base is of great importance to the region’s green and sustainable development in terms of its ecosystem, economy and society, according to Zhang Bin, deputy director of the region’s energy bureau.

Australia continues to back its coal industry as many Western nations have turned their back on the dirtiest fossil fuel, approving a third coal mine extension in a month and bolstering partnerships for long-term coal exports.

We already know the demand is there, with China requiring increasing coal to bridge its fuel demand gap, but Australia is one of the few remaining nations outside of Asia to continue to back coal as a major energy source.

Earlier this month, Australia approved its third coal mine extension within a month. In September, Environment Minister Sussan Ley approved extensions for the Whitehaven Coal and Wollonggong Coal mines. The latest extension approval was for the Glencore Mangoola thermal coal mine in New South Wales, allowing it to continue production for eight more years, mining approximately 52 million tons of coal.

But it’s not just other countries that are putting pressure on Australia to join them in curbing its coal production. In May, a ruling from Australia’s high court encouraged the country’s environment minister to reconsider coal mine expansions due to the obligation the ministry has to the Australian childrens’ future, as well as the general impact of coal production and use on climate change.

While environmental activists and international energy organizations are less than happy with Australia’s ongoing support for coal, many Australians back the decision to expand mines because of their contribution to the country’s employment. Around 400 workers are currently employed at Glencore, and the expansion will add 100 construction jobs.

Australia is the world’s biggest exporter of coal, with strong links to the Asian market. To date, Australia has made no pledge to reduce carbon emissions to net-zero by 2050, unlike many of its Western counterparts. Many countries across Europe and North America have vowed to rapidly reduce carbon emissions, an aim that is expected to be reinforced in the upcoming COP26 climate summit in Glasgow this month, which Australia’s Prime Minister Scott Morrison will attend.

However, shortly after the announcement of the third expansion project, Australia’s resources minister proposed the establishment of a state-run $180-billion lending option for the coal industry, with the stipulation that borrowers support a net-zero carbon emissions target. This strategy comes as banks and insurers become less willing to lend to the dying coal sector.

Australia’s dependence on coal is not surprising considering its close proximity to the Asian market, where coal demand remains high. Several Asian countries, most notably China and India with their ever-expanding populations, continue to rely on coal, as well as oil and gas, to meet their national energy demand.

“While China unambiguously needs as much coal as it can get its hands on to avert a [fourth-quarter] slowdown due to the tyranny of rolling power shortages, geopolitical tensions with Australia have waylaid the most convenient source of high-calorific coal from Down Under,” Vishnu Varathan, head of economics and strategy for Asia and Oceania treasury department at Mizuho, stated of China’s reliance on coal imports.

However, in late 2020, China ended its coal imports from Australia following difficult trade relations, namely Australia’s support for an international inquiry into China’s management of the Covid-19 pandemic. Coal is Australia’s third-largest export to China, a country that accounts for 32.6% of all Australian exports, with Australia exporting more to China than it imports.

After reportedly telling utilities and steel mills to stop all Australian coal imports, China began to import its coal from regional exporters Indonesia, Mongolia, and Russia. India has apparently been buying discounted coal that was left stranded in Chinese customs following the falling out between China and Australia. In recent months, Indian cement makers and sponge iron plants have sought to boost supplies with this low-cost option.

The Chinese stockpile of Australian coal, and its willingness to sell the supply at a discount, suggests the dedication it had to cutting trade ties with Australia. However, the energy crisis experienced in recent months has finally proved too much for China to continue holding a grudge. Fuel shortages and high energy costs have led the Chinese government to resume Australian coal imports. This month, China released Australian coal from bonded warehouses in addition to receiving 450,000 tons of Australian coal cargoes at the beginning of the month.

During the time that China refused imports, Australia did not just simply wait for China to come running back, rather it fostered its relationship with India. Australia held its first joint working group meeting on coal and mines with India this September to encourage greater participation in Australia’s ongoing coal production. Australia identifies India as a key market for some of its lower-grade coal, with prices significantly undercutting those of the premium coal products imported by China.

With little commitment to net-zero aims, ongoing support for coal plant expansion projects despite a high court interjection, and ongoing trade links with high-demand countries across Asia, it seems unlikely that Australia will curb its coal production or make it more carbon-friendly any time soon, despite international pressure to do so