A Canadian company said Tuesday it plans to start construction of the disputed Keystone XL oil sands pipeline through the U.S. Midwest in April, after lining up customers and money for a proposal that is bitterly opposed by environmentalists and some American Indian tribes.
Construction would begin at the pipeline's border crossing in Montana, said TC Energy spokesman Terry Cunha. That would be a milestone for a project first proposed in 2008.
The announcement came after the company secured $1.1 billion in financing from the Canadian provincial government of Alberta to cover construction through 2020 and agreements for the transport of 575,000 barrels of oil daily.
Despite plunging oil prices in recent weeks, Alberta Premier Jason Kenney said the province's resource-dependent economy could not afford for Keystone XL to be delayed until after the coronavirus pandemic and a global economic downturn have passed.
"This investment in Keystone XL is a bold move to retake control of our province's economic destiny and put it firmly back in the hands of the owners of our natural resources, the people of Alberta," Kenney said.
A spokeswoman for Montana Gov. Steve Bullock said he had been in contact with Kenney to raise concerns over an estimated 100 workers coming into the state for the line's construction. Bullock said that could further strain rural health systems facing the coronavirus.
"TC Energy holds a tremendous responsibility to appropriately manage or eliminate this risk and we will continue to monitor the plans for that response," Bullock spokeswoman Marissa Perry said.
There was only one confirmed infection as of Friday from eastern Montana counties along the line's route, but the virus has been spreading in rural areas in recent days.
Company representatives said they would follow the guidance of government and health authorities to determine the best way to keep construction crews and the public safe.
The pipeline was rejected twice by the administration of President Barack Obama over worries it could make climate change worse. President Donald Trump has been a strong proponent of the $8 billion project and issued it a permit that environmentalists say was illegal.
A court hearing in the permit dispute is set for April 16 before U.S. District Judge Brian Morris in Great Falls. Morris has previously ruled against the project.
The company has previously said it also plans in April to begin work on camps where pipeline construction workers would live in Fallon County, Montana and Haakon County, South Dakota.
The company said the 1,200-mile (1,930-kilometer) pipeline would start sending oil to the U.S. in 2023. It's designed to move up to 830,000 barrels (35 million gallons) of crude daily at from the oil sand fields of western Canada to Steele City, Nebraska, where it would connect to other pipelines that feed oil refineries on the U.S. Gulf Coast.
Opponents in January asked Morris to block any work. They said clearing and tree felling along the route would destroy bird and wildlife habitat. Native American tribes along the pipeline route have said that the pipeline could break and spill oil into waterways like Montana's Missouri River.
The judge in December had initially denied a request from environmentalists to block construction because no work was immediately planned.
TC Energy filed reports with court in recent weeks declaring its intentions to start work.
"At this time, we are continuing with our planned activities and will adjust if it becomes necessary," Cunha said.
The remaining $6.9 billion in construction costs is expected to be funded through a $4.2 billion loan guaranteed by the Alberta government and a $2.7 billion investment by TC Energy.
Once the project is complete, TC Energy expects to buy back the Alberta government's investment and refinance the $4.2 billion loan.
"We thank U.S. President Donald Trump and Alberta Premier Jason Kenney as well as many government officials across North America for their advocacy without which, individually and collectively, this project could not have advanced," TC Energy chief executive Russ Girling said in a statement.
A representative of the Sierra Club said the decision to push forward with the project amid the coronavirus pandemic was "a shameful new low" for the company. Pipeline opponents contend workers could inadvertently spread the virus to rural areas with limited health care services.
"By barreling forward with construction during a global pandemic, TC Energy is putting already vulnerable communities at even greater risk," said the Sierra Club's Catherine Collentine. "We will continue to fight to ensure this dangerous pipeline is never completed."
Opposition to another pipeline built through the region several years ago, the Dakota Access Pipeline, culminated in months of protests, sometimes violent, near the Standing Rock Sioux Reservation that straddles the North Dakota-South Dakota state line.
Lawmakers in some states have sought to curb the possibility of similar protests against Keystone XL.
South Dakota Gov. Kristi Noem successfully pushed a legislative measure to revive the state's criminal and civil penalties for rioting and inciting a riot, drawing demonstrations from groups opposed to the pipeline. The law she signed last week enacts criminal and civil penalties for people who "urge" force or violence.
Noem said she spoke with TC Energy on Monday and did not expect construction to begin in South Dakota until the summer.
Another oil pipeline in TC Energy's Keystone network in October spilled an estimated 383,000 gallons (1.4 million liters) of oil in eastern North Dakota.
Critics have said a damaging spill from Keystone XL is inevitable given the length of the line and the many rivers and other waterways it would cross beneath.
Inflation in the 19 countries that use the euro currency sagged to 0.7% in March from 1.2% February as the virus outbreak and an oil price war between Saudi Arabia and Russia rippled through the economy.
A key factor in the officials figures published Tuesday was volatile energy prices, which plunged 4.3% from the previous month.
A decline in oil prices since the start of the year has been accelerated by Saudi Arabia's decision to increase production and preserve market share after Russia balked at joining in common cuts among members of the OPEC oil cartel and allied producing countries.
The virus outbreak has led to a wide-ranging decline in economic activity as a wave of business closures and social distancing measures swept over Europe.
Global shares were mostly higher after China reported strong manufacturing data, extending an overnight rally on Wall Street.
France's CAC 40 added 1.5% in early trading to 4,443.47. Germany's DAX gained 2.5% to 10,063.41, while Britain's FTSE 100 jumped 2.2% to 5,685.74.
U.S. shares were set to drift higher, with Dow futures edging up 0.6% to 22,460.20. S&P 500 futures also rose, by 0.7% to 2,645.18.
Still, it was a welcome sign of resilience.
Japan's benchmark Nikkei 225 rose in morning trading but reversed course to dip nearly 0.9%, finishing at 18,917.01. Australia's S&P/ASX 200 also fell back, losing 2.0% to 5,076.80, while South Korea's Kospi picked up 2.2% to 1,754.64. Hong Kong's Hang Seng stood at 23,603.48, up 1.9% and the Shanghai Composite inched up 0.1% to 2,750.30.
India's Sensex jumped 3.6% to 29,467.39. Shares rose in Thailand, Indonesia and Singapore.
An official survey showed China's manufacturing rebounded in March as authorities relaxed anti-disease controls and allowed factories to reopen. But an industry group warned Tuesday that the economy has yet to fully recover.
The purchasing managers' index issued by the Chinese statistics bureau and an official industry group rose to 52 from February's record low of 35.7 on a 100-point scale on which numbers above 50 show activity increasing.
The overnight rally on Wall Street tacked more gains onto a recent upswing for the market, which is coming off the best week for the S&P 500 in 11 years, albeit after falling into bear market territory. Optimism is budding that the worst of the selling may be approaching, but markets around the world are still wary as leaders work to nurse their economies through the pandemic. The S&P 500 remains 22.4% below its record set last month, and oil tumbled to an 18-year low.
"Despite some respite for markets overnight, uncertainty remains as the spread of the COVID-19 virus continues," said Zhu Huani at Mizuho Bank, warning against too much optimism.
"Central banks and authorities continue to step up measures to support the economy."
Sentiment was brightened by news of potential developments in the fight against the coronavirus outbreak.
Johnson & Johnson leaped 8% after saying it expects to begin human clinical studies on a vaccine candidate for COVID-19 by September. Abbott Laboratories jumped 6.4% after saying it has a test that can detect the new coronavirus in as little as five minutes.
Stocks jumped last week after the Federal Reserve promised to buy as many Treasurys as it takes to get lending markets running smoothly and Capitol Hill reached a deal on a $2.2 trillion rescue package for the economy.
"The market wants to see everything line up, and last week everything lined up," said Nela Richardson, investment strategist at Edward Jones, referring to the unprecedented aid from the Fed and Congress.
Now, she said, President Donald Trump also appears to be in sync with health experts about the need to restrict the economy to slow the spread of the virus. Trump on Sunday extended social-distancing guidelines, which recommend against group gatherings larger than 10, through the end of April. Earlier, he had said he wanted the economy open by Easter.
"Now that message is in line," said Richardson. "All these things line up coming into this week, and that's why you saw strong performance last week continuing today."
Economists expect a number of weak reports on the economy to come in through the week. The lowlight will likely be Friday's jobs report, where economists expect to see the steepest drop in the nation's payrolls since the Great Recession.
The number of known infections around the world has topped 780,000, according to Johns Hopkins University. The United States has the highest number in the world, more than 160,000.
Most people who contract COVID-19 have mild or moderate symptoms, which can include fever and cough. But for others, especially older adults and people with existing health problems, the virus can cause pneumonia and require hospitalization.
More than 37,000 have died worldwide due to COVID-19, while more than 160,000 have recovered.
ENERGY: Benchmark U.S. crude added $1.10 to $21.19 a barrel. It fell 6.6% to $20.09 a barrel on Monday, after touching its lowest price since 2002. Oil started the year above $60 and has plunged on expectations that a weakened economy will burn less fuel. The world is awash in oil, meanwhile, as producers continue to pull more of it out of the ground.
Brent crude, the international standard, picked up 72 cents to $27.14 per barrel.
CURRENCIES: The dollar was trading at $108.34, up from $107.76 on Monday. The euro was little changed, at $1.0996 from $1.0995.
Chinese tech giant Huawei said Tuesday its sales of smartphones and other products grew by double digits last year despite U.S. sanctions but warned it now faces a "more complicated" global environment.
Huawei Technologies Ltd. is embroiled in a series of disputes with Washington, which accuses the company of being a security risk. The company denies the accusation, and Chinese officials say the Trump administration is abusing national security claims to restrain a rival to U.S. tech companies.
Huawei is China's first global tech brand and most successful private sector company. Its conflict with Washington has added to tension over Beijing's technology ambitions and trade surplus that prompted President Donald Trump to launch a tariff war with China in 2018.
Last year's sales rose 19.1% over 2018 to 858.8 billion yuan ($123 billion), in line with the previous year's 19.5% gain, the company reported. Profit increased 5.6% to 62.7 billion yuan ($9 billion), decelerating from 2018's 25% jump.
Business "remains solid" despite "enormous outside pressure," Eric Xu, one of three people who take turns as Huawei's chairman, said in a statement.
However, Xu warned, "the external environmental will only get more complicated going forward."
Sanctions approved by President Donald Trump in May will, if fully enforced, cut off access to most U.S. components and technology. Washington has granted extensions for some products, but Huawei founder Ren Zhengfei has said he expects the barriers to be enforced.
The company, the world's No. 2 smartphone brand behind Samsung, said 2019 handset sales rose 15% to 240 million.
Huawei phones can keep using Google's Android operating system but face sales challenges because the American company is blocked from supplying music and other popular services for future models.
Huawei is creating its own services to replace Google and says its system had 400 million active users in 170 countries by the end of 2019.
Establishing its own ecosystem requires Huawei to persuade developers to write applications for its new system, a challenge in an industry dominated by Android and Apple's iOS-based applications.
Huawei also is, along with Sweden's LM Ericsson and Nokia Corp. of Finland, one of the leading developers of fifth-generation, or 5G, technology meant to expand networks to support self-driving cars and other futuristic applications.
The Trump administration is lobbying European governments and other U.S. allies to avoid Huawei equipment as they prepare to upgrade to 5G. Australia, Taiwan and some other governments have imposed curbs on use of Huawei technology, but Germany and some other nations say the company will be allowed to bid on contracts.
Huawei, which says it is owned by the 104,572 members of its 194,000-member workforce who are Chinese citizens, denies it is controlled by the ruling Communist Party or facilitates Chinese spying.
The company responded to Trump's export controls by removing American components from its major products.
The company has unveiled its own processor chips and smartphone operating system, which helps to reduce its vulnerability to American export controls. The company issued its first smartphone phone last year based on Huawei chips instead of U.S. technology.
Huawei also is embroiled in legal conflicts with Washington.
Its chief financial officer, Meng Wanzhou, who is Ren's daughter is being held in Vancouver, Canada, for possible extradition to face U.S. charges related to accusations Huawei violated trade sanctions on Iran.
Separately, U.S. prosecutors have charged Huawei with theft of trade secrets, accusations the company denies.
The company, headquartered in the southern city of Shenzhen, also has filed lawsuits in American courts challenging government attempts to block phone carriers from purchasing its equipment.
Asian markets started the week with fresh losses as countries reported surging numbers of infections from the coronavirus that has prompted shutdowns of travel and business in many parts of the world.
Japan's benchmark fell nearly 3% and other regional markets were mostly lower. Shares in Australia surged 7% after the government promised more recession-fighting stimulus.
"We want to keep the engine of our economy running through this crisis," Prime Minister Scott Morrison told reporters in Canberra.
The unprecedented $130 billion package includes wage subsidies of up to $1,500 per two weeks to businesses to keep workers on the job.
U.S. futures rebounded, gaining nearly 1%, but oil prices were lower.
Tokyo's Nikkei 225 lost 2.8% to 18,851.04, while the Kospi in South Korea reversed early losses, gaining 0.4% to 1,717.10. The Shanghai Composite shed 0.7% to 2,752.53, while the Hang Seng in Hong Kong lost 0.4% to 23,399.38.
Shares fell in Taiwan and Southeast Asia. India's Sensex fell 2%.
Hopes that a $2 trillion relief bill would ease the economic havoc brought by the pandemic fell flat on Friday, as the major indexes ended lower. The S&P 500 still gained 10.3% last week, its biggest weekly win since 2009. The Dow Jones Industrial Average's 12.8% weekly gain was its biggest since 1938. But the market is still down 25% from the peak it reached a month ago.
The pandemic relief bill approved by the Congress and signed Friday by President Donald Trump includes direct payments to households, aid to hard-hit industries like airlines and support for small businesses. Analysts expect markets to remain turbulent, however, until the outbreak begins to wane.
"Sentiment once again took a turn for the worse going into a week of reckoning by means of economic fundamentals," Jingyi Pan of IG said in a commentary. "The rally seen for Wall Street last week may amount to little more but a relief rally with sentiment turning sour once again going into a fresh week."
The push to deliver financial relief has gained urgency worldwide as the outbreak widens. The number of cases in the U.S. has now surpassed those in China and Italy, climbing to more than 142,000 known cases, according to Johns Hopkins University. The worldwide total has topped 723,000, and the death toll has topped 34,000, while nearly 152,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, or death.
The damage to corporate profits, the ultimate driver of stock prices, remains uncertain. Very few companies have dared to issue forecasts capturing the damage, though traders are girding for discouraging results in the next few weeks as earnings reporting season begins. Many companies have simply withdrawn their profit forecasts altogether.
At the start of this year, analysts expected S&P 500 companies' earnings would grow 4.4% in the January-March quarter. They now expect earnings will be down 4.1%, according to FactSet.
Earnings for airlines, which have been hit by lost bookings as businesses and individuals canceled travel plans to minimize their risk of contracting the virus, are expected to be catastrophic. Delta went from an expected 2.2% decline to a 108% plunge.
Energy companies have suffered, meanwhile, by a plunge in oil prices partly due to a price war that broke out early this month between Saudi Arabia and Russia. The energy sector of the S&P 500 has lost half its value this year.
U.S. benchmark crude dropped 4.2% or $91 cents on Monday to $20.60 per barrel in electronic trading on the New York Mercantile Exchange. It slid 4.8% to close at $21.51 a barrel on Friday. Goldman Sachs has forecast that it will fall well below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
Brent crude, the international standard, gave up 4.2% or $1.16 to $26.79 per barrel.
The yield on the 10-year Treasury slipped to 0.67% from 0.68% late Friday. Lower yields reflect dimmer expectations for economic growth and greater demand for low-risk assets.
In currency trading, the dollar was at 107.75 Japanese yen, down from 107.94 late Friday. The euro weakened to $1.1078 from $1.1142.