Virginia City to Divest Budget Funds From Fossil Fuels

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Officials in Charlottesville, Virginia, have voted to divest the city’s operating budget investments from any entity involved in the production of fossil fuels or weapons.

 

WVIR-TV reports the City Council voted 4-1 last week to complete those divestments within the next 30 days.

 

Supporters of divestment argued that weapons and fossil fuels do not align with the city’s strategic plan goals, including being responsible stewards of natural resources.

 

Officials said fossil fuel and weapons companies make up only a small portion of the city’s operating fund investment portfolio. They said the divestment will have little or no financial impact on the city.

 

Several cities worldwide have fully committed to divestment from fossil fuels according to 350.org’s Fossil Free project, including other college towns like Ann Arbor, Michigan, and Berkeley, California.

 

 

 

Boris Johnson to EU: I Won’t Pay Unless Deal Improved

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Former Foreign Secretary Boris Johnson is stepping up his campaign to be Britain’s next prime minister by challenging the European Union over Brexit terms.

Johnson told the Sunday Times he would refuse to pay the agreed-upon 39 billion-pound ($50 billion) divorce settlement unless the EU offers Britain a better withdrawal agreement than the one currently on the table.

 

The contest for leadership of the Conservative Party officially begins Monday. The post was vacated Friday by Prime Minister Theresa May, who will serve as a caretaker until a new leader is chosen and moves into 10 Downing Street.

 

The party expects to name its new leader in late July.

 

Johnson, the early frontrunner in a crowded field, told the newspaper he is the only contender who can triumph over the Labour Party led by Jeremy Corbyn and Nigel Farage’s Brexit Party.

 

Johnson is a hard-line Brexit advocate who vows to take Britain out of the EU on the Oct. 31 deadline even if there is no deal in place.

 

He and other contenders say they can get better terms from EU leaders in Brussels than the deal that May agreed to but was unable to push through Parliament. Those failures led to her decision to resign before achieving her goal of delivering Brexit.

 

But EU officials have said they are not willing to change the terms of the deal May agreed to.

 

One of Johnson’s main rivals for the post, Environment Secretary Michael Gove, continued to be sidetracked Sunday by questions about his acknowledged cocaine use when he was a youthful journalist.

 

He told BBC Sunday that he was “fortunate” not to have gone to prison following his admission of cocaine use. He said he was “very, very aware” of the damage drugs can cause.

 

Nominations for the leadership post close Monday afternoon.

 

 

Trade Experts Unruffled About Rare Earth Minerals Supply

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Rising trade tensions between the U.S. and China have sparked worries about the 17 exotic-sounding rare earth minerals needed for high-tech products like robotics, drones and electric cars. 

 

China recently raised tariffs to 25% on rare earth exports to the U.S. and has threatened to halt exports altogether after the Trump administration raised tariffs on Chinese products and blacklisted telecommunications giant Huawei.  

  

With names like europium, scandium and ytterbium, the bulk of rare earth minerals are extracted from mines in China, where lower wages and lax environmental standards make production cheaper and easier.  

  

But trade experts say no one should panic over China’s threats to stop exporting the elements to the U.S. 

 

There is a U.S. rare minerals mine in California. And Australia, Myanmar, Russia and India are also top producers of the somewhat obscure minerals. Vietnam and Brazil both have huge rare earth reserves.  

  

The sky is not falling,'' said Mary B. Teagarden, a China specialist, professor and associate dean at the Thunderbird School of Global Management in Phoenix.There are alternatives.” 

 

Simon Lester, associate director of the center for trade policy studies at the Cato Institute think tank in Washington, agreed. “Over the short term, it could be a big disruption, but companies that want to stay in business will find a way,” he said.    

Although the U.S. is among the world’s top 10 countries for rare earths production, it’s also a major importer of the minerals, looking to China for 80% of what it buys from other countries, according to the U.S. Geological Survey. China last year produced 120,000 metric tons of rare earths, while the United States produced 15,000 metric tons.  

Mountain Pass Mine

 

The United States also depends on China to separate the minerals pulled from Mountain Pass Mine, the sole rare earths mine in the U.S., which was bought two years ago by the Chicago-based JHL Capital Group LLC .  

  

“We need to develop a U.S.-based supply chain so there is no possibility we can be threatened,” said Ryan S. Corbett, managing director of JHL Capital. 

 

The mine’s top products are neodymium and praseodymium, two elements that are used together to make the lightweight magnets that help power electric cars and wind turbines and are found in electronics such as laptop hard drives. 

 

Mountain Pass, located in San Bernardino County, Calif., was once the top supplier of the world’s rare earth minerals, but China began taking over the market in the 1990s and the U.S. mine stopped production in 2002.  

  

Mountain Pass later restarted production, only to close again amid a 2015 bankruptcy. Corbett said extraction resumed last year after JHL Capital purchased the site with QVT Financial LP of New York, which holds 30%, and Shenghe Resources Holding Co. Ltd. of China, a nonvoting shareholder with 9.9%.  

  

Since then, Mountain Pass has focused on achieving greater autonomy with a $1.7 billion separation system set to go online late next year that would allow it to skip sending rare earths ore to China for that step. 

 

China could hurt itself in the long run by cutting off the U.S., specialists said.  

  

David Merriman, a rare earths analyst for Roskill commodity research in London, said that during a similar trade flap with China in 2011, Japan began looking to other countries, including Australia, for the minerals needed to manufacture electronics.   

Australian rare earths production giant Lynas Corp. Ltd. this month announced a proposed deal with Blue Line Corp. of Texas for a separation facility at an industrial site in Hondo, Texas.  

Other deposits

  

There may be other options, too. Deposits of rare earths have been detected in other U.S. states, including Wyoming and Alaska, as well in several remote areas of Canada. The Interior Department is calling for more prospecting and mining of “critical minerals,” including on public lands currently considered off-limits, and even in oceans. 

 

We have to be more forward-thinking,'' said Alexander Gysi, an assistant professor in geology and geological engineering at the Colorado School of Mines in Golden.It would be better for the U.S. to have a greater range of sources for rare earths.”

G-20 Finance Leaders’ Goal: Adapt to Turmoil in Trade, Tech

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Financial leaders of the Group of 20 gathered Saturday to brainstorm ways to adapt global finance to an age of trade turmoil and digital disruptions.

The central bank governors and other financial regulators meeting in this southern Japanese port city also flagged risks from upsets to the global economy as Beijing and Washington clash over trade and technology.

Asked if other financial leaders attending the meetings in Fukuoka were raising concerns over the impact on global markets and trade from President Donald Trump’s crusade against huge, chronic U.S. trade deficits, especially with China, U.S. Treasury Secretary Steven Mnuchin said no.

Trump and members of his administration contend that the ripple effects of the billions of dollars in tariffs imposed by Washington on Chinese exports over the past year are creating new business opportunities for other businesses in the U.S. and other countries.

But Mnuchin acknowledged that growth has been slowing in Europe, China and other regions.

“I’m hearing concerns if we continue on this path there could be issues. There will be winners and losers,” he said.

The G-20 officials were expected to express their support for adjusting monetary policy, for example by making borrowing cheaper through interest rate cuts, in a communique to be issued as meetings wrap up on Sunday.

Their official agenda on Saturday was focused on longer-term, more technical issues such as improving standards for corporate governance, policing cyber-currencies and reforming tax systems to ensure they are fair for both traditional and new, online-based industries.

Ensuring that governments capture a fair share of profits from the massive growth of businesses like Google and Amazon has grown in importance over the many years the G-20 finance chiefs have been debating the reforms aimed at preventing tax evasion and modernizing policies to match a financial landscape transformed by technology.

One aim is to prevent a “race to the bottom” by countries trying to lure companies by offering unsustainably and unfairly low tax rates as an incentive.

Mnuchin said he disagreed with details of some of the proposals but not with the need for action.

“Everyone, we are now facing a turning point,” Japanese Finance Minister Taro Aso told the group. “This could be the biggest reform of the long established international framework in over 100 years.”

Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. France and Britain have already enacted stop-gap tax systems for digital businesses, but they are not adequate, said French Finance Minister Bruno Le Maire.

“For the time being there is no fair taxation of this new economic model,” Le Maire said, adding that the hope is to have an agreement by the year’s end.

The issue is not confined to the wealthiest nations. Indonesia, a developing country of 260 million with more than 100 million internet users, is also struggling to keep up.

“The growth has been exponential but we cannot capture this growth in our GDP as well as in our tax revenue,” said Indonesian Finance Minister Mulyani Indrawati.

Mobile banking, big data, artificial intelligence and cloud computing are among many technologies that are expanding access to financial services for many people who in the past might not have even used banks.

But such innovations raise questions about protecting privacy and cybersecurity, Aso said.

“We need to stay vigilant against risks or challenges,” Aso said.

Japan, the world’s third-largest economy, is hosting the G-20 for the first time since it was founded in 1999. The venue for the annual financial meeting, Fukuoka, is a thriving regional hub and base for start-ups.

The G-20 groups include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.

With Mexico Deal Done, US Urges China to Resume Trade Talks

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One down, still others to go. President Donald Trump claimed a victory after Washington and Mexico agreed on measures to stem the flow of Central American migrants into the United States.

Trump called off plans to impose a 5% tax on Mexican exports, and Treasury Secretary Steven Mnuchin, speaking to reporters Saturday in Fukuoka on the sidelines of a meeting of financial leaders of the Group of 20 major economies, urged China to follow suit and return to stalled negotiations.

Mnuchin said he planned to have a private conversation with the head of China’s central bank, Yi Gang. In a G-20 group meeting later in the day, the two were seen exchanging friendly remarks, but there were no fresh signs Beijing is ready to compromise in the dispute over trade and technology.

“From our perspective of where we are now, it is a result of them backtracking on significant commitments,” Mnuchin said. “I don’t think it’s a breakdown in trust or good or bad faith. … If they want to come back and complete the deal on the terms we were negotiating, that would be great.”

Mnuchin said he had no direct message to give to Yi, who has participated in the 11 rounds of talks so far on resolving the dispute between the world’s two largest economies over technology and trade.

He said there were no plans for trade talks in Washington or Beijing before Presidents Donald Trump and Xi Jinping are due to meet in Osaka for the G-20 summit on June 28-29.

“This will be a one-on-one with Gov. Yi to talk alone about the trade issues,” Mnuchin said. But he added, “I would expect the main progress will be at the G-20 meetings of the presidents.”

The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing Beijing of using predatory means to lend Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. Those tactics, the U.S. contends, include hacking into U.S. companies’ computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidizing Chinese tech firms.

The deal with Mexico helps alleviate uncertainty over the deal Washington recently reached on revising the North American Free Trade Agreement. The new U.S.-Mexico-Canada deal has been heading toward a vote in Congress and might have been stymied by new tariffs. But the U.S. is still negotiating new trade deals with Japan after withdrawing from a Pacific Rim arrangement, the Obama-era proposed Trans-Pacific Partnership.

America’s huge trade deficit with China — a record $379 billion last year — is one factor driving Trump’s frustrations with Beijing.

The United States now is imposing 25% taxes on $250 billion in Chinese goods. Beijing has counterpunched by targeting $110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the U.S. heartland.

The U.S. side has been preparing to expand retaliatory tariff hikes of 25% on another $300 billion of Chinese products, and Mnuchin indicated it was prepared to take that step if negotiations with Beijing fail. But he said Trump had not yet made a decision on that, suggesting room for further delays depending on the outcome of his discussion with Xi later this month.

“As the president has said, if we can get the right agreement, that’s great. If we can’t, we will proceed with tariffs,” he said.

 

US, China Talk Trade at G-20 Finance Meeting

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U.S. Treasury Secretary Steven Mnuchin said Saturday that he plans to speak privately with China’s central bank governor about trade on the sidelines of annual Group of 20 finance talks in southern Japan, but has no direct message to give him.

Mnuchin and Yi Gang, chairman of the People’s Bank of China, are to hold routine talks on various issues and then break away for their discussion on trade. Yi, he noted, has participated in now-stalled talks between Washington and Beijing over the trade and technology dispute between the two largest economies.

“This will be a one-on-one with Gov. Yi to talk alone about the trade issues,” Mnuchin told reporters in the Japanese city of Fukuoka. But he added, “I would expect the main progress will be at the G-20 meetings of the presidents.”

He said there were no plans for trade talks in Washington or Beijing before Presidents Donald Trump and Xi Jinping are to meet in Osaka for the G-20 summit June 28-29.

​Trump tariffs

The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing Beijing of using predatory means to lend Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. Those tactics, the U.S. contends, include hacking into U.S. companies’ computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidizing Chinese tech firms.

Trump has also complained repeatedly about America’s huge trade deficit with China, a record $379 billion last year.

The United States now is imposing 25% taxes on $250 billion in Chinese goods. Beijing has counterpunched by targeting $110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the U.S. heartland.

The U.S. side has been preparing to expand retaliatory tariff hikes of 25% on another $300 billion of Chinese products, and Mnuchin indicated it was prepared to take that step if negotiations with Beijing fail. But he said Trump had not yet made a decision on that, suggesting room for further delays depending on the outcome of his discussion with Xi later this month.

​‘Hearing concerns’

Asked if other financial leaders attending the meetings in Fukuoka were raising the issue, Mnuchin said no. But he acknowledged the slowdown in Europe, China and other regions.

“I’m hearing concerns if we continue on this path there could be issues. There will be winners and losers,” he said.

Mnuchin and other officials in the Trump administration assert that the winners from the tariffs standoff, including the United States, will benefit from investments by companies moving their operations out of China to avoid the tariffs.

Countries were welcoming news that after a flurry of negotiations, Trump said he would refrain from imposing 5% tariffs on products from Mexico after it “agreed to take strong measures” to stem the flow of Central American migrants into the United States.

The tariffs that had been scheduled for Monday were “indefinitely suspended” after the two sides signed an agreement, he said in a tweet.

“It’s a good thing,” Japan’s central bank governor, Haruhiko Kuroda, told reporters.

On the agenda: taxes and crime

The agenda for the G-20 talks in Fukuoka on Saturday were mainly concerned with reforms of tax policies, combatting money laundering and cybercrimes, and innovations in financial technologies.

Japan is hosting the G-20 for the first time since it was founded in 1999.

FedEx Ends Amazon’s FedEx Express Plane Service

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FedEx Corp. Friday decided not to renew its contract with Amazon.com Inc. for U.S. cargo delivery through FedEx Express, the unit that delivers packages on planes, a move that reflects the broader trend of the e-commerce company moving services in-house.

Amazon has been building out its own delivery network of planes, trucks and vans, a development that is seen posing a potential long-term challenge to FedEx and delivery rival United Parcel Service Inc., both of which count Amazon as a customer.

FedEx described the decision as a strategic move that would allow it to focus on the broader e-commerce market, a group that would include rivals of Amazon scaling up one- and two-day delivery. FedEx forecast that the market would double to 100 million packages per day in the United States by 2026.

“Amazon had a better rate with UPS, so it made no sense for them to use FedEx,” said Dean Maciuba, director of consulting services at Logistics Trends and Insights.

Other FedEx contracts unaffected

The decision does not impact any existing contracts between Amazon and other FedEx business units or relating to international services, the package delivery company said.

Amazon accounted for less than 1.3% of FedEx’s revenue last year, the company said in its statement.

Analysts said that the ending of FedEx Express’ contract with Amazon is likely to benefit UPS, which gets a relatively larger share of revenue from the online retailer.

“We would expect UPS to report much stronger volume growth in next-day air products over the next several quarters,” Bernstein analyst David Vernon wrote in a client note.

UPS volumes have been boosted by Amazon’s move to one-day shipping for its paid Prime service, and “this news means more growth in lower priced, lower weight, lower service level … domestic express products at UPS,” Vernon said.

Amazon building its fleet

In recent years, Amazon has steadily expanded its fleet of delivery aircraft, which Air Transport Services Group Inc. and Atlas Air Worldwide Holdings have operated.

The company is investing $1.5 billion to build an air cargo hub in northern Kentucky, setting it up to rely less on others for air shipping.

Amazon has 40 leased cargo planes and has signed an agreement to bring 10 more planes into the fleet in the next two years.

“We respect FedEx’s decision and thank them for their role serving Amazon customers over the years,” Amazon said in an emailed statement.

Shares of FedEx, which rose as much as 1.65% earlier in the session, pared gains and closed up 0.75% at $158.02. Amazon shares ended the day 2.8% higher at $1,804.03.

UPS shares closed up 0.2% at $98.23 after rising as much as 1% earlier in the session.

Trump Announces Deal With Mexico Averting Tariffs

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Cindy Saine at the State Department contributed to this report. 

 

U.S. President Donald Trump said late Friday that the United States and Mexico had reached a deal on migration to avert tariffs.

“I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended,” he tweeted.

“Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States,” Trump said.

Earlier Friday, Trump had tweeted that there was a “good chance” the two sides would reach a deal to avert tariffs over the surge of migrants across the U.S. border. However, he added, “If we are unable to make the deal, Mexico will begin paying Tariffs at the 5% level on Monday!”  

U.S. and Mexican officials returned to the negotiating table Friday for a third day of talks to find a way to stem the migrant flow.

Effect on hiring?

Trump’s trade wars with Mexico and other countries appeared to have spooked American companies into putting the brakes on hiring. They added just 75,000 jobs in May, far fewer than the 180,000 economists expected, the Labor Department reported Friday.  

 

Although the jobless rate held steady at a 50-year low of 3.6%, Friday’s figures were the latest signal that the U.S. economy, while healthy, is weakening. Manufacturers, which are particularly sensitive to trade disputes, added only 3,000 jobs, extending an anemic streak of hiring in the sector.

U.S. and Mexican officials discussed a deal calling for Mexico to sharply increase patrols of its border with Guatemala to curb migration, The Washington Post reported, with the deployment of 6,000 National Guard troops. The newspaper said Mexico and the U.S. could overhaul asylum rules throughout the region, requiring Central Americans to first seek refuge in Mexico rather than traveling through it to reach the U.S. 

 

With such a plan in place, the United States could send Guatemala asylum seekers to Mexico, and those from Honduras and El Salvador to Guatemala.  

Earlier Friday in Mexico City, President Andres Manuel Lopez Obrador reiterated his own optimistic position. 

Causes of ‘chaos’

 

“There is dialogue and an agreement can be reached,” Lopez Obrador said. “I’m optimistic we can achieve that.” He added it was a mistake, though, for the U.S. to link migration with trade, saying again that migration must be addressed by solving social and economic problems in Central America.

“The causes of the migratory chaos aren’t being analyzed, only the effects,” he said.  

U.S. authorities have said more than 100,000 undocumented migrants, mostly from the three Central American countries, have crossed into the United States in recent months. The U.S. government announced Wednesday that in May, 144,000 migrants were detained at the border, up 32% from April. It was the highest monthly figure in 13 years. 

 

Some Republican lawmakers, normally close political allies of Trump, had said they would try to block any potential tariffs with legislation, which would have drawn wide support from opposition Democrats. Numerous lawmakers feared rising consumer costs for Americans if the tariffs were imposed on Mexican goods, including cars and numerous food products exported to the U.S.

US Jobs Growth Slows Sharply

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U.S. job growth slowed sharply in May and wages rose less than expected, suggesting the loss of momentum in economic activity was spreading to the labor market, which could increase calls for the Federal Reserve to cut interest rates this year.

The cool-off in hiring reported by the Labor Department on Friday was even before a recent escalation in trade tensions between the United States and two of its major trading partners, China and Mexico. Economists have warned that the trade fights could undermine the economy, which will celebrate 10 years of expansion next month, the longest on record.

The economy thus far has been largely resilient to the trade war with China. President Donald Trump in early May slapped additional tariffs of up to 25% on $200 billion of Chinese goods, which prompted retaliation by Beijing.

Last week, Trump said he would impose a tariff on all goods from Mexico in a bid to stem the tide of migrants across the U.S.-Mexican border. Talks are ongoing to prevent the duties from kicking in at 5% on June 10.

Nonfarm payrolls increased by 75,000 jobs last month, the government said in its closely watched employment report, falling below the roughly 100,000 needed per month to keep up with growth in the working-age population.

The economy created 75,000 fewer jobs in March and April than previously reported. Economists polled by Reuters had forecast payrolls rising by 185,000 jobs last month.

May’s disappointing job growth was flagged by a report on Wednesday from payrolls processing firm ADP showing the smallest gain in private payrolls in nine years last month. Another report this week showed a drop in online ads by businesses looking for help.

Last month’s slowdown in job gains, however, probably understates the health of the labor market as measures such as weekly applications for unemployment benefits and the Institute for Supply Management’s services employment gauge have suggested underlying strength.

Monthly wage growth remained moderate in May, with average hourly earnings increasing six cents, or 0.2% following a similar gain in April. That lowered the annual increase in wages to 3.1% from 3.2% in April. The average workweek was unchanged at 34.4 hours last month.

The moderation in wage gains, if sustained could cast doubts on the Fed’s optimism that inflation would return to the U.S. central bank’s 2% target. Financial markets are pricing in two rate cuts this year.

The tepid employment report added to soft data on consumer spending, business investment, manufacturing and homes sales in suggesting the economy was losing momentum in the second quarter following a temporary boost from exports, inventory accumulation and defense spending. Growth is cooling as the massive stimulus from last year’s tax cuts and spending increases fades.

The Atlanta Fed is forecasting gross domestic product rising at a 1.5% annualized rate in the second quarter. The economy grew at a 3.1% pace in the first quarter.

The unemployment rate remained near a 50-year low of 3.6% in May. The jobless rate was partly pushed down by workers dropping out of the labor force over the last four months.

Employment gains in May slowed across all sectors. Manufacturing payrolls increased by 3,000 last month.

Manufacturing employment will be watched closely for signs of the impact of the tariffs on the economy. Factory output has been weak and sentiment dropped to a 31-month low in May, with manufacturers worried mostly about the trade tensions. Employers in the construction sector hired 4,000 workers in May. Government payrolls fell by 15,000 jobs.

 

Fiat Chrysler Drops Renault Merger Idea

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Italian-U.S. carmaker Fiat Chrysler on Thursday pulled the plug on its proposed merger with Renault, saying negotiations had become “unreasonable” because of  political resistance in Paris.  

 

Fiat Chrysler Automobiles, or FCA, had stunned the markets last week with a proposed “merger of equals” with the French group that would — together with Renault’s Japanese partners, Nissan and Mitsubishi Motors — create an auto giant spanning the globe.  

 

The French government, which controls 15 percent of Renault, gave the deal a conditional green light, with analysts suggesting it wanted more control over the combined group alongside Fiat’s Agnelli family. 

 

FCA said late Wednesday that it “remains firmly convinced of the compelling, transformational rationale” of the tie-up, which it said was “carefully balanced to deliver substantial benefits to all parties.”

 

“However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” it said in a statement.  

 

On Thursday, FCA chief John Elkann stood by the decision to start, and then leave, the merger talks. 

 

“When it becomes clear that the conversations have been brought to the point beyond which it becomes unreasonable to go, it is necessary to be equally brave to interrupt them,” Elkann wrote in a letter to employees published by Italian media.  

Renault expressed its “disappointment” at the turnabout. 

 

“We view the [Fiat] opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European-based global auto powerhouse,” it said in a statement. 

 

The combined group, including Nissan and Mitsubishi, would have been by far the world’s biggest, with total sales of 15 million vehicles, compared with both Volkswagen and Toyota, which sell around 10.6 million apiece. 

 

Shares in Renault plunged by more than 6 percent on the Paris stock exchange. In Milan, FCA shares also initially slid but then recovered to close up 0.1 percent.

Nissan holds key

Despite the verbal sparring that erupted after FCA’s announcement, industry experts did not rule out talks being resumed.  

 

“The collapse of the proposed Fiat Chrysler/Renault merger leaves both firms exposed to the shifting dynamics of a sector at a crossroads,” Ilana Elbim, credit analyst for Hermes Investment Management, said in a note.  

 

Pointing to falling sales volumes in major auto markets, she said “mega-mergers designed to save on capital expenditures remain inevitable.” 

 

On Tuesday, Renault’s board had said it was studying FCA’s offer “with interest,” but held off final approval pending further deliberations.  

 

By Wednesday, all Renault directors had come around in favor of the merger, with the exception of the employee representative affiliated with the powerful CGT union and two from Nissan who abstained, according to a source close to Renault.   

The two Nissan directors were said to have asked for more time to approve the deal. There was no official comment from Nissan headquarters in Tokyo. 

 

Relations between Renault and Nissan have come under strain since the arrest in November of their joint boss, Carlos Ghosn, who awaits trial in Japan on charges of financial misconduct. 

 

French Finance Minister Bruno Le Maire had laid down conditions for the tie-up with FCA, insisting there be no plant closures and that the Renault-Nissan alliance be preserved.  

 

The Renault source said Le Maire had asked for another board meeting next Tuesday following his return from a trip to Japan, where he was to discuss the proposal with his Japanese counterpart at a meeting of G-20 finance ministers.  

Blame game

A source close to FCA said it was the “sudden and incomprehensible” objections by Le Maire’s ministry that had caused the deal to collapse. 

 

Italian Deputy Prime Minister Luigi Di Maio said: “When politics tries to intervene in economic procedures, they don’t always behave correctly, I don’t want to say any more.”   

But Le Maire stressed that, of his conditions, only the explicit approval of Nissan remained to be secured, while aides denied that the ministry had played politics with the deal. 

 

A source close to the finance ministry said the French government “regrets the hasty decision of FCA.” 

 

“Despite significant progress, a short delay was still necessary so that all conditions set by the state could be met,” it said. 

 

Le Maire indicated the French government was amenable to changes at Renault despite FCA’s U-turn. 

 

“We remain open to the prospect of industrial consolidation, but once again, in calmness, without haste, to guarantee the industrial interests of Renault and the industrial interests of the French nation,” he told the French parliament. 

 

For his part, Elkann said FCA “will continue to be open to opportunities of all kinds that offer the possibility of strengthening and accelerating the realization of this strategy and creating value.”