Hurricane Otis leaves 100 dead or missing in Mexico

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Hello,

The week begins on a sombre note in Mexico, with the count of deceased or missing people due to Hurricane Otis approaching 100.

The Category 5 storm hit the Mexican Pacific resort city of Acapulco last week with winds of 165 miles per hour (266 km per hour), flooding the city, tearing roofs from homes, hotels and other businesses, submerging vehicles, and severing communications as well as road and air connections.

Otis intensified with unexpected speed just prior to making landfall on Wednesday, becoming the most powerful storm to ever strike Mexico's Pacific coast. It caught forecasters by surprise, gathering strength with unexpected speed before it came ashore, and surpassed initial predictions.

“Money’s no use to us”

Residents in flooded areas have criticized the lack of government help. Many are struggling to find food and water.

"I was cleaned out, left with nothing," said Blanca Estela Morales, a wheelchair-bound 52-year-old staying in a government-run shelter after her home was flooded. "This is really hard for me –  we sleep on the floor, we don't have water to wash with."

Looting broke out as the city's population of nearly 900,000 became increasingly desperate for food and water.

"Right now, money's no use to us because there's nothing to buy, everything's been looted," 57-year-old Acapulco resident Rodolfo Villagomez said after Otis tore through the city. "It was total chaos. You could hear it here hissing like a bull."

Talking to insurers

Mexico's government intensified efforts to get Acapulco back on its feet as the toll of dead and missing continued to rise.

The cost of damage from the hurricane could climb as high as $15 billion according to estimates, and Mexico has sent some 17,000 members of the armed forces to keep order and help distribute tonnes of food and supplies in Acapulco.

"We're going to talk to the insurers so that they do not delay the procedures, so that they act soon," Mexican President Andres Manuel Lopez Obrador said during a press conference while pledging other forms of assistance.

"For those who do not have insurance, we are going to find a way (for them) to benefit from cheap loans, both from commercial banks and development banks."

Consultancy CoreLogic wrote in a research note that insurable damage to buildings from Otis' winds alone could reach $15 billion, adding that in Mexico insurance coverage tends to be limited to hotels and resorts.

Catastrophe bond

Mexico will likely receive a pay-out of some $62.5 million from a catastrophe bond that insures the country against earthquakes and hurricanes, Plenum Investments estimated.

The investment manager calculated "a high probability" Mexico will get half of the bond's $125-million payment earmarked towards Pacific hurricanes.

In 2020, the World Bank issued four tranches of catastrophe bonds for the country's natural disaster fund, FONDEN, to insure against earthquakes and hurricanes for four years.

Bond documents showed Mexico had paid an undisclosed insurance premium for $485 million worth of coverage, which the World Bank transferred to 38 catastrophe bond investors. 

ESG Lens  

Lithium miners have had a tough year as weak electric vehicle (EV) sales growth led to high stockpiles and sent prices of the metal tumbling, as they came under pressure due to concerns of falling near-term demand and oversupply. Lithium is a key metal used in EV batteries.

Lithium prices in China, the metal's top consumer, sank during the quarter, hit by lacklustre buying. The Chinese spot battery grade lithium carbonate prices fell around 45% to 165,000 Chinese yuan ($22,561.63) per tonne during the July-September quarter. 

Quote of the Day

“The climate clock is in the red – this is the final opportunity to make game-changing moves that can avert the worst impacts. Société Générale needs to quit its support for fossil fuels, and throw its weight behind the surge in renewable power that will see Europe clean up its power system by 2035.” 

Brigitte Alarcon, campaigner at Beyond Fossil Fuels

ESG Spotlight 

Countries that are home to the world's three major rainforests agreed to cooperate to overcome deforestation and safeguard biodiversity but fell short of a concrete alliance to protect the vital carbon sinks.

The announcement came on the final day of the Congo Republic-hosted Three Basins summit, which brought together presidents, NGOs, technical experts and finance sector officials to strengthen governance and preservation of the Amazon, the Congo basin, and forests in Southeast Asia.

"We've realized that joining forces is an absolute necessity, and we've recognised that the initiative to unite the three basins is part of an inevitable dynamic," said Republic of Congo environment minister Arlette Soudan Nonault.

Over the three days of the summit in Brazzaville, experts and policymakers from countries with tropical forests discussed shared priorities ahead of the U.N. COP28 climate talks next month. They examined different funding mechanisms to help developing countries preserve their important ecosystems.

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