April 19, 2018
Issue 225  |  View Past Issues

Editor's Note

Even some of coal’s biggest supporters are becoming far more sombre about the global outlook for the thermal coal industry. The Australian Government’s official commodities forecaster last week released its outlook to 2023 and — where it once was bullish about a rapid expansion in demand in India and China — is now left pinning its hopes on Pakistan, Vietnam, the Philippines and Malaysia to offset declines elsewhere in seaborne coal demand. As if to reinforce the point, Chinese regulators have imposed restrictions on imported coal at a number of ports in southern China.

The latest assessment of global air pollution paints a sobering picture of premature deaths increasing in China despite recent gains in air quality. However, it also notes air quality has rapidly worsened in countries such as India, Pakistan and Bangladesh.

Clearing the air may seem like an obvious policy to embrace but major countries and companies have yet to sign on. Japan has agreed to fund a new coal plant in Vietnam, a UK company is pushing for a lignite plant in Kosovo and residents in Taiwan are resisting the central government’s push for a new coal plant in Taipei City. In more encouraging news, Indonesian residents succeeded in having a coal mining company fined for illegally disposing its coal ash waste. In Australia, a five-year long campaign against a proposed new lignite plant has come to an end with the collapse of the project.

Bob Burton


ContourGlobal baulks at complying with new European pollution standards

The UK-headquartered ContourGlobal has revealed that its plan for a new 450–500 megawatt (MW) lignite plant in Kosovo may not meet the new European Union pollution standards, writes Gerard Wynn from the Institute for Energy Economics and Financial Analysis in Energy and Carbon.


Australian lignite ‘clean coal’ project collapses

Over five years after the Australian and Victorian governments established a A$90 million (US$70 million) Advanced Lignite Demonstration program to subsidise the development of new lignite projects in the Latrobe Valley, the last of three short-listed projects has collapsed. In May 2014 Coal Energy Australia (CEA) was offered $30 million (US$23 million) for the construction of a $143 million (US$111 million) demonstration plant designed to produce fertiliser, oil and coal used in steelmaking. However, the company recorded a series of annual financial losses and suffered from a high turnover of directors. After CEA failed to meet its performance milestones, the government terminated the subsidy program. Environment Victoria, which has campaigned against the program since it was established, said the collapse of the project would “free up A$30 million (US$23 million) of public funding to spend on projects that are actually capable of creating sustainable jobs in the Latrobe Valley.” (The Age)

Top News

Opposition to Taiwan coal plant an issue in Mayoral race: The decision of the central government to approve the construction of the 1200 MW Shenao Power Plant in New Taipei City has become a central issue in the mayoral election campaign, with candidates for both the Democratic Progressive Party and the Chinese Nationalist Party opposing the project. The central government has refused to undertake a new environmental assessment for the project after it was last approved for construction in 2011. The local government election will he held on November 24. Environmentalists have urged that the project be scrapped. (Taipei Times, Taipei Times)

Indonesian coal company fined for illegal river pollution: An Indonesian subsidiary of Banpu Public Company, Thailand’s largest coal producer, has been fined 2 billion rupiah (US$145,000) after the Tenggarong District Court in East Kalimantan ruled in December that the company had illegally dumped 4000 tonnes of fly and bottom ash from its coal power plant  without a permit. PT Indominco Mandiri operates three coal mines and a small power plant in Indonesian Borneo. The Mining Advocacy Network (Jatam), which supported villagers who complained about pollution from the plant, argues the fine is inadequate and wants the company’s permit revoked. (Mongabay)

Indian cabinet backs coal seam gas licence plan: The Indian Government has approved a bid from Coal India and its subsidiaries to extract coal seam gas from within its mining licence areas without also needing approvals under the petroleum and natural gas regulations. Coal India subsidiaries are initially looking to exploit the Jharia coalfields in Jharkhand and at Ranigunj in West Bengal. Coal India has indicated it will seek bids from international companies to operate both projects. Coal seam gas projects elsewhere around the world have proved controversial due to conflicts with farmers, impacts on aquifers and the disposal of waste products. (Economic Times, The Hindu)

PM2.5 air pollution worsens in South Asia as death toll mounts in China: The US-based Health Effects Institute (HEI) estimates that by 2030, about 1.6 million premature deaths a year in China will be caused by extreme air pollution. While average PM2.5 pollution levels fell by 6.5 percent across 338 cities in China in 2017, the number of premature deaths due to air pollution is projected to increase as the population ages even as air quality improves. The HEI’s State of Global Air 2018 report found that China and India accounted for 51 per cent of the total global PM2.5-related deaths. It also found that since 2010, PM2.5 air pollution has increased most in Pakistan, Bangladesh and India. (Reuters, Health Effects Institute)

Another coal ship sinks near Sundarbans World Heritage Area in Bangladesh: A coal ship carrying 775 tonnes of coal sank in the Pasur River near the Sundarbans World Heritage Area, reportedly due to being overloaded. The ship, the sixth freighter to sink in or near the Sundarbans, was initially grounded and then sank on the rising tide. The transportation of coal requires transhipment from a moored carrier to smaller capacity ships capable of navigating the shallow river channels to Mongla Port. The proposed 1320 MW Rampal coal plant, which is currently under construction despite strong community and international opposition, would require about four million tonnes of coal a year. (Dhaka Tribune, Dhaka Tribune)

German Energy Minister looks to buy time on coal phase-out: German energy minister Peter Altmaier restated that the new coalition government led by Angela Merkel aims to cut coal power output by half by 2030 but emphasised his immediate priority is on expanding grid capacity for new renewables generation. With the remaining six nuclear plans scheduled to close before 2022, Altmaier signalled the coal phase-out would be pushed to the mid-to-late 2020s claiming it would not be possible to simultaneously exit from nuclear power and close coal plants. However, since 2003 when the first nuclear plant was retired, the rapid growth in renewables in Germany has displaced over half of hard coal generation and just over 10 per cent of lignite generation. (Platts)


Australia: Residents launch legal action against South Korean coal company and Minister for Planning over the approval of the Wallarah mine in NSW.

Bangladesh: Engineers express alarm that life of Rampal plant will be short due to use of sub-standard materials in a highly corrosive environment.

Mongolia: Consortium aims to complete feasibility study in May on 549 kilometre Erdenet to Ovoot coal railway.

Pakistan: Call to close unlicensed coal import dumps around Karachi due to air pollution concerns.

US: Former coal lobbyist confirmed as second-in-command at the Environmental Protection Agency.

US: President of Navajo Nation concedes the 2250 MW Navajo Generating Station is likely to close in December despite Peabody campaign.

Companies + Markets

China imposes restrictions on coal imports: Customs officials in coal ports in southern China have recently instituted a range of restrictions, with some banning imports altogether and others blocking shipments to specific groups of end users. Xiamen and Quanzhou ports in Fujian have reportedly suspended the berthing of all ships carrying imported coal from 13 April. Guangxi, Zhejiang and Guangdong ports have also imposed restrictions on imported shipments. It is unclear how long the restrictions will apply. (IHS Markit, Reuters)

Slowing demand likely to see thermal coal prices and volumes fall: Citi estimates thermal coal prices in the Asia-Pacific market will fall to US$80 per tonne by the end of 2018, increase to US$85 a tonne in 2019 and then fall back to US$80 a tonne again in 2020. Increased Chinese domestic production and an expected fall in Indian imports are likely to slow demand growth. The Australian Government’s Department of Industry, Innovation and Science estimates the global prices will drop to US$75 per tonne in 2023 and expects the seaborne thermal coal trade to fall by 25 million tonnes a year to 1033 million tonnes by 2023, with growth in Vietnam and the Philippines potentially offsetting a slow decline in demand in South Korea, Japan, China and India. (Platts, Department of Industry, Innovation and Science [pdf])

Doubts over Indonesian utility’s bid for bonds to fund coal plants: Indonesia’s publicly owned electricity utility PLN may struggle to raise US$1 billion from the global bond market to fund its plan for a major expansion of coal generation, according to a new report by the Institute for Energy Economics and Financial Analysis. With power prices capped in 2018 and 2019 and rising power payments to independent power producers, PLN is under pressure to reduce its coal-centred capital expenditure program. (Institute for Energy Economics and Financial Analysis)

Eskom plants run low on coal: Eskom has confirmed that coal stockpiles at seven of its power stations, which have a combined capacity of 20,712 MW, are running so low that new supply contracts are needed. One report suggested that senior Eskom executives have proposed a coal supply emergency be declared as the utility is relying on expensive diesel and gas plants. Part of the supply crisis is attributed to the cash-strapped Eskom deciding to avoid capital expenditure at mines “tied” to the plants but contracted out to private operators to supply coal on a “cost plus” basis. Another contributing factor has been the poor performance of the Gupta family’s Tegeta Resources Optimum mine. The company was placed in administration in February 2018. Eskom has also suspended a senior executive for granting a three-month extension to a Gupta-owned company to supply sub-standard coal for Hendrina power station. (Daily Maverick, Fin24.com)

Rio Tinto faces investor ire over blocking shareholder climate resolution: The refusal of the Board of Rio Tinto to allow only Australian investors and not UK shareholders to vote on a resolution urging the company to review its membership of the Minerals Council of Australia (MCA) drew criticism from the Church of England Pensions Board. While Rio Tinto has now divested from all coal projects, it continues to belong to and defend its membership of the MCA which promotes building new coal plants. The company was also quizzed over its plan to build a new coal power station at its copper mine in Mongolia. The resolution on the company’s membership of the MCA will be put to Australian investors at its annual general meeting in Melbourne on May 2. (Sydney Morning Herald, London Mining Network)

Japan backs new Vietnamese coal plant: The Japan Bank for International Cooperation (JBIC) has agreed to provide up to US$560 million in loan funding for the 1200 MW Nghi Son 2 plant in Vietnam. A coalition of banks, including the Export-Import Bank of Korea, Malayan Banking Berhad and JBIC, has agreed to provide US$1.87 billion for the project. Marubeni Corporation is one of the major shareholders in the Vietnamese company proposing the plant. (Japan Bank of International Cooperation)

Australian brown coal to hydrogen project: The Australian and Victorian governments have agreed to contribute A$50 million (US$39 million) each to subsidise the development of a A$496 million (US$385 million) brown coal to hydrogen plant at the Loy Yang mine in the Latrobe Valley. The year-long project, proposed by a consortium of Kawasaki Heavy Industries, J-Power, Iwatani Corporation, Marubeni and the Australian energy utility AGL, aims to produce “up to” three tonnes of hydrogen from 160 tonnes of brown coal. Other projects in Australia are based on renewable power and will produce more hydrogen at a fraction of the cost. (RenewEconomy)

Mozambique thermal coal exports increase but face challenges: Exports of thermal coal from Mozambique are slowly increasing but face quality and logistics challenges. The country’s thermal coal is sold for less than South African coal due to higher ash and lower moisture content which causes more dust control problems. Mozambique’s Maputo port also only caters for Panamax ships, which carry up to 90,000 tonnes, while the Richards Bay Coal Terminal in South Africa caters for Capesize ships, which can carry up to 140,000 tonnes. Mozambique’s growing coal exports are predominantly destined for India, Pakistan, Singapore and Sri Lanka. (Platts)

Correction: The last edition of CoalWire described Singareni Collieries Company Ltd as a Coal India subsidiary. It is actually a joint venture between the Government of Telangana State and the Government of India.


Perusahaan Listrik Negara (PLN): A Power Company Out of Step With Global Trends, Institute for Energy Economics and Financial Analysis, April 2018. (Pdf)

This 20-page report argues Indonesia’s publicly owned electricity utility, PLN, may have increasing difficulty raising funds from the global bond market as it continues to pursue new coal plants.

Global Power Plant Database, World Resources Institute, April 2018.

This power plant database includes details of about 25,500 power plants from 162 countries but, at this stage, excludes Chinese plants. The database is contained in an Excel file.

State of Global Air 2018, Health Effects Institute, April 2018. (Pdf)

This 24-page report details the disease burden from both indoor and outdoor air pollution with a particular emphasis on China and India.

Central Appalachia: Coal Mining Reclamation: Bonding Policy Recommendations, Alliance for Appalachia, April 2018. (Pdf)

This 35-page report recommends changes to coal mine bonding for adoption by state and federal agencies to better protect communities and the environment in West Virginia, Virginia, Kentucky and Tennessee.