August 20, 2020
Issue 335  |  View Past Issues

Editor's Note

As the Vietnamese Government moves closer to finalising its next power development plan, all indications are it will rule out support for more coal plants for the period to 2030. But that leaves a raft of projects that have been approved but have not yet been built. One of these is the 1200 megawatt (MW) Vung Ang 2 which a subsidiary of Samsung is considering supporting. In the US, coal power is waning fast but the costs of past pollution linger on. The legal struggle for compensation by workers suffering health impacts from the cleanup of the coal ash spill at the Tennessee Valley Authority’s Kingston coal plant is a sobering illustration of the real cost of coal.

Red ink, downgrades and financial stress on coal plants and mines has dominated much of the business reporting on coal over the last week. The Polish state-owned utility Enea has written down the value of its fleet of coal plants by US$141 million as the company that operates the Cerrejon coal mine in Colombia has reported a US$100 million loss over the first six months of 2020. BHP, one of the shareholders in the Cerrejon mine, has formally announced it plans to divest itself of the project along with three other coal mines. In Germany, an energy analyst estimates the utilities with older hard coal plants will all be submitting compensation tenders rather than risk substantial losses over the next decade. Peabody Energy, one of the biggest global boosters of coal power, has had its credit rating downgraded for the second time this year by Moody’s.

Bob Burton


Sick and dying coal ash cleanup workers fight for their lives

Fifty workers have died and hundreds have fallen ill after working on the cleanup of the coal ash dam spill at the Tennessee Valley Authority’s Kingston power station, writes Austyn Gaffney in the Guardian.

China slow to curb coal financing as Japan, South Korea shift ground

China risks being left behind as South Korea and Japan signal a shift away from financing overseas coal power plants, writes Harry Pearl in the South China Morning Post.

Coal’s days may be over in the US

Renewables will most likely surpass fossil fuel in electricity generation this year despite the Trump administration’s efforts to prop fossil fuels up, writes Justin Fox in Bloomberg.

How US utilities use secret campaigns against climate action

The Ohio nuclear and coal bailout scandal engulfing FirstEnergy has shone a light on how US power utilities have spent millions on dark money groups to campaign against renewable energy and climate policies, writes Benjamin Storrow in E & E News.

Top News

Vietnamese Government energy adviser rules out more new coal plants to 2030: The director of the Vietnam Energy Institute (VEI), Tran Ky Phuc, has told a meeting attended by Deputy Prime Minister Trinh Dinh Dung that between 2020 and 2030 Vietnam “will not develop new coal-fired power projects.” VEI is advising the government on the next power development plan (PD8) and developed 11 possible scenarios. VEI estimate 2030 power demand will be 8–9 terawatt hours lower than previously estimated. The VEI is backing a scenario in which coal generation is reduced to 36 per cent of total power generation by 2035, compared to the target in the current plan of 42 per cent. The scenario includes an increase in the share of renewables to 32 per cent by 2030. Vietnam currently has 7340 MW of new coal capacity under construction and a further 22,320 MW proposed. (Saigon Times, Nguoi Lao Dong[Vietnamese])

Korean electronics giant under pressure over coal plant role: NGO groups have called on the Korean company Samsung to rule out any involvement in the proposed 1200 MW Vung Ang 2 coal plant in Vietnam. Samsung, which is best known for its role as the manufacturer of consumer electronics products including the Galaxy mobile phone, is the target of a full-page ad in the Financial Times calling on the company to end its support for the project. The company is currently considering involvement in the consortium building the project. (Eco-Business, Market Forces)

Peabody pushes funding for CCS project to save coal plant from closure: Documents obtained through a public records request reveal that after the Colorado Public Utilities commission approved Xcel Energy’s plan to close two units at the Comanche coal plant in Colorado, the Energy Policy Network, a group backed by Peabody Energy, persuaded the US Department of Energy to spend US$120,000 on a study promoting the potential for a carbon capture and storage (CCS) project at the plant. The 1635 MW Comanche plant consumes coal from Wyoming where Peabody Energy is a major producer. The push for a CCS plant failed to gather momentum and Xcel Energy remains committed to closing two of the three units at the Comanche plant by 2025 and commission new renewables capacity. (Energy and Policy Institute)

Documents reveal Canadian ministers backed coal companies before policy change: Months before the Alberta Government rescinded the 1976 Coal Policy banning open-cut coal mines along the eastern slopes of the Rocky Mountains, the province’s Minister of Economic Development, Trade and Tourism, Tanya Fir, and Environment Minister Jason Nixon wrote letters of support of Valory Resources, an Australian coal company seeking to develop a project affected by the policy. Valory Resources, which currently has no operating mines, is planning on developing the 16,000-hectare open-pit mine near Alberta’s Bighorn Wilderness. Another project that could benefit from the policy changes is the 2800 hectare Grassy Mountain metallurgical coal mine proposed by Riversdale Resources, a subsidiary of Hancock Prospecting which is owned by the controversial Australian mining billionaire, Gina Rinehart. (The Tyee, CBC)

Ohio bailout scandal stalls finalisation of bankruptcy payments: Bankruptcy court Judge Alan Koschik has deferred until November 2020 a final decision on the payment of fees and expenses to firms involved in the bankruptcy proceedings for Energy Harbor. The three-month deferral is due to the possibility that some of the firms seeking reimbursement could be affected by the racketeering charges filed by the US Attorney against former Ohio House Speaker Larry Householder and four associates. Energy Harbor, which was previously known as FirstEnergy Solutions, was one of the beneficiaries of a bailout law passed as a result of a US$61 million campaign waged by Generation Now, a group funded in large part by FirstEnergy Solutions. Koschik conditionally approved payments to some firms in the case but excluded the US$68 million sought by the utility’s bankruptcy co-counsel and lobbying firm, Akin Gump Strauss Hauer & Feld. The lobbying firm confirmed in court it had lobbied for FirstEnergy Solutions on the bailout law at the centre of the federal racketeering case. (Energy and Policy Institute)

Report finds Indian coal auctions concentrated in important forest ‘no go’ areas: The Centre for Science and Environment has found that of the 41 coal blocks the Modi Government announced would be auctioned to the private sector in June, 21 were originally identified in the ‘no go’ list developed by the previous government as comprising significant areas of unfragmented forest. The report found that of the 49 blocks cleared for coal mining since 2015, nine were in ‘no go’ areas. Ministry of Coal documents reveal that of the mines auctioned since 2015, 67 per cent are not yet operational. (Centre for Science and Environment)


Australia: Worker employed mostly in open-cut coal mines over 41 years has been diagnosed with black lung disease.

Australia: Protest over discharge of coal sludge from South32’s Dendrobium Mine into a creek.

Bulgaria: After the Maritsa 3 plant was dropped from providing reserve capacity ContourGlobal cuts staff.

India: Fitch Ratings estimate power demand for the year to March 2021 will fall by four per cent, with coal plants likely to bear the brunt of the decline.

Turkey: Deprecation of the lira against the US dollar has reduced the profitability of imported coal plants compared to gas generators.

Myanmar: Three people arrested over protest against Alpha coal-fired cement project face court.

Sri Lanka: Ceylon Electricity Board imposes one-hour power cuts for four days after a technical fault shut down the Norochcholai coal power plant.

UK: The Bradley mine, one the UK’s last coal mines, has closed after residents blocked approval for expansion.

US: Army Corps of Engineers proposes weakening the permit system that limits coal companies from filling streams.

US: GenOn announces June 2021 closure of the 728 MW Chalk Point Generating Station in Maryland.

Companies + Markets

Moody’s downgrades Peabody Energy again: The credit rating agency Moody’s has downgraded Peabody Energy’s creditworthiness for the second time in 2020 warning that falling revenue is likely to result in the company breaching loan restrictions later in 2020. Moody’s argues that the market for Powder River Basin coal is likely to remain oversupplied and will continue to lose market share to gas and renewables. Moody’s suggests a company restructuring and improved market conditions may improve the company’s position in 2021 but warns that it expects the price of thermal coal to remain near the bottom of a range of US$55–75 per tonne and metallurgical coal below the midpoint of US$100–160 per tonne in 2021. Peabody has announced it plans to cut about 100 jobs at the Wambo mine in NSW following the suspension of underground mining due to low coal prices. (Moody’s, Singleton Argus)

Indonesian coal lobby presses for higher exports: The Indonesian coal mining lobby group (APBI) wants the Indonesian Government to suspend fines against companies which fail to meet their domestic market obligation (DMO) to sell 25 per cent of their production to local consumers. The DMO was introduced to ensure adequate supply of coal for power stations and set a domestic price cap of US$70 per tonne. APBI unsuccessfully lobbied the government to suspend coal royalties earlier this year as mining companies were hit by falling demand due to COVID-19 restrictions. Indonesia’s domestic coal demand in 2019 was 139 million tonnes. The Ministry of Energy originally estimated 2020 domestic demand at about 150 million tonnes and exports of a further 400 million tonnes. APBI estimates domestic demand may only be between 100 and 110 million tonnes due to COVID-19 and delays in the commissioning of new coal plants. (Argus)

Colombian miner racks up a big loss as demand slumps: Coal exports from the Cerrejon thermal coal mine in Colombia in the first half of 2020 have fallen to 9.5 million tonnes, a decline of over 28 per cent compared to the year before. Cerrejon reported a loss for the first half of 2020 of 368 billion Colombian pesos (US$100 million). The Cerrejon mine, which is owned by a joint venture of BHP, Anglo American and Glencore, has been hit by the collapse in European demand for coal, a 26 per cent fall in price compared to the year before and COVID-19 restrictions. In 2017 a Colombian court ruled in favour of communities objecting to the expansion of the La Puente pit which would have diverted Bruno Creek. Cerrejon is Colombia’s largest thermal coal exporter. In 2014 Cerrejon commissioned a US$1.3 billion expansion to increase production from 33 million tonnes a year to 40 million tonnes. In its latest corporate filing BHP noted the likely production for the Cerrejon mine would be about 21 million tonnes for the 2020–2021 financial year. (Reuters, Argus)

BHP unveils plan to offload thermal coal mines: In response to pressure from investors and NGOs BHP has confirmed that it plans to sell its two thermal coal mines — the Mt Arthur mine in New South Wales and its one-third share in the Cerrejon mine in Colombia. BHP has been pursuing the separate sale of the two mines over the last year but recently rejected bids as inadequate. The company also flagged that it will sell its 80 per cent share in the BHP Mitsui Coal (BMC) joint venture which operates the South Walker Creek Mine and Poitrel Mine mines in Queensland. BMC’s mines produce lower-quality metallurgical coal and, bundled together with Mt Arthur and Cerrejon, may be more attractive to potential buyers. BHP downplayed suggestions of a broad shift away from metallurgical coal to non-coal alternatives but acknowledged that it sees a better future for higher quality metallurgical coal as steel producers seek to cut emissions. Some analysts caution BHP may be making the same miscalculation on metallurgical coal that it made with thermal coal. (Australian Financial Review [paywall], Bloomberg, BHP [Pdf])

German utilities tipped to pursue compensation rather than risk coal losses: A report by consulting firm ICIS estimates utilities will submit tender bids for the closure of about 10,000 MW of Germany’s 21,000 MW of hard coal plants. The first round of tenders for coal closures opens on September 1. ICIS estimates all coal plants built before 1990 will make more from compensation than continuing to operate over the next decade. Under the German Government’s coal exit legislation, tenders for compensated closures will he held over the next four years with plants progressively shut down to 2027. Plants remaining online after that time will be required to close without compensation. ICIS estimates the European Union’s carbon price will rise from the current level of around €25 (US$30) per tonne of carbon dioxide equivalent (tCO2e) to over €40 (US$47) per tCO2e. (ICIS)

Polish utility declares losses on coal fleet and scrapped project: The state-owned utility Enea has written down the value of its coal fleet by 523 million Polish zloty (US$141 million). It did not provide reasons for the writedown. It also reported a loss of 137 million Polish zloty (US$37 million) on a loan raised for its failed plan to build the 1000 MW Ostroleka coal plant. The plant was cancelled following a court decision though the utility is considering building a gas-fired plant at the same site. (Enea)

Tata Power absorbs loss-making Mundra subsidiary: Tata Power has announced it will merge its wholly owned subsidiary Coastal Gujarat Power into the parent company as a way of resolving the financial stress on the 4000 MW Tata Mundra project. The project, one of the first big private coal plants built that was reliant on imported coal, has recorded years of losses after Indonesia adopted a policy of only allowing coal to be exported if it was sold at or above a benchmark price. The policy change crippled Tata’s business model which was based on cheap imported thermal coal from Indonesia. Since then Tata Power has, so far unsuccessfully, been trying to renegotiate the power purchase agreements with five state distribution utilities to require them to pay a higher price to cover the higher costs of Indonesian coal. (Livemint)

Investors submit resolution to wind down Australian coal company: Investors in Whitehaven Coal and New Hope Group, the two largest pure-play Australian coal companies, have submitted resolutions asking the companies to outline how they plan to wind up their current mining operations. The resolution argues the companies should protect shareholders’ funds by not investing in new projects and support a fair transition for affected workers. NGO Market Forces argues that Whitehaven Coal proposes to spend A$2 billion on two new mines to increase coal production from 22 million tonnes in 2019 to 40 million tonnes in 2030. New Hope Group plans to spend a further $2 billion on expansions and continue production until 2040. The NGO argues the new projects are not compatible with the Paris Agreement and would become stranded assets as restrictions on coal power take effect. Last week Whitehaven Coal was granted permission to build the Vickery coal mine, extracting 168 million tonnes of coal over 30 years. The company estimates about 60 to 70 per cent of the coal from the mine will be metallurgical coal. (ABC News, Market Forces, Guardian)


Thar Coalfield Water Impacts: Financial and Social Risks, Pakistan Fisherfolk Forum, July 2020. (Pdf)

This 37-page report documents the social and environmental risks with the development of the Thar coal field and associated coal plants in Pakistan.