August 1, 2019
Issue 285  |  View Past Issues

Editor's Note

Over the last week there have significant announcements suggesting a shift away from at least new coal power and related infrastructure may be accelerating. In Europe, the European Investment Bank has proposed ending all support for new coal and other fossil fuel projects by the end of 2020. In the Philippines, President Rodrigo Duterte has directed his Secretary of Energy, Alfonso Cusi, to emphasise renewables over new coal plants. The Philippines is one of the top ten countries proposing new coal plants. So far, Cusi is resisting. In Australia, Suncorp, one of the country’s major financial services providers, has announced it plans to exit from all insurance and investments in thermal coal by 2025.

As major coal consumers shift away from coal, coal exporters are grappling with how to adjust. In Colombia, President Ivan Duque is seeking to boost trade with China in a bid to diversify the economy away from reliance on coal export income. This comes as Anglo American — a one-third shareholder in the Cerrejon mine in Colombia — has flagged that it is likely to unveil plans in 2020 to exit its thermal coal mines there and in South Africa.

In South Africa, the dire financial position of Eskom is threatening to drag the economy down with it. The Kusile coal plant, a huge new expensive but flawed project, is one of the causes of Eskom’s financial headache.

Bob Burton


Shuffling the deck chairs as Eskom’s crisis continues

Eleven years after construction commenced on Eskom’s controversial Kusile coal plant not one of the six 800 megawatt (MW) units is actually supplying power to the grid, writes Chris Yelland in the Daily Maverick.

Top News

Philippines President signals need to shift away from coal reliance: In his fourth State of the Nation address Philippines President Rodrigo Duterte stated that he expects the Secretary of Energy, Alfonso Cusi, to “fast-track the development of renewable energy sources and to reduce dependence on traditional energy sources such as coal.” Duterte’s statement has been welcomed by the Climate Change Commission, a government advisory agency, and Philippines NGOs as a decisive signal to regulators and investors. The Philippines has 9444 MW of proposed new coal plant capacity which has not yet entered construction, making it one of the top ten countries for proposed coal plants. Following Duterte’s speech Cusi claimed that coal and gas are “the bridging-fuel we will need” to transition to more renewables, a claim which promoted civil society groups to accuse him of being “insubordinate.” (Philippine Environews, PanayNews)

European Investment Bank proposes end to coal and fossil fuel funding: A draft energy lending policy released by the European Investment Bank (EIB) proposes a ban on funding fossil fuel projects including all coal mine and power stations and fossil fuel infrastructure. The EIB is the world’s largest development bank. The draft policy makes exceptions for biofuels and gas-fired combined power and heat plants. The policy is proposed to come into effect by the end of 2020 if approved by European Union finance ministers at a meeting on September 10. (Climate Home, European Investment Bank)

Eskom concedes cost-cutting spurred dramatic increase in pollution: Eskom, the South African Government-owned utility, has acknowledged that a lack of maintenance in 2018 at its coal plants was one of the major factors behind the dramatic increase in air pollution at power stations. Eskom data that fine particle air pollution from its coal plants surged to 0.47 kilograms per megawatt hour of sent out electricity in the year to March 31, 2019 compared to 0.27 kilograms the year before. Eskom stated that the failure of bag filters at four units at its 4116 MW Kendal coal plant and the 3654 MW Tutuka coal plant and poor coal quality were other factors. (Bloomberg)

US regulator plan to expand coal ash use: The US Environmental Protection Agency (EPA) has proposed allowing unlimited amount of coal ash to be used on construction and landscaping sites with the only proviso being that some projects in risky sites, such as those close to groundwater, provide a demonstration. The EPA proposal would weaken a 2015 coal use rule that limits use of coal ash as fill to a maximum of 12,400 tons (11,250 tonnes) per site and would also apply to coal ash stockpiles. The proposed changes would not require public notification of projects seeking to use coal ash as fill despite the risk to groundwater. One project the proposed rule change will benefit is the ten-story high coal ash dump in Puerto Rico at the site of AES’s 454 MW Guayama plant. (The Hill, Earthjustice)

Challenge to coal mine plans near South African National Park: AfriForum, a South African civil society group, has accused a company proposing to build an 18,000 hectare coal mine near Kruger National Park of including in its own assessment report a word-for-word section from a report on another mine in the area. AfriForum said Manzolwandle Investments did not allow groups to register their interest or provide proper documentation on the proposed project. After sending a letter to the company objecting about the inadequate process, the company agreed to register AfriForum as an interested party but have given them only until August 15 to submit comments on the proposal. (IOL)

Despite fine, illegal drilling was not disclosed by Queensland Government or mining company: Documents released in response to a Freedom of Information request have revealed that New Hope Group was fined just A$3152 (US$2172) for illegally drilling 27 bores and preparing a further 41 outside its designated mining area at its New Acland mine. The fine, which was one-twentieth of the maximum penalty which could have been levied for a serious breach of the law, was not publicly disclosed by either the company or the Queensland Department of Environment and Science. The New Hope Group has been pressing the State Government for the approval of an expansion of the mine despite strong community opposition. (Guardian)

“We are now facing a death spiral,”

said Eskom Chief Executive Phakamani Hadebe after revealing another big loss for the heavily indebted utility.


Australia: Queensland Police drop trespass charges against French journalist and his film crew who attended Adani coal protest.

Australia: BHP fined A$2000 (US$1378) for dumping 3000 tonnes of polluted water into river and A$15,000 (US$10,336) in NSW for dust emissions from Mt Arthur mine.

Chile: Enel subsidiary gets permission to shut the 158 MW Tarapaca coal plant in December, earlier than its original May 2020 timetable.

India: Naveen Jindal and four other Jindal Steel and Power officials have been charged with allegedly deceiving the Ministry of Coal over the allocation of Urtan North coal block in Madhya Pradesh.

Zimbabwe: Hwange Colliery coal ash dumps near residential area take a toll on children’s health.

Companies + Markets

Suncorp pledges to phase out thermal coal insurance: In response to a shareholder resolution filed by the NGO group MarketForces, Suncorp has announced that it will not invest in, underwrite or finance new thermal coal mines or power stations. Suncorp also stated that it will phase out all thermal coal exposures by 2025. Suncorp is a major financial services company in the Australian and New Zealand markets. While MarketForces has welcomed Suncorp’s pledge, it plans to proceed with its shareholder resolution, which requests the company also set a deadline for exiting from oil and gas projects. (Guardian, Insurance News, MarketForces)

Colombian President seeks to boost China trade to ease reliance on coal exports: Colombia’s President Ivan Duque embarked on a three-day trade trip to China aimed at attracting investment to help diversify the country’s economy and reduce dependence on thermal coal and oil exports. Colombia exports about 80 million tonnes of thermal coal a year, making it the world’s fourth largest exporter after Indonesia, Australia and Russia. Coal and oil currently account for almost 50 per cent of Colombia’s export income. Colombia’s coal exports have been hit by the decline in European demand while oil exports fell dramatically in 2016 when prices declined. Duque’s trip comes as Guillermo Fonseca, the President of Cerrejon, a joint venture between BHP, Glencore and Anglo American, has requested “postponing some tax payments until the coal price recovers as a means of relief to improve cash flow."(Foreign Brief, Mining Journal)

Alarm grows about South African economy as Eskom wins qualified bailout: Eskom has revealed that that in the year to March 31, 2019 it lost 20.7 billion rand (US$1.5 billion) and that despite foreshadowed bailout payments from the government it is likely to lose another 5 billion rand (US$352 million) in the current financial year. South Africa’s Finance Minister, Tito Mboweni, has foreshadowed that the National Treasury will provide 59 billion rand ($US4.1 billion) to Eskom in stages over two years but tied to attaining specific objectives. However, Moody’s warned that the bailout was “credit negative” in the absence of a strategy to address the utility’s financial crisis. Eskom has debt of 400 billion rand (US$28 billion) with an annual interest bill of about 50 billion rand (US$3.5 billion). However, the utility’s electricity sales currently generate only 25 billion rand (US$1.75 billion) per year. (Daily Maverick, IAfrica, Reuters)

Anglo American flags thermal coal exit in 2020: Anglo American CEO Mark Cutifani has flagged that he does not see the company holding its thermal coal mines in the long term but has deferred making a decision until 2020. Anglo American has thermal coal mines in South Africa and a one-third share of the Cerrejon project in Colombia which between them produce about 27 million tonnes of thermal coal. (Business Live [paywall])

Russian coal producer Mechel seeks further delay on debt repayment: Mechel, a major Russian coal and steel producer, is seeking the support of its lenders to delay its debt repayments from 2020–24 to 2024–26. Mechel owes Sberbank, VTB and Gazprombank 347.5 billion roubles (US$5.5 billion), which accounts for most of the company’s debt. In early July, Mechel warned shareholders in the Southern Kuzbass Coal Company (SKCC) and two other subsidiaries that they were unlikely to receive dividends in the next few years as any profits would be directed to restoring declining production levels. Mechel CEO, Oleg Korzhov, said the company plans to outsource transport of coal from the company’s mines to a contractor. SKCC has a production capacity of 18 million tonnes a year of coking and thermal coal. (Reuters, Interfax)

Solar undercuts Indian coal power: The consultancy Wood Mackenzie estimates the levelised cost of power in India from solar is now US$38 per megawatt hour, which is 14 per cent cheaper than from coal plants. The report estimates that India’s good solar resource, rapidly expanding market and competition between developers have combined to push solar power prices down to half of those in other Asia–Pacific countries. The consultancy estimates that in Australia, the market with the second cheapest utility solar, gas generation already cannot compete with renewables and further price falls will undercut coal plants from 2020. (Reuters)


The great coal collapse of 2019, Sandbag, July 2019. (Pdf)

This 12-page report details the dramatic decline in coal generation across the 28 countries of the European Union in the first half of 2019.