Editor's Note
Over the last decade, community opposition and rapidly shifting economic factors have seen 70,000 megawatts (MW) of proposed coal and lignite plants in Turkey cancelled or deferred. In the US, the company proposing a new coal port to cater for exports into the Asian market has a suffered a major legal setback. In China, a think tank allied with one of the major fossil fuel companies has suggested coal use will peak in 2025. With the prospect of Chinese coal imports declining, the Australian Government is pinning its hopes on the Indian market. Not only does a recent government analysis overlook some key factors but Coal India and the power generator NTPC are looking to expand domestic coal production and renewables.
As financial pressures on coal mining companies and power generators grow, corporate business strategies are being recast. While the Russian Government is looking to boost coal exports, BHP is looking to offload its two remaining thermal coal mines in Colombia and Australia. In Mozambique, once touted as the next big coal exporting country, Vale has racked up large losses in the first half of 2019 and has flagged lower export volumes. In South Africa, Exxaro Resources has complained of the impact of rising insurance costs and touted its hope to diversify. As Eskom struggles to stay afloat, South Africa’s National Treasury has proposed privatising the utility’s coal plants to cut debt. In Greece, a new CEO at the public power utility has flagged cutting its reliance on lignite and boosting renewables.
|
|
Behemoth coal plants threaten utilities’ emissions reductions goals
A host of US utilities plan to run their super-polluting coal plants for decades despite ambitious plans to slash emissions, writes Ben Storrow in E & E News.
Australian report on coal exports to India is missing the backstory
The Australian Government’s new Coal in India report fails to address key factors that suggest a decline in Indian imports, writes Tim Buckley from the Institute for Energy Economics and Financial Analysis in RenewEconomy.
A lawyer, 40 dead Americans, and a billion gallons of coal sludg
The Kingston coal ash dam disaster in 2008 imposed a heavy health toll on cleanup workers but resolution of their legal actions for compensation may drag on for years, writes Jared Sullivan in Men’s Journal.
US insurers hold billions in coal-exposed investments
The costs of insurance for US coal mining companies and coal-reliant power utilities are rising as the insurance industry shifts to restrict its support for fossil fuel producers, write Taylor Kuykendall, Ashleigh Cotting, Jason Woleben and Hailey Ross in S & P Global.
|
Turkish coal plans falter due to community opposition and economic headwinds
Opposition from residents and environmentalists, along with shifting economic factors, has led to cancellation of an estimated 70,000 MW of proposed coal and lignite capacity in Turkey since 2009. An anonymous utility source told Platts those projects reliant on imported coal “are definitely dead” due to the lack of subsidised loans and the Turkish Government’s emphasis on reducing reliance on imported fuels to reduce the current account deficit. President Erdogan’s plan to increase capacity reliant on domestic lignite supply has encountered strong local opposition due to concerns over air pollution and impacts on agricultural lands. Proposed lignite projects have also struggled to obtain finance due to the rapid depreciation in 2018 of the Turkish lira and slowing electricity demand growth. (Platts)
|
Court rebuff for US coal port developer: Washington State Court of Appeals has rejected an appeal by Millennium Bulk Terminals against the Department of Natural Resources’ refusal to lease state-owned aquatic lands for the Longview export coal project. The court found that Millennium had “intentionally misrepresented the scope of its plans for the property in 2011... Millennium intentionally concealed the extent of its plans for the coal export facility in order to avoid full environmental review.” Millennium had claimed that up to 44 million tonnes of coal would be exported per year into the Asian market through the proposed US$680 million port on the Columbia River. (Seattle Post Intelligencer)
Legal challenge against decision on Aboriginal heritage threatened by Shenhua mine: Dolly Talbott, a representative of Gomeroi Traditional Custodians, has launched legal action against Australia’s Minister for the Environment, Sussan Ley, over her refusal to protect Aboriginal sacred sites from Shenhua’s proposed Watermark coal mine in New South Wales. Ley acknowledged in her decision that the mine would result in the “likely destruction of parts of their Indigenous cultural heritage” but determined that the “expected social and economic benefits” of the proposed mine “outweighed the impacts” on the Gomeroi people. The legal challenge will argue the Aboriginal and Torres Strait Islander Heritage Protection Act is intended to protect and preserve Aboriginal cultural heritage and that the Minister exceeded her powers in prioritising economic factors. (ABC News, EDO NSW)
BHP quietly looks to offload coal assets: While BHP has obliquely signalled it plans to exit its two thermal coal mining projects — the Cerrejon project in Colombia and the Mt Arthur mine in Australia — Macquarie Capital is reportedly advising the company on its exit options. With BHP reported as unlikely to sell the projects to private equity companies, Glencore is tipped to be one of the leading contenders. Under the terms of its February 2019 climate policy Glencore announced that it would “limit its coal production capacity broadly to current levels” but with the caveat that it could buy-out the minority stakes of joint venture partners in existing projects. BHP’s one-third stake in Cerrejon currently entitles the company to about 9 million tonnes of thermal coal. To comply with its policy and buy the 17 million tonnes a year Mt Arthur mine in New South Wales Glencore would have to sell other projects. (Australian Financial Review)
Chinese think tank predicts coal use to peak in 2025: CNPC Economics and Technology Research Institute, a think tank run by the state-owned China National Petroleum Corporation, argues that Chinese coal consumption could peak by 2025 and fall by 18 per cent between 2018 and 2035. Such a decline would see coal’s share of power generation decline from 59 per cent in 2018 to 40.5 per cent in 2035. The think tank argues that coal generation could fall by about 39 per cent from 2018 to 2050 at which point it would account for 35 per cent of generation. The flurry of reports by think tanks associated with Chinese fossil fuel companies are aimed at influencing the next Five Year Plan for energy, which is currently in the early stages of being prepared. (Reuters, China Dialogue)
Many US coal ash dams in high-risk flood zones: An examination of US Environmental Protection Agency data indicates that at least 101 coal ash pits are within areas designated by the Federal Emergency Management Agency as at risk of a 1-in-100-year flood event. Of the 101 at-risk coal ash dams, 70 sites are at operating coal plants. Not only are the sites at risk based on current flood risk assessment but a heating climate will lead to higher rainfall events, potentially increasing the risk of toxic pollution of groundwater or dams being flooded or collapsing. (Politico)
Sri Lankan Government bows to utility and reinstates coal plants: Sri Lanka’s Ministry of Power and Energy is seeking Cabinet approval to obtain 207 hectares of land at Foul Point in Trincomalee to establish a coal plant comprising up to five 300 MW coal units by 2039. In May the Ceylon Electricity Board’s (CEB) recently released a draft Generation Expansion Plan 2020–2039, in which it proposed up to eight new 300 MW coal units with five at Foul Point and a further three at the existing 900 MW Norochcholai plant. The draft plan is intended to replace a plan previously approved by the Public Utilities Commission of Sri Lanka (PUCSL) which found new coal units were uneconomic and instead backed a mix of renewables and gas units. Following opposition from CEB, the new government has moved to strip the PUCSL of its powers to modify CEB’s proposed plans. (Sunday Times, Sunday Times)
“The cost of insuring your mines is getting more expensive because of your carbon issues,”
said Mxolisi Mgojo, the Chief Executive Officer of Exxaro Resources, a major South African coal mining company.
|
Australia: Coal exploration licence held by subsidiary of Whitehaven Coal suspended over breach of environmental conditions.
Japan: Sumitomo proclaims that go-ahead for 1320 MW Van Phong 1 plant in Vietnam is consistent with its revised climate policy.
South Africa: South32 finalises sale of its loss-making South African thermal coal mines to Seriti Resources.
Ukraine: Former energy regulator head placed on international watch list over coal power pricing scandal.
US: New management plan allows for coal development in areas formerly included in Grand Staircase-Escalante National Monument in Utah.
US: Vistra Energy to close four Illinois coal plants with a combined capacity of 2068 MW.
US: Court rules in favour of Powder River Basin Resource Council request for release of reclamation bond valuation documents.
“Eskom ran out of cash and came close to complete collapse on multiple occasions in 2019,”
said Jabu Mabuza, Eskom’s Chairman and Chief Executive Officer.
|
Putin looks to cut taxes to boost Russian coal exports: Russian President Vladimir Putin has ordered a review of coal taxes to be completed by October 31 as coal exporters face increasing challenges in the export market. While the Russian Government has flagged the potential to increase exports by 100 million tonnes a year, exports to Europe have declined as key importing countries move away from coal power. Russian exporters face strong competition in the Asian market from Indonesian and Australian producers. Putin acknowledged that Russia’s reliance on volatile coal markets “creates certain hazards, certain risks.” He also directed the Ministry of Energy to help facilitate the use of coal for liquefied gas and hydrogen. (Reuters, S & P Global, Tass)
Vale racks up losses at its Mozambique mine: In the first half of 2019 Vale lost US$175 million on its Moatize coal mine in Mozambique. The Moatize mine produces roughly equal amounts of thermal and metallurgical coal. However, about three-quarters of the revenue is derived from metallurgical coal sales. Vale foreshadowed that in 2019 coal production from the mine may decline to 10 million tonnes compared to 14 million tonnes produced in 2018. Vale first commissioned the Moatize mine in mid-2011 and subsequently built the Nacala coal terminal which has a capacity of 18 million tonnes a year. Vale hopes to increase sale of thermal coal to a 200 MW plant near the port of Nacala which a subsidiary of China Energy Engineering Corporation plans to have completed in 2022. (Mining Weekly, Vale, Macauhub)
South African coal company flags diversification plan: Exxaro Resources, a major South African coal producer which primarily supplies Eskom, has flagged that in response to investor concerns about climate change the company will investigate “structural changes” to the business. In its latest report to shareholders the company stated that it would investigate “an ‘early value’ strategy” of accelerating production from its thermal coal projects. In 2018 Exxaro sold just over 45 million tonnes of coal, including 8 million tonnes for the export market. However, the company noted that it expects the oversupply of the export thermal coal market to continue depressing coal prices. Exxaro is also hoping to develop the Thabametsi mine to supply 3.9 million tonnes of coal to the proposed 630 MW Thabametsi plant. (Bloomberg, Exxaro Resources)
Coal India and NTPC tout big coal expansions: NTPC, the Indian Government-owned power utility that generates about one-quarter of the country’s power, claims its plans to increase coal production from its 11 coal blocks from the current 9 million tonnes per annum to over 100 million tonnes per year. The NTPC fleet of coal plants, which have a capacity of 41,580 MW, require about 160 million tonnes of coal a year. At present NTPC sources most of its coal from Coal India, a majority government-owned coal company which is being progressively privatised. Coal India claimed it may increase production by 50–55 million tonnes per year over the next three years, subject to land acquisition for mining, and eliminate up to 120 million tonnes per year in coal imports. (The Hindu, Economic Times)
National Treasury floats plan to sell Eskom’s coal plants as part of restructuring plan: Eskom’s Chairman and interim Chief Executive Officer, Jabu Mabuza, said President Cyril Ramaphosa’s plan to split the utility into generation, distribution and transmission divisions would occur internally over the next 12–18 months with the transmission arm to be spun off into a standalone state-owned company within 4–5 years. Mabuza also said that the government had bailed out Eskom’s finances solely because of the knock-on effects the collapse of the utility would have on South Africa’s credit rating and the potential to trigger the need for an international bailout. South Africa’s National Treasury has proposed Eskom’s coal plants be sold off with power purchase agreements at plant-specific tariffs for the duration of the plants’ lives. (Mining Weekly, South African Treasury [pdf])
Greek utility flounders as carbon costs rise: The new chairman and CEO of Public Power Corporation (PPC), Georgios Stassis, has warned that the publicly owned utility is facing a cash shortfall of up to €800 million (US$887 million). Sassis said PPC would develop a plan to cut losses and reassure lenders ahead of the finalisation of its half-year report in the next few weeks. One of the factors behind the losses has been the rising cost of carbon dioxide emissions from its lignite plants. The utility’s new business plan, Stassis said, would increase the role for renewables and reduce reliance on lignite. (Ekathimerini)
Analysts warn Navajo coal company taking on big risks: The Institute for Energy Economics and Financial Analysis (IEEFA) argues that the Navajo Transitional Energy Company plan to buy three thermal coal mines from Cloud Peak Energy is a “high-risk gamble which would put hundreds of millions of Navajo Nation dollars at risk by investing in a low-margin sector which is in steep decline as markets for Powder Basin coal shrinks. IEEFA characterises the proposed transaction as “a case of a small company with small assets buying another company with small (and distressed) assets.” In 2018 the three mines — the Antelope and Cordero Rojo mines in Wyoming and the Spring Creek mine in Montana — produced about 50 million tons (45 million tonnes) of thermal coal. (Institute for Energy Economics and Financial Analysis)
|
Coal in India 2019, Australian Department of Industry, August 2019. (Pdf)
This 82-page report reviews trends in India’s demand for both thermal and metallurgical coal, albeit with an eye to the possibility of increased coal exports from the current low level.
|
|
