February 27, 2020
Issue 311  |  View Past Issues

Editor's Note

It seems that over the last week the pace of the shift away from thermal coal noticeably quickened. In the Philippines, the provincial government of Antique has banned the construction of new coal plants. In Brazil, a court has suspended the environmental assessment process for a new mine due to the lack of proper consultation with Indigenous communities. In North Macedonia, the government has released a draft energy strategy in which two out of the three scenarios flag an end to lignite plants by 2025. In Australia, the CEO of the world’s largest coal port has stressed the need for an urgent diversification strategy away from reliance on thermal coal exports.

In a new report, the ratings agency Moody’s noted that the shift by some insurance companies to cut support for thermal coal utilities and mining companies is a positive move to cut legal liabilities and reduce risks of falling asset values of carbon-heavy investments. In the US, JP Morgan Chase, the world’s largest private fossil fuel funder, has announced further restrictions on coal financing and support. As financial restrictions on coal mining and power plants become ever more restrictive, Bloomberg New Energy Finance has noted that about half of all the coal plant capacity proposed in Vietnam and Indonesia has not yet won financial support. In Japan, a review of the country’s support for international coal plants has been announced.

Coal industry scandals keep unfolding too. In Australia, a former mining company executive has alleged test results of cargoes destined for China and South Korea were falsified, while in New South Wales a mammoth trial over a coal licence allocation scandal is underway. In South Africa, a court has set aside a coal contract between Eskom and Tegata Exploration and Resources, a mining company previously owned by the controversial Gupta family.

Bob Burton


South African coal miners confront collapsing markets

While some of its politicians continue to imagine that coal has a future in South Africa the coal industry is facing rapidly growing problems at home and abroad, writes Kevin Davie in Business Insider.

Coal-fired power is losing to renewables in India

Coal power in India is being increasingly priced out of the market by cheaper renewables such as solar, as new coal plants have been abandoned by private investors, writes Clyde Russell in Reuters.

Cap coal ash in place? US utilities have learned better

Forward-thinking utilities recognize that storing any waste, much less coal ash, in a dry, lined landfill away from water is the most basic form of modern waste disposal options, writes Frank Holleman from the Southern Environmental Law Center in Utility Dive.


Philippines province bans new coal plants

The provincial legislature of the Philippines province of Antique, the Antique Provincial Board, has adopted an ordinance banning the construction of any new coal plants. The ordinance also provides for sanctions against any government officials or employees who would “seek, assist or work for and endorsement” of new coal plants in the province. Antique province hosts the country’s largest coal mine on Semirara Island where the Semirara Mining and Power Corporation also operates a coal plant. (Inquirer)

Top News

Brazilian court suspends coal mine assessment process: Judge Clarides Rahmeier from the Federal Court of Rio Grande do Sul has ruled to suspend the environmental licensing process for the proposed Mina Guaiba coal project. The judge ruled that the licensing process could not proceed until an assessment by the National Indian Foundation (Funai) has been undertaken and included in the environmental impact study on the mine. Legal action against the environmental assessment process was brought by Indigenous communities affected by the project and has been welcomed by civil society groups. The coal company Copelmi has proposed to produce 8.1 million tonnes of coal a year from the project. The judge’s ruling can be appealed. (Sul21 [Spanish], 350.org)

Japan announces review of support for international coal projects: Japan’s Minister for the Environment, Shinjiro Koizumi, has announced that the country’s support for international coal projects will be reviewed. The review, which is due to start in June, will influence the infrastructure export policy which is due to be developed in December. While Koizumi has strongly backed the need for change, the powerful Ministry of International Trade and Industry has promoted support for coal plants involving Japanese companies. Japan is the second largest public funder of international coal projects which has led to widespread international criticism. (Reuters)

North Macedonia flags coal exit prospects by 2025: The government of North Macedonia has released a draft energy strategy in which two of the three energy scenarios foreshadow an end to the 699 megawatt (MW) Bitola lignite plant by 2025. In the third scenario the closure of the plant is delayed until 2040. Macedonia’s only other coal plant, the 125 MW Oslomej plant, is due to close this year. North Macedonia’s utility has commenced construction of a 10 MW solar plant at the Oslomej mine with a tender for up to a further 100 MW of solar capacity open until May 2020. One option flagged in the draft strategy is to also build solar capacity at the mines used to supply the Bitola plant. The energy strategy is due to be finalised in 2020. (Government of North Macedonia [pdf], Bankwatch)

Report argues South Korea needs to rapidly phase out coal power: A report by Climate Analytics argues that South Korea needs to phase out its 60 coal units by 2029 to meet the Paris Agreement goal of limiting global temperature increase to 1.5 degrees. South Korea currently has a further seven under construction. The report argues the current rate of retirement would see South Korea’s emissions exceed the Paris Agreement pathway by 247 per cent. This would increase to 317 per cent if all planned coal units come online. The report estimates that power sector emissions need to fall by 58 per cent below 2017 levels by 2025 to be on track to reach the 2030 target. The report also notes South Korean public finance agencies have financed 22 coal units abroad between January 2013 and August 2019. (Climate Home News, Climate Analytics)

Australian company faked tests on coal quality for South Korea and China: A former senior employee of Terracom, a small Australian coal exporter, has filed legal action against the company alleging it pressured the laboratory testing company, ALS, to falsify coal quality results. Justin Williams, who had previously worked at Aquila Resources and Peabody Energy, also alleges he was told of a scheme by which Noble Resources International, a commodities trader, paid bribes to officials in Chinese and South Korean coal importing companies. ALS Australia informed the stock exchange that a preliminary investigation had revealed that “a number of certificates” from two coal laboratories in Australia had been amended “without proper justification.” ALS also announced that it has stood down four staff. (Australian Financial Review [paywall], ALS)

Former NSW ministers on trial over coal tender process: The New South Wales Supreme Court has been told that former Labor Party Minister and powerbroker, Eddie Obeid, along with his son Moses, stood to make up to A$60 million on the sale of properties covered by a coal exploration licence allocated in 2009. The former NSW Minister for Mining, Ian Macdonald, is also on trial on nine charges of misconduct while in public office. Prosecutors allege Macdonald directed the Department of Primary Industries to include properties owned by the Obeids in a coal tender process and that he allegedly leaked them a confidential list of tenderers. The Obeids and Macdonald have pleaded not guilty. The trial is expected to run for five months. (Sydney Morning Herald, ABC News)

South African court cancels Gupta-era coal contract: The High Court of South Africa has set aside a 3.7 billion rand (US $246 million) coal contract between Eskom and Tegeta Exploration and Resources, a mining company previously owned by the controversial Gupta family. Duduzane Zuma, a son of former President Jacob Zuma, was a minor shareholder in Tegeta Exploration and Resources. In March 2015 a 10-year contract to supply the Majuba power station from the Brakfontein colliery was entered into despite Eskom staff having warned the quality was too low for the plant. The court also granted the Special Investigating Unit (SIU) permission to launch proceedings over the contract under the Companies Act. In December 2018 the SIU stated that it would seek a punitive costs order against Eskom and Tegeta. (Fin24, Ministry of Justice and Correctional Services [pdf])


India: Ministry of Environment’s Expert Appraisal Committee approval for coal projects in Goa used conditions cut-and-pasted from a project 500 kilometres away in Mumbai.

South Africa: Minerals and Energy Minister to inspect Canadian and US carbon capture and storage plants.

Spain: Endesa will bring forward by a year the closure of the 1100 MW Litoral plant and the 1400 MW As Pontes plant to mid-2021.

South Africa: Exxaro plans to sell two of its South African mines which produce just over 8 million tonnes of coal a year.

South Korea: Danish pension fund APG has sold its €60 million (US$65 million) stake in the South Korean utility KEPCO and the Church of England is considering divesting by the end of 2020.

UK: Anglo Pacific, a London-based funder of mining projects, has ruled out new coal investments.

UK: To cut air pollution, coal for home heating will be phased out between 2021 and 2023.

US: The owners of the Poplar Grove mine in Kentucky have sought Chapter 11 bankruptcy protection for the mine which produced its first coal in 2019.

US: Nevada Gold Mines (NGM) plans to build a 100 MW gas unit to cut demand on its 215 MW coal plant. NGM is also reviewing option of a 200 MW solar farm with battery storage.

Companies + Markets

Half of proposed coal plants in Vietnam and Indonesia struggling to gain finance: A report by Bloomberg New Energy Finance (BNEF) estimates that about half of 41,000 MW of new coal plants proposed in Vietnam and Indonesia have not yet secured finance and may never be built as restrictions on financing new coal plants take effect. BNEF analyst, Allen Tom Abraham, said the financing restrictions announced by Asian banks in 2019 mean it will be “difficult to find experienced investors and cheap capital to build these projects.” BNEF also notes that Asian governments wanting to proceed with coal plants will be under pressure to provide financial guarantees against defaults and to provide long-term offtake agreements. (Bloomberg)

Moody’s rates insurance move away from thermal coal as a positive: The credit ratings agency Moody’s has flagged that the move by Allianz, AXA, Swiss Re, Munich Re and Zurich to cut their investments and reinsurance of some fossil fuels is “a positive”. Moody’s noted that reducing reinsurance coverage for coal had the effect of reducing insurance companies’ legal liabilities if courts found a connection to specific damaging weather events. However, Moody’s noted that ending reinsurance of thermal coal companies would not eliminate legal liability for the historical period when coverage was in effect. The ratings agency also stated that insurance companies divesting from fossil fuel assets are “better protected against the risk of such assets losing value faster than expected due to the transition to carbon-neutral alternatives.” (Moody’s)

JPMorgan Chase increases restriction on coal support but leaves loopholes: In an update to its environmental and social policy framework, JPMorgan Chase, the world’s largest private fossil fuel funder, has announced it will not provide finance or advisory services to coal companies that earn the majority of their revenue from coal and it will phase out existing support by 2024. Under the revised policy JPMorgan Chase will not provide project funding for new coal plants worldwide. However, the Rainforest Action Network argues that the new policy allows continued support for new coal mines owned by diversified mining companies and continued corporate financing of companies which build new coal power plants. In Sweden, the board of the Swedish Export Credit Agency, EKN, announced that after December 31, 2020 it will not provide new guarantees for the financing of exports to coal mining. EKN ceased providing support for coal power plants in 2017. (Washington Post, JPMorgan Chase, Rainforest Action Network [pdf], EKN)

Finnish utility Fortum rejects Paris Agreement motion: The Finnish utility Fortum is opposing a shareholder resolution filed by WWF Finland which seeks to amend the company’s articles of association to set a plan to align the company’s operations with the Paris Agreement’s goal of a maximum warming limit of 1.5 degrees Celsius. In October Fortum announced it had agreed to spend €2.3 billion (US$2.5 billion) to increases its stake in the German utility Uniper to 70.5 per cent. European NGOs have expressed alarm that Uniper has won agreement from the German Government to commission the 1100 MW Datteln 4 coal plant this year. (Fortum)

India flags aim of boosting domestic coking coal production and increased imports from the US: Senior Coal India executives and government officials have suggested India should aim to produce up to 35 per cent of the country’s metallurgical coal needs from domestic sources. They argue this would cut imports and reduce the outflow of foreign exchange. However, Indian metallurgical coals require upgrading due to their high ash content. In 2019 India imported an estimated 61 million tonnes of metallurgical coal, making it the second largest importer from the seaborne market. The Indian Government aims to increase steel production from 140 million tonnes to 300 million tonnes by 2030, which would increase the demand for coking coal to 175 million tonnes. While Coal India is promoting increased domestic production, the Minister for Steel, Dharmendra Pradhan, has also flagged the prospect of increased imports of US metallurgical coal. (Financial Express, Daily Pioneer)

Newcastle port chief calls for urgent diversification away from reliance on coal: Craig Carmody , the chief executive of the Australian Port of Newcastle, the world’s largest thermal coal exporting port, has complained that restrictions imposed by the NSW State Government when the port was privatised in 2013–14 are blocking the ability of the port to diversify away from reliance on coal. Carmody says the need to diversify is urgent as coal, which makes up about 95 per cent of exports through the port, may only last for another 15 years. “You transition when you can afford to transition, not when everything is a fire sale,” he said. (Sydney Morning Herald)

China coal production increases as Mongolia relaxes export ban: Mongolia has also announced that on March 3 it will resume coal exports to China, reversing a ban which has been in place since February 10. Mongolia’s Deputy Prime Minister announced the end of the export ban after Chinese companies stated they aimed to return to full capacity on March 2. Mongolia exported over 33 million tonnes of metallurgical coal to China in 2019. Mongolia supplies over 30 per cent of China’s metallurgical coal imports. China’s National Energy Administration claimed that central government-owned coal companies are already back at 95 per cent production while the whole sector was operating at just 76.5 per cent capacity. (Reuters, Argus)

South African coal-to-gas producer flags plan for 600 MW plant: Sasol, the government-owned coal-to-liquids producer, is seeking Department of Mineral Resources and Energy approval for up to 600 MW of additional generating capacity at its Secunda and Sasolburg sites. Sasol currently self-generates half of its 1200 MW demand for its South African plants from gas units fuelled by exports from a project it operates in southern Mozambique. Sasol said the proposal is for wind and solar generation near its Secunda and Sasolburg operations along with extra gas generation capacity. South African industries have been hit by persistent load shedding as Eskom struggles to keep unreliable coal plants operating. (Engineering News)


Transitioning towards a coal-free society: Science-based coal pathway for South Korea under the Paris Agreement, Climate Analytics, February 2020. (Pdf)

This 28-page report argues that South Korea’s current coal power trajectory falls well short of what is required to meet the country’s obligations under the Paris Agreement.