Editor's Note
For years promoters of coal power have peddled the notion that coal power is here for decades to come. It was a message designed to buttress declining political influence, assist staff recruitment and reassure nervous communities. It was a narrative that may have served the companies well in the short term but it is now serving coal communities very poorly. As the downturn in US coal demand accelerates, the bankruptcy of Wyoming coal producer Blackjewel has seen about 600 miners locked out, wages checks bounce, social services to be overloaded and regulators scramble. Those watching the company and industry closely could see the crash coming. In Russia’s Kuzbass coal mining region, about 2000 miners have also been recently suspended. Neither region, along with many others around the world, is prepared for a transition away from coal occurring far faster than they ever expected. The Japanese mining equipment manufacturer, Komatsu, has also realised that its over-exposure to the coal sector is a serious business risk.
In Germany, financial pressure on coal generators from rising carbon prices and other factors is driving a switch away from both hard coal and lignite generation. The government has also flagged that compensation for the closure of hard coal plants required by 2022 will be awarded by tender to those submitting bids for the lowest cost of carbon emissions reduction.
In India, villagers have won a procedural challenge to a proposed Adani mine that would displace 14 villages. In Myanmar, 3000 monks and villagers took to the streets to protest against the resumption of a coal mine. In the Dominican Republic, two finance sector executives have resigned as part of the ongoing fallout from leaked internal Odebrecht documents of payments notated as related to the Punta Catalina coal plant. In India, the government-owned utility NTPC has cancelled the contracts for the development of two mines over corruption allegations.
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The demise of Wyoming’s big coal producers
The collapse of Blackjewel, a major US coal producer, has revealed how workers and local communities are losing out while local politicians refuse to plan for a future beyond coal, writes David Roberts in Vox.
Seven bombshells in the Blackjewel bankruptcy
Evidence presented at the Blackjewel bankruptcy hearing only reinforced the idea that the company suffered from almost unbelievably incompetent management, writes Clark Williams-Derry in Sightline.
German lignite shows signs of stress from rising European carbon prices
Germany’s dirtiest coal-fired power plants are increasingly stressed as a sustained rise in European carbon prices begins to bite, writes Gerard Wynn from the Institute for Energy Economics and Financial Analysis.
Fastest-growing market Asia rethinks coal's prospects
The outlook for Asia’s coal industry is dimming as Chinese import demand wanes and the growth of renewables is undermining demand, write Melanie Burton and Fransiska Nangoy in Reuters.
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3000 protest against restart of Myanmar coal mine: Over 3000 monks and villagers have protested against the recommencement of the Mine Kaing coal mine in Shan State. In April 2017 mining operations were suspended after thousands of villagers and monks rallied against the commencement of the mine which is several kilometres from the town. Villagers have expressed concern about the damage mining will do to the land and their water catchment and the increased risk of harassment which often accompanies mining projects. The latest rally occurred just days after the UN Special Rapporteur on human rights in Myanmar warned of breaches of human rights after protests erupted due to the lack of adequate environmental safeguards with the coal-fired Alpha Cement Factory in Mandalay and the Tigyit coal plant in Shan State. (Myanmar Times, Reliefweb)
Two Dominican Republic officials resign over payments: Two Dominican Republic officials have resigned after media reports of payments tagged in internal Odebrecht records as being associated with the Punta Catalina coal plant which the Brazilian company is constructing. Gregorio Salcedo Llibre resigned as president of the Dominican Republic stock exchange after it was revealed US$2.4 million had been paid by Odebrecht to two of his companies. Llibre, who was an advisor to the committee that awarded the contract for the plant, insisted the payments were for financial services unrelated to the project. Odebrecht records also indicated that US$100,000 was paid to a company owned by Guzman Ibarra, an executive with the publicly owned bank, BanReservas. Ibarra said Odebrecht had paid him for advisory services. (International Consortium of Investigative Journalists)
Indian utility cancels coal mining contract over corruption concerns: The Indian Government-owned utility, NTPC, has cancelled contracts with BGR Mining for the development of its Chatti-Bariatu coal mine in Jharkhand and Talaipalli coal mine in Chhattisgarh due to corruption allegations. NTPC suspended a senior executive after the Central Bureau of Intelligence filed a charge against him and BGR Mining executives over a payment that was allegedly sought in relation to the projects. While the Delhi High Court overturned the suspension of the NTPC executive, the utility proceeded to cancel the contracts on July 4 after it wasn’t satisfied with the response of BGR Mining. The Chatti-Bariatu mine is planned to produce 7 million tonnes of coal a year for NTPC’s 1320 megawatt (MW) Barh plant while the Talaipalli mine is planned to produce up to 18 million tonnes of coal a year for the 3200 MW Lara plant, which is under construction. (The Hans India)
Report finds lax oversight of water permits for South Africa’s coal mines: A report by the Center for Environmental Rights (CER) has found South Africa’s Department of Water & Sanitation has failed to properly monitor or enforce compliance with the conditions of water use licences issued for eight coal mines in Mpumalanga province. CER found that the department failed to challenge misrepresentations of data by external company auditors or respond to violations identified by the companies themselves. The report reviewed mines owned by Glencore, Tshedza Mining Resources, Exxaro, South32, Wescoal, Anglo American and Universal Coal Development. However, CER found it impossible to obtain water licence data for another five mines, including the Optimum mine, from either the department or the companies. (Daily Maverick, Center for Environmental Rights)
China removes mention of coal plants in Bangladesh World Heritage resolution: At the recent meeting of UNESCO’s World Heritage Committee representatives of the Chinese Government amended a resolution to remove all references to three proposed coal plants near the Sundarbans World Heritage Area in Bangaldesh. Two of the three proposed plants — the 350 MW Barisal plant and the 1320 MW Kalapara plant — are backed by Chinese–Bangladeshi joint ventures. The third project, the 1320 Rampal plant, is backed by a Bangladeshi–Indian joint venture. The final resolution simply noted that the Bangladesh Government should work to “take all necessary mitigation measures” to limit damage to the Sundarbans World Heritage Area from the proposed coal and other industrial plants. (Climate Home News)
Hearing on Adani mine in India delayed by court challenge: The High Court of Bilaspur in Chhattisgarh has delayed the public hearing for environmental clearance of the proposed Gare Pelma-II coal mine. The coal block has been allocated to the Maharashtra State Power Generation Company which has contracted the development of the mine to Adani Enterprises. The proposed mine, which would result in the removal of 14 villages, has been opposed by the villagers. Their legal representative, Goldman Environmental Prize winner Ramesh Agrawal, argued that only a member-secretary of the State Pollution Control Board could determine the timing of the public hearing and that the decision could not be delegated to an official with the regional office. The Raigarh district already hosts up to seven mines and a 4000 MW coal plant. (Times of India)
Report reveals widespread breaches of Indian coal plant water limits: A survey by the NGO Manthan Adhyayan Kendra has found that just 51 per cent of coal plants in 12 of India’s 29 states are in compliance with Ministry of Environment, Forests and Climate Change (MoEFCC) regulations on water consumption. By December 2017 India’s coal-fired power plants, with the exceptions of those plants using seawater for cooling, should use no more than 3.5 litres of water per kilowatt hour of electricity generated, according to the MoEFCC standard. Of the 156 plants or units for which Manthan Adhyayan Kendra could obtain data, 30 acknowledged that they did not comply with the standards. (CounterView)
“I’ve spent twenty years in coal. Where can I go next? I would not recommend any young people join this industry,”
said a mining engineer with an MBA said on the sidelines of the Coaltrans mining industry conference in Indonesia.
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Australia: NGO launches legal challenge against the renewal of pollution licences for the Vales Point, Eraring and Mt Piper coal plants.
Indonesia: Two more children have drowned in abandoned coal mining pits near Samarinda.
Ireland: Moneypoint power station, a major purchaser of coal from the Cerrejon mine in Colombia, announces job cuts to address “low-running regime”.
Kenya: An NGO has challenged the US Ambassador to Kenya’s support for the Lamu coal plant despite court ruling rejecting the initial environmental assessment.
Malaysia: Flawed boiler tubes trigger delay in commissioning of the 2000 MW East Jimah plant and hits share price of its owner, Tenaga Nasional Bhd.
Switzerland: Two dozen arrested in protest against Credit Suisse and UBS banks’ role in financing coal and oil projects.
US: The drug company Mylan, which sells asthma treatments, has invested in loss-making coal refinery plants to accrue tax credits.
“The bankers aren’t here. A lot of the services like insurers aren’t here any more … It’s a lot more domestic [Indonesian] players, and they want to be perceived as energy companies, not as coal companies,”
said Alistair MacDonald from SMG Consultants at the recent Coaltrans conference in Indonesia.
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Komatsu exposed to downturn in demand for coal mine equipment: The President of Komatsu, Hiroyuki Ogawa, has acknowledged that the growing risk to coal demand means the company needs to reduce its “dependency” on supplying equipment for coal mining. Komatsu revealed that in the year to March 2019, 49 per cent of its sales of mining equipment was machinery such as hydraulic excavators and dump trucks for coal mines. While Japanese finance and trading companies have signaled a withdrawal from support for thermal coal projects, Komatsu aims to keep supplying the sector. In 2017 Komatsu bought the US-based Joy Global for about US$3.7 billion to expand into underground mining equipment. Komatsu is also a member of the World Coal Association. (Bloomberg Japan [Japanese], Komatsu)
Collapse of major Wyoming company leaves regulators scrambling: The July 1 collapse of Blackjewel has left government agencies scrambling to provide support services for the 570 miners locked out of the Eagle Butte and Belle Ayr mines and to ensure the mines are safe. Blackjewel, which produced 36 million tons (33 million tonnes) of thermal coal in 2018, was the sixth largest coal company in the US at the time that it sought bankruptcy protection. Employees have been left with unpaid wages and uncertainty over their retirement benefits. The collapse of Blackjewel comes as the Federal Energy Regulatory Commission (FERC) has substantially revised its three-year forecast of US power generation from a report it produced just a month ago. FERC’s latest report estimates a further 4628 MW of coal plant retirements by June 2022 and coal’s share of generation capacity declining to 19.5 per cent. (Sheridan Press, Vox, Windpower Engineering)
Mass layoffs in Russian thermal coal mining region: About 2000 employees at thermal coal mines in the Kemerovo region have been stood down due to the decline in prices and reduced exports to Europe. Suspended workers are entitled to two-thirds of their average salary, but there are doubts that demand will increase. (OTP [Russian])
Glencore exposed to coal price slide: In the wake of a landslide that killed an estimated 41 people at Glencore’s Kamoto copper and cobalt mine in the Democratic Republic of Congo, Jefferies analysts Chris LaFemina and Patricia Hove have warned that the company’s share price is also very exposed to the outlook for coal. While the company earned over 30 per cent of its revenue from coal, this has become a major risk now that thermal coal prices have “collapsed.” They estimate that every US$10 fall in thermal coal price company revenue will drop by US$480 million. They argue that even if thermal coal prices recover at some point, investors are increasingly wary of thermal coal as environmental and social concern “becomes a more prominent theme”. (Mining Journal)
Chinese ultra-high voltage transmission line to displace imported coal: The construction of the 3324-kilometre-long ultra-high-voltage transmission line connecting Xinjiang province in western China to Anhui province just inland from coastal Shanghai is likely to be completed within the next year. Once completed, the line will facilitate the export of electricity from mine-mouth coal plants in Xinjiang and could displace the consumption of up to 30 million tonnes of imported thermal coal and more expensive domestic coal power. (Platts)
Germany announces tender process for coal closures: The German Government has announced that compensation payments for the closure of hard coal plants will be awarded to companies submitting tenders for the lowest cost for avoided carbon dioxide emissions. In January the government-appointed coal closure commission proposed 4000 MW of hard coal plants would need to close by 2022. The government expects draft legislation for the hard coal closures to be finalised within the next few months. The coal commission also proposed the closure of an additional 3000 MW of older lignite plants in western Germany by 2022 but with the decision of which plants will close to be determined by direct negotiations with the utilities. (Platts)
Report highlights Adaro Energy’s use of subsidiaries in low-tax locations: A report by the NGO Global Witness has found that Adaro Energy’s use of subsidiaries in low-tax countries could have the effect of reducing the amount of tax paid in Indonesia. Adaro Energy is one of Indonesia’s largest coal producers. The report argues Adaro Energy’s use of its Singapore coal trading arm, Coaltrade Services International, may have allowed the company to pay US$125 million less in tax between 2009 and 2017. The report argues a further US$45 million could have been paid in Indonesian taxes if Adaro Energy didn’t operate subsidiaries in Malaysia and Mauritius. In 2017 Adaro Energy won a ‘Golden Taxpayer’ award from Indonesian Finance Minister, Sri Mulyani. (Global Witness)
Report finds Japanese thermal coal imports set to decline: A report by the Institute for Energy Economics and Financial Analysis finds that proposed coal plant additions in Japan have dropped from 12,700 MW as of January 2015 to less than 4600 MW now, with further cancellations expected. While Japan currently has 8700 MW of new coal plants under construction, the old plants they are mostly replacing have almost similar capacity. With declining coal use, Japan’s thermal coal imports are likely to decline with the impact concentrated on Australian coal producers based in the NSW Hunter Valley. The report also notes that a decline in Japanese imports of NSW coal will result in a significant decline in royalty payments to the NSW Government. (Institute for Energy Economics and Financial Analysis)
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Taxing Times For Adaro, Global Witness, July 2019. (pdf) (Media release here.)
This 9-page report details the impacts on Indonesia’s tax revenue from Adaro Energy’s use of subsidiaries based in low-tax jurisdictions.
Correction: CoalWire #280 used the incorrect link for the Energy Policy paper “Discursive resistance to phasing out coal-fired electricity: Narratives in Japan's coal regime”. The correct link is here.
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