CoalWire 88, May 21, 2015

May 21, 2015
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The Truth Behind Peabody’s Campaign to Rebrand Coal as a Poverty Cure

“The story Linda Jing tells in the video is slick and persuasive: she was a girl from a poor village forced to study by candlelight because there was no electricity until coal-fired power plants arrived, transforming her destiny and that of China. … The message in the Linda Jing video is clear – coal is the solution to poverty in developing nations. It is Peabody’s bold attempt to change the conversation away from climate change, and it has embraced it with gusto on its Advanced Energy for Life website,” writes Suzanne Goldenburg in the Guardian.

Suggested Tweet: The truth behind @PeabodyEnergy’s campaign to rebrand #coal as a poverty cure http://bit.ly/1HfoLdY @suzyji

It’s Time for Norway’s Pension Fund to Divest More of Its Coal Holdings

“The global coal industry has become an increasingly risky investment unfit for any investment fund with a fiduciary duty to those it serves … the Norwegian Government Pension Fund Global has made strides over the years in divesting from coal, but our research indicates that the fund’s managers have not gone far enough. Coal holdings are simply too risky to own in this day and age. The industry is arguably the poorest-performing sector in the world and is in a state of deep structural decline simply because coal markets are not what they used to be. Nor will they likely recover,” writes Tom Sanzillo from the Institute for Energy Economics and Financial Analysis.

Suggested Tweet: Global #coal industry unfit for any investment fund – time for Norway’s Pension Fund to #divest http://bit.ly/1IL3jlc @ieefa_institute

Balkan Coal Rush Risks Lasting Damage

“Balkan countries and Ukraine are making ‘substantial investments’ in polluting coal power stations to sell cheap electricity to the European Union (EU), as the bloc searches for new suppliers to reduce its dependence on Russian gas. EU officials appear reluctant to use energy negotiations next month, or trade law, to force higher air pollution and environmental standards, despite the risks the rush poses to EU climate change and enlargement policies, and to finances and public health in the Balkans,” writes James Crisp in EurActiv.

Suggested Tweet: #Balkans #coal rush risks risks EU #climatechange policies, finances & public #health http://bit.ly/1PSKKvR @JamesCrisp6

top news

Huge subsidies for coal, says IMF: A working paper by International Monetary Fund (IMF) staff says that in 2015 energy subsidies amounted to US$5.3 trillion, noting that “coal accounts for the biggest subsidies, given its high environmental damage and because (unlike for road fuels) no country imposes meaningful excises on its consumption.” The IMF says the subsidies account for about 6.5 per cent of global gross domestic product and “likely exceed government health spending across the world.” (International Monetary Fund,International Monetary Fund)


Indian Supreme Court castigates corruption agency head: The Supreme Court has described as “completely inappropriate” meetings between Ranjit Sinha, the then head of the Central Bureau of Investigation, and executives of companies under investigation in the ‘Coalgate’ scandal without investigating officers being present. The Supreme Court has directed the Central Vigilance Commission to report back to the court by July 6 on whether the meetings had any impact on the investigations.(Livemint.com)


Duke Energy pleads guilty on coal ash dam charges: Duke Energy has pleaded guilty to nine counts of breaching federal environmental laws including four charges over the February 2014 collapse of the coal ash dam at the Dan River Steam Station. Five other charges relate to problems at four other coal plants in North Carolina. The court imposed US$102 million in fines and placed the company on probation for five years. Duke Energy still faces lawsuits by citizens groups over leaking coal ash dams at 14 sites in North Carolina. (New York Times, Southern Environmental Law Center)

Mass relocation due to subsidence in Chinese coal province: Over 655,000 people in 1352 villages will be relocated in the coal mining province of Shanxi due to the problems caused by subsidence following underground mining operations. Underground coal mining has affected over 5000 square kilometres of the province, damaging houses, water supplies and farmlands, according to Xinhua news agency. (ECNS.com)


German Government ponders easing proposed emissions rule: In response to lobbying by power utilities RWE and Vattenfall, some unions and coal-belt politicians, the German Government is considering softening its proposed carbon levy on emissions from old coal plants. The Ministry of Economic Affairs and Energy has proposed cutting the reduction target for the coal power sector by over a quarter to 16 million tonnes by 2020. The changes, the ministry document states, would “improve the economic viability of old power stations.” (Clean Energy Wire)


Pollution spikes as power plants turn off pollution controls: Power plant operators in states such as Pennsylvania, Ohio and West Virginia have turned off emissions control equipment due to the availability of cheap tradeable pollution credits. While New Jersey residents suffer from the health impacts associated with high ozone levels caused by nitrogen oxide emissions from neighbouring states, the US Environmental Protection Agency’s ‘cap and trade’ policy allows plants to continue to pollute if they buy credits from less polluting plants. (NorthJersey.com)

“Coal demand in China has peaked … It went down last year, it’s probably going down even more this year. Coal prices [in China] will never recover, ever,”

said Laban Yu, a Hong Kong-based analyst at Jefferies Group.

news

Australia: Government open to using US$3.94 billion infrastructure fund for Galilee coal projects.


Colombia: Drummond charged with workplace safety violations over the death of two miners.


Indonesia: Government flags dropping Central Kalimantan coal railway from infrastructure list.

Poland: Cost-cutting JSW reportedlyconsidering mid-2017 shutdown of Krupinski thermal coal mine.


UK: Thoresby mine, one of the UK’s last deep underground pits, will close in July.


Vietnam: Scientists ponder challenge of managing growing coal ash volumes.

“As China makes up 22 per cent of seaborne trade and is expected to see continued domestic oversupply, the country will be a major cause of depressed global import demand this year … Market fundamentals outside of China also remain uninspiring, for both metallurgical and thermal coal. Under such circumstances a material price recovery is unlikely this year,”

wrote Rory Simington, Wood Mackenzie’s principal Asia Pacific coal analyst. (Paywall)

companies + markets

Tata Steel writes down Mozambique coal project: Tata Steel has written down the value of its investment in the Benga coal mine in Mozambique by US$247 million. In a corporate filing to the Bombay Stock Exchange the company said the “the economic viability” of the mine “remains uncertain at the current level of commodity prices.” The company bought a 35 per cent stake in the project in November 2007. International Coal Ventures Limited owns the remaining 65 per cent share of the joint venture. (Times of India, Tata Steel)


Chinese coal power in nosedive:  Major changes to China’s electricity market – currently being debated by power planning agencies – could further accelerate the shift away from coal generation. While promoting the use of market forces to set prices, draft documents also indicate the intent to promote renewable energy and cut dirty coal plants. Bloomberg New Energy Finance estimates that three gigawatts of coal capacity will replace each gigawatt retired between now and 2020, half the rate of the last five years. Plant utilisation rates have fallen to the lowest level since 1978 with further decline likely this year. (Wall Street Journal, The Business Times)


Coal India unveils plan for doubling production: The Minister for Coal and Energy, Piyush Goyal, has revealed that in order for Coal India to meet the government’s goal of doubling domestic coal production by 2019-2020 it would need an additional 70 to 100 new mines, predominantly in Jharkhand, Odisha and Chhattisgarh. Such an expansion hinges on three major new railway connections and an investment of US$20 to US$25 billion. Goyal reiterated his view that increasing domestic production would “substitute for imports of thermal coal in the next two and a half years.” (Business Standard, Economic Times)

US bill proposes moratorium on new federal coal leases: Democratic Senator Edward Markey has proposed a bill requiring a moratorium on new coal leases on federal land until the Department of Interior completes a ‘fair market’ analysis of the value of the coal. The bill also proposes to increase compliance inspections for licences holders, raise fines for breaches of licence conditions, impose higher minimum lease rental rates and require the department to consider the climate change impacts of coal leases and development. (SNL)


Polish coal industry faces headwinds from east and west: The Deputy Economy Minister Jerzy Pietrewicz has vowed that Poland, the largest hard coal producer in the European Union, would not close existing coal plants but only seek to make them more efficient. In the first quarter of 2015 Polish hard coal production fell just over 8 per cent, with production by the state-owned company Kompania Weglowa falling by 17 per cent and the privately-owned Bogdanka dropping by 11.5 per cent. (The News, Platts)


Banks launch legal action against Russian coal miner: Two Russian banks – the privately-owned Sberbank and the state-owned VTB – have  launched legal action over unpaid debts by Mechel, a major Russian metallurgical coal producer. Sberbank is seeking the payment of US$77.74 million and VTB US$38.87 million. At the end of 2014 it was estimated that Mechel had debts of US$6.8 billion and, despite protracted discussions with its lenders, had not negotiated the restructuring of its debt. (Reuters)

“I don’t know whether it’s 15 or 20 but there are quite a number of [coal] businesses which are on the market [in Australia] … We look at most of them but half the problem is that they are generally not tier one assets and the people who are trying to sell these things still don’t have their head around the fact that they may have overpaid for them four years ago to such an extent that they are never going to recover that value,”

said Reinhold Schmidt, the chief executive of Yancoal, an Australian subsidiary of Yanzhou Coal Mining Company.

resources

The Case for Divesting Coal from the Norwegian Government Pension Fund Global, Institute for Energy Economics and Financial Analysis, May 2015. (Pdf) (Also available in Norwegian.)


This report argues that the structural decline in the global coal market has rendered divestment from coal stocks the only option for investment funds concerned about long-term returns.


Mozambique: Protect the Rights of Farmers Resettled for Coal Mines, Human Rights Watch, May 2013.


This 5-minute video documents the problems caused by the resettlement of residents for coal mining operations in Tete province, Mozambique. (This video preceded Rio Tinto’s sale of its operations to the Indian consortium, International Coal Ventures Limited.)