CoalWire 114, December 10, 2015

December 10, 2015

editor’s note

Over the last week nothing has gone right for the coal industry. Part way through the Paris climate talks Beijing issued a ‘red’ alert over appalling air quality while New Delhi – with even worse air quality – finally bowed to community outrage and announced the shutdown of two and possibly three coal plants. While coal lobbyists were busing hyping coal’s prospects, Anglo American – one of the world’s largest coal exporters – was announcing it is keen to sell many of its coal projects.

Bob Burton
CoalWire Editor

features

Polish Government bailout for loss-making coal mines may break EU laws

Poland’s plan to force government-owned power utilities to buy Kompania Weglowa’s loss-making coal mines and other financial subsidies may break two European Union laws, writes Krystina Shveda in Greenpeace’s EnergyDesk.

Tweet: 80% of Polish coal plants aren’t profitable; but the government’s rescue plan may be illegal http://bit.ly/1IPWcWr

Europe needs to accelerate coal plant phase-out to meet climate targets

The European Union needs to accelerate its coal plant shut down by as much as three times as currently planned to meet its climate targets, writes Zachary Boren at Greenpeace’s EnergyDesk.

Tweet: #Europe needs to accelerate #coal plant phase out to meet #climate targets @zdboren http://bit.ly/1Oh4rws

top news

Adani demands ban on Australian legal actions: The chairman of the Adani Group, Gautam Adani, has told journalists that he met Australian Prime Minister Malcolm Turnbull on November 4 to request a law be passed to extinguish legal challenges to his company’s proposed Carmichael mine in the Galilee Basin. “The politicians have to go to Parliament and enact a special law which says that once the government gives approval, no one can challenge it,” Adani said. Adani also conceded the project hasn’t been able to attract finance and implied the project is not viable at current global prices. (Livemint, EndCoal)


Scottish regulator warns of risks with underground coal-to-gas: Draft reports by the Scottish Environment Protection Agency (Sepa) warned of “sometimes unknowable” risks associated with underground coal gasification (UCG) projects. After reviewing UCG projects in Europe, the US and Australia, Sepa warns risks include air and water pollution, “uncontrollable” underground fires and underground explosions. Two companies – Cluff Natural Resources and Five Quarter – have UCG licences which are strongly opposed by residents. (Herald Scotland)

Outrage over Indian smog forces plant shutdowns: Public outrage at extreme air pollution in New Delhi, which has been ranked by the World Health Organization as the world’s most polluted city, has spurred the Delhi government to shutdown two coal plants within a week. The Delhi government has announced the closure of the 700 megawatt (MW) Badarpur plant and the 1820 MW Rajghat plant, though it is unclear whether the closure is temporary or permanent. A third plant in neighbouring Uttar Pradesh is also slated to be closed. (Times of India, International Business Times)


Study finds CCS costs underestimated: A study published in Environmental Science and Technology has found the costs of CCS plants in the US have been significantly underestimated. Previous studies estimated the additional fuel cost of a CCS plant over a conventional plant at US$29 million per year while the authors estimated it is actually $126 million a year. The authors note this makes CCS plants more expensive than wind and comparable to solar in the US, and potentially globally. (Michigan News, Environmental Science and Technology)

“So why all the happy noises [from Rio Tinto about the future of coal]? Well, a used car dealer doesn’t list the flaws of all the models in the showroom, and mining executives are little different. [Jean-Sébastien] Jacques [Rio Tinto’s coal head] has a couple of coal mines he might like to sell. His actions speak louder than his words,”

writes David Fickling in Bloomberg.

news

Australia: Government inquiry finds Hazelwood mine fire “likely” to have caused increase in deaths.


Colombia: Drummond plans to export an extra five million tonnes after night-time railway ban lifted.


Dominica: Groups and residents seeks injunction to block construction of two coal power plants.

France: Engie official confirms Indian coal plant and Indonesian mine up for sale.


Malawi: MOU signed with China for $600 million 300 MW Kam’mwamba power plant.


US: Cost of Kemper Carbon Capture and Storage plant climbs to US$6.49 billion.

companies + markets

Anglo American plans to slash coal portfolio: In an ‘investor day’ presentation Anglo American has announced that it plans to sell its Drayton thermal coal mine in Australia and four South African mines producing thermal coal for the domestic market. The company stated it will only retain low cost coal projects which are “producing premium quality products.” The company operates six thermal coal export mines in South Africa, four mines in Australia and has a one-third stake in the Cerrejon mine in Colombia. Details of the mines will be closed or sold will be finalised in February. (Anglo American, Anglo American)


Funds hard to find as Poland plans coal rescue plan: The plan by Poland’s new pro-coal Prime Minister, Beata Szydlo, to require power utilities to merge with the loss-making coal industry has hit the valuations of the four public power companies. Polska Grupa Energetyczna’s (PGE) shares have fallen 30 per cent since the start of the year. Last week PGE’s chief financial officer, Magdalena Bartos, said that the company was already “receiving more and more signals from investment banks that they are not interested in lending money for such [coal] projects. This trend will intensify.” (Reuters, Platts)


Thermal coal glut grows to record volumes: A Bloomberg Intelligence report estimates that there are 118 million tonnes of surplus thermal coal in 2016 as demand falls in importing countries such as China, and India increases domestic production. Andrew Cosgrove from Bloomberg Intelligence estimates thermal coal may need to fall to US$40 a tonne before existing coal exporters cut substantial production. Platts reports the Newcastle benchmark price has fallen to US$50 a tonne, its lowest level in a decade. (Bloomberg, Platts)

India signals plan to cut met coal imports: In a bid to cut coking coal imports for steel plants the Indian Coal and Power Minister, Piyush Goyal, has urged the newly created National Mineral Exploration Trust (NMET) to fund exploration for metallurgical coal deposits. Goyal wants to mimic his thermal coal strategy of boosting domestic production in a bid to cut foreign exchange outflows for coal. It is estimated India is likely to import about 54 million tonnes of metallurgical coal in 2015. (Mining Weekly, Australian Government)


The US industry’s loss-making ‘zombie mines’: An assessment of the future of the US coal industry by consultancy firm McKinsey estimates that even if the industry cuts production by 20 per cent by 2020 it would still have about US$70 billion in debt and liabilities, including mine site rehabilitation costs. The phenomena of companies running loss-making mines to cover interest and bondholder costs, McKinsey wrote, has created “a collection of ‘zombie mines’ that cannot turn a profit but are too costly to close.” (SNL, McKinsey)


China thermal coal imports keep falling: Over the January to October period this year China’s thermal coal imports have fallen by 39 per cent compared to the same period in 2014.(Business Insider)

resources

End of an Era, Greenpeace UK and Climate Action Network Europe, December 2015. (Pdf) (A media release providing an overview of the report and graphics is here.)

This report reviews the emissions of the 280 coal plants in the European Union and concludes that to meet the 2°C target their phase-out must occur three times faster than currently planned.


Climate Change Scorecard: Do the MDB’s pass the 2 degree test, Bank Information Center and the Sierra Club, December 2015. (Pdf)

This 19-page report finds that none of the world’s main multilateral development banks (MDB’s) have aligned their lending policies to support limiting the global temperature increase to 2°C.

Can carbon capture and storage justify new coal-fired electricity?, Overseas Development Institute, December 2015.

This 8-page briefing paper provides a good overview of the daunting challenges facing CCS and explains why carbon capture and storage does not justify new coal-fired power capacity.


Double Jeopardy: Coal’s threat to Forests, Fern, December 2015.

This report investigates the overlap between forests and proposed coal mines in Australia, Indonesia, India and Romania. There is also a detailed interactive set of maps for Australia, Canada, India and Indonesia.