CoalWire 119, February 4, 2016

February 4, 2016

editor’s note

This week there have been fascinating signals that the much-touted coal boom in India is looking shaky. In Germany a major utility has announced a big write-down of the value of its coal plants because of the rise of renewables. In South Africa controversy rages over the sale of a coal mine to a family friendly with President Jacob Zuma while in the US a consultant to a company which caused a massive water pollution disaster with a coal processing chemical has been sentenced to three years on probation.

Bob Burton
CoalWire Editor

features

Is India starting to waver on coal?

Seemingly unrelated events in the last few weeks suggest that coal’s role in India’s future may be far more tenuous than widely portrayed, writes Bob Burton in EndCoal.

Tweet: Is #India starting to waver on #coal? @bobburtonoz bit.ly/1mcbsrc

top news

Indian board directs port to slash coal imports: The Goa State Pollution Control Board, after finding air pollution reached double permitted levels at times, directed subsidiaries of Adani and JSW to cut coal imports through the Mormugao Port by 25%. The board also imposed a set of other conditions to cut coal dust pollution at the port facilities where the two companies import a total of 12.4 million tonnes of coal a year. (Times of India, CoalSwarm)


Legal challenges to US mines: WildEarth Guardians is challenging decisions made by the Department of Interior in December 2015 to approve two new coal lease extension on public land: one for Peabody Energy’s Twentymile mine in Colorado and another for PacificCorp’s Jim Bridger mine in Wyoming. Despite the Obama Administration’s January 15 announcement of a qualified moratorium on new public land coal leases, a panel advising the Bureau of Land Management has recommended the agency begin the environmental assessment process on expansions of a Cloud Peak Energy mine in Wyoming and a Lighthouse Resources mine in Montana. (WildEarth Guardians, Wyoming Public Media)


Queensland approves Adani’s Carmichael mine but hurdles remain: The Queensland Government has granted the final environmental licence to Adani for the proposed Carmichael coal mine in the Galilee Basin. However, the $US11.6 billion project still requires a mining licence, is facing two separate legal challenges – one from an Aboriginal landowners’ group and another by the Australian Conservation Foundation – and lacks financial support from banks. (Guardian)

Probation for ex-employee over US coal chemical disaster: A former environmental consultant to Freedom Industries has been sentenced to a three-year probation and fined US$10,000 for his role in the January 2014 spill of a coal-processing chemical into the Elk River. The plant was just upstream of a major water supply intake resulting in hundreds of thousands of people being left without water for as long as 10 days. Five former company officials at the company will be sentenced over the next three weeks.(Charleston Gazette-Mail)


Polish councils look beyond coal: The heads of four regional councils, as well as a children’s charity and Greenpeace, have written to Poland’s chief geologist Mariusz Jedrysek urging him to drop plans to reserve large areas of land for lignite mining. The proposal, initially unveiled in October last year, has provoked a public backlash as land reservation for long-term coal mining would override council’s planning powers, preclude other development for decades and signal that major new lignite mine expansions were being considered despite global and European Union climate targets. (Climate Home)


Court clears way for plant in Pakistan:The Lahore High Court has accepted assurances by the Punjab Government that environmental standards relating to the proposed Sahiwal Coal Power Plant will be enforced and dismissed a legal challenge to the plant. A challenge to the 1320 MW plant argued construction had commenced without assurance that the plant would meet national air emissions standards. (The Nation)

“We are struggling to see how we can sell more coal quickly to liquidate some of the [40 million tonnes of Coal India’s] stocks … I am seeing a situation where we have to gradually peter down the growth in coal production because of our inability to market that coal,”

said the Minister for Power, Coal, New and Renewable Energy, Piyush Goyal.

news

Australia: Liberal MP charges taxpayers for trip to Polish coal project of company he has shares in.


Czech Republic: NWR flags possible closure of three mines and halving of 12,828 strong workforce.


Egypt: Government seeks financial support for power plan and eyes South African coal supplies.

Ghana: Opposition to 700 megawatt (MW) plant proposed by Volta River Authority and Shenzhen Energy.


India: Coal India unions want taxes increased on imported coal to protect domestic supply.


Myanmar: Residents protest secret plan to build 20 MW coal plant at cement factory.

companies + markets

Executive gloom at US coal conference:Robert Murray, the CEO of the privately-owned Murray Energy, complained at a major US coal industry conference that the collapse of companies was dragging the industry “down the bankruptcy sewer.” Murray said that mines “with little debt and few liabilities” compete with companies “with full debt and liability loads.” An attorney with Davis Polk & Wardwell, which has acted in coal company bankruptcy proceedings, told the conference “we’ll probably see 50, 60, 70% of US coal [mining] capacity going through bankruptcy between 2012 and 2017. There’s no way around it.” (SNL, Taylor Kuykendall)


Mozambique’s coal railway expands faster than port capacity: Tripling the capacity of the Sena railway to handle 20 million tonnes of coal a year from the Moatize coalfields to the port of Beira is set to be completed by June. However, an expansion of the port proposed in 2014 by a joint venture of the government-owned rail and ports company CFM and Indian company Essar Ports has yet to receive final approval. The new terminal would take three to four years to build but there is uncertainty about the viability of the project as the seaborne market faces a glut and India is shifting away from imported coal. (Zitamar)


Coal companies facing resolutions to disclose climate risks: Three of the world’s largest coal exporters – Anglo American, Glencore and Rio Tinto – are all facing shareholder resolutions requiring they disclose how they are addressing climate change. The resolutions have been organised by the ‘Aiming for A’ coalition and have attracted support from investors including Calpers, Aviva Investors and AXA. Anglo American and Glencore have said they will back the resolutions. (Financial Times)

Glencore sells South African mine to friends of President Zuma: Late last year Glencore sold its Optimum mine for US$136 million to Tegeta Exploration & Resources, a subsidiary of Oakbay Investments Group. The sale followed Glencore’s refusal to reduce the price of coal sold to the government-owned utility Eskom. The sale to Oakbay, controlled by the Gupta family which is close to President Jacob Zuma, has raised the ire of coal mining unions. Glencore’s CEO Ivan Glasenberg met the Minister of Mineral Resources, Mosebenzi  Zwane, in Zurich ahead of the finalisation of the deal. (Sunday Times, Bloomberg)


More write-downs for German fossil fuel generators: EnBW, the third-largest energy supplier in Germany, has written off US$764 million of the value of its coal-fired plants due to the falling wholesale power prices caused by the increase in renewable generation. RWE, Germany’s largest utility, is expected to announce further write-downs when it releases its annual report on March 8. (Bloomberg)


South African exports in marginal growth: South African thermal coal exports grew by 1.3 per cent in 2015 despite falling demand from major European customers. The single largest and fastest growing market was India which accounted for just over 46 per cent of the 75.4 million tonnes of thermal coal exported in 2015. Other growth markets in 2015 were Turkey, Pakistan and Israel. (Platts)

resources

Stranded Assets and Thermal Coal, University of Oxford, January 2016. (Large pdf)

This 188-page report reviews financial risks to the world’s largest 100 power utilities, the top 20 coal-mining companies and the 20 biggest coal-to-liquids companies. It also provides a brief policy overview of the ten major thermal coal consuming and/or producing countries – Australia, China, Germany, Indonesia, India, Japan, Poland, South Africa, the US and the UK. This is a very useful report.