CoalWire 102, 17 September 2015

Posted September 16, 2015 by Bob Burton

September 17, 2015

editor’s note

The ongoing fall in China’s coal consumption and imports is profoundly reshaping both the prospects for limiting the global temperature increase to 2 degrees and the export coal industry. The export prices for thermal and metallurgical coal continue to fall, dragging down Indonesia’s exporters as well as new mine projects as far apart as the Galilee Basin in Australia and the Russian Arctic.

This week there was also a protest against a proposed plant in Pakistan, a further delay for Kenya’s first coal plant and the tallying of the horrific health costs of coal use in Europe. Meanwhile, Japan is trying to hook Bangladesh on a coal plant with a cut-price financing deal, while the investment arm of the ruling African National Congress (ANC) in South Africa has drawn condemnation for investing in a consortium proposing a coal plant which would be decided on by the government.

features

China’s economic restructuring leaves coal out in the cold

“There is an economic battle going on in China, but it’s not quite the one you’re reading about in the business pages. China’s industrial data for the first eight months of the year, released on Sunday, showed dramatic falls in coal output (5 per cent), thermal power generation (2.2 per cent), cement production (5 per cent) and crude steel output (2 per cent). Coal imports were down a whopping 31 per cent … Together with coal imports and inventory data, the output numbers indicate that China’s coal consumption is on track for a 6-8% reduction this year, which would mean a fall in China’s CO2 emissions equal to the UK total,” writes Lauri Myllyvirta in Greenpeace’s EnergyDesk.

Suggested Tweet: #China’s economic restructuring leaves #coal out in the cold http://bit.ly/1M82y6F @laurimyllyvirta @Energydesk

France makes a bold move on coal finance: Will other countries follow?

“French President Hollande [has] made a bold announcement, declaring that France would no longer provide financial support for coal-fired power plants overseas unless they are equipped with technology to capture and store the carbon dioxide emissions. His announcement follows in the steps of President Obama, who announced in 2013 a ban on support for coal plants overseas except in very limited circumstances, and provides a model for other rich countries who are dragging their heels on adopting similar bans,” writes Pascal Canfin from the World Resources Institute in Euractiv.

Suggested Tweet: #France makes a bold move on #coal finance: Will other countries follow? http://bit.ly/1ULjJwY @pcanfin @EurActiv

top news

Uproar over ANC role in South African power plant consortium: Chancellor House, an investment company of the ruling African National Congress (ANC), has been revealed as a minor shareholder in Colenso Power, a private company bidding to supply power to the publicly-owned utility Eskom. The company, a joint venture with Shandong Electric Power Construction Corporation, is proposing to develop a 1000 megawatt (MW) coal plant at Colenso. While President Jacob Zuma has defended the involvement of Chancellor House, the ANC is being called upon to avoid any conflict of interest by divesting from the company. (M&G Centre for Investigative Journalism, Times Live)

Protest against proposed Pakistan coal plant: Dozens of demonstrators have protested against a 110 MW coal plant proposed to be built in Muzaffargarh district in Punjab. Residents and farmers object to the increased health impacts from air pollution and the impact on mango orchards and agricultural lands. Muzaffargarh district already has a coal plant. (The Nation, CoalSwarm)

Further delay for Kenya’s first coal plant: The proposed construction of the 1050 MW Lamu coal plant has been further delayed as the National Land Commission has not yet completed a resettlement plan. The Kenyan-Chinese consortium proposing the project can’t file the project’s Environmental Impact Statement until the resettlement plan has been completed. The proposed plant faces community opposition and has been the subject of several delays. (Reuters, CoalSwarm)

Bangladesh leans towards Japanese port and power pitch: Bangladesh’s Planning Minister has signalled the government may abandon a Chinese-backed bid to build a port project in favour of a Japanese-supported US$4.6 billion port and 2400 MW power station complex at Matarbari. The Japan International Cooperation Agency (JICA) has already agreed to provide US$3.7 billion for the Matarbari project at highly concessional rates. Sumitomo Corporation and Marubeni Corporation, both Japanese companies, are bidding on the power station complex. (South China Morning Post)

World’s largest PR firm dumps coal clients: Edelman, the world’s biggest public relations firm, has announced it will no longer represent coal companies but will continue to work for other fossil-fuel clients. “Right now the only categorical exclusion we have is on climate denial and coal,” said Michael Stewart, the president and chief executive for Edelman Europe. (Guardian)

Huge health toll from coal in Europe: Climate Action Network Europe estimates pollution from the coal industry imposes costs of between US$23.7 billion and US$68 billion from the premature death of about 23,000 people a year. Poland, Germany, the United Kingdom, Romania and the Czech Republic experienced the greatest burdens of pollution. (Guardian, Climate Action Network Europe)

“The idea of baseload power is already outdated. I think you should look at this the other way around. From a consumer’s point of view, baseload is what I am producing myself,”

said Steve Holliday, CEO of National Grid, which operates the UK gas and electricity distribution network.

news

Czech Republic: Opinion poll reveals 70 per cent oppose demolition of villages for coal expansion.

Ukraine: DTEK drops imports of “expensive” South African coal, preferring domestic supplies.

US: Environmental groups urge President Obama to end new public land leases for fossil fuel.

Vietnam: Ministry of Finance proposes mining fee increase to cover environmental clean-up costs.

Zimbabwe: Africa’s richest man, Aliko Dangote, starts talks over proposed 630 MW coal plant.

companies + markets

Indonesian coal production plummets: Indonesia’s coal exports have fallen by 18 per cent to 211 million tonnes in the first eight months of 2015, according to the Ministry of Energy. With domestic demand for power stations falling marginally, total coal production has dropped by 15.4 per cent due to falling Chinese imports and the oversupply of the Asian market. Indonesia, the world’s largest coal exporter, is aiming to cut production to 425 million tonnes this year. (Jakarta Globe)

Thermal coal price sets new record low: Three thermal coal export benchmarks indicate that thermal coal is now selling for the lowest price since the 2008-2009 Global Financial Crisis. Thermal coal is now trading at between US$51 and US$58 a tonne according to the Amsterdam-Rotterdam-Antwerp, Newcastle and Richards Bay benchmarks, 75 per cent lower than the record peak of 2008. (Reuters)

Met coal benchmark price falls again: Rio Tinto has agreed to supply Nippon Steel and Sumitomo Metals with metallurgical coal for US$89 per tonne, the lowest benchmark price since 2007. The latest contract price means the price of metallurgical coal has now dropped by 30 per cent since the start of 2015. The falling price has been triggered by the rapid decline in Chinese metallurgical coal imports as well as the commissioning of new Australian mine capacity begun at the height of the coal boom. (SNL)

Big writedown for Russian Arctic project: Tigers Realm Coal, a company which is proposing to build a major metallurgical coal export project in the Russian Arctic, has written down the value of its only coal assets by US$122.5 million due to the falling export price. In its financial report for the first half of 2015 the company’s auditor flagged that the company may not be able “to continue as a going concern.” (EndCoal, Tigers Realm Coal)

Polish hard coal production falls: Poland’s Ministry of Economy has reported that production of hard coal from the country’s state-owned mines fell by 2.5 per cent in the first half of 2015 and the companies lost US$388.7 million. Increasing losses on coal mining has seen the pro-coal government oppose European Union policies on state subsidies and climate polices rather than substantially restructure the coal and energy sector. (Platts, Euractiv)

resources

Big Shift, Christian Aid, September 2015.

Christian Aid, a leading UK development group, has launched its Big Shift campaign to persuade the UK government and industry to move away from the use of coal and other fossil fuels. The group’s website includes a pocket guide to the campaign, a Q & A sheet and a campaign briefing. The documents are here.

Adani: Remote Prospects, Institute for Energy Economics & Financial Analysis, September 2015. (Pdf)

This report is an update on earlier analysis of the financial viability of Adani’s proposed Carmichael mine in the Galilee Basin and finds that it is now even more unbankable.

European Coal Map, Climate Action Network Europe, September 2015.

The European Coal Map displays key data on Europe’s coal problem: greenhouse gas emissions, the impact on health from pollution, where the existing and proposed coal plants are and what action governments are taking. The site also features the stories of twenty campaigns against coal from across Europe.

Assessing Thermal Coal Production Subsidies, Carbon Tracker Initiative, Energy Transition Advisors, the Institute for Energy Economics & Financial Analysis and Earth Track, September 2015.

This report finds that coal from the Powder River Basin in the US and Australia is subsidised by almost US$8 per tonne and US$4 per tonne respectively. The report argues that the removal of the subsidies would reduce demand and cut greenhouse gas emissions.

take action

Tell the UK Government to end fossil fuel export credits

Christian Aid has launched a petition urging the UK Secretary of State for Business, Sajid Javid, to make a public commitment to ending the UK Government’s support to coal projects through export credit guarantees. The petition is here.

Tell big banks: Don’t cash in on Coal India

The Rainforest Action Network has launched an online petition urging the Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, and Morgan Stanley not to participate in the sale of a 10 per cent stake in Coal India. The deadline for adding your name to the petition is September 23.