CoalWire 105, October 8, 2015

Posted October 8, 2015 by Bob Burton
Tags: Australia, Colombia, Germany, India, Indonesia, Mozambique, Poland, South Africa, Spain, UK, US, Vietnam

October 8, 2015

editor’s note

Financial stress is the phrase that best sums up the coal industry’s last week. The Polish Government rearranged the deck chairs for its loss-making coal companies while a South African railway company executive has flagged it is looking to government to insulate it from losses due to the falling coal export price. Old coal projects stagger on though, with the NSW Government approving a new export terminal for Newcastle … while acknowledging there is no current need for it.

features

The Polish Government’s illusionists’ trick with coal

The Polish Government has adapted the illusionists’ old pea-and-thimble trick by taking the assets of a loss-making coal company and hiding them under the cover of another state-owned company … but it is a pre-election ploy which is fooling no-one, writes Bob Burton in EndCoal.

BHP Billiton’s carbon bomb

BHP Billiton’s recent annual report reveals the company has 16 billion tonnes of coal tucked away in projects from Colombia, Australia and the forests of Indonesia, making the company’s coal stockpile one of the world’s largest unexploded ‘carbon bombs’, writes Bob Burton in EndCoal.

Indonesian economy in trouble for betting on coal

The coal industry not only destabilises the Indonesian economy but also carries extremely high social costs in terms of health, social and climate impacts, writes Arif Fiyanto from Greenpeace Southeast Asia in the Jakarta Globe.

campaigns

Villagers take coal protest to Indonesian President’s palace

Police arrested – and subsequently released – 43 people protesting in front of President Jokowi’s palace against the proposed 2000 MW Batang coal plant in central Java. 74 landowners are refusing to sell their land for the project, which would impact five villages and pollute rich coastal fishing grounds. Two Japanese companies – J-Power and Itochu – own two-thirds of the joint venture company for the project, which is seeking funding from the Japan Bank for International Cooperation. The project has missed its October 6 deadline for financial close for a fourth year running. (Coconuts Jakarta, Greenpeace Southeast Asia [photos])

top news

Glencore warns against subsidies for new Australian mines: Glencore, the world’s largest thermal coal exporter, has argued against the use of public funds to subsidise the development of new coal mines which would adversely affect other coal producers. The Australian Government recently stated that it could use infrastructure funds to subsidise a railway line for Adani’s Carmichael mine. “We are strong believers that if a project can’t get away on its economic merits, it shouldn’t be developed,” said Peter Freyberg, the head of Glencore’s coal division. (Sydney Morning Herald)

UK coal plants closed or converted by 2023?: According to an anonymous government official the UK Government is considering a proposal that by 2023 all ten remaining coal plants be converted to biomass, fit carbon capture and storage or close. It is reported that the policy, if adopted, would be announced before the commencement of the Paris climate negotiations on November 30. (Blue & Green Tomorrow, Bloomberg)

Minister extends Mumbai coal terminal operation: Residents have condemned the state environment minister’s decision to extend the coal-handling operations of the Mumbai Port Trust until 2017 despite the trust’s earlier announcement it would clear the site by October 31. After lobbying from coal users, the minister directed the Maharashtra Pollution Control Board to allow the port’s coal operation to continue subject to conditions including the use of covered coal trucks and coal dumps. However, residents and environmentalists argue the ‘consent to operate’ for the coal-handling operation expires at the end of the month and the port has admitted it cannot meet environmental standards. (Times of India, Times of India)

NSW Government approves extra Newcastle terminal: The Planning Assessment Commission has approved the proposed T4 coal export terminal at Newcastle even though it notes “there is no immediate need for the development.” The proposed 70 million tonnes per annum terminal has been the subject of a strong community campaign, in part due to the additional air pollution which would be generated from coal being transported through suburban areas via uncovered rail wagons. Approval for the US$3.4 billion project lapses in five years. (Planning Assessment Commission, Newcastle Herald)

Vietnamese coal-related death toll could grow by over five times: Researchers from Harvard University estimate that 4300 people a year die from coal-related pollution – with the potential of an increase to 25,000 premature deaths a year if all proposed coal plants are built. The results of the report were presented at the ‘Coal and Coal Power: The Unknowns’ conference in Hanoi organised by Green Innovation and Development Center in association with the Vietnam Union of Scientific and Technological Associations. (Tuoi Tre News, Greenpeace Southeast Asia)

“This comprehensive report [on air and water pollution in districts in the states of Uttar Pradesh and Madhya Pradesh with coal mines and power plants] shows very serious levels of pollution in the area in question. Don’t the people of that area have a right to live? You can’t do this to the people. There is no monitoring of emissions at all. Much effort is required to tackle … environment hazards that could be drastic to human health,”

stated a National Green Tribunal bench headed by Justice Swatanter Kumar.

news

Germany: Greenpeace expresses interest in buying Vattenfall’s lignite mines and power plants.

India: Controversy dogs Adani over its port and Indian coal and iron ore mining projects.

India: Andhra Pradesh villagers protest loss of land for Hinduja Group 1040 megawatt (MW) coal plant.

Mozambique: Anglo American loses interest in Moatize coal projects and shuts Maputo office.

Spain: Competition regulator warns coal subsidies may break EU law and be environmentally counterproductive.

US: Legal action launched to require new environmental review of Oakland coal export plan.

companies + markets

Reliance Power dumps Indonesian mines:Indian company Reliance Power has announced its intent to sell three coal concessions in South Sumatra, Indonesia to concentrate on domestic coal projects and expand solar generation. In 2008 the company bought the three Indonesian projects – which had a combined potential capacity of 30 million tonnes a year – to supply the company’s proposed 3960 MW Krishnapatnam Ultra Mega Power Project in Andhra Pradesh. However, the Indonesian Government’s September 2010 regulation banning the export of coal below an international benchmark price made the power project unviable. (Economic Times)

Falling price increases risk of South African stranded assets: An executive of the South African government-owned rail company Transnet has suggested the government should consider financial support for the coal sector if coal export prices fall to US$45 a tonne. Speaking in a personal capacity, Transnet’s General Manager Divyesh Kalan said if prices continued to fall marginal producers would struggle to meet their obligations under the take-or-pay rail contracts. “If the mines are in financial trouble, Transnet will also be,” he said. (Mining Weekly)

US utility signals exit from future CCS projects: NRG Energy, a major US electricity utility, has announced that while it will complete the construction of the Petra Nova Carbon Capture and Storage (CCS) project in Texas it will not invest in further projects. The US$1 billion Petra Nova CCS project, to be commissioned in 2016, aims to capture 90 per cent of the carbon dioxide from the existing 240 MW Parish coal plant and sell it for use in ‘Enhanced Oil Recovery’ (EOR) projects nearby. NRG Chief Executive David Crane acknowledges that CCS for EOR was attractive when the oil price was between US$75 to $100 a barrel but, with oil selling for US$45 a barrel, it is no longer viable. (Houston Chronicle)

Citigroup cuts coal financing, ANZ weakens standards: In an update to its environmental policy framework Citigroup has reported it has begun to cut lending to coal mining and will continue “reducing our global credit exposure to coal mining companies.” However, ANZ – the largest Australian lender to fossil fuel projects – has gone in the opposite direction. Market Forces Campaigner Julien Vincent points out that its new policy actually weakens their standards for coal plants from the existing 0.69 tonnes of carbon dioxide per megawatt hour (tCO2/MWh) to 0.8 tCO2/MWh. Nor has ANZ ruled out funding Adani’s proposed Carmichael coal mine. (Rainforest Action Network, Market Forces)

Rio Tinto sale signals possible exit from coal: In what is seen as the first stage of Rio Tinto’s exit altogether from coal the company has sold its 40 per cent stake in the Bengalla mine in NSW’s Hunter Valley to New Hope Corporation and restructured its Coal & Allied joint venture with Mitsubishi Development. Rio Tinto is also negotiating the sale of its two other Hunter Valley mines and may be open to selling its remaining Queensland metallurgical coal mines. In late 2014 Rio Tinto sold its Benga project in Mozambique – which it bought for US$3.7 billion – for just US$50 million. It has also been attempting to sell its minority stake in SouthGobi Resources which has coal exploration projects in Mongolia. (Rio Tinto, Sydney Morning Herald)

resources

Resources and Energy Quarterly: September 2015, Australian Government Department of Industry, October 2015. (Pdf) (Word version here; statistical tables on commodity data here.)

This free report outlines the Australian Government’s rather optimistic assessments of demand for both thermal and metallurgical coal.

Reconsidering Coal’s Fair Market Value: The Social Costs of Coal Production and the Need for Fiscal Reform, Institute for Policy Integrity, October 2015. (Pdf)

This 68-page report provides a detailed review of the US Government’s coal leasing program for federal lands and argues for reforms in how public coal is valued and allocated.

“Wind and solar boost cost-competitiveness versus fossil fuels”, Bloomberg New Energy Finance (BNEF), October 5, 2015.

In this media release BNEF outlines how onshore wind and solar are now cheaper than coal and gas in the UK and Germany while the costs of coal plants are rising and the cost gap narrowing elsewhere.