September 8, 2016
Issue 149  |  View Past Issues
CoalWire

Editor's Note

In the first half of this year the total amount of coal-fired generating capacity in pre-construction planning fell by 158,000 megawatts (MW), which is almost equal to the entire coal-fired generating capacity of the 28 countries in the European Union. It is a dramatic shift largely underpinned by China’s move to curtail new coal plant expansion plans and India’s slowing demand-growth and energy diversification.

In a similar vein, in the last week the Indian Government has conceded the 2020 goal of producing one billion tonnes of coal a year by 2020 is unrealistic. A legal challenge launched by villagers objecting to a major coal project in Pakistan – which has major coal power expansion plans of its own – has revealed the mining company was pushing ahead with at least one wastewater disposal dam it didn’t have approval for.

Bob Burton

Features

The global coal plant pipeline shrinks in 2016

The amount of coal power capacity under development worldwide saw a dramatic drop in the first half of 2016, mainly due to shifting policies in Asia, write Christine Shearer and Ted Nace in EndCoal.

A false dawn for Indonesian coal

Increased Indonesian coal production in response to the recent price rise for seaborne thermal coal  would only depress the global price and make the inevitable transition away from coal mining harder, writes Tim Buckley from the Institute of Energy Economics and Financial Analysis in the Jakarta Post.

Campaigns

Legal challenge stalls unapproved Pakistan coal mine pipeline

A legal challenge against two proposed dams has stalled work on a part-completed pipeline for Sindh Engro Coal Mining Company’s (SECMC) proposed Thar II coal mine. The residents of Ghorano have launched a legal challenge in the Sindh High Court arguing the dams – to store brackish mine wastewater – will adversely affect 15 villages with a population of around 15,000 people. They also argue a second dam at Dukkur Cho will affect a Ramsar-listed wetland and wildlife sanctuary. The Sindh Coal Authority, which owns over half the share in the SECMC joint venture, told the court the proposed dam at Ghorano has not been approved. (Express Tribune, Express Tribune)

Top News

Australia seeks US$92m for coal ship damage to Barrier Reef: The Australian Government is seeking a Federal Court order to require Shenzhen Energy Transport to pay US$92 million for the rehabilitation costs of damage to part of the Great Barrier Reef. In April 2010 the Shen Neng 1, carrying a load of 65,000 tonnes of coal from the port of Gladstone, crashed into the Douglas Shoal, damaging a 40-hectare section of the reef and shedding a large amount of toxic paint. (Gladstone Observer,  Lloyd’s List Australia)

Head of Pakistani coal company arrested: At the turn of the decade the Pakistani Government allocated the Lakhra coal mine to the Fatehullah Group to supply a 200 megawatt (MW) coal plant. While the company proceeded to mine and sell the coal, the power plant wasn’t built. As a result of the failure to honour the contract, the Pakistan Government’s National Accountability Bureau has arrested the head of the parent company and issued a summons to the former Chief Minister. (The News)

Cerrejon resumes Colombian exports after vowing clean-up: Following a three-day shutdown and clean-up, the regional environmental regulator has allowed Cerrejon Coal to resume exports from Puerto Bolivar port. The regulator also required the company to submit a dust mitigation plan and commit to the installation of sprinkler systems and screens to reduce coal-dust pollution affecting neighbouring communities. (Argus)

Report argues new Dutch coal plants should close:  A court-mandated target of cutting greenhouse gas emissions by one-quarter by 2020 would be cheaper if one or two recently-commissioned coal plants closed, a consultancy report argues. In 2015 Dutch greenhouse gas emissions increased by five per cent due to the commissioning of three new coal plants. The Dutch Government proposes meeting the target by closing two old coal plants, cutting energy use and supporting a Rotterdam carbon capture and storage project. (DutchNews, Reuters)

Murray Energy’s US$250,000 support for Republican Attorneys-General:  After Murray Energy, a major privately-owned US coal company, donated US$250,000 to the Republican Attorneys General Association the company’s chief executive met with state prosecutors to discuss the Obama Administration’s Clean Power Plan. Shortly after the meeting the Attornerys General challenged the plan in the federal court. (Bloomberg)

News

Australia: Senate votes against public funding for Adani’s Galilee Basin mine and infrastructure.

Australia: Subsidiary of Jindal Steel under investigation over whether it is fit to hold mining licence.

India: Coal India unveils 600 MW of solar projects in four states as part of its 1000 MW target.

India: Greenpeace activist challenges criminal defamation lawsuit of Essar subsidiary, Mahan Coal.

US: Drummond sued over ongoing water pollution from abandoned underground mine in Alabama.

Companies + Markets

India drops billion-tonne target for 2020: The Modi Government has formally abandoned its 2020 goal of increasing coal production to one billion tonnes a year as stockpiles at both power stations and mines have grown and power demand remains lower than expected. In 2015-16 India produced 536 million tonnes of coal. While Coal India – which produces 80 per cent of the country’s coal – aims to lift production by nearly 12 per cent by the end of March 2017 to over 598 million tonnes, coal shipments in the five months to the end of August have increased by just 0.2 per cent. (Economic Times, Bloomberg)

South African exports keep on falling: India’s July thermal coal imports from South Africa have fallen by 31 per cent compared to 2015 and are down 14 percent on the preceding month. India takes about half of South Africa’s thermal coal exports, making South Africa vulnerable to the Indian Government’s goal of eliminating thermal coal imports by 2020. In the first seven months of 2016 South Africa exported 39.73 million tonnes of thermal coal, a fall of 7.2 per cent from the same period in 2015. (Platts)

Eskom’s borrowing costs rise: Eskom is facing a US$2 billion funding shortfall as major investors including Futuregrowth Asset Management have decided against providing new loans or rolling over debt until major concerns about governance of South Africa’s government-owned utility are addressed. Until last week Eskom had been resisting a Treasury audit of its coal supply contracts with a company owned by the politically well-connected Gupta family. As the dispute with Treasury has dragged on, the premium that financial institutions charge for holding Eskom bonds has increased. (Bloomberg)

Samsung dumps troubled Kazakhstan project: Samsung has terminated its involvement in the joint venture proposing to build the 1320 MW Balkhash Thermal Power Plant in Kazakhstan. In 2009 Samsung entered into an agreement with the state-owned utility Samruk Energy but “temporarily” suspended its involvement in September 2015 due to its inability to raise finance for the project. Samsung recently sold its 75 per cent stake in the project to Samruk Energy for US$192.5 million. (Reuters, CoalSwarm)

China’s largest coal province pays to shut mines: The government of Shanxi, China’s largest coal-producing province, has paid US$142 million to six coal companies to close coal mines this year. The Chinese Government has targeted the closure of 250 million tonnes of coal capacity in 2016, with Shanxi having closed 68.8 million tonnes capacity in the first half of the year. (Reuters)

Poland bids for new coal plant funds as part of climate deal: Poland has proposed that it will only support the European Union’s ratification of an amendment to the Kyoto Protocol if the European Commission guarantees funding for new coal plants. Poland has 4280 MW of proposed coal plants, but financing expensive new projects is a major hurdle. (Reuters, CoalSwarm)

WoodMac estimate big fall for global thermal coal trade: The coal industry consultancy company Wood Mackenzie estimates the global thermal coal trade could fall by 40 per cent by 2035. Wood Mackenzie estimates prices could drop below US$50 a tonne if global policy of restricting the global temperature increase to 2 degrees Celsius is implemented. The consultancy estimates Columbia, Russia and South Africa would all be significantly affected. It estimates Australian thermal coal exports could fall by 35 per cent and Indonesian exports by 43 per cent. If Carbon Capture and Storage technology is not viable, exports would be even lower. (Sydney Morning Herald)

Resources

China Shenhua Energy Company: Key Details From 2016 Interim Results Aptly Titled “Coal Supply - Side Reform”, Institute for Energy Economics & Financial Analysis, September 2016. (Pdf)

This 5-page memo details the key insights into China’s energy transformation revealed in the latest financial return of Shenhua, the country’s largest coal company.

Peabody Energy’s Five-Year Business Plan to Emerge from Bankruptcy Is Not Credible, Institute for Energy Economics and Financial Analysis, August 31, 2016. (Pdf)

This 7-page briefing paper analyses Peabody Energy’s proposed post-bankruptcy business plan and finds it not only lacks credibility but raises further questions for regulators over the use of self-bonding for rehabilitation liabilities.