Applied Fiber, WireCo WorldGroup, DSM Dyneema have joined forces to deliver synthetic fiber dragline & rope shovel pendants to the global mining industry.

Fauji Fertilizer Bin Qasim Ltd’s 118 MW coal-fired power plant has been inaugurated and is to provide electricity to K-Electric.

The CBR-1 constitutes a coal seam stack of 7 m true vertical thickness.

Rio Tinto will appoint three new independent non-executive directors to the boards of Rio Tinto plc and Rio Tinto Ltd.

A deal with German private equity giant, AMCI International, could pave the way for further investments in the Australian coal sector by Australian Pacific Coal (AQC), following its agreement to acquire the Dartbrook coal mine earlier this year.

AQC will raise AUS$10 million via a share subscription agreement with AMCI, which is run by German billionaire, Hans Mende, in what AQC CEO and Managing Director John Robinson described as an “extremely important strategic partnership.”

“We look forward to working with AMCI and out other investors to add value through prudent investments in the Australian coal sector,” added Robinson.

AMCI was founded in 1986 by Mende and Fritz Kundrun as a coal and metals sourcing and trading company. Today the company is one of the leading privately-owned natural resources companies with investments in coal and minerals, metals and shipping.

“AMCI looks forward to completing the transaction in due course and having a successful relationship with Australian Pacific Coal’s management,” said AMCI Australia’s Managing Director, Brian Clifford.

AMCI and Mende have a history in the Australian coal sector – at one point owning a major stakes in Gloucester Coal and Whitehaven Coal. It continues to hold stakes in the Chain Valley Colliery in New South Wales and the Lake Vermont coal mine in Queensland.

With thermal coal prices strengthening, it seems the German company is looking to boost its stake in the industry again. And with recent acquisition of the Dartbrook mine setting, AQC appears well set to take advantage of the strengthening market dynamics.

“The global recovering that is being experienced in the thermal coal price is very encouraging. The recent Chinese government announcement reducing their internal coal mine production and the limitations they have placed on importation of low quality, low calorific value coals has seen an increase in the values achieved for Newcastle benchmark coals,” said Robinson.

“AQC will be impeccably placed in meeting the increased demand for its Newcastle benchmark quality coal given Dartbrook’s proximity to the seaborne markets.”

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The International Energy Agency’s (IEA) 450 Scenario, which outlines an energy pathway that limits global temperature increases to 2°C, would result in a significant reduction in coal’s share of the global generation mix, according to analysis from Wood Mackenzie.

According to the research consultancy, a 2°C limit on temperature rise would reduce coal’s share to just 16% by 2035, compared to 41% in 2013. It would also see long-term prices fall and stay below real US$50 per tonne and could prompt massive industry consolidation.

The IEA 450 Scenario is based on high improvements in energy efficiency and an increased share of nuclear, renewables and gas in the generation mix. It also assumes the carbon capture and storage will become commercial post-2020, supporting 980 million t of thermal coal consumption in 2035.

The scenario is important following last year’s COP21 in Paris, where agreement was reached to limit global temperature rises to “well below 2°C”. The world’s two largest carbon emitters, the US and China, recently ratified the Paris Agreement at the latest G20 talks with India expected to join them later this year.

Yet achieving the 450 Scenario will be challenge for nations at early stages of maturity that hold significant fossil-based reserves (think India) and mature economies that are “fossil-fuel free islands” (think Japan), Jonny Sultoon, Research Director for Global Coal Markets at Wood Mackenzie, told World Coal.

“The IEA 450 Scenario as it has been interpreted looks very restrictive beyond 2030 for countries like Japan, South Korea and Taiwan,” Sultoon said. “Taking Japan as an example, in the Ministry of Economy, Trade and Industry’s Nationally Determined Contribution (NDC) base case scenario, coal takes approximately 25% share of fuel mix by 2030 with a fairly strong return for nuclear generation.” This would result in the country’s thermal coal imports falling to the 100 million tpy range, according to Wood Mackenzie’s analysis.

“But all country level NDCs are not strictly speaking setting up a plan to limit global temperature rises to 2°C. Various estimates suggest anywhere from 2.7°C to 3.3°C of rise given all of the NDCs submitted,” Sultoon continued.

So to reach that 2°C goal (as per the 450 Scenario) or lower (as per the Paris Agreement), Japan’s coal use may well have to fall further than currently planned. “Japan would have to rely on a combination of much stronger nuclear (which we feel is very challenging, following Fukoshima), lower carbon-intensive generation (highest efficiency CCGT plants and/CHP, some possible also equipped with CCS) and more aggressive renewables growth,” said Sultoon.

This could conceivably see Japan’s coal imports fall to the 50 – 60 million tpy range – a 60% reduction from today’s levels.

As well as impacting the level of coal usage, the 450 Scenario would also require use of only the highest-quality coals. Taking Japan again, the imported coals would need to be “of the highest quality (in kcal terms), low ash, low sulfur to feed a fleet well into the 40%+ efficiency range,” Sultoon said.

That trend would be evident globally too, added Prakesh Sharma, Research Director for Global Coal Markets at Wood Mackenzie. “Our analysis suggests demand for high-energy bituminous coals will be more resilient compared with low-energy lignite-type coals,” Sharma said.

This would see Australian exports holding up better than most on the country’s higher-quality coal, although still falling 35% from 210 million t in 2015 to 135 million t by 2035. “In comparison, Indonesian exports will decline from 340 million t in 2016 to 193 million t by 2035. Colombia, Russia and South Africa combined will export less than Australia in 2035,” Sharma continued. 

One potential impact of this upheaval could be significant coal industry consolidation as the industry attempts to maintain control over prices in a shrinking market. And then there are the unknowns: “Many unintended consequences may emerge that have not yet been evaluated nor integrated into corporate strategies and governmental plans,” Sharma concluded.

In the post-Paris world, it seems the coal industry will to get used to significant volatility and uncertainty as it attempts to keep its place in a changing energy landscape.

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Outgoing CEO of the Queensland Resources Council (QRC), Michael Roche, has been appointed to Australian law firm, McCullough Robertson, in an advisory role. Roche will join McCullough Robertson’s resources group in February 2017.

“McCullough Robertson plays at every level of the resources chain,” said Roche, who will divide his time between the law firm’s Brisbane, Sydney, Melbourne and Newcastle offices.

“The team embraces the tough pioneering work of structuring and negotiating projects from the bottom up but it equally comfortable advising government and peak industry bodies to help shape policy and legislation.”

Head of McCullough Robertson’s resource group, Damien Clarke, welcomed Roche to the role, saying the company was looking forward “to tapping into Michael’s expertise to provide enhanced strategic insight and deliver our clients unmatched advice”.

Roche led the QRC for 11 years before announcing his intention to step down earlier this year.

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On 6 September 2016, DMT and DLR are presenting their newly developed, innovative and GNSS-independent measuring system DMT Pilot 3D at Hamburg’s shipping fair SMM.

The mobile system DMT Pilot 3D, originally developed for the Mars missions, offers a wide range of application possibilities, in particular for all kinds of inspection and 3D surveying requiring fast accurate measurements where satellite-based navigation is not or insufficiently available. In the case of ship inspection, the system can be used to record and automatically position inspection photos in a previously created 3D computer model of the vessel. The system, however, can also be applied in a number of other fields, including mining or underground infrastructure projects, the forestry sector and in almost all industrial installation and building projects.

“The inspection and 3D surveying system DMT Pilot 3D has the potential to significantly reduce the effort involved in documenting the results of structural inspections of ships – while at the same time increasing the quality”, said Dr Christian Cabos, Head of Information Management Technologies at the auditing and classification company DNV GL. “We are already in a position to integrate the results of ship inspections in our inspection software ShipManager Hull.”

As a pilot user of the GNSS-independent inspection and 3D surveying system, DNV GL has been closely involved since the beginning in developing the system specifically for customers in the shipping industry, to create a flexible and user-friendly product.

The DMT Pilot 3D system is being developed in a long-term technological partnership with the German Aerospace Centre and the other partners ivii and VINS in close cooperation with end-users. Within this partnership, DMT has taken on overall responsibility for the system and has the task of manufacturing the DMT Pilot 3D system and coordinating the global marketing activities.

Edited from press release by Harleigh Hobbs

Peabody Energy’s El Segundo coal mine has been awarded the Safe Operator of the Year Award by the New Mexico Bureau of Mine Safety and New Mexico Mining Association. Operating for more than a year without any reportable mine or contractor injuries, the mine achieved the state’s best safety record in the year to 30 June 2016.

In addition to the mine’s award, Roy Jones, a Relief Supervisor and member of the mine rescue team at El Segundo, was recognised with a Rescue Response Award after rendering first aid at a non-mining accident that occurred in Albuquerque last April, during which he stablised a spinal injury until paramedics arrived.

“Leadership in safety is our first value and starts with each one of us,” said Peabody President – Americas, Kemal Williamson. “We are extremely proud of the team at El Segundo for living our safety values. We also recognise Roy for inspiring all of us with quick, lifesaving actions that prevented further injury and enabled a positive recovery from a serious accident.”

The El Segundo mine employs around 200 workers. Earlier this year, its mine rescue team earned overall first place and three first place honours at safety events at the Tri-State Fireman’s Association Competition.

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In December 2015, Intercem was awarded a contract by Lafarge-Holcim for the turnkey supply of a hot gas system for a coal mill at a cement plant in Chekka, Lebanon. By realising this project, energy costs during operation for the cement plant will be consequently reduced and the specific labour need will be optimised.

This project is already the second contract for such an applications between Lafarge-Holcim and Intercem. In 2013 a hot gas system was realised in a cement factory in Jordan.

The new hot gas system in the coal mill plant in Chekka connects the preheater with the coal mill and comprises a hot gas duct with a length of 360 m and a diameter of 900 mm. The process data of the hot gas outlet of the heat exchanger are of 18 500 Nm3/h at 400°C.

Besides diverse ducts, a cyclone, a process fan and several control dampers, compensators, the complete instrumentation and automation, and a new recirculation duct with two control dampers at the existing vertical coal mill were supplied.

The turnkey scope of supply and services included:

  • Project management.
  • As-built-survey of the existing plant using 3D laser scanning.
  • Review of the statics of the existing steel structure and concrete construction.
  • Process and detail engineering.
  • Supply of the mechanical equipment including steel structure.
  • Coordination of the locally produced components.
  • Supply of the electrical equipment, including clarification of connections and integration into the existing control systems.
  • Execution of the complete foundation works.
  • Transport management.
  • Electrical and mechanical assembly of the plant.
  • Commissioning of the hot gas system.
  • Training of the operating team.

The turnkey handover to the customer is planned for 4Q2016.

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Wood Mackenzie is forecasting global trade in thermal coal to fall by 40%, if global temperature rise is limited to 2°C. The study follows the ratification of the COP21 Paris Agreement by the US and China at the recent G20 Summit in China.

The research consultancy believes that thermal coal trade volumes will fall from an estimated 900 million t this year to 527 million t by 2035. The contraction could also have implications for thermal coal pricing, if it leads to market consolidation.

“Wood Mackenzie’s proprietary modelling suggests seaborne import demand to shrink by 40% by 2035,” said Prakesh Sharma, Research Director of Global Coal Markets at Wood Mackenzie. “Asia, Europe and the Americas will import 433, 80 and 15 million t, respectively, in 2035 from 673, 170 and 39 million t, respectively, estimated for 2016.”

Sharma continues: “Although the impact on prices is hard to predict in a carbon-constrained world, they will undoubtedly will be lower. Wood Mackenzie’s modelling suggests a sub US$50 per tonne FOB Newcastle (real terms) benchmark pricing post-2020. However, the market may well consolidate which could result in producers having more power over prices. Other factors such as a global price on carbon and greater demand for premium thermal coal could sharply increase supply costs which could also lead to higher prices.”

Underpinning Wood Mackenzie’s coal trade forecast is its analysis of the EIA’s 450 Scenario. According to Wood Mackenzie, under this scenario a 2°C limit on temperature rise would result in a sharp reduction in the coal’s share of the global generation mix from 41% in 2013 to just 15% in 2035.

“Thermal coal trade in a 2 degrees Celsius world looks very challenging,” Sharma concluded. “Many unintended consequences for energy supply security, power generation costs and fuel prices may emerge that have not yet been evaluated nor integrated in corporate strategies and governmental plans despite the two major nation’s formal ratification over the weekend.”

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Arch Coal has announced its new board of directors to take over responsibility for the company upon its emergence from Chapter 11 bankruptcy.

In addition to Arch’s CEO, John Eaves, the new board will comprise six independent directors, including Sherman Edmiston, recently Chief Restructuring Office at Xinergy, at a Central Appalachian thermal and metallurgical coal produce, and Richard Navarre, a former President of Peabody Energy.

Other directors include James Chapman, who brings more than 30 years of experience in investment banking, and Scott Fogal, a partner in private investment firm, Vogal partners.

Completing the line-up is Patrick Bartels, a Managing Principal at Monarch Alternative Capital, which focuses on investing in stressed and distressed companies, and Patrick Kreighauser, Executive Vice President and Chief Financial Officer at Sachs Electric Co. and former Senior Vice President and Chief Financial Officer at Arch Coal and director of Walter Energy.

“We look forward to welcoming a new board of independent directors with the right mix of experience and business acumen to help guide Arch in a rapidly evolving and highly dynamic market environment,” said Eaves.

The new board is subject to bankruptcy court approval of the company’s plan of reorgnisation. A hearing to consider the plan is scheduled to being on13 September.

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Software developers, data scientists, engineers and entrepreneurs will convene in San Francisco from 23 – 25 September for a 54 hour hackathon sponsored by Caterpillar and Unearthed, an Australia-based open innovation organisation for the global resources sector. The hackathon format brings together creative problem solvers and industry experts, who work in teams under intense time pressure to propose prototype solutions to industry challenges.

“Caterpillar is pleased to sponsor Unearthed San Francisco,” said Tony Johnson, Marketing Manager for Caterpillar Global Mining, Surface Mining & Technology Division. “It’s especially fitting to host this event just prior to MINExpo, where Caterpillar will showcase a strategy of continuous innovation.”

“The Unearthed organisation has inspired more than 1000 innovators to attack problems in the global resources sector and, in the process, at least 150 promising solutions have been produced,” said Roberto Ortega, Innovation Incubator, Caterpillar. “We’re excited to put that kind of energy and imagination to work on behalf of our customers.”

Among the innovations emerging from Unearthed events are novel sensors and analytics for preventing oversize material from blocking the crushers on iron ore sites, predictive algorithms that dramatically reduce the need for laboratory sampling and wearable devices that improve workplace safety. Some of the mining and oil & gas companies taking advantage of this approach include BHP Billiton, Iluka Resources, Newcrest, Rio Tinto and Woodside.

“The global resources sector faces unprecedented pressure to improve the efficiency and sustainability of its operations, and at the same time it will see nearly US$1 trillion of impact from new technologies in the decade ahead,” explained Justin Strharsky, Director of Unearthed. “We are helping industry adapt by creating opportunities for entrepreneurs.”

The task at hand

In San Francisco, Caterpillar will challenge hackathon participants to propose innovative ways to use telematics data and real-time coaching to improve surface mining truck operator performance.

“Operator technique has a profound effect on productivity, fuel efficiency, component life and operating costs,” explained Johnson. “Our customers spend a lot of time and resources on traditional training activities, but we believe we can augment their work with data, analytics and real-time feedback.”

Using several large datasets from Caterpillar, hackathon participants will spend the weekend exploring how the information could be used to improve operator performance, predict potential problems, reward desired behavior and reduce machine misuse. Caterpillar subject matter experts will be on hand to provide industry perspective.

At the end of the session, teams will have five minutes to present their ideas and five minutes to respond to questions from a panel of judges. Cash prizes will be awarded for the top prototypes. The first-place team will be featured in a video shown at MINExpo 2016, the world’s premier mining equipment and technology exhibition.

“We expect that the solutions provided by the hackathon participants will be applicable to surface and underground mining equipment,” Ortega said. “In the spirit of innovation, the solutions are likely to be applicable to most types of heavy equipment and not limited to mining applications.”

“The hackathon is just one more way we’re putting the latest tools, processes and ideas to work for Caterpillar customers—helping them improve safety, increase production efficiency and reduce costs,” Johnson concluded.

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Manuli Hydraulics Mining Division has released the new Sliderlock hose connection system for sale. An innovative new concept designed to ensure the integrity of staple lock hose connections, Sliderlock is a unique product in the mining industry.

Featuring a spring-loaded cover to ensure that the staple is fully retained in even the harshest conditions, Sliderlock further enhances the traditional staple lock connection design that has been in use in underground mining applications for over 50 years.

Aside from improving safety and performance, the Sliderlock cover also minimises dust ingress and, combined with Manuli Flushfit™ staple lock fittings, provides a compact, snag-free design which allows for a more space-efficient arrangement of connections without the risk of excessive hose abrasion.

To support its OEM customers, the Sliderlock system is interchangeable with existing male end designs that use Flushfit, and is also complimented by a dedicated range of adaptors.

Manuli Hydraulics is focused on achieving excellence in the design, manufacture and supply of fluid conveyance solutions, components and associated equipment for high-pressure hydraulics, refrigeration and oil and marine applications. Manuli Hydraulics has over 2000 employees, with manufacturing and logistics facilities located in 14 countries throughout the world.

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Komatsu America Corp., a leading global heavy equipment manufacturer, will be a major exhibitor at MINExpo 2016 in Las Vegas.

At Booth 7027, Komatsu will showcase innovative machines and solutions that drive mine optimisation. Among machines on display will be several Tier-4 Final machines, including an ultra-class dump truck, hydraulic shovel, wheel loader and crawler dozer.

“Today’s mining economic environment demands more than iron,” said Dan Funcannon, Vice President and General Manager of the Mining Division at Komatsu America. “That’s why Komatsu is focusing efforts on bringing real value to our customers through the integration of machine technology with total mine site management systems to reduce cost per tonne moved.”

Funcannon added: “We will have much to say about improving mine performance and will have a number of world-premiere products on display.”

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Galilee Energy has completed drilling activities associated with the Glenaras R1 pilot lateral well project, despite adverse weather conditions.

“The Glenaras lateral well programme presented some significant challenges but out experiences team along with the principal drilling contractor, Schlumberger, have achieved a fantastic technical outcome,” said Galilee’s Managing Director, Peter Lansom.

“We look forward to bringing the well onto production in the coming weeks and hopefully achieving a more rapid drawdown on this R1 coal.”

The Glenaras project is targeting coalbed methane (CBM) production. The lateral drilling programme aimed to increase the production offtake from the existing pilot well.This will accelerate reservoir pressure drawdown and the onset of gas production.

Production operations at the pilot well are expected to continue through the remainder of 2016.

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Paringa Resources has acquired the surface property rights necessary for the construction of the re-named Poplar Grove coal mine in Kentucky, US. Previously known as the Buck Creek No. 2 mine, the Poplar Creek is a proposed 1.8 million tpy mine located within the Buck Creek Complex.

The surface rights represent a total of 318 acres controlled by local landowners and secures mine site property for Poplar Grove, adding to that secured for the construction of a barge loadout facility and the Cypress mine (formerly Buck Creek No. 1 mine).

Permitting at the site is progressing as planned, the company added, and remains on track for mine construction to begin early next year with production from early 2018.

“Over the coming months, Paringa is looking forward to updating the market on the Poplar Grove mine’s design, infrastructure, OPEX estimate, leasing and permitting,” said Paringa’s President and CEO, David Gay.

The company added that it is expecting to announce significant reductions to the OPEX at Poplar Grove due to continued reductions in the costs of labour, materials, supplies, leased equipment and fuels. Final OPEX estimates will be incorporated into the bankable feasibility study, which is due later this year.

“General investor sentiment for US thermal coal continues to show signs of improving, providing an ideal environment to finalise financing discussions for the best thermal coal project in the US,” concluded Gay.

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TerraCom has announced the finalisation of two share placements worth a combined AUS$2.1 million as the company seeks to establish itself as an independent mining company with operations on three continents.

The company already operates the Baruun Noyon Uul metallurgical coal mine in Mongolia and recently entered into an agreement to buy the Blair Athol mine in Queensland, Australia. It is also developing two further assets in Queensland, as well as evaluating the acquisition of a hard coking coal in Kalimantan, Indonesia.

The company raised AUS1.1 million through a placement to three Eastern European private investment companies led by Light Speed Commercian. It also finalised an AUS$1 million placement to private and institutional clients of Fosters Stockbroking (FSB).

The company recently appointed FSB to provide, corporate and capital market services. In addition to the placement to FSB clients, TerraCom has agreed to issue FSB a total of 30 million unlisted options in two equal tranches in lieu of cash or retainer payments for FSB’s services.

“The engagement of FSB is an important part of the establishment of a strong and diverse investor base, which should build on the interest in Australia and already being generated in Asia and Europe,” said TerraCom’s Chairman, Cameron McRae.

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Aspire Mining, a Mongolia-focused coal explorer and infrastructure development company, has received an expression of interest from China Development Bank (CDB) to fund up to 75% of the EPC contract cost to build the Erdenet-to-Ovoot Railway in northern Mongolia.

Originally planned to connect Aspire’s metallurgical coal projects to Mongolia’s existing rail infrastructure, the Erdenet-to-Ovoot line was recently included in plans for a Northern Rail Corridor, which would join Chinese and Russian rail networks via Mongolia.

A 30 year rail concession was granted to Aspire’s rail subsidiary Northern Railways LLC in August 2015 by the Mongolian government to progress the development of the railway.

“The CDB expression of interest confirms that, subject to CDB being satisfied with the first stage of the bankable feasibility study for the Erdenet-to-Ovoot Railway, CDB intends to provide a non-binding term sheet in relation to the provision of a long-term debt facility to Northern Railways to fund up to 75% of the EPC contract cost of that project,” Aspire said in an ASX release.

CDB is a Chinese state-owned policy financial institution that provides medium to long-term financing facilities that serve China’s long-term economic and social development strategies.

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Indonesian coal company Adaro Energy recorded a 16% fall in revenues from its coal mining and trading activities in 1H16, as the average selling price for its coal fell 17%. Lower production costs enabled the company to increase in coal business profit, however, by 15% to US$134 million.

The company sold 17.1 million t over the period – flat with 1H15. Coal production was 25.9 million t, keeping the company on track to hit the lower end of its 2016 target of 52 – 54 million t.

Cost of revenue fell, however, by 21% as the company benefited from lower strip ratios and good operational productivity.

In addition, the company said it had hedged 30% of its fuel requirements – the most significant cost item at Indonesia’s truck-reliant coal mines – for the rest of year at well below its 2016 budget.

The company was also positive on future demand.

“We are pleased to see the recent improvement in thermal coal market dynamics on the back of supply rationalisation in major coal producing countries and sustained demand,” said Adaro’s President Director and CEO, Garibaldi Thohir.

“We continue to believe the current market downturn is cyclical and that the long-term fundamentals for coal remain intact. We are optimistic with the prospect from Indonesia and other Southeast Asian countries as these countries will continue to depend on coal to fuel their surging energy needs to achieve stronger economic growth.”

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The Hume Coal Project has said investors were losing faith in the political process after local MPs supported a petition calling for a ban on any current or proposed mining activities in the area of its proposed metallurgical coal mine.

“There is a loss of faith in the political process by investors when [local politicians] prejudge and publicly voice their opposition, in the absence of the facts, before a development application is lodged with the NSW government and dealt with under NSW planning law,” said Ben Fitzsimmons, a spokesperson for the Hume Coal Project.

The Hume Coal Project includes an underground coal mine producing around 3 million tpy of metallurgical and industrial coal from the Wongawilli coal seam. The project is located in the Southern Highlands region of NSW.

The company, which is backed by Korean steel company, POSCO, is planning to submit the Environmental Impact Statement to the New South Wales government towards the end of this year.

“Once the EIS is submitted, both local MPs will have the facts readily available and be able to make a decision based on fact not the exaggerated claims and mistruths about Hume Coal and the proposed development,” continued Fitzsimmons.

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West Virginia based ERP Compliant Fuels is reportedly on the verge of buying three metallurgical coal mines in British Columbia, according to local media reports.

According to the Times Colonist, a Vancouver-based newspaper, ERP is negotiating to buy the idled Wolverine, Brule and Willow Creek mines with a sale expected to close shortly.

ERP Compliant Fuels would look to reopen the Brule mine, which produces PCI coal, immediately, following by the Wolverine mine in spring of 2017. Reopening of Willow Creek would not be part of the company’s first-year plans due to its high costs of the production.

Metallurgical coal prices are up over 70% so far this year, following market lows in 1Q16.

Meanwhile, Asian steelmakers are reportedly looking to diversify supply after numerous mine closures in the US has left Australia as the dominant supplier to the region.

The three British Columbia mines were previously owned by bankrupt US coal company, Walter Energy, which put them up for sale earlier this year as part of its bankruptcy proceedings.

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Pembroke Resources expects to start production at its Olive Downs metallurgical coal project next year, according to company CEO Barry Tudor, with an additional two mines starting up before 2019.

“We’d like to get it into production as soon as possible,” Tudor told Reuters in an interview. “But we’re not trying to pick peaks in the market.”

Pembroke acquired the Olive Downs assets in Queensland’s Bowen Basin from the Australian arm of US coal company, Peabody Energy, and Hong-Kong-based CITIC Resources in May for AUS$120 million plus an additional royalty.

The assets include Olive Downs South, Willunga and Olive Downs North with rights to four exploration permits for coal and two mine leases – both for Olive Downs North.

Pembroke, which is backed by US private equity company Denham Capital, acquired a 100% interest in Olive Downs South and Willunga and an 87.3% interest in Olive Downs North.

The initial mine will target a 1 million tpy production rate but at full ramp up, the complex could produce as must as 14 million tpy, making Olive Downs among the largest metallurgical coal mines in Australia.

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Kibo Mining has received the first fixed payment from SEPCO III, a China-based EPC contractor, under a new agreement between the two companies to develop the Mbeya coal-to-power project (MCPP) in Tanzania.

Under the new agreement, SEPCO III will refund development costs incurred by Kibo in exchange for being appointed sole bidder for the EPC contract for the Mbeya project.

The mining company received the first refund payment of US$1.8 million. The companies must now agree the final refund amount and the deadline for payment by 22 September.

“SEPCO III’s prompt and diligent performance with regard to the first payment due under the agreement demonstrates great enthusiasm for and belief in the MCPP, as well as in the company,“ said Louis Coetzee, CEO of Kibo.

“We believe that all the remaining conditions of the agreement will be met with the same due diligence and that the Kibo/SEPCO III relationship will play a pivotal role in the further development and ultimate delivery of the MCPP”

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Demand

According to a new BIMCO analysis report for 2016, the dry bulk commodity imports into and exports out of China in 1H16 are very positive – and nothing short of extraordinary. But, putting it into perspective, compared to the devastating freight rate levels over the same period, it highlights that something is very wrong in the dry bulk market. The market is nowhere near balanced.

BIMCO’s data on seaborne iron ore imports into China, shows a growth of 9.6% for 1H16 as compared to 1H15. With seaborne coal volumes shipped into China during 1H16 being on par with 2H15, this represents a 5% growth on 1H15. A continued surge in thermal coal imports seems limited, as hydropower electricity generation due to heavy rainfall is likely to squeeze coal consumption (used for power generation) yet again.

Among the minor seaborne commodities, Chinese steel product exports continue to support its high steel production – and therefore also the elevated imports of iron ore. Exports are up by 9.4% in 1H16 compared to the same period last year. Trade barriers being set up against Chinese steel, primarily in the Western hemisphere, have little impact as most steel is exported to other Asian countries. Steel exports have been a steady and solid trade compared to Chinese coal imports, which were down in January/February but very strong in May/June.

Also as expected, there was a new record of grain exports out of Argentina during 1H16 – up by 42.1% year-on-year.

At the same time, there were appalling freight rates during the worst quarter ever (1Q16), making it a terrible first half of 2016. Year to date, the Baltic Dry Index is down by 26% on last year’s performance, which was already dreadful.

On 10 August, freight rate levels are merely covering OPEX, with no contribution to cover overhead and financing costs. BIMCO expects the industry to be lossmaking for the full year.

The devastating freight rates have left asset values for dry bulk ships battered. A 2010-built capesize ship was valued by VesselsValue.com on 1 August 2014 at US$49.75 million. Two years later, that same ship had lost 57.3% of its value and is now worth only US$21.25 million. The pain is felt across the fleet; worse for older ships and slightly less severe a drop in value for newer ships.

Supply

As 31 million DWT of new capacity has entered into the fleet since 1 January 2016; the order book is slowly emptying. Currently standing at 110 million DWT, the order book is now down at a level not seen since late 2006. Forget about the order book-to-fleet ratio being at a 13 year low, that ratio is irrelevant. What matters is that the fleet will not stop growing unless an equal amount of capacity is demolished at the same time.

So far in 2016, 23 million DWT has been taken out of the fleet and sold for scrap. This means the fleet, year to date, has grown by 1.1% by early August. This level of scrapping is as expected. Nevertheless, it is still worrying that the level of demolition is not higher. The dry bulk industry is faced with the lowest earnings ever, with overcapacity being the main problem and demolition the silver bullet. Difficult as it is to part with your ship, it’s what the industry needs the most.

Over the course of the past two years, the dry bulk fleet (excluding handymax ships) has grown by just 2.3%. In contrast, the handymax fleet has grown by 12.9% – a net inflow of 308 new ships. None of the other dry bulk segments have grown substantially in numbers, but new ships have larger capacity than the scrapped ones, ensuring fleet capacity continues to grow.

This trend is set to continue for the rest of the year, despite the fact that demolition of handymax and panamax ships has been the strongest in 2016 – relatively. As handysize demolition has cooled off, while capesize capacity is steadily leaving the fleet, compared to the full year in 2015.

The rate of slippage in deliveries remains very high, but is slightly reducing from the 50% seen during 2Q16. If this development continues, the fleet growth could reach 1.8% in 2016, which does not support an improvement in the market.

Outlook

Positive demand growth rates across the board for dry bulk commodities are high, and there is one that is ruling them all: iron ore. In 1H16, there was a volume growth of 42 million t of iron ore going into China, compared to a combined volume growth of 12 million t for coal, soybeans and steel products on other Chinese trades.

Increasing demand for iron ore is strong on the best trade lane of them all – Brazil to China. Shipments on that trade were up by 24% to reach 98 million t in 1H16 compared to 1H15. Such a development used to mean much higher freight rates, but as 2015 passed, spot rates for capesize ships were only modestly buoyed by volume growth on this trade. BIMCO believes that a significant part of the iron ore has been transported on “Vale’s conveyor belt of Chinese-owned VLOCs”. If this continues to remove cargoes from the open market, volume growth on the Brazil to China iron ore trade – once the greatest driver of freight rates in the spot market – will no longer affect the spot market on this trade nor the general freight market significantly.

Handymax ships, on the other hand, have seen a flurry of new ships delivered and have fared well due to the broad-based demand growth outside the iron ore market. They will continue to do so. The fast growing handymax fleet, however, will also going forward put a lid on shipowners and operators’ chances of lifting freight rates into really profitable levels.

Growing iron ore imports have not meant higher steel production in China. BIMCO indicates it can conclude that some of the much needed substitution away from domestically mined, poor quality ore towards the import of higher iron content quality ores, and is happening at a fair pace.

This has stirred a surprising move by the Metallurgical Miners’ Association of China (MMAC) who say the big three iron ore producers are “using low-priced dumping to crowd out higher-cost producers [in China]”. They claim 329 mines were shut last year and another 793 closed in the first five months of 2016. The MMAC crying foul is unprecedented. But for the dry bulk shipping industry, substituting the higher cost produced ore in China delivers much needed volume growth at sea.

For the coming months: September – November, BIMCO expects transported volumes to stay put – as the high volumes transported in recent months may have run ahead of underlying demand. Expect the freight rates to move up, down and sideways before moving up again in the fourth quarter of the year.

Edited by Harleigh Hobbs

Trolex is launching a new campaign, ‘Support Mining’ (#supportmining), which is targeted at giving the mining industry what it most needs now – lower cost equipment that helps it to increase output efficiency. This is in response to the tough times facing the industry and the need to control cost levels.

The first initiative in the #supportmining campaign is to supply the sensors for the company’s new GasHawk PGM at cost price to all of the company’s customers. This means on average an 80% discount compared to the Trolex’s nearest competitors on this product. These are exactly the same products from exactly the same suppliers that the company’s competitors are selling, just 80% cheaper.

“If companies are happy with their supplier and happy to pay 4 or 5 times the cost for their sensors then we respect that, but we know that there are some businesses out there that might want to know why they are paying these exceptionally high charges for simply passing on a product. You don’t need to pay those prices with Trolex,” said Glyn Pierce-Jones Group Managing Director at Trolex Group Ltd.

Trolex has been supplying the mining industry for 60 years and has a reputation for delivering high-quality safety equipment at honest prices and this initiative demonstrates why.

The new GasHawk from Trolex is the world’s foremost personal gas detector for mining, with up to seven days battery life even with infrared sensors installed. With the new #supportmining offer on consumables as part of the launch, the cost of ownership on the GasHawk will be around 50 – 60% less than inferior competitor units.

Edited from press release by Harleigh Hobbs

South African mining company, Petmin, recorded 1.236 million t of saleable anthracite production from its Somkhele mine in the financial year to June 2016 (FY2016), down from 1.335 million t in the previous financial year. The company sold 1.122 million t of anthracite.

Production at Somkhele was hit by a minor geological disturbance encounted in one of the three mining areas, while production from plant 3 was restricted during the first half of FY2016 to conserve process water during a regional drought in KwaZulu-Natal.

Rains have since replenished water supplies and the company reported “sufficient process water at full production for the foreseeable future”.

Petmin also produced 0.349 million t of thermal coal, down from 0.368 million t in the previous financial year. Thermal coal sales totaled 0.442 million t of coal – up from 0.352 million t.

“The steady performance of Somkhele is a result of the combined efforts of the management team, our employees and ht local community working together to ensure a stable and profitable environment,” said Petmin’s CEO Jan du Preez.

Looking forward, Petmin expects anthracite production at Somkhele to increase by 4% in the current financial year (FY2017), while sales volumes are expected to grow 20% as a result of sales of inventory built up in 2016.

Production costs are expected to increase by 6%, although this will offset by increasing prices on both domestic and export markets. Local demand is expected to rise 7%, while local prices are forecast to increase 3%. Meanwhile, a weaker rand against the dollar is expected to more than compensate for falling average dollar prices.

“We expect dollar prices for exports in the six months to 31 December 2016 to reduce by 19%, due to one-off sales from stockpiles while prices for the 6 months to June 17 are expected to be 9% higher than 2016, in line with current increases in global coal prices,” the company said.

Thermal coal production and sales are also expected to increase in FY2017 by 20% and 9%, respectively. The company is currently fully committed in terms of both anthracite and thermal coals with total committed sales volumes of 1.46 million of anthracite and 0.453 million t of thermal coal.

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The Indian government appears to have scrapped Coal India’s target to produce 1 billion t of coal by 2020 as demand has failed to keep up with supply.

According to the Economic Times, an Indian newspaper, the state-owned mining company has been asked to keep its production in line with demand, as well as looking at ways to boost its coal sales. India currently has coal stockpiles of over 70 million t, including 28.31 million t at power plants.

“Coal India has now been asked to produce as much as the market can consume,” a coal sector official told the Economic Times. “It has also been asked to devise ways so that more coal is sold, including import substitution, as well as devise new types of e-auction that can lead to more coal sales.”

Coal India has been working to boost its production of coal following severe coal shortages in 2015. In the financial year to April 2016, the company produced 538.57 million t and had been set a target of 598.61 million t for the current financial year.

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According to a Westmoreland Coal news release, NRG Texas Power (NRG) has provided notice that it will terminate the lignite supply agreement at the Jewett mine two years early on 31 December 2016.

Westmoreland intends to conduct the multi-year reclamation work for NRG following the conclusion of the supply contract.

“As NRG has decided to fuel its plant differently in response to current energy market conditions, we are shifting our focus to providing multi-year reclamation services. We have an outstanding track record of operating the Jewett mine safely and cost efficiently and plan to build on this performance during the reclamation phase,” said Kevin Paprzycki, Chief Executive Officer of Westmoreland Coal Co.

The lignite supply contract with NRG is a cost plus contract which accounts for approximately 2% of Westmoreland’s 2016 adjusted EBITDA guidance. Westmoreland expects to maintain positive cash flow generation at Jewett during the next several years with the cost plus arrangement continuing through reclamation. NRG is responsible for the reclamation liability so Westmoreland does not foresee using cash net of reimbursements for reclamation.

Edited from press release by Harleigh Hobbs

Sedgman, a subsidiary of CIMIC Group, has been awarded a three-year contract extension by Red Mountain Joint Venture (RMJV) to continue its operations at the RMJV coal handling and preparation plant (CHPP) in Queensland’s Bowen Basin.

Worth AUS$75 million, the contract continues Sedgman’s operation and maintenance of the CHPP until June 2019 with the potential for an additional two year extension after the initial period.

Established by Peabody Energy and BHP Mitsui Coal (BMC) the RMJV operates shared coal infrastructure for the adjacent Poitrel (BMC) and Millenium (Peabody Energy) mines.

The RMJV CHPP processes both metallurgical and PCI coals bound for export. Annual production from the facility now exceeds 8.1 million CHPP feed tones with a throughput of 1000 tph.

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Rolls-Royce will be presenting MTU diesel engines designed to meet Tier 4 interim and Tier 4 emission standards, including a full range of services, at MINExpo, the world‘s largest mining trade show, in Las Vegas from 26 to 29 September on Booth 8071. A Rolls-Royce genset, which can be used to supply electric power to remote mining locations, will be presented at MINExpo for the first time. The MTU brand is part of Rolls-Royce Power Systems.

MTU-Series 2000 for Tier 4 interim and 4000 for Tier 4

Rolls-Royce will be presenting on its stand a 12-cylinder MTU Series 2000 diesel engine which meets the US EPA Tier 4 interim emission standards. The product portfolio includes 12 and 16-cylinder versions of the MTU Series 2000 engine for mining applications that cover a power range extending from 783 to 1163 kW and are available for EPA Tier 4 interim.

Bernd Krüper, Vice President Industrial Business at MTU, said: “MTU engines are known for their above-average service life (TBO), reliability and very good fuel efficiency. These features, particularly in mining, an application with an extremely high number of operating hours, provide operators with a significant economic benefit.” The MTU Series 2000 Tier 4 interim and 4000 Tier 4 engines can be integrated into vehicles very easily, since no additional space is required for an elaborate exhaust gas aftertreatment system, including the associated tank system. This also reduces the maintenance and service requirements. Since no SCR systems with urea solutions are necessary, there is also no need for an additional infrastructure in the mine.

MTU service solutions for mining applications

Engines used in mining applications in particular are exposed to the most extreme conditions imaginable: long operating hours, heavy loads, extremely dusty environment and harsh climatic conditions. MTU ValueCare offers operators an extensive service portfolio designed to extend the service life of engines and to maximise performance while optimising costs. The MTU ValueCare portfolio, in addition to fast response replacement parts supply and high quality consumables, such as coolants, engine oil and filters, also includes maintenance contracts designed specifically to meet the needs and requirements of the individual customer. With its reman programme, MTU provides fully refurbished products that provide customers with the same performance, quality and service life as new MTU products. MTU additionally provides remote services to support the effective operation of the customer’s systems and optimised maintenance services by making operational data and its evaluation available to customers on a web-based portal. MTU provides support throughout the entire life-cycle, even for traditional products such as the Detroit Diesel 2-stroke product line.

Rolls-Royce brand genset on show at MINExpo for the first time

Rolls-Royce will be exhibiting a model of its 20-cylinder B35:40 genset at MINExpo for the first time. The natural gas driven Series B35:40 is available for the 60-Hz market as 12, 16 and 20-cylinder versions covering an electrical output range extending from 5375 to 9000 kW. The gensets, which are based on medium speed engines, due to their high output, are ideal for the generation of electric power in remote locations or mines.

Edited from press release by

Russian coal company, Raspadskaya, has announced a net profit of US$49 million in 1H16, up from a US$8 million loss in the first six months of 2015, despite a 15% fall in revenues as the company achieved a 10% decrease in cast cost of production per tonne of concentrate.

Revenues from coal concentrate sales totaled US$139 million, split evenly between domestic and export sales, while raw coal sales to domestic consumers made US$3 million. Sales of additional good and services brought total revenues to US193 million for 1H16, compared to US$228 million in 1H15.

The company mined 4.883 million t of coal – a 4% fall on the previous year. A ramp up of production at Razrez Raspadsky mine to 2.025 million t from 1.329 million t in 1H15 helped to offset falls in production at the Raspadskaya and Raspadskaya Koksovaya mine. Coal concentrate production stood at 3.086 million t.

“Production at Razrez Rapadsy increased by 53% year-on-year due to the efforts of the management and employees to increase operational efficiency,” said Sergey Stepanov, General Director of Raspadskaya. “This partly offset a decline in production at other assets. In 2016, we are aiming to mine around 10 million t of raw coal.”

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Coal India (CIL), India’s state-owned coal company, has reported monthly coal production of 32.43 million t in August – 21% below its original target of 40.89 million. Production in the financial year-to-date now stands at 194.81 million t.

Offtake for August stood at 36.72 million t compared to a target offtake of 44.51 million t. This brings total offtake for the financial year-to-date to 211.38 million t – 12% lower than the 240.95 million t target but 0.2% up on the same period in the previous financial year.

CIL has registered strong production growth in recent years on the back of government pressure to boost domestic coal production. Yet there are now signs that the state-owned company is producing more than required with coal stockpiles at power plants totaling 28.42 million t – or enough for 21 days of supply – according to the Central Electricity Authority.

Stockpiles at mines add a further 45 million t to the country’s stockpiles, according to local media reports. This has led to CIL being asked to produce only as much coal as the market can consume, a senior coal sector official told the Economic Times.

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The US Mine Safety and Health Administration (MSHA) issued 161 citations during special impact inspections conducted at 11 coal mines and six metal and non-metal mines in July.

Special impact inspections began in April 2010 at mines that “merit increased agency attention and enforcement due to their poor compliance history or particular compliance concerns.”

MSHA issued 85 citations to coal mines in July, including 20 to Peabody Energy’s Foidel Creek mine in Colorado and 17 to Contura Energy’s Deep Mine 41 in Virginia.

None of the inspected coal mines were citation free. Armstrong Energy’s Survant mine in Kentucky was the best performer with just one citation, while Virginia Conservation Legacy Fund’s (VCLF) Oak Grove mine and the MC#1 mine, which is owned by Coalfield Transport Inc. and Foresight Energy/Murray Energy, received just two.

Other mines to be inspected included Rosebud Mining’s Mine 78, VCLF’s Federal No. 2 mine, Alpha Natural Resources’ Ewing Fork No. 1 surface mine, Hubble Mining’s Mine No. 11, Revelation Energy’s D1A Garmeaga mine and the Fanco mine, which is controlled by RWE Trading Americas and JMP Coal Holdings.

In total, three mines were inspected in West Virginia and Kentucky with one mine apiece in Pennsylvania, Virginia, Illinois, Colorado and Alabama.

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Thiess is to design and build an additional processing module at Lake Vermont coal mine’s coal handling and preparation plant (CHPP), generating revenue of AUS$30 million.

Engineering, procurement, construction and commissioning of the module will be undertaken by Thiess’ sister company, Sedgman, and is expected to be completed in late 2017. Thiess will then continue to operate and maintain the facility for the balance of the current term.

Thiess and Sedgman are subsidiaries of CIMIC Group, formerly Leighton Contractors. The companies delivered the original CHPP to Lake Vermont in 2007 and expanded the facility in 2012. Thiess has operated the mine since 2008. The Bowen Basin mine is owned by Jellinbah Group.

“The Lake Vermont expansion demonstrates the value of CIMIC Group’s capability, drawing together the best of Theiss and Sedgman’s expertise to deliver value for our clients,” said CIMIC Executive Chairman and CEO, Marcelino Fernández Verdes.

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