Norfolk Southern has issued the following statement regarding Canadian Pacific’s withdrawal of its unsolicited acquisition proposal and its related shareholder resolution:
“Norfolk Southern’s board and management team are committed to enhancing value for shareholders. Since the company’s new management team was appointed, Norfolk Southern has been focused on implementing a strategic plan to streamline operations, reduce expenses and maintain superior customer service levels.
The Norfolk Southern team has made significant progress and is on track to achieve annual productivity savings of more than $650 million and an operating ratio below 65% by 2020. We are confident the continued execution of our plan will deliver superior value to all of the company’s stakeholders by best positioning Norfolk Southern to succeed.
We thank our shareholders for their input and support throughout this process and our employees for their hard work and dedication to strengthening Norfolk Southern as a critical component of the nation’s transportation infrastructure.”
Edited from press release by Angharad Lock
Wollongong Coal’s flexible short-term financing agreement with Jindal Steel & Power has been increased to AUS$175 million, the Australian coal company said in a statement.
The short-term drawdown facility has also been renewed until 31 March 2017. To date, Wollongong has drawn around AUS$153.25 million under the facility to meet its operational and development costs.
Jindal Steel & Power is Wollongong’s major shareholder. Wollongong owns two metallurgical coal mine in New South Wales: Russell Vale and Wongawilli – both of which are currently in care and maintenance.
Edited by Jonathan Rowland.
Sino-Aus Energy Group has paid the majority of its first tranche financial contribution to its joint venture with Altona Energy, Arckaringa Coal Chemical.
Payment of AUS$4 million has been made with the balance of AUS$1.4 million expected by the end of April, following approval of the transfer by the Chinese government.
The Arckaringa joint venture aims to develop an integrated coal mining and coal-to-liquids plant to produce syngas products for the Australian market.
The project in South Australia has a JORC compliant coal reserve of 1.3 billion t and could produce feedstock for the production of methanol.
Edited by Jonathan Rowland.
Central European coal company, New World Resources (NWR) produced 1.87 million t of coal in 1Q15, according to its 1Q16 trading update. The company sold 1.12 million t of metallurgical coal over the period and 805 000 t of thermal coal.
This marks a slight increase on the same period last year. NWR produced 1.78 million t in 1Q15 and sold 999 000 t of metallurgical coal and 566 000 t of thermal coal.
Average prices fell, however, with the company’s metallurgical coal fetching €76 per tonne, down from €90 per tonne in 1Q15, and thermal coal prices averaging €47 per, down from €56 per tonne in 1Q15.
NWR produces metallurgical and thermal coal for the steel and energy sectors in Central Europe through its OKD subsidiary, which it the largest hard coal mining company in the Czech Republic.
NWR made a loss of €223 million on revenues of €630 million in 2015 on the back of falling coal prices. It also said it expected to be loss-making for several years to come as the pricing environment remained weak.
Edited by Jonathan Rowland.
Company founders, Russell Moran and Gino D’Anna, still hold a combined stake of 21.11% in Atrum Coal, according to a company release. D’Anna and Moran were forced off of the board last year after alleged misconduct.
The company’s largest shareholder was listed as Lenark, PL, which holds a 20.68% stake in the company. Lenark PL is thought to be affiliated with non-executive director and former company chairman, James Chrisholm.
Atrum Coal is currently involved in legal action against its founders following the establishment of BC Anthracite by Moran and D’Anna. BC Anthracite holds tenements in the Groundhog Coal Basin in British Columbia adjacent to those held by Atrum Coal.
D’Anna recently forced a shareholder vote that aimed to remove two non-executive directors, Steven Boulton and Cameron Vorias, from the board. Both measures were rejected at an extraordinary general meeting.
Atrum Coal is developing the Groundhog anthracite project in British Columbia. The project has total JORC resources of 1.567 billion t. It is currently led by Executive Chairman, Bob Bell, who took up the position last year.
Edited by Jonathan Rowland.
Coal stocks at Indian power plants remain high at 38.96 million t, according to figures from the Central Electricity Authority, rising from 37.2 million on last month.
Stocks would cover 26 days of average coal burn in the country, which required 1.478 million tpd of coal to keep its power plants operational.
The figures are also in stark contrast to the same time last year when coal stocks totaled 27.133 million and a number of power plants were down to critical levels of the fuel.
Coal imports accounted for about 2.6 million t of coal stocks with domestic coal making up the rest. India has been pushing its domestic coal production in an attempt to stabilise and grow the country’s often-unreliable electricity production.
In February, the Economic Times reported that India’s coal imports for the financial year to April 2016 would be around 155 – 160 million t compared to around 185 million t in the previous financial year because of increased domestic coal production.
The 101 power plants covered by the data have a combined generating capacity of 122.8 GW.
Edited by Jonathan Rowland.
Duke Energy has announced numerous leadership changes.
Dhiaa Jamil is to become Executive Vice President and Chief Operating Officer. Jamil currently oversees nuclear, fossil/hydro, fuels and systems optimisation, coal combustion products and transmission operations.
Melissa Anderson has been named Executive Vice President, Administration and Chief Human Resources Officer, assuming responsibility for the administrative services organisation.
“These changes support execution of our strategic priorities and commitment to operational excellence, while streamlining reporting responsibilities and using the bench-strength of our leadership team,” said Lynn Good, President and CEO.
In addition, a new group, Business Transformation and Technology, is being formed to support the company’s strategy.
Brian Savoy will lead the new organisation as Senior Vice President. Savoy, 40, has served as Senior Vice President, Chief Accounting Officer and Controller, since 2013.
“This new group reflects the importance of technology as a transformational tool to achieve our strategic objectives,” said Young.
Succeeding Savoy as Senior Vice President, Chief Accounting Officer and Controller will be Bill Currens, 47, who currently serves as Vice President, Investor Relations.
Michael Callahan will succeed Currens as Vice President, Investor Relations.
The changes are effective in May.
Edited from press release by Angharad Lock
New and enhanced tools in Vulcan 10 will value-add to technical data across critical modelling, design and planning processes. The software updates include new automated pit designer, variogram analysis, implicit modelling and grade control.
Vulcan 10 heralds a new era in user experience with the introduction of the Maptek Workbench as an integrated platform for development and delivery of products and services.
“The Workbench defines our future as a global mining technology leader,” said Maptek CEO Peter Johnson at the software launch. “A new design, new platform, new applications, new technology – the Workbench establishes a new environment for ongoing innovation in product development. Designing a new platform presents a host of challenges that need to be considered. One of the issues Maptek faced was resolving how mature products interact with new products and ensure an auditable data flow across mine processes.”
“When it comes down to it the important thing about software design is how it relates to the user,” Johnson continued. ‘This is especially true in critical value markets like mining. It’s not enough to just develop a new application, it must improve the workflow and respond to practical concerns of the user base and business conditions.”
A new splitting solids tool applies current Vulcan multi-boolean capability to generate valid mining blocks for scheduling. Created solids can be clipped to a new topography as new data becomes available, delivering noticeable improvement in workflows for mid-term scheduling. This is complemented by another option that interactively cuts bench polygons, with target tonnage reserved against a block model as cutting proceeds.
Sophisticated modelling techniques are aided by advanced visualisation regimes for communicating alternative scenarios.
The new automated pit designer for creating mineable pit shells improves efficiency for engineering tasks. Pit models become dynamic agents in the planning process as optimised block models are transformed into realistic mine design contours in seconds. These contours in turn can be applied to further design work or generation of long-term schedules.
Vulcan 10 implicit modelling includes a new radial basis function for defining domains with shared or independent structural trends while accurately honouring drillhole data. Uncertainty modelling allows multiple orebodies to be automatically generated from drillhole datasets. Incorporating financial information enables quick assessment of mining viability for different scenarios.
The Maptek Workbench also enables a free 12-month trial of core drillhole viewing and exploration tools in Maptek Eureka for Vulcan Modeller users.
Edited from press release by Angharad Lock
Canadian Pacific Railway Ltd has announced that it has terminated efforts to merge with Norfolk Southern Corp. (NS). This includes the withdrawal of a resolution asking NS shareholders to vote in favour of good-faith negotiations between the two companies. No further financial offers or overtures to meet with the NS board of directors are planned presently.
CP proposed an end-to-end railroad that would enhance competition for both companies.
“We have long recognised that consolidation is necessary for the North American rail industry to meet the demands of a growing economy, but with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders,” said CP CEO E. Hunter Harrison.
Edited from press release by Angharad Lock
Reports of coal’s death appear to have been greatly exaggerated, at least judging by major Asian importers’ continued commitment to the black gold.
Despite reviving nuclear energy, Japan has given the green light to more coal-fired power plants, after importing a record amount of thermal coal in 2015. Meanwhile, coal demand is set to hit a new record high in neighbouring South Korea, while Taiwan’s new government could back increased coal imports to replace ageing nuclear reactors.
Added to the emerging demand from ASEAN and India, and suddenly coal bulls have reason for optimism after a year to forget for the global industry, including a drop in demand by China.
Moves by miners to reduce metallurgical coal oversupply could even see prices start rising again, with analysts predicting a rise in the benchmark price in 2Q16 as China curbs output.
The world’s biggest coal consumer, producer and importer has flagged plans to cut 1.8 million workers from its coal and steel workforce, with Chinese firms reportedly pushing Beijing to set a price floor to protect against mass bankruptcies and layoffs.
China accounted for 50% of global coal consumption in 2014, but now plans to cut around 500 million t of production over the next 3 – 5 yr. This would be achieved by closing more than 5000 coal mines, retraining and relocating workers and not approving any new mines for the next three years.
BB&T Capital Markets coal analyst Mark Levin points to a shrinking number of coal ships at Newcastle Ports and Consol Energy’s sale of a US coal mine for US$420 million as signs of a coal revival.
According to the International Energy Agency’s (IEA) Medium-Term Coal Market Report 2015, while global coal consumption stopped growing in 2014 for the first time since the 1990s, the main driver was a drop in Chinese demand, with India overtaking the US as the second-largest coal consumer.
However, declining demand and oversupply forced prices of both thermal and metallurgical coal lower in 2015, with import prices for thermal coal in Europe and Asia dropping below US$60/t, while prices for Australian metallurgical coal slipped below US$100/t.
According to the Australian government’s Department of Industry, both metallurgical and thermal coal markets are expected to remain well supplied through 2016, placing further downward pressure on prices. It expects metallurgical coal prices to drop by 16% in 2016 to average US$86/t, with thermal prices to decline by 12% to around US$60/t for the Japanese 2016 fiscal year.
Nevertheless, the IEA said it expected worldwide coal consumption to continue growing at a rate of 0.8% a year through to 2020, with the strongest growth seen in ASEAN (up 7.8% a year) and India (up 4.1% per annum). India is seen as replacing China as the world’s largest coal importer, with Australia deposing Indonesia as the largest exporter.
With key Asian economies turning to coal for affordable and abundant energy, some 400 GW of power generation capacity – roughly equal to the combined installed capacity of Japan and South Korea – is expected to be added across the region through to 2040, of which 40% will be coal-fired, the World Coal Association noted.
Japan: it’s hip to be square
Japan’s revival of its shuttered nuclear power industry is set to continue in 2016, but coal’s status appears far from threatened despite the nation’s commitment to curbing emissions.
In January, Kansai Electric Power Co. resumed operations at the No. 3 unit of its Takahama plant, the third such plant to restart after the Sendai units of Kyushu Electric Power Co. recommenced operations in August 2015. This followed a complete shutdown of the nation’s nuclear power industry, comprising 43 plants, in the wake of the March 2011 disasters.
Another three nuclear plants may come online in 2016, with as many as 33 reactors needed to be switched back on to meet the government’s target for nuclear to contribute 22% of the nation’s energy needs by 2030, according to analysts.
Japan’s nuclear shutdown helped thermal coal imports grow to a record 114 million t in 2015, up almost 5%, even while liquefied natural gas (LNG) imports dropped by nearly 4% to 85 million t for their first decline since the disasters.
“The figures are consistent with the government’s 2030 basic energy plan, which aims to reduce LNG usage and maintain coal,” Tom O’Sullivan of energy consultancy Mathyos Japan told Reuters. “This would seem to contradict the aims of the COP21 conference in December that sought to reduce global carbon emissions.”
Under the 2030 plan, coal is expected to account for 26% of total energy, down from 30% in 2015, with LNG dropping to 27% from 43% as part of a decline in fossil fuels to 56% from 88%. The push to restart nuclear power follows a doubling in fuel costs, causing the trade deficit to blow out and electricity rates to surge by nearly 40%.
However, Japan’s commitment to lowering greenhouse gas emissions by 26% from 2013 levels by 2030 has put pressure on the power industry, including coal, to curb emissions. The government is expected to set tighter standards for coal-fired plants and ‘encourage’ inefficient facilities to be scrapped under even tougher targets for emissions to be reduced by 80% by 2050 from current levels.
Yet after blocking a reported five new coal projects since June 2015, the Environment Ministry decided in February 2016 to approve the construction of new coal-fired power plants in exchange for tougher standards on emissions. Two coal plants in Ibaraki Prefecture and two in Fukushima Prefecture were expected to be approved under the new guidelines, according to Japan’s Nikkei business daily.
Japan could build as many as 41 new coal-fired power plants over the next decade, with some 23 GW of new coal capacity under development as of 2015 compared to total capacity of 41 GW in 2014.
The Japanese industry has sought to curb emissions by investing in new technologies, including the Osaki CoolGen project in Hiroshima, which uses integrated gasification fuel cell combined cycle to curb emissions by as much as 30%.
Japan has also continued to invest in carbon capture and storage (CCS) technology, including a pilot project to inject carbon dioxide into deep saline aquifers off the coast of the northern island of Hokkaido. The Japanese government has invested a reported US$300 million in the project, with a goal of making CCS a viable technology by 2020.
“It is difficult at this point to estimate how much CO2 emissions will be cut in Japan and how much of that should be achieved through CCS in the future,” Takeshi Nagasawa, Director of the Global Environment Partnership Office at Japan’s Trade Ministry, told Bloomberg News. “But it is still important to build technologies so that we will be ready when it is needed.”
Nevertheless, power use declined in 2015 to its lowest level since 1998 on the back of higher prices, a shrinking manufacturing sector and declining population. The complete liberalisation of the power sector in April 2016 is expected to add to the pressure on utilities, with total revenue of the nation’s three largest power generators expected to shrink by 5.5% in fiscal 2016.
According to the Australian government, Japan’s metallurgical coal imports are set to remain steady at around 50 million t in 2016 compared to 51 million t in the previous two years. Thermal coal imports are expected to drop from an estimated 144 million t in 2015 to 135 million t as nuclear plants restart and “relieve some of the pressure on coal-fired plants operating at capacity.”
Despite weaker resource earnings, Japan’s major trading houses are also reportedly on the prowl for new investments. Mitsubishi Corp., estimated as the world’s fourth-largest mining business by value of its mining and energy assets, has stated its ambition to double production volumes in metallurgical coal and copper by 2020, requiring an estimated US$12 billion in new investments.
Being the ‘odd one out’ among the G7 in not curbing coal power does not appear to trouble energy-hungry Japan, which plans on further exports of its ultra-supercritical, low-emission plants, even while it builds more capacity at home.
South Korea: no stopping King Coal
Record coal demand is forecast for South Korea in 2016, following an increase in the number of coal-fired power plants starting operations and despite Seoul’s COP21 pledge to curb emissions.
Coal accounted for around 40% of the nation’s electricity supply in 2015, despite the government’s move to hike the tax on imported coal for power generation. Based on data from Korea Electric Power Corp. (KEPCO), the nation’s current coal-fired power plants are operating at around 80% of capacity, but even more plants are planned.
According to the Korea Energy Economics Institute (KEEI), South Korean coal demand will increase by over 6% to more than 140 million t in 2016, following the startup of nine new plants with a combined capacity of 7.7 GW.
Asia’s fourth-largest economy expects to build 19 new coal-fired power plants by 2022, despite scrapping plans for four new plants as part of its COP21 pledge to curb emissions by 37% by 2030.
“It takes about four to five years to build new power plants and start operations. We just can’t cancel the operation of new plants that are already built and ready,” an anonymous energy ministry official told Reuters.
In January 2016, the nation imported nearly 10 million t of coal, up 5% from a year earlier. Imports of thermal coal used for power generation were up by nearly 6% y/y, mainly from Australia, Indonesia and Russia.
An OECD report ranked South Korea last among its members in use of renewables, with such power sources accounting for only 1.1% of total energy, compared to its large share from crude oil and coal, which accounted for around two-thirds of primary energy supply.
The Australian government’s forecaster expects South Korea’s demand for metallurgical coal imports to stay flat in 2016 at some 34 million t, although thermal coal imports are seen rising by around 4% to 106 million t as the new plants come online.
Taiwan: new government’s energy dilemma
Taiwan is also set to buck the trend set by the West by actually boosting coal imports in 2016. According to the Australian government’s forecaster, the world’s fifth-largest coal importer may increase thermal coal imports by over 2% in 2016 to 62 million t.
In 2014, per capita coal consumption amounted to 2.51 t of coal equivalent, behind only Australia (2.66 t) and Kazakhstan (3.15 t). Coal accounted for around 40% of the island’s power generation that year, compared to 30% for natural gas and 18% for nuclear, but the nation’s three operating nuclear plants are scheduled for decommissioning from 2018.
Construction of a fourth nuclear power plant was halted in 2014 and appears unlikely to restart, given the longstanding opposition to nuclear power from the newly elected Democratic Progressive Party (DPP) government.
Nevertheless, Taipei has pledged to curb greenhouse gas emissions by 50% compared to 2005 levels by 2050, along with introducing a cap-and-trade carbon trading scheme.
Taiwanese President Tsai Ing-wen is seen favouring gas to meet the nation’s emission reduction targets, while gradually phasing out nuclear power from 2018. An expanded role for coal is seen as unlikely, given the DPP’s aim of reducing the nation’s economic reliance on China, its leading supplier.
Conclusion
For Asian coal watchers, the Year of the Monkey may be mischievous, but with demand rising and supply apparently starting to decline there are still plenty of reasons to smile.
Written by Anthony Fensom
The Association of British Mining Equipment Companies (ABMEC) and the Midland Institute of Mining Engineers (MIMinE) have reported a mutual collaboration and partnership. An official signing of a Memorandum of Understanding (MOU) will take place at the 11th Annual Safety Seminar – “Safely Managing the Challenge of Change” – on 15 April 2016 at the Holiday Inn Royal Victoria, Sheffield, UK.
ABMEC’s purpose is to gather market intelligence and facilitate growth as a collective, sharing resources and opportunities. Annually, member companies produce mining equipment and services valued in excess of US$1 billion, 90% of which is for the export market.
MIMinE is a professional institute, which aims are to promote the science and practice of engineering in mining and its associated disciplines by fostering, experience, interest and research.
ABMEC member companies demand accredited employees to promote and apply their equipment and services. Many of these are also members of MIMinE. The MoU plans to build on these synergies.
Edited from press release by Angharad Lock
Coal of Africa (CoAL) has said that the most recent extension to its takeover offer period for Universal Coal was to allow time to negotiate a formal loan agreement with Yishun Brightrise to provide funds for the purchase.
Under a previous agreement, Yishun Brightrise had been due to provide a US$15 million investment in exchange for an equity stake in the company. This will now be replaced with a US$15 million loan agreement. No reason was provided for the change.
Full details of the loan agreement are to be announced after it has been signed. On 8 April, CoAL said it was extending its offer period to 29 April. It had been due to close on 14 April.
CoAL and Universal Coal own a range of coal producing and developments assets in South Africa. Both are listed on the ASX with CoAL also listed in London and Johannesburg.
Edited by Jonathan Rowland.
Introducing a national carbon price in the US could be beneficial for coal communities and low-income households, according to new analysis from the World Resources Institute (WRI) presented at West Virginia University’s (WVU) National Energy Conference.
West Virginia has been particularly impacted by the decline in coal mining in the US with Joyce McConnell, Provost of WVU, describing the situation in the state as the “collapse of an economy. Thousands of coal miners have been laid off in West Virginia and many coal mines – often the economic heart of small communities – have closed.
But according to Noah Kaufman of the WRI, help for these communities could come from the introduction of a national carbon price.
“Coal country can reap benefits from an unlikely source: a policy to put a price on carbon emissions,” Kaufman wrote in an op-ed in the Charleston Gazette-Mail. “If designed well, a carbon price could provide billions of dollars each year for these communities, while curbing air pollution and the risks of a changing global climate.”
Revenue from a national carbon price would be in the range of US$100 – 200 billion, Kaufman’s research showed. Directing a portion of this revenue to communities reliant on coal mining could ensure that coal miners’ pensions and health benefits are protected, while providing money to develop abandoned coal mines for economical development projects – such as the storage of carbon.
Meanwhile, those on low incomes could be protected from higher energy prices through a rebate of about 10% of revenues from a carbon price, protecting the poorest 20% of households.
Kaufman concludes his op-ed by noting that a pair of crises – the collapse of the coal industry in Central Appalachia and the need for a cost-effective climate change policy – offers great opportunities.
“Coal communities and climate activities are not natural allies, but a pair of crises can bring improbable allies together. With a carbon price, the transition to a low-carbon energy system can be an opportunity to take Central Appalachian communities beyond coal,” Kaufmann said.
Edited by Jonathan Rowland.
According to the latest market report by EnAppSys, gas fired plants increased their power contribution by nearly a third from the end of 2015. With gas prices falling and coal fired stations closing, generation from coal during the three month period was also lower than both nuclear and renewable sources.
In 1Q16 gas (CCGT) provided 35.4% of the country’s electricity at 29.68TWh (13.7GW). This was followed by renewables at 22.4% which generated 18.78TWh (8.7GW), nuclear at 19% and generating 15.98TWh (7.5GW), coal at 16.2% generating 13.56TWh (6.3GW) and imports at 7.1% generating 5.92TWh (2.8GW).
This position is a marked improvement from the previous year, when there was almost 50% more generation from coal than from gas. In 1Q15, coal generated 28.7TWh (13.3GW), against an output of 19.65GW (9.1GW) from CCGT plants.
The turnaround reflects the poor economic conditions for coal generation. Further anticipated coal closures have been forestalled by the recent offer of supply contracts to both Drax and Fiddler’s Ferry by National Grid as part of its efforts to maintain the country’s generating margins for winter 2016/17.
Paul Verrill, a director of EnAppSys, stated: “The government has sent out the message that unabated coal will play no role in the market beyond 2025. With this message as a backdrop and with coal stations in the UK paying much higher carbon costs than stations on the continent, many coal stations have taken the decision to close earlier than anticipated. The government has previously declared an intention to get new CCGT plants in place to offset the coal station closures, but obviously this is not going to be possible ahead of winter 2016/17. As a result, the ancillary service contracts recently awarded to Drax and Fiddler’s Ferry will play a role in securing additional capacity for the next 12 months and this should reduce the risks of supply shortage.”
Overall, following a mild weather end to 2015, levels of power demand climbed by 18% during 1Q16. Despite this increase, with power availability levels also growing, the supply margin was generally very comfortable.
Paul Verrill said: “It has been an interesting start to 2016. However, while the system has generally been well supplied, with wholesale power prices dropping 15% from Q1 2105, there have been some occasions of interesting market activity. For example, the decline in coal’s share of generation is seeing the market relying more and more on intermittent sources of power, increasing the role of ancillary services and storage. At times this has seen National Grid pay millions of pound on tight days to ensure that there is sufficient short-term margin within the system. This has surprisingly come from the coal plants, which had planned to close.”
“One of the biggest issues facing the market into 2016/17 is the cost incurred to maintain margin until the capacity mechanism comes into full force in Oct 2018, and how National Grid and the government achieve this without distortion to market operation that can risk jeopardising investment in new build,” Verrill continued.
Edited from press release by Angharad Lock
LWP Technologies Ltd has reported very positive results from the ongoing fly-ash test work being undertaken at the company’s Brisbane-based pilot plant.LWP’s Research & Development (R&D) team has been testing Queensland-sourced fly-ash at the pilot plant with laboratory results showing very positive results. These results validate LWP’s path to commercialising cost effective, fly-ash based proppants for use in oil & gas hydraulic fracturing.
This ability to deliver a superior product and compete on price with imported mined frac sand gives LWP access to a large portion of the proppants market.
The focus is on developing proppants using minimal bauxite to compete in Australian markets where mined frac sand is often imported. The high transport and logistics costs of importing frac sand to Australia from the United States provides an excellent opportunity for an LWP licensee to manufacture and sell a far superior product at a similar price point to mined frac sand.
Further, the more that proppants are handled during the transportation and handling process, the more proppants degrade, which may result in the proppants received at the unconventional oil and gas well bearing little resemblance to the proppants that left the mine gate, and may contain more than the 10% fines specified as the maximum allowable in the API and ISO standards.
Potential end users have shown keen interest in being able to obtain pristine, spherical proppants that conform to the API and ISO standards, provided they are available at a price point that was competitive with mined frac sand.
The primary objectives for LWP’s R&D team has been to:
1. Formulate a financial model to evaluate whether LWP proppants are able to be manufactured at a price point to compete with imported mined sand proppants.
The financial model indicates that proppants made from Australian fly-ash are able to be locally produced for less than the transportation and handling costs of importing frac sand proppants mined in the USA. The profit margin should be attractive to a potential licensee.
2. Optimise the proppant mix design to minimise bauxite required (a high cost input item) to achieve a minimum 6000 Psi proppant, as 6000 Psi is significantly higher in compressive strength than most mined frac sand proppants delivered to Australian unconventional oil and gas wells.
The in-house test results outlined below confirm that this objective has been not only achieved, but exceeded.
3. Determine the maximum compressive strength ceramic proppants achievable using Australian flyash with 10% bauxite or less in the mix design. The R&D team is confident that given further time for optimisation, the proppants produced in the pilot plant will achieve even higher compressive strength proppants.That the Company’s technology can be adjusted/modified to take advantage of proppant markets where the primary proppant costs are for transportation and handling, using the same flyash resource bodes well for the Company’s prospects.
The highly encouraging test results to date using Queensland fly-ash are below:

LWP’s Chairman Siegfried Konig, commented: “Test work at the Brisbane pilot plant is ongoing and delivering very positive outcomes. The fact that the pilot plant can produce a proppant of compressive strength of above 6000 Psi is clear and further validation of our technology. We are confident of improvingthese results as test work continues.”
“The unconventional oil & gas industry is aggressively assessing technology that delivers lower finding and development costs for hydraulic fractured horizontal and vertical wells. While the US remains the biggest market, interested parties from a number of countries are assessing our fly-ash based proppants. We continue to negotiate with a range of parties and are encouraged by the growing interest which are at various stages of negotiation.”
“With test work ongoing and LWP pursuing commercial discussions, the Company is well funded to continue to deliver on its objectives. We look forward to updating shareholders on other developments in the near term.”
Edited from press release by Angharad Lock
Kibo Mining plc, the Tanzania focussed mineral exploration and development company, has announced that the restatement of the Mbeya coal resource has now been completed. This represents another key milestone as the MCPP approaches the final stages of its development ahead of Financial Close.
Key highlights include
- An increase in total Mineral Resource from 109.23 million t to 120.793 million t, representing a 10.42% increase over the previously disclosed Mineral Resource.
- Re-classification of total Coal Resource into Measured Resource of 20.904 million t, Indicated Resource of 88.601 million t and Inferred Resource of 11.28 million t.
- Final Raw Quality attributes of coal are within specification for power plant design.
- Restatement represents a substantial increase in the quality and confidence level of the Mineral Resource, which will provide a critical input to the reserve statement of the Mining Definitive Feasibility Study (MDFS) presently underway.
- 91% of restated resource now qualifies for inclusion in ultimate reserve statement.
Louis Coetzee, CEO of Kibo Mining, commented: “The restated Mbeya coal resource is a further example of the MCPP feasibility study exceeding our expectations. The work undertaken was primarily aimed at improving confidence levels in the resource, to enable the MDFS to state an appropriate coal reserve. This objective was exceeded, with 91% of the total resource now in the Measured and Indicated categories. An unexpected 10.4% increase in the overall resource was also delivered.”
“The restated Mbeya coal resource also provides comfort that the mine will have sufficient reserve capacity, subject to viable MDFS results, to satisfy the energy needs for potential future expansions of the Mbeya Power Plant,” concluded Coetzee.
Edited from press release by Angharad Lock
Queensland is to develop a core group of doctors to help tackle the re-emergence of coal miners pneumoconiosis – also known as Black Lung – in the state. The measure was included in an interim report into recent occurrences of Black Lung in Queensland’s coal industry. The report is being prepared by Professory Malcolm Sim of Monash University.
“The re-emergence of coal miners pneumoconiosis is an issue I have taken very seriously and that’s why there’s an independent review into the state’s health screening system,” said Queensland Minister for State Development and Minister for Natrual Resources and Mines, Dr Anthony Lynham.
“One of the interim findings […] is a closer focus on development and maintaining a manageable core cohort of nominated medical examiners.”
Nominated medical examiners are doctors who undertake the regular official health assessments of miners. Under the current system, nominated medical examiners are selected by mining companies and generally include general practitioners and physicians.
Under the new plans, these doctors would be given standard introductory training and require minimum training and experience of Black Lung diagnosis.
“Effective health assessments are critical to screening system and early identification and prevention of coal miners’ pneumoconiosis,” continued Dr Lynham. “It’s critical that we have a core group of experienced nominated medical advisers who are skilled, experienced, can share information and be kept up-to-date on the specific occupational health requirements for Queensland’s coal mine workers.”
The government also said it would review the appointment procedures for nominated medical advisors.
In response to the interim report, Acting CEO of the Queensland Resources Council, Greg Lane, said the state’s coal industry was “keen to work with all stakeholders in progressing the interim findings.”
“The health and safety of workers is a top priority and the resources sector is committed to maintaining compliance with the Coal Mine Workers’ Health Scheme,” Lane continued. “Industry remains committed to implementing the recommendations of Professor Sim and his team of experts, in a timely matter.”
Queensland currently has six confirmed cases of Black Lung.
Edited by Jonathan Rowland.
Canadian Pacific (CP) has released a white paper, Precision Railroading: Using the CP Model to Build a Leading Transcontinental Railway, detailing how the precision railroading philosophy – which has been used successfully to elevate CP from industry laggard to leader over the last four years – would transform Norfolk Southern Corp. (NS) and eventually build a leading transcontinental railway in North America.
“Politicians, shippers and others are calling for a strong, healthy and high performing rail system yet no one has the stomach to challenge the status quo,” CP CEO E. Hunter Harrison said. “Clearly, moving goods reliably and efficiently is top of mind for everyone in the industry; we believe precision railroading and a CP-NS combination address those challenges.”
Precision railroading has enabled CP to lower its operating ratio dramatically, improve service, reinvest record amounts in its network and in the communities it serves, and create significant shareholder value in a very short time.
CP looks forward to the US Surface Transportation Board’s (STB) decision on its petition for a declaratory order confirming the viability of the proposed voting trust structure, an option CP has proposed as the fastest way for NS shareholders to receive consideration for their shares.
CP believes that all stakeholders will benefit if the proposed transaction is evaluated on its merits and based on a full record that includes the opportunity for all interested parties to comment within the STB’s prescribed framework, free from political interference. CP remains hopeful that the STB will be able to offer clarity that will allow NS shareholders to make an informed decision on CP’s pending resolution.
This proposed merger addresses capacity challenges; provides better, faster service for shippers – and at a lower cost; and enhances competition by ending bottleneck pricing and provides modified terminal access. The end result would be a single-line, transcontinental option that improves market access and ensures the timely and efficient flow of freight – supporting the North American economy now and into the future.
Edited from press release by Harleigh Hobbs
Opposition politicians in Australia have called for a national steel plan after Australian steelmaker, Arrium, went into voluntary administration. The company operates the Whyalla steelworks in South Australia.
“Steel is a strategically significant industry for Australia; we must now become the only advanced economy in the world to let our steel industry die,” said Bill Shorton, Leader of Opposition Labout Party, in a statement.
“The government needs to get serious about working with the industry to secure the future of the steelmaking industry in this country.”
Among Shorton’s demands includes a call for the government to maximise the use of Australian steel in government-funded infrastructure projects at local, state and federal level.
The global steel industry has been hit by falling prices on the back of a glut in supply of the metal from China. This has put pressure on national steel industries around and prompted the EU to impose a new range of tariffs on Chinese steel imports in January.
In the UK, where the steel industry faces significantly higher costs than elsewhere in the EU due to the country’s high carbon tax, Indian company, Tata, has put its steel business, including the historic Port Talbot steelworks, up for sale after suffering massive losses.
Echoing comments from his Australian counterpart, the UK Labour Party Leader, Jeremy Corbyn, has called on the UK government to intervene to save the UK steel industry.
“If we don’t intervene to protect this steel works, and the other steel works, we will have no steel industry in Britain,” Corbyn said on a visit at the end of last month to Port Talbot.
Edited by Jonathan Rowland.
ASX-listed mining company, Paringa Resources, has begun its bankable feasibility study (BFS) at its Buck Creek No. 2 mine in the Illinois Coal Basin in the US.
The No. 2 mine lies within the Buck Creek Mine Complex and south of the Buck Creek No. 1 mine’s proposed 3.8 million tpy coal project.
“We are looking forward to rapidly progressing the BFS with the aim of starting construction during mid-2017,” said Paringa’s CEO, David Gay.
The company has been able to move directly to BFS on No. 2 mine on the back of a comprehensive recent scoping study and the ability to leverage its work as part of the BFS for No. 1 mine.
“Typically, a coal project in the US at this stage would move directly into construction,” said Gay. “However, we will complete the BFS to identify key areas for optimisation.”
Since Paringa acquired the Buck Creek Mine Complex in 2013, its mine engineers have prepared a geological model for the entire site. It was this work that identified the resource now targeted by the No. 2 mine development.
Paringa now aims to develop the No. 2 mine first, following by the No. 1 mine, as part of a “staged development strategy for building a new mid-tier high-margin Illinois Basin coal company,” the company said.
The Buck Creek Mining Complex lies in Kentucky close to the Indiana border and close to a number of producing mines owned by Alliance Resource Partners. It has direct access via barge to the Ohio River coal market, the location of a number of coal-fired power plants.
The Illinois Basin is second largest coal-producing region in the US. Its popularity has increased in recent years as most coal-fired power plants in the US have now installed scrubbers to remove around 95% of sulfur dioxide emissions, negating the impact of Illinois Basin coal’s high sulfur content.
Edited by Jonathan Rowland.
The Environment and Climate Change Minister, Catherine McKenna, and EPA Administrator, Gina McCarthy, met on 7 April 2016. The Coal Association of Canada and the American Coalition for Clean Coal Electricity urged Canadians to watch the talks.
“It’s notable that Ms. McCarthy’s plan to phase out coal in the US is being held to intense scrutiny in the US Supreme court,” commented Robin Campbell, President of the Coal Association of Canada. “Canadians have been significantly impacted by regulations in the US that affect our ability to get resources to market. While climate change policy is of significant importance to both countries, the market access issue also needs to be addressed.”
“While it is important that their discussions focus on the impact of climate change on indigenous communities, it’s worth noting that the resource sector in Canada is the greatest employer of indigenous people in Canada, and protecting jobs is our top priority,” Campbell continued. “Ms. McCarthy’s endorsement of carbon capture and sequestration technologies is a made-in-Canada solution to providing affordable and reliable power to Canadians while maintaining the jobs and communities that sustain this country. We look forward to meeting with Minister McKenna to discuss this innovative and moderate approach to the coal mining and power industry.”
The American Coalition for Clean Coal Electricity warned Canadians, citing McCarthy’s role in the US coal phase out.
“Our neighbours to the north would be well advised to listen carefully to what EPA Commissioner Gina McCarthy isn’t saying as she makes her pitch for reducing emissions in Canada. For instance, she’s not likely to talk about how her own plan, here in the United States, has been halted by the land’s highest court as its legality is questionable, at best. Nor will McCarthy talk about how her plan will cost more than US$300 billion yet reduce global temperature rise by less than .01 degree,” said Laura Sheehan, senior vice president of communications for the American Coalition for Clean Coal Electricity.
“It’s also interesting to hear McCarthy talk about the importance of research & development and new technologies to burn coal and other fossil fuels cleaner, given her policies at home placed a de facto ban on furthering critical development of carbon capture and sequestration. So while McCarthy talks a good game today up North, we encourage her audiences to keep their ears open and ask if what they are hearing is too good to be true.”
Edited from press release by Angharad Lock
The coal industry contributed over AUS$26 billion into the Queensland and New South Wales economies last year, according to the Queensland Resource Council (QRC) and NSW Minerals Council.
The industry supported 37 732 direct jobs and 17 180 local businesses across both states, as well as providing AUS$1.6 billion in royalty payments to the Queensland government and AUS$1.1 billion to the New South Wales government.
“Coal is a vital pillar of the Queensland economy and if the government wants to see this strong export performance and flow of royalties continue, it must now work with industry on a plan for a more competitive and productive Queensland resources sector,” said QRC Acting CEO, Greg Lane.
Coal’s contribution to the Queensland totaled AUS$15.8 billion in direct spending by way of wages, salaries, businesses purchases and community contributions.
“Whether it’s a full-time job to put food on the table, support to keep local business afloat, or royalties to employ teachers, nurses and police – every single Queenslander has a stake in the coal industry,” concluded Lane.
In New South Wales, coal’s direct economic contributions totaled AUS$10.3 billion, including AUS$2.3 billion in wages and salaries to the industry’s 17 165 full-time employees.
“Coal mining is going through tough times; however the sector is resilient and still making a massive contribution to our economy,” NSW Minerals Council CEO, Stephen Galilee, said today.
Galilee also noted the growing demand for New South Wales coal from across southeast Asia and India.
“Coal provides around 85% of New South Wales’ electricity and remains New South Wales’ most valuable commodity export. With hundreds of new technology low emission coal-fired power generation units being deployed by trading partners across the region, the IEA has forecast demand for coal to increase across southeast Asia and India. We’re already starting to see evidence of this, with exports of New South Wales coal to India increasing by 110% in the last financial year alone,” Galilee concluded.
The integrated water usage licence (IWUL) has been suspended for Coal of Africa’s (CoAL) Makhado project in South Africa, the company announced in a statement. The suspension follows an appeal to the Department of Water and Sanitation by the Vhembe Minerals Resource Forum.
Under the South African National Water Act No 36, such an appeal automatically suspends the IWUL. The appeal had been anticipated, the company said, and CoAL is now in the process of preparing an urgent representation to the Minister of Water and Sanitation to “request that the IWUL remain in full force and effect pending the final conclusion of the appeal.”
“We are actively engaging with the department to resolve this appropriately,” said CoAL’s CEO, David Brown. “We remain committed to the sustainable development of the Makhado project, whilst recognizing its potential to drive socio-economic development.”
The Makhado project is a mixed product opencast mine development in Limpopo Province. The project contains a resource of 344.8 million t and envisages annual production of ROM coal of 12.6 million t, yielding 2.3 million t of hard coking coal and 3.2 million t of thermal coal for export and domestic markets.
“We will continue to engage with all stakeholders to ensure the ongoing implementation of our co-existent model, seeking co-operation between mining, agriculture and heritage land uses,” concluded Brown.
According to its website, the Vhembe Minerals Resource Forum exists to protect water supplies and promote sustainable farming against the impact of coal mining in the region of the Makhado project.
Edited by Jonathan Rowland.
Falling thermal coal prices on the seaborne market are unlikely to help boost imports into India, according to a new research note from Australian bank, Macquarie.
The report looks at the potential for India to become an arbitrage market in the short term. An arbitrage market occurs when the cost of imported coal falls low enough to displace domestic coal in the supply mix.
China had been the world’s key arbitrage market between 2011 and 2014, helping to soak up supply on the seaborne market. Since the, however, Chinese imports have fallen on a mix of reasons including felling domestic prices, slowing demand grown and government protectionism.
This has left the burden of correcting global oversupply on producers – primarily Indonesia, which has seen its coal exports fall significantly in recent years.
“Our base case assumption has been that continued market contraction would primarily be accounted for by further Indonesian supply cuts,” Macquarie said.
But an alternative scenario sees India – the only major coal importer and producers aside from China – become and arbitrage markets, restimulating Indian imports demand and helping to set a floor for international prices.
This scenario is unlikely, however, according to Macquarie’s data with domestic coal costs for core (i.e. power and fertilzer plants) at US$25 per tonne while the landed cost of imported coal stands at US$53 per tonne – a domestic discount of US$28 per tonne.
The only market in which imported coal comes close to being competitive with domestic coal is in non-core industries (i.e. aluminium, steel and cement, etc.) on India’s West Coal, where transportation costs are higher.
“However, considering that cement producers have increasingly been moving towards petcoke as a cheaper fuel source, this is far from certain too,” said Macquarie.
As a result, “we don’t see India becoming an import arbitrage market and maintain our view that supply adjustment will have to come from seaborne suppliers,” Macquarie concluded.
The bank expects Indian thermal coal imports to be down y/y in 2016, following the trend in China and Europe, where a wave of LNG imports could see Continental Europe follow the UK in switching from coal to gas.
Edited by Jonathan Rowland.
Labour issues in the coal mining sector could pose challenges in South Africa and China this, according to recent analysis from BMI Research.
In South Africa, upcoming elections in which the ANC, which has ruled South Africa since the end of Apartheid, could lose control of key municipalities, including Johannesburg, are likely to push the ANC into more populist policies – including support for mining unions in wage negotiations.
“We expect the government’s vocal support for labour unions, particularly in wage negotiations, will increase due to a rising challenge from the political left,” said BMI Research.
South Africa’s mining industry already suffers from some of the lowest margins in the world with wages accounting for around 50% – 60% of mining companies’ costs. Should unions seek further wage increases, with government support, it could result in significant mine closures and layoffs.
Meanwhile, in China, attempts by the central government to close and consolidate coal production to help deal with huge overcapacity in its domestic coal industry could see a rise in industrial action in the country.
“Both government efforts at consolidation and company efforts to reduce production costs will be affected by rising tensions among workers,” said BMI Research. Worker demonstrations doubled in Chine in 2015 to 2774, according to figures from the Hong Kong-based China Labour Bulletin, while December 2015 saw a monthly record set.
Increasing bouts of worker unrest may force the central government to relax its plans to cut coal production, extending the oversupply challenge into the medium term.
South Africa-focused coal company, Coal of Africa (CoAL) has announced an extension to its offer period for its proposed takeover of Universal Coal – its third such extension.
According to a company announcement, the offer will now close on 29 April. It had previously been due to close 14 April.
The company also said that shareholders holding about 62% of Universal’s shares on offer had accepted the offer. CoAL first announced the deal in November 2015. It values Universal at about US$91 million.
Edited by Jonathan Rowland.
Italian imports stood at 16 million t of thermal coal and 3.5 million t of metallurgical coal in 2015, according to figures from Italian coal industry association, Assocarboni, similar to import levels in 2014.
Italy relies on imported natural gas and renewables for much of its electricity supply, resulting in electricity prices 50% higher than the European average. Coal accounts for just 13% of the Italian energy mix compared to a European average of 28%.
At its annual congress, Assocarboni’s President, Andrea Clavarino, called for the use of more coal in Italy to bring down electricity prices and help boost the competitiveness of Italian manufacturers.
“Coal is not the enemy to fight,” said Clavarino in his address to the congress. “Electricity production from coal has an environmental impact in its lifecycle similar to natural gas, taking into account the efficient curb-emissions systems developed in recent years.”
Clavarino continued: “Assocarboni thus proposes to use more coal – through the implementation of the best combustion technologies – and renewables, and less gas, which is expensive and has serious supply security issues. Nowadays, coal guarantees low costs and energy security, as reserves are equally distributed across the world, and therefore is, together with renewables, the best combustible to support economic and industrial development across the world, including Italy.”
Italy boasts some of the most efficient coal-fired power plants in the world with the Torrevaldalige Nord power plants achieving average efficiency rates of 40% and peak efficiency rates of 46%. As a result, Italian coal-fired power plants emit 25% – 30% less carbon dioxide that less-efficient plants.
Clavarino also pointed to a number of studies that show, when lifetime carbon dioxide emissions are takan into account, shale gas generates higher emissions than coal. “Lawmakers must keep these findings in consideration in the definition of a country’s energy policies,” Assocarboni concluded.
Edited by Jonathan Rowland.
Rhino Resouce Partners and ION Carbon & Minerals, a subsidiary or AMCI Holdings, are to explore a potential joint venture (JV), according to a Rhino press release. The proposed JV would be called Encore Global Commodities and would focus on developing and marketing Rhino’s thermal, metallurgical and speciality coals.
“The Encore JV with AMCI has the potential to broaden and expand the reach of Rhino’s coal, in addition to moving our production into historically underserved and under utilized markets,” said Joe Funk, President and CEO of Rhino’s general partner.
“AMCI’s experience, expertise and global relationships with customers should provide Rhino with a substantial opportunity to grow our sales and cash flow through a joint venture framework. We anticipate the joint venture would become a significant marketing entity for all Rhino coals that would build strong, direct relationships between the partnership and its customers.”
The initial agreement provides a 60 day due diligence period for Rhino and AMCI to review and finalise the formation of the JV. The proposal comes following the acquisition by Royal Energy Resources of a majority stake in Rhino’s general partner. According to the Rhino press release, Royal introduced the JV partners.
“Encore will be positioned to take advantage of the complementary experience and strength of the two partner, allowing Rhino to tap into AMCI’s global presence as needed and on a mostly variable cost basis,” said Patrick Valentine, Managing Director of Ion Carbon. “This is the way to thrive and grow in today’s environment.”
Rhino Resource Partners produces thermal and metallurgical coal in a variety of coal basins in the US, including Central and Northern Appalachia and in the Western Coalfields in Utah and Colorado. It also leases coal through its Elk Horn subsidiary.
Edited by Jonathan Rowland.
Danish engineering firm, FLSmidth, has appointed Marius Kloppers, the former CEO of BHP Billiton, to its board of directors at its annual general meeting held on 5 April.
“To achieve much-needed efficiency gains, the mining industry will heavily increase its spending on service agreements and equipment with performance guarantees,” said Kloppers in an interview with Make Sense TV on his FLSmidth appointment.
“This gives FLSmidth a unique opportunity to aid global mining companies in adjusting to the ‘new normal’ in the global mining market.’
South African Kloppers led BHP Billiton, the world’s largest mining company, from 2007 to 2013.
Edited by Jonathan Rowland.
Vortex Global Ltd, a European solids and bulk handling components company, has appointed of Brolton Group Pty Ltd. as its exclusive agent in Australia.The Brolton Group is one of Australia’s largest industrial engineering companies and also serves as an agent to Coperion, Sturtevant and Whitwick.
“Brolton has extensive experience in the material handling and mineral processing industries,” said Laurence Millington, Vortex Director of International Business. “With the other companies that Brolton represents, our slide gates and diverter valves are quite complementary to their product line.”
Brolton Group provides process automation and industrial engineering services, such as general, mechanical, civil and construction engineering, for heavy industry, FMCG and broader manufacturing. Brolton Group is also systems integrators for quality brands, such as Rockwell Automation, Pilz and Sick.
“Vortex gates, valves and spouts are easily adaptable,” Mark Lix, Brolton Sales Manager indicated, “Brolton’s focus on providing seamless engineering solutions is supported by Vortex’s dedication to creating the right design for each application, and we are looking forward to working together in providing Australian customers with high-performing valves and streamlined processing solutions.”
Edited from press release by Harleigh Hobbs
IHS Energy
The thermal coal market is expected to remain challenging for the next few years, due to prices close to all-time lows, a massively oversupplied Chinese market, uncertain Indian market growth and diminishing consumption across Europe, the US and China, according to IHS, a research firm. Nevertheless, signs are starting to emerge of a recovery in the market and that supply and demand will rebalance later this decade, according to IHS Energy experts.
Like any other commodity, coal follows the trend of boom and bust, with the boom cycles normally a lot briefer in duration than the busts. Currently mired at the bottom of the bust-cycle, the coal industry finds itself in a challenging position for the same reasons weighing on other commodities: an oversupplied market, which continues to suppress global prices.
“The ground has already been laid for the next boom in coal prices – and the longer the wait for price recovery goes on, the greater the likelihood that values will spike,” said David Price, Senior Director of the Global Steam Coal Service at IHS Energy.
In 2015, prompt European thermal coal prices from key suppliers including Colombia and Russia averaged US$56.77/t delivered ex-ship to Amsterdam/Rotterdam (DES AR), based on an energy content of 6000 kilocalories (kc) per kilogram on Net as Received (NAR) basis. In 2014, prices averaged US$77.2/t (DES AR), and today, they are struggling to hold levels of US$45.00/t DES AR. The situation has led to a spate of mining industry bankruptcies and divestments around the world, while what is left of the international coal mining sector is working ever harder to cut costs in order to stay profitable.
IHS Energy’s Global Steam Coal Service published forecasts of prices at an average close to today’s level for most of the rest of this decade. According to Price, before the market can stabilise, prices may still have to decline further. “We believe that prices in 2016 may have to come down further from 2015 levels, but probably not by as much as they did from 2014.”
The over-enthusiastic investment in anticipation of a Chinese import boom that did not happen was the main trigger of the collapse in prices. It has brought the delivered thermal coal prices down in Europe from around US$125/t in 2011, to a monthly average of just US$46/t in March 2016, barely US$20/t above 2002’s all-time low of below US$26/t. Thermal coal prices hit a record high of almost US$210/t in July 2008 just before to the financial crisis.
However, according to IHS energy experts, the prices should begin climbing as 2020 approaches. “It is today’s weakness that is laying the ground for tomorrow’s market strength,” Price said.
Price is firm in his view that, “the longer this bear market continues, the greater the chance of a substantial spike in prices, because the industry will not be in a position to respond to the demand side when that first additional tonne of coal cannot be supplied.”
The key to any price recovery, he added, will be tightening supply, which is expected to emerge now that investment in new capacity has all but dried out. Investment by the big four global diversified miners (BHP Billiton, Rio Tinto, Anglo American and Glencore) fell across all commodities from US$55.8 billion in 2012, and US$52.4 billion in 2013, to an estimated US$26.0 billion in 2015 and is likely to be minimal in 2016, with a large part of this reduction affecting coal supplies. Additionally, other market developments could potentially accelerate the progress back to positive price trends.
Supply and demand – rebalanced?
”Coal’s battle for the European and US markets has likely been lost, worn down by increasing environmental costs, government measures to move away from coal and, in the US at least, competition from cheap gas, but other markets continue to offer promise of further growth,” Price said.
Despite setbacks in 2015, India’s plans to expand its coal-fired power plant fleet will reinforce its status as the world’s leading market for internationally traded coal. Reflecting its COP21 commitments, India has all but doubled taxes on coal purchases. The flat-rate tax is structured in such a way as to drive India’s coal consumers to buy higher-quality coal, which points to growth in coal imports.
IHS Energy expects an additional 50 million tpy of import demand to emerge in the thermal coal market between now and 2020, above 2015’s 905 million t.
In China, IHS Energy projects a recovering economy will rebalance thermal coal supply and demand – and any further measures to contain production beyond the 1 billion tpy already announced could be a big positive for the international market.
Also massive supply cuts by Indonesia last year, estimated at 50 – 60 million t of exports, are also helping to rebalance the market, but further big cuts in Indonesian supplies are a strong possibility.
Moreover, the US is closer to balancing internal supply and demand for thermal coal than it has been since the onset of the shale gas revolution in 2008. While this US rebalancing is unlikely to generate a significant rise is US import demand, it does reduce the uncertainty about excess US output being pushed into export markets.
“The future of coal is brighter than some people think,” Price said.
Edited by Jonathan Rowland.
One of the biggest advances in crane safety and cost-efficient management over the past decade has been the advent of lifecycle care in real time.
New remote digital monitoring and analytical technologies – such as Konecranes’ TRUCONNECT® – can look inside the performance of a crane or whole fleets of cranes to accurately predict the most suitable and timely maintenance for optimum service, as well as spot impending production risks and accident hazards.
The company’s TRUCONNECT technology harnesses in a user-friendly way the power of the industrial internet, the heart of which is based on a series of machinery sensors working together to gather and analyse data for specific purposes. By operating in this way, they can enable efficiencies that were unimaginable just a short time ago.
“With powerful but highly accessible technologies, such as TRUCONNECT, crane maintenance is an entire generation ahead of the days of external inspections, laborious dismantling to find and fix problems – or simply fixing something when it fails,” said John Bailey, General Manager, Service Development, Konecranes SE Asia Pacific.
“With the accident liability that outdated practices entail – and the potential for expensive downtime that companies just can’t afford these days – old approaches are just no longer accepted as safe and productive risk management in the world-class industries we serve,” he continued.
Such industries include automotive and general manufacturing, bulk materials handling, cement, mining, power generation, petrochemical, ports and container handling, pulp and paper, shipyards, steel and waste-to-energy.
In developing TRUCONNECT to complement its MAINMAN planned maintenance services to such industries, Konecranes has incorporated into the technology its experience as a major global crane and lifting equipment manufacturer, as well as the world’s largest crane service organisation, with more than 450 000 pieces of lifting equipment under maintenance agreements worldwide. Konecranes’ 10 300 remote monitoring connections and 600 service locations worldwide – including throughout the Asia-Pacific and Australasia – have fed into the understanding of industry needs that has produced the TRUCONNECT suite of remote service products connecting data, machines and people. Through such products, Konecranes applies the Industrial Internet to lead the evolution of service through remote monitoring, diagnostics, analytics and usage-based predictive maintenance – providing real-time visibility and offering customers unique predictive capabilities and crane management efficiencies.To make the process of real-time monitoring for lifecycle care as intuitive and easy to use as possible, Konecranes has integrated TRUCONNECT® remote monitoring and reporting and MAINMAN planned maintenance results captured by mobile enabled technicians into an easily accessed online customer portal, ‘yourKONECRANES.com’. This web portal – which gives real-time browser-based access to individual customers’ equipment data and maintenance history – links usage data, maintenance data and asset details, giving a transparent and complete view of events and activities of a crane over any selected time interval. Aggregated data can be viewed, analysed and shared quickly, for a single asset or an entire fleet.
Data is sent to this customer portal from Konecranes TRUCONNECT remote monitoring and reporting technology along with MAINMAN planned maintenance findings, which can be applied to a huge variety of lifting equipment across the range of industries Konecranes serves.
TRUCONNECT gathers data on running time, motor starts, work cycles and brake condition and can also send alters by text or email of hazardous events, such as hoist overloads, emergency stops and over-temperatures.
MAINMAN planned maintenance uses Konecranes’ proprietary ‘Risk and Recommendation’ method to visually categorise findings into safety, production and undetermined risks allowing for easy prioritisation and planning of future maintenance activities by asset.
“To make the best use of this innovative technology, insights can be drawn by observing anomalies, patterns and trends, helping users make fact-based decisions,” explained Bailey.
Anomalies can show up as faults, such as overloads. These events are considered abnormal and should be addressed promptly as they occur. Knowing when an overload occurs is the first step in identifying its cause.
Patterns help reveal relationships between variables. For example, overload or emergency stop alerts or excessive starts may indicate the need for operator training aimed at reducing human-error downtime and the risk of safety incidents. Recurring motor overheats may indicate changes are needed in equipment or process.
The study of trends can help prioritise corrective action and investments. Analysing data behaviour over time supports the development of predictive maintenance.
“Our aim is not to be confusing or overwhelming with a flood of data and analytics,” indicated Bailey. “We have teams of experienced staff who take a consultative approach to help guide our customers’ decision making. We share our findings, provide recommendations and discuss how each action can optimise particular aspects of operations and maintenance.”
Konecranes technicians and inspectors are mobile-enabled, which means they are constantly connected to TRUCONNECT’s data through their phones, tablets and computers. They can access maintenance history, equipment usage and operating information and look up spare parts and manuals.
“Konecranes Remote Support experts can communicate with your crane, no matter where it is, and provide remote support and troubleshooting in the event of a breakdown or indication of a fault. The data from TRUCONNECT can be used to identify the need for corrective on-site maintenance and spare parts,” concluded Bailey. “TRUCONNECT’s integration into the ‘yourKONECRANES.com’ portal is designed to improve the user experience and is a key development in delivering lifecycle care in real time, which will help extend the life of valuable assets by planning better maintenance programmes and identifying faults and problems at an earlier stage”.
Edited from press release by Harleigh Hobbs
SunCoke Energy Inc. (SXC), a supplier of high-quality coke to the integrated steel industry, has divested its coal mining business to Revelation Energy LLC.
The transaction, which closed on 6 April, includes substantially all of SunCoke’s remaining coal mining assets, mineral leases, real estate and mining reclamation costs. Under the terms of the deal, Revelation Energy will receive approximately US$10.3 million from SXC to take ownership of the assets and associated costs.
The mining assets Revelation has acquired are located primarily in Buchanan and Tazewell counties in southwest Virginia, US.
In conjunction with the transaction, Revelation Energy and SunCoke’s Jewell Coke operations have entered into a coal supply agreement whereby Revelation will deliver approximately 300 000 short tpa to Jewell Coke for the next five years at a favourable delivered cost as compared to alternative coal sources, which is intended to provide a cost-effective, local supply of high-quality, mid-vol metallurgical coal. SunCoke also expects to incur approximately US$2 million of transaction-related costs.
The transaction is expected to be cash flow neutral to SunCoke by the end of 2017 based on avoided potential mine closure and reclamation costs of approximately US$12 million. In addition, as compared to potentially closing its mines, SXC expects to realise approximately US$2 million to US$3 million per year of lower administrative, regulatory, compliance and purchased coal costs through 2020, as well as reduce its mining-related liabilities and collateral requirements.
”Despite our aggressive efforts to reduce costs by rationalising our mining footprint, the drastic and sustained decline in coal prices will likely prevent us from generating positive cash flow from our mining operations for the foreseeable future,” said Fritz Henderson, Chairman, President and CEO ofSunCoke Energy, Inc. ”We believe this value-positive sale will improve our long-term cash flow and allow us to focus on our core coke-making and coal logistics businesses.”
The deal excludes SunCoke’s legacy black lung and workers’ compensation liabilities, and certain properties that are necessary for Jewell Coke’s operation or were unavailable for transfer based on contractual provisions. SunCoke may transfer other properties to Revelation Energy after closing, subject to required consents, for additional payment to Revelation of up to US$0.7 million.
Edited from press release by Harleigh Hobbs
To the Editor:
Re “” (Business Day, March 30):
Your characterization of the Boundary Dam 3 carbon capture and storage project excludes a significant amount of information about the success of the project that has been released over the last few months. From January to the present, the facility has been very successful, as demonstrated in its
It’s also worth mentioning that there is a provincial election in Saskatchewan, and SaskPower (a crown corporation) does not comment on stories during the writ period.
As it stands, carbon capture and storage is an important technology in the reduction of greenhouse gas emissions; it was endorsed at the Paris climate change conference last year, and will play an important role in helping developing countries industrialize while limiting or reducing their carbon footprint.
ROBIN CAMPBELL
President, Coal Association of Canada
Edmonton, Alberta
The Chinese coal sector is currently plagued by significant oversupply as a dip in economic growth and concerns over pollution levels in major cities have hit the country’s demand for the fuel. Yet the government’s attempts to encourage supply cuts and industry consolidation will face significant challenges, according to a new report from BMI Research.
The Beijing government has long advocated consolidation in the coal sector and has recently stepped up its efforts in this area with a number of announcement and policies to facilitate implementation. Yet a number of factors stand in the way of industry reform.
The Chinese coal industry is essentially decentralised with ownership of mines devolved to provincial and local level, where they provide key sources of regional employment. This remains the case, despite central governments attempts to force industry consolidation: according to official statistics, there remains over 2000 companies and 11 000 coal mines in operation in the country with 53% of registered mines having an annual capacity of less than 90 000 t.
A significant pipeline of new capacity is also scheduled to come online in China over the next few years, exacerbating the oversupply challenge. Estimates from Fitch Ratings suggest that there is currently around 1.4 billion t of idle capacity currently in the system with another 1.9 billion t of new capacity to be added by 2017. While not all of this may come online, “less than half of this idle and new capacity would be sufficiently sizeable to leave the coal industry in multi-year overcapacity”.
That oversupply would persist even if government blocked all imports of coal and hit its target for cutting capacity by 0.5 – 1 billion t in three to five years.
The risk of labour unrest will also make reform difficult. In another recent report, BMI Research noted that “government’s drive to slash overcapacity has resulted in an increase in labour unrest.” Last year, worker protests doubled to 2774 with Decembers total of more than 400 such incidents setting a new monthly record, according to the Hong Kong-based China Labour Bulletin.
Finally, announced reforms targeting consolidation and capacity cuts will play second fiddle to government’s support for state-owned enterprises in China’s new five year plant. This includes plans to provide oversupplied sectors with fiscal, tax, financial and land policy support in order to rescue and upgrade their businesses.
“Consolidating the sector and cutting capacity will prove difficult,” concludes BMI Research. “As such, coal overcapacity is likely to be a prolonged issue and local coal companies’ earnings will remain under pressure.”
Edited by Jonathan Rowland.