Nine Coal & Allied funded scholarships at the University of Newcastle are available to Hunter Valley locals.
These tertiary scholarships totalling more than AUS$25 000 are open to new and continuing students from communities in Maitland, Cessnock, Singleton, Muswellbrook and the Upper Hunter local government areas.
Coal & Allied Community Relations specialist Travis Bates said: “We encourage students studying Engineering, Nursing, Medicine, Education, Social Work or Science to apply for Coal & Allied scholarships. This year we have three scholarships available to first year students worth AUS$5000 each, three scholarships for second year students at AUS$2500 and three scholarships for third year students worth AUS$1000.”
“Our scholarships are about building pathways for Hunter Valley locals to pursue tertiary education and recognising the leadership role our scholars can play in promoting education and mentoring fellow students,” Bates continued.
Past scholarship recipient Hayley Frazer stated: “Receiving the Coal & Allied scholarship put less pressure on working hours so I could focus more on my studies and doing the things I loved to do. I enjoy being involved in the community, which is near impossible when working two jobs and keeping on top of your studies. The scholarship helped support me financially so I was able to donate my time more willingly to help coach sporting teams, participate in days, such as clean up Australia day, and be a more active community member without financial stresses.”
The Singleton local received Coal & Allied scholarships in 2012 and 2013 while completing her Bachelor of Environmental Science and Management at the University of Newcastle. She now works at Coal & Allied as a graduate in the Environmental and Community Services team.
University of Newcastle Director of Advancement Rebecca Hazell said: “These scholarships not only benefit the direct recipients, but also their families and the Hunter Valley community. The gift of a scholarship empowers students to strive for excellence in their studies, enabling them to give back to their community through their skills, training and expertise.”
Hazzell concluded: “Through its generous scholarship program, Coal & Allied has supported the education of Upper Hunter students and given the gift of education for 10 years.”
Edited from press release by Harleigh Hobbs
The Chamber of Mines recently attended the CoalSafe 2016 conference, hosted by the South African Colliery Managers’ Association (SACMA), in Secunda, Mpumalanga.
President of the Chamber of Mines, Mike Teke noted: “We commend the coal industry for its continued improvement in safety performance. We further note that Minister of Mineral Resources Mosebenzi Zwane congratulated 16 companies for operating without any fatalities for a period of more than 12 months at the annual announcement of safety statistics in Pretoria in January this year. Five of these companies were coal mining companies including Exxaro, Sasol, Total Coal South Africa, Kuyasa Mining and Coal of Africa. The performance of these companies indicates to us that the industry’s goal of Zero Harm is achievable.”
In 2015, the coal industry reported five fatalities compared to nine in 2014. This represents an improvement of 44%. The number of injuries reported by the coal industry has also decreased to 207 injuries during 2015, compared to 267 in 2014, which is an improvement of 22%.
Teke added: “While we recognise that work towards ensuring that each and every mineworker returns from work unharmed every day must continue, we are gratified to note the continuing improvement in safety performance across the mining industry.”
“We extend our thanks to those who are involved in the rescue attempts at Lily mine owned by Vantage Goldfields. Our thoughts continue to be with the employees and family members of those affected by this great tragedy,” he concluded.
Edited from press release by Harleigh Hobbs
The Queensland Resources Council has released a new guide for resource companies’ engagement with the communities in which they are based. Based on the QRC’s Listening to the Community project, the guide identifies five principles for effective engagement: communication, integrity and transparency, follow through, understanding and awareness and respect.
“Our members understand that their social licence to operate needs to be earned, renewes and reinforced by listening to the communities when times are good but, more importantly, during the tougher times that we’re experiencing now,” said Michael Roche, QRC’s CEO. “We know from our research the communities want companies to listen and actively engage in their communities – to attend and be part of the local school fete rather than simply handing over a cheque.”
The original Listening to the Community project was undertaken in 2013 and has now been reviewed and updated to reflect the changed environment of today. “The economic and social landscape looks a lot different to when we first undertook this initiative, so we thought it was time to review and update the guide in 2016 to better reflect the needs of local communities where resources companies operates,” Roche explained.
“Most communities are experiencing the adjustment from construction to production, as well as the severe cost cutting forced on most resources operations in the face of plunging commodity prices,” continued Roche. In this environment, the QRC found that communities valued clear and honest communication from companies – even when it involves bad news, such as job losses.
Edited by Jonathan Rowland.
Bharat Heavy Electricals Ltd (BHEL) has achieved yet another landmark in the power development programme of the state of Uttar Pradesh by successfully commissioning the second 500 MW thermal unit at Anpara-D thermal power plant (TPP) in Sonbhadra district of Uttar Pradesh.
Including this recent commissioning, BHEL has added 2320 MW of generating capacity in Uttar Pradesh in the current fiscal (2015 – 2016).
This is a first of its kind project, where the power plant has been set up on an abandoned ash pond, thereby enabling saving of scarce land. Setting up the power plant on an ash pond required special technological innovations in the area of civil engineering. Successful execution of this project has set an alternate option for future projects facing constraints of scarcity of land.
BHEL was awarded the contract for setting up two units of 500 MW each at Anpara-D TPP by Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL). The first 500 MW unit of the project was commissioned in June 2015.
In addition, BHEL has recently commissioned two sets of 660 MW rating in UP, at Bara in December 2015 and Lalitpur in January 2016. The company’s scope of work for the project eincluded design, engineering, manufacture, supply, erection and commissioning of state-of-the-art equipment for the project on Engineering, Procurement & Construction (EPC) basis. Key equipment included steam turbines, generators and boilers, along with associated auxiliaries and electricals, besides controls & instrumentation (C&I), electrostatic precipitators (ESPs), suitable for Indian coal and Indian conditions, Balance of Plant (BOP) packages and civil works.
BHEL has been a major partner in the power development programme of Uttar Pradesh, with 77% of its government sector projects, aggregating to over 13 000 MW having been supplied by BHEL.
Edited from press release by Harleigh Hobbs
New analysis from the University of Queensland (UQ) has thrown into doubt the long-term viability of delivering Galilee Basin coal to India. According to UG Global Change Initiative Researcher, Lynette Molyneaux, the economic profile of many of India’s energy-poor states is unsuited to supporting coal-fired power.
The research calculates the costs of supplying Galilee Basin coal to new coal-fired power plants in one such state – Bihar in northeast India on the border with Nepal. The costs included a percentage of the amount required to buy and develop the Abbot Point coal terminal, as well as projected costs to ship the coal to the Indian port of Paradip and then rail it from Paradip to Bihar. This was then compared to the costs involved in deploying a decentralised micro-grid in the same region.
“We estimate it would cost about US$94/t to deliver Galilee Basin coal to Bihar,” said Molyneaux. “Overall, we found that it would cost about US$29 billion over 20 yr to supply even a modest amount of electricity to each household in Bihar.”
“The elephant in the room for proponents of coal-fired power to relieve energy poverty for the rural, agrarian poor is that remote rural locations have little or no industry to underwrite the costs of electrification,” Molyneaux concluded. “Coal-fired power stations are not designed to run for just a few hours a night, which is what the 15.8 million households in Bihar need to light their homes and charge their mobile homes.”
As an alternative model, Molyneaux points to the solar panels installed on people’s homes in Bangladesh, which have reduced the use of noxious fuels and provided employment for up to 100 000 people. The research – ‘Rural Electrification in India: Galilee Basin Coal versus Decentralised Renewable Energy Micro-Grids’ – is published in the April issue of Renewable Energy.
The UQ research is by no means the only one to questions the Galilee Basin developments. More harmfully, the financial community has also raised questions over the commercial viability of projects in the Galilee Basin –which include Adani Mining’s Carmichael project and GVK Hancock’s Alpha and Kevin’s Corner projects.
In August, Australia’s Commonwealth Bank resigned as the financial advisor to the Carmichael project as it was “finding it increasingly difficult to justify its involvement in a project which was both harmful to the environment and commercially infeasible,” according to a December 2015 note from BMI Research.
This was a significant blow, according to BMI Research, which described the situation as “grim”. Without the support of an Australian bank, which foreign banks rely on to do the necessary due diligence and for on-the-ground knowledge and expertise, Adani is unlikely to be able to secure sufficient for the US$16.5 billion project: a briefing from the IEEFA’s Tim Buckley noted last September that the project was “increasingly unbankable” with fifteen of the world’s largest financial houses having either ceased or ruled out involvement.
“The Carmichael project is far from financial close and the first commercial coal remains and remote prospect,” concluded Buckley. Similar problems face GVK Hancock, which is also yet to secure funding for its Galilee Basin projects.
“The prospects for further coal production in Australia remains grim due to the environment of persistently low coal prices and the increased reliance of India and China on their domestic thermal coal production to fuel their thermal power plants,” concluded BMI Research, which expects the country’s production to reach 498 million t by 2019 – only slightly higher than the 481 million t forecast in 2016.
Edited by Jonathan Rowland.
BHP Billiton is to cut 290 jobs at its Mt Arthur Coal asset in New South Wales (NSW) to “strengthen the commercial viability of the mine”, the company said in a press statement.
BHP Billiton’s NSW Energy Coal business, which includes Mt Arthur Coal, reported a loss of US$9 million in the six months to December 2015 on the back of low prices for thermal coal on the international markets. Over the past 18 months, global prices for thermal coal have dropped by an average realised price of 27%.
“Despite extensive work over the past two years to reset out production costs and safely improve the mine’s productivity, Mt Arthur Coal must continue to significantly improve performance to be a globally competitive operation,” said NSW Energy Coal Asset President, James Palmer.
“The decision was not taken lightly because we understand it will have a range of impacts on our workforce, their families and the local community,” Palmer continued. “However, the changes will put Mt Arthur Coal on a more sustainable footing for the future.”
According to the press release, Mt Arthur Coal has begun consultations employees and their representatives about the implementation of the decision. According to Palmer, the company intends to “word closely with employees and the local community to manage the impacts of the decision.”
The Mt Arthur Coal job losses are the latest in a succession of coal mining layoffs in the Hunter Valley with union official, Peter Jordan, saying the region is set to lose more than 1000 jobs in 2016 – including 500 from the closure of Anglo American’s Drayton mine.
Edited by Jonathan Rowland.
A sit-in at Keaton Energy’s Vaalkrantz underground coal mine in South Africa ended peacefully on 4 March, according to a company press release. The sit-in began on 29 February and involved employees of Nasonti Mining, a contractor at Vaalkrantz.
Nasonti had launched a retrenchment process in early February, citing financial pressure and halting all operations at Vaalkrantz. It also applied for voluntary liquidation.
Following this, on 29 February a number of its employees entered the Vaalkrantz mine, demanding payment of their outstanding salaries and retrenchment packages from Nasonti. After initial attempts to resolve the situation by mine management were not successful, Keaton alerted the Department of Mineral Resources and mine unions, requesting their intervention.
An eviction order was granted by the Labour Court on 1 March and served to the protesters on 2 March. On 4 March, following the presentation of a three-part resolution plan by mine management, the Nasonti employees agreed to exit the mine.
“No harm came to any person during the negotiation process,” Keaton said in its statement. “Production was largely unaffected given that Nasonti had halted operations and underground mining was temporarily on stop.”
The company “continued to engage peacefully with all stakeholders in an attempt to facilitate resolution in good faith and with the best interested of all in mind,” it concluded.
Edited by Jonathan Rowland.
Supported by government reforms and strong growth in output from Coal India (CIL), Indian coal production will rise to 1.01 billion t in 2020, according to a research note from BMI Research, from 703.72 million t in 2015.
Despite this, coal production will not meet the government target of 1.5 billion t by 2020 as challenges remain including the threat of strikes from coal unions and low coal prices, which will limit the attractiveness of the sector for international investors despite the government’s determination to open up the industry to private companies with the passage of the Coal Mines (Special Provisions) Bill.
Slowness to grant environmental approvals for new mines, a lack of capacity on Indian railways and challenges to financing the purchase of new freight trains by state-owned India Railway’s could also hamper production growth.
As a result, the country will continue to rely on imports to cover coal demand: the structural deficit totaled 187 million t in 2015, according to BMI Research. While this is likely to fall as domestic production ramps up, coal imports will remain a key supply line for coastal power plants given India’s transport infrastructure issues and the low price of coal on international markets.
This will see Indian companies continue to look abroad as they seek to plug gaps in production. Although the financial viability of Adani and GVK Hancock’s super-sized projects in Queensland’s Galilee Basin, Australia, remains in doubt, projects in southern Africa continue to receive interest from Indian firms.
“South Africa has been cited by Indian mining and industrial companies as the obvious supplier since Indonesia’s coal is of poor quality and extraction costs in Australia are high,” BMI Reseach said. “Jindal and Atha Group have already invested in South African coal, while companies including Dalmia Cement are considering entering the sector.”
Mozambique is also garnering some interest with India’s International Coal Ventures – a consortium of state-owned Indian companies – buying Rio Tinto’s Mozambique assets in July 2014 and joining CIL and Jindal in investing in the southern African country.
Despite the challenges, then, the future of coal in India appears positive. “We expect coal to retain its primacy in India over the coming years and energy poverty remains a key concern,” concluded BMi Research. “The fuel will remain the only realistic option for providing cheap and abundant energy for the local population […] to 2024.”
Edited by Jonathan Rowland.
Dominion Virginia Power and Prince William County have reached a settlement agreement on releasing treated water from coal ash ponds at the company’s Possum Point power plant that will further protect aquatic life, human health and recreational activities on Quantico Creek and the Potomac river.
The agreement means that Prince William County will withdraw its appeal of a permit from the Virginia Department of Environmental Quality (DEQ). The agreement and DEQ’s permit allow Dominion to safely and in an environmentally sound manner treat, discharge and monitor pond water as part of a plan to permanently close five ash ponds at Possum Point power plant located in Dumfries.
“After extensive dialogue, we as a Board are comfortable that the dewatering of the ponds will be done in a way that provides an additional level of protection, and that addresses concerns raised by our residents,” said Corey Stewart, Chairman of the Prince William Board of County Supervisors.
Dominion agrees with the Prince William Board of County Supervisor’s findings that the health and safety of its citizens, the environment and aquatic life are fully protected.
Under the agreement, Dominion agrees to go beyond federal and state requirements and add enhanced protections in operating state-of-the-art treatment equipment already planned for the project and to provide additional water treatment if monitoring shows elevated levels of certain constituents.
“Dominion will always be committed to keeping Quantico Creek and the Potomac safe for fishing, boating, swimming and all the activities we Virginians love to do. We look forward to moving ahead with this important environmental project,” said Pam Faggert, Chief Environmental Officer for Dominion. “The county has helped us create a plan that reflects Dominion’s and the County’s shared commitment to maintain the quality of these two waterways.”
The US Environmental Protection Agency issued its Coal Combustion Residual Rules in the spring of 2015 calling for the closure of ash ponds across the country in the wake of two major ash spills in recent years in Tennessee and North Carolina. The intent of the rules is to remove the risk of ash spills in the nation’s rivers. The rules encourage power companies to eliminate the risk of further spills by closing their ash ponds by the spring of 2018.
Ash ponds were used across the country to store the ash left over from burning coal to produce electricity. Dominion has stepped up as a leader in its efforts to close eleven ash ponds at four power plants across the state.
As part of closing the ash ponds at Possum Point, Dominion must first remove water that has accumulated in the ponds. The water removal process involves pumping water from four ponds into a fifth pond that has a clay liner. Under the terms of the stringent wastewater discharge permit issued by DEQ and the State Water Control Board, Dominion must construct a wastewater treatment facility at the power plant.
The facility will clean the water to levels that are considerably better than those required by Virginia’s environmental laws and will be enforced through the permit issued by DEQ. The treated water will be tested before release to ensure that it is much cleaner than required by the permit.
“We are proud that Dominion has shown that we are committed to protecting the environment,” Faggert said. “We have been in the forefront in reducing power station emissions that cause smog and acid rain. We have made dramatic strides in reducing mercury emissions. We have moved aggressively to reduce carbon emissions tied to global warming and to move our generation fleet to cleaner renewable and natural gas generation.”
Edited from press release by Harleigh Hobbs
Westmoreland Coal Co. has announced its 2015 revenues increased 26.4% y/y to a record US$1.4 billion, primarily as a result of the WMLP and Buckingham acquisitions, which added US$305.7 million and US$30.1 million to revenue and Adjusted EBITDA, respectively. Adjusted EBITDA for 2015 was a record US$216.7 million as a result of the aforementioned acquisitions, which overcame the effects of unfavourable weather conditions and the sales impact of customer outages at several operations during the year.
Net loss applicable to common shareholders in 2015 was US$203.3 million (US$11.36 per diluted share). Included in 2015 net loss is a non-cash impairment charge of US$136.2 million related primarily to the company’s ROVA power plant arising from lower projected power pricing. Also included in 2015 net loss was a derivative loss of US$5.6 million related to the ROVA power plant as well as a US$5.4 million loss on debt extinguishment arising from the early repayment of amounts outstanding under the company’s term loan from the Kemmerer Drop.
Westmoreland also incurred higher interest expense year over year due to higher debt levels arising from the company’s MLP and Buckingham acquisitions as well as a tax benefit arising from tax planning strategies.
“We produced solid operational results and continued to generate meaningful cash from our core business in 2015, which is a testament to the strength of our differentiated business model,” commented Kevin Paprzycki, Westmoreland’s CEO. “2015 was a transitional year for our business as we concentrated our efforts towards integrating our recent acquisitions and executing the new MLP strategy. Our focus shifts in 2016 towards maximising cash generation from our unique mine mouth business model, and we anticipate delivering shareholder value by strategically paying off debt and strengthening our balance sheet.”
During 2015, the Westmoreland contributed 100% of the outstanding equity interests in Westmoreland Kemmerer LLC (the Kemmerer mine) to WMLP for US$230.0 million in aggregate consideration (the Kemmerer drop).
Acquisition activity during 2014 and early in 2015 drove segment results for the US, Canada and WMLP Coal segments. Results for the coal-US segment reflect a full year of operations in 2015 from the Buckingham acquisition, which was completed on 1 January 2015. Results of the coal-Canada segment reflect a full year of operations in 2015 compared to eight months in 2014, owing to the fact that the Canada acquisition was completed on 28 April 2014.
While 94% of the company’s customer contracts were shielded from open market coal pricing volatility in 2015, declines in the reference prices for the Coal Valley operation in the Canada segment and the Northern Appalachia region in the WMLP segment had an adverse effect on the results for those segments. Results for the US coal segment were favourably impacted by strong revenue in 1H15 as well as cost control measures at the Absaloka mine.
The Power segment incurred a US$133.1 million impairment charge related to power pricing as a result of depressed power prices. The segment also benefited from lower derivative losses, which declined US$25.5 million y/y.
Edited from press release by Harleigh Hobbs
The Cat Reman product line now includes double solenoid valves for underground mining applications. These valves are remanufactured to the same high specifications as new solenoids using the same Cat OEM-designed components, the same quality checks and the same test equipment. They incorporate all critical engineering changes and updates and meet MSHA regulations for intrinsically safe components. Available off the shelf at a fraction of the price of new, Cat Reman valves are backed by a same-as-new warranty.
Both new and Cat Reman valves are designed to perform reliably in extreme conditions and withstand harsh underground mining environments. They are made with top quality materials, including chrome and gold, which provide corrosion resistance to improve connectivity and reliability. Unlike other brands, Cat new and Cat Reman double solenoid valves feature sealed electronic components to eliminate potential for spark ignition of underground gases and coal dust. All seals and fasteners are installed and torqued to precise specifications to maximise protection against dust, water and other contaminants.
Edited by Jonathan Rowland.
The Pennsylvania Department of Environmental Protection (DEP) has awarded a US$13 455 319 competitively bid contract to Rosebud Mining Co. to remediate and reclaim a 62-acre abandoned mine site in the community of Ehrenfeld, in Cambria County.
“We can finally award a contract to reclaim this unsightly and hazardous abandoned coal refuse pile,” said John Quigley, DEP Secretary. “Two years ago, the original bids for this project came in far too high, preventing this public health and safety project from moving forward. The project design was reworked and locating a nearby site to place refuse material resulted in a cost reduction to allow the contract to proceed.”
Of the four competitive bids received, Rosebud was the lowest qualified bidder. Previous bids for this project reached as high as US$21.6 million. The site is a visual blight on the community, and includes a coal refuse pile that towers over more than 100 nearby homes and buildings. The steep pile poses dangers for riders of all-terrain vehicles on the site.
The project, expected to last three years, involves hauling 3.2 million short t of coal refuse to the nearby permitted facility being reclaimed by the mine operator. The reclamation includes extinguishing a five-acre portion of the pile currently burning, and reducing fines (sediment comprised of small coal pieces and dust) running into the adjacent stream, an unnamed tributary to the Little Conemaugh river. Highly acidic runoff from the pile has flowed into the stream and river for many years and will be eliminated by the project.
The reclamation plans include improved drainage, tree plantings and the development of a recreational park on a portion of the site, due to its location along the ‘Path of the Flood Trail’, commemorating the 1889 Johnstown flood.
Secretary Quigley added: “An important additional benefit of this project is that the contract that we are awarding enables the company to recall 40 recently laid-off miners to complete the reclamation work. We are doubly happy that the project helps the community, the environment, and these workers.”
A majority of the funding is provided through Pennsylvania’s 2016 federal Abandoned Mine Land (AML) Grant, derived from a fee on coal. This project is one of several being pursued as part of the Little Conemaugh river restoration project.
Edited from oress release by Harleigh Hobbs
A resolution seeking to force Australian gas company, Santos, out of the coal seam gas (CSG) business and towards renewable energy will not be put to shareholders at the company’s annual general meeting (AGM), the company has confirmed in a press statement.
The resolution noted the recent decision by AGL to withdraw from the CSG sector and political uncertainty around CSG development in New South Wales, where the opposition Labor Party recently reconfirmed its opposition to CSG development and where Santos’ Narrabri CSG project is located.
It concluded that “Santos is best to walk away from the controversial Narrabri [CSG] project and rebuild investor confidence with established business priorities and by looking forward to new opportunities in the renewable energy sector.”
In refusing to put the notice to shareholders at the AGM, the company noted that the request for the resolution to be put to the AGM failed to satisfy the relevant section of the Corporations Act. Santos also noted that a similar resolution was defeated in 2014 with 99.2% of the vote cast against and that the resolution would not have been legally binding.
The 98 signatories to the resolution that have been confirmed as Santos shareholder held just 0. 019% of the company’s shares on issue.
Edited by Jonathan Rowland.
Bankrupt US coal mining company, Alpha Natural Resources (ANR), has filed a proposed reorganisation plan with the bankruptcy court, detailing plans for the sale of assets – including a stalking horse bid from the company’s first lien lenders.
A stalking horse bid sets the lower limit for an asset sale – in this case US$500 million – but is subject to higher or better offers. The stalking horse bid identifies the core assets to be auctioned. On the mining side, these include ANR’s mines in Wyoming and mines and reserves in Pennsylvania, as well three West Virginia and Virginia mines: McClure, Nicholas and Toms Creek.
The bid also covers ANR’s Marcellus shale gas interests and the company’s interest in the Dominion coal export terminal in Newport News, Virginia.
Remaining assets would become part of a ‘reorganised Alpha’, which would be structured to focus primarily on fulfilling all of the company’s environmental reclamation obligations on an ongoing basis. Funding would be provided to ensure this smaller company would be able to meet its obligations. It would also continue to operate a number of the remaining mines, “adjusting to market conditions and allowing for a phased approach to this work.”
“Since we began the bankruptcy process last August, we have taken numerous steps to enhance efficiency throughout our business and make some but necessary decisions regarding the future of our operations,” said ANR’s Chairman and CEO, Kevin Crutchfield. “These filings represent an important step in our effort to effectively restructure the company and emerge from Chapter 11 better positioned to meet new market realities.”
The proposals are subject to creditor and bankruptcy court approval. ANR entered Chapter 11 bankruptcy last August, one of number of US coal companies to end up in bankruptcy court following a sharp downturn in coal demand in the US and steep falls in the international price of coal.
Edited by Jonathan Rowland.
According to a new report from the US Energy Information Administration (EIA), nearly 18 GW of electric generating capacity was retired in 2015, a relatively high amount compared with recent years. More than 80% of the retired capacity was conventional thermal coal. The coal-fired generating units retired in 2015 tended to be older and smaller in capacity than the coal generation fleet that continues to operate.
Coal’s share of electricity generation has been falling, largely because of competition with natural gas. Environmental regulations affecting power plants have also played a role. About 30% of the coal capacity that retired in 2015 occurred in April, which is when the US Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) rule went into effect. Some coal plants applied for and received one-year extensions, meaning that many of the coal retirements expected in 2016 will likely also occur in April. Several plants have received additional one-year extensions beyond April 2016 based on their role in ensuring regional system reliability.
Much of the existing coal capacity in the US was built from 1950 to 1990 during a time when electricity sales were growing much faster than population and gross domestic product. In more recent years, electricity sales growth has slowed or fallen, and net capacity additions (of all fuel types) have been relatively low. The coal units that were retired in 2015 were mainly built between 1950 and 1970, and the average age of those retired units was 54 years. The rest of the coal fleet that continues to operate is relatively younger, with an average age of 38 years.
The coal units retired in 2015 also tended to be smaller than the rest of the coal fleet. The net summer capacity of the average retired coal unit was 133 MW, compared with 278 MW for the rest of the coal units still operating.
The amount of coal capacity retired in 2015 was about 4.6% of the nation’s coal capacity at the beginning of that year. Nearly half of the 2015 retired coal capacity was located in three states: Ohio, Georgia, and Kentucky, and those states each retired at least 10% of their coal capacity in 2015. Other states that traditionally have had high levels of coal-fired electricity generation, such as Indiana, West Virginia, and Virginia, each retired at least 1 GW of coal capacity in 2015.
Edited by Harleigh Hobbs
Stanmore Coal has signed a significant offtake agreement for its Isaac Plains metallurgical coal with an East Asian steel producer. Details of the supply agreement have not been made public, but Stanmore said it represented a ‘material portion’ of the semi-soft coking coal that will be produced at Isaac Plains.
“We are very pleased to sign this significant sales contract with one of the largest steel producers in Asia,” said Nick Jorss, Stanmore’s Managing Director. “This foundation contract provides a strong platform for Stanmore’s coking coal sales in the lead up to production. A number of other contracts are under negotiation with top tier steel producers.”
The restart of coal production at Isaac Plains, which Stanmore bought last year from Vale and Sumitomo Corp, is on track for April. Mining contractor, Golding Contractors, has taken over operational responsibility for the site following approval of the mine plan by Queensland’s Department of Environment and Heritage Protection, with drill and blast work underway and the dragline ready for operations after an overhaul. The coal wash plant is not being ready for first coal production next month.
“On average each year we use around 215 kg of new steel per capita across the globe,” concluded Jorss. “This goes into a range of applications from major infrastructure, such as mass transit system, water and energy to housing, cars and kitchen appliances. Our coking coal produced a t Isaac Plains will create over 700 000 t of steel each year, enough to build a new Sydney Harbour Bridge every month.”
Stanmore Coal bought the Isaac Plains mine for US$1 last August from Brazilian mining giant, Vale and Japanese trading house, Sumitomo Corp. The reopened mine will reportedly create 150 new jobs and produce 1.1 million t of metallurgical coal. The mine is located east of Moranbah in the Bowen Basin of northern Queensland.
Edited by Jonathan Rowland.
Prairie Mining Ltd has announced the results of a pre-feasibility study (PFS) – prepared in accordance with the JORC Code (2012 Edition) – conducted on its Lublin coal project (LCP), located in the low cost and proven Lublin Coal Basin in south eastern Poland.
Utilising the project’s initial marketable ore reserve estimate of 139.1 million t of coal, the project can support average steady state production of 8.0 million tpa ROM coal, yielding an average of 6.34 million tpa of saleable clean coal.
Prairie’s Chief Executive Officer, Ben Stoikovich, said “The PFS has confirmed the potential to develop a world scale, multi-generational coal mine with strong cash flows.”
Prairie has indicated the LCP’s fundamentals are extremely encouraging with average operating cash costs (inclusive of SG&A and royalties) during steady state production of US$24.96/t of saleable coal Free On Rail at the Mine Gate (FOR), which would postion the LCP to be the lowest cost supplier of coal into Prairie’s key regional European target markets.
The high margin LCP is expected to achieve average earnings before EBITDA of US$348 million per annum (steady state). According to Prairie, this provides for high cash margins from the adoption of international best practice for the design and operation of the mine and coal processing.
According to the company, there is potential for significant expansion of production beyond the proposed PFS marketable reserve, by inclusion of some 87 million t of inferred resource from the 391 seam, or inclusion from other new coal seams, which will be examined as part of upcoming technical studies to enhance the project.
Stoikovich believes the LCP is a highly advanced project, which has “the potential to become a significant new coal producer within the industrial heartland of Europe and offer a strategic supply of high quality coal to regional European markets, and for seaborne export.” He believes this could grow in importance as security of energy supply concerns increase.
Miroslaw Taras, a Prairie executive and former CEO of Lubelski Wegiel Bogdanka, further said: “The Lublin coal project is the first coal mining investment in Poland in line with international standards such as JORC or the Equator Principles. The new Jan Karski mine at the Lublin Coal Project will be the first, but hopefully not last in Poland to introduce advanced roof bolting technology for roadway primary support, which will lower costs, increase productivity and improve safety. I believe that the world-class Lublin coal project can contribute to Poland reclaiming its position as a reliable coal exporter in Europe and bring enhanced energy security to the region. I am strongly connected to the Lublin region as I have already built one mine in Lublin and seen the prosperity it bought to the community. I will now take even greater satisfaction in working on a similar project, except that this project will have the benefits of being more technologically advanced, thoroughly planned and run according to international best practice. I’m proud to see the Lublin Coal Project continue to receive strong support from the local community and government who recognise its potential to provide a tremendous boost in local employment opportunities in both the regional and national economy.”
Prairie’s Polish and international management team with experience in developing, operating and financing world-scale coal projects, will now commence discussions with potential off-takers and EPC contractors as well as focus on Project permitting.
Edited from press release by Harleigh Hobbs
Executive Director of coalbed methane (CBM: called coal seam gas in Australia) company, Galilee Energy, Paul Bilston, has resigned his role to take up a senior management positions in a gas infrastructure business based in Melbourne.
“The board would like to thank Paul for his efforts and support of the company,” said Galilee’s Chairman, David King. “Whilst I am disappointed to lose his skills and experience on the board, I would like to wish him well in what is a very exciting and challenging new role.”
The board have agreed to waive the usual notice period “as a result of current market conditions” with Bilston finishing his role at the end of March. Galilee’s board have also decided that Bilston’s executive role will not be replaced but will seek to appoint a new non-executive director “at the appropriate time.”
Edited by Jonathan Rowland.
A key Queensland mining health and safety body has welcomed its first female members: two highly-qualified mining engineers.
Minister for State Development and Minister for Natural Resources and Mines Dr Anthony Lynham said International Women’s Day was a good time to highlight the credentials of Julie Devine and Bryony Andrew as members of the mining industry’s Board of Examiners.
“This is an historic first for Queensland but it’s also a vote of confidence in two women who have had impressive careers as mining industry professionals in a male-dominated industry,” Dr Lynham said.
“Women made up less than 15% of the resources sector workforce in 2014, but industry bodies are optimistic about surpassing the 20% mark by 2020. Both Ms Devine and Ms Andrew have extensive experience in the mining industry and will make a valuable contribution to the board, which assesses and examines applicants for safety positions and issues certificates of competency.”
The board determines the required qualifications and experience for workers to serve in key safety critical positions in mines and quarries. All board members must hold a mining certificate of competency and have at least 10 years’ practical mining experience.
Bryony Andrew is the manager of the Poitrel coal mine near Moranbah in Central Queensland. She has a background in mining engineering, with significant industry experience as a production manager, and development manager.
Julie Devine is a senior mines inspector with the Department of Natural Resources and Mines since 2009. Before that, she had a two-decade career as a mining engineer, mine manager and mines inspector in Queensland and Papua New Guinea.
With the Board of Examiners meeting again this week, Dr Lynham said the Palaszczuk Government was committed to increasing female representation on government boards and committees.
“Since July 2015, women’s representation on government boards has grown from 31% to 37% in January 2016,” he said.
Edited from press release by Harleigh Hobbs
Coal of Africa (CoAL) and its subsidiary company, MbeuYashi Propritary Ltd, have been accused of breaching payment obligations relating to the 2010 acquisition of the Chapudi coal project from Rio Tinto Minerals Development and Kwezi Mining.
MbeuYashi originally acquired the Chapudi assets for US$75 million. Located in Limpopo Project, the assets comprise both thermal and metallurgical coal development projects and are contiguous with CoAL’s flagship Makhado metallurgical coal project, which now forms part of the company’s Greater Soutpansberg project.
Of the original US$75 million price tag, CoAL and MbeuYashi have repaid US$56 million, leaving US$19 million still to be repaid. According to CoAL, this is due by 15 June 2017 but Rio Tinto and Kwezi Mining now claim that payment is due immediately.
CoAL has disputed the claims and said it will “defend itself vigorously” should Rio Tinto and Kwezi pursue the matter. “CoAL and MbeuYashi have met and will continue to meet all of their payment obligations to Rio Tinto and Kwezi,” the company said in a statement.
CoAL is currently in the process of acquiring ASX-listed South African coal mining and development company, Universal Coal. When asked what impact the Rio Tinto notice would have on the acquisition, the company told World Coal: “At this stage the company does not envisage this having an impact on the Universal Coal acquisition. The company remains focused on completing the acquisition and as, per the press release today, it will be disputing the validity of the notice from Rio Tinto.”
Edited by Jonathan Rowland.
Geological carbon dioxide (CO2) storage resources in North America are among the most thoroughly understood in the world, according to a new report launched by the Global CCS Institute.
The Global Storage Portfolio is the first report of its kind to provide a comprehensive worldwide summary of geological storage resource assessments from almost 50 countries. Nations identified as leading the way on storage readiness, include the US, Canada, Norway, and the UK.
“The identification and quantification of storage sites, both in North America and globally, is critical to the deployment of carbon capture and storage (CCS) as part of a worldwide effort to close the gap between current international climate commitments, and what scientists say is needed in order to limit global warming to well below 2°C”, explained Jeff Erikson, the Institute’s General Manager, The Americas.
The US and Canada are leaders in the development and deployment of CCS. They are not only major emitters of CO2, but also have a vast potential to store CO2. Carbon capture, utilisation and storage (CCUS) has been a driving force in advancing CCS in the US and Canada, particularly the utilisation of CO2 for enhanced oil recovery.
Availability of storage space for the injected CO2 is a critical precondition of a CCS project. Not knowing how much storage potential is available could significantly undermine a nation’s ability to meet emissions reduction targets by hampering their ability to deploy CCS in a timely fashion.
The vast storage resources available to support CCS in the US and Canada exceed the projected capacity requirements over the coming decades, according to Global CCS Institute. For example, it is estimated that in the US alone, 1600 gigatonnes (Gt) of CO2 could be stored in deep saline formations, equivalent to about 300 years of current annual CO2 emissions in the US. “CCS is a vital technology for meeting the world’s targets for mitigating global warming at least cost” said Erikson.
Regional resource assessments are important in providing policymakers and other stakeholders with an indication of the storage potential in any given location, and can serve as an important first step in selecting and proving storage sites to support project deployment.
Only proven storage scenarios are considered in the report, including deep saline formations, depleted or depleting oil and gas fields, and enhanced oil recovery using CO2. All three scenarios have been successfully utilised for existing CCS projects around the world.
Many countries use different evaluation criteria for their assessments and use different methods to calculate their storage resource. By consolidating this work, the Institute has been able to review and compare the results from regional studies for each country.
Edited from press release by Harleigh Hobbs
Universal Coal shareholders representing 53.2% of the company’s shares have now accepted Coal of Africa’s (CoAL) takeover bid, according to a press announcement from CoAL. Universal Coal is an ASX-listed coal mining company with a number of producing and development assets in South Africa.
CoAL’s takeover bid also received approval from its own shareholders at a recent general meeting, clearing the way the bid to continue. The general meeting also approved the issuing of shares to Yishun Brightside Investment and M&G Investment Management, funds from which will be used to fund the acquisition of Universal Coal.
The offer is still subject to various other conditions. CoAL has now extended the offer period by a month to 15 April in order to “allow sufficient time to receive further offer acceptances and for the remaining conditions to be satisfied.”
“CoAL is of the view that good progress has been made on the remaining conditions, which are mainly procedural in their nature, and that they can be fulfilled in a timely matter,” the company said.
The company also said that it had entered into a subscription agreement with Haohua Energy International (Hong Kong) Resource Co. (HEI), a subsidiary of Shanghai-listed coal producer, Beijing Haohua Energy Resource Co., under which HEI will purchase US$5 million of new CoAL shares. The funds will be used to provide additional funding for CoAL’s corporate activities and obligations.
The HEI share purchase is conditional upon the offer for Universal Coal meeting its conditions and the approval of Australia’s Foreign Investment Review Board. HEI currently owns 24% of CoAL.
Listed in London, Sydney and Johannesburg, CoAL is a coal exploration, development and mining company with assets in South Africa. Its key projects include the Vele cal mine, which produces both thermal and metallurgical coal and the Greater Soutpansberg Project/MbeuYashu, which includes the company’s flagship Makhado metallurgical and thermal coal project.
Edited by Jonathan Rowland.
RungePincockMinarco (RPM) has announced a significant upgrade to XECUTE – the industry’s first and only enterprise mine planning application for the ultra-short-term horizon. The launch of XECUTE 1.1 delivers several software enhancements that advance both product functionality and overall user experience.
XECUTE 1.1 includes RPM’s market leading Product Optimiser functionality, as well as pre-defined mining levels, which enables users to pre-configure elements of the mine plan. Other additions include greater flexibility across the product with respect to configuring mining activities and enhanced, real-time, multi-user capabilities.
The ability to visualise and adjust ultra-short-term schedules is made easier with the enhancement of in-built 3D capabilities. XECUTE 1.1 includes more advanced animation functionality providing the user with full 3D visualisation of the excavation of individual mining blocks.
“Users are truly in the driver’s seat. Inspired by gaming technology, changes to mine plans can be made in real time, across multiple users. If a user makes an approved change to the mine plan from say head office or a mine site, that change is then reflected across every user who logs into that mine plan anywhere in the world. This is a very powerful software enhancement to XECUTE,” said RPM’s Executive General Manager Software, Craig Halliday.
“This product has gone from strength to strength since its launch at AustMine last year. With continued development, XECUTE remains the industry’s only solution which combines design, reserving and scheduling into a single, dynamic 4D environment.”
Edited by Jonathan Rowland.
Rio Tinto’s annual mineral resources and ore reserves update, which has been released as part of its 2015 annual report, includes increases to Rio Tinto Coal Australia’s mineral resources and ore reserves in New South Wales and Queensland, Australia.
The updated ore reserves and mineral resources are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and Australian Securities Exchange (ASX) Listing Rules.
Total coal ore reserves for all deposits have increased by 397 million t, from 2106 million t to 2504 million t. Increases in ore reserves include:
Total mineral resources, exclusive of ore reserves, have increased by 1376 million t, from 5429 million t to 6805 million t. These increases include:
Mt Robert contains a maiden mineral resource estimate of 31 million t.
The upgrades have resulted from a programme of orebody knowledge and strategic mine planning optimisation undertaken at Rio Tinto Coal Australia. They are based on a rigorous examination of all Rio Tinto Coal Australia leases that included:
According to Rio, these increases in ore reserves and mineral resources reflect a continuation of the work announced in 2014.
Edited from press release by Harleigh Hobbs
According to a new report from the US Energy Information Administration (EIA), the US remains a net exporter of coal, exporting 74 million short t and importing 11 million short t in 2015. Coal exports fell for the third consecutive year in 2015, ending the year 23 million short t lower than in 2014 and more than 50 million short t less than the record volume of coal exported in 2012. Slower growth in world coal demand, lower international coal prices and higher coal output in other coal-exporting countries contributed to the decline in US coal exports. Lower mining costs, cheaper transportation costs and favourable exchange rates (compared to the US dollar) continue to provide an advantage to producers in other major coal-exporting countries, such as Australia, Indonesia, Colombia, Russia and South Africa.
One of the only increases in US coal exports in 2015 was for exports to India, which increased by almost 2 million short t, bringing its share of US coal exports to 9%, up from 5% in 2014. Coal exports to the rest of Asia fell. Europe has traditionally been a leading destination for coal exports, but exports were down 14.6 million short t (28%) in 2015.
US coal exports are mainly shipped from six customs districts that together accounted for 90% of US exports in 2015. Norfolk, Virginia, the largest coal port, shipped 26.2 million short t of coal, accounting for 35% of total US exports. Baltimore, Maryland, was the only major customs district (districts that generally export more than 1 million short tpa of coal) to increase exports in 2015, largely driven by increased exports to India.
US coal imports totalled 11.3 million short t in 2015, the same as in 2014, with 85% of imports being thermal coal that is primarily used to generate electricity. Although the amount of imports did not change in 2015, the source and point of entry of these imports changed from 2014. The biggest changes in the origin of US imports involved imports from Colombia and Indonesia, which increased by 8% and decreased by 42%, respectively. Colombian coal is highly competitive with domestic coal at power generators located along the Gulf of Mexico and southern Atlantic coasts. Metallurgical coal, which is used in the steelmaking process, was primarily imported from Canada.
Tampa, Florida, overtook Mobile, Alabama, to become the largest recipient of coal imports in 2015. The closure of coal-fired electricity generators in New England led to a 41% (0.5 million short t) decrease in imports into the Boston, Massachusetts, customs district. Increased Canadian imports drove the increase of imports (0.1 million short t, 55%) into the Portland, Maine, custom district. Imports into the Honolulu, Hawaii, custom district remained nearly unchanged as declines in Indonesian imports were offset by imports from Canada and Australia.
Edited by Harleigh Hobbs
According to a new report launched by the Global CCS Institute, geological carbon dioxide (CO2) storage resources in the North Sea are among the most thoroughly understood in the world.
The Global Storage Portfolio is the first report of its kind to provide a comprehensive worldwide summary of geological storage resource assessments from almost 50 countries. Nations identified as leading the way on storage readiness include Canada, Norway, the US and the UK.
Andrew Purvis, the Institute’s General Manager Europe, Middle East and Africa, said identification and quantification of storage sites were critical to the deployment of carbon capture and storage (CCS) as part of global efforts to closing the gap between current international climate commitments, and what scientists say is needed in order to limit global warming to well below 2°C.
“CCS is a vital technology for meeting the world’s targets for mitigating global warming at least cost – the very objective is simply impossible without CCS,” said Purvis. “Availability of storage space for the injected CO2 is a critical precondition of a CCS project. Not knowing how much storage potential is available could significantly undermine a nation’s ability to meet emissions reduction targets, by hampering their ability to deploy CCS in a timely fashion.”
“Regional resource assessments are important in providing policymakers and other stakeholders with an indication of the storage potential in any given location, and can serve as an important first step in selecting and proving storage sites to support project deployment.”
“The assessment of offshore storage resources in the North Sea, complemented by detailed evaluation of the storage capacity at several specific sites and the availability of oil industry infrastructure for re-use, should provide a significant advantage to CCS deployment there,” explained Purvis.
Only proven storage scenarios are considered in the report, including deep saline formations, depleted or depleting oil and gas fields, and enhanced oil recovery using CO2. All three scenarios have been successfully utilised for existing CCS projects around the world.
Many countries use different evaluation criteria for their assessments and use different methods to calculate their storage resource. By consolidating this work, the Institute has been able to review and compare the results from regional studies for each country.
Edited from press release by Harleigh Hobbs
In line with Tata Power’s aim to improve the quality of life and uplift the economic conditions of its surrounding communities, the largest integrated power company in India has on the occasion of Late JN Tata ‘s birth day, which is celebrated as ‘Founder’s Day’ in the Tata Group, inaugurated its third Tata Power Skill Development Institute (TPSDI), a Centre for Excellence for Power Plant Skills, at Maithon Power Ltd.
The institute was inaugurated by Mr Ashok Sethi, COO & Executive Director, Tata Power, in the presence of Mr R N Subramanyam, Chief Finance Officer, Tata Power under kind presence of M. M. S. Dave, Chief-Business Development, Tata Power; Mr. K Chandrashekhar, CEO & ED, Maithon Power Ltd and Mr P. Thakur, Dy. CEO, Maithon Power Ltd, as well as other senior officers from Tata Power & Maithon Power Ltd.
TPSDI – Maithon’s 10 000 ft2 plus campus is situated adjacent to Maithon Power Ltd in Dhanbad district of Jharkhand with a training capacity of 100 people per day.
TPSDI Maithon provides the extensive space and infrastructure needed to conduct courses across the whole range of Electrical, Mechanical and other skills.
With a focus on building employable skills in the youth, TPSDI – Maithon also offers various other employability skills to meet local needs and address industry requirement.
Speaking at the event, Mr Ashok Sethi, COO & ED, Tata Power, said: “TPSDI endeavours to help in capacity building in the power sector. The objective of the institute is not merely training people but to enhance their skills and make them employable. TPSDI will be the frontrunner for skilling workers by adopting a structured course. Structured skill training of the kind provided by TPSDI will help reduce dissatisfaction and create safe workers.”
Edited from press release by Harleigh Hobbs
Morning Consult released new national poll results that indicated there is major support of coal-based electricity in the US – with 54% in favour.
The American Coalition for Clean Coal Electricity has indicated: “Once again, the writing is on the wall – American voters overwhelmingly support the use of coal to generate electricity. And once again, public opinion does not match public policy. In a new national poll conducted by Morning Consult, 54% of registered voters ‘totally approve’ the use of coal to generate electricity, compared to 32% who ‘totally disapprove.’ 14% have no opinion.”
It concluded: “Despite the near-constant fearmongering campaign conducted by this administration and its allies, the electorate continues to recognise the importance coal plays in the production of affordable and reliable energy.”
Edited from press release by Harleigh Hobbs
Three Chicago-based investors, affiliates of Allstate, Duchossois Capital Management, and CC Industries Inc., have announced the formation of a new freight railcar leasing company: Riverside Rail.
Earlier this week, the investor group acquired 2032 railcars. The diversified railcar fleet includes a mix of covered hoppers, coal cars, mill gondolas, boxcars and centerbeams.
The investor group believes railcar leasing represents an attractive long-term investment and seeks to grow this initial railcar investment into a larger railcar leasing fleet.
Riverside Rail plans to build a full-service leasing and management services company over the next several years.
BMO Harris Bank led a credit facility for the railcar acquisition, and Vedder Price served as legal counsel to Riverside Rail. Terms of the transaction were not disclosed.
Edited from press release by Harleigh Hobbs
Jonathan Rowland
Mining is a political business – and nowhere is this more evident than Mongolia. This landlocked Asian country has huge mineral wealth but, even at the peak of the commodities cycle, was singularly unable to develop its mining industry to any significant extent. Now parliamentary elections, coupled with the downturn in global commodity demand, look likely to keep Mongolia’s mining industry development in the slow lane.
A particularly apt example of how closely mining and politics entwine in Mongolia came at the end of January when the current Prime Minister, Saikhanbileg Chimed, faced a vote of no confidence. Members of parliament accused the prime minister of abusing his power when he agreed a development and financing plan for Turquoise Hill Resources’ Oyu Tolgoi (OT) underground copper mine. The MPs claimed the deal offered little benefit to Mongolian citizens.
The vote of no confidence was the latest act in the OT drama that has elements of both tragedy and farce. OT is one of the largest and purest copper deposits in the world and should be the engine for Mongolia’s economic development: if it ever reaches its full potential, it could account for a third of the country’s GDP.
Yet it is OT’s size and value that has been its downfall. Mongolia cannot develop the mine on its own. But the country has never been entirely comfortable with foreign ownership of its mineral wealth, originally falling out with Turquoise Hill’s controlling stakeholder, Rio Tinto, in 2013. Nor is OT the only instance where government interference has complicated the development of Mongolia’s mineral wealth: the same plot has been played out at the country’s largest coal project at Tavan Tolgoi (TT).
Ultimately, the prime minister survived the vote of no confidence and looks likely to remain in power until the June elections,1 leaving the hard-fought deal (it ultimately split the government and resulted in six ministers losing their jobs) over OT in place. It is hardly the resounding success that the government was aiming for, however, a success that could have heralded a new and welcoming environment for foreign investment, which fell by 85% between 2012 and 2015.2
Nor is the issue entirely settled. Resource nationalism will be hot topic in the run up to the parliamentary elections with the Mongolian People’s Party – the country’s former communists who were ejected from the ruling coalition last year over the OT deal – poling strongly. Should they perform well enough to form at least a coalition government in June, foreign investors may again face a more hostile environment.
Beyond purely local issues, Mongolia’s mining sector faces the same commodity headwinds that have buffeted the global mining sector. The slowdown in Chinese growth – to which Mongolia’s economy is indelibly linked – is of particularly concern.
“Mongolia’s macroeconomic performance continues to be tightly linked to that of China with the mainland economy accounting for approximately 90% of the demand [for] Mongolia’s exports,” BMI Research wrote in a recent research note.3 “We believe that the structural slowdown in the Chinese economy remains in place and will continue to weigh on Mongolia’s commodity exports over the coming months […] Indeed for the whole of 2015, Mongolia’s exports fell by 19.1% and this was majorly due to a collapse in commodity exports.”
That point was echoed by Stephen Duck, Senior Consultant – Steel Raw Materials at CRU: “Given the downturn in prices, most Mongolian coal miners are burdened with debt and have reported losses since 2013,” Duck told World Coal. “Production has been falling with CRU estimating coal exports to fall to 10.8 million t in 2015. Production is also unlikely to recover lost ground in 2016, given the weak outlook for demand in China.” CRU forecasts exports to fall to 7.1 million t in 2016 with recovery back to 10.8 million t only by 2020.
In early February, Mongolian coal mining company, Mongolian Mining Corp. (MMC), said it was seeking to restructure debt of US$600 million, appointing J.P. Morgan Securities (Asia Pacific) and SC Lowy Financial (HK) Ltd. In a statement, MMC blamed “changes to economic policy implemented within the group’s principal target market, China, [that have] resulted in reduced crude steel production and consequently lower coking [metallurgical] coal consumption and declining import volumes,” on its precarious financial state.
“Mongolia relaunching key mining talks later this month” ran the headline in the Wall Street Journal.4 The story focused on Tavan Tolgoi – Mongolia’s vast metallurgical coal reserve – and quoted a Mongolian official “familiar with the situation” as saying the goal was to award the contracts before the Mongolian parliamentary elections in June. The story appeared in October 2011.
Fast forward four years and not too much has changed. A government-approved US$4 billion deal had been lined up last year with a consortium comprising Japan’s Sumitomo Corp., China’s Shenhua Energy and MMC. But then came the politics. The speaker of the parliament said that deal might violate Mongolian laws; shortly after, the government agreed that the deal would need to be approved by parliament – and the deal essentially died.
“When we submitted the proposed agreement for the Tvan Tolgoi coal mine project, I said there was a 50-50 chance for approval,” one of the country’s chief negotiators, Mendsaikhan Enkhsaikhan, told Reuters in September.5 “At this moment, it’s less than 10% that it will be approved by parliament and will be implemented.”
Similar politicking has plagued Tavan Tolgoi since the government first began looking for development partners in 2010. An initial deal that included Shenhua and US mining company, Peabody Energy, was signed in July 2011 but cancelled two months later following protests from the Japanese and Korean governments whose companies had been excluded.
The project hasn’t progressed much since then – and if last year’s shenanigans are anything to go by, may remain stalled for some time yet unless Mongolia can put in place an institutional structure for mining that keeps politics at arms length.
“Taven Tolgoi is going to remain a failed case of Mongolian mining governance unless the parliamentary election of 2016 or the next commodity boom changes conditions,” wrote Jargalsaikhan Mendee of the Political Science Department at the University of British Colombia in a recent opinion piece for IndraStra.6 “It may continue to fail unless politicians unite to provide autonomy for bureaucrats and professionals to increase institutional resilience of Mongolian mining governance.”
Although Tavan Tolgoi remains stalled, a number of smaller mine expansions and exploration projects from smaller players are making better progress and will help to boost Mongolia’s coal production in coming years.
These projects include the expansion of Naryn Sukhait by Mongolian Alt Group, the 460 million t Khushuut coal project by Mongolian Energy Corp. and the 175 million t Ulaan Ovoo project by Prophecy Coal. Meanwhile, TerraCom (formerly Guildford Coal) announced in February 2015 that its Baruun Noyon Uul (BNU) metallurgical coal mine had begun production.
According to the company’s quarterly report to the end of December 2015, BNU produced 179 140 t ROM coal and shipped 164 839 t to China over that three month period, compared to production of 154 374 t ROM and shipments of 64 618 t in the previous quarter.
Despite the success in bringing BNU to production, TerraCom said it was facing financial pressures as a result of “continuing weak global market conditions” and was seeking to restructure its existing financial facilities as well as generating new funding. The restructuring of its balance sheet was due to be completed in 1Q16.
ASX-listed Aspire Mining is also actively developing projects in the country with stakes in both coal mining and railroad projects in the north of the country. Aspire’s projects include the Ovoot metallurgical coal project and the Ekhgoviin-Chuluu joint venture with Noble Group (which owns a 90% stake in the Nuurstei metallurgical coal project).
The ASX-listed company also owns Northern Railways, which aims to connect Ovoot to the country’s national rail network and then onto Russia’s Trans-Siberian Railway. Upon completion, the line will be able to transport 100 million tpy of coal and will increase Mongolia’s access to Russian, Chinese and seaborne metallurgical coal markets.7
Aspire’s development of a railway to its Ovoot coal projects highlights another challenge facing the Mongolian coal industry: infrastructure. As Russell Taylor, a mining executive with experience of working in Mongolia, pithily put it to World Coal: “Without suitable transport and export infrastructure, the coal is just as landlocked as Mongolia itself. China and Russia both have large reserves, so Mongolia can’t rely on those two nations as a complete market.” Despite this, “Mongolia has not implemented a suitable railway network to transport coal out of Mongolia [nor does it have] access or agreement to a port in either China or Russia.” If it is ever to restart its coal sector, this lack of infrastructure needs to be resolved, Russell concluded. Moving coal by truck to China – as TerraCom does with its BNU coal – is hardly a long-term solution.
CRU’s Stephen Duck takes up this theme: “Due to a lack of transport infrastructure, Mongolian coal miners have been losing competitiveness against other exporters due to the high transport cost of trucking,” Duck told World Coal. “For Mongolian metallurgical coal to be more competitive, transportation costs must fall significantly. In April 2014, a JV was established to construct 18 km of railroad connecting the Gashuun Suhait/Grants Mod board crossing by the end of 2014. This development would reduce the transportation cost for this route from US$7 – 8/t to US$2/t. However, development of the project is behind schedule.”
Yet where mining projects go, so too go their associated infrastructure: “There is a scheduled parliamentarian election in the summer of 2016,” continued Duck. “We do not expect that any big decisions on rail infrastructure will be made before the election in June 2016. The new government will only likely form a cabinet by the Autumn 2016 and no major decisions will be taken before then.”
This means that – even in a best-case scenario – a new railway is unlikely to be commissioned before 2019, according to Duck. “With this assessment in mind, we are pessimistic on the development of the Tavan Tolgoi railway project and other infrastructure projects in Mongolia in the medium-term. We believe that transportation bottlenecks and weak market conditions will prevent Mongolian producers from ramping up exports; we forecast 2019 metallurgical coal export volumes of around 11 million t.”
Despite the political, economic and infrastructure challenges, there remains great potential on Mongolia’s steppes driven by its geographical location and the quality of Mongolia’s coal.
“We believe proximity [to China] and the high-quality grade of Mongolia’s coal make the country ideally placed to cement its position [as] one of the leading suppliers of coking [metallurgical] coal to the Chinese market over the next few years,” said BMI Research in a research note.7 “The high-grade of Mongolian metallurgical coal means suppliers are able to circumvent the ban on ‘dirty’ coal introduced by China’s government. A number of independent studies have confirmed that the blend, with its medium ash, low sulfur and high G value, to be better than primary coking coal imported from Australia.”
Duck concurs: “We believe Mongolia will have an important role to play in the Chinese metallurgical coal market in the longer-term.” Given the sector’s tortuous recent history, exactly how long Mongolia’s coal industry will have to wait, is anybody’s guess – but when it does come it will bring further significant challenges for the country’s governance.
“The Mongolian government will face major domestic challenges over the coming decade as the country’s mining boom takes off and it seeks to strike a balance between distributing the revenues in a way that is acceptable to the population, while avoiding stoking inflation,” wrote BMI Research in a recent report on the long-term politics of the country.8 And that is not to mention social challenges, including immigration and a growing wealth gap, and foreign policy issues, as the country seeks to avoid falling under too much influence from its giant neighbours.
Those sorts of challenges would be hard enough to face in the best governed of countries – and Mongolia is hardly that. It seems then that mining development will continue to face a bumpy ride with more than a passing chance that it will end in another ugly crash.
This article first appeared in the March 2016 issue of World Coal.
About the author: Jonathan Rowland is the editor of World Coal magazine.
Duke Energy issued a statement in response to 12 Notices of Violation issued by the North Carolina Department of Environmental Quality (NCDEQ) related to seeps at coal ash basins.
According to the company, the best way to reduce or eliminate seeps altogether is to safely remove the water from ash basins and close them in ways that protect people and the environment and that is what Duke Energy is doing right now.
Duke indicated there is nothing new here. Even the state environmental regulator acknowledges that seeps occur at every earthen impoundment, and those at ash basins are not impacting water quality.
Duke is doing everything the state has asked to address seeps, including cataloguing, testing and monitoring them. Nearly two years ago, the company included seeps in permit applications to the state and has been working through the process ever since.
In 2010, Duke Energy talked with NC DEQ about permitting seeps. At that time, the agency chose not to pursue that, believing seeps to be inconsequential.
Cindy Ritzman and David Boardman.
[embedded content]
3D Coal Stockpile from URCV on Vimeo.
A coal stockpile accurately modelled in 3D from aerial imagery.
How many hammers and screwdrivers are currently on the shelves at any local hardware store on any given day of the year? The store’s management has an accurate count of every product type. Products arrive in neat, countable boxes tagged with codes or RFID devices and are subsequently sold using bar code scanners. The ongoing perpetual inventory of those items is highly accurate, due to the traceability or measurability of the products. Accurate perpetual inventory enables stores to make data-driven decisions that improve business operations and reduce financial write-offs.
Unfortunately, accurate perpetual inventory is much harder to realise in the mining industry. This is because mining products do not arrive neatly in boxes nor do they get tagged with barcodes. It is hard to perform an inventory count as products are stored in all shapes, sizes and environments. Products also change weight based on moisture and compaction and can be ‘lost’ through erosion and floor loss. Extensive effort goes into maintaining and managing conversation factors for converting yards to tonnes. Producing and selling in tonnes is also carried out, yet cubic yards of meters are used to inventory. And do not forget the safety challenges!
It is easy to become accustomed to significant error in day-to-day perpetual inventories – and the end of year write-off. It is very common to hear a story of a massive, multi-million dollar write-off that a CEO and CFO had to explain to investors and shareholders. Everyone’s site or production manager has had to stand in front of an executive at one point in their career to explain how an error happened – and promise that inventory will be better managed going forward.
Companies in the industry strive to achieve and maintain an inventory +/-5%. However, the actual variation might realistically skew over/under in the range of 20 – 30% vs actual. For national or global companies with multiple sites and locations, any variation could easily multiply into the tens or hundreds of millions of dollars.
Many have tried to manage perpetual inventory better by using scales to better manage production and sales. Scales are working well for tracking sales – but still generate variances due to moisture. Scales are being used for tracking critical production – but are challenging to implement for all production due to cost and maintenance. Therefore more frequent inventory counts are the most viable solution to addressing perpetual inventory accuracy.
Unlike retailers and manufacturing companies, which perform physical inventory counts once or twice a year, materials companies must perform more frequent counts to reduce errors that build up over time. Historically, companies have performed annual inventory counts with quarterly or monthly estimates to help manage write-off risk. Some companies have now advanced to twice-yearly, or even quarterly counts.
The majority of CFOs and controllers would perform more frequent physical inventory counts, if time and cost allowed. CFOs and controllers report that the major costs included in conducting a physical inventory count are attributed to management oversight, planning, measuring, reviewing and reconciling data, as well as updating financial systems. Add to this, the costs of labour and time to perform a count using internal or external resources. Each of these labour and time costs are magnified by the range of a company’s geographical distribution.
Companies that achieve a more accurate perpetual inventory through monthly or quarterly physical inventory counts receive several positive business benefits:
Accelerate the speed and reduce the cost of physical inventory counts through new technologies
Technological advances are now shrinking the time needed to perform company-wide physical inventory counts from 3 – 5 weeks down to 3 – 5 days. The costs to perform multiple quarterly or monthly counts are now comparable to the historical price of one annual count. Significant advances in image processing, software as a service (SaaS), drones and phones make this possible.
Perform monthly physical inventory counts with a mix of measurement technologies, including iPhones, drones and planes.
Manual photogrammetric processes of the past are now fully automated thanks to advances in image processing and computer vision. High-quality cameras embedded in drones, attached to planes and built into mobile phones are more available and easier to use than traditionally higher-cost GPS and laser-based measurement technologies. The combination of high-quality low-cost cameras, combined with advanced image processing enable rapid low-cost 3D modelling from imagery. Volumetric measurements generated from imagery are now an accepted form of aerial survey.
SaaS is a way of delivering applications over the internet as a service. Instead of installing and maintaining software, companies simply access it via the internet, freeing themselves from complex software and hardware management. SaaS companies leverage cloud computing to cost effectively scale operations to meet customer demand.
Leveraging SaaS, image processing, airplanes, drones and phones makes it possible to accelerate the speed and reduce the cost of physical inventory counts. The time to perform an inventory count is now only limited by how fast the imagery of stockpiles can be collected. Airplanes can be used to quickly take aerial images of hundreds of sites across geographically dispersed operations. Drones used by trained professionals – internal staff or external service providers – can be used to obtain aerial images at localised sites. And now even a phone can be used.
Using a combination of SaaS and image capture methods makes it possible to complete a company wide inventory in 3 – 5 days. Thousands of stockpile measurements can be generated from millions of images in just 24 hr. Finance and operations employees quickly review and approve data via a common website with no need to manually enter or transfer data.
StockpileReports.com was launched in 2013 by experienced scientists and engineers in the computer vision field to help companies achieve accurate, perpetual inventories through more frequent physical inventory counts. Subscription-based software, along with project management and consulting services, are provided by the company to enable companies to perform a fast and low-cost physical inventory count. The web portal allows employees to successfully plan the count, perform the count and review and approve the results. Software is provided that enables customers to collect their own imagery using drones and iPhones. To completely eliminate field labour, customers can choose to leverage a fleet of over 35 aircraft to rapidly capture aerial images across North America. Now physical inventories that used to take companies 3 – 5 weeks – or even three months for large nationwide operations – can be completed in 3 – 5 days.
A 3D model of a coal stockpile, used for generating volume reports by Stockpile Reports.
A multinational materials company that manufactures and distributes cement, ready-mix concrete, aggregates and materials including coal, recently approached Stockpile Reports searching for a solution to reduce time and costs associated with inventory measurements across multiple sites.
The company had been performing inventory counts on multiple sites and regions. They had hired an expensive third-party survey team, who used a truck-mounted laser for measurements. Using a truck-mounted laser was accurate, but the costs associated with the surveys only allowed for physical inventory measurements to be performed once yearly.
During the rest of the year, team members kept a perpetual inventory by performing self-reported monthly estimates of material on hand. They estimated these amounts monthly and sent the totals to the Finance Department.
As a result of not using current, accurate measurement data, the company was experiencing major write-offs every year, corresponding to large financial swings.
Stockpile Reports was used to perform monthly physical inventory counts using a mix of measurement technologies, including iPhones, drones and planes. A combination of collection methods were used, depending on an individual site’s location, safety, stockpile placements and sizes:
The cost-savings were immediate, as there is no third-party labour needed to implement the solution. The time-savings enabled the company to perform company-wide measurements regularly. For example, the average time required using internal labour and Stockpile Reports’ flyover service was 20 min. for each site. Internal labour used for piloting a drone for site measurements averaged approximately 45 min. per site. The average measurement by iPhone was 3 – 5 min. per stockpile and bunker.
The materials company has accelerated physical inventory counts and is now performing monthly measurements. Measuring often, regularly and accurately is the key to inventory control. They are now able to make data-driven material handling decisions and are greatly reducing financial write-offs.
Over the last three years, Stockpile Reports has worked with over 125 companies in 18 countries performing physical inventory counts at over 1625 locations. Based on this experience, the company believes that more frequent physical inventory counts (quarterly or monthly) is the most effective way to enable accurate perpetual inventories – with accuracy levels similar to other retail and manufacturing businesses – and reduce write-offs. After all, every stockpile is cash sitting on the ground.
Note: This article first appeared in the March issue of World Coal.
About the authors: Cindy Ritzman is Marketing Director for StockpileReports.com and David Boardman is Founder and CEO at URC Ventures.
Babcock & Wilcox Enterprises Inc. has announced its subsidiary, The Babcock & Wilcox Company (B&W), has been awarded a contract for approximately US$80 million to design and manufacture a highly efficient, supercritical boiler and other components for the Masinloc Thermal Power Plant. The order comes as part of the expansion project in Zambales Province, Philippines.
B&W will engineer and supply the coal-fired boiler to POSCO Engineering and Construction Co. Ltd.
B&W’s scope includes the supply of one 300 MW Spiral Wound Universal Pressure (SWUPTM) supercritical boiler and auxiliary equipment.
“Reliable baseload power is a critical component to the success of a growing economy such as the Philippines,” said B&W Global Power Division Sr. Vice President Paul Scavuzzo. “We recognise the importance of this project and are proud to have been chosen to supply a boiler that will provide clean, efficient and affordable energy to the residents of Zambales Province.”
B&W intends to perform engineering, procurement and fabrication activities at its joint venture facility, Thermax Babcock & Wilcox Energy Solutions Private Ltd, in Pune, India.
Project completion is expected in Spring 2019.
Edited from press release by Angharad Lock
Joy Global, a worldwide leader in high-productivity mining solutions, has reported consolidated bookings in the first quarter totalled US$550 million – a decrease of 21% compared to the same quarter in 2015. Original equipment orders decreased 33%, while service orders were down 18% compared to the prior year.
According to the global miner, current quarter bookings were reduced by US$50 million from the impact of foreign currency exchange movements versus the year ago period, a US$15 million decrease for original equipment and a US$35 million decrease for service bookings. After adjusting for foreign currency exchange, orders were down 14% compared to the first quarter of 2015, with original equipment orders down 24% and service orders down 11%.
Bookings for underground mining machinery decreased 31% in comparison to 1Q15. Original equipment orders decreased 39% compared to the previous year. Bookings for opencast mining equipment saw smaller declines, decreasing 8% in comparison to the prior year first quarter. Original equipment orders decreased 19% compared to 2015.
“While market conditions took another step down this quarter, our results were in-line with the company’s expectations heading into the quarter,” said Ted Doheny, President and CEO. “Our customers are taking unprecedented actions on their equipment fleets to conserve cash as commodity prices have weakened. This has adversely impacted our incoming order rate, particularly in the U.S. coal and copper markets. In the face of these difficult conditions, we continued to aggressively reduce costs and tightly control trade working capital and capital expenditures, resulting in another quarter of strong cash generation.”
Doheny continued: “I am very proud of the resiliency of the Joy Global team. These market conditions require tough, decisive action on costs and our team continues to deliver on this challenge while remaining intensely focused on helping our customers solve their toughest operational challenges. The ultimate result of these actions will make us a stronger company that is able to respond to both current and future demand.”
Joy reported consolidated net sales totalled US$526 million, decreasing 25% compared to first quarter of 2015. Original equipment sales decreased 39% and service sales decreased 20% compared to the prior year. Net sales for underground mining machinery decreased 29% in comparison to the same period in 2015 and net sales for surface mining equipment decreased 20% in comparison 2015.
The mining company’s operating loss for the first quarter of fiscal 2016 totalled US$45 million, compared to operating income of US$58 million in the first quarter of fiscal 2015. This included an aggregate negative impact of US$27 million from restructuring charges – primarily in the underground North America and China regions – compared to a cumulative net US$2 million positive impact in the first quarter of fiscal 2015 for restructuring charges, mark to market pension income and excess purchase accounting charges.
With weakening Chinese and emerging markets, as well as US coal facing many challenges leading to falling production and a slowing in seaborne thermal coal markets slowing, weakening commodity demand is foreseen.
Joy Global indicated with limited scope for an improvement in commodity prices, mining companies are being forced to take unprecedented measures to defer spending on equipment maintenance and procurement. Strained cash flows among its customers are expected to drive further delays in maintenance work and original equipment purchases.
“We will continue to control those factors which we can,” continued Doheny. “With the increased challenges in some of our end markets, we are further leveraging our footprint optimisation and other operational excellence strategies across the business and are now targeting over US$100 million in cost reductions for the year. We will also remain focused on driving additional cash gains through improved working capital performance and monetization of non-core assets.
“Our key product development programs are moving forward and we are seeing successes in field trials on our hybrid excavator and our underground hard rock loader. We believe that these organically developed machines will deliver significant value to our customers and we look forward to delivering them to the market place later this year and into 2017. Providing customers with highly differentiated equipment and service systems solutions to improve safety and lower their cost per ton is the core of our strategy.”
Dohney concluded: “Taking into account current weaker market conditions, we now expect sales and earnings for the year excluding restructuring charges and mark to market pension adjustments to be towards the middle of our previous guidance range of US$2.4 billion to US$2.6 billion for sales and US$0.10 to US$0.50 for adjusted earnings per fully diluted share. With regard to phasing across the fiscal year, we expect all of our adjusted earnings will come in the second half of the fiscal year.”
Edited from press release by Harleigh Hobbs
The Colorado Mining Association has issued a statement on the idling of the Bowie Mine No. 2 in Delta County.
Stuart Sanderson, CMA President, stated: “once again, the heavy hand of government has caused 68 hardworking employees to lose their jobs; as we said in connection with a previous decision by management to reduce the work force at the mine, both federal and state governments are to blame for policies discouraging the use of coal, our most affordable and abundant fuel for electricity generation.”
CMA referred to a news release that it published on 31 October 31 2014, which cited settlements reached as a result of negotiations behind closed doors between the government and anti-coal special interests that resulted in the closure of Tennessee Valley Authority power plants that once burned coal.
“Government has played the primary role in cutting off access to export markets for Colorado coal like the TVA – once one of our largest customers. And with the passage of legislation mandating the premature retirement of coal plants in Colorado or their conversion to higher cost energy sources, mines like Bowie have virtually no markets in state,” Sanderson added.
Sanderson cited the Environmental Protection Agency’s Clean Power Plan, the order by the Interior Secretary to impose a moratorium on new federal coal leasing, and state laws mandating the use of higher cost energy as primarily to blame for the decline in coal markets.
“What is particularly distressing about the current situation is that most of the miners are young and have families, which is so important for rural economies to grow. There is something very wrong with state and national environmental laws when they create unemployment while simultaneously creating energy poverty through higher electric rates,” Sanderson concluded.
Edited from press release by Harleigh Hobbs
