China is turning away from coal it a faster-than-expected pace, according to new figures from the China National Energy Agency, as the country’s economic slowdown reduced electricity demand growth. Official GDP growth was 6.9% in 2015, its lowest level in a quarter of a century, but many analysts believe that the actual rate of growth could be much lower – and could get much worse.
Overall growth in power generation was also anemic at best as the economy continues its transition away from energy-intensive heavy industries and towards growth based on the service sector and household consumption.
As a result, Chinese coal demand again fell in 2015, building on the decline reported in 2014, and is expected to fall again in 2016 with the China Academy of Sciences forecasting a fall in Chinese coal production of 4%. Meanwhile, Chinese coal imports plummeted by around a third in 2015.
In contrast, investment in renewable generation hit an all-time high of US$110 billion in 2015, according to Bloomberg New Energy Finance, with low-carbon electricity generation (hydro, wind, nuclear and solar) growing by more than 20%.
And that pace of growth is expected to continue into 2016. According to the IEEFA’s Tim Buckley, China will add 24 GW of wind, 16 GW of new hydro, 6 GW of nuclear and 18 GW of solar in 2016 – more than enough to meet total demand growth. Meanwhile, the National Energy Agency has announced a moratorium on new coal mine projects for up to three years and the intent to close thousands of small mines.
Yet Benjamin Sporton, CEO of the World Coal Association, was more positive about China’s coal outlook, telling the Guardian that “coal will remain the backbone of the Chinese electricity mix for decades to come”.
“Rather than focusing on short-term fluctuations and wishing coal way, it is important to focus on making sure coal is used in the cleanest possible way with high-efficiency low-emission plants using modern emission control technologies and working to develop carbon capture and storage,” Sporton concluded.
Written by Jonathan Rowland.
Thermal coal imports at major Indian ports rose almost 12% between April and November 2015, according to figures from the Indian Ports Association. Imports of metallurgical coal were also up by 2.5%.
Thermal coal imports totaled almost 63.2 million t over the period compared to 56.5 million t in 2014. The Port of Paradip in the eastern state of Odisha handled the most with throughput of just under 20 million t compared to 19.6 million t in the previous year. Port of Kamarajar (formerly known as Ennore) in the southeastern state of Tamil Nadu and just 24 km north of Chennai, India’s fifth largest city, came in second with throughput of 16.3 million t compared to 15.9 million t in 2014.
However, it was the Port of Kandla in the western state of Gujarat that recorded the largest increase in thermal coal imports with throughput jumping over 3 million t from just under 6.8 million t in 2014 to over 9.8 million t in 2015.
On the metallurgical coal side, imports rose from 20.9 million t between April and November 2014 to 21.4 million t over the same period in 2015. Paradip again led the pack with throughput of 5.8 million t – up from 5.1 million t in 2014. Port of Mormugao in the state of Goa took second spot with imports jumping almost 1 million t from 4.5 million t in 2014 to 5.5 million t in 2015.
Overall, Indian ports registered a 3.32% increase in volume handled. This figures masks significant differences in performance, however, with Mormugao boasting an impressive 27.06% increase in traffic, while just down the coast, traffic at New Mangalore in the state of Karnataka fell by 8.5%.
Figures from the Indian Ports Association cover the thirteen major Indian ports responsible for handling about three quarters of India’s seaborne cargo traffic.
Written by Jonathan Rowland.
Kibo Mining, a Tanzania focussed mineral exploration and development company, is pleased with its Phase 1 of Stage 2 results for the Mbeya Definitive Mining Feasibility Study (MDMFS).
This is a critical milestone in reaching the final stage of the broader Mbeya coal to power project (MCPP), Mining Feasibility Study.
Key results include:
Louis Coetzee, CEO of Kibo Mining, said: “We are very pleased with the latest results and also with the overall progress of the MDMFS. Since announcing the very first set of results from the concept study and with every announcement since, the MCPP has consistently demonstrated that it is a project with considerable financial and technical substance. This will stand us in good stead during the coming weeks when we work on finalising the power purchase agreement and other commercial agreements associated with the MCPP.”
According to Kibo, an immediate next step in the MDMFS will involve the restatement of the Mbeya coal resource. This will be based on the technical work that was done on the coal resource during the feasibility studies to date, the additional geological data gained from the geotechnical drill programme, as well as the data from earlier exploration drilling, sampling and laboratory analysis that has not yet been incorporated in the Mbeya coal resource statement.
Edited from press release by Harleigh Hobbs
RungePincockMinarco (RPM) has reported a significant improvement to the way mine planning data is managed and communicated with the launch of their new enterprise application, Plan Manager.
Plan Manager provides a new method for managing planning data across the mine planning horizons, from life of mine to execution planning and every stage in between. It delivers greater accuracy, auditability and a defined and repeatable process for merging planning data.
The application enables users to view, analyse and approve mine plans across different planning horizons (life of mine, long-term, medium-term, short-term and ultra short-term) and then publish an integrated plan in a variety of formats (including ISA-95 B2MML) up to the enterprise level. The consolidated mine plan can then be consumed by enterprise financial systems, process control and fleet management systems and then analysed through the corporate business intelligence systems.
Richard Mathews, CEO and Managing Director, commented: “Managing the interactions between planning horizons has traditionally been a significant challenge for the industry. A wide range of planning applications are used by different planning departments, often operating in silos. This has meant that the gap between a Life of Mine plan and the weekly schedule has been wider than desired. The introduction of Plan Manager finally bridges this gap.”
“The RPM product management team has spent considerable time with mine planners in one of RPM’s key tier one mining clients during 2015 unravelling the complexities of this issue across many different mining operations and planning horizons culminating in RPM releasing its Plan Manager product,” continued Matthews.
Plan Manager supports a level of detail that is appropriate to each planning horizon, with the ability to update sections of the plan without touching data that has not changed. This means that the re-planning process is faster and more efficient. The application can also pull in task status information, stockpile balances, grades and external plan inputs, such as rail schedules, and make them available to different mine scheduling applications.
The full plan history functionality within Plan Manager provides users with a complete audit trail for submitted and approved plans. It allows all plans that have been submitted to be checked to ensure their validity. These checks and balances deliver greater visibility and control around the entire plan consolidation process, which also comes with security built into the workflow so that the plan approval process and automated publishing is delivered with confidence.
Mathews concluded: “As the undisputed leader in innovative mine scheduling solutions, RPM has long experienced the frustrations of working across different planning horizons. We expect the launch of Plan Manager to be embraced and appreciated as much by our own teams as it will be by the industry.”
Edited from press release by Harleigh Hobbs
Anglo American plc has entered into a Share Sale Agreement (SSA) with Batchfire Resources Pty Ltd to sell its 100% interest in the Callide thermal coal mine in Queensland, Australia.
Callide consists of an opencast thermal coal mine and associated processing infrastructure that produced 7.6 million t of coal in 2014 (and 5.6 million t in the first nine months of 2015), the majority of which (4.7 million t in 2014) was sold to two adjacent power plants under long-term contracts.
The transaction will be carried out via a sale of shares in the subsidiary companies holding Anglo American’s interest in Callide.
The transaction will remain subject to several conditions precedent, and its terms are confidential.
Edited from press release by Harleigh Hobbs
A new report, Scottish CO2 Hub – A unique opportunity for the UK, published by Scottish Carbon Capture & Storage (SCCS) has detailed a concept that could lead the way for deployment of Carbon Capture & Storage (CCS) in the UK and Europe.
According to the report, the creation of a Scottish CO2 hub can help tackle Europe’s greenhouse gas emissions by providing a stepwise, affordable route to a CCS industry in the UK using existing infrastructure, established shipping technologies and well-characterised storage assets in the Central North Sea.The hub would be a central collection point for CO2 emissions from different sources across Europe, from where the greenhouse gas would be transported for permanent storage in rocks deep beneath the North Sea.
Stuart Haszeldine, Professor of CCS at the University of Edinburgh and SCCS Director, explained: “The beauty of this proposal is its flexibility and adaptability. From a small start capturing emissions in Scotland with transport and storage based on existing assets, the system can be progressively expanded to receive CO2 from England and Europe using shipping, instead of large expensive pipes. By the early 2020s this can achieve a key milestone in the deployment of CCS – the establishment of commercial storage operations in the North Sea – with a whole new industry following from that.
By beginning with a modest industrial and power CCS cluster in Central Scotland that can make use of existing pipelines and offshore infrastructure to establish CO2 storage in the Central North Sea quickly and affordably, the study indicates how this could develop into a new large-scale industry for the UK while helping solve Europe’s CO2 storage challenge.
This concept could be economically attainable through reusing existing infrastructure (avoiding decommissioning costs); by value generated from a CO2 utilisation market created through CO2-Enhanced Oil Recovery to help maximise economic recovery of oil; and through a flexible shipping solution for CO2 transport from southern UK and European sources. Using technology already well established for shipping liquefied CO2 between European ports, a ship transport system requires lower initial capital investment than building pipelines and allows sequential, project-by-project expansion of the system. This reduces the financial risks and makes investment more attractive.
Haszeldine concluded: “A critical point is that while re-evaluation and consideration of CCS options is underway, it is essential than no decommissioning of potentially relevant pipelines, boreholes or offshore facilities is agreed by the UK Government or the Oil & Gas Authority.”
Edited from press release by Harleigh Hobbs
US think thank, the Institute for Energy Research (IER), has critised the decision to suspend approvals for new coal leases on federal land, calling it a “shot heard round the West.”
“Throughout his time in office, President Obama has shown complete disregard for the communities and people left in the wake of his ideological climate agenda,” said IER President, Thomas Pyle. “The pattern couldn’t be clearer. Having already destroyed the livelihoods of Appalachian families, the president is now moving to the citizens of the West with this moratorium on coal leasing.”
Pyle also predicted that the coal moratorium would soon be extended to oil and gas leading in an effort to “make [President Obama’s favoured energy sources the ‘preferred’ energy sources,” concluding that “as the sun sets on his presidency, this administration has once again made it clear that they have no intention of slowing down their costly agenda – no matter who it harms.”
The moratorium on coal leasing comes as a recent study released by the IER looking at the economic impact of opening up federal lands to oil, gas and coal leasing concluded that such a policy would boost US GDP by US$127 billion annually over the next seven years, creating an additional 552 000 jobs.
The federal government would also receive an additional US$3.9 trillion in federal tax revenues over a period of 37 years.
“The economic impulses creased by opening federal lands and waters to oil, gas and coal extraction could […] help significantly to spur economic growth – and help break the economy out of its sluggish post-recessionary malaise,” said the report, which was authored by Prof. Joseph Mason of Louisiana State University.
“Importantly, those benefits would be realized without any increase in direct government spending. Rather, increased output would refill national, state and local government coffers without additional government outlays,” Prof. Mason’s report concluded.
Written by Jonathan Rowland.
The Queensland Natural Resources and Mine Minister has confirmed another case of black lung in the state bringing the total number of official cases to six.
Dr Anthony Lynham said a 51 year old electrician who had worked underground coal mines was the latest case. The diagnosis was confirmed as coal worker’s pneumoconiosis after a routine pre-employment medical assessment revealed abnormalities.
The affected man is no longer working in the coal industry.
The Queensland coal mining industry has been rocked by a resurgence of the disease, prompting Dr Lynham to announce a five-point action plan to combat the issue.
The five point action plan includes a review to improve the existing screening system, more action on coal mines exceeding regulated limits on dust levels, an improvement to data collection, investigating potential regulatory changes and placing the issue on the agenda for the national council of mining ministers.
Coal mine workers in Queensland are required to undergo a mandatory Coal Mine Workers Health Scheme medical assessment before the start of their employment and then at again at least every five years. Despite this, more cases of the disease are expected to be uncovered as a review of medical and workplace records gets underway.
A review of the Coal Mine Workers Health Scheme has been announced to be headed by Professor Malcom Sim, Director of the Monash Centre Occupational and Environmental Health at Monash University.
Edited by Jonathan Rowland.
DRA Global’s, a global multi-disciplinary engineering and project delivery group, South African company DRA Projects SA has been awarded the Optimisation Study and Front End Engineering and Design (FEED) package for Coal of Africa Ltd (CoAL) Makhado coal project.
The Makhado project, located in the Limpopo Province of South Africa and approximately 80 km from CoAL’s existing Vele coal mine, is projected to produce both hard coking coal and thermal coal for export and domestic consumption. Initially the operation will be an opencast mine, with potential for expansion to an underground operation in future years.
This award is in following with DRA’s previous work on the Makhado project in the preparation of the Definitive Feasibility Study of the coal processing and handling facilities, completed in early 2013.
The scope of the Optimisation and FEED assignment expands this preceding work by DRA to now include the infrastructure components of the project and also the integration of the work of a number of specialist consultants.
Commenting on the award, Paul Thomson, DRA’s CEO, said: “It is especially pleasing to be awarded this next phase of the investigation and development of the Makhado coal project. Our early interaction with CoAL began in 2010 with initial studies and the new award is testament to the sound relationship established between our two organisations and our respective project teams.”
Thomson continues: “A key requirement of the Optimisation Study and FEED phase will be the identification of appropriate cost reduction opportunities to help optimise the economics of the project in the current challenging market. DRA and its key staff have had many years’ experience in the design and delivery of “fit-for-purpose” yet high-performance project in coal and other commodities. We will apply this experience and skill fully to the Makhado project. We very much look forward to continuing to work closely with CoAL through future phases of the project.”
CoAL intends to commence work on the Makhado site during the second semester of 2016, followed by a 26 month build programme with first coal produced during 2019.
David Brown, CEO of CoAL commented: “We are pleased to have DRA on board during the next phase of developing the Makhado project. This is an exciting yet crucial phase of the project development and being associated with DRA during this period will ensure a successful start to the construction of the Makhado project.”
Edited from press release by Harleigh Hobbs
Two further mine spills have been reported to the New South Wales Environmental Protection Authority (EPA) from mines in the Hunter Valley as record rainfall continues to impact the state.
Following a mine collapse at Peabody Energy’s Wambo mine, the EPA has said it is investigating the collapse of part of a sedimentation dam wall at Rio Tinto’s Warkworth coal mine in the Hunter Valley. It is the second dam wall collapse at the time this year after a partial collapse of the wall was reported to the EPA by the mine on 6 January.
At the time of the first collapse, the company told the EPA that the event has not “caused or threatened harm to the environment,” according to an EPA media release. The EPA was also advised that work to contain the sediment-laden water had been undertaken.
Since then, the EPA said that it had been provided with photographs that suggest that sediment-laden water containing soil and sand was still leaking from the site and that a quantity of sediment from the original incident was yet to be cleaned up.
“The EPA has requested additional information from Warkworth and will be conducting a site inspection to assess the impact,” the EPA said. “Depending on the outcome of the investigation, the EPA will consider further regulatory action.”
The EPA also said that it had ordered Rio Tinto to clean up the site to prevent further movement of the sediment both on and off the site.
Separately, it has been reported that water had spilled over a coal mine dam at Rio Tinto’s Bengalla mine near Muswellbrook in the Hunter Valley.
The EPA has yet to confirm the nature of the Bengalla incident, but spokesperson for Rio Tinto said the overflow event was not a result of a dam wall collapse as at Warkworth and Wambo mines and that the company was working with the EPA to investigate the incident.
The latest spills have drawn sharp criticism from the Australian Greens with their Mining Spokesperson, Jeremy Buckingham, accusing coal mining companies of “cutting costs and trashing the environment almost with impunity”.
“Three coal mine dam failures in the Hunter […] indicates there is a systematic problem with the environmental standards being applied by the industry,” Buckingham said.
Written by Jonathan Rowland.
Robindale Energy recently started using a new SENNEBOGEN 875 material handler for loading coal from ships on the Monongahela River in Pennsylvania, US.
The material handler is equipped with the Green Hybrid system, which can save up to 30% more energy than conventional concepts. With the attached 14 yd double shell grab, it unloads up to six jumbo barges per day.
Upon taking over the coal handling station on the Monongahela River, Paul Theodorakos, Equipment Manager at Robindale Energy, was confronted with the task of increasing the loading capacities. While the work was previously done with an earth-moving excavator, the plan was now to find a handling solution that was specially tailored to the circumstances.
“All things quickly pointed to SENNEBOGEN,” Equipment Manager Paul Theodorakos reported. “I have been in the coal business for 39 years, but I had never had to take care of unloading ships before. The modified earth-moving excavator from the 1990s was no longer able to provide the necessary handling performance. So I started to look for a solution.”
The joint inspection of a SENNEBOGEN 875 at Charleston Bulk Transfer (CBT) in South Carolina, US, where the machine loads up to 12 500 tpd of coal, helped make the final decision. “Our host, Fabian Turner, President of CBT, was full of praise; the innovative Green Hybrid system in particular convinced me,” Theodorakos looks back.
A new SENNEBOGEN 875 material handler unloads coal barges at Donard Dock for Robindale Energy in Pennsylvania, US.
Edited from press release by Harleigh Hobbs
US rail operator, CSX, is to close its division offices in Huntingdon, West Virginia, on the back of declining coal revenues. Huntingdon division sits at the heart of the Central Appalachian coalfields – the region that has been hit hardest by the downturn in the US coal industry.
The closure of the Huntingdon division offices comes as part of a restructuring of CSX’s operations administration from ten to nine divisions. Its administrative responsibilities will be reassigned to five adjoining divisions based in Atlanta, Baltimore, Florence, Great Lakes and Louisville.
“Over the past four years alone, CSX’s coal revenues have declined US$1.4 billion,” the company said in a press statement. “[This] announcement is part of CSX’s focus on reducing structural costs and aligning resources with demand in its coalfields.”
The 121 management and union employees who currently report to the Huntingdon division offices will remain employed in the area to support the transition of administrative responsibilities to neighbouring offices over the next few months. Following that, the company expects many to be offered the opportunities vacant positions in other areas of the network.
CSX recently announced a fall in quarterly revenue in 4Q15 of 13% on the same period in 2014. Full year revenue was US$11.8 billion – with falling coal volumes partially offset by growth in other markets. The company also said that it expects the difficult business conditions to continue through 2016 with the company forecasting a further fall in earnings.
Overall, freight volumes fell 6.1% on the US rail network on the back of significant declines in coal traffic. Coal production is expected to fall 10% in 2015, according to data from the US Energy Information Administration, as competition from cheap natural gas and regulatory pressures reduced its share in the energy mix.
Meanwhile, coal production in Central Appalachia is forecast to fall hardest to finish the year 40% below its average annual level between 2010 and 2014.
Edited by Jonathan Rowland.
Commencing January 2016, Liebherr Maritime cranes’ design, sales and customer service for mobile harbour cranes, reachstackers, ship cranes as well as offshore cranes will operate out of the company’s maritime production site in Rostock, Germany.
The factory in Rostock has been continuously growing since 2002 and employs more than 1400 people today. In line with personnel increase, Rostock has taken the lead in production for all maritime cranes, excluding container cranes, which are manufactured in Ireland. The plant has direct sea access, enabling cranes to be shipped in parts or even fully assembled and are able to drive on barges for transport and immediate operation after arrival.
According to the company, due to steady investments, the factory at the Baltic Sea provides space for further growth in all areas. This is especially important for the development and manufacturing of new products, such as the LHM 800, the world’s largest mobile harbour crane.
This transition to Rostock plant is part of the company’s strategic realignment that intends to increase performance, focus on growth and improve operational efficiency across.
Lieberr believes the new structure, which combines its maritime sales and technical resources to one location, will speed decision-making and increase productivity, while providing a simplified customer experience.
The maritime production site at the Baltic Sea in Rostock, Germany.
Edited from press release by Harleigh Hobbs
Rio Tinto has released solid 4Q15 coal production results.
The company’s share of hard coking and thermal coal production was in line with 2015 guidance, while semi-soft coking coal production was 7% above the top end of the guidance range.
Hard coking coal production finished 11% higher than 2014 following improved production rates at Kestrel. Fourth quarter tonnage saw a 16% increase compared to the same quarter of 2014 due to the longwall changeover at Kestrel in 2014.
Semi-soft coking coal production was 14% higher than 2014, and 9% higher in the fourth quarter than in the same quarter of 2014. This is reported to be a reflection of mine production sequencing at Hunter Valley operations.
Rio indicated thermal coal production was broadly in line with 2014. Fourth quarter production came in at 9% higher than in the same quarter of 2014, due to increased production at Hail Creek.
Rio Tinto CEO Sam Walsh stated: “Against a challenging market backdrop for the industry, Rio Tinto remains focused on operating and commercial excellence to leverage the low-cost position of our Tier 1 asset base. In 2015, we delivered efficient production, meeting our targets across all of our major products, while rigorously controlling our cost base. We will continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016.”
Edited from press release by Harleigh Hobbs
Dry bulk throughput at ports in the North Sea Canal Area, which includes the ports of Amsterdam, IJmuiden, Beverwijk and Zaanstad, fell in 2015, resulting in a fall in total throughput for the first time “in years”, according preliminary figures released by Port of Amsterdam.
Coal transhipment was particularly weak, falling by 11% to 17.3 million t. Agribulks were also down by 6% to 7.4 million t, while other dry bulks – including ores and fertilizers – did grow by 9% to 8 million t.
Overall, Port of Amsterdam – the largest port in the North Sea Canal Area – saw throughput fall by 1.8% to 78.4 million t. This was partially offset by increases in the tonnages handled at the other three ports with IJmuiden up 2% to 17.9 million t, Zaanstad up 47% to 340 000 t and Beverwijk up 44% to 343 000 t.
The fall in throughput comes despite record handling figures in 1H15 as 2H15 lagged behind expectations, explained Dertje Meijer, CEO of Port of Amsterdam.
“This relates to an extremely mild winter weather, which meant less coal was needed to power plants,” Meijer said, adding that he did not see this as a trend and that the port expected to return to growth in 2016.
Edited by Jonathan Rowland.
US LNG imports are expected to begin within the next few weeks with the departure of the LNG tanker Energy Atlantic from the Sabine Pass LNG export project – the first of five LNG projects under construction in the lower 48 states that will add about 80 billion m3/year of export capacity by 2020.
As well as having a potentially significant impact on global gas markets, US coal producers are hoping that LNG exports will help to reduce the volume of gas in US domestic markets, raising prices – a key part in boosting demand for coal.
As Peabody Energy, the largest coal company in the US noted, in its 3Q15 results release: “Over the next few years, the company projects rising coal demand over 2015 levels as natural gas prices increase on growing LNG exports, onshore demand and pipeline exports to Mexico.”
But such hopes may be misplaced according to a new report from Thomson Reuters: ‘US LNG export: the start of a new era’.
“For the next few years, US LNG exports will represent a very small share of total gas production/consumption in the country and will have very little impact on Henry Hub prices,” Anne Kat Brevik, Director of LNG Analysis and the report’s author, told World Coal.
“As LNG exports ramp up towards 2019 – 2020, we could see some impact on Henry Hub pricing,” Brevik continued. “However, this also depends on the price that LNG can achieve in e.g. Europe and Asia. If Henry Hub + 15% [the variable contract element] + shipping costs surpass the obtainable landed price, US LNG exports will dry up.”
Written by Jonathan Rowland.
The US Interior Department is to launch a comprehensive review that aims to identify and evaluate potential reforms to the federal coal programme according to concerns from the Government Accountability Office, the Interior Department’s Inspector General, Members of Congress and the public.
“We haven’t undertaken a comprehensive review of the programme in more than 30 years,” said Secretary of the Interior, Sally Jewell. “We have an obligation to current and future generations to ensure the federal coal programme delivers a fair return to American taxpayers and takes into account its impacts on climate change.”
While this review is underway, there will be a three-year pause on new coal mining leases on federal land.
“Given serious concerns raised about the federal coal programme, we’re taking the prudent step to hit pause on approving significant new leases so that decisions about those leases can benefit from the recommendations that come out of the review,” explained Secretary Jewell.
But this plan to halt coal mine leases was met with criticism from the coal industry with Colin Marshall, CEO of coal miner, Cloud Peak Energy, saying he was “disappointed” with the decision and accusing the government of pandering to “special interest groups whose stated goal is to shut down the US coal industry”.
According to Marshall, the moratorium was aimed at delaying leases, making it difficult for coal to be mined – potentially aiming to stop mining it altogether – and “denying its economic benefits to the nation.”
Marshall’s comments were echoed by President and CEO of the US National Mining Association, Hal Quinn, who said the idea that a moratorium was needed, “defies credulity”.
“Every federal coal lease sale and subsequent mining project must pass multiple levels and sequences of both federal and state evaluation,” Quinn said. “It is stunning that the administration believes a process that already pushes the development of coal projects beyond a decade needs more red tape and delays.”
Republican politicians were also critical of the decision with Senate Majority Leader, Mitch McConnell, calling the move “just the latest front in an ideological war on coal.”
“At a time when Americans are calling on the Obama Administration to protect our nation and strengthen the Middle Class, the Administration is again making clear that its priorities are elsewhere,” McConnel said. “No wonder more than 70% of Americans want to see the next President take a different approach from the current one. Americans want this Administration to focus on building opportunity for them, not advancing some regressive war that attacks Middle Class jobs and punishes the poor.”
Edited from various sources by Harleigh Hobbs
Coal throughput at Port of Rotterdam rose 1% in 2015 t despite a fall in demand for thermal coal from Germany. According to official figures, 30.7 million t of coal was transported through the port last year.
Demand for thermal coal was boosted by the commissioning of two new high-efficiency coal-fired power plants by Uniper (formerly E.ON Benelux) and Engie (formerly GDF Suez) on the Maasvlakte. Both plants boast efficiency of 46% and are carbon capture and storage ready. They bring the total number of coal-fired plants on the Maasvlakte to three. About 60% of coal handling through Rotterdam is thermal coal.
This offset a fall in the need for coal from Germany on the back of higher renewables generation, particularly solar and wind generation.
On the metallurgical side, which accounts for the remaining 40% of coal handling through Rotterdam, throughput increased slightly. Volumes of other bulk materials fell, however, with throughput of ores and scrap falling by 0.6% and throughput of agricultural bulk down 3.7%. Handling of fly ash exports to the US rose, however.
Overall, the amount of dry bulk handling at Rotterdam in 2015 fell 1%.
The star performer in 2015, however, was oil with throughput of crude oil rising 8.1% to 103.1 million t. The supply and transport of oil products rose by 18% to 88.5 million, while LNG throughput rose 91.3% – albeit from a low base.
“Low oil prices result in high margins for the refineries, so they have large quantities shipped in for refining,” explained Allard Castelein, CEO of the Port of Rotterdam Authority. “This not applies to the refineries in Europe but also to those in Russia. The latter produce a relatively large amount of duel oil which is shipped to the Far East via Rotterdam.”
Looking ahead to 2016 and Castelein said the port aims to match 2015’s performance.
Edited by Jonathan Rowland.
The New South Wales Environment Protection Agency (EPA) is investigating an incident at Peabody Energy’s Wambo coal mine in the Hunter Valley region. The incident resulted in a portion of a dam wall collapsing, discharging laden rainwater to the environment.
“Communities across the Hunter and Mid-North Coast regions have just experienced record rainfall […] While this is a factor to consider, the EPA’s investigation will also examine how the dam, which was used as a sediment control measure, is managed, maintained and monitored,” the EPA North Director, Gary Davey, in a statement.
The EPA was informed of the incident on Monday 11 January when the mine reported it to the Environment Line. It is not known how long before that the wall collapsed or how much material may have left the site – a fact highlighted by the EPA as cause for concern.
“The EPA is […] concerned that it took nearly a week to discover the problem and report it,” Davey said. “An assessment of the monitoring systems currently in place at the mine will form part of our investigation,” adding that it was “vital” for environmental protection licence holders to have early warning processes in place so that events such as a dam breach can be responded to quickly.
Peabody acquired the Wambo mine in 2006. It is a combined opencast and underground operation, producing 7.2 million t of thermal and PCI coal for export and domestic markets in 2014, according to the company website. Last year, an extension to the underground mine was granted by the New South Wales Departments of Planning and Environment, allowing the mine to develop three new longwall panals.
“The EPA will be carrying out a thorough investigation of the incident and has also requested a full incident report from Wambo Coal,” Davey concluded, adding that any failure of the mine to meet its responsibilities under environmental legislation may result in further regulatory action from the EPA.
Edited by Jonathan Rowland.
Bharat Heavy Electricals Ltd (BHEL) has commissioned a 520 MW coal-based thermal generating unit in Andhra Pradesh. The unit has been commissioned at the 2 x 520 MW Vizag thermal power project of Hinduja National Power Co. Ltd (HNPCL), Visakhapatnam, which BHEL is executing on EPC (Engineering, Procurement and Construction) basis.
Additionally, in Uttar Pradesh, BHEL commissioned a 660 MW supercritical unit of Lalitpur super thermal power project (STPP). This is the second 660 MW unit commissioned by BHEL in Uttar Pradesh within a fortnight.
Last month, BHEL commissioned the first unit of 3 x 660 MW Prayagraj super-thermal power project (STPP) at Bara in Allahabad district of Uttar Pradesh. The unit has been synchronised by BHEL four months ahead of the schedule agreed with the developer. It is reported that the commencement of generation from the unit will result in significant improvement of power availability in the state.
Edited from press release by Harleigh Hobbs
EP UK Investments Ltd (EP UK), a subsidiary of Energetický a prumyslový holding (EPH), which owns the 2 GW Eggborough coal-fired power plant in the UK, has reached an agreement with RWE Supply & Trading GMBH. on the purchase of Lynemouth Power Ltd.
Lynemouth Power was a 420 MW coal-fired power plant that has been working with contractors to design a technical solution for full conversion of the power plant to run on biomass.
The EU gave the plant clearance on 1 December 2015 for its supporting Contract for Difference from the UK government. Once the conversion is complete, it will generate about 2.3 TWh of low-carbon electricity per year, which is sufficient to power around 700 000 homes or a city the size of Sheffield. The plant will operate at base-load, thus providing schedulable low-carbon electricity.
Neil O’Hara at EP UK commented: “We are pleased that EPH has made this investment and look forward to working closely with the Lynemouth Power team and its contractors to reach final investment decision. Whilst we are working under tight time constraints and challenging foreign exchange conditions, we believe that with the continuing efforts of the Lynemouth team and the ongoing support of the contractors the business will achieve its ambitions.”
Edited from press release by Harleigh Hobbs
Goods throughput in Rotterdam increased by a total 4.9% to 466.4 million t in 2015. This significant growth is almost entirely attributable to the increased throughput of crude oil and oil products.
Allard Castelein, CEO Port of Rotterdam Authority, said: “Low oil prices result in high margins for the refineries, so they have large quantities of oil shipped in for refining. This not only applies to the refineries in Europe but also to those in Russia. The latter produce a relatively large amount of fuel oil, which is shipped to the Far East via Rotterdam. The result is an 8% increase in the throughput of crude oil and an 18% increase in the throughput of oil products.”
Although this year the port owes its growth to oil, according to Castelein the port is in a transition phase: “Due to the need to combat climate change, the port is fully committed to energy efficiency as well as the development of renewable energy and bio-based chemistry. Rotterdam already has one of the most energy efficient refining and chemicals clusters and the largest bio-based cluster in the world. It is our ambition to retain our leading position.”
The throughput of ores and scrap fell by 0.6% to 33.9 million t. Although steel demand slightly increased, this was offset by the import of cheap Chinese steel. The throughput of coal increased by 1.0% to 30.7 million t. The coal transported to Rotterdam consists for approximately 40% of coking coal used in blast furnaces and 60% of coal for power plants.
The concentration of coking coal entering Rotterdam slightly increased the throughput volume. Good harvests provided lower imports of mostly oil seeds and fodder, as a result of which agricultural bulk fell by 3.8% to 10.8 million t. The amount of other dry bulk decreased by 3.9% to 12.3 million t as fewer nutrients and minerals were imported. In contrast, more fly ash, a residue of coal plants, was transported to the United States. Overall, the handling of dry bulk decreased by 1.0%.
Edited from press release by Angharad Lock
Aboitiz Power Corp. has inaugurated its 300 MW baseload power plant in Davao City, Mindanao. The plant is viewed by many as an important long-term solution to the Mindanao power supply problem, and it currently supplies baseload power to more than 20 electric cooperatives and distribution utilities in Mindanao.
The power plant uses circulating fluidized bed (CFB) combustion technology, which minimises emissions and ensures that the power plant meets Philippine Clean Air Act standards. It houses the country’s first coal dome, which provides a safe and efficient way to store coal fuel.
During the launch ceremony at the power plant site, which is located in Brgy. Binugao, Toril district, AboitizPower CEO Erramon I. Aboitiz said that the project forms part of the company’s commitment to support the growth of Mindanao and indicates the positive impact of government reforms in the energy sector.
“Following the project’s groundbreaking and construction, other private power producers have started to invest in Mindanao and we hope their entry in the next couple of years will eventually lead to a steady and reliable supply of power in this region,” Mr. Aboitiz said. “For us, this is a strong indication that EPIRA is indeed working and has allowed private investments to come in and help Mindanao secure its power needs. EPIRA has positively transformed our power industry from a monopolised, politicised, and heavily subsidised structure into one that is competitive.”
The first unit of the power plant started commercial operations in September 2015 while the second unit is undergoing reliability tests and will be in full commercial operations by February 2016.
Edited from press release by Angharad Lock
Big Stone 475 MW coal-fired power plant’s new air-quality control system (AQCS) is commercially operational. The three-year US$384 million project is now complete and the system is reducing emissions in compliance with new federal and state regulations.
The project is intended to help the plant owners –Otter Tail Power Co., Montana-Dakota Utilities Co. and NorthWestern Energy – balance their commitments to environmental stewardship with cost-effective service for their customers by enabling them to responsibly generate base-load electricity from coal at Big Stone. The new system reduces nitrogen oxides and sulfur dioxide emissions by approximately 90% and mercury emissions by approximately 80%.
For all three companies, making environmental upgrades at this plant was less expensive than building a new plant. “Our analysis showed alternatives, such as building a new generation resource, to be more than 30 percent more expensive,” commented Otter Tail Power Company President Tim Rogelstad. Otter Tail Power Company operates the plant on behalf of itself and the two other owners.
The AQCS is a result of the Environmental Protection Agency (EPA) requiring the State of South Dakota to submit an implementation plan describing how Big Stone Plant would reduce its emissions in compliance with Best Available Retrofit Technology (BART) guidelines. The EPA approved South Dakota’s plan in 2012. The AQCS project is complete more than a year before the spring 2017 deadline to comply with the South Dakota Regional Haze State Implementation Plan.
“Despite challenges along the way, the project was completed on schedule. Because of lower-than-expected procurement and engineering costs, the project cost about US$384 million—a 21% reduction from the original budget of approximately US$490 million. And with workers putting in more than 2.5 million labour hours, our safety record is stellar,” detailed Rogelstad.
Big Stone plant is located near Big Stone City, South Dakota, and in close proximity to Milbank, South Dakota, and Ortonville, Minnesota.
During the initial planning phase, the AQCS project team contacted the communities through informational meetings and helped businesses and government entities in order to plan for an influx of workers to the area during the project.
“We extend many thanks to the Big Stone City, Milbank, and Ortonville communities and surrounding areas. We greatly appreciate your welcome, assistance, and patience as we reaffirmed our commitment to environmental stewardship with cost-effective service for our customers through this project,” said Rogelstad.
Edited from press release by Harleigh Hobbs
Steve Bradbury, Dingo, USA
As economic factors outside of the mining industry’s control continue to drive pricing down, operations are cutting to the bone in order to survive. This environment poses significant challenges for organisations, including less manpower, fewer outside resources, aging equipment and lower morale – to name a few. But these issues are readily apparent and can be addressed. The bigger concerns are the ones that are not immediately obvious. One of the most dangerous conditions that this environment breeds – one that often goes undetected until it is too late – is a phenomenon dubbed the ‘normalisation of deviance’ by sociologist Dr Diane Vaughan.
The normalisation of deviance is defined as: “the gradual process through which unacceptable practice or standards become acceptable. As the deviant behaviour is repeated without catastrophic results, it becomes the social norm for the organisation.” This process is difficult to detect because it happens slowly, over a series of small, seemingly inconsequential decisions to cut corners. And more often than not, these shortcuts feel necessary at the time because teams are under enormous pressure. One of the most famous examples of the disastrous results that this phenomenon can lead to was the failure of the O-ring gaskets on the Space Shuttle Challenger. Under incredible time and cost pressure, NASA proceeded with the launch when they had overwhelming evidence that O-ring failure could be catastrophic.
But there is an upside to this phenomenon. When organisations make small, positive incremental changes over time, they can create a new, higher standard of operational excellence. Author, Darren Hardy, calls this the Compound Effect. The key point is that every day, people in an organisation make hundreds to thousands of minor decisions that collectively have major consequences. When the systems and processes are put in place to help improve this collective decision-making, the entire organisation will reap the benefits.
Dingo has spent 25 yr helping mines take advantage of this Compound Effect simply by tapping into the power of underused data. And while Big Data is getting a lot of press lately, using this massive amount of data will not necessarily lead to the desired outcome. In fact, Dingo often finds that companies are drowning in it. Sound decision-making is not typically driven by how much data a mine has, it is driven by how well a mine uses the data that it does have.
In the realm of maintenance, one of a mine’s biggest cost centres, Dingo has identified three key tools to help capitalise on data and improve decision-making across the board:
All of the data in the world is useless unless a mine has a centralised system to collect, organise and connect condition data and then transform it into actionable knowledge.
When Dingo is engaged by a maintenance operation to implement an Asset Health program, the company frequently uncovers a tremendous amount of data that is sitting idle in Excel files, desktop folders, databases and even pdfs. Because the data is disorganised and difficult to access, people tend to ignore it and make decisions without complete information – a deviation from the norm. Over time, these suboptimal decisions affect the health of costly equipment. Based on data compiled from more than 50 mining operations across the globe, 33% of major components are regularly operating in a warning state – and more than 11% are running in critical condition.
TRAKKA condition management software. A centralised software system with the right capabilities will provide personnel with the tools to succeed and facilitate a process that drives the desired results.
While getting all of this data into a centralised condition management system might seem daunting, a good provider will offer guidance on both the right data to capture and the best way to capture it. For example, TRAKKA, Dingo’s condition management software, has an extensive data connector library, a comprehensive list of data connections that are preconfigured to seamlessly connect and interface with condition monitoring data providers, ERP systems and mobile field inspection devices.
Once the data is in the system, a predictive analytics engine can provide excellent decision support. However, a number of maintenance organisations fall down because they focus on task completion vs issue resolution. By implementing action tracking, where open issues and actions taken are fed back to the reliability team, maintenance decisions continuously improve until the equipment returns to a normal operating state.
Finally, Dingo has learnt that visibility is critical to achieving the benefits of the Compound Effect. Two important features to look for in this area are unlimited users (or seats) and a performance dashboard. Software with limited licences tend to put the control, and the power, in the hands of a few individuals, which creates functional silos and can hinder decision-making. An open system creates transparency that helps ensure everyone has complete information and context when they are making those seemingly minor decisions.
Benefits of a close-looped process. An integrated, close-looped process that tracks issues through resolution will create a cycle of continuous improvement.
Performance dashboards provide two distinct advantages. First, they force the team to come up with clear goals that are well understood from the ground up. By operating with the end in mind, people tend to make favourable choices with a higher degree of consistency that lead to the desired state. Second, what gets measured, gets done. By providing clear goals and visibly measuring them, everyone starts taking accountability for keeping the organisation on course.
Another key insight is that the mines that are successfully raising the bar are not setting lofty, unachievable goals and mandating that their teams deliver them. These mines are setting smaller, more attainable targets and equipping their teams with the decision-support tools to help them maximise on the information available.
A large North American coal mining operation provides a strong testament to the true value of the Compound Effect. When Dingo engaged with this company over seven years ago, over 50% of its fleet was running in critical to warning condition. By bringing essential condition data into an Asset Health system and using this information to systematically improve maintenance decisions, these mines now consistently operate with 90% of their fleets in normal condition. This improvement translates into over US$20 million cost savings per year – calculated through the rebuild cost of breakdown avoidance and component life extension. This number dramatically increases when labour and productivity savings are added to the calculation.
In this environment, mines know that they cannot afford to sit tight and wait for a market upswing, but most of the obvious cost cuts have been made. It is time to look for the less obvious, but potentially more impactful ones. By equipping an organisation with the systems and tools to tap into the power of existing data to help everyone make better decisions – big and small – mines will not only survive, they will thrive.
TRAKKA performance dashboard. Performance dashboards provide clarity, increase accountability and help keep teams on track to achieve goals.
Edited by Harleigh Hobbs.This article first appeared in the January 2016 issue of World Coal.
The Queensland state government has released a five-point action plan to tackle coal miner’s pneumoconiosis – also known as Black Lung after five cases were recently confirmed in the state.
“Protecting the health and safety of workers is a fundamental issue for any Labor Government,” said Dr Anthony Lynham, Queensland’s Natural Resources and Mines Minister and Acting Health Minister, adding that is was likely more cases may be identified after a review of medical and workplace records.
“I am determined to get on top of this issue to protect workers now and into the future and to be open and transparent as we progress,” added Lynham.
The five point action plan will include a review to improve the existing screening system, more action on coal mines exceeding regulated limits on dust levels, an improvement to data collection, investigating potential regulatory changes and placing the issue on the agenda for the national council of mining ministers.
According to Dr Lynham, eight underground coal mines in Queensland have been directed to improve monitoring or bring respirable dust levels back into compliance over the past twelve months – but added that only one was still exceeding dust limits.
Despite this, the Queensland Resources Council has insisted that Queensland coal operators take their obligations to provide a safe working environment “very seriously.”
“Queensland has a rigorous and transparent system of compliance on coal dust monitoring to Australian Standard 2985 with any exposire being further managed through a hierarchy of controls,” said Michael Roche in a statement released in December. “Mine safety and health management systems ensure that the risks are managed and kept as low as reasonably practicable.”
Yet Jason Hill from the mining division of the CMFEU said the union had been contacted by “a lot of concerned people” and that he believed the number of cases could rise substantially.
“We’ve got a spreadsheet in the Mackay office with a lot of concerned people who have contacted the union,” Hill told journalists. “A lot of them are retired mine workers [but] we’ve had relatives of dead mine workers who have died of lung cancer, who reportedly never smoked or who lived a healthy life. We would have 30 – 40 [names] at the moment.”
Written by Jonathan Rowland.
Andrew Moore
The US Environmental Protection Agency’s (EPA) Clean Power Plan (CPP) could not have come at a worse time for a US coal industry already looking vulnerable in the face of low natural gas prices and other regulatory challenges. While it is too early to say what the impact of the CPP will be – and whether it will withstand legal challenges – the long-term outlook looks fairly bleak for coal. Still, it looks set to remain a major energy source for the US and the world for decades to come.
Last July, Minnesota Power said it would idle and eventually close its coal-fired Taconite Harbor power plant on the shore of Lake Superior.
It followed up the announcement in September with an integrated resource plan filed with the state of Minnesota, noting the closure would be accompanied by plans to increase natural gas generation and add renewable power – all of which would help the utility “to position itself for compliance with” the CPP.
At 150 MW, the relatively small plant burned only 684 000 short t of coal in 2014 – a drop in the ocean compared with the 999.7 million short t of coal mined in the US last year. But it was enough to catch the attention of Peabody Energy, the largest US coal producer, which cited the closure in an August filing with the US Court of Appeals for the District of Columbia in support of an emergency stay petition brought against the EPA by 15 states opposing the CPP.
“EPA tries to brush off the Taconite shutdown as ‘likely part of the general shift away from coal,’ but the unrebutted evidence is that the [CPP] was a precipitating factor,” said the Peabody filing. “Indeed, a sector already weakened by market forces and pre-existing environmental regulations is even more vulnerable to draconian regulatory measures like the [CPP].”
Vulnerable seems an apt description for the US coal industry. While it is too early to tell what impact the CPP might have, it could not have come at a worst time. Low natural gas prices have made coal uneconomical to burn in many parts of the country. Meanwhile, in markets where coal can compete, producers are often pitted against each other.
The outlook could look even gloomier if utilities begin to view carbon dioxide as a risk regardless of what happens with the CPP. “Generally speaking, utilities are obviously looking at the CPP, and you know, there is some pretty clear handwriting on the wall here, and some are starting to take some action,” said one utility official who did not want to be identified.
What seems clear is the US coal industry faces an uncertain future, though by no means is it going away.
In 2008, US coal production peaked at 1172 million short t, with roughly 94% consumed by industry and the electric power sector, where coal-fired generation made up 48.2% of the US power market.
That same year, prices reached an all-time high for the physical coal underlying the two Central Appalachia futures contracts: the 12 500 Btu/lb CAPP rail (CSX) contract, which hit US$160.60/short t, and the 12 000 Btu/lb CAPP barge contract, which hit US$143.25/short t.
Seven years later, it is a much different picture. According to the US Energy Information Administration (EIA), US coal production is estimated to total 914 million short t in 2015 – a 22% drop from the recent peak and the lowest annual total since 1986.
Coal generation is expected to make up 35% of the US power market in 2015, with the most share lost to natural gas, which made up 21.4% of US generation in 2008 but is expected to make up 31.6% in 2015.
And prices for the physical coal underlying two of the three major coal futures contracts are at multi-year lows: in early October, the CAPP rail contract fell to US$35.40/short t, a 78% drop from its 2008 peak, while the CAPP barge contract dropped to US$40.75/short t, down 72% from its 2008 peak.
All this has happened before the CPP has been made official and despite it facing an uncertain future. Already, 26 states and a number of industry groups have filed legal challenges to the plan, which would take effect in 2022.
But the EPA’s projections do not bode well for the coal industry. According to the agency’s regulatory impact analysis for the plan, US thermal coal production could drop to 729 million short t by 2025 in its base case review. The figure could drop as low as 606 million short t under a more stringent scenario.
“The [CPP] turned out to be worse than we thought it would be,” said Paul Bailey, Senior Vice President for policy and affairs at the American Coalition for Clean Coal Electricity. “Coal is down a lot, and the EPA likes to claim that’s because of natural gas prices, and some is due to that, but a great deal of it from the analysis we’ve done is due to EPA regulations.”
In 2008, the net summer capacity of US coal-fired generation totalled roughly 313 GW, according to the EIA. As of October, Platts-unit Bentek Energy estimated net summer capacity for US coal-fired generation at roughly 300 GW, with another 24 GW of announced retirements by 2025.
Bailey and much of the industry attribute the recent closures to the EPA’s Mercury and Air Toxics Standards Rule, which mandated certain emissions controls be installed by April 2015. Even though the Supreme Court remanded the rule in June, utilities had already made the decision to close roughly 13 GW of coal-fired generation that was not economical to retrofit.
With the CPP, Bailey believes utilities could possibly shutter 40 – 50 GW of coal-fired generation, resulting in the closure of roughly a quarter of the US coal fleet compared with 2008.
“I think it’s a little premature to say how it will really impact the industry, and whether it will be actually implemented,” said Betsy Monseu, the CEO of the American Coal Council. “We know there is opposition to it far beyond just coal; there are utilities concerned states concerned […] and there is going to be a great deal of push back.”
Regardless of the outcome, Monseu rightly points out that coal generation is not going away. The surviving plants will likely run at higher capacity factors, “but I don’t believe we’ll resign to a smaller market,” she said.
“We’re existing in a smaller market because of regulation in large part, and changes in energy markets, and we’re adapting to that,” Monseu said. “You’re seeing lots of restructuring on the coal side and with efforts to improve balance sheets and restructure as a leaner, more efficient, segment for the future.”
Robert Moore, President and CEO of Foresight Energy LP, a major producer of Illinois Basin coal, wrote in response to emailed questions from Platts that he believes the US thermal coal market might drop to 600 – 650 million short tpy if the CPP is implemented.
“It is too early to tell what the coming restructuring of the coal industry will do to overall production levels in each region, but it is evident that the CPP encourages using higher Btu thermal coal from the Illinois Basin,” wrote Moore. “The 8400 Btu/lb and lower production in the Powder River Basin will likely be negatively impacted.”
In the base case review of the EPA’s regulatory impact analysis for the CPP, the agency projects coal production from the US’s Interior region, which includes the Illinois Basin, would total 250 million short t in 2025. In 2014, Interior production totalled 188.7 million short t.
And in the Powder River Basin, the nation’s largest coal-producing region, the EPA forecasts 2025 production to total 379 million short t – down from 430.4 million short t in 2014.
Without the CPP, Moore noted that US coal production will likely remain robust, referring to the EIA’s most recent long-term projections.
In its 2015 Annual Energy Outlook issued earlier this year, the EIA forecast in its base case review that US coal production would total 1105 million short t in 2025 and 1118 million short t by 2030, though it did not include the CPP in its modelling. The EIA’s forecast points to the fact that coal-fired generation historically has been an inexpensive baseload power source and will likely remain so in the future, especially as natural gas prices are forecast to increase due to greater industrial and power demand as well as increasing LNG exports.
In 2008, when coal production peaked, the average price for the NYMEX Henry Hub natural gas futures contract was US$8.891/million Btu. As of 15 October, the 2015 contract price averaged US$2.744/million Btu, and the average price for the 2020 contract was US$3.224/million Btu.
In the base case review in its annual forecast, the EIA put spot natural gas price at US$4.88/million Btu by 2020 and US$7.85/million Btu by 2040, in 2013 dollars.
Even if states and utilities work to eliminate carbon emissions, coal remains integral to the reliability of the power grid.
Minnesota Power made headlines with its plan to close Taconite Harbor, but the utility will still have more than 11 GW of net summer coal-fired generation capacity in its fleet by 2020, according to its recent integrated resource plan.
“Even though gas prices are still low, coal is still very economical in many places,” said Joe Nipper, Senior Vice President of Regulatory Affairs and Communications for the American Public Power Association. “It’s available to run. Some are not running because of gas prices, but it is available. So we have lots more capacity to generate electricity from coal-fired plants, but utilities are often choosing to generate or dispatch from other sources, but may be keeping coal capacity maintained and up to date, and running those units some of the time.”
There is also the possibility that commercial-scale carbon capture could become economically viable, enabling coal-fired power plants to reduce their carbon emissions. At the moment, however, carbon capture is generally confined to areas of the country that contain oil fields. The captured CO2 is pumped into existing oil wells to help increase production, a process known as enhanced oil recovery (EOR). But the costs of capturing and transporting the CO2 are high.
Further down the road, the coal industry faces a daunting reality. The last US coal plant entered service in 2012 and, while there are several coal plants in various stages of planning, only one is under construction: Southern Co.’s Kemper plant in Mississippi, which gasifies locally-mined lignite to fire an integrated gasification combined-cycle power plant.
Despite the addition of carbon capture technology, the plant is likely to serve more as a warning than a sign of progress, as it is more than US$4.7 billion over its initial US$2.2 billion budget.
Furthermore, in 2014 the EPA issued stringent carbon emissions guidelines for new power plants that essentially rule out the construction of any new coal-fired plants, given that coal would be physically unable to come under the emissions limits. That means that by 2040, most of the plants in the existing US coal-fired fleet will have reached the end of their useful lives of 70-plus yr. While plants can be maintained and their lives extended, costs go up, while efficiencies go down, making it a less attractive option.
Exports also remain an option, but not in the current environment. A global oversupply of coal has pushed down prices worldwide, and new demand from Asia is not likely to materialise for several years.
“Looking at this strategically, and for the longer term, one thing that is very important is technology and continuing to advance [carbon capture] and support for that at the federal level,” said the American Coal Council’s Monseu. “There is a recognition that coal is going to be a major fuel source for the US and the world for decades and, if that’s the case, then if there are goals for emissions reductions, there needs to be commitment to technological solutions to making that happen.”
Edited by Harleigh Hobbs.This article first appeared in the January 2016 issue of World Coal
Clifford Smee
Over the next five years, the global coal industry is expected to witness a fundamental structural change to the seaborne market: a move away from Chinese led demand growth. The last 10 yr have seen significant growth in the global seaborne market. But with global production seeming to have peaked in 2014, serious issues remain as to its sustainability.
The majority of global coal reserves are located in the US, followed by Russia, China, Australia, India and Germany, which collectively account for 76.9% of the global total. The major producers are China, the US, India, Australia, Indonesia and Russia, collectively accounting for 81.1% of global production in 2014. Logically, this means that a country, such as Indonesia, is rather rapidly depleting its reserves. Over the forecast period, these rankings will remain the same, with little movement in position, as had happened with the rapid rise of Indonesia over the previous decade when production increased from 154 million t in 2005 to 458 million t in 2014. Other developed countries, such as Australia and the US, may never find an economic need to exploit their reserves.
For the two largest consumers of coal, China and the US, serious efforts are now being made to curtail coal use, which contributed to global consumption decreasing in 2014. Consumption in 2014 fell by 62 million t compared to 2013, and it will likely decrease again in 2015. This would be the first fall in consecutive years in recent history. Efforts to curtail consumption include increased environmental protection regulations and the US government’s plans to decrease overall coal consumption by 180.4 million t and by 2.2% in electricity generation in 2015 over 2014. The Chinese government has also initiated an ambitious campaign to diversify its energy sources, consolidate its coal mines and cap consumption, announcing various coal quality restrictions and a ban on new developments of coal-fired plants.
Delving deeper into Chinese coal production, over the last decade global production has continuously increased, mainly due to increased production in China. Yet, Chinese coal production decreased to an estimated 3.59 billion t in 2014: the first fall registered since 2000. Most Chinese coal mines are located in Inner Mongolia, Shanxi, Shaanxi and Xinjiang. In 2014, coal output in Inner Mongolia fell by 12% to 123 million t, while production in Shanxi was relatively flat increasing by just 1.5% over 2013. Since the state-owned enterprises account for approximately 62% of total domestic coal production, both provincial and central governments have initiated measures to support domestic industry, including a reduction in provincial-level mining fees and royalties, the imposition of an import tax of 3% and 6% on metallurgical and thermal coal respectively and a reduction in export tax from 10% to 3%.
Without robust demand growth from China and the developed economies, there is likely to be little support for prices. Hence, the world is unlikely to see a return of US$100/t prices for thermal coal over the forecast period; prices are instead expected to stay around US$60/t FOB (Newcastle 6700 GAD) to 2020. The net effect of prices at these levels will be that export-oriented countries, such as Australia, Indonesia and Colombia, will have to focus on reducing operating costs to stay competitive in the seaborne market. These countries will increasingly close their higher-cost smaller coal mines, with large expanding opencast mines taking their place.
Over the forecast period, global coal mine production is projected to grow moderately at a CAGR of 1.6% to 8.6 billion t in 2020. This very moderate growth will be mainly driven by developing Asian countries, predominately India. In India, the government plans to quickly increase coal production and allow private investment in the industry. The government’s decision to reallocate all 204 coal blocks, which were earlier declared illegal by the Supreme Court of India in December 2014, is projected to increase coal production to over 1 billion t in 2020. Coal is a major source of energy in the country; it has the largest share as a raw material for energy production and an increase in population is expected to drive growth in demand for energy.
Other potential growth countries are Russia and the former Soviet Union countries. Recently, the Russian government announced plans to increase the use of coal as one of its primary energy sources from 25% in 2014 to 27% in 2020. In contrast, very few new large-scale projects in the US, Australia and Indonesia, announced in the boom era, are likely to be developed over the next five years.
By 2020, the global coal market will likely have shifted from its reliance on China, with export-based countries having stagnating production and a shift away from the seaborne market for many coal consumers, such as China. The one exception to this will be India, which will continue to increase in coal consumption driving both domestic production and import demand growth.
This article is based on the report ‘Global Coal Mining to 2020’ (Timetric; August 2015).
Clifford Smee is Lead Analyst – Mining at Timetric.
Edited by Harleigh Hobbs.This article first appeared in the January 2016 issue of World Coal.
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