Global

Indonesia raises coal royalty rate to range of 14% to 28%

Indonesia raised its royalty rate for coal miners from a single tariff of 13.5% to a range of 14% to 28% dependent on government-set coal benchmark prices, a change miners said could impact future investment. The maximum royalty applies to general sales when prices breach $100 per tonne, Lana Saria, a director at the Energy and Mineral Resources Ministry said. Coal sold under the so-called domestic market obligation (DMO) to power plants and some other industries will be charged the 14% royalty, as those prices are capped at $70 and $90 per tonne.

The new scheme was set as coal miners convert their licenses into a new special mining permits (IUPK) system when their contracts expire. The new royalty rate takes effect immediately for IUPK issued prior to 2022, while those issued this year will be charged the new rates in 2023. Under the new scheme, miners holding a special permit converted from older, so-called "first generation" contracts will be charged production royalties of 14% to 28% depending on the price brackets.

Indonesia's Adaro sells coal to European buyers ahead of Russia sanctions

Indonesia's second biggest coal miner PT Adaro Energy Indonesia Tbk (ADRO.JK) said it has shipped roughly 300,000 tonnes of coal to some buyers in Europe, where countries are seeking a new source of the fuel due to sanctions on Russia. The coal was sold via the spot market, chief finance officer Lie Luckman said. Demand from Europe would likely increase, but markets such as Japan, China, South Korea and India, which are among Adaro's biggest buyers, would remain priorities. the firm had sold to buyers in the Netherlands and Spain, he said. Coal prices have surged over the invasion, which Russia calls a "special military operation". That helped top thermal coal exporter Indonesia to post record high exports in March.

Indonesian Government issues coal mining taxes regulation to boost state revenues

The government had issued Governmental Regulation Number 15 of 2022 on Enforcement of Taxes and/or Non-Tax State Revenue (PNBP) in Coal Mining that was stipulated on April 11, 2022. It has been issued to complement Law Number 3 of 2020 on the Amendments to Law Number 4 of 2009 on Mineral and Coal Mining. Law Number 4 of 2009 stipulates that expiring mining contracts can be extended with a Special Mining Business Permit (IUPK), by considering the condition of state revenues. The first part of the government regulation describes the implementation of income tax payments for coal mining business actors, including the Mining Business Permit (IUP) holders, IUPK holders, IUPK as Continuation of Contract/Agreement Operations holders, and Coal Mining Concession Work Agreement (PKP2B) holders. Meanwhile, in the second part, the regulation stipulates that the PNBP rate for coal production will be implemented progressively on the holders of IUPK as Continuation of Contract/ Agreement Operations in accordance with the Coal Reference Price (HBA).

. Australia’s Whitehaven Coal Says Output Forecast Holding Up

Australia’s Whitehaven Coal reiterated its annual production view even as wet weather and a labour shortage exacerbated by Covid-19 dented third-quarter output. Managed run-of-mine coal production fell to 5.2 million tonnes (Mt) in the three months ended March 31, from 5.5 Mt a year ago. Still, Whitehaven maintained its full-year runof-mine coal production projection of 19 Mt to 20.5 Mt. That implies a June quarter output of between 5.4 Mt and 6.9 Mt, which would be higher than year-ago figures. Australia’s largest independent coal miner also left its annual managed coal sales outlook unchanged at 17.2 Mt to 17.8 Mt. Whitehaven stands to benefit from a move by several nations to reduce their dependence on Russian coal following Moscow’s invasion of Ukraine. The company said this month it was approached by prospective customers ahead of an expected ban on Russian coal imports by the European Union. Whitehaven, which expected to be debtfree by the March quarter, also said it held A$161 million ($118.91 million) in net cash as at April 19.

Australia face limits in coal exports to Europe ahead of Russian ban

Australia, among the world's top coal exporters,

have hit their production limits and are unlikely to meet Europe's demand for additional supplies if the European Union bans Russian coal imports, mining executives said. producers have fielded calls from buyers reliant on Russian coal and have been approached by the government to help coal buyers in allied countries, such as Poland, to replace Russian supply. While benefiting from soaring prices for metallurgical coal used in steel mills as well as thermal coal used in power generation, Australian miners are unable to boost output quickly, and most of their volumes are tied up in contracts to existing customers. Australian output has been hit by floods in New South Wales and Queensland, COVID-19 outbreaks and labour shortages, holding output below full capacity. Total thermal coal exports for the year to June 2022 are expected to rise about 7per cent from a year earlier, when output was hit by China's unofficial ban on Australian coal, to 206 million tonnes, then slip to 204 million tonnes in 2023

Construction starts on new Qld coal mine

The first sod has been turned on a new coal mine which has an expected operating life of nearly 80 years. The Olive Downs coal mine is a new project to produce metallurgical coal, used for steel making, located near Moranbah in central Queensland. The federal government provided a $167.5 million loan to support the mine's first stage of development, including rail and transmission lines, water pipelines, access roads and a coalhandling preparation plant. It expects to increase Australia's export capacity, deliver more coking coal to international buyers, and generate up to $10 billion in economic activity in the next eight decades. Construction will create around 700 jobs and an estimated 1000 positions will be required at full production, expected to start in 2023

South Africa's Exxaro gets 'numerous' European requests for coal

South Africa's Exxaro Resources (EXXJ.J) has received "numerous" requests from European countries wanting to sign supply contracts after the European Union proposed sanctions on Russian coal, the coal miner said. The EU sanctions against Russia, imposed after the latter invaded Ukraine, have put European countries under "severe pressure" to diversify their coal supply, Exxaro said. Exxaro said it has the right quality of coal for the European market, but that current production has already been allocated, and South Africa's struggling rail network means miners will not be able to export more to meet the increased demand.

"South African coal producers are able to produce more coal, but significant work will need to be done to improve logistics in order to ramp up coal supply for export," Exxaro said. State-owned rail company Transnet's capacity to haul mineral exports has been limited by cable theft and vandalism, which resulted in a 14% decline in volumes in the year to March 2021, compared to the previous year. South Africa's coal exporters expect a 10 million tonne increase in Transnet capacity this year, following the introduction of 40 additional locomotives by the utility in March 2022.

South Africa’s Transnet declares force majeure on coal contracts, Thungela says

South Africa’s state-owned logistics firm Transnet has declared force majeure and is seeking to terminate long-term coal transportation agreements, thermal coal producer and exporter Thungela Resources TGAJ.J said. Despite Thungela saying the development would not materially impact its 2022 production forecast, its shares fell 7.8% by 0945 GMT, their biggest fall in a month. Thungela said Transnet on April 8 notified coal exporters of force majeure and “expressed a desire” to terminate its long-term coal transportation agreements. The coal exporters are engaging with Transnet to “clarify the contractual position” and ensure the stability of coal deliveries to take advantage of strong demand for South African coal, Thungela said. Coal producer Exxaro Resources last week said it had received “numerous” requests from European countries wanting to sign supply contracts, after the European Union proposed sanctions on Russian coal.

China to Add 300 Million Tons of Coal Capacity This Year

Top Chinese policymakers reiterated the importance of coal for the country’s energy security and laid out a plan to add 300 million tons of coal production capacity this year. The State Council, China’s cabinet, pledged to support coal production and projects to ensure the country’s energy supplies in a meeting chaired by Premier Li Keqiang. The expansion would represent about 7% of China’s projected coal consumption for this year. The official spotlight on coal reflects policymakers’ concerns about energy supplies after last year's power shortages, analysts said. It also underscores China’s rising energy demand and declining coal imports amid uncertainties caused by the war in Ukraine, they said. The cabinet’s vow to increase coal production indicates that China will maintain an expansion of output that started in the fourth quarter of 2021. China has set ambitious long-term climate goals and renewable energy development plans, but coal is still the top priority for the country’s energy security and generates about 60% of electricity nationwide

China’s March coal imports from Russia plunge 30% yr/yr

China’s coal imports from Russia in March fell 30% from a year earlier, as fears of sanctions impeded purchases and China generally bought less foreign coal. The world’s biggest coal consumer imported 3.12 million tonnes from Russia last month, data from the General Administration of Customs showed recently. That was down from 4.43 million tonnes in March 2021. China’s total coal imports in March slid by 40% from a year earlier, as record-high domestic output and government-capped prices made overseas supply less attractive. Chinese traders also scaled back imports of Russian coal as they struggled to secure financing from state banks that worried about potential foreign sanctions after Russia invaded Ukraine. Refinitiv’s trade flows data shows that, as of April 20, 3.23 million tonnes of seaborne Russian coal was expected to arrive in China in April. Analysts estimated that China could import 20 million tonnes more Russian coal in 2022 than last year

Vietnam to raise annual coal imports to 46.5 million tonnes by 2025, confirms trade ministry

Vietnam plans to raise its annual coal imports to 46.5 million tonnes by 2025 and to 123.7 million tonnes by 2045 from 36 million tonnes last year, the Ministry of Industry and Trade has announced. The South-East Asian country, a regional manufacturing powerhouse, turned from a net coal exporter to a net importer nearly a decade ago and has been increasingly reliant on imported coal for its power generation. Indonesia and Australia have been its key coal suppliers. The ministry said Vietnam is seeking to import more coal from South Africa, adding such imports totalled 7.5 million tonnes last year. Its coal imports in the first quarter fell 24.5% year-on-year to 6.43 million tonnes, but the value of those imports more than doubled to US$1.48 billion, according to the government's customs data. The first sod has been turned on a new coal mine which has an expected operating life of nearly 80 years

. EU embargo on Russian coal would raise prices worldwide

Europe’s coal futures prices have surged to a record high in real terms over the last month as traders anticipate an EU embargo on Russian exports will disrupt supplies globally. EU policymakers may decide higher electricity and gas bills for households and industry are the necessary price to respond to Russia’s invasion of Ukraine. But EU decisions will have significant spill-overs for other coal-importing countries in Asia, Africa and Latin America, likely raising coal, gas and electricity prices for all consumers. Europe now depends on imports to meet more than 40% of its coal consumption, up from less than 30% at the start of the century, according to data from BP (“Statistical review of world energy”, 2021). Russia supplied roughly 50% of coal imports in both 2019 and 2020, accounting for more than 20% of the region’s total consumption.

Balkans turns to coal as energy crisis trumps climate commitments.

North Macedonia - Balkan nations in southeast Europe are turning to coal as they try to tackle a global surge in energy prices, raising fears among environmentalists that countries are rowing back on commitments to phase out the most polluting fossil fuel. North Macedonia, once a frontrunner in attracting renewable energy investors, said earlier this month it planned to open two new coal mines to supply power stations. The new coal mines are Zivojno, close to the Bitola power plant in the south of the country, and Gushterica, near the Oslomej plant in the west. Serbia has said it is increasing coal production due to insufficient rain for hydro-electric plants, and that it will import 500 tonnes of coal per day from Montenegro. Bosnia, the only Balkan country that exports electricity, says it will delay plans to shut down coal-fired power plants due to high energy prices and the impact of war in Ukraine

. After Russian coal ban, Poland faces substantial deficit

Poland will have to compensate for a shortfall of up 8 million tonnes of hard coal after the country decided to ban Russian coal owing to Russia's invasion of Ukraine, Jacek Sasin, the state assets minister, has said.

To make up for the difference, Poland will increase domestic coal extraction and import the commodity from other countries, Sasin said recently. Sasin, who is also a deputy prime minister, said 2049 was still valid as the final date of terminating coal extraction in Poland, but the phasing out curve will be different from original plans as "for the time being we have to keep coal extraction at an increased level."

Sasin also said previous ideas to replace coal with gas are now "outdated" due to surging gas prices.

US coal exports to reach 3-year high amid war in Ukraine: EIA

Pointing to supply disruptions amid Russia’s war in Ukraine, the Energy Information Administration April 12 revised upward their 2022 US coal export projections to three-year high 89 million st. The estimated volume is 4.5% higher than 2021 exports and the highest since 92.9 million st in 2019, according to the EIA’s April Short-Term Energy Outlook. Domestic coal consumption is projected to increase 14.2 million st on the year in 2022 as Henry Hub spot prices climb to $5.43/MMbtu in 2022, compared with $4.06/MMbtu in 2021. The EIA estimates 2022 coal consumption at 560.1 million st, up 2.6% from 2021, with electric power consumption at 517 million st, up 3.1% from 2021. Coal is expected to gain generation share at 22.9% of the stack in 2022, up 0.4% from 2021. The opposite is anticipated for natural gas as the share is expected to fall from 37.2% in 2021 to 35% in 2022 amid high prices.

West Virginia coal production on the rise for 2022

Charleston — The world market for coal is changing and West Virginia is poised to benefit from the opportunity, but a top official in the industry cautions it will take some teamwork and planning. Chris Hamilton, President of the West Virginia Coal Association agreed there is an opportunity for West Virginia’s coal industry which has been beleaguered for quite a while to enjoy a nice rebound. According to Hamilton, Europe’s desire to rotate away from Russian energy, the soaring coast of natural gas, and what he called failures in the green energy sector have pushed up demand and the price for coal. “We have an opportunity, but the question is can we capitalize on that opportunity today. In order to do that there’s going to have to be some obstacles and logistical issues identified and responded to,” Hamilton said in an appearance on MetroNews Talkline. Teck provides steelmaking coal sales and pricing update Canada based Teck Resources Ltd has provided unaudited 1Q22 steelmaking coal sales volumes and realised prices in light of the impacts of recent logistics disruptions in British Columbia, Canada. The recent CP work stoppage interrupted rail service to the company’s steelmaking coal operations in the Elk Valley in Southeastern British Columbia. As a result, the realised 1Q22 steelmaking coal sales were 6 million t, slightly below the low end of the previously announced guidance of 6.1 – 6.5 million t. Record steelmaking coal FOB prices resulted in an increase in the average realised steelmaking coal price in 1Q22 to US$357/t. The increase in steelmaking coal prices from 4Q21 further resulted in positive pricing adjustments of approximately CAN$88 million. Teck’s 1Q22 financial results are scheduled for release on 27 April 2022.