GLOBAL

Indonesian Coal Exports Surge 32% on Strong Asia Demand

Indonesian seaborne coal exports rose partly due to improved economic conditions in China and an increase in energy demand. During the first four months of 2023, Indonesian coal exports to China are estimated to have risen 65% y/y. The Chinese economy is performing significantly better than last year, when strict COVID restrictions were in place. As a result, industrial activity has increased, boosting coal demand.

Coal supply has also improved as Indonesian coal exports have not been restricted by an export ban which was in place in January 2022.

The surge in coal exports is supporting rates for panamax and supramax ships which transport 85% of Indonesian coal. Earnings in both segments remain higher than pre-COVID levels but have weakened significantly compared to 2022. Indonesian coal exports account for 19% and 11% of all cargo transported by panamax and supramax ships respectively. The higher coal volumes have helped offset weaker grain and minor bulk volumes. However, due to shorter coal hauls, freight rates for the two segments have still been impacted negatively.

Higher demand for Indonesian coal has also been seen in other smaller economies in East and Southeast Asia. Coal prices have started to cool from record high levels in 2022, improving its attractiveness in price sensitive economies such as the Philippines and Vietnam. Additionally, spillover effects of China’s economic recovery have been seen in South Korea. Chinese demand for South Korean industrial goods has increased, leading to higher South Korean coal imports. India is the second largest destination for Indonesian coal, but unlike other destinations, exports from Indonesia have slightly decreased so far this year.

Indonesia’s PLN, IEA sign pact on emissions reduction

Indonesia's state-owned power generator PLN has entered into an initial agreement with the Paris-based IEA to further its plans to reduce its carbon footprint. PLN aims to leverage IEA's expertise in finalising the Just Energy Transition Partnership Investment and Policy Plan (JETP IPP), which aims to accelerate Indonesia's coal energy phase out and speed up investments in renewable energy infrastructure. Indonesia will receive an initial $20bn over the next 3-5 years from its international partners such as the US, the EU, Japan and Canada under the JETP. The planned funding will consist of a mix of concessional loans, market-based loans, grants, guarantees and investments from public and private-sector entities.

The latest partnership with IEA is part of Indonesia's broader plan to reach net zero by 2060. The pact paves the way for PLN to utilise IEA's Global Energy and Climate model to generate sectorby-sector long-term plans to reduce emissions, the power utility said. The initial agreement with the IEA will help in better categorisation of existing PLN power plants for either continuing operations or accelerated decommissioning, the utility said.

Under a business-as-usual scenario with existing efforts to reduce emissions, PLN expects the power generation sector to produce up to 433mn t of carbon emissions by 2030. But Indonesia has outlined emissions from the power generation industry to be fall to 335mn t by 2030 under PLN's electricity supply business plan (RUPTL), which aims to reduce 1.6bn t of carbon dioxide emissions over the next 25 years

Ship from Indonesia becomes largest to dock at Bangladesh port

A 229 metres long ship with a 12.5 metres draught that brought coal to Matarbari for a power plant has become the largest to dock at any Bangladeshi port. The vessel, OWUSU MARU bearing the flag of Panama, arrived at the jetty built for the Matarbari power plant. The docking was confirmed by AbulKalam Azad, the executive director (project) of Coal Power Generation Company Bangladesh Limited.

The ship arrived via Singapore with coal from Indonesia’s Tarahan, which is the first ship to bring coal for a coal-fired power plant. The authority had berthed more than 120 ships at the jetty, said Rear Admiral M Shahjahan, the chairman of the Chattogram Port Authority, or CPA, during the 136th founding anniversary ceremony of Chattogram Port.

“Today, the biggest ship to ever visit Bangladesh has arrived at Matarbari's coal jetty,” Rear Admiral Shahjahan said. “Once the Matarbari terminal is completed, it will enable deep draft vessels, including commercial ships with a depth of 16 meters or more, to access the area.” The vessel has a capacity of 80000 tonnes. However, the ship brought a total of 63000 tonnes of coal, according to Azad. He added that unloading the coal from the ship may take around six to seven days, while even bigger ships can dock here in the future.

China takes Australian thermal coal as India declines

China has usurped India as the premier importer of lower-grade Australian thermal coal, but there are questions as to whether the shift is structural or driven by temporary price factors. China's imports from Australia of the fuel used to generate electricity are estimated by commodity analysts Kpler at 4.44 million tonnes in April, more than double March's 2.21 million and the most since China ended its unofficial ban on Australian coal earlier this year. The April volumes are also largely in line with what China, the world's biggest coal importer, was buying prior to the imposition of the ban in mid-2020, which subsequently saw arrivals from Australia drop to zero by early 2021.

To be sure, China's imports of thermal coal from Australia, the world's second-biggest coal exporter, still lag well behind the 19.29 million tonnes in April from top supplier Indonesia.

Australian thermal coal has to be price competitive with domestic supplies, something that has been the case in the past few months, but also a situation that may be coming to an end. Australian coal with a 5,500 kilocalorie per kg (kcal/ kg) energy content, as assessed by commodity price reporting agency Argus, ended at $117.81 a tonne in the week to April 21. This was slightly higher than the previous week's $116.65, which was the lowest price since January last year

Asian met coal could ease in Q2 on higher supply, mixed Chinese demand outlook

Asian metallurgical coal prices are expected to soften in the second quarter as supply disruptions in Australia are set to ease on warmer weather, while China’s demand outlook is mixed amid uncertain steel requirements and the country resuming Australian coal imports after a near two-and-a-half-year pause. The benchmark Platts premium low-volatile hard coking coal prices, on FOB Australia basis, averaged $343.91/mt in Q1, up from $278.13/mt in the previous quarter, showed data from S&P Global Commodity Insights.

Chinese steelmakers have indicated that they would be open to buying more Australian material in Q2, but added that it would depend on a workable arbitrage emerging between seaborne and domestic PLV as domestic prices have been under pressure since March. Chinese mills’ appetite for coking coal imports will depend largely on steel demand and prices. Margins for steel saw increased pressure in early-April amid production that grew on the year over January-March and a slow recovery in demand.

Met coal output in Australia is likely to increase in Q2 amid forecasts for warmer-than-median temperatures over most of the country in AprilJune. The latter part of the forecast period is also expected to see El Nino conditions, typically associated with hot and dry weather that are ideal for mining operations

Super funds in Australia is investing billions into new coal and gas

Australia's 15 biggest super funds have more than $25 billion invested in companies that are expanding coal, oil and gas production, analysis by the Australian Conservation Foundation has revealed. That's despite international experts agreeing that new fossil fuel projects risk blowing out ambitions to keep global temperature rise as close as possible to 1.5 degrees. The analysis found nearly a fifth of the total amount was invested in Australia's top three biggest polluters - Woodside, Santos, and Chevron.

ACF corporate campaigner Jonathan Moylan says Australia's biggest super funds have enormous influence when it comes to driving Australia's clean energy transition, or blocking it. "By the choices they make about how they invest our retirement savings, super funds can transform Australia from the world's largest exporter of climate pollution to a country that manufactures low or zero emissions materials here with our abundant wind and sunshine," Mr Moylan said.

He pointed to efforts by Vision Super and HESTA, and now possibly the Australian Retirement Trust, to pressure Woodside towards genuine climate action as examples of super funds using their muscle to push companies they invest in to cut emissions. "A growing number of Australians don't want their retirement savings locking in greenhouse emissions with new projects when they could be building clean energy infrastructure for the twenty-first century," Mr Moylan said.

$280m in construction announced for coal terminal in Australia

Dalrymple Bay Infrastructure in Australia has announced it will design and construct a new ship loader and reclaimer for its coal terminal in Queensland. The company’s wholly owned subsidiary Dalrymple Bay Infrastructure Management is to proceed with plans for the new machinery under its non-expansionary capital expenditure (NECAP) program at Dalrymple Bay Terminal.

The new ship loader and reclaimer will replace existing machinery at the terminal. The projected costs of the projects are around $165 million and $116 million, respectively. DBI managing director and CEO Anthony Timbrell said the NE-

CAP program would ensure terminal capacity remains available. “To ensure that the Dalrymple Bay Terminal continues to accommodate metallurgical coal exports from the Bowen Basin for use in steel production that will enable the world’s transition to a low carbon future, DBI will focus on its investment in the pipeline of NECAP projects required at DBT over the coming years,” he said.

DBI expects the projects to be funded through a combination of existing debt capacity and internal funds from operations. Design and construction are scheduled to commence this year and take around three or four years to complete.

Re-opened Wilkie Creek coal mine in Australia, clears the way to start off operations

The reopened Wilkie Creek coal mine is expected to start exporting in a few months after the project ticked off a string of critical milestones, clearing the way for the start of full operations. The project near Dalby, about 250km west of Brisbane, is forecast to produce about 2.4 million tonnes a year of high-quality thermal coal, destined for markets in Asia. The open cut mine was previously operated by Peabody Energy and has been in care and maintenance since 2014.

Peabody Energy sold it to New Wilkie Energy in July 2021, which kick started its revival in a climate where there is speculation on the future of new coal mines. The company’s managing director Gary Williams said a significant milestone has been reached with Queensland Rail receiving Ministerial approval and has signed the Access Agreement to enable the first shipment of NWE coal early in the second half of the year, using the West Moreton Coal rail system servicing the Port of Brisbane.

Australia, one of the world’s largest coal exporters, is now committed to cutting carbon emissions by 43 per cent by 2030 from 2005 levels, on a path to reaching net-zero emissions by 2050. There is speculation that there will be no new coal mines in Australia and in March the federal government blocked a planned coal mine by billionaire Clive Palmer because it would endanger the Great Barrier Reef. Australia's best business newsletter. Get the edge with AM and PM briefings, plus breaking news alerts in your inbox.

Australia's South32 cuts output across divisions, shares slump

Australian diversified miner South32 Ltd cut output guidance for several operations hit by wet weather and other issues in the third quarter, which sent its shares down nearly 10%.The Perth-headquartered miner said however it expected to benefit from higher volumes and prices in the June quarter. Its shares slid as much as 10% to A$4.00, sharply underperforming a 2.2% drop in the mining sector .AXMJ.

Wet weather and temporary disruptions at the Appin metallurgical coal mine led to a 21% drop in metallurgical coal production in the March quarter from a year earlier and a 7% cut in output guidance for the year. The division is its most lucrative, comprising a third of earnings during the first half.South32 said it now expects to produce 6.5 million tonnes of Illawarra metallurgical coal for the year to June 2023, down from a forecast of 7.0 million tonnes.

South 32 also cut output guidance at MozalAluminium by 8% to 340,000 tonnes and Cannington payable zinc equivalent production by 6% to 195,900 tonnes. It lowered its nickel production forecast by 7% to 40,500 tonnes. However, the company said it remains on-track to meet its full year production guidance at most of its operations.

Australia closes oldest coal plant, pivots to renewable

Australia's oldest coal-fired power plant will shut down as the country, a once-notorious climate straggler, prepares for a seismic shift towards renewable energy. The Liddell power station, about three hours' drive north of Sydney, is one in a series of ageing coal-fired plants slated to close in coming years. Built in 1971, Liddell provides about 10 percent of the electricity used in New South Wales, Australia's most populous state.

For decades, coal has provided the bulk of Australia's electricity, but University of New South Wales renewable energy expert Mark Diesendorf told AFP that stations such as Liddell were fast becoming unreliable "clunkers". Besides being inefficient, highly polluting and expensive to repair, the continued widespread use of coal-fired power plants would make Australia's climate targets almost impossible to meet. Australia has long been one of the world's largest coal producers and exporters, and under a series of governments of all stripes it has resisted pressure to scale back the industry.

But the Centre-left government elected last year on the promise of climate action has pledged that 82 percent of the country's electricity will come from renewable sources by 2030. This demands a drastic overhaul while world leaders such as Norway produce more than 90 % of their power through renewables, Australia currently sits around 30 percent. "The plans are for a fairly rapid phase-out," Diesendorf told AFP. Under growing public pressure to address the climate crisis, many Australian fossil fuel companies increasingly prefer to shutter old coal plants than keep them online.

South Africa

Blackout-beset South Africa may delay closing coal stations

South Africa may delay shutting down many of its highly polluting coal-fired power stations, President Cyril Ramaphosa said, a move that could stem a crisis of daily electricity blackouts but would slow a shift to greener energy sources. South Africa is Africa's most developed economy but is experiencing rolling nationwide blackouts, sometimes for more than 10 hours a day, because of an electricity shortfall. The blackouts, which have become worse over the past year, have been deeply damaging to the economy and to the popularity of Ramaphosa's government ahead of national elections next year.

Under the new plan, which Ramaphosa outlined only broadly in his weekly letter to the nation, South Africa will consider a delay in the decommissioning of some of its 14 coal plants to help ease the electricity cuts, known as “load-shedding.” About 80% of South Africa's electricity is provided by coal. The nation is the world's 16thlargest emitter of greenhouse gases overall, at about 1.13% of global emissions, and 45th per capita based on 2019 data, according to ClimateWatch.

The blackouts are cutting electricity to South African homes and businesses and its 60 million people several times a day, usually in two-hour blocks. Ramaphosa wrote that South Africa was still committed to the world’s climate targets but had to balance that with its energy security requirements and the immediate priority of ending, or at least reducing, the power cuts. He pointed out that South Africa wasn't the only country leaning on coal to address short-term energy supply problems.

South Africa’s ANC approves plan to extend use of coal plants despite climate concerns

South Africa’s governing party has approved plans by the Electricity Minister KgosientshoRamokgopa to extend the use of Eskom

Holdings SOC Ltd.’s coal-fired plants earmarked for decommissioning, in a bid to stave off an escalation in power cuts. KgosientshoRamokgopa, South Africa’s electricity minister, addresses employees during a visit to the Eskom Holdings SOC Ltd.Ramokgopa presented his plan to ease rolling blackouts, known locally as load shedding, before the African National Congress’s highest decision-making body.

“The NEC supports the approach that as we prioritize load shedding we will need to re-visit our decommissioning schedule to balance energy security and our climate commitments,” President Cyril Ramaphosa said in his closing address to the ANC’s National Executive Committee. Africa’s most-industrialized nation has been hobbled by an energy crisis that’s slowing economic growth and increasing costs for companies. The plan to keep using the dirtiest fuel for longer may also delay transition to cleaner fuels and access to $8.5 billion of funding by rich nations for closing coal plants.

The updated schedule will be determined by a number of factors including modeling to estimate projected future capacity from various sources as commissioned by the National Energy Crisis Committee of Minister. Other factors to be considered will include, research on the decarbonization trajectory to be conducted by the Presidential Climate Commission, as well as a feasibility study on the refurbishing of power stations which has been commissioned by the National Treasury.

South Africa driving reforms in electricity sector

Speaking at the South Africa–Finland Roundtable Business Forum held in Menlyn, east of Pretoria, President Ramaphosa said South Africa is in the grip of an energy crisis. “We are implementing the national Energy Action Plan to increase the current supply of energy and to achieve energy security in the long-term,” President Rama- phosa said. President Cyril Ramaphosa says South Africa is driving reforms in the electricity sector to enable private investment in electricity generation and accelerate the procurement of new generation capacity, including solar, wind, gas and battery storage.

“We are implementing the national Energy Action Plan to increase the current supply of energy and to achieve energy security in the longterm,” President Ramaphosa said. Speaking at the South Africa–Finland Roundtable Business Forum held in Menlyn, east of Pretoria, on Tuesday, President Ramaphosa said South Africa is in the grip of an energy crisis. The Business Forum was attended by government representatives and business leaders from the two countries.

“Even as we work to improve the performance and efficiency of our existing coal-fired power stations to address energy shortages, we remain committed to a just energy transition, and to our target of achieving net zero emissions by 2050. “A just transition to a low carbon, climateresilient, greener economy forms part of South Africa’s global climate change commitments. We believe that there is alignment between our objectives and Finland’s goals,” President Ramaphosa said. On the economic front, President Ramaphosa said South Africa is ready for a partnership with Finnish companies willing to do business in South Africa.

United States

U.S. coal shipments increased slightly in 2022 as power plants replenished stockpiles

The amount of coal received by power plants in the United States has largely declined over the past decade as coal-fired electricity generation has fallen and many coal-fired power plants have closed. However, slightly more coal was shipped to U.S. power plants in 2022 than in 2021 even though coal-fired generation fell by nearly 8% in 2022. The 8-million-ton increase in coal shipments came as power plants replenished their coal stocks, which had been drawn down in 2021.

Coal-fired plants stockpile coal to ensure they have enough fuel supply on-site; they build up inventory to prepare for periods of greater electricity demand and draw from the stockpile as needed. Most coal is supplied through longterm contracts between utilities and coal producers that specify the amounts of coal to be delivered at set intervals, although some contracts allow flexibility in delivery volumes. Plants also supplement their coal supply with spot purchases of coal as needed. Coal stockpiles at U.S. power plants declined in 2021 because plants drew from stocks to meet increased electricity demand. In 2021, U.S. coal-fired generation increased for the first time since 2014, driven by growth in electricity demand and a stronger competitive position given rising natural gas prices.

The increased coal burn and large stockpile draws came at a time when limited coal supply made it difficult for some plants to rebuild their stockpiles. As U.S. coal mines ramped up production in 2022, coal shipments increased as plants worked to replenish stockpiles. In 2022, 459 million short tons of coal were delivered to power plants in the United States

Exporting Alabama Coal, Growing Alabama Jobs

It’s no secret that Alabama’s economy is booming, and so is business at your Port. In 2021 alone, the Port was responsible for $85 billion dollars of economic impact and created nearly one-in-seven jobs state-wide. On top of that, our economic activity sent more than $2 billion in tax revenue back to state and local governments. What you may not know, however, is that our state’s coal industry is a key driver in this success. Alabama’s coal is sought after worldwide, and Alabama’s port is the fastest way to get it there.

Alabama’s coal is special. It is different from thermal coal, which has long been burned for energy. Instead, our coal is metallurgical, or “met” coal, a key component in steel making. The chemical makeup of Alabama’s met coal is recognized industry-wide as some of the finest met coal in the world. From ships to scalpels, met coal is used to produce high-grade steel.

With major coal industry expansions underway in the Birmingham and Tuscaloosa areas, exports are expected to double in the next five years. Alabama’s port needs to be ready. That’s why Gov. Kay Ivey recommended $25 million in her budget request to support much-needed upgrades at McDuffie. This investment will complement improvements the Port is already making and speed up the modernization of our coal-handling equipment. With the State’s assistance, McDuffie will reach its full potential of more than 20 million tons exported annually, ensuring the Port offers the efficiency needed to keep up with the growing demand for Alabama coal.

Europe

EU coal terminal inventories rise to 9-week high

Coal stocks at northwestern European import terminals have risen 4% on the week to a nineweek as seaborne vessel arrivals persist despite diminishing generation demand, port data showed .Combined inventories at four key terminals in Amsterdam, Rotterdam and Antwerp (ARA) were assessed last at 5.83m tonnes, up by 0.23m tonnes from a week ago, according to Montel estimates. The figure was the highest since the week beginning 20 February and 1.37m tonnes higher than the same period last year.

A source at Rotterdam’s key EMO terminal said that although vessel arrivals were “busy” for the time of year, reloadings onto barges for shipment to inland plants were “normal”. And stocks could rise further, with deliveries to Rotterdam and Amsterdam provisionally seen this week at a combined 0.53m tonnes, compared with 0.21m tonnes last week, according to DBX estimates.

Muted generator demand and ample supply was weighing on European coal prices, with the front-month API 2 contract last seen down USD 3.75 on settlement at USD 131.50/t, on Ice Futures.Of the ARA stock total, inventories at EMO were seen this week at 3.9m tonnes, up 0.2m tonnes on the week, while Amsterdam’s OBA terminal, the second-largest ARA coal import hub – reported a decrease of 0.04m tonnes to 1.37m tonnes.

German coal burn may fall by 19%YoY this summer

German hard coal-fired generation might fall year on year this summer, if recent trends of weaker overall power demand, renewables build-outs and a coal-gas fuel switch incentive continue. Hard coal-fired generation over 1 April–30 September could slip by 19pc on the year and 5pc below the 2018-22 average to 4.8GW, under a scenario where overall electricity generation is on average 4.1pc lower on the year in April-September, according to Argus calculations.

This is in line with the 4.1pc drop in German power demand over 2022-21, which was primarily the result of industrial and household demand erosion associated with high prices, policy and behavioural changes in energy consumption stemming from the fallout of the Russia-Ukraine conflict. A 19pc drop in hard coal-fired generation would equate to 1.9mn t less NAR 5,800 kcal/kg coal burn across the six-month period.

This scenario assumes that wind and solar power generation grow by 7pc and 5pc respectively year on year, and that lignite generation declines by 5pc year on year, in line with the percentage drop in output over the first quarter. Germany is planning to phase out 1.9GW of lignite capacity by July, so there is further downside risk to the lignite outlook. Oil-fired generation, which plays a minimal role in the power mix, is assumed to be flat to last summer, while hydropower, biomass-fired power, imported power and other forms of generation are forecast in line with seasonal trends.

Russia Eyes Asian Markets For Its Coal Exports

Russia is now looking at expanding its coal exports to the Asian market, said Deepak Kannan, Global Head of Coal Pricing, S&P Global Commodity Insights as Europe taps other markets for its coal exports. Kannan explained that the coal trade flows have changed drastically since the war between Russia and Ukraine broke out last year. “As Europe stopped coal imports from Russia, it was cut short of fuel and had no gas supplies. There was a shift in demand for Asian coal, and Europe started scrambling for cargoes from wherever they could get. They tapped Colombia, South Africa, Australia and even Indonesia,” said Kannan.

With this shift in European demand, Kannan said that Russia did not have a home for its coal exports and started offering cargoes at a discount to whoever was buying. Among the countries that are now buying Russian coal are China, India, and South Korea. “Two years ago, Russian coal imports by India were around 4 million tonnes, today it is around 17-18 million tonnes. That is a big leap you see here for Russian coal,” Kannan stated.

Kannan also delved into other markets in Asia, such as Vietnam, which today is buying nearly two-three million tons of coal per month compared to one million tonnes of coal per annum a few years back. Citing the lack of indigenous production in Southeast Asian and Northeast Asian markets, Kannan said they all have to depend on imported coal

UK’s biggest power generator

Drax ends coal burning operations

British power generation firm Drax has announced the end of coal burning operations at its plant in Yorkshire, northern England. With four of the plant’s six generators now burning biomass, the power station has become largest generator of renewable power in the UK. The plant kept its final two coal-fired units until now as a contingency, following energy supply concerns after the invasion of Ukraine. Drax are now converting the remaining two coal elements into combined cycle gas turbines alongside 200MW battery storage.

Drax Group CEO Will Gardiner stated: “By converting the plant to use sustainable biomass we have not only continued generating, but we have also played a significant role in enabling the UK’s power system to decarbonise faster than any other in the world. “We’re now planning to go further by using bioenergy with carbon capture and storage (CCS) to permanently remove millions of tonnes of carbon dioxide from the atmosphere each year.”

However, the UK government has reportedly denied Drax access to subsidies in order to push forward its CCS project. In 2020, Drax provided 11% of the UK’s power, the largest of any generator. Initially commissioned in 1974 as a state-owned coal plant Drax has had the largest capacity for power generation since then. The plant began co-firing biomass in 2008. Drax currently benefits from government energy subsidies that expire in 2027, casting the future of its biomass operations into doubt.