GLOBAL

Asia coal process down as winter season passes

The coal prices and volumes are decreasing in Asia, on the back of easing Europe’s energy crisis and the passing of the winter season, as per Reuters. Prices of the main traded grades for coal used in power plants dropped to their lowest in months last week, and to the weakest in a year in the case of one of the major Australian varieties”, Reuters added.

Furthermore, Australian coal at Newcastle Port with an energy value of 5,500 kilocalories per kg, as assessed by commodity price reporting agency Argus, slipped to $129.87 tonnes in the week to January 27, 2023, the lowest since the week of January 21, 2022, it noted. This grade of coal is most commonly purchased by Indian utilities and was the preferred Australian thermal grade among Chinese buyers prior to Beijing's unofficial ban on Australian cargoes, imposed amid a diplomatic dispute in mid-2020.

Despite the lifting of the Chinese ban, it is unlikely that buyers will flock back to Australian thermal coal, given the availability of inexpensive and similar quality coal from Russia. Last week, the higher quality 6,000 kcal/kg Newcastle grade went down, with the index settling at $307.47 a tonne, which is below the 31% record high of $442.89 reached in early September.

China's coal prices fall to 1 yrlow, clouding demand, and import outlook

China's thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faster than demand, analysts and traders said. High inventories in the world's top coal consumer are capping its appetite for imports, pressuring global prices. The slow recovery in China's coal consumption also points to a gradual rebound in power consumption and growth in the world's second-biggest economy.

Analysts forecast China's coal demand to grow 2% this year on resurgent industry and construction and to bring an extra appetite for imports, especially high-quality Australian coal after China partially eased a ban on imports from there. However, rising stocks at ports and utilities suggest a faster resumption of output at mines than downstream industries such as steel, cement, and chemical, can use, dampening market confidence in the near-term demand outlook.

Spot prices for thermal coal with a heating value of 5,500 kilocalories (kcal) at northern Chinese ports plunged to 980 yuan ($142.49) a tonne this week, a level last seen in early February 2022. Global thermal coal prices also slid, with Australian 5,500 kcal coal falling 10% to about $118 a tonne on the free-on-board (FOB) basis over the past two weeks, while Indonesian 3,800 kcal coal shed 17% to about $67 a tonne

China Boosts Australian Coal Imports

Chinese utilities and traders have stepped up purchases of Australian coal in February, encouraged by signs of further policy relaxation after trade partially resumed last month following a two-year hiatus. In early January, Beijing gave permission to four government-backed firms, comprising steel giant Baowu Group and three state utilities, to ship in Australian coal, the first sign of an easing of the unofficial import ban in place since late 2020. The ban was imposed after relations between Beijing and Canberra turned sour over several political and public health matters.

A full resumption in trade between the world's biggest coal consumer and the world's No. 2 exporter could support global prices for the fuel used in power generation and steel production. At least 15 vessels hauling about 1.4 million tonnes of February-loading Australian coal are bound for China, according to shiptracking data from Refinitiv and Kpler.

Another more than 1 million tonnes of thermal coal have been booked to load in March, a senior trader with a state-run Chinese utility said. "Trades have picked up significantly over the past three days following (the) ministry's remarks," he said. A spokeswoman for China's Ministry of Commerce, responding to a query at a news conference last week about the process for importing Australian coal, said it was a normal commercial activity and that trades are processed via an automatic import license system.

Indonesia still considering coal HBA formula changes

Indonesia's energy ministry (ESDM) is continuing to study the possibility of revising the formula currently used to calculate the country's coal HBA reference price, with it aiming to have a new method in place before the end of this year.

The plan to update the current HBA formula followed concerns among Indonesian suppliers after a decoupling in the price of high-calorific value (CV) Australian coal compared with other grades and origins for much of last year. The HBA is based on GAR 6,322 kcal/kg coal with 8pc total moisture, 0.8pc total sulphur, and 15pc ash. It is calculated based on the average of four coal price indexes the Indonesian Coal Index, Newcastle Export Index, GlobalCoal Newcastle Index, and Platts 5900 index in the previous month. It consequently tracks physical high-CV Australian and Indonesian prices closely.

Australian NAR 6,000 kcal/kg prices were assessed at $400.25/t fob Newcastle by Argus at the end of 2022, around 130pc higher than at the start of the year, although the market has since softened. Indonesian GAR 6,500 kcal/kg prices were assessed at $235.73/t fob Kalimantan at the end of 2022, up by around 60pc compared with the start of last year. The HBA is used to set the prices of different Indonesian coal products, as well as the number of royalties that companies need to pay to the Indonesian government before they are allowed to export their coal. .

Petcoke prices rising on growing demand while coal is falling as supply increases

As China reopens, oil is finding support, seeing a recovery in oil prices to surpass the US$85 mark. The warm winter in Europe and lower gas prices are taking off pressure on demand in the region. However, Russia’s discount is still in place for countries that do not sanction Russian gas supplies (China, India, and Turkey). Meanwhile, coal prices are falling as supply increases and demand is dropping as the fear of recession impacts markets. The price of API4 coal is US$171.

With the return of Indian buyers and the US weather and maintenance leading to a drop in supply, petcoke prices are also rising. The 6.5 percent S petcoke FOB contract sold at US$131 while the 6.5 percent S petcoke CIF ARA contract sold at US$143. Resistance is to be found at US$145, 180 and 215, while support is around US$125, 115, 100, and 85. Multi-year support is found at US$36.

The discount for 6.5 per cent S petcoke FOB sold at US$131 is at 39 per cent when compared with 2Q23 API4 coal sold at US$171. The CIF ARA 6.5 per cent S petcoke contract sold at US$143 is at a discount of 27 percent, when compared with 2Q23 API2 coal sold at US$165. In terms of freight rates, a sharp downturn is supporting FOB prices with the USGC-ARA price now at US$18.50.

Australia’s NSW finalises coal reservation policy

Australia's New South Wales (NSW) state government has issued final directions for its thermal coal reservation policy for domestic power generators. The total coal reserved under the scheme is 19.76mn t/yr, which is roughly in line with domestic generator demand. Of this, around 15mn t/yr is sold under long-term contracts and while covered by the reservation policy, will not be majorly impacted.

The remaining is spot volumes and will be covered by a combination of the other suppliers, with the bulk covered by Glencore, Yancoal, Whitehaven, and BHP from coal that could have otherwise been sold to the export market. All four producers continue to discuss the reservation policy with the NSW government, but it is unclear if this will have any impact on the final directions released on 16 February.

Each firm must have available the lower of either the percentage prescribed by the NSW government or the number of tonnes. This must be available up until 30 days before the beginning of the April-June quarter of 2023 and 60 days before each subsequent quarter until the end of 2024. All coal sold domestically must be at a maximum price of A$125/t ($86/t) for 5,500 kcal/kg thermal coal, with an equivalent per tonne price of A$0.02273/kcal/kg for coals with other specific energy. The state could provide compensation if coal mining firms prove that their cost of production is higher than the A$125/t cap.

Australian energy minister rules out ban on new coal mines

Australia’s energy minister has ruled out a ban on new coal mines as part of the country’s overhaul of climate policy.“That’s not part of our agenda,” Chris Bowen said when asked directly about the prospects for a ban on ABC’s Insiders TV program. “It won’t be part of those negotiations.”

The government was elected on a pledge to end the country’s climate wars and last year passed landmark legislation mandating emissions cuts of 43 percent off 2005 levels by 2030. However, the bill left the detail on how the cuts will actually be achieved to future debate.

The overhaul of its carbon pricing policy, which aims to abate about 205 million tons by the end of the decade, is one of the first skirmishes. The so-called safeguard mechanism would cover about 215 entities that account for around a quarter of Australia’s total emissions. Highpolluting facilities would be forced to reduce pollution or pay costs. The Green Party, which controls a crucial block of votes that the government is courting for other legislative priorities, is trying to push the government to go further and rule out new coal and gas operations. They are also concerned about the role of using carbon credits to offset emissions.

BHP to sell more Australian coking coal mines

Australian resources firm BHP and Japanese trading house Mitsubishi plan to sell the 12mn t/ yrBlackwater and 2.5mn t/yrDaunia mines from their BHP Mitsubishi Alliance (BMA) joint venture in Queensland. BMA has launched a trade sale process for these lower-grade hard coking coal, pulverised coal injection, and thermal coal mines while retaining ownership of premium hard coal mines like the 6mn t/yr Peak Downs and 5mn t/yrSaraji. This meets with BHP's strategy to move to high-grade coking coal, which it sees as best placed to remain profitable in a transition to a low-carbon economy.

The planned divestment follows BHP's sale of its 80pc stake in BHP Mitsui Coal (BMC) coking and thermal coal joint venture to Australian firm Stanmore in May 2022.Blackwater and Daunia produced 14.65mn t of BMA's 58.28mn t of coal production in the 2021-22 fiscal year to 30 June. The sale will cut BMA's production to around 45mn t/yr. BMA's Hay Point port facility near Mackay has a capacity of 55mn t/yr, although it only exported 46.3mn t in 2022.

Blackwater coal is usually shipped through Gladstone. But it is unclear if Daunia coal will continue to use the Hay Point facility or be shifted to the adjacent port of Dalymple Bay Coal Terminal if the sale goes through.

Bettercoal launches South Africa, working group

Bettercoal has announced the establishment of its South Africa Working Group – a memberled group focusing on coal in South Africa. The group was formed due to increasing volumes of South African coal coming into Europe, and the need for Bettercoal Members to ensure that there is due diligence monitoring in these changing coal supply chains. The group serves as a platform for Bettercoal to work with its members to better understand the context relevant to coal mining in South Africa.

Bettercoal has worked with its country working groups since 2018 to better understand countryspecific challenges and foster better relationships with all stakeholders in key coal markets. For example, the Colombia Working Group has been active since 2018 and been engaging with a variety of stakeholders on prioritised issues.

The newly established South Africa Working Group is also a recognition of increasing Bettercoal activity in the country, with the South African producer Canyon Coal recently starting their Bettercoal assessment journey. Wind and solar power generated more electricity in the EU last year than gas did. European countries were forced to accelerate their renewable energy capacity after Russia's invasion of Ukraine sparked a global energy crisis.

South Africa won’t abandon coal

President Cyril Ramaphosa says that abandoning coal as a fuel source is an idea that must be dispelled. South Africa faces a catch-22 where it must reduce reliance on coal to align with its Just Transition framework; however, is still heavily reliant on coal in light of the immediate energy crisis. Responding to the debate over the State of the Nation Address (SONA) on 16 February, the president said that coal-fired power stations still provide 80% of the country’s energy source.

As a result, he said that this will still provide the bulk of South Africa’s ‘base load’ supply into the future. “We are committed to a future energy mix that consists of a diversity of energy sources, including coal, renewables, nuclear, gas, hydro, storage, bio-mass and other forms of energy,” said Ramaphosa.

“Through the work of the Presidential Climate Commission, the Presidential Climate Finance Task Team led by Mr. Daniel Mminele, government departments and stakeholders, we have developed a clear, just and inclusive path towards a low-carbon economy and society,” said Ramaphosa. In the latter parts of 2022, Cabinet approved the $8.5 billion plan to move away from coal. The plan is made up of foreign climate finances pledged by some of the world’s richest nations to re-purpose and close coalfired power plants in South Africa..

Glencore declares N$121b dividend

Glencore PLC, the largest natural resources company in the world, has reported a record surge in annual profit, boosted by its coal and trading divisions, as it declared a US$7 billion (N$121 billion) dividend to its shareholders.In its preliminary results for 2022, released late last week, the group posted an adjusted Ebitda of US$6,4 billion – a 73% increase from 2021.

Glencore's core profit increased by 60% to US$34,1 billion, and US$17,9 billion from that amount was reported from coal production.

The mining giant says it has increased coal output from its own mining activities by 7% to 110 million tonnes. This was a major contributing factor to the 59% increase in adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) of US$27,3 billion (N$470 billion) from its industrial operations. Earnings from coal mining accounted for about two-thirds of total earnings.

Its coal guidance for 2023 is at the same level as 2022, at about 110 million tonnes, with a possible positive or negative variance of five million tonnes. The miner produced 1,06 million tonnes of copper in 2022, a 12% decrease from the previous year. The miner's South African thermal production of 16,4 million tonnes was an 18% decrease from 2021, due to the disposal of the Middelburg mine and the wet weather challenges that affected the mine.

Germany: Coal imports increase in 2022 amid Ukraine war

Germany increased its coal import by 8% last year, as it tried to cope with a shortage in the country's energy supply after Berlin stopped relying on Russian oil and gas due to Moscow's invasion of Ukraine. The country imported 44.4 million tons of coal in 2022, the Association of Coal Importers (VDKI) said in an evaluation covered by the German newspaper Bild.

Russia remained the top supplier of coal, despite sanctions imposed by the European Union in August banning the import of Russian coal to bloc members. However, Russian supplies stood at 13 million tons, which is a 37% decline from the year before. In second place came the US, with 9.4 million tons, a 32% increase from the year before.

Shipments arriving from South Africa and Colombia saw significant increases, standing at 3.9 million tons (278%) and 7.2 million tons (210%), respectively, according to the VDKI. Germany says it wants to be carbon neutral by 2045. In 2020, it announced it would stop burning the climate killer, gradually phasing out its coal-fired plants by 2038. However, sanctions imposed on

Russia last year due to its invasion of Ukraine shook Germany's energy supply, causing a return to an increase in the use of coal.

EU coal rebound smaller than feared in 2022 energy crunch

The EU's use of coal-fueled power rose last year as countries faced a shortfall in energy supplies related to Russia's invasion of Ukraine, but the increase was not as high as many feared, according to a report. That's partly thanks to a boost in renewable energy production, which generated a record 22 percent of the EU's electricity last year.

As EU countries scrambled to shore up energy supplies after Russia cut off gas flows following its invasion of Ukraine and the bloc imposed sanctions on Moscow's coal and crude oil, some turned to mothballed coal power plants to replace lost supplies. The move caused EU coalfired electricity generation to rise by 7 percent compared to 2021, accounting for 16 percent of EU electricity, but the situation "could have been much worse," said the report by think tank Ember.

The report points to a fall in coal generation in all four of the final months of 2022 mainly due to lower electricity demand. The 26 coal units brought back online across the bloc last year ran at just 18 percent average utilization between October and December, it says, while the EU burned through just one-third of the 22 million tons of extra coal it imported as a failsafe.

Russian mining sector targets Asian customers

Russia continues a re-direction of its hydrocarbons and minerals exports from Western states to the Asian region, as sanctions’ pressure from the West tightens. As part of these plans, particular hopes are put on coal exports to the region, where the demand for it remains high, especially due to big discounts, provided by Russian suppliers. Russia has already been able to increase its coal deliveries to South Ko- rea, overtaking Australia – the main player in this market in the past.

At present South Korea imports about 2 million tonnes of thermal coal monthly from Russia and there is a possibility that the country’s dependence on Russian coal will only continue to grow. That will be also due to attractive prices, which are offered by Russian coal producers to their Asian and particular South Korean customers. At the end of December, 6,000 kcal Australian coal cost US$409.5 per tonne, compared to US$244 per tonne for Russian coal.

In the meantime, many Russian mining and metals’ companies are also considering China as one of the potential biggest sale market for them in the Asian region, although, according to a recent report, published by the Russian Aton investment company, there could be serious difficulties for Russian business during their expansion in China, despite the fact that the Chinese market is huge, (accounting for more than 50% of the global consumption of many metals including nickel and copper). China has a powerful domestic production, so imports account for only 25% of its consumption.

New Coal Company begins shipments in West Virginia

Allegheny Metallurgical Coal, a new company to be served by both CSX Transportation and Appalachian & Ohio, moved its first train of highgrade metallurgical coal earlier this month. The company, located along U.S. Route 119 between Buckhannon, in Upshur County, and Philippi, in Barbour County, moved the first train Feb. 8. Its loadout is designed to minimize loading time and traffic disruptions on the busy highway. Each train of 130 empty coal hoppers will cross Route 119 to enter the property and will be split into two equal halves.

After 65 cars are deposited on a siding, the other 65 empties will move through a continuous loadout. The motive power will then exchange the two cuts, load the second 65 cars, and reconnect the two halves. According to the company, this entire process will require no more than 4 hours; the loadout design is considered innovative for West Virginia rail-haul operations.

Allegheny Metallurgical President Keith Hainer told the Elkins Inter-Mountain newspaper the system is “unique in West Virginia. This allows a 130-car train to cross Route 119 without having to stop. This increases the efficiency of filling the train cars and keeps traffic interruptions to a minimum so we aren’t disrupting commuters, buses, and other travelers along the road. We have explored many options to move this product in the safest manner, with the least amount of impact, and the best value and rail meets these criteria.”

99 percent of U.S. coal plants cost more to run than to replace with renewables, the study determines

It would be cheaper to build new renewable energy capacity than it is to continue operating nearly every existing coal plant in the U.S., a new report from Energy Innovation finds.

The nationwide median cost of existing coal power is $36/mW-h, compared to just $24/ mWh for new solar. The only cost-competitive coal plant to operate compared to building new renewables, Wyoming’s Dry Fork Station, is just $0.32/mW-h cheaper than new renewables.

“Coal is unequivocally more expensive than wind and solar resources, it’s just no longer cost-competitive with renewables,” Michelle Solomon, a policy analyst at Energy Innovation, told The Guardian. “There’s a huge opportunity here to invest in coal communities, build local economic resilience, and save money in the process.”

On average, the marginal cost for the coal plants is $36 each megawatt hour, while new solar is about $24 each megawatt hour, or about a third cheaper. Only one coal plant – Dry Fork in Wyoming – is cost-competitive with the new renewables. “It was a bit surprising to find this,” said Solomon. “It shows that not only have renewables dropped in cost, but the Inflation Reduction Act is also accelerating this trend.”

Renewables Beat Coal In the US, Surpass Gas For First Time In Europe

The renewable energy juggernaut is gathering strength in virtually every nation on Earth. There are two reports out this week that highlight the extent to which renewables are outperforming coal in the US and methane gas in Europe by almost every metric, especially cost. Here’s a roundup of the latest renewables news this week. A report by Energy Innovation dated January 29, 2023 claims “99 percent of the existing U.S. coal fleet is more expensive to run compared to replacement by new solar or wind. Replacing coal plants with local wind and solar would also save enough to finance nearly 150 gigawatts of four-hour battery storage 60 percent of the coal fleet’s capacity.

“This research shows all but one of America’s 210 coal plants is more expensive to operate than either new wind or new solar. If the IRA’s new energy community tax credit is included in the equation, 199 of the 210 plants are more expensive to operate compared to local solar resources sited within 45 kilometers of the plant. Local wind resources are also cost-effective and readily available, with 104 plants having cheaper wind resources within 45 kilometers.

Michelle Solomon, a policy analyst at Energy Innovation, tells The Guardian, “Coal is unequivocally more expensive than wind and solar resources. It’s just no longer cost-competitive with renewables. This report certainly challenges the narrative that coal is here to stay. “Not everyone agrees. Coal lobbyists in particular would like to see their fat salaries continue for a while longer.

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GLOBAL MINETEC LIMITED starts off its logistics from moving the quality coal from mine stock. The coal is loaded and transported through tippers and subsequently loaded to wagons to be carried to the respective thermal power plants. GLOBAL MINETEC LIMITED is a brand that believes in strengthening its innate competence and growing better each passing day. With numerous new ideas out of its pandora box GLOBAL MINETEC LIMITED strives at becoming a giant business conglomerate. With strong core values and impeccable services GLOBAL MINETEC LIMITED is the name you can count on.

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