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Global
World needs to break its addiction to coal to fight climate change, U.N. chief says
We must break the addiction to coal," U.N. Secretary General Antonio Guterres said at U.N. Headquarters in New York on Monday, on the day that two lawmakers in Sweden nominated teen climate activist Greta Thunberg for the 2020 Nobel Peace Prize.
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The U.N. chief has called for a reduction of coal before, but it was clearer than ever that the top world diplomat is sharpening his message and calling for action, several diplomats at the meeting told CBS News. Guterres spoke to a coalition of nations called the U.N. Group of Friends on Climate and Security, initiated by Germany along with the Pacific state of Nauru in Micronesia, which formed the group in 2018 to move the climate agenda forward. Monday's meeting was co-chaired by France and Morocco. France, the driver behind 2015 Paris climate agreement — from which the Trump administration began its withdrawal process — will also host a world conservation congress in June. At the event on Monday, France's U.N. Ambassador Nicolas de Riviere said: "In 2019, we witnessed the ravages of climate inaction: tropical cyclones, wildfires, cities asphyxiating under clouds of smoke and heat waves and we know that what 2019 is only the weakest version of what is yet to come if we do not choose to act now. Guterres said 70 nations have committed to becoming carbon neutral by 2050, including the European Union, but he noted that these countries represent less than one-fourth of global emissions.
US coal stocks continue sharp decline into 2020
After losing more than half of their value in 2019, U.S. coal companies in the SNL Coal Index continued the downward plunge in the first month
of 2020. The value of the SNL Coal Index has declined 22.9% year-to-date as of Feb. 3, compounding on a 53.5% year-to-date drop heading into the last full day of trading of 2019. Weakening export markets, an ongoing secular decline in domestic coal demand and investors increasingly turning away from the coal sector are all likely factors driving the downward fall in coal equity values. The losses are spread across the industry. Consol Energy Inc., primarily a thermal coal producer, has seen its stock lose 44.0% of its value year-to-date, and shares of increasingly metallurgical-focused coal producer Contura Energy Inc. are down 36.2% year-to-date. The stock prices of other large producers such as Peabody Energy Corp., Arch Coal Inc. and Alliance Resource Partners LP have lost a fifth of their value or more since the beginning of the year.Pure-play metallurgical coal players such as Ramaco Resources Inc. and Warrior Met Coal Inc. fared better early in the year, but are still down 14.9% and 8.9%, respectively.
EIA expects 2020 US coal output to fall 13.7% on year: STEO
US coal production is forecast to be about 596 million st in 2020, down 13.7% from the estimated 2019 output of 690 million st, data from the Energy Information Administration's ShortTerm Energy Outlook showed Tuesday. The EIA projects output of about 587 million st for 2021, the lowest level since the early 1970s. Coal exports in 2020 are expected to total 86 million st compared with estimated exports of 92.4 million st in 2019. Exports in 2021 are projected to be 85 million st. The February export forecast increased from the January forecast by 3.5 percentage points and 2.1 percentage points for 2020 and 2021, respectively. Coal consumption by the power sector is expected to total about 465 million st in 2020, down 14.6% from 2019, and about 469 million st in 2021. While the February projection dropped 15.3 million st in its 2020 forecast, the 2021 projection rose 4.8 million st from the January STEO. Total US coal consumption is forecast to be about 516 million st in 2020, down 13.3% from the 2019 estimate and 15 million st lower than the January projection. The EIA's 2021 forecast is at about 519 million st. Compared with US coal-powered estimated generation share of 24% in 2019, the February EIA report projects coal generation share of 21% in 2020 and 12% in 2021. The natural gas generation share for 2020 is projected to be 38%, up 1 percentage point from the forecasts for both 2019 and 2021.
Chinese coking coal imports rise by 15.3pc in 2019
China imported 74.6mn t of coking coal last year, up by 15.3pc from 64.7mn t in 2018, according to Chinese customs data. But imports in December stood at an all-time low of 1.7mn t, down by 72.43pc from November, and down by 45.7pc from December 2018. Total Chinese imports from Australia stood at 30.9mn t in 2019, higher by 9.69pc from 2018. Australian exports to China fell by 95.7pc, to a low of 111,263t, in December from November. This is 74.3pc lower than the 432,992t of Australian coking coal imported by China in December 2018. Stricter import policies towards the end of the year meant that a significant amount of coking coal was denied customs clearance, with clearance of many cargoes delayed to January 2020. This delay has occurred for the past two years. Imports from Mongolia also fell by 43.1pc to 1.57mn t in December, down by 37.9pc from December 2018. China imported 33.8mn t of coking coal from Mongolia in 2019, higher by 22pc from 2018. This is in line with the market's view that China should continue to step up coking coal imports from Mongolia to make up for the shortfall from Australian imports because of strict import policies on Australian coal. China imported 17,289t of coking coal from Russia in December, down by 96.8pc from November and down by 85.9pc from December 2018.
Russia Looks to Double Coal Exports To China
Russia has been historically associated with oil and gas exports, yet the news somewhat underreports its coal market presence. Although neither the world’s largest coal producer nor exporter, Russia seems to continue with its strategic aim to ramp up coal exports, all the while
domestic carbon demand is about to plummet. Step by step, first by getting its spare production capacity ready, now by ensuring appropriate infrastructure solutions are there to transport all the goods, Moscow is laying the groundwork for a large-scale expansion that is about to take place in the mid-2020s. Another story that juggles on the border of the political and economical, East Asian markets and nations take central stage in Russia’s export policy, once again. At first glance, 2019 was not the ideal year for the Russian coal industry. Bumping down from last year’s all-time high, coal production decreased 0.2 percent year-on-year to 439 million tons. Prices both in Europe and Asia have reached multi-year lows this summer, especially the former has seen quotations plummeting amid robust coal-to-gas switch dynamics and market oversupply – both have recovered somewhat in the autumn months, yet Europe witnessed another steep drop this Januarys. Domestic Russian demand for coal was stagnating, too, as coal usage in thermal stations, especially in Southern Siberia where it is predominantly mined, decreased by 3 percent year-on-year all the while coking coal demand remained stagnant. This might seem as a harbinger of future stagnation, yet the industry remains upbeat on Asian demand. In fact, the deeper one digs into Russia’s export plans vis-à-vis East Asia the more interesting it gets.
Indonesia has slightly increased its coal reference price known as coal benchmark reference price for February amid the lower supplies and rising demands. The Indonesian Energy and Mineral Resources Ministry set the coal reference price for the month at USD 66.89 per tonne, up 1.45 percent from the price for January. Ministry spokesman Mr Agung Pribadi said “The lower supply of coal in China after the country celebrated the Spring Festival and bushfires in Australia dragged outputs of the commodity. However, demands for coal increase during winter in China, Japan and South Korea.” The coal price has weakened since September 2018 and for 2019, the Indonesia's coal reference price only averaged at USD 77.89 per tonne. The Indonesian reference price for thermal coal is the basis for setting up the prices of the country's 77 coal products and measuring the royalty producers have to pay for each tonne of coal sold.
Japan to build up to 22 new coal power plants despite climate emergency
Just beyond the windows of Satsuki Kanno’s apartment overlooking Tokyo Bay, a behemoth from a bygone era will soon rise: a coal-burning power plant, part of a buildup of coal power that is unheard of in an advanced economy. It is one unintended consequence of the Fukushima nuclear disaster almost a decade ago, which forced Japan to all but close its nuclear power program. Japan now plans to build as many as 22 new coal-burning power plants - one of the dirtiest sources of electricity - at 17 different sites in the next five years, just at a time when the world needs to slash carbon dioxide emissions to fight global warming. Together the 22 power plants would emit almost as much carbon dioxide annually as all the passenger cars sold each year in the United States. The construction stands in contrast with Japan’s effort to portray this summer’s Olympic Games in Tokyo as one of the greenest ever. The Yokosuka project has prompted unusual pushback in Japan, where environmental groups more typically focus their objections on nuclear power. But some local residents are suing the government over its approval of the new coal-burning plant in what supporters hope will jump-start opposition to coal in Japan. The Japanese government, the plaintiffs say, rubber-stamped the project without a proper environmental assessment. The complaint is noteworthy because it argues that the plant will not only degrade local air quality, but will also endanger communities by contributing to climate change.
Australian coal generation displaced by increasing solar output
The Australian Energy Market Operator (AEMO) has released its Quarterly Energy Dynamics (QED) – Q4 2019 report, which tracks the market impacts of extreme heat, generator and transmission line outages, as well as the shifting supply mix in the country. Australia experienced its hottest and driest year on record in 2019, and also saw their second-lowest annual hydro generation output in a decade. The market impacts of prolonged and extreme heat and dry conditions experienced across the country, together with the tragic bushfire emergency, are also reflected in this final quarter report.
Key report findings:
Black coal-fired generation decreased by 1,061 MW on average compared to Q4 2018, reaching its lowest quarterly level since Q4 2016. The decline was due to a combination of coal supply issues (notably at Mt Piper which fell an average 552 MW), unit outages, and displacement by solar output. Total variable renewable energy (VRE) output across the National Electricity Market (NEM) continued to rise this quarter. During Q4 2019, average grid-scale VRE generation reached 2,868 MW, representing a 39 percent increase from last year. VRE generation accounted for 14 percent of the NEM supply mix in Q4 2019 compared to 10 percent in Q4 2018. Market revenue for grid-scale batteries also trended upwards this quarter, driven by increased returns from Frequency Control Ancillary Services (FCAS) markets. Total Q4 2019 battery revenue of $20m represents the highest quarter on record, 70 percent higher than the previous record.
SA mining industry not ready to survive without coal
The mining industry in South Africa is a long way from being ready to survive without coalgenerated electricity, the Minerals Council SA (MCSA) has said. South Africa’s electricity crisis, the impact of the climate crisis and the necessity for sustainable, environmentally friendly mining practices were the main talking points at the Investing in African Mining Indaba, which was held in Cape Town this week. In his opening address at the indaba, Mineral Resources and Energy Minister Gwede Mantashe said that South Africa’s Integrated Resource Plan looks at coal playing a smaller role in South Africa’s energy mix, and that it would comprise 60% or less of the mix by 2030. The MCSA, which represents the leading mining companies in the country, emphasised during a press conference that the move away from coal would have to be gradual because coal-fired power stations remain necessary for baseload power provision. At present, renewable energy, such as solar and wind power, cannot provide the kind of certainty energy-intensive users in the mining industry require.
Roger Baxter, the CEO of the MCSA, said the organisation was in favour of a “just transition” from coal to cleaner, more environmentally friendly energy.
Anglo American to decide fate of South African thermal coal assets this year
Global miner Anglo American will decide this year whether to sell its South African thermal coal business, Chief Executive Mark Cutifani told Reuters on Monday. Anglo American and other mining companies have come under growing pressure to reduce their exposure to coal because of concern over climate change. South32 has agreed to sell its South African thermal coal operation to Seriti Resources, subject to regulatory approval. “I expect we will take a view this year. But we will consult with our key stakeholders before we do that,” Cutifani said in an interview on the sidelines of the African Mining Indaba industry conference in Cape Town.
Cutifani said Anglo American would consult with government, communities and employees before a decision is announced. It has already received interest from potential buyers both inside and outside of South Africa, he said. The diversified miner had no plans to exit its coking coal business but was rather looking at ways to reduce its carbon impact, he said.
