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European Union eyes tariffs on American coal, farm goods over trade dispute
The European Union wants to slap tariffs on American industries that are politically near and dear to President Trump and congressional Republicans this election year, a new report says. The EU has asked the World Trade Organization for permission to impose tariffs on $11.2 billion worth of US exports that would hammer farmers, coal producers and fisheries, Bloomberg News reported Tuesday. The move could reportedly hit parts of the US that are politically crucial for Trump and top GOP lawmakers. For instance, the EU’s coal tariffs may target Missouri — which has two Republican senators — while House Minority Leader Kevin McCarthy’s California district could be vulnerable because it produces fruits and nuts, according to Bloomberg. House Minority Whip Steve Scalise’s Louisiana district could also be affected by tariffs on roughly $700 million in seafood exports, the news service reported. The EU’s request is reportedly the latest episode in a lengthy trade dispute with Washington over aerospace subsidies. The WTO gave the US a $7.5 billion award last year over the EU’s illegal subsidies for European planemaker Airbus. Europe now wants to retaliate with the new tariffs after the WTO found the US illegally subsidized Airbus rival Boeing, according to Bloomberg. The US expects the WTO’s decision — which could come as soon as next month — to be more limited, “with only about $300 million at stake,” the outlet reported. The two sides could reportedly work out a deal to avoid the backand-forth tariff fight, but the EU’s chief trade negotiator recently indicated that’s unlikely.
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Coal supply adjustment limits ARA downside potential
The potential for a modest recovery in European coal burn and an accelerating supply-side adjustment in the Atlantic should offer countervailing support to the market in the near term, although prices continued to fall this week. Europe-delivered prices have rebounded from May's 17-year low of $38.67/t to over $45/t this month, with an August cargo trading at $45.50/t des AR today. Power-sector coal burn remains exceptionally low in Europe, but clean dark spreads suggest more coal-fired capacity will be needed in the third quarter. And the speed of the Atlantic supply adjustment has accelerated, with flows unlikely to recover soon, so any rise in western European coal burn would probably quicken the stock draw. Expected profit margins for German coal-fired plants with an efficiency of 46pc or more in July and August have recovered to above zero this month, after slumping deep into the red in May. The market is pricing in more fossil fuel-based generation in the second half of summer, as nuclear availability is expected to decline and as power demand recovers from Covid-19. French nuclear availability is scheduled to average 34.4GW in the third quarter — 3.7GW down on the year. And the decline will probably be steeper than available data suggest, as EdF says nuclear generation will decline to 300TWh in 2020, implying second-half output of 28.5GW. German nuclear availability will also slip because of maintenance. Around 7.2GW will be available in the third quarter, against 7.6GW in the same period last year. July-August typically sees Europe's lowest wind speeds, creating additional upside for fossil fuelfired output. This potential was visible this week, as German coal burn rose to a three-month high of 2.9GW to counter a 48pc week-on-week decline in wind generation to 4.3GW — a 2020 low.
US coal industry declining irreversibly
Nearly all of the coal produced in the United States goes for electricity generation, but its share has eroded in recent years by growing natural gas-powered generation and rising share of renewable energy generation. According to the US Energy Information Administration, coal is one of the main sources of energy in the US, accounting for 14% of domestic primary energy production in 2019, Oil Price reported. Most of the coal produced in the US is used to power coal-fired power plants, while the industrial sector and the commercial sector account for small shares of coal consumption, the EIA said. EIA data shows that US coal production and consumption have been on a decline since peaking in 2008 and 2007, respectively. Last year, for example, US coal production hit its lowest level since 1978, while coal consumption dropped to the lowest since 1975. The rise of renewables and declining coal electricity generation resulted in energy consumption from renewables in the United States surpassing in 2019 coal consumption for the first time since 1885. Last year, total US renewable energy consumption increased by 1% compared to 2018, while coal consumption slumped by almost 15% year on year, the EIA said. The rise of renewable energy sources, especially wind and solar, marked a historic milestone for energy consumption last year. For the first time since the Industrial Revolution, renewable energy overtook coal as a source of energy.
US coal output forecast at 530 mil st in 2020, consumption at 394 million st: EIA
The US Energy Information Administration forecast coal production of 530 million st in 2020,
down 23.2% from the estimated 2019 output of 690 million st, the Energy Information Administration's Short-Term Energy Outlook reported June 9. The 2020 output projection rose 1.4% from the May outlook, the first month-on-month increase since the start of the year.For 2021, the EIA projected output of about 549 million st. Coal exports for 2020 were projected to total 63.6 million st, down 31.5% from last year's exports. The forecast also rose 0.6% month on month.Coal exports in 2021 are projected to be 70 million st. Power sector consumption was forecast to total 351 million st in 2020, down 35% from 2019 consumption and 4.6% below the May report. In 2021, consumption is forecast at 425 million st, down 6.5% from the previous report.Total US consumption was forecast to be about 394 million st in 2020, down 13.2% from the previous outlook and 33% below 2019. The EIA 2021 forecast was about 469 million st, down 5.9% from May's forecast. Compared with US coal-powered estimated generation share of 24% in 2019, the June EIA report projected coal generation share of 17% in 2020, down from 19.2% in May, and 20% in 2021, down from the previous projection of 21.3%. Natural gas generation share for 2020 was projected to be 41%, up from 37.3% in 2019, and the highest since S&P Global Platts began tracking the data in 2013. In 2021, gas generation was projected at 36%.
Anglo restarts Australia’s Moranbah coking coal mine
UK-South African mining firm Anglo American has restarted its 6.5mn t/yr Moranbah North coking coal mine in Queensland, Australia, four months after a seam collapse forced its closure. The return to production will add supply back into the seaborne market at a time when demand is weak because of Covid-19 restrictions in key markets such as India, Europe and northeast Asia. This could add further downward pressure on already sliding metallurgical coal prices. But Anglo has lost production at its 5mn t/yr Grosvenor coking coal mine, which has been closed following an explosion in May, and at its 4mn t/yr Dawson coking and thermal coal mine, where it is has suspended one shovel and excavator fleet because of lower demand. Anglo produced 3.83mn t of metallurgical coal in January-March, down from 4.16mn t in October-December and 6.28mn t in January-March 2019. The decline was driven by a fall in production at the Moranbah North mine to 451,000t in January-March from 2.33mn t in October-December, although it was up from a year earlier when an extended longwall move cut production to 240,000t. The production in the latest quarter all came in January before the roof collapse. Moranbah North produced 6.15mn t of coal in 2019, down from 6.76mn t in 2018. Anglo maintained its full-year 2020 production at 19mn-21mn t, after it reduced the target from 21mn-23mn t in February. Argus assessed the premium hard low-volatile coking coal price at $109.50/t fob Australia on 12 June, up slightly from a low of $107/t fob on 4 May but down from $163.05/t fob in midMarch. Argus assessed the non-premium hard mid-volatile coking coal price at $91/t fob Australia and semi-soft coking coal price at $67.50/t fob, down from $144/t fob and $104.60/t fob, respectively, in mid-March.
Glencore receives special status for QLD coal project
The Queensland Government has recognised Glencore’s proposed billion-dollar coal mine, Valeria as a coordinated project.This is a major milestone for Glencore as it moves the Valeria project through its approval processes. Valeria will produce metallurgical and thermal coal, and support up to 1400 construction jobs and 950 full-time operational jobs over a 35-year mine life.The Valeria coal mine will replace production from other Glencore operations coming to the end of their mine lives, including the
Clermont coal mine in central Queensland. “Our Australian coal operations will continue to produce the high-quality coal required to meet expected levels of global steel production and energy demand in Asia,” Glencore coal assets Australia chief operating officer Ian Cribb said. “In Queensland, coal continues to be an important driver of the economy as a source of jobs, royalties, reliable energy and support for local businesses both in the city and the bush.” Glencore’s coal assets contributed more than $4 billion to the Queensland economy through investment in existing mines, royalties, community programs and spending capital on goods and services from regional suppliers. Queensland Treasurer Cameron Dick said the Valeria mine would be a valuable part of the state’s plan to unite and recover employment post-coronavirus.
South Africa consults with industry on nuclear power plans
South Africa’s energy ministry began consultations with industry on preparations for a proposed 2,500 megawatt (MW) nuclear power plant building programme, which has faced opposition from environmental campaigners. South Africa wants to supplement its power capacity because of problems at state utility Eskom’s fleet of coal-fired power plants, some of which will be decommissioned over the next two decades. The energy ministry aims to use the consultation process - known as a Request for Information - to get some idea of the cost, possible ownership structures, cost recovery, the enduser cost and sustainability of the nuclear programme, it said in a statement. “Given the long lead-time of building additional new nuclear capacity, upfront planning is necessary for security of energy supply to society into the future,” the energy ministry said. Earthlife Africa Johannesburg and the Southern African Faith Communities’ Environment Institute earlier this month wrote to the energy minister threatening to take legal action if he moved to build new nuclear power plants without proper consultation. Three years ago, the same groups succeeded in persuading a court to block a nuclear power agreement with Russia, signed under then-president Jacob Zuma. South Africa, which operates the continent’s only nuclear power plant near Cape Town, said last month that it planned to procure 2,500MW of new nuclear capacity by 2024. South Africa’s long-term energy plan, released in October, listed nuclear power
Indonesia’s $300m geothermal play risks being undercut by cheap coal
A newly secured loan of $300 million for Indonesia to boost its geothermal energy generation will be wasted amid a glut of cheap coal power, and also could contribute to environmental degradation, observers say. On May 28 the Asian Development Bank (ADB) announced the approval of the loan to PT Geo DipaEnergi (GDE), a state-owned company that was initially set up as a joint venture of state utility PT PLN and state oil and gas firm PT Pertamina. The loan will finance the addition of 55 megawatts of generating capacity each at existing geothermal plants in Dieng, in Central Java province, and Patuha, in West Java. The projects are expected to be completed by 2024. But clean-energy observers say these plants may be unable to compete with existing and new plants running on coal, which the government subsidizes for power generation. They will feed into the Java-Bali grid, which already has a glut of idle electricity due to low demand, effectively meaning the geothermal power could go to waste, said SatrioSwandikoPrilianto, renewable energy campaigner at Greenpeace Southeast Asia.
Farmers work a potato farm near a geothermal plant on the Dieng Plateau, on the Indonesian island of Java. Image by RadityaMahendraYasa. “This is a key point that needs to be addressed, because there’s currently already about 40% overcapacity in the Java-Bali grid,” Satrio told Mongabay. “Coupled with the pandemic that has caused lower electricity consumption, it isn’t impossible that the growth at PLN will be lower than the company projected in its latest planning.”
Indonesia's 2020 coal exports seen at 435 million Tonnes - energy ministry
Indonesia, a major global thermal coal producer, exported 175.15 million tonnes of coal in January to May and exports for the full year are expected to be 435 million tonnes, the Energy and Mineral Resources Ministry said in a statement recently. The country exported 458.8 million tonnes of coal in 2019, data from Indonesia Coal Miners Association (APBI) showed. The coronavirus crisis "significantly impacted" global coal markets, including Indonesia, PanduSjahrir, chairman of APBI, said in an industry webinar Coaltrans. He said 2020 global seaborne demand, which was estimated at 980 million tonnes before the crisis, had now been revised down to 895 million tonnes. Shipments from Indonesia had been hit by the lockdown in China this year and ongoing coronavirus restrictions in India and the Philippines, he said. "Indonesian thermal coal has been majorly impacted given around 65% of Indonesia thermal coal exports are to those three countries," Sjahrir said, adding he did not expect global demand for coal to recover to the 2019 level until 2022.
As part of the plan to reduce atmospheric pollution and carbon emissions while improving energy-use efficiency, China intends to cap total energy consumption to within 5 billion tonnes of standard coal (7,000 kcal/kg) and further lower coal as a percentage of energy use to 57.5% this year, according to a post by the National Energy Administration (NEA) on June 22. By reducing reliance on coal, China will continue developing its non-coal energy, with NEA setting higher production guides for oil and natural gas for this year. More power generating facilities fuelled by non-fossil energy will also be constructed, according to the NEA release. Table 1: NEA non-coal energy output and development guidance
China strengthens logistics, storage capabilities for thermal coal, LNG
China is enhancing its logistics and storage capabilities for thermal coal and LNG in a bid to maintain stable supply of generating fuel, China's National Energy Administration and National Development and Reform Commission said in an official statement published June 18. China plans to add a total of 30 million mt in coal storage facilities across power plants in 2020 in order to ensure normal coal stock levels are maintained at above 15 days' supply for coaldriven power plants in the main coal-consuming regions, the statement said. "Coal companies are encouraged to collaborate and build storage at transportation centers [in] coal consuming regions in order to improve the flexibility in coal supply," it added. Chinese railway transportation capabilities for coal will be boosted by more than 40 million mt in Shaanxi province and more than 20 million mt at Xinjiang in northwest China in 2020 in order to fulfill Chinese coal demand, it added. In the statement, China urged utilities to improve energy-generating efficiency and eliminate inefficient facilities and coal mine sites. "China has been eliminating its less efficient mines and consolidating its supply. Hence in the long run, China will improve coal supply domestically," a Singapore-based trader said .
