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Coal Prices Hit Decade High Despite Efforts to wean the world Off Carbon
Coal prices have climbed to their highest level in a decade, making the fuel a hot commodity in a year when governments are pledging reductions in carbon emissions.
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A shortfall of natural gas, rebounding electricity usage and scanty rainfall in China have lifted demand for thermal coal. Supplies have been crimped by a closed mine in Colombia, flooding in Indonesia and Australia and distorted trade flows caused by a Chinese ban on Australian coal.
Prices for thermal coal—which power plants burn to boil water into steam, spin turbines and generate electricity—have more than doubled over the past year as a result. Coal delivered into northwest Europe earlier this month hit its highest price since November 2011, having climbed 64% in 2021. Prices for coal exported from Newcastle in Australia, most of which heads to Asia, have risen 56%, according to Argus Media.
Both coal-price benchmarks have outstripped gains in oil, copper and other commodity markets that are benefiting from a vaccine-fired burst of economic activity. The upswing in fuel markets is contributing to higher electricity prices in the U.S. and Europe. Central banks are grappling with a jump in inflation powered in part by rising raw-material costs, though highflying commodities such as lumber have lost steam of late.
Global leaders commit to accelerate transition to clean energy by 2030
Annual investments of 35 billion dollars can bring electricity access for 759 million people who currently lack it and 25 billion dollars a year can help 2.6 billion people gain access to clean cooking between now and 2030, said delegates at the five-day UN ministerial meeting which concluded here on Friday.
The required investment represents only a small fraction of the multi-trillion-dollar global energy investment needed overall, but will bring huge benefits to one-third of the world's population, they said.
The recommendations on energy access are part of a proposed global roadmap with concrete actions to achieve clean, affordable energy for all by 2030 and net zero emissions by 2050 launched by the United Nations to set the groundwork for a large-scale mobilisation of commitments this year.
The proposed roadmap, which will inform the high-level dialogue on energy in September and be considered in the political statement resulting from the summit, is based on reports submitted by five technical working groups that have brought together over 160 experts since March.
China Has Promised To Go Carbon-Neutral By 2060, But Coal Is Still King
The walls and ceiling of the Nanshan mine shimmer black, carved straight into a 200 million-year-old coal seam running 1,300 feet underground. Black veins of Jurassic-era coal deposits still thread Shanxi province in China's north, enriching public coffers and keeping generations of miners steadily employed.
Last year, China committed to going carbonneutral by 2060, an ambitious undertaking for a country that still relies on coal for more than half its energy needs. The country has invested heavily in solar, wind and nuclear energy. Yet coal-fired heavy industry still made up about 37% of all its economic activity last year, and some provinces are even planning to increase coal-fired power generation.
China's top leaders haven't specified how they plan to draw down reliance on coal.
"China will strictly control coal-fired power generation projects and limit the increase in coal consumption," China's President Xi Jinping said at an online climate summit convened by President Biden earlier this year. But he shied away from giving a more detailed energy pledge.
Europe and the US keep investing in Chinese coal
China’s booming coal industry makes both goals a distant prospect. Producing and burning coal harms the environment, putting biodiversity at risk. Moreover, burning coal is still the largest source of CO2 and is responsible for about one-third of the global temperature increase so far. Coal still accounts for about 60% of China’s present electricity consumption and, with over 1,000 GW of installed capacity, China operates half of the world’s coal-fired power plants.
In 2020, 38.4 GW of new coal-fired capacity was also commissioned. A further 247 GW is under construction or planned, representing 49% of the global coal-fired power plants under development. This is in stark contrast to the repeated pleas of the UN’s secretary-general Antonio Guterres that “no new coal plants should be approved”.
It is well known that China is the EU’s largest trading partner; therefore, many European goods are produced using Chinese coal power. Less obvious are the global financial flows: even though China’s coal companies are mainly domestically funded, foreign financiers also support the Middle Kingdom’s coal industry.
One-tenth of the money that has flowed into the Chinese coal sector in the last two years
has come from abroad. Forty-eight international banks have provided USD 21.7 billion for the Chinese coal industry. The lion’s share of this sum was provided in the form of underwriting, namely by issuing shares and bonds.
By far the largest foreign financiers are from the UK and the US. English banks such as HSBC and Standard Chartered have lent USD 5 billion. US banks such as JPMorgan Chase and Citigroup are close behind with USD 4.9 billion. Banks from Japan, Switzerland and France have also sunk over USD 2 billion each into the Chinese coal sector.
Russia is ready supply at least 40 mln tonnes of coking coal to India
India asked Russia to supply at least 40 mln tonnes of coking coal annually and Russia is ready to provide this volume, Deputy Energy Minister Anatoly Yanovsky told reporters on the sidelines of the Russian Coal and Mining exhibition.
“We have prepared a draft memorandum of cooperation between the Ministry of Energy of the Russian Federation and the Ministry of Steel Industry of India. While preparing this document, we held several meetings via videoconferencing because of the pandemic and our Indian partners said, that they would like to purchase at least 40 mln tonnes of coking coal from Russia. Of course, we have the opportunity to ensure such supplies, “Yanovsky said, noting that coal exports from Russia are growing.
According to him, in 2020, despite losses in coal production, Russia managed to increase exports.
“This year, our exports continue to grow following the results of 4-5 months,” the deputy minister said.
Vietnam’s May coal imports decline
Vietnam's coal imports nearly halved in May from a year earlier, as a steady rise in hydropower and renewable energy output pressured coal burn.
Seaborne receipts declined for a sixth straight month in May from a year earlier to 3.81mn t, provisional customs data show, falling from a record monthly high of 7.19mn t in May 2020. Imports were also down from 3.94mn t in April. Vietnamese customs data do not differentiate between coking and thermal coal.
The drop comes off a high base in May 2020 when Vietnam's strategy to curb the spread of Covid-19 ensured broad business continuity and supported demand for seaborne coal, helping to take the country's overall 2020 imports to an all-time high. The decline last month underscores softness in the country's demand for imported coal amid stable growth in generation from alternative sources such as hydropower and renewables.
Coal-fired generation of 12.65TWh in May was flat on the year but rose from April's 11.7TWh amid a surge in demand because of hot weather conditions. It accounted for the biggest portion of the country's generation mix. Coal may continue to meet the bulk of Vietnam's energy needs in the coming years despite the country's renewable energy push. Vietnam's government has pared its 2030 target for installed coal-fired capacity, although imported-coalfired generation capacity is still expected to more than triple.
Australia exported record high volumes of thermal coal to India in April, as changing trade flows reflect Beijing's ban on imports of Australian coal.
April increased by 14pc from the eight-year low in March but declined by 7pc from April 2020, according to data from the Australian Bureau of Statistics (ABS) supplied through GTT.
There were no shipments to China for the fourth consecutive month, with initial shipping data suggesting this continues into early June. Shipments to Vietnam have also declined this year, and together these two factors have lowered January-April total shipments by 10pc on the year.
India, which is in the midst of a Covid-19 surge, has more than compensated for lower imports in the first half of 2020 and Australian exports to the nation hit a record high of 2.46mn t in April. This may reflect a larger than average discount for low grade 5,500 kcal/kg NAR Australian coal export prices compared to similar grade South African export prices in April. This premium widened in early to mid-May but has since shrunk.
Australian exports continued to move to smaller markets for its coal such as Indonesia, Thailand, the Netherlands, Malaysia, United Arab Emirates, the Philippines and Pakistan, as suppliers continue to look to diversify in response to Beijing's import ban.
adani group to begin coal export from australia mine this year
The Adani group will export first coal from its Australian mining project this year, riding out a series of lawsuits and public litigation initiated by environmental activists.
The group’s Australian business arm Bravus Mining & Resources on Thursday said it has exposed the first of the coal seams for mining at the Carmichael mine in Australia’s Queensland province.
India will be a ‘foundation customer’ for Carmichael coal and Bravus has already secured the market for 10 million tonnes per annum production, agencies quoted company CEO David Boshoff as saying.
“The coal will be sold at index pricing and we will not be engaging in transfer pricing practices, which means that all of our taxes and royalties will be paid here in Australia. India gets the energy they need and Australia gets the jobs and economic benefits in the process,” Boshoff was quoted as saying.
Carmichael coal will contribute to the Adani group's burgeoning energy portfolio that is designed to create a sustainable energy mix, incorporating, thermal power, solar power, wind power and gas.
anglo american coal spin-off may not be beneficial, says short seller
Mining company Anglo American has “massively underestimated” the environmental liabilities associated with a South African coal business that it is spinning off, according to short seller Boatman Capital Research.
Boatman, which has also waged a long-running campaign against engineer Babcock International, claimed in a report published that the clean-up costs for Thungela’s seven mines could be as much as $1.36bn, or nearly three times the amount of money it has currently set aside, because of proposed regulations.
Major miners are under pressure from investors to divest from coal because of its contribution to climate change. Thermal coal is burnt in power stations to generate electricity, a process that is responsible for about 30 per cent of global carbon dioxide emissions.
Rio Tinto sold its last coal mine in 2018, while BHP is also looking to divest its thermal coal business. The demerger will allow Anglo to focus on producing metals that will be in demand during the shift towards clean energy such as copper and platinum.
It will also test the appetite of London-based investors for coal mining stocks. In a report published last week, the company’s corporate broker Liberum said Thungela could command a market value of $440m to $950m.
Glencore snaps up BHP, anglo stakes in Colombian coal mine
Diversified miner Glencore will become the sole owner of the Cerrejon thermal coal mine in Colombia by buying out partners BHP and Anglo American, boosting its coal assets at a time when others are looking to exit the sector.
Glencore said on Monday it expects to pay $230 million for the combined 66% stake owned by BHP Group and Anglo when the deal completes in the first half of 2022. It sees production volumes at the mine declining materially by 2030.
Mining companies have been reviewing their ownership of thermal coal assets as they transition out of polluting fossil fuels to meet emissions targets and shift towards sustainable investments.
But global demand for coal is expected to jump 4.5% in 2021, after a record pandemic-led drop last year. An increase in coal-fired power generation in Asia, where many countries including China are still building new capacity, accounts for three-quarters of the rebound, the International Energy Agency (IEA) said recently.
Grassy Mountain coal mine in alberta Rockies not in public interest
A joint federal-provincial review has denied an application for an open-pit coal mine in Alberta’s Rocky Mountains, saying its impacts on the environment and Indigenous rights aren’t worth the economic benefits it would bring.
In its 680-page report released Thursday, the panel questioned the ability of Benga Mining, owned by Riversdale Resources, to control the release of selenium from its proposed Grassy Mountain mine.
“In some cases the claimed effectiveness of the proposed measures was overly optimistic and not supported by the evidence,” the report says. “As a result, we are not confident about the technical and economic feasibility of some proposed mitigation measures.
A spokesman for Riversdale Resources or Benga Mining was not immediately available for comment. Riversdale first filed its environmental impact assessment on the mine in 2016. Public hearings on the project in southern Alberta’s Crowsnest Pass region were held last fall.
The mine, said Riversdale, would create about 500 jobs during two years of construction and 400 over its 23-year life. The company said it would pay $1.7 billion in royalties and $35 million in municipal taxes over that time.
weekly US coal train loadings reach 18-month high with 82 trains/d: STB
Weekly US coal train loadings averaged 82 trains/day, up 1.8 trains/d from the previous week and up 25.4 trains/d from the yearago week, Surface Board Transportation data showed June 18.
Loadings were at their highest level since the fourth week of 2020.
Only Central Appalachian loadings dipped 0.5 train/d week on week to 12.2 trains/d. From the year-ago week, loadings were up 3.9 trains/d.
Illinois Basin loadings rose the most from the week before, up 2 trains/d to 6 trains/d. Loadings jumped 3.1 trains/d year on year.
In the Powder River Basin, loadings averaged 46.5 trains/d, up 0.4 train/d from the previous week, and up 9.5 trains/d from the year-ago week.
Loadings in the Northern Appalachian basin averaged 10.7 trains/d, up 1.7 trains/d week on week, and up 6 trains/d year on year. In other regions, loadings averaged 6.7 trains/d, up 0.3 train/d from the previous week, and up 3 trains/d from the year-ago period.
US coal exports ticking higher, pushed by high petcoke prices, China
US coal exports in April were 24.3% higher year on year at 6.2 million mt, which was down 10.2% from March, according to US Census data released June 9.
The upward trend was also noticeable in the year-to-date comparison, which is up 8.1% compared with the same four-month period in 2020.
On an annualized basis, US coal exports in 2021 would total 74.9 million mt, up 20% from last year.
Exports of bituminous coal, from the Illinois Basin, Northern Appalachia and Central Appalachia, totaled 2.5 million mt in April, down 27.3% from March but up 70.4% from the year-ago month. On a year-to-date basis, bituminous coal exports are up 35.7%.
The top destinations for bituminous coal in April were India, at 1 million mt compared with 436,458 mt in the year-ago month; the Netherlands, at 258,021 mt compared with 163,507 mt last year; and Egypt, at 232,369 mt compared with zero in the year-ago month.
Canada will not approve new thermal coal mining projects or plans to expand existing mines because of the potential for environmental damage, Environment Minister Jonathan "The government considers that these projects are likely to cause unacceptable environmental effects within federal jurisdiction and are not aligned with Canada's domestic and international climate change commitments," he said.
In a statement, Wilkinson said thermal coal - primarily used for generating electricity - was the single largest contributor to climate change.
Canada produced 57 million tonnes of coal in 2019, just 1% of the overall global total. Canadian output in 2019 comprised 47% thermal coal and 53% metallurgical coal, which is used for steel manufacturing, according to official data.
Bangladesh govt scraps plans for 10 coal plants, pursues green options
The Bangladesh government has scrapped plans to build 10 coal power plants as it investigates alternative energy sources, including liquefied natural gas.
Among the major projects cancelled by the government is a 1,320-megawatt coal-based power plant on the Moheshkhali Island in southeastern Bangladesh, according to State Minister for Power and Energy Nasrul Hamid.
Bangladesh had approved the construction of 18 coal power plants since 2008.
“It’s now essential for us to generate electricity through more environment-friendly sources,” Hamid said at a media briefing in Dhaka on Sunday, referring to Bangladesh’s role in combating climate change.
Bangladesh chairs the Climate Vulnerable Forum, whose 48 member states represent the 1.2 billion people most threatened by climate change.
