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Global coal plant development fell for fourth year running in 2019: research

Global coal power plant development declined for the fourth year running in 2019, while a total of 13 gigawatts (GW) of capacity construction has been delayed so far this year due to the coronavirus, research by environmental organizations shows.

The annual survey of the global coal plant pipeline by Global Energy Monitor, Greenpeace International, the Sierra Club and the Centre for Research on Energy and Clean Air showed a 16% drop last year in capacity under construction and development. This year, 15 plants with a total capacity of 13 GW have so far been delayed by workforce or supply chain issues related to the coronavirus outbreak. However, China’s approval of permits for coal plants has increased in an effort to stimulate its economy.

From March 1 to 18 this year, China approved more coal-fired capacity for construction (6.6 GW) than during all of 2019 (6.3 GW). Even with the overall fall in coal plant development in 2019, the world is not on track for the steep reductions in coal power necessary to meet goals to limit global warming, the report said.Scientists have said coal use needs to fall 80% by 2030 to keep global warming below 1.5 degrees Celsius.

Demand destruction to further depress coal prices in March

European coal prices will remain at around multi-year lows in March on concerns the deadly coronavirus will further erode global demand and amid still low gas prices and ample supply.The API 2 front-month contract has dropped 4% since the end of January to USD 46.20/t – the lowest on a rolling basis since May 2016 – on Ice Futures.

The Cal 21 had fallen 5% to USD 56.75/t, only marginally higher than contract low of USD 56.20/t. “The fundamentals aren’t positive and could get weaker depending on coronavirus impact on demand,” said independent coal analyst Plamen Natzkoff, also pointing to the bearish influence of weak freight rates.

The Baltic Dry Index – which tracks global dry freight rates – was assessed last at 529 points, around 45% lower than at the start of the year, with already relatively weak global commodity demand and surplus tonnage exacerbated by the spread of the deadly coronavirus – known officially as Covid-19.

“I think coronavirus will be the main driver [of API 2 prices in March] simply because it is beginning to affect everything else,” said an analyst with a European coal trading firm. “While weather will of course play a role, as the cases of the virus spread across Europe, we could see it start to affect demand as control measures are implemented,” he added.

China’s benchmark power coal price drops slightly

China’s benchmark power coal price dropped slightly during the past week. The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of coal prices in northern China’s major ports, stood at 551 yuan (about 77.8 U.S. dollars) per tonne, a drop of four yuan week on week, according to Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. Released by the Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. every, the BSPI is a leading indicator of China’s coal prices

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.

Will China build hundreds of new coal plants in the 2020s?

China’s 14th five-year plan (FYP), setting out its national goals for 2021-2025, will arguably be one of the world’s most important documents for global efforts to tackle climate change. The overarching plan for economic and social development in the world’s largest emitter is to be finalised and approved in early 2021, followed by more detailed sectoral targets over the next year.

A power sector plan can be expected around winter 2021-22. Ahead of the FYP’s publication, powerful stakeholders, such as the network operator State Grid and industry body the China Electricity Council, are lobbying for targets that would allow hundreds of new coal-fired power stations to be built. And a recent update to the “traffic light system” for new coal-power construction signaled further relaxation of permitting.

This is all despite significant overcapacity in the sector, with more than half of coal-power firms already loss-making and with typical plants running at less than 50% of their capacity.

The push for more coal power also appears at odds with China’s climate goals, including a target to peak its CO2 emissions no later than 2030. To reach this goal, low-carbon sources will need to cover any increases in energy demand, meaning less need for additional electricity generation from coal.

US coal exports dipped by 30% in 2019: EIA

U.S. coal exports dropped 20% in 2019 from the previous year, hurt by the downturn in global coal demand, says the U.S. Department of Energy and its Energy Information Administration. In 2019, U.S. coal exports declined to 93 million short tons with both metallurgical coal and steam coal dropping, the EIA said in a report.

That is down from nearly 120 million short tons in 2018, it said. U.S. steam coal exports slipped by 30% in 2019 from 2018, while metallurgical coal declined

by 12%, it reported. Steam coal is used for electricity generation with most U.S. steam coal coming from the Powder River Basin of Wyoming and Montana. Metallurgical coal is used to produce coke for steelmaking. Most metallurgical coal comes from Appalachia. The top destinations for U.S. coal exports in 2019 were India, Japan, the Netherlands, Brazil and South Korea, the EIA said.

Together they accounted for 53% of U.S. coal exports. India last year imported about 12.8 million short tons of coal from the U.S., it said. About 75% of India’s electric power is generated by burning coal, 85% of which was covered by domestic production and the rest was imported, it reported.

In 2019, India got 8.1 MMst of steam coal from the U.S., making it the No. 1 destination for U.S. shipments for the third year in a row, the EIA said. Japan’s imports of U.S. coal remained steady at 2018 levels, despite its steel production slipping by nearly 5%, it said.

Coal suppliers fear uncertainty over Indonesia's new shipping rules could hurt export demand

Indonesian thermal coal suppliers and shipping companies are growing increasingly concerned as the May 1 implementation of a requirement to use local ships for exports draws closer, as the government has yet to define what it means by Indonesian-controlled ship, market sources said. Just 8.8% or 63 of the 717 coal ships plying the region are Indonesian flagged, according to Platts trade-flow software cFlow.

The country's Ministry of Trade announced the requirement to use Indonesian insurance and ships for exports in 2017 and subsequently delayed the implementation to May 1, 2020, to enable details of the plan to be ironed out..

The association said its members were concerned that coal exports could be disrupted given the increasingly limited time and lack of technical guidelines provided to facilitate the implementation. ICMA said its members were worried that overseas buyers may turn to suppliers in other regions instead amid a global oversupply of coal.

A source close to the matter said the Ministry of Trade had met with Indonesian coal miners to explain the May 1 changes "without providing definitions for Indonesian-controlled ships.' Without a clear definition of what classifies a ship as Indonesian controlled, market sources expected the most practical solution for ship owners would be to register their ships under Indonesian companies. The ICMA said it was continuing to appeal for a deferment of the May 1 implementation.

‘Unbridled exploitation’: Mining amendments a boon for Indonesia’s coal industry

The coal industry in Indonesia, one of the world’s top exporters of the fossil fuel, has laid waste to large swaths of forest, polluted waterways, and disenfranchised local communities, observers say. Under a new deregulation bill being deliberated in parliament, things could get even worse, they warn.

The bill, one of two so-called omnibus bills containing more than 1,000 proposed amendments to at least 79 laws, calls for a loosening of several restrictions on mining companies to boost industry growth. This lifting of oversight shows the deregulation initiative is meant to maximize natural resource exploitation instead of ensuring sustainable extraction, said Satrio Swandiko, a climate and energy campaigner at Greenpeace Indonesia.

“The interests of the coal industry clearly play a huge role [in the bill] and have been accommodated by the government in the drafting of the bill,” he said. Among the key changes: Coal miners will be exempt from having to rehabilitate their concessions, as that requirement only applies to mining companies whose permits have expired. Many companies already shirk this obligation to rehabilitate mining sites, and the change could make the problem worse, said Muhammad Iqbal Damanik, a researcher at the environmental NGO Auriga Nusantara.

“We’ve investigated some mining sites with abandoned pits and there are many concessions that are no longer active but still have coal deposits,” he said, adding some had been abandoned for up to 10 years. “In the end, they avoid their responsibility to rehabilitate [the concession]. Imagine if this was to be legalized under the omnibus law,” Iqbal said.

Coronavirus in China affects Africa construction industry

The coronavirus has been slow to take root in SubSaharan Africa (SSA), but the number of cases is now beginning to grow and the construction industry is facing disruption stemming from the China shutdown. From imposing travel bans to barring mass gatherings and shutting down schools, governments

across Africa are increasingly implementing comprehensive measures in a bid to control the spread of the new coronavirus.

The emergency moves come amid a worrying rise in the number of infections registered in recent days across the continent after weeks of relatively few reported cases.

As of 19 March, 33 African countries combined had reported more than 600 cases and 17 deaths due to the virus, 150 cases alone were reported in South Africa.

Amid the worsening situation with regards to the coronavirus outbreak, GlobalData has cut its forecast for SSA’s construction output growth to 5.4% in 2020, from 6.0% previously.

Although the direct impact from the coronavirus has been limited to date, many countries in Africa are exposed to the knock on effects from the construction shutdowns in China. In recent years, China has emerged not only as SSA’s largest trading partner but as a large and fast-growing source of aid and the largest source of construction financing; these contributions have supported many of Africa’s most ambitious infrastructure developments in recent years.

As part of their increasing activity in overseas markets, Chinese companies have significantly boosted their engagement in Africa, covering a wide range of sectors. Africa is part of China’s ‘One Belt, One Road’ (BRI) initiative and with significant focus on coal and large hydropower projects.

South Africa dismisses coal lobby legal challenge

The Coal Transporters Forum (CTF) argued that Eskom had concluded the PPAs for the 27 wind and solar projects without following due process, and added that South Africa’s renewables procurement plan (REIPP) would harm the utility’s finances.

But a Supreme Court judge dismissed the coal truckers’ application and confirmed the National Energy Regulator of South Africa (Nersa), the Department of Energy and Eskom all followed the correct procedures. The decision ends a long legal battle over the contracts signed in April 2018.

Developers won allocations in a tender in April 2015, but Eskom delayed signing the power deals — citing overcapacity and slump in energy demand — for three years. South Africa’s high court first rejected the CTF’s legal challenge in March 2019. The CTF was then refused leave to appeal in the High Court in June of that year, and has now been denied leave to appeal in the Supreme Court of Appeal.

Ntombifuthi Ntuli, CEO of the South African Wind Energy Association (SAWEA), said the window for the CTF to appeal in the country’s Constitutional Court had also now closed.

“The CTF legal challenge was launched on the basis of arguments which had no legal basis and which demonstrated little appreciation of government’s clear commitment to achieving a more diverse energy mix that would build national energy security while also addressing national climate objectives and achieving local economic development," Ntuli said.

Australia set to retain its mantle as top met coal exporter

The federal government's March Resources and Energy Quarterly stated the value of Australia's metallurgical coal exports reached a record high for a second consecutive year in 2018-19.

Export earnings increased to $44 billion in real terms, driven by high prices and, to a lesser extent, growing export volumes.

Metallurgical coal export earnings are projected to decline in real terms to $35 billion in 2021-22, as prices ease, before recovering to $38 billion in 2024-25.

Export volumes are projected to grow solidly over the next five years, increasing from 184 million tonnes in 2018-19 to 205 million tonnes in 2024-25.

Higher export volumes will be driven by the ramp up of production at a number of mines, the largest of which is Qcoal's 10 million tonne per annum Byerwen mine in the Bowen Basin in Queensland.

The closure of a number of mines due to resource depletion is expected to weigh on export volumes towards the end of the next five years.

"The collapse of a roof at Anglo American's Moranbah North mine in Queensland in late January 2020 will weigh on production in the short term," the report states.

"Anglo American has revised down its metallurgical coal production guidance to 19-21 million tonnes for 2020 as a result of the accident, after producing 23 million tonnes last year."