Coal Age

MAY 2013

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news continued Continued from pg 7... Yorkshire, Thoresby in Nottinghamshire along with six surface mines, remain viable." UDM union reps were less optimistic. "Our members are very concerned," said Jeff Wood. TEPCO Boosts Coal Capacity Instead Tokyo Electric Power Co. (TEPCO) is currently mulling over plans to cut spending on oil and concentrate power generation from coalfired plants instead. This plan is in the wake of increasing oil expenditures after the Fukushima nuclear disaster, which caused the government to shut down almost all nuclear power plants in Japan. TEPCO, which has been reliant on crude and fuel oil to generate the gigawatts of power needed to fill in the gap of the mothballed nuclear power plants, has set targets of bringing down oil purchases by as much as 30%, according to the company. The plan would mean that Japan's largest utility will either generate or buy 54% more electricity from coal-fired plants. In April, TEPCO president Naomi Hirose said the company will do "whatever it takes" to return to profitability and hopes to do so without raising rates for customers. The utility had been operating on an annual loss of 323.7 billion yen (US$3.3 billion) in 2012. This amount was pinpointed from a 13% increase in expenses coming from rising fuel prices, and the resulting need to purchase fuel in greater amounts. TEPCO is hoping the reversion to coal-powered electricity will move the utility on a path back to profitability. India Relies on More Imports to Bridge the Gap Despite having some of the world's largest coal reserves, India, which imported 110 million metric tons (mt) between Q1 and Q2 2013, may be forced to rely on imports through 2017 to meet massive shortages, according to government officials. State Coal Minister Pratik Prakashbabu Patil told Hindi News a "gap" between domestic demand and production will outlast India's 12th Five Year Plan beginning in 2012 during which New Delhi is seeking 9.6% economic growth and 10% poverty reduction. The latter will be especially difficult to achieve for the country soon to become the world's most populous amid dire energy shortfalls, according to analysts. Overall coal production for 2012, meanwhile, stood at 557.5 million mt, Patil said, noting that general license coal may be imported at prevailing global prices through import duty payments. In 2012, India's Planning Commission reported that coal imports would likely reach 185 million mt by 2017—nearly 20% of worldwide sales—further expanding the demand-supply deficit. This contrasts with the 137 million mt imported by Q4 2012, prompting calls for stepped up domestic production. Coal Exports from Port Waratah Up 9.1% Coal exports from Port Waratah Coal Services (PWCS) in Newcastle, New South Wales, Australia, totaled 8.2 million metric tons (mt) in March, rising by 3.15% compared to February. Of all of the coal handled at the terminals, 22% was coking coal. In the first quarter of the year, coking coal exports constituted 19% of total coal exports of 26.3 million mt from PWCS, with the overall volume up 9.1% Continued on pg 10... 8 www.coalage.com lysts during a conference call to discuss earnings. "We believe these fundamentals will be good for spot coal prices and should bode well" for the next few years. Current trends are encouraging for U.S. coal producers, he added, as electric utility stockpiles are declining toward more historically normal levels while gas prices continue to rise. The company, which produced 34.8 million tons in 2012, expects both 2013 production and sales to be in the range of 38.1 million to 39.1 million tons. After adding about 2 million tons of sales commitments in the first quarter, Alliance is committed to supply 38.6 million tons in 2013, 31.6 million tons in 2014, 23.9 million tons in 2015 and 19.2 million tons in 2016. Alliance continues to get strong production from several of its larger underground mines including River View in Union County, Ky., and Onton No. 9, which it acquired in 2012, in Webster County, Ky. Development of the new Gibson County continuous miner operation in Gibson County, Ind., is on schedule, with production targeted to begin in the third quarter of 2014. The mine will turn out about 5.2 million tons annually at peak production. The new White Oak No. 1 longwall mine in Hamilton County, Ill., has secured sales for 2013 and 2014. The mine is owned by White Oak Resources, and Alliance is contributing financially to its development. Eventually, the mine will produce about 6.5 million tons a year. However, Alliance has been forced to ratchet back 2013 production at Tunnel Ridge. "Our ramp-up of Tunnel Ridge production is going slower than expected," Craft said, because of a "split coal zone that extended further into the reserves than was anticipated. This geologic condition has caused both lower run-ofmine production" as well as lower yields during the quarter. As a result, Craft said Alliance has altered the mine plan at Tunnel Ridge, which went into production last year, "to minimize the longwall mining in this zone for the remainder of the year." Alliance has "factored in 4.9 million tons of production from Tunnel Ridge in 2013." Longwall moves are scheduled at the mine in June and October. "By going to the next panel after the second longwall move is when we should start seeing more benefit," he said. Alliance expects the mine to produce about 6 million tons in 2014, a "conservative" estimate, Craft said, because Tunnel Ridge has the capacity to produce 6.2 million to 6.6 million tons annually. Wyoming Coal Strikes Historic Milestone In a resoundingly solid development for America's most challenged natural resource sector, Wyoming officials say their state, which produces more than 30% of American coal, will mine its 10 billionth ton of coal this month. "Coal mining has provided thousands of jobs in Wyoming over the last 150 years, all the while fueling America's economy," said Wyoming Gov. Matt Mead. "It keeps the lights on in our homes and powers America's industries." Since 1987, Wyoming has been ranked a top U.S. producer of coal—satisfying 40% of the country's electricity needs. Globally, coal itself is forecast to outpace oil as the world's No. 1 fuel by 2015. Cheap North American natural gas, coupled with regulations, has hurt the domestic market for coal. These facts starkly contrast beliefs of lawmakers like Mead. "The importance of this industry to the country cannot be overstated," he said. Researchers at Wyoming's State Geological Survey (WSGS), citing coal production records dating to 1865, have determined May 2013

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