Coal Age

JUN 2013

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news continued Continued from pg 7... Coal of Africa Proposes Placing Mooiplaats Colliery on Care and Maintenance Coal of Africa Ltd. has proposed placing the Mooiplaats Colliery on care and maintenance and will embark on a regulatory Section 189A process with effect from June 3 with stakeholders. This decision follows sustained and concerted attempts over the past two financial years to make the operation profitable and enable it to produce positive cash flows. The company's efforts to improve productivity and establish profitable operations at Mooiplaats, including capital investment, have been hampered by the global downturn in thermal coal prices over the last year. The situation has been exacerbated by the inability of the colliery to ramp up production to achieve required targets due to poor operational performance and challenging geological conditions. Consequently the company has continued incurring an unacceptable level of operational losses. Two New Coal Terminals May Soon Be Built in Far Eastern Russia RIA Novosti reported that billionaire Gennady Timchenko is planning to build two coal terminals in Russia's Far East. The energy tycoon said coal terminals are what are really needed in the Far East right now. He would not enter the venture alone, but did not identify his partners. Timchenko earlier announced plans to build a coal terminal in Murmansk, in Russia's northwest, but that project has yet to be implemented. The Armenian born energy trader, 60, was ranked eighth on the latest Forbes list of Russian billionaires with an estimated fortune of $14.1 billion. Sumitomo Pulls Out of Australian Coal Venture Australia's Aquila Resources said Sumitomo will not acquire an interest in undeveloped coal mining leases it owns in the eastern part of the country. The two firms entered into a memorandum of understanding last April that gave Sumitomo the right to acquire a 20%-50% interest in 21 of Aquila's Queensland mining sites. A local Sumitomo unit said the company is not in a position to pursue the matter, citing a downturn in coal prices. IndoMet Coal to Begin Production Soon A coking coal development project called IndoMet Coal, which is a joint venture between BHP Billiton and Jakarta-listed PT Adaro Energy, is expected to start production soon. "The first production will start in the third quarter of 2013," said Isnaputra Iskandar, a research analyst with PT Nomura Indonesia. The IndoMet Coal project covers seven contracts of work in East and Central Kalimantan. Coal reserves under the agreement are estimated at 774 million metric tons. L&L to Provide Coal to Datang Power L&L Energy has signed an agreement to provide 1 million metric tons of coal to a Datang International Power Co. power plant. "Wholesaling coal to customers like the Datang, one of China's largest power generators, is an important driver to our growth," said L&L Chairman and CEO, Dickson Lee. "We look forward to further expanding our distribution network for additional revenue and botContinued on pg 10... 8 www.coalage.com come for Illinois producers interested in shipping their high-sulfur steam coal to foreign markets, according to a new study. Once a non-factor for Illinois, coal exports have risen exponentially in the past few years and now present a real growth engine for the Midwestern state. In 2010, the state exported 2.5 million tons of coal. That more than doubled to 5.5 million tons in 2011 and then to more than 13 million tons in 2013, nearly a third of the state's total output of 47 million tons. "Illinois coal is in high demand overseas and we have the resources and infrastructure to take advantage of this opportunity for economic growth," said Gov. Pat Quinn. "Our rail lines and river ports, which we continue to improve under the Illinois Jobs Now! construction program, give us a unique export advantage over other states in the region." The new study, performed by Emily Medine, a principal at Energy Ventures Analysis Inc., bears that out. Released in May, the report said Illinois has the largest reserves of bituminous steam coal in the United States and the capacity to produce significant quantities of coal in excess of domestic demand. That makes increased exports a necessity for the state. The coal is well suited to the large and growing global coal market because of its low cost structure, access to the Gulf of Mexico for vessel loading, and the increased ability for global customers to use this quality of coal. That is why Illinois exports have soared since 2010, the study said. "The primary reasons for the increases were the growth in the global steam coal market, the marketing efforts by coal producers and traders, the increased acceptance of Illinois-quality coal, and, most importantly, the competitiveness of Illinois coal versus alternative sources available in the global market," the study stated. In 2012, 10 producers operating 22 mines accounted for the vast majority of Illinois coal production, with Foresight Energy and Peabody Energy representing nearly 50% of the state's total output in both 2011 and 2012. More than 80% of Illinois coal production last year came from underground mines, with about 50% of the total from longwall operations. Foresight, owned by Florida billionaire Christopher Crane, owns three large longwall mines in Illinois that together could be turning out more than 30 million tons in a year or so. More and more, Illinois coal is finding a home in Europe. Asia, which had effectively disappeared as a market for the state, returned in a meaningful way over the last three years. South America also is a growing market for U.S. coals. However, Canada has all but faded away as a market because the province of Ontario, home of the country's largest city, Toronto, is requiring the closure of Ontario Power Generation's coal-burning power plants. In all, Illinois coal found its way to at least 18 countries over the past two years, the study said. They included Mexico, the Dominican Republic, South Korea, Pakistan, India, China, Spain, Portugal, Ireland, Holland, Denmark, Finland, France, Great Britain, Germany, Belgium and Chile, as well as Canada. To sustain and grow exports of Illinois coal, the report recommended several initiatives, including: maintaining and improving Illinois' competitiveness from the mine to the customer through navigation on the Mississippi River and increasing the draft in the Gulf of Mexico to allow for the loading of larger class- June 2013

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