Coal Age

MAR 2017

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6 www.coalage.com March 2017 news continued Centennial will continue to evaluate strategies to maximize cash flow, including through the sale of mineral reserves and equip- ment. The company is evaluating a range of strategies for its Ala- bama mineral reserves, including holding reserves with substantial unmined coal tons for sale or contract mining when conditions in Alabama and global coal markets improve. Cash expenditures relat- ed to mine reclamation will continue until reclamation is complete, or ownership of, or responsibility for, the mines is transferred. North American Coal expects to continue its efforts to devel- op new mining projects and is pursuing opportunities for new or expanded coal mining projects, although they believe future opportunities are likely to be limited. Analyst Questions DP&L Decision to Side With Sierra Club Murray Energy Corp. is pushing back against a controversial plan by Dayton Power & Light Co. (DP&L), Ohio's smallest inves- tor-owned electric utility, to close the coal-burning J.M. Stuart and Killen power plants in the state by mid-2018. DP&L, an AES Corp. subsidiary, recently entered into a stipu- lation with several parties including the Sierra Club in support of a revised electric security plan that would provide the utility with $125 million in revenue from customers annually for five years — a total of $625 million, to strengthen its balance sheet. Closing Stuart and Killen now is part of the plan, but it was not always so. DP&L previously floated a proposal with the Ohio Public Utilities Commission (PUC) that could have ensured the continued operation of both baseload plants for another 10 years. Because DP&L shares ownership of Stuart and Killen with other electric utilities such as Dynegy Inc. and American Electric Power Co., it cannot shut either plant unilaterally. As a result, ne- gotiations are under way to secure the approval of all co-owners. Ohio-based Murray, the largest privately owned and under- ground mining company in the U.S., is intervening at the PUC against the DP&L stipulation to protect its business interests, as it sells steam coal to both plants. In a March 1 filing with the commission, Energy Ventures Analysis Inc. principal Emily Medine, testifying on behalf of Mur- ray, made a case for the sale of Stuart and Killen by DP&L, not the plants' retirements. She also questioned the decision by DP&L to enter into a stipulation with the Sierra Club, a national environ- mental group that opposes coal-fired generation and coal mining throughout the country. "Given the information available, it appears committing to the closure of Killen and Stuart was the price for garnering Si- erra Club support and that DP&L believes it has a better chance of obtaining approval for its ESP with Sierra Club support than without, and that the ESP with the closure of Killen and Stuart is a better outcome for DP&L than no ESP," Medine said. But she disagrees. A sale of the plants "should generate posi- tive value to DP&L both through a payment and a transfer of costs related to the ultimate closing of the plants, thereby reducing the revenue needed to support DPL's heavy debt load," she said. Also, while DP&L may own only about 1,100 megawatts (MW ) at the two generating stations, which account for about 3,000 MW of generation combined. "Historically and prospectively, this capacity has at most times been 'in the money,'" she said. "If the capacity is retired, the lay off employees. The company is shipping coal through the Ridley Terminal in Prince Rupert, British Columbia, to Asian markets. Chinese Miners Benefit From Improving Coal Prices Some listed coal companies in Shanxi province, the country's larg- est coal production base, expect to see profits grow, thanks to ris- ing coal prices resulting from the nationwide capacity reduction campaign, according to China Daily. Shanxi Lu'an Environmental Energy Development Co. Ltd. said in a public filing that it expected to make a net profit between 680 million yuan ($99 million) and 950 million yuan last year, up from 103 million yuan in 2015. Lu'an said the earnings hike was due to sharply rising coal prices in the second half of last year. Likewise, Shanxi Xishan Coal and Electricity Power Co. Ltd. es- timated that its profit would hit 367 million-437 million yuan last year, up 160% to 210% on a year-on-year basis. Yang Quan Coal Industry (Group) Co. Ltd. estimated its profit would rise more than threefold year-on-year. The National Energy Administration earlier set a goal to cut 50 million metric tons (mt) of coal capacity in 2017, down by 80% on the 2016 target of 250 million mt. According to the China Na- tional Coal Association, the combined profits of coal companies, with government subsidies, amounted to 32 billion yuan, up 363% year-on-year. China has set goals to cut 800 million mt of coal capacity by 2020. Last year, China's output of coal decreased by 11.2% year-on-year to 2.3 billion mt. Cambodia Orders New Coal-fired Power Plant Toshiba Plant Systems and Services Corp. (TPSC) landed a con- tract to construct a 150-megawatt coal-fired power plant in Preah Sihanouk province, which would be Cambodia's third coal-fired power plant. TPSC will build the turnkey power plant for Cambo- dian Energy II Co. Ltd. (CEL2). Construction should be completed by late 2019. Poland to Reduce Coal Output The Polish government wants to reduce coal output to 65 million metric tons (mt) from a little more than 70 million mt in 2016, the Warsaw Voice reported. The Polish Energy Ministry also said it is working on a program to improve the coal sector through 2030. China Bans North Korean Coal Imports In a bid to comply with the United Nations Security Council reso- lution that China participated in drafting in November last year, the country has now decided to ban all coal imports from North Korea, according to the Malaysia Sun. China's decision also comes in light of the recent missile test conducted by North Korea. The country announced the decision in a public notice that was issued by China's Ministry of Commerce, along with the country's customs agency. Russia, Iran Begin Building Large Power Plant Russia and Iran have begun the construction of a 1.4-gigawatt (GW) coal-fired power plant in Bandar Abbas in southern Iran, ac- cording to Iran Daily, citing Sputnik. The Russian company Techno- promexport and an Iranian holding company signed an agreement on the construction of a thermal power plant in Iran with $1.27 billion funded by Russia. The Russians will also improve the ef- Continued from p. 5... Continued on p. 7...

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