Coal Age

DEC 2017

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Page 10 of 51

December 2017 9 news continued Continued from p. 8... Alliance earned $61.9 million on revenues of $453.2 million in the third quarter, down from earnings of $89.1 million on rev- enues of $552.1 million a year ago. EBITDA in the latest quarter of $142.2 million also was lower than EBITDA of $199.3 million in the year-ago period. Altogether, the company sold 9.6 million tons of coal in the third quarter of 2017, a 13.9% increase from the second quarter this year, but down by 10.3% from the 10.7 million tons it sold in the third quarter of 2016. Appalachian sales of 2.7 million tons were only 2.9% lower than a year ago, while Illinois Basin sales of 6.8 million tons rep- resented a 12.5% drop from last year. Alliance attributed most of that decline to the issues at Hamilton. The company said its Tunnel Ridge longwall mine in West Virginia, River View room-and-pillar underground mine in Union County, Kentucky, and Gibson South room-and-pillar under- ground mine in Gibson County, Indiana, continued to produce well during the third quarter. Foresight Exports More Coal Foresight Energy is placing more coal sales internationally, main- ly to Europe and Asia, as it looks to offset a "lackluster" steam coal market in the U.S. that could benefit greatly from a cold winter, according to Robert Moore, chairman, president and CEO of the St. Louis-based company. Through the end of September, Foresight sent 3.4 million tons into the export market, up from 2.1 million in the year-ago period, Moore said. Foresight expects 2017 export volumes to exceed 5 million tons, he said. That would represent almost a quarter of the 21.3 million tons to 21.7 million tons of coal the company expects to sell in 2017, amounts that should generate revised adjusted EBITDA of $290 million to $300 million. Foresight anticipates 2018 coal sales to be "relatively flat" ver- sus 2017, he said. Unlike some of his industry colleagues, Moore said he does not yet see any evidence of "tightness" in U.S. steam coal markets. "We continue to see lackluster demand from most of our electric utility customers as well as a shift in their procurement practices as they move away from longer-term coal positions toward short- er-term and spot purchase positions." Given those circumstances, Foresight will continue to partic- ipate in the export market while officials hope for at least a tradi- tionally cold winter following two years of mild winters and sum- mers that have suppressed electricity demand and delayed utility coal purchases. Moore acknowledged that many utilities have taken advan- tage of low-cost natural gas in the past year or so, applying more pressure to the coal burn. "These folks have locked in this low- price natural gas," he said. In terms of improving coal demand, "you're going to have to see an ongoing robust export market," he said. "You need to see some good weather and just normal weather. I mean, we've had two years now without a hot summer and without a cold winter — sooner or later, that's going to change." Moore noted that improving export prices and demand and normal winter weather would provide a catalyst for increased do- tions in 2015, its volumes have doubled each year, and Minkevich is targeting 3 million mt in 2018. Turkey Launches Smart Coal Strategy Explaining it will be built with a human- and science-oriented approach with transparency and open management, Turkish Energy and Natural Resources Minister Berat Albayrak said the govern- ment's basic principle has been to act with smart, rational strate- gies in all the processes of coal, indicating they were launching a "smart coal strategy." Speaking at the opening of the Second Coal Action Plan Workshop, Albayrak said, "At every step we take, in every strategy and application we realize, we will prioritize people." Albayrak highlighted a goal to increase the reputation of the industry. "We will keep track of this by increasing inspections in this area and conducting audits every three months, especially on sites with penalty of closure or without licenses," he noted. Working with universities and equipment providers, the minis- try hopes to implement a higher degree of mechanization. Vietnam Approves 3 Coal-fired Power Plants Sumitomo Corp. has gained an investment certifi cate worth $2.58 billion to develop Van Phong 1 thermal power project, according to VietNamNet Bridge. Work will start next year on the 1,320-mega- watt (MW) station. The project is expected to boost the develop- ment of the Van Phong Economic Zone. Year to date, Vietnam has approved three build-operate- transfer (BOT) thermal power projects. The largest one is Nghi Son 2 thermal power plant project. In November, Korea Power Electric Corp. (Kepco) reported it had signed a $2.3 billion deal to build the Nghi Son No. 2 power plant. A consortium that includes Kepco and Marubeni signed a turnkey-ba- sis contract with Doosan Heavy Industries and Construction to man- age construction and operation of the 1,200-MW plant for the Nghi Son 2 Economic Zone, located 200 km south of Hanoi. Kepco and Marubeni will both hold a 50% share in the project and Kepco ex- pects to receive around $13.2 billion through the plant's operations over a 25-year period. Construction was expected to begin by the end of 2017 and the project was slated for completion by the end of 2021. In mid-2017, an investment certifi cate was presented to a Sin- gaporean investor to develop Nam Dinh No. 1's 1,100-MW thermal power project worth more than $2 billion in Nam Dinh Province. Kazakhstan Exports Coal to Finland, Japan Kazinform reported that year-to-date through the end of October, Kazakhstan exported 23.4 million metric tons (mt) of coal. Do- mestically, 61.8 million metric tons of coal were delivered to the market, explained Kazakh Energy Minister Kanat Bozumbayev. "Of that total volume, 74.4%, that is 46 million mt of coal, was shipped to power plants." Roughly 10 million mt of coal were consumed by the residential market. Kazakhstan exports to Russia, Central Asia and several Eu- ropean countries. "This year, a good amount of coal — more than 2.4 million [metric] tons — was exported to Finland," Bozumbayev said. He also mentioned that coal was also exported to Japan. Kazakhstan produced 98 million mt of coal in 2016. As much as 71.8 million mt of this volume was supplied to the domestic market, 26.2 million mt sent to export. In 2017, Kazakhstan plans to produce 100 million mt.

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