Coal Age

OCT 2018

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Page 9 of 51

8 October 2018 news continued Two years ago, Paringa inked a "cornerstone" contract with Kentucky's two largest electric utilities, Louisville Gas & Electric (LG&E) and Kentucky Utilities (KU). Under that arrangement, Pa- ringa will deliver 4.75 million tons to the PPL Corp. subsidiaries over fi ve years. A utility spokeswoman said in early October that LG&E/ KU expect to begin receiving coal from Poplar Grove in late De- cember or early January 2019. LG&E/KU operate several major coal-burning generating stations in the Bluegrass state. Construction on Poplar Grove began in August 2017 and is nearing completion. The work was affected somewhat by rainy weather in early 2018. Poplar Grove is the fi rst of two deep mines planned by Paringa as part of its Buck Creek mining complex in the high-sulfur Illinois Basin. Poplar Grove is expected to produce up to 2.8 million tons per year (tpy) while the second mine, Cypress, is projected to be a 3.8-million-tpy operation. Construction on Cypress is slated to begin once Poplar Grove is in production in a few months. Paringa has patterned its coal strategy after Alliance Resource Partners, the largest steam coal producer in the ILB and considered among the most profi table coal companies in the United States. Paringa has identifi ed about two-dozen power plants along and near the Ohio River that could purchase barge coal from Pop- lar Grove and/or Cypress. OVEC, based in Piketon, Ohio, is jointly owned by several electric utilities with American Electric Power Co. controlling the largest portion, around 40%. OVEC was formed in 1952 to supply electricity to a uranium enrichment plant near Portsmouth, Ohio. OVEC offi cials could not be reached for comment. Clifty Creek and Kyger Creek are expected to continue operat- ing until at least 2040. Indiana Coal Mining Rebounding While Indiana may not produce 39 million tons of steam coal like it did in 2013 anytime soon, the state's coal industry is on the re- bound with at least a couple of new mines planned, the recent resumption of production at Alliance Resource Partners' Gibson South underground mine and companies seeking to extend the lives of several existing mines. It all adds up to an encouraging picture, according to Colleen Baughman, state coal permit supervisor in Indiana. She hopes the industry can stabilize after a few down years and continue to provide good-paying jobs for hundreds of employees in tradition- al mining counties. Permitting activity has been fairly brisk in 2018 and in late October she said Sun Energy Group recently fi led an application for a state permit to develop the Flint Hill surface mine near Dale in Spencer County. The mine would be small, probably no more than a few hundred thousand tons of coal a year. But it is never- theless important for the message it sends in the era of Donald Trump, a president who supports coal, unlike his predecessor: Coal is back in Indiana. In fact, it actually never left. Following the strong production of 2013, the state experienced several years of declining coal output. This year, the Indiana Coal Council predicts Indiana will produce about 33 million tons, about a million tons more than last year. electricity prices for residential use have also been hiked for three consecutive months. Donmez said that 19 million metric tons (mt) of coal would be produced with the new agreements, which is expected to halve annual imported coal costs. Russian Coal Transport by Rail Increase State-owned Russian Railways (RZD) handled 276 million met- ric tons (mt) of coal in the fi rst three quarters of 2018, up 5% year-on-year amid improvements to aging infrastructure and strong export demand, according to the Montel News Agency. Shipments in September, to domestic destinations, as well as to neighboring countries and export ports, were 1.4% higher on the year at 29 million mt. The year-to-date increase was in line with a 4% rise in total Russian coal exports, and a 6% increase in production, over the nine-month period, according to provisional energy ministry data. RZD said that a new 1.2-kilometer railway tunnel had been opened in the key coal-producing Kuzbass region, following six years of construction work. It said that this improvement will allow for faster delivery of coal to Russian and foreign consumers. Exxaro Expresses Interest in South32 Coal Assets in South Africa South Africa's Business News reported that Exxaro is interested in South32's local coal assets, which include an export quota, as it looks to increase its exports. South32 plans to dispose of its South Africa Energy Coal (SAEC) operations, consisting of four coal mining operations and processing plants in the coalfi elds of the Mpumalanga province. Mike Fraser, South32 COO, said they are quality assets and there has been a lot of interest. He said South32 has around 21% of the available export capacity at the Richards Bay Coal Terminal. China Clamps Down on Thermal Coal Imports Chinese demand for Australian thermal coal was stronger than expected in the fi rst half of 2018, but softened in September af- ter the Chinese government imposed unoffi cial restrictions on coal imports in a bid to prop-up its domestic coal miners, the Financial Review reported. "China's reduction in coal imports is almost becoming an annual tradition, as the government works to try and support lo- cal producers," James Rickards, investor relations manager for Yancoal. "As a result, it's been both anticipated and prepared for. We're likely to see continued fl uctuations in pricing across both low and high ash thermal [coal], but the China decision shouldn't cause too signifi cant a ripple." Ukraine's Coal Imports Continue to Climb Imports of coal to Ukraine rose to 15.6 million metric tons (mt) for the fi rst nine months of 2018, a 20% year-on-year increase, valued at $2.2 billion, according to Interfax. Ukraine imported coal worth $1.4 billion from Russia (63%), $671 million from the U.S. (31%) and $87 million from Canada (4%). Ukraine ex- ported more than 50,000 mt of coal worth $8.1 million during the same period. Continued from p. 7...

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