Coal Age

JAN-FEB 2019

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Page 10 of 51

January/February 2019 9 worldwide news continued "We are encouraged by the pivot- al decision to proceed with the power project at Tavan Tolgoi," said Ulf Quell- mann, CEO of Turquoise Hill. "Re- solving Oyu Tolgoi's long-term power requirements is critically important to the mine's long-term development and today's signing of the PSFA is a positive milestone toward that goal. "We will continue to work closely and collaboratively with our partners to finalize the details of the power project, which will allow this truly great world- class asset to achieve its full potential for the benefit of all stakeholders." The PSFA formalizes the role of each party and sets out an amended timetable for Oyu Tolgoi to source power domestically. Construction is expected to start in 2020 following further studies and commissioning of the power plant is scheduled for mid-2023. Oyu Tolgoi will now move forward to confirm the technical de- sign of the project and finalize the commercial arrangements, including financing, underpinning the PSFA. The 300-megawatt plant will be ma- jority owned by Oyu Tolgoi and situat- ed close to the Tavan Tolgoi coalfields. Severstal Reports Increase in Coking Coal Production In its fourth quarter earnings statement, Russian steelmaker Severstal report a decrease in pig iron and steel produc- tion, but the company said its sales of coking coal from Vorkutaugol increased by 2% to 3.37 million metric tons (mt) in 2018. The company said it plans to grow production volumes of clean cok- ing coal to approximately 5.6 million mt per year (mt/y) at the Vorkutaugol mine and plans to ramp-up Yakovlevskiy mine to approximately 5 million mt/y per year in 2023, which will result in a higher level of vertical integration. Sedgman Receives EPC Contract for Byerwen Mine in Australia The engineering, procurement and construction (EPC) contract will de- liver an expansion on the first phase of the project, which Sedgman was awarded in February 2018, and in- cludes the duplication of the existing coal handling and processing plant. The contract will generate reve- nue of $155 million for CIMIC Group. CIMIC Group CEO Michael Wright said, "The CIMIC Group has a long standing and successful relationship with QCoal, which started in 2007, pro- viding EPC services through Sedgman and mining services through Thiess. "This latest contract demon- strates Sedgman's ability to deliver positive and consistent outcomes for QCoal, and is a testament to the Sedgman team's focus on delivering enduring value for our clients." Sedgman Managing Director Grant Fraser said, "We are pleased to continue our strong, long-term rela- tionship with QCoal and look forward to assisting with the expansion of the Byerwen mine in a timeframe that optimises QCoal's benefit." Early work has commenced and the project will conclude in early 2020. The Byerwen mine site is located 20 kilometers west of Glenden in Queens- land's Bowen Basin. Ukraine Increases Coal Imports in 2018 In 2018, Ukraine increased imports of coal and anthracite by 8.1%, 1.61 mil- lion metric tons (mt), compared to 21.388 million mt in 2017, according to Open4 Business. According to the state fiscal service, coal was imported for $3.04 billion, which is 10.6% more than in 2017. At the same time, coal imports from the Russian Federation amounted to $1.82 billion (its share in imports was 60%), the United States to $907 million (30%), Canada to $163 million (5%), other countries to $143.94 million (5%). In addition, Ukraine last year exported about 64,000 mt of coal and anthracite for $8.6 million, in particular to the Rus- sian Federation for $5 million, Slovakia for $3.2 million, Moldova for $724,000, and other countries for $127,000. Russian Coal Exports, Production Hit 5-year High in 2018 Last year, Russia's production and ex- ports of coal hit their highest levels since 2013. According to S&P Global Platts estimates of data from Russia's Energy Ministry, Russian coal exports increased last year by 3.4% compared to 2017, to reach 191 million metric tons (mt), the highest level since S&P Global Platts started collecting data on Russia's coal industry in 2013. Coal production also reached its highest level since 2013 at 431.76 million mt. Russia's production in- creased by 6% in 2018 compared to 2017. According to Platts estimates, Russian producers continue to seek domination on the European market. Last year, the average free on-board coal prices for the Atlantic and Pacific markets were both higher compared to 2017, which could be a big incen- tive for Russia to continue producing and exporting more coal to seaborne destinations, according to Platts. Rus- sia's Energy Minister Alexander Novak said he thought coal production could reach 433 million mt by 2020. Indonesia Sets Lower Coal Production Target for 2019 The Indonesian government has low- ered its coal production target for 2019 to 480 million mt in an effort to stabilize the global coal price, accord- ing to the Jakarta Post. Energy and Mineral Resources Ministry Mineral and Coal Director General Bambang Gatot Ariyono said the government considered various factors before deciding on the figure, including the movement of the US dollar. "The goal is to maintain a good coal price," he said. "There were pos- sibilities that the government might revise the production target this year. We will continue to oversee the situ- ation. Usually, coal miners will revise their production target no later than July. One of the reasons to revise the target was to increase state revenue." Worldwide News Continued on Page 14

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