Coal Age

JUL 2013

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news continued Continued from pg 6... mately borne by the consumer. In another step in a bid to streamline the operations and ensure transparency within the system for effectiveness, group of Ministers approved a draft Coal Regulator Bill likely to be passed. The regulator will fix guidelines for price revision, improve competitiveness in the e-auctions, set trading margins, and increase transparency in the allocation of reserves, which will have long term impact. Japanese Utilities Import More Coal from U.S. & South America Japanese power companies are increasing imports of fuel coal from the U.S. and South America to curb rising fuel costs for their thermal power plants. In April, Tohoku Electric Power Co. imported about 70,000 tons of fuel coal from the U.S. and has started burning it at its Noshiro power plant in Akita Prefecture. Last November, Kansai Electric Power Co. and Kyushu Electric Power Co. signed an agreement to jointly purchase 1 million tons of U.S. coal. Meanwhile, Tokyo Electric Power Co., which had stopped buying coal from the U.S. after a devastating earthquake and tsunami crippled its Fukushima Daiichi nuclear power plant two years ago, began buying the fossil fuel again in April. Electric Power Development Co. has turned to South American coal. The company has started importing from Colombia this year and has already bought 70,000 mt of coal from the country. Ukrainian Court Rules Import Quotas on Coking Coal & Coke Are Illegal Ukrainian steel producer Industrial Union of Donbass successfully challenged in court the decree of the Cabinet of Ministers of Ukraine dated March 13, imposing importation restrictions on coking coal and coke. On June 10, the Ukrainian court ruled against the decree, canceling it. Exports from Richards Bay Decrease in May South Africa-based Richards Bay Coal Terminal, one of the world's largest coal handling ports, exported 4.34 million metric tons (mt) of coal in May, down 30% from 6.24 million mt in April and decreasing by 6% year-on-year. Coal exports from the terminal in the first five months of the year amounted to 27.7 million mt, increasing by 4.3% compared to the corresponding period of the previous year. Stocks at the terminal stood at 2.47 million mt at the end of May. Australia Coal Exports Climb Coal shipments from Australia, the world's second largest exporter, rose in April as key mining regions in the country's east recovered from torrential rains that earlier this year disrupted some mining operations and damaged infrastructure. Exports from major Australian coal terminals increased 5% during the month to 27.55 million metric tons (mt) from about 26.24 million mt in March. Despite the monthly rise, volumes at the largest coal ports were down 15% compared with December before the rain damage when exports peaked at 32.43 million mt. Coal shipments fell sharply during the first few months of this year after the remnants of a tropical cyclone battered Queensland, the largest coal producing state. Some rail links were shut for parts of February and March after severe flooding from what was the state's heaviest rainfall in two years, and major producers like Rio Tinto and Yancoal Australia declared force majeure on contracts they were not able to fulfill. ˛ 8 www.coalage.com their mining assets. Initially, more than 60 potential buyers were solicited by Trinity, "including competitors as well as other strategic and financial investors," Trinity said in a court filing. More than 30 prospective purchasers then entered into so-called nondisclosure agreements and performed varying degrees of due diligence, including management presentations and site visits to the various mining complexes. According to the filing, Trinity and its affiliates received first round, non-binding proposals from 14 potential buyers across all six mining complexes. After fielding the offers, Trinity, its affiliates and their advisers invited some of the potential buyers to return for a second round bid "and submit concrete binding offers and thereby compete to be a 'stalking horse' for some or all of the debtors' assets." After that, several additional potential purchasers, who also were not identified, approached the debtors and their advisers "and commenced to negotiate for the purchase of all or some of the debtors' assets," Trinity added in the filing. The Deep Water complex in West Virginia had total estimated coal reserves of approximately 70 million tons as of March 31. Currently, about 40,000 tons tons of met coal are mined monthly. Deep Water consists of one active surface mine with multiple units, two active highwall miners and two idled underground mines. The North Springs complex in McDowell, Mingo and Wyoming counties in West Virginia produced compliance steam coal and high volatile "B" quality met coal when it was operating. It has about 16.1 million tons of estimated reserves, most of which is met coal. The Falcon complex in Boone County, W.Va., controls an estimated 6.2 million tons of low-sulfur steam coal. Prater Branch, in Magoffin and Floyd counties in eastern Kentucky, has an estimated 18.3 million tons of lower-sulfur steam coal. Little Elk, a mid-sulfur steam coal complex in Perry County, Ky., controls an estimated 11.9 million tons of coal reserves. DOI Approves Lease and Exploration Agreements Between Cloud Peak and the Crow Tribe Cloud Peak Energy (CPE) and the Crow Tribe of Indians recently announced the U.S. Department of Interior, through the Bureau of Indian Affairs (BIA), has approved an option to lease and exploration agreement signed by the Crow Tribe and Big Metal Coal Co., a CPE subsidiary. CPE paid the Crow Tribe $1.5 million upon BIA approval, as provided in the agreements, and will fund $75,000 in college and vocational scholarships annually beginning with the 2013-2014 academic year. The two groups signed the agreements on January 24 and the Crow Tribe submitted them to the BIA for the required approval shortly thereafter. The terms provide for exclusive options to lease and develop up to an estimated 1.4 billion tons of in-place northern Powder River Basin coal on the Crow Indian Reservation in southeast Montana, near CPE's Spring Creek mine and Youngs Creek Mining Co. and CX Ranch properties. CPE has now paid a total of $3.75 million in option payments to the tribe. It will make additional annual payments during the initial five-year option period that could bring total payments during the period to $10 million. Upon any future exercise and required regulatory approval of a lease or leases, and development of mining, Big Metal Coal will provide preferential hiring, training and promotion to qualified Indians and will make bonus, production tax and royalty payments to the Crow Tribe. July 2013

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