Strange days for coal mining – Mr Russell
Mr Clyde Russell wrote in Reuters that it’s been weird in the coal world in recent days, with the world’s largest shipper Glencore saying it’s capping output, biggest seaborne buyer China putting restrictions on some imports and an Australian court saying mines must factor in climate change. Throw in an executive at a major Indian coal-fired power generator saying his company won’t build any new plants as coal can’t compete with renewables, and it’s little surprise that environmental activists may be tempted to pop champagne corks. The common theme at work is that coal is finding it harder to secure a long-term future in the world’s energy mix. But it’s worth unpacking the various developments and assessing the likely real impacts beyond public relations spin.
The most significant development this week was Glencore’s announcement on Feb. 20 that it will cap its annual output around its current capacity of 145 million tonnes. Glencore is the world’s fourth-biggest coal mining company but also the largest supplier to the seaborne market, as miners that produce more, Coal India, China Shenhua Energy and Peabody Energy of the United States, are focused on their domestic markets.
China is showing that two can play that game, with customs at the northern port of Dalian placing an indefinite ban on imports from Australia, and restricting those from other countries, according to an exclusive Reuters report on Thursday. This isn’t the first time China has taken such measures, and the most likely outcome is that imports will decline for a period of time, but may eventually recover. Much of the coal China imports from Australia is coking coal, and this is harder to source from other countries, with the only real alternatives being Canada and the United States. What is clearer is that China, the world’s biggest coal importer, wants to limit its total imports, which means that over time it’s unlikely to be much of a growth market.
India, the second-biggest coal importer, looms as a great hope for the sector, but the Coaltrans India conference this week in New Delhi showed that while imports may grow this year and next, a dearth of new projects and the likely eventual improvement of domestic coal availability should result in a shrinking market.
New-build coal plants are struggling to compete against wind and solar in India, with Rajit Desai, an executive at major private generator Tata Power, telling the conference that his company wasn’t looking at developing any new plants, and will instead focus on buying existing units that are effectively distressed assets.
In another apparent victory for climate activists, an Australian court ruled on Feb. 8 that a mine development couldn’t go ahead, citing the impact from the greenhouse emissions that would be created. While the mine in question most likely would have been rejected on other grounds, such as its close proximity to a retirement complex, the court nonetheless signaled that climate mitigation may become a part of any future approval process.
Source : Reuters