Australian coal mine approved despite climate ruling
Australia's federal government has approved Indian-owned Australian coking coal mining firm Wollongong Coal's plan to restart the Russell Vale Colliery in the Illawarra region of New South Wales (NSW), ending a spate of rejections for projects in the wake of a key climate change court case.
This is the first coal mine approval by the Australian minister for the environment Sussan Ley since the Federal Court of Australia ruled in May that she may breach her duty of care to protect Australian children if she failed to consider the effects of climate change when approving coal mines. She took into account China's capacity to buy coal elsewhere in the world after Beijing disrupted imports of Australian coal when deciding to approve Russell Vale.
The argument that Australian coal mines will simply be replaced by alternate sources if they are not approved, could lead to further approvals including Whitehaven Coal's 10mn t/yr Vickery mine, which was at the centre of the Federal Court ruling in May.
The Russell Vale approval allows Wollongong, which delisted from the Australian Securities Exchange a year ago, to extract 3.7mn t over five years after a previous plan to extract 4.7mn t was rejected. The firm has been under financial pressure for several years and was forced to close the Wongawilli coking coal mine in NSW in April 2019 following safety breaches.
Jindal Steel, which took control of Wollongong from Indian firm Gujarat NRE Coke in 2013, has issued a cash advance of A$550mn ($408mn) to its Australian affiliate. Wollongong had drawn down A$486.8mn as of 30 June 2020.
The NSW Independent Planning Commission last week rejected a plan by South Korean steel producer Posco to build the 3mn t/yr Hume coal project in the Southern Highlands and associated rail link to Port Kembla. It also rejected Australia-based mining firm South32's proposed A$956mn expansion of its Dendrobium coking coal mine in the Illawarra.
Russell Vale, Dendrobium and Hume mines were to use the Port Kembla export terminal near Wollongong, with the future of exports at the terminal threatened by them falling below critical mass.
Argus yesterday assessed the premium hard low-volatile coking coal price at $270/t fob Australia, up from $109.25/t on 10 May.
Argus last assessed high-grade Australian thermal coal at $172.15/t fob Newcastle for NAR 6,000 kcal/kg on 3 September, up from $151.90/t on 30 July and a low of $46.18/t a year ago. It assessed lower-grade coal at $103.99/t fob Newcastle for NAR 5,500 kcal/kg on 3 September, up from $92.93/t on 30 July and $35.04/t a year earlier.
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India’s Adani Power raises imported coal use in Jan-Mar
India’s Adani Power raises imported coal use in Jan-Mar
Singapore, 6 May (Argus) — India's leading private sector utility Adani Power more than doubled its use of imported thermal coal during January-March and in the April 2023-March 2024 fiscal year to meet rising power demand. The Bombay Stock Exchange-listed firm used 5.19mn t of imported coal over January-March, more than twice that of 1.99mn t a year earlier. Domestic coal burn also rose by nearly 18pc on the year to 8.83mn t during January-March, following higher availability of local fuel and increased dispatches to utilities. Adani Power consumed 19.44mn t of imported coal over India's April 2023-March 2024 fiscal year. This was also more than double that of 7.66mn t in 2022-23. Its domestic coal burn increased by 10pc on the year to 31.72mn t in 2023-24. Higher imports came on the back of a sharp drop in seaborne prices. The Argus -assessed Indonesian GAR 4,200 kcal/kg coal averaged $57.88/t fob Kalimantan over April 2023-March 2024, down by over 31pc from an average of $84.45/t in the year earlier. The company's fuel cost stood at 3.33 rupees/kWh sold (0.04¢/kWh sold) in January-March, down from Rs5.30/kWh sold a year earlier because of lower blended fuel costs, following a decline in seaborne coal prices. Fuel cost for 2023-24 stood at Rs3.59/kWh compared with Rs4.78/kWh in the previous year. Lower imported coal prices also boosted power offtake under imported coal-based power purchase agreements. The company sold 22.13bn units of electricity in January-March, up significantly from 14.25bn units sold a year earlier. It sold 79.27bn units in 2023-24, up from 53.39bn units in the year earlier. Higher volumes during January-March and the fiscal year were driven by its Mundra, Udupi, Raipur, and Mahan plants — apart from the incremental contribution of the Godda unit — which were commissioned in April 2023. Domestic power sales volumes were driven by growing power demand across the country, the company said. Utility demand could continue to support imports by utilities and lift overall Indian demand for seaborne coal. India imported 14.27mn t of thermal coal in March, up by 8pc from 13.2mn t a year earlier, according to shipping broker Interocean data. Thermal power expansion plans Adani Power operates 15.25GW of thermal generation capacity in the Gujarat and Maharashtra states of west India, Madhya Pradesh and Chhattisgarh in central India, Rajasthan in north India, Karnataka in south India and Jharkhand in eastern India. The firm is eyeing a capacity of more than 24GW by 2029. It is undertaking a brownfield thermal capacity expansion of 1.6GW at its 1.2GW Mahan power project in Madhya Pradesh. It has started developing a 1.6GW expansion at its existing 600MW unit in Chhattisgarh. Adani Power has also emerged as the frontrunner to acquire thermal generation capacity and an under-construction project from domestic debt-ridden Lanco Amarkantak Power. Lanco owned and operated a 600MW thermal power plant in central India's Chhattisgarh state and was planning 1.32GW of generating capacity under the second phase of the project. Adani is in the process of acquiring a 1.2GW debt-ridden thermal power project in south India's Tamil Nadu state. Plant operator Coastal Energen is also having a corporate resolution insolvency process. It is evaluating an organic expansion of 1.6GW, besides considering other inorganic acquisition opportunities, to meet strong demand for thermal power in the coming years, the company said. By Ajay Modi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US met coal suppliers expect belated supply tensions
US met coal suppliers expect belated supply tensions
London, 3 May (Argus) — US coking coal prices have so far brushed off any impact of the collapse of the Francis Scott Key bridge in Baltimore on 26 March and the subsequent disruption of vessel traffic via the Port of Baltimore. Suppliers such as Arch Resources and Blackhawk that utilise the Baltimore shipping route have sought effective alternative arrangements so far and buyers have been largely comfortable despite some delays in laycans. Other suppliers such as Northern Appalachia's largest producer, Consol Energy's Bailey mine , which is a key supplier to Atlantic end-users, have faced more challenges, market participants suggest. The decline in fob Australia coal prices from last year's highs amid improved supply availability has also weighed on prices. The Argus assessed premium low-volatile coking coal fob Australia price was at $242.80/t on 3 May, largely unchanged from $254/t on 26 March after reaching a low of $224/t on 8 April. The US east coast prices have followed a similar trajectory, with low-volatile fob US east coast at $215/t today down from $220/t on 26 March after falling to a low in April. Low European demand has been one of the reasons behind the tepid response to coking coal shipment delays from the US. But with expectations of at least some recovery in the second half of 2024 and still no firm date on when the Baltimore traffic will return to normal, some US suppliers suggest coking coal prices may face some upward pressure later this year. Luxembourg-based steelmaker ArcelorMittal has kept its apparent steel demand outlook in Europe unchanged for 2024, expecting a growth of 2-4pc on the year . European steel association Eurofer downgraded its apparent steel consumption outlook for 2024 again , to 3.2pc from a previous forecast of 5.6pc, owing to worsening geopolitical tensions, economic uncertainty, energy prices, inflation and higher interest rates. But this would still be an improvement from a 9pc fall in steel consumption in 2023. There is also optimism among US coal suppliers that Brazil may be a source of renewed demand in the coming months with domestic steel production expected to improve. The Brazilian government is due to increase taxes for some imported steel products after facing pressure from the domestic steel industry to apply tariffs on imports, in particular on Chinese steel. Taxes will be increased to 25pc on 11 steel products — mainly flat rolled — contingent on such import levels exceeding prescribed quotas, the trade ministry's committee on foreign commerce, Gecex/Camex, said. Brazil's crude steel output reached 31.9mn t in 2023, down by 6.5pc on the year, World Steel Association data show. In the US, the fall in seaborne met coal prices also points to potential consolidation in the sector and the possibility of supplies tightening down the road. Industry participants highlight that some of the small and mid-sized mining operations that have emerged in the past two years amid a strong price environment are struggling. Bens Creek Group, which operates the Bens Creek Mining project in West Virigina with around 30,000-35,000st (27,200-31,800t) per month of coking coal output, filed for Chapter 11 bankruptcy in April. The year-to-date average price of high-volatile A for 2024 stands at $242.62/t fob Hampton Roads and is estimated to be above production costs for some of these mines. In 2022, high-volatile A prices averaged $347.81/t fob Hampton Roads, driven by a combination of market concerns over the Russia-Ukraine conflict and supply disruptions in Australia. While Russian coking coal remains available and competitively priced in the market, in particular a key supply source for China, US sanctions will continue to put pressure on major coal importers such as India and South Korea to reduce their Russian imports. The US announced fresh sanctions against Russian coal producer Sibanthracite's group of companies earlier this week. By Siew Hua Seah Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian rail workers vote to launch strike: Correction
Canadian rail workers vote to launch strike: Correction
Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan's trading firms see metals prices cutting profits
Japan's trading firms see metals prices cutting profits
Tokyo, 2 May (Argus) — Major Japanese trading houses are expecting lower profits from their metals businesses during the April 2024-March 2025 fiscal year, mostly because of lower prices of commodities such as iron ore and coking coal . Japanese trading house Mitsui forecast profits for its metal and natural resource business falling by 14pc on the year to ¥290bn ($1.87bn) during 2024-25, primarily because of lower iron ore prices. Mitsui plans to cut iron ore output by 0.3pc on the year to 60.9mn t at its mining projects where the company owns production ri ghts or a production stake during 2024-25 . This includes the joint venture project Robe River in Australia with Australian iron ore producer Rio Tinto. Japanese trading house Sojitz also expects profits from its metal and natural resource business to decline to ¥35bn, down by 20pc on the year, mostly because of a bearish coking coal market. The company said its overall coal business can cut production costs during 2024-25, partly because it plans larger-scale output at the Gregory Crinum coking coal mine in Australia, without disclosing further details. But Sojitz said it cannot generate higher profits because of lower coking coal prices. The trading house expects the average coking coal price to fall to $230/t during 2024-25, according to the company's chief financial officer Makoto Shibuya, down by $57/t from a year earlier. The company reiterated that the price is not necessarily their selling price. Sumitomo expects profits from its natural resource business would remain flat at ¥72bn on the year, mostly as its nickel production in Madagascar recovers from the output cuts in 2023 , with an aim to produce 19,000t of nickel during 2024-25, up by 9.8pc on the year. A rebound in nickel production could offset possible losses from coal and coking coal prices falling to $266/t and $133/t respectively in the ordinary market, down by $21 and $9, according to the trading house. Sumitomo plans to increase coking coal production by 9.1pc to 1.2mn t but reduce coal output by 4.8pc to 4mn t during 2024-25. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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