Australian energy, resources projects delayed
Australian construction and engineering firm Decmil has warned that key construction components and supplies have been delayed or cancelled because of the Covid-19 outbreak, which will delay the development of major resources and energy projects.
The firm also warned that restrictions on travel between Australian states were making it difficult to deliver key skilled personnel into projects in resources-rich states such as Western Australia (WA) and Queensland. It has been two and a half months since WA and Queensland closed their state borders and the federal government imposed a 14-day quarantine at designated hotels for all international arrivals. Ports have remained open with some restrictions around crew leaving vessels, but overseas manufacturers that produce modules for resources and energy projects have curtailed production in response to national and regional Covid-19 rules.
This is extending the lead time for key items and in some cases seeing deliveries cancelled, which is likely to translate into delays for major projects already in construction and could see those in the planning phase shelved.
"The delivery of key supplies and construction components have all been either delayed or cancelled as a result of restricted international trade in light of Covid-19," said Decmil in its prospectus issued to raise A$50mn ($33.7mn). The raising is to shore up the firm's balance sheet as it navigates the current economic climate.
Decmil is involved in several key resources project in Australia, including for Queensland gas producer QGC, Indian energy firm Adani's Carmichael coal project in Queensland, iron ore mining firm Fortescue Metals (FMG), Australian resources firm South32, and WA petroleum and LNG firm Woodside.
The warning from Decmil follows that by UK-Australian mining firm Rio Tinto that supply chain disruptions could delay major projects.
A delay to major projects may be welcome in some oversupplied commodities such as coal and LNG but could put further upward pressure on iron ore prices, already strongly supported by supply disruptions caused by Covid-19.
Rio Tinto, BHP and FMG are all developing major projects to either sustain production levels or add incremental tonnes. BHP's 80mn t/yr South Flank project is due to deliver ore from 2021, while Rio is working on the 43mn t/yr Koodaideri mine, as well as investments at Robe River and Tom Price. FMG plans to deliver first ore from its Eliwana project by December and from the 22mn t/yr Iron Bridge project in 2022.
Uncertainty about whether projects are deliverable in the current global economic climate may lead more firms to shelve projects that are not yet in construction, particularly in oversupplied commodities where companies are looking to curtail output.
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BHP to expand gas-fired West Australia power station
BHP to expand gas-fired West Australia power station
Sydney, 17 April (Argus) — Australian resources firm BHP plans to increase power generation at its 154MW Yarnima gas and diesel-fired facility near the Pilbara iron ore mining hub of Newman in Western Australia (WA) state. The proposal, according to documents filed with WA's Environmental Protection Authority (EPA), will see output increase by 85MW to a total of 239MW through gas reciprocating engines and associated infrastructure with up to 120MW of nominal new capacity to be built in stages. Peak scope 1 greenhouse gas (GHG) emissions from the project are predicted to be 480,030 t/yr of carbon dioxide equivalent (CO2e), while scope 3 emissions related to supplying the gas are expected to be 37,260t CO2e/yr. Power demand at BHP's iron ore operations in the Pilbara is forecast to increase from 150MW currently to 1GW by 2040, as the company reduces its GHG emissions through electrification of its rail and mining fleets and must balance renewables with firmed generation. The iron ore mining sector is a large-scale producer of Australian GHG emissions through its Pilbara-based operations. Displacing liquid fuels such as diesel, which Australia consumes at an average rate of around 500,000 b/d by electrifying processes and switching to lower CO2-emitting sources such as gas, is expected to trend as Australia's largest polluters meet government mandates . Yarmina currently runs a 35MW diesel-fired temporary power station as part of its installed capacity. Canadian energy firm TransAlta earlier this year lodged plans to build a new 150MW gas-fired power station for BHP's Nickel West operations in WA's Northern Goldfields region. WA's domestic market is likely to be short on gas later this decade despite being Australia's largest LNG export state, the Australian Energy Market Operator (Aemo) has warned in its Western Australia Gas Statement of Opportunities. Aemo's modelling released last year shows the closure of WA's state-owned coal-fired power stations will drive increased requirements for gas-fired electricity generation in the next decade. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Shale discipline even at $200/bl: Ex-Pioneer CEO
Shale discipline even at $200/bl: Ex-Pioneer CEO
New York, 16 April (Argus) — Public independent shale oil producers will remain disciplined and keep production steady even if crude prices soar on geopolitical tensions, according to the former chief executive officer of Pioneer Natural Resources. "Even if oil gets to $200/bl, the independent producers are going to be disciplined," Scott Sheffield said today at the Columbia Global Energy Summit in New York. Public independents showed restraint when oil prices jumped in the immediate aftermath of Russia's invasion of Ukraine in 2022, as they focused on improving shareholder returns rather than ramping up production to take advantage of short-term prices, he said. One benefit of the recent wave of consolidation is that it may kickstart some growth in a sector that has showered shareholders with excess cash via dividends and share buybacks in recent years. Before Pioneer agreed to be bought for $59.5bn by ExxonMobil late last year, the company was only increasing output at around 5pc a year. Once the acquisition closes, the top US oil major is going to grow Pioneer's assets at 10-15pc a year, said Sheffield. "That's an example where somebody is stepping up and adding production," he added. Global crude prices have moved very little since the weekend when Israel and allies thwarted a massive missile and drone attack from Iran. WTI today fell by just 5¢/bl to $85.36/bl while June Ice Brent fell by 8¢/bl to $90.02/bl. The industry veteran stepped down as chief executive at the end of last year but remains on the board of Pioneer. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Ramaco adding production, sees market growth
Q&A: Ramaco adding production, sees market growth
New York, 16 April (Argus) — Randall Atkins is a founder and chief executive of metallurgical coal producer Ramaco Resources. He also has been involved in energy-related investment and financing activity for over 40 years. In this Q&A, edited for length and clarity, he discusses effects from the Francis Scott Key bridge collapse, his outlook for coal and the company's research projects. What effect has the Key bridge collapse and Port of Baltimore closing had on Ramaco and the US coal industry in general? Like most things of that tragic nature, it is going to take longer than everyone expects to actually solve the problem. I think where it is going to impact producers probably more is on the rails. There will be a need for...producers to rearrange stockpiles and to rearrange where they are going to try and ship, even at reduced levels. Particularly, CSX is going to have an immense logistical complexity to deal with over the near-term. We do not ship from Baltimore. We have not seen any problems, knock on wood, with our rail shipments post the incident. What are your long-term projections for metallurgical coal given expectations that low-volatile coal reserves will shrink in coming decades and the steel industry could be in oversupply? Low vol coal has traditionally been the highest priced coal and the dearest, if you will. High vol A coal has over the last few years grown in importance, and to the extent that there is any new increase in production in the US, it's high vol. What we perceive is that there is going to be a crowding in the high vol space. As a result, our increase in production is primarily in low vol. As far as the demand side is concerned, we do not believe that blast furnace steel demand is going to decline anytime soon. There's a lot of noise from the green community that hydrogen is going to replace coal in blast furnaces. We took some advice on that from the IEA…and when that question was posed (to IEA), the answer that was given was it would take about $1.5 trillion to build a pilot plant using hydrogen by 2035 and probably about another equal or greater sum to build a commercial facility by 2040. So, I don't lose a lot of sleep on the demand for coal for blast furnaces. What I do see shifting, however, is the US has held relatively steady at about 20mn short tons (18.1mn metric tonnes) of met coal demand over the last 10 to 15 years. The growth is clearly overseas, and the growth is clearly at the moment in Asia. When we started back in 2017, and 2018 was really our first year of production, we predominantly sold coal domestically; I think 80pc of our coal went to US steel mills. Now that is almost reversed. We're going to sell probably this year, 70pc overseas, and about a third or less domestically. With Europe moving towards electric arc furnace technology and significant new blast furnace capacity coming online in Asia, what kind of role will the US play as a coal supplier over the coming years? It is cheaper to use a blast furnace than electric arc. And the steel that they (Asian companies) mostly require is the heavier steel for cars and buildings and things of that nature. So, they have a bias towards blast furnace capacity. The US and Europe are very developed economies that are trying to go and wean away from coal, (while) the rest of the world is aggressively moving further into coal. People will shake their heads at the cost that European and American consumers will start to have to pay for that privilege. We see market growth is still there, but it's a different kind of growth. It will be more in the Asian markets, predominantly some in Europe, some in South America and Africa. The low vol coal demand in Asia is extremely strong because while they are able to buy high vol product from Australia very inexpensively, they do not have the low vol production. They need that to blend up to get the proper mix in their blast furnaces. There is a very good future for low vol, and that is the direction we are positioning ourselves. How confident is Ramaco about securing its investments in the longer run given the emphasis on ESG? What I see is sort of a dichotomy. In the thermal coal business, there's not a lot of investment in new mining there for the obvious reason that their customer base is declining. On the met side, it is a bit shortsighted from an investment standpoint because of the composition of the ownership of met coal companies. Virtually every major metallurgical coal producer except for us went through bankruptcy and post-bankruptcy proceedings. Their board composition became essentially distressed debt investors...Their interest was not developing a long-term coal company. Strategically their vision was: "How can we most quickly get money back out of that coal company?" We are certainly the only coal company that is doubling in size. We produced a little under 4mn st last year. We will be at about 4.5mn st this year. We can maybe go higher, depending upon the market. The market is not strong right now. The other issue (for coal producers) even when they weren't doing special dividends, is they've now shifted to doing large-scale share buybacks. You are starting to see the cost curve increase for most domestic coal producers. What you haven't seen, but I think you will probably find over the next probably 18 to 24 months, is you will begin to see depletion kick in. The amount of coal that they are able to produce from their existing operation will begin to decline. And that is strictly a result of not investing in new mine production. My approach was to kind of be a little bit of an outlier and then approach coal to products as an alternative use, certainly for thermal coal. And that, of course, brought us to rare earth (mineral extraction). Do you have funding for Ramaco's rare earth materials projects? Let me step back one step. We introduced the idea that we actually had rare earth (deposits) in May 2023….When we sent the samples to be tested, they tested them as if they were hard minerals. In other words, they did not combust off the organic material. What we have done since then, is we went back and we had samples that were probably 200-300 parts per million. From a commercial standpoint, we have kind of crossed the Rubicon that this is indeed sufficiently concentrated that it makes commercial sense. Now what we are doing is we are going through a process of further chemical analysis and testing to determine what is the best extraction and refinement technique. And the last point you raised was financing. We have a very nice growing mining metallurgical business, which can provide the funding to do whatever we want to do on rare earth. I am not too concerned about our financing capability. Any updates on your coal-to-carbon product projects ? We have looked at a number of different things with the national labs. We started looking at carbon fiber, which could be made from coal and we have got some patents around some very interesting processes. The areas that we are now focusing on...are using coal to make synthetic graphite. The other thing we are working on is using coal for direct air capture. We are considering going into a pilot phase sometime starting later this year with Oak Ridge National Laboratory on a synthetic graphite plant. As far as direct air capture, we probably have more work to do. We are also working on that with Oak Ridge. But I would hope that sometime by 2025, certainly 2026, we would perhaps have our first product, quote unquote, to be able to offer into the market. And it would be delightful if it was synthetic graphite. By Elena Vasilyeva Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Liberty Whyalla blast furnace down after maintenance
Liberty Whyalla blast furnace down after maintenance
London, 16 April (Argus) — GFG Alliance is negotiating with workers at its Whyalla plant in Australia for "short-term" options as its blast furnace experienced operational and technical issues after maintenance work last month. Suppliers of the plant told Argus in late March that the blast furnace was experiencing issues. "Ageing assets like the blast furnace will eventually be retired as part of the Whyalla Steelworks transition to new technologies," a GFG spokesman said. "Plans are being developed to safely continue productivity of the blast furnace and, more broadly, the Whyalla Steelworks, as well as enable a more sustainable future." "GFG remains committed to returning the blast furnace safely to operational use," he added. GFG is a collection of entities including Liberty Steel. Whyalla has a production capacity of about 1.2mn t/yr, with about two-thirds of that cast into billet and sent by rail to GFG's Infrabuild business for processing into longs. Under the agreement between the two plants, payment from Infrabuild to Whyalla can be made before delivery. Infrabuild raised $350mn through a bond sale towards the end of last year at an interest rate of 14.5pc. Meanwhile, Liberty remains in talks with the Czech government over the emissions allowances for its Ostrava site. The Czech Ministry of Environment wants proof that Ostrava will produce again before granting free allowances to the site, and the significant change in its operating rates mean the company may not receive those allowances until June or July — its restructuring plan envisages selling a portion of those allowances in May. The idling of the blast furnace since October, and the stoppage of coking facilities at the site, also impacts the number of allowances that will be granted. Sources suggest coking is unlikely to restart, meaning there will be no allowances granted for the facility, while there is also concern about when the blast furnace may restart. "The EU emissions trading system is a complex system which is designed to avoid interference in the distribution of the allowances and the calculations of the emissions," a Liberty spokesperson said. "This system governs about 11,000 companies across the EU and Liberty Ostrava only expects to be treated in the same way as all the others." By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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