Bottom reached for coal, iron ore? – by Oliver Probert (Australian Journal of Mining – August 07, 2014)

http://www.theajmonline.com.au/

An ANZ commodities expert says iron ore and coking coal prices may have reached their bottom, and he’s singing from the same hymnbook as at least one mining executive.

A report from Mark Pervan, global head of commodity strategy for ANZ, this week said that with the stabilisation of the overall macro environment, commodity markets are entering the second half of 2014 on a positive note.

While an increase in commodity prices is likely to occur, the report says, it will be a modest one, however.

“Overall, the backdrop looks accommodating for commodity markets in H2 2014,” Pervan’s report states. “But the upside looks limited over the next month or two until we see this supported by a pick-up in physical demand, which is expected later in the year.”

Commenting specifically on mined bulk commodities, Pervan wrote: “Supply-side issues remain, but the bottom appears to have passed for coking coal and iron ore. Seasonal drops in power demand will cap any thermal recovery.”

Pervan’s confidence in iron ore was echoed by Atlas Iron chief executive Ken Brinsden, who was referenced in a number of mainstream media outlets for his comments at the Diggers & Dealers conference in WA this week.

Read more

COLUMN-Coking coal prices set for modest gains, thermal still marooned – by Clyde Russell (Reuters U.K. – July 5, 2014)

http://uk.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, Aug 5 (Reuters) – Prices for thermal and coking coal appear poised to diverge, with the power-plant fuel remaining mired in the doldrums and the steel-making ingredient posting modest gains.

The halving of thermal coal prices since early 2011 has grabbed the most attention in the beleaguered industry, but coking coal has actually performed worse, dropping by almost two-thirds since its post-2008 recession peak in mid-2011.

The 2011 high was reached after severe flooding in Queensland state, the main coking coal producer in top exporter Australia.

Both types of coal have been plagued by oversupply, which has swamped the modest increases in demand in top importers China and India.

The problem for thermal coal has been supply hasn’t significantly been cut despite weak prices. Producers in the top two exporters Indonesia and Australia have been instead trying to cut costs and increase volumes in order to boost revenues.

Australian producers have another problem, the so-called “take-or-pay” contracts that commit them to paying for transport costs whether they actually ship coal or not.

Read more

Australian plus-sized model Robyn Lawley opens up about her nude coal mining protest (News.com.au – July 31, 2014)

http://www.news.com.au/

MODEL Robyn Lawley has come clean about her revealing nude protest against coal mining, taking Prime Minister Tony Abbott to task over his green credentials.

The 25-year-old Lawley, currently in New York, posted an image on her Instagram account earlier this week showing her stomach, breasts and “Stop coal mining” scrawled across her stomach in red lipstick.

Robyn said the protest was in response to the Federal Government’s approval of the Carmichael Coal Mine in Queensland.
Today she has taken another swipe at Prime Minister Tony Abbott, criticising his scrapping of the carbon tax earlier this month.

“After running a campaign that bewildered the public and convinced citizens they would have to pay said tax through increased energy bills, our leaders were able to shut the (carbon price) system down,” Lawley said.

“What’s the big deal? That scheme was meant to be a powerful incentive for all businesses to cut their pollution and by investing the tax dollars in clean technology and solutions.”

The popular model also raised her concerns about the government’s support for the expansion of the massive Abbott Point Coal Terminal in north Queensland.

Read more

RPT-COLUMN-Rio’s Mozambique debacle sows seeds of next commodity boom – by Clyde Russell (Reuters U.S. – July 31, 2014)

http://www.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, July 31 (Reuters) – While it’s easy to point the finger of blame at Rio Tinto’s former management and feel a tad smug about their downfall, the real lesson of the company’s humiliating exit from its Mozambique coal assets is that the wheels of the next commodity boom are now in motion.

This may seem counterintuitive at first, as once all the arguments over Rio Tinto’s wisdom of paying $4 billion to gain a foothold in Mozambique are stripped away, it comes down to the fact that weak coal prices made it uneconomic to spend any more to develop the mines and infrastructure.

Oversupply in the coal sector has been a chronic problem, and given the amount of mine capacity that is currently under-utilised, it’s likely that prices will struggle for some time to come even if optimistic demand projections are met.

When Rio bought Riversdale’s Mozambique assets in 2011, thermal coal prices at Australia’s Newcastle port, an Asian benchmark, had peaked at $136.30 a tonne in January of that year. Coking coal reached an eye-watering $330 a tonne at mid-year.

Since then, prices have plunged. Newcastle thermal coal is currently $67.89 a tonne, while Australian spot coking coal fetches about $114 a tonne.

Read more

Teck still on solid ground, despite coal price slump – by Nelson Bennett (Business Vancouver – July 29, 2014)

http://www.biv.com/

BC’s largest mining company remains on solid financial ground, despite its profits dropping 63% in the first half of 2014 and a commitment to spend $850 million this year on a new oilsands project in Alberta.

In a second-half earnings call, Teck Resources Ltd. (TSX:TCK.B) reported its profits dropped from $197 million in the second quarter of 2013 to $72 million in this year’s second quarter.

That decline was due largely to a global glut of metallurgical (“met”) coal, which accounts for about half of Teck’s business. The company’s gross profits were down from $871 million in Q2 2013 to $633 million to date.

But unlike American coal miner Walter Energy Inc. (TSX:WLT), Teck has not had to resort to closing any of its B.C. mines, although it has officially mothballed the long-planned restart of the Quintette mine in Tumbler Ridge.

Teck estimates it could take several months to whittle down the current oversupply of steelmaking coal. Teck’s coal sales in Q2 were up by 500,000 tonnes, but prices were down 23% to US$122 per tonne. The company expects to ship 26 million to 27 million tonnes of coal in 2014, and has contracts to sell at US$120 per tonne for the higher-grade coal.

Read more

UPDATE 3-Rio Tinto pulls plug on ill-fated Mozambique coal venture – by Silvia Antonioli and Jim Regan (Reuters India – July 30, 2014)

http://in.reuters.com/

LONDON, July 30 (Reuters) – Rio Tinto has agreed to sell coal assets it bought through a $4 billion acquisition of Riversdale in 2011 for just $50 million to an Indian joint venture, ending its ill-fated venture in Mozambique’s coal sector.

The sale of Rio Tinto Coal Mozambique to International Coal Ventures Private Limited (ICVL), includes the Benga coal mine and other projects in Tete province, assets that had a value of $71 million as of March 31 in Rio’s books.

In 2013, Rio Tinto sacked its chief executive and other executives directly involved in the acquisition of Riversdale and wrote off about $3.5 billion of the purchase price, partly owing to a failure to secure a permit to move coal by barge down Mozambique’s Zambezi River.

Rio Tinto is only retaining one of the assets it got from the Riversdale acquisition: the Zululand Anthracite Colliery, a small coal mine in South Africa.

“It has clearly been a horrible experience for Rio Tinto,” said Liberum analyst Richard Knights, saying that the sale price was lower than he expected and implied a further writedown.

“The assets clearly weren’t as good as they thought but in order for them to be written down that aggressively they must have seen very little scope in the foreseeable future for the profitable export of coal from Mozambique.”

Read more

Coal comfort: faster to start mine in Indonesia than here – by Andrew Fraser (The Australian – July 30, 2014)

 http://www.theaustralian.com.au/

PETER Lynch can tell you exact­ly the difference between setting up a mine in Indonesia and Australia — the former takes four years; the latter somewhere between seven and 10. And the cost of producing coal from Indonesia is about two-thirds that from Australia.

Mr Lynch is in a position to know. A veteran mining figure who worked for MIM and other companies, he was the first to realise the potential of the Galilee Basin in central Queensland in 2006. He pegged out 13 explor­ation permits covering 250sq km. In 2010, Clive Palmer made him an offer he couldn’t refuse, paying $130 million for Waratah Coal and control of the project.

Now chief executive of mining company Cokal, Mr Lynch saw potential in Indonesia, and in early 2011 started digging exploratory holes in a remote part of Central Kalimantan. Three years later, he has all his key approvals in place and is finalising his financial backing, with the aim of starting production in September next year — a bit over four years from when he first eyed the area. By contrast, the earliest date for coal to come out of the Galilee Basin is 2017, despite the approvals process starting several years earlier.

Mr Lynch’s tale illustrates the concerns the Business Council of Australia and Hancock Prospecting chairman Gina Rinehart have raised this week about Australia losing its competitive edge because of high labour costs and red tape.

On Monday, Environment Minister Greg Hunt approved Adani’s proposed Carmichael mine in the Galilee Basin, but the Indian company still needs to get approval for the construction of a proposed railway line to Abbot Point.

Read more

INTERVIEW-Mozambique still counting on coal, despite price doldrums – by Pascal Fletcher (Reuters India – July 28, 2014)

http://in.reuters.com/

MAPUTO, July 28 (Reuters) – Mozambique is still counting on increasing coal exports to expand its infrastructure and drive economic growth, despite depressed global prices which might delay the timing of some major railway and port projects, the transport minister said.

Gabriel Muthisse told Reuters the government was also keen to attract investors to help build the infrastructure needed to exploit huge offshore natural gas reserves in the north.

The World Bank has forecast that coal and gas may generate up to $9 billion in revenues by 2032 for the southern African state, which is still poor and recovering from a 1975-1992 civil war.

Rio Tinto , Brazil’s Vale and India’s Jindal have invested heavily in developing Mozambique’s coal deposits – the fourth-largest untapped recoverable coal reserves in the world.

But billions of dollars of investment in rail and port expansions are still needed to carry the coal from the inland Tete mines to the seaborne market.

With global prices for coal in the doldrums because of oversupply and sluggish demand, experts and producers say Mozambican coal mining operations face an uphill battle to be competitive in the next few years, especially when so much infrastructure capacity still needs to be built.

Read more

Surface mining’s price – by Rebecca Schmoyer (Albany Times Union – July 26, 2014)

http://www.timesunion.com/

Mountaintop coal removal leaves environmental and health impacts

A few weeks ago, I stood on top of Armstrong Mountain. The day was clear and the valley below filled with spruce, fir and hardwood forest. Unbroken ridges extended into the distance. As my final summit of the 46 Adirondack High Peaks, it was a moment of accomplishment. But while I took in the view, I was troubled by a somber national milestone.

As of this year, over 500 of the Appalachian Mountains have been destroyed by mountaintop removal coal mining. It’s time for New York state to divest from this industry.

According to the Office of State Comptroller’s 2013 asset report, the state has millions invested in companies that practice what the industry decorously calls “surface mining.” But the impact of mountaintop removal mining on the people and landscape of central Appalachia is far from superficial. The U.S. Environmental Protection Agency estimates the industry has left 1.2 million acres, or over 2,000 square miles, of barren, scarred land — an area bigger than the state of Delaware. And the devastation continues.

A few days later, Vernon Haltom and I are standing on a flattened ridge in southwestern West Virginia. Here, in the dust above Coal River Valley, summertime means blasting.

“They’re at it six days a week,” says Haltom, executive director of Naoma, W.Va.-based Coal River Mountain Watch.

Read more

Coal India undermined by basic equipment flaws – by Krishna N Das (Reuters India – July 25, 2014)

 http://in.reuters.com/

NEW DELHI – (Reuters) – As Prime Minister Narendra Modi’s government looks to shape up Coal India Ltd (COAL.NS) for a potential major restructuring, the world’s biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.

The new government, which has a 90 percent stake in the company whose total market value is about $40 billion, is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.

But the firm, which accounts for more than 80 percent of India’s production and employs 350,000, has not met its output target for years, ensuring the country remains the world’s third-largest coal importer despite sitting on huge reserves.

A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government’s reform strategy. [ID:nL3N0O6458]

Two units produced less in the last fiscal year than a year ago, partly due to lack of basic equipment and ageing machinery, Power and Coal Minister Piyush Goyal told parliament this week.

The minister did not provide data but according to a top official at one Coal India unit this issue could be cutting Coal India’s annual output by more than 10 percent. The official declined to be identified due to its policy on talking to media.

Read more

Mozambique trying to ease coal companies’ pain, but no tax breaks – by Pascal Fletcher (Reuters Africa – July 21, 2014)

http://af.reuters.com/

MAPUTO (Reuters) – Mozambique is discussing with its foreign coal mining partners ways to help them ride out depressed markets but will not be offering special tax breaks to ease the pain, its mineral resources minister said on Monday.

Esperanca Bias told Reuters the government understood that companies such as Vale of Brazil and Rio Tinto, which helped Mozambique to start up in 2011 as a coal producer and exporter, were feeling the pain of depressed global prices for coal used in steelmaking and generating power.

The southern African nation, which still bears the scars of a 1975-1992 civil war, has the world’s fourth-largest untapped recoverable coal reserves, estimated at over two billion tonnes.

Vale is investing billions of dollars on rail and port networks to bring greater volumes of coal to the market, up from a current export capacity of five million tonnes per year. It is targeting 22 million tonnes by 2017/2018.

But Vale, which announced an accumulated loss of $44 million for Mozambique operations in the first quarter, says it urgently needs to cut operating costs to remain competitive.

“We’re studying this,” Bias said on the sidelines of the 5th Mozambique Coal Conference in Maputo. “We are working on it to see what can be done from our side.” she added.

Read more

Coal Fuels Brewpubs in Wyoming as Kentucky Mines Misery – by Mark Drajem (Bloomberg News – July 18, 2014)

http://www.bloomberg.com/

Trying to find the boom in U.S. coal? Stop in the Gillette Brewing Company in Wyoming, which 38-year-old Tom Gorton opened using some of the $70,000 a year he earns mining coal.

“Things were iffy there for a little bit, but it’s picking up now,” Gorton said at his brewery in the center of town, where customers wash down brie baked in a wood-fired oven with gluten-free blue agave ale. “When people have a little extra money, that changes things.”

In the coal region of eastern Kentucky, about 1,300 miles away, extra money is hard to come by. Brandon Farley lost his job there when the James River Coal Co. (JRCCQ) mine closed. Months of looking turned up only one job lead: a minimum wage opportunity at the local Pizza Hut.

“They want coal to be done with,” Farley said. “I believe it’s coming to an end.”

The experience of these two mining communities reflect the conflicting views of coal itself. Environmentalists see signs of its demise in shrinking production and growing concerns over global warming. Boosters point to a surge in demand by developing countries hungry for cheap and plentiful energy. Germany and Japan, too, are burning more coal as they reconsider the risks of atomic power.

Read more

India’s coal shortage a boon for Australian miners – by Vicky Validakis (Australian Mining – July 15, 2014)

http://www.miningaustralia.com.au/home

In what could be good news for Australia’s coal industry, India’s power plants are running out of stock, forcing the country to increase its import levels.

India already imports 20 per cent of its coal requirements and shipped in 152 million tonnes of coal last year.

However rising electricity demands are putting an increasing strain on local production, with state-run Coal India Limited (CIL) asked to up its output by importing more of the commodity to mix with domestic supply.

A source told The Economic Times that India’s power plants were not running at optimum levels, with more coal required to help in a ramp-up.

There are currently 65,000 MW of power generation projects out of action. Although pooling will raise the cost of coal, it is seen as a way to help underperforming plants generate more electricity.

The demand for coal in India is expected to come in at 551.60 million mt in 2015, however supplies are predicted to amount to just 466.89 million mt, leaving an 84.71 million mt shortfall.

Read more

THE LUDLOW MASSACRE STILL MATTERS – by Ben Mauk (The New Yorker – April 19, 2014)

http://www.newyorker.com/

On April 20, 1914, members of the Colorado National Guard opened fire on a group of armed coal miners and set fire to a makeshift settlement in Ludlow, Colorado, where more than a thousand striking workers and their families were camped out. Today, the Ludlow massacre, which Caleb Crain wrote about in The New Yorker in 2009, remains one of the bloodiest episodes in the history of American industrial enterprise; at least sixty-six men, women, and children were killed in the attack and the days of rioting that followed, according to most historical accounts.

Although it is less well-remembered today than other dark episodes in American labor history, such as the Triangle Shirtwaist Factory fire that claimed a hundred and forty-six lives, the Ludlow massacre—which Wallace Stegner once called “one of the bleakest and blackest episodes of American labor history”—changed the nation’s attitude toward labor and capital for the next several decades. Its memory continues to reverberate in contemporary political discourse.

In the summer of 1913, United Mine Workers began to organize the eleven thousand coal miners employed by the Rockefeller-owned Colorado Fuel & Iron Company. Most of the workers were first-generation immigrants from Italy, Greece, and Serbia; many had been hired, a decade prior, to replace workers who had gone on strike. In August, the union extended invitations to company representatives to meet about their grievances—including low pay, long and unregulated hours, and management practices they felt were corrupt—but they were rebuffed.

Read more

India needs to restructure Coal India to raise output -govt report – by Krishna N Das (Reuters India – July 9, 2014)

http://in.reuters.com/

(Reuters) – India needs to restructure state behemoth Coal India Ltd quickly to raise output to feed fuel-starved power plants, the finance ministry said in a report, as the country grapples with rising imports amid a push for electricity to all.

Coal India (CIL), the world’s largest coal miner, accounts for about 80 percent of India’s production of the black rock but has failed to meet its output targets for years due to delays in obtaining environmental approvals to expand mines and what critics say are inefficiencies owing to its size.

Millions go without power in India and blackouts are common. “The process of restructuring CIL needs to be pushed through swiftly to boost coal production,” said the finance ministry in the Economic Survey report presented to parliament on Wednesday.

The report – submitted a day before Finance Minister Arun Jaitley delivers his maiden budget – did not say what kind of restructuring it was recommending for CIL.

Reuters reported in May that newly elected Prime Minister Narendra Modi could explore breaking up some of CIL’s eight local units and making state governments equity holders to help speed land acquisition and other such processes.

The government should also allow commercial mining by private companies, said the ministry’s report.

Read more