bama unveils new coal mining rules (The Hill – July 16, 2015)

http://thehill.com/

The Obama administration Thursday unveiled new standards meant to better protect streams in Appalachia from the controversial mountaintop removal coal mining process.

The proposed rule, from the Interior Department’s Office of Surface Mining (OSM), would update three-decade-old standards that create a buffer zone around streams, prohibiting mining activities and waste from getting near them and harming the ecosystem.

Administration officials characterized the rule as a common-sense approach that uses the best available science to protect streams and groundwater from the effects of mining.

But Republicans and industry leaders immediately blasted the rule as part of President Obama’s “war on coal” and challenged the idea that the 1983 standards need updating.

“These regulations are meant to protect human health and welfare by protecting our environment, while helping to meet the nation’s economic needs and supporting economic opportunity,” Interior Secretary Sally Jewell told reporters Thursday.

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The Latest Sign That Coal Is Getting Killed – by Tom Randall (Bloomberg News – July 13, 2015)

http://www.bloomberg.com/

Coal is a sick dragon, and the bond market wields a heavy sword

Coal is having a hard time lately. U.S. power plants are switching to natural gas, environmental restrictions are kicking in, and the industry is being derided as the world’s No. 1 climate criminal. Prices have crashed, sure, but for a real sense of coal’s diminishing prospects, check out what’s happening in the bond market.

Bonds are where coal companies turn to raise money for such things as new mines and environmental cleanups. But investors are increasingly reluctant to lend to them. Coal bond prices tumbled 17 percent in the second quarter, according to an analysis by Bloomberg Intelligence. It’s the fourth consecutive quarter of price declines and the worst performance of any industry group by a long shot.

Bonds fluctuate less than stocks, because the payoff is fixed and pretty much guaranteed as long as the borrower remains solvent. A 17 percent decline is huge, and it happened at a time when other energy bonds—oil and gas—were rising. Three of America’s biggest coal producers had the worst-performing bonds for the quarter:

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COLUMN-China Shenhua’s Australian coal mine on troubled path – by Clyde Russell (Reuters India – July 14, 2015)

http://in.reuters.com/

LAUNCESTON, Australia, July 14 (Reuters) – A planned Chinese-owned coal mine in Australia has become the latest example in a long line of mud-slinging trumping sensible debate.

While it makes for great headlines, there are few things less edifying than seeing politicians, business and community leaders flinging gratuitous insults at each other.

The stoush is over the Australian federal government’s approval of a A$1 billion ($746 million) coal mine being developed by China Shenhua Energy Co in the Liverpool Plains region of New South Wales state.

It would be something of an understatement to say the 10-million tonne a year project has been controversial, with its approval showing splits in the ruling Liberal National coalition, while prompting threats of civil disobedience from farmers and legal action from a variety of opponents.

The main issue is that the proposed mine, known as Watermark, is in prime agricultural land and there is concern that not only will it take up land that could be used for farming, but also that the mine will deplete or degrade the region’s underground water table.

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China imports of coal go into steep decline but there’s a silver lining for Australia – by Angus Grigg (Australian Financial Review – July 13, 2015)

http://www.afr.com/

China is demanding less coal and more wheat.

That’s the key message from first-half trade data released on Monday by the Customs Bureau, which showed China’s overall imports remained weak while exports were only marginally better.

In US dollar terms the value of trade in the world’s second biggest economy fell 6.9 per cent over the first half of the year as wheat imports surged and coal declined.

For Australia, these wildly divergent statistics are hard to ignore. Over the first six months of the year, the volume of China’s coal imports fell 37.5 per cent compared to the same period in 2014.

The volume of wheat imports was up 66.5 per cent over the same period. For coal, the decline is a combination of protectionism and falling domestic demand.

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Gas overtakes coal at US power stations – by Ed Crooks (Financial Times – July 12, 2015)

http://www.ft.com/intl/companies/oil-gas

New York – The US generated more of its electricity from gas than from coal for the first time ever in April — in a sign of how the shale boom is putting mounting pressure on the country’s mining industry.

Plunging prices for natural gas, which have fallen alongside oil since last summer, led to it being used to generate 31 per cent of America’s electricity in April, while coal contributed 30 per cent.

This was the first month in US history that gas-fired electricity generation surpassed coal-fired generation, according to SNL Energy, a research firm — although it came close in 2012 when gas prices were also very weak. In 2010, coal provided 45 per cent of US power.

Since then, competition from cheap shale gas — unlocked by the rise of horizontal drilling and hydraulic fracturing — plus a growing regulatory burden on coal-fired power plants, has squeezed out coal use. That trend has accelerated in 2015.

Brett Blankenship of Wood Mackenzie, the research company, said the combination of cheap gas and new environmental regulations such as curbs on mercury and related pollution from coal-fired plants was having a particularly deleterious effect on coal generation.

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U.K. to End 300 Years of Deep Coal Mining as Prices Slump – by Alessandro Vitelli (Bloomberg News – July 10, 2015)

http://www.bloomberg.com/

Britain plans to close its last deep coal mine in December, spelling the death of an industry that’s kept the nation’s economy humming since the Industrial Revolution.

The U.K.’s last deep underground mine, located at Kellingley in northern England, will shut around Dec. 15, U.K. Coal Holdings Ltd. said in a statement. The company’s Thoresby mine ceases production on Friday.

The closing of Kellingley will mark the nation’s exit from an industry that employed more than a million workers at 3,000 pits a century ago. Since 2000, U.K. power generators Electricite de France SA to RWE AG bought more of the fuel from abroad, where coal from Australia to Colombia is cheaper, according to the Federation of U.K. Coal Producers. European prices slumped to an eight-year low in April.

“The U.K. coal industry has been in structural decline for 40 years,” Paolo Coghe, an analyst in Paris at Societe Generale SA, said Friday by phone. “It’s no longer positioned to withstand an extended period of low prices such as the one we are experiencing now.”

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UK Coal’s Thoresby Colliery to cease mining on Friday (Reuters U.K. – July 10, 2015)

http://uk.reuters.com/

LONDON – Coal mining at Thoresby Colliery, one of the last remaining underground coal mines in Britain, will cease on Friday and 360 employees will be made redundant, mine owner UK Coal said in a statement.

Mining at UK Coal’s Kellingley mine will also cease on or around December 15, the company said.

Underground coal mining has become unprofitable in Britain because of fierce competition from cheaper markets such as Colombia, Russia and the United States, falling domestic demand and a government drive away from carbon-intensive coal power generation.

UK Coal was placed into administration in 2013 after struggling with rising costs, hefty pension liabilities and strong competition from cheaper coal imports.

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A Colorado Coal Mining Town Struggles to Define Its Future – by Jack Healy (New York Times – July 8, 2015)

http://www.nytimes.com/

Tighter regulations, environmental lawsuits and a pivot toward cleaner-burning natural gas have knocked communities like Somerset, Colo., on their heels.

SOMERSET, Colo. — For more than a century, the economy and identity of this tiny community wedged into the mountains have been defined by the coal heaps, railroad tracks and deep underground mines that filled train cars with coal and miners’ pockets with money. “Welcome to Somerset,” says the blue sign at the entrance to town, “Coal mining town since 1896.”

Maybe no longer. The Elk Creek Mine, towering over Somerset, once employed about 200 people, but it has been shut down since a collapse and underground fire in December 2012, with just nine employees left to manage its dismemberment. It is selling off its equipment, handing over its water treatment plant to residents and weighing whether to tear down the concrete coal silo that looms over the town and close for good.

“Everybody thinks our community is just going to fold and fall down,” said Terry Commander, who runs the local water district. “We have to learn how to be able to stand up on our own.”

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Coal habits die hard as Australian miners boost exports – Peter Kerr (Sydney Morning Herald – July 8, 2015)

http://www.smh.com.au/

Australian miners are continuing to expand coal shipments despite weak demand in China and sliding prices, with three ports in Queensland setting new export records for the 2015 financial year.

Minerals Council analysis found Australian coal exports rose 5 per cent in the past year, with new records set at Dalrymple Bay, Hay Point and Abbott Point.

Those ports take the bulk of the coking coal coming from Queensland’s Bowen Basin, where BHP in particular has ramped up production in recent years from the mines it shares with Mitsubishi.

As the lowest-cost producer in the coking coal business, BHP and Mitsubishi have been happy to increase exports on the back of two new mines – Daunia and Caval Ridge – coming into operation during the past two years.

The rising production has coincided with fading demand for steel in China, creating an oversupply of coking coal that has had prices slump 21 per cent in the past year, according to RBC Capital Markets.

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After coal, can better health save West Virginia? – by Valerie Volcovici (Reuters U.S. – July 7, 2015)

http://www.reuters.com/

WILLIAMSON, WV – With coal trains chugging past in the distance, Jack Perry watches as his wife, Margie, plants row upon row of Hungarian pepper seedlings in the community garden that residents of this West Virginia coal town call the “Garden of Eatin’.”

“The peppers they sell at the stores don’t taste anything like this,” says Perry, a retired coal worker. His grandfather brought over the original batch of seeds in the early 1900s when he arrived from Hungary to work in southern West Virginia’s mines.

The coal industry that sustained those generations is on life support in Williamson and surrounding Mingo County, battered by exhausted mines and competition from natural gas. Williamson’s faded sign welcoming drivers to “the heart of the billion dollar coal field” now competes with billboards for weight loss and pain clinics, and the main street is lined with empty storefronts and pawn shops.

Unlike their neighbors in Kentucky, where there have been state-sponsored economic transition efforts, West Virginians have been largely left on their own to respond to coal’s decline. The state’s politicians have focused on fighting federal emissions regulations in Congress and in court, blaming the Obama administration for imposing what they say are crippling costs on the industry.

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How German cities are turning former coal mines into parks [photos] – by Marielle Segarra (Newsworks.org – July 7, 2015)

http://www.newsworks.org/

I’m spending a few weeks in Germany as part of a German/American journalist exchange program through the RIAS Berlin Kommission and the Radio Television Digital News Foundation. During the trip, I’m sending back lessons on urban planning and revitalization from German cities. Today’s topic: how cities in the Ruhr region are embracing their heritage by repurposing industrial sites.

When I think of quintessentially European cities, I imagine cobblestone streets, historic brick buildings, magnificent cathedrals, sidewalk cafes, and chocolatiers on every corner. I think of cities with history stretching back hundreds, and even thousands of years. Paris. Or Brussels. Or Rome, or Prague, or Vienna, or Hamburg…

But of course, Europe has all kinds of different cities, each with their own unique aesthetic and history.

Last week, I visited several cities in Germany that don’t fit the mold. What’s most prominent about them isn’t ancient history, but rather, their more recent, industrial heritage.

The Ruhr region of Germany is a sprawling metropolitan area, with 5.2 million people and 53 cities with boundaries that blur together. For decades, the region was dotted with thousands of coal mines, steel mills, and other industry.

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China’s steel dragon has lost its appetite for American coal – by John Dizard (Financial Times – July 3, 2015)

http://www.ft.com/home/us

It may be too late to save the coal industry from looming financial disaster, says John Dizard

As the headlines earlier this week told you, the US coal industry scored a win at the Supreme Court. With a 5-4 majority it ruled that the Environmental Protection Agency had to consider compliance costs when it issues emissions rules for power plants. The court sent the Mercury and Air Toxics Standards (Mats) back to the agency to justify its net economic benefits.

Whatever short-term cheer this brought to the coal-mining companies, it has come too late to save most of the industry from looming financial disaster. Coal company shares and bonds bounced up for a day and then fell back into depression.

Most US coal capacity, more than 500m tons of annual production, is owned by companies in financial distress. The unsecured bonds of Arch Coal, behind which are more than 130m tons of capacity, are selling for 14 to 17 cents on the dollar. Peabody Coal (about 200m tons of capacity) has a bond maturing in 2018 that is priced at 48 cents on the dollar.

Even after the oil and gas price plunge, many oil and gas exploration and production companies with big reserves and negative cash flows have been able to raise new equity and refinance debt. The coal trade, on the other hand, is attracting little investor interest.

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Mongolia premier pledges to end Tavan Tolgoi coal mine impasse – by James Kynge and James Wilson (Financial Times – July 2, 2015)

http://www.ft.com/intl/markets/emerging-markets

London – Mongolia will “in the very near future” end an impasse over investment in a $5bn coal mine and push forward “Steppe Road” infrastructure plans with Russia and China, the prime minister has said as he seeks to shore up investor support for his country’s flagging economy.

Saikhanbileg Chimed also indicated that Mongolia planned to launch another sovereign bond as the country seeks to get “back to business” following two years of slowing growth in gross domestic product, plummeting foreign direct investment and rating agency downgrades of its junk-rated “Chinggis” bonds.

Official approval for investors to start work on the Tavan Tolgoi (TT) coking coal mine in the Gobi desert should follow soon after a review of the investor agreement in parliament this month, Mr Saikhanbileg told the Financial Times in an interview. Investors in the project include China’s Shenhua Energy and Japan’s Sumitomo Corp.
“TT will be unlocked in the very near future,” he said.

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Coal bid sets up clash of mining heavyweights – by Neil Hume (Financial Times – July 1, 2015)

http://www.ft.com/intl/companies/mining

Ivan Glasenberg and Sir Mick Davies set to go head-to-head over the Hunter Valley

It is a tantalising prospect for deal junkies: Sir Mick Davis going head-to-head with his arch rival Ivan Glasenberg in a takeover fight.

And one that has become a possibility with news that X2 Resources, the private equity vehicle set up by Sir Mick, is in discussions with Rio Tinto about a possible bid for its Hunter Valley coal business in Australia.

There is no love lost between Sir Mick and Mr Glasenberg, two of the biggest names in the mining world. Their relationship soured three years ago when Glencore reworked its friendly merger with Xstrata into a full-blown takeover that ousted Sir Mick as chief executive.

Since then Sir Mick has come back leaner and, arguably, hungrier. He’s raised $5.6bn from investors to buy mining assets for X2, with additional debt backing from at least one leading bank. His notoriously large frame, which inspired part of his nickname, has slimmed down. But standing between Sir Mick and his first deal is the hyper-competitive man who removed him from his last job.

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Mick Davis is ready to make a contrarian bet on thermal coal – by James Wilson and Neil Hume (Financial Times – June 30, 2015)

http://www.ft.com/intl/companies/mining

Mick Davis, former chief executive of Xstrata, knows coal. By the time Xstrata was sold to Glencore in 2013, Mr Davis had turned the miner into the world’s largest exporter of thermal coal, the type used in power stations. Coal lay behind Xstrata’s decade-long record as a corporate success story, riding the commodities boom.

So it is no surprise that Mr Davis could make coal his first deal for X2, the private company he has established with the aim of creating a mid-tier mining group. Having secured equity commitments of up to $5.6bn from investors, X2 is talking to Rio Tinto, the miner with listings in London and Sydney, about acquiring its Australian coal assets in New South Wales.

No deal has been finalised and X2 and Rio both declined to comment, but Mr Davis appears ready to take a contrarian bet on coal.

The commodity has been suffering from a supply glut for years. The price of thermal coal has halved since 2011, and opposition to fossil fuels’ role in contributing to climate-changing carbon dioxide emissions is growing.

But Mr Davis is probably focused on the opportunity to buy coal assets at a low point in the commodities cycle.

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