A Week In Coal: 13 February 2015

This Friday 13^th, the superstitious among those in the coal industry may want to stay away from making any bold predictions about the future of the coal market, as it seems further uncertainty over coal prices and production is the only certainty we can rely on.

Mozambique: land of uncertainty

Once billed as a great land of opportunity for prospective coal miners, the coal rich African state saw the high-profile withdrawal from its coal sector by Rio Tinto last year, and more uncertainty over the country’s coal mining future seems to be on the cards. Coal India Ltd has intimated it will scrap its maiden overseas coal production project in Mozambique as the deposits in the acquired books are “not good enough to be called coal”, a top company executive said. Perhaps not the most confidence-raising statement that could have been issued.

Divestment campaigns pick up the pace

When Stanford University announced its decision to divest from coal, many in the industry dismissed it as purely symbolic. However, fossil fuel divestment has continued apace and this week news broke that the Norwegian Sovereign Wealth Fund – the Government Pension Fund Global – would ditch its investment in coal companies. This news was itself followed by news that California lawmakers were hoping to pass a bill that would see the largest pension funds in the US also divest from coal. As pressure mounts on governments to introduce regulation to tackle climate change – following findings by scientists that most of the world’s fossil fuels must remain in the ground if we are to avoid 2°C of global warming – many funds are reevaluating whether the risk that comes from investing in coal and other fossil fuels is worth it.

Rallying cry for CCS

The World Coal Association has hit back at those urging or seeking divestment from coal. The organisation said that there must be greater investment in cleaner coal technologies in order to meet growing global energy demand while also reducing CO2 emissions. The WCA said that coal plays a vital role in society by providing over 40% of global electricity and as an indispensable ingredient in modern infrastructure. 

A tale of woe

Coal production in the US state of Colorado is indeed a sorry tale. News broke this weak that the state’s beleaguered coal industry – hobbled by mine closures and a weak market – had produced the lowest amount of coal for 20 years. The state’s eight remaining coal mines produced under 23 million t of coal in 2014 – a 5% drop from 2013. Many analysts fear the decline of the coal industry will be felt across the state, as increased job losses – almost 350 came in 2014 – lead to depressed local economies. One of the things handicapping US coal is that global markets are saturated as more production came on to supply Asia, just as its economies slowed down. The story in Colorado is just part of a wider tale of woe for the US coal industry as a whole, which has seen steady decline over the past few years.

Mining sector requires urgent solutions

Mining is being squeezed between low commodity prices and rising expectations from government and civil society, but is still struggling to find practical strategies out of this predicament, according to SRK Consulting (SA) chairman and corporate consultant Roger Dixon. Commenting from the African Mining Indaba in Cape Town, South Africa, Dixon said that a number of speakers had highlighted the dilemma that the sector is facing – trying to ride out the commodity slump while needing to address its social license to mine. He said the solutions to balancing the demands made by shareholders and society are likely to come from more constructive partnerships between mining companies, government and NGOs – a point made strongly at the conference by former British Prime Minister, Tony Blair. In these times of uncertainty, one thing is clear: solutions and answers are needed now; not later.

Written by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/13022015/a-week-in-coal-13-february-2015-1895/