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A week in coal: 15 August 2014

World Coal,

The seemingly terminal decline of US thermal coal imports made headlines this week, as the US Energy Information Administration released a report showing just how far thermal coal imports had fallen since their peak in 2007. Total figures for 2013 stood at 7 million t (compared to 30 million t in 2007) and preliminary data for 2014 indicate that thermal coal imports are set to remain firmly in the doldrums. The EIA report notes that retirements of coal-fired power plants, decreased use of coal-fired power plants, and higher international coal prices compared with domestic prices, have aided and abetted the decline.

World Coal recently reported that power plants in the US are turning to Russia for imports of coal. Yet the story couldn’t be more different across the Atlantic in Europe, where the Polish Foreign Minister, Radoslaw Sikorski, said that the country would consider imposing sanctions on Russian coal imports. Poland has been among the more vocal supporters in the EU of tougher sanctions on Russia over its intervention in Ukraine.

Also from Europe came news that German utility, RWE, is set to close further coal-fired generation units, as the company reacts to increasingly bleak market conditions. The firm announced that supply contracts will be terminated at the end of 2014, while coal-fired units across three German power plants will be closed from the beginning of 2015 through to the end of 2017. Total reduction in coal-fired capacity could amount to 1 GW, according to RWE, as the long-term future of coal power in Germany is in doubt amid continuing oversupply of power in the European behemoth.

Also in doubt is the development of China’s coal-to-gas (CTG) industry. The government has announced plans to regulate the industry more tightly, after the last few years saw a flurry of CTG projects announced across China. Concerns have been raised about overcapacity and the environmental impact of CTG projects in what is a loosely regulated industry, while changing economics of CTG have seen one leading developer, Datong, divest its two domestic CTG projects. The Economist Intelligent Unit noted that “China’s goal of producing 50 million cubic meters at CTG plants by 2020 is therefore in doubt.”

Finally, it was also announced this week that a 300 km coal railway, part of the massive Carmichael coal mine scheme, had been approved by the Queensland state government. Adani’s North Galilee Basin Rail project, which is estimated at costing AU$ 2.2 billion to build, will link the Carmichael coal mine with the east coast port of Abbot Point. The railway, which will be able to transport 100 million tpa of coal, could also link other coal mines in the Galilee Basin to the port. Queensland Deputy premier, Jeff Seeney, said up to 2400 jobs could be created as the standard gauge greenfield rail line is constructed. 

Written by Sam Dodson

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