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A week in coal: 31 October 2014

World Coal,

This Halloween coincides with the time when we at World Coal take a look back at the week’s news.

The nightmare before Christmas

This year’s old hallows eve has brought with it more evidence of difficult coal market conditions, as companies release their financial reports for the third quarter. Ghosts and ghouls may not be real, but debtors, creditors and continued low-coal prices very much are. Among the companies to report slipping into  – or indeed, remaining in – the red are Rhino Resources, Alpha Natural Resources, Oxford Resources, Cloud Peak Energy, Bowie Resources and Arch Coal, the latter reporting a US$ 97 million loss over Q3. With more companies still due to release their financial reports, expect more of the same as companies struggle in the adverse market conditions.

Wildhorse problems

The lights are going off across Central Europe, as energy firms grapple with persistently low prices and margins. There are ill winds at hand as Wildhorse Energy announced this week it would exit the Hungarian underground coal gasification (UCG) sector – after witnessing its share value fall 85% since the start of 2014. The company has written all UCG projects in Hungary down to “nil value”.

Its time to be practical

Milton Catelin, CEO of the World Coal Association (WCA) has taken issue with EU climate change policies, suggesting that ever-tighter emissions regulations are impractical. In a blog post, Catelin said the EU should concentrate on practical actions and accept that Europe relies on coal. He argued a more honest approach to any climate change negotiations would be to include coal through the adoption of modern coal power technologies, such as supercritical and ultra-supercritical plants, coal gasification and CCS.

EPA seeks stakeholder input

The US Environmental Protection Agency  (EPA) is to seek further comments from stakeholders on its proposed Clean Power Plan (CPP), raising the possibility of more flexibility in the implementation of its regulations. The plan has proved controversial among many in the coal industry, with Hal Quinn, presaident and CEO of the National Mining Association, branding the plan a “glorious mess”.

An uphill struggle

Finally this week, we turn our attentions to the struggles facing coal miners in Queensland, Australia. The Institute for Energy Economics and Financial Analysis has said that planned new coal mines in the Galilee Basin are “too risky to attract adequate investor support”, adding that they face an uphill struggle to find the funding needed to make them feasible. The outlook, then, is bleak for grand, large-scale projects, such as the Carmichael mine. The Institute said the companies involved face an “increasingly difficult hurdle in securing funding due to the rapid deterioration of coal project profitability following a halving of the coal price. The increased probability of a structural decline in thermal coal raises the financial risks involved.”

Written by Sam Dodson

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