Weak Coal Prices

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Targets set to tackle city smog
Emissions Angus Grigg
419 words
6 Mar 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Beijing | China is targeting no growth in coal consumption across major population areas this year and will set a cap on total energy usage as it strives to ease chronic air pollution.

In a signal Beijing is stepping up action on climate change, Premier Li Keqiang said trials of emission-trading schemes would be expanded this year and a greater emphasis placed on green power.

"Environmental pollution is a blight on people's quality of life and a trouble that weighs on their hearts. We will fight it with all our might," he told China's Parliament on Thursday.

China is the world's largest emitter of carbon dioxide and other gases that cause climate change. Last year, only seven of its 77 largest cities met the government's air pollution standards.

Premier Li said China would "strive for zero growth in the consumption of coal in key areas of the country". This follows a historical reversal in coal use last year, with consumption falling by 2.9 per cent and production by 2.5 per cent. It was the first time in 14 years that coal use in China had fallen.

In a report accompanying Premier Li's speech, China's National Development and Reform Commission said it would accelerate the switch from coal to cleaner energy sources in areas affected by severe smog.

"We will strictly control the number of energy-intensive projects and put into affect policies for coal use reduction and for replacing some coal use with alternative energy sources," the NDRC said.

This signals a greater use of natural gas, potentially providing a boost to Australian LNG producers, which have been hit hard by falling prices.

China is aiming to generate 20 per cent of its stationary energy from zero-emission sources by 2030, under a bi-lateral climate change deal signed last year with the United States. To achieve this, it must roll out more green power over the next five years than all the electricity generation capacity in the US.

Under the deal signed with President Barack Obama, China also signalled its emissions will peak in 2030 and possibly earlier. "We will set a ceiling on total energy consumption," Premier Li said, without specifying when the cap would be unveiled or at what level it would be set.

Further details on China's climate change action could be announced when its new environment minister, Chen Jining, holds a press conference on Saturday.


Fairfax Media Management Pty Limited

Document AFNR000020150305eb360001b

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Coal miners cut output as prices fall
RHIANNON HOYLE DOW JONES JUNE 03, 2015 8:52AM

Glencore plans to cut back output at its Collinsville coal mine by up to 40 per cent. Source: Supplied
China’s appetite for coal used in steelmaking is faltering, deepening a market downturn miners say is the worst in recent memory.

The price of steelmaking coal shipped from Australia, the world’s biggest exporter, has fallen 23 per cent this year to roughly $86 a tonne, its lowest level in nearly a decade. The slide extends a decline begun in 2011, during which the fuel’s value has slumped by around three-quarters.

The prolonged dive is now compelling miners to move beyond cutting costs, their first line of defence in hard times. Major suppliers Glencore and Canada’s Teck Resources are reducing production, blaming the chronic global oversupply of coal.

But analysts caution that prices will recover only if more cuts are made. The consultancy Wood Mackenzie doesn’t expect the oversupply of steelmaking coal, or coking coal, to clear up until about 2022.

China, whose breakneck economic growth has been the engine for most global commodity markets, won’t need as much steelmaking coal in future, analysts now project. That leaves miners who rushed to open new pits in the boom years to struggle.

Chinese sectors such as heavy industry and real estate are growing less quickly or slowing, causing a moderation in steel demand. China’s imports of coking coal plunged more than 40 per cent in April from a year earlier, to 3.75 million tons. Over the first four months of 2015, imports were down by roughly a quarter from a year earlier, according to customs data.

The world’s No. 2 economy is now tilting toward growth driven by consumer-led sectors. In turn, the country’s appetite for commodities is evolving. Metals used to make electronic products are becoming relatively more popular. Copper is in, while coal is out.

“Driving much of this slowdown (in coal) is China’s transition,” said Citigroup analyst Ivan Szpakowski. “It is a transition we think there is no going back from.”

The coal-market downturn has even outpaced the collapse in prices of iron ore, the other key steelmaking ingredient. China is less reliant on imported coal than on iron ore from overseas, so as demand ebbs, it can meet more of its needs domestically.

For sure, rising Indian demand may help compensate eventually. The country’s large coal reserves contain little quality coking coal. Citigroup forecasts India’s imports will overtake China’s net imports by the end of the decade, moving past purchases by Japan — another major buyer — shortly after.

But in the short term, the gloomy price environment is changing the coal industry’s economics.

At current spot prices, more than half of the coal produced is being dug up at a loss, Citigroup estimates. Many miners do lock in sales each quarter at fixed prices — exporters are selling at around $109.50 a tonne for the current quarter — but buyers are likely to drive a harder bargain for the rest of the year.

“The third quarter will be tough, and the fourth quarter even tougher,” said Wood Mackenzie coal-market analyst Kiah Wei Giam.

Even giants such as Australia’s BHP Billiton, which is the world’s No. 1 coking-coal exporter, in partnership with Japan’s Mitsubishi, are under pressure, at a time when shareholders are demanding greater returns. While BHP’s coal division, which also produces thermal coal, generates around 15 per cent of the company’s revenue, it contributed only 2 per cent of its operating profit in the six months through December.

US producers have been the hardest hit. A stronger greenback means US shipments struggle to compete against cargoes from elsewhere. China is also taking considerably less coal from Canada and Russia.

Australia, too, has seen the amount of coal shipped to China decline, although local miners have succeeded in driving down operating costs, limiting the damage. Producers have been reluctant to reduce output due to so-called take-or-pay contracts, which have locked them into paying for access to ports even if they don’t have enough material to ship.

“Coal producers have so far been slow to make closure decisions,” said Stewart Butel, managing director of midsize coal producer Wesfarmers Resources, a unit of Australian conglomerate Wesfarmers Ltd. “The (coking) coal market remains in oversupply.”

Attitudes may now be changing.

Glencore, whose chief executive, Ivan Glasenberg, has long been critical of miners failing to cut excess production, said it plans to pare back output at its Collinsville open pit in Queensland by as much as 40 per cent and eliminate up to a quarter of the mine’s workforce.

“The situation at Collinsville reflects the challenges being faced by all Australian coal mines in one of the most difficult markets in the industry’s recent history,” the company said in a statement.

Smaller producers are feeling the squeeze elsewhere.

Vancouver-based Teck Resources slashed its dividend after reporting lower-than-expected profit in April. Last week, Teck said it would briefly idle six Canadian coal operations, reducing its planned third-quarter output by 22 per cent.

Dow Jones

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Cheap coal use will slash demand for gas: IEA
THE AUSTRALIAN JUNE 05, 2015 12:00AM

Matt Chambers

Resources Reporter
Melbourne
Coal surge to hit gas demand

The IEA says Australia’s LNG expansion program will not yield expected results. Above, an LNG tanker off Darwin. Source: Supplied
THE International Energy Agency has delivered a blow to delegates at the Paris World Gas Conference, including Woodside Petroleum chief Peter Coleman, slashing global gas demand forecasts in the face of growing coal-fired power use.

As executives from the world’s biggest gas exporters, including ExxonMobil, Royal Dutch Shell and Total, combined at the forum to promote gas as being climate friendly and make direct attacks on coal, the Paris-based IEA revised down its demand forecast.

“One of the key, and largely unexpected, developments of 2014 was weak Asian demand,” IEA executive director Maria van der Hoeven said yesterday.

“The experience of the past two years has opened the gas industry’s eyes to a harsh reality: in a world of very cheap coal and falling costs for renewables, it was difficult for gas to compete.”

Asian weakness led the IEA to cut its global growth forecast from 2.3 per cent a year to 2 per cent. This represents an annual drop of 130 billion cubic metres of gas demand (the equivalent of 100 million tonnes of LNG) by 2019, when global demand is now expected to be 3985 bn cubic metres.

While Australia’s seven under-construction LNG projects have most of their production tied up in long-term markets, demand expectations have fallen in key markets of Japan, Korea and China.

In Japan, a slow return of nuclear power combined with weak electricity demand growth meant lower gas usage, while in Korea, a large coal-fired power program has been put in place.

In China, gas demand growth slowed to between 8 and 9 per cent in 2014, down from 14 per cent for the five previous years.

“A sharp deceleration in primary energy consumption growth, ample hydro availability and high import prices all contributed to curtail the increase in consumption. The outlook (in China) looks uncertain,” the IEA said.

The agency said Australia’s $US200 billion LNG expansion program that was coming to an end would probably not yield expected results, given falling oil and LNG prices.

“With hindsight, carrying out such a large simultaneous expansion program seems to be questionable from a business perspective,” the IEA said.

It said a $US50 drop in oil prices represented a $US20bn drop in annual Australian LNG revenues once all the plants were up and running.

The slowing demand provides insights into why big gas has stepped up its attacks on coal in Paris.

Mr Coleman told the conference that gas was cleaner and did not rely on government subsidies.

“Give me a break. Who coined clean coal? And why did we let that happen,” Mr Coleman said, according to media reports.

In Melbourne yesterday, Glencore coal boss Peter Freyberg said coal could have reduced emissions if more investment was made in carbon capture and storage and in low-emission power stations.

“There’s no doubt gas has positioned itself well in the environmental space in terms of rating themselves as a cleaner fuel, but they too have carbon emissions,” Mr Freyberg said.

“In Japan, they’re building more coal capacity to displace gas because gas has been uneconomic in terms of solution for the problems they’ve had post Fukushima. It’s incumbent on the coal industry to better tell its story of what we can do with our emissions, how we can reduce them.”

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Jun 16 2015 at 10:52 AM Updated Jun 16 2015 at 6:18 PM

Coal is not dead, says Adani

Abbot Point coal terminal will be the export gateway for coal from the Galilee Basin. Glenn Hunt

by Mark Ludlow
Indian energy giant Adani, which plans to make a final decision on its $16.5 billion Carmichael Mine this year, believes coal will remain the cheapest source of energy for decades.

As Adani signed agreements with indigenous groups which could deliver benefits worth $250 million over the next 30 years, Adani Australia chief operating officer Samir Vora said talk about the end of fossil fuels was exaggerated.

"Coal is definitely the main source of energy – you can't deny it. It's growing every year no matter what anyone says," he said in an interview.

"India is investing in new generation technology to make coal more efficient to bring down the carbon footprint. There is a balance for everything [like renewables] but coal will undoubtedly remain the main source of fuel for decades."

Amid speculation Adani would not be able to finance the mega-mine in Central Queensland, Mr Vora said he was confident it would have the funds once final mining and dredging approval was granted by the state and federal governments.

"Coal is a commodity which is always going to be cyclical so we should make sure we stay on the right side of the cost structure which is under our control. It is still challenging but we are still able to compete," he said.

Adani on Tuesday signed indigenous participation plans with the Juru, Birriah and Jangga Aboriginal people as well as a memorandum of understanding with the Wangan and Jagalingou group.

The agreement will offer business development, jobs and training opportunities for indigenous people over the three-decade life of the mine if it is finally given the green light by Adani later this year.

This ranges from environmental management at the Port of Abbot Point in far North Queensland and at the mine in Central Queensland, a potential bus services to the mine and training programs.

COMMITMENT TO INDIGENOUS EMPLOYMENT

There is also a commitment to an indigenous employment target of 7.5 per cent and a trainee target of 10 per cent and a Most of the agreements kick in once construction of the project begins.

The Galilee Basin has become the latest frontier in the battle against fossil fuels, with environmentalists and some indigenous groups rallying against the approval of new mines by Adani, GVK/Hancock Coal and Clive Palmer's Waratah Coal.

Irene White, a representative of the Wangan and Jagalingou people, said they wanted their communities to benefit from the mine if it ever got off the ground.

"We have negotiated with two other mining companies in the Bowen Basin and it didn't happen. But I'm confident it will happen this time around," Ms White said.

The Wangan and Jagalingou group has been divided by a splinter group, lead by Adrian Burragubba, who is challenging the approval of the mining lease by the Native Title Tribunal.

The Australian Financial Review last month revealed the Aboriginal group had been bankrolled by Wotif.com founder and millionaire Graeme Wood who said he was committed to ending fossil fuels.

Mr Burragubba last week traveled to the United Kingdom to urge UK bank Standard Chartered not to fund the mine, saying indigenous people were opposed to the project. "It's going to have a terrible impact on our people," he said.

Ms White said she was not concerned about the disagreement among elders saying it was just a stalling tactic to try and stop the project.

Angelina Akee, who is chairwoman of the Kyburra Munda Yalga Aboriginal Corporation, said her priority was to make sure indigenous people had access to training and were given a decent shot at getting a job on the project.

"We're looking forward to training and employment opportunities for our mob when everything gets going," she said.

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• Aug 31 2015 at 12:00 AM 
   
  
  
•  Updated Aug 31 2015 at 12:00 AM 
  

Coal M&A predicted to rise as prices slump and growth projects prove difficult

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NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/7/w/h/c/image.related.afrArticleLead.620x350.gjaul5.png/1440931282555.jpg[/img]Consolidation is set to sweep Australia's struggling coal sector as diversified majors lose patience with depressed coal prices. Darren Pateman
by Amanda Saunders
Consolidation is set to sweep Australia's struggling coal sector over the next six to 12 months, as diversified majors lose patience with depressed coal prices and companies choose M&A instead of navigating a political and environmental minefield to develop new projects. 
Ernst & Young transactions partner Paul Murphy says Australian coal will follow the run of M&A in gold, the only sector that has demonstrated an appetite for growth, by consolidating at the mid-tier level. 
Gold was the "precursor to the activity that would ripple through the mining sector for the next few years", said Mr Murphy, who specialises in mining deals. Most coal miners in Australia were open to sale discussions at the right price, he said. 
All metrics pointed to the June half as the low ebb of the cycle in mining M&A, he said  

EY's latest statistics on mergers and acquisitions show mining deals done in the June half fell 30 per cent to $US12.7 billion, excluding BHP Billiton's $US8.7 billion spin-off of South32.
Deal volumes were down 43 per cent to 170 on the year-earlier period. The lion's share, or 54, of the deals were in gold followed by 21 in coal, but the value of deals in both commodities was on par – at $US3.2 billion apiece. Most of the deals were done in China and the United States, followed by Canada and Australia. Capital raised by the industry was down 2 per cent in the half to $US142 billion, with the IPO market remaining weak.  
Rio Tinto, Peabody, Vale and Anglo American are looking to sell down or exit their coal portfolios in Australia. Glencore teamed up with Bloomfield to buy Vale's mothballed Integra coal mine last week. 
SIGNS OF RATIONALISATION



"There has to be rationalisation in Hunter Valley and Bowen Basin, and we are seeing the first signs of that," Mr Murphy said. 
"We have been scraping along bottom for so long, there is probably a realisation it is going to stay like this for a while. Companies are losing patience." 
Many coal players in Australia were faced with a "real dilemma", was it better to buy an existing operating asset, or take the political risk of trying to develop a tenement they had bought in the past five years.  
"M&A is a lot safer, you do not face the environmental push-back on undeveloped property. And because of pricing, companies that need the coal for supply security reasons, probably will find it cheaper to do M&A.

"Buyers in Australian coal will likely include passive investors like Japanese trading houses, and corporates like Glencore who take a long-term view and see this as a once in a lifetime opportunity to leverage into the market," Mr Murphy said.
Across the broader mining sector, listed company boards were slowly warming to the idea of counter cyclical deals, he said. But the exception was pure-play coal miners and high-cost iron ore players. 
"Public companies are caught in rhetoric of what has happened in last few years, a deal has to be very convincing to get past the board, not just for majors, but mid-tiers too.
"The focus has been on returns on capital, companies that have been too late in the cycle (on doing deals) and [have] taken big impairments in last few years, have no appetite for M&A." 

"The dynamic will switch, we just have to wait for a catalyst, a really good deal, then others will start to follow suit." 
If companies can make counter cyclical acquisitions, at a time when much of the mining industry is in distress, they can pick up assets at "never to be repeated prices". 
Mr Murphy warned it was only the first movers who executed deals in the first third of the cycle "who get premium returns during an M&A upswing".  
"You've got to look at it as – not doing something is as risky as doing something and getting it wrong." 

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Salim Group in consortium with ex-Tinkler exec for Rio coal assets

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NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/i/t/e/8/k/image.related.afrArticleLead.620x350.gjlwte.png/1442261885506.jpg[/img]Rio is hoping to fetch as much as $U4 billion ($5.4 billion) in a sale of its thermal coal business in NSW, with chief executive Sam Walsh confirming last month that he would be open to a sale at the right price. Julian Andrews

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• Sarah Thompson
   
  
  
•  Anthony Macdonald
   
  
  
•  Jake Mitchell
  

Indonesian conglomerate Salim Group has emerged as a financial backer of former Tinkler Group executive Scott Winter as he weighs up a bid for a number of Rio Tinto's Australian coal mines.
Winter, Nathan Tinkler's former right-hand man, is preparing an offer for several of Rio's NSW coal assets including the Mount Pleasant thermal coal project, as revealed by Street Talk last month.
It's understood Salim Group, headed by Anthoni Salim, is a partner on the bid, according to Asian banking sources raising funds for the deal.
Mr Salim is ranked third on Indonesia's rich list and is also chairman of Hong Kong investment company First Pacific, 45 per cent owned by the Salim Group.

First Pacific in February bought Australia's largest listed food manufacturer Goodman Fielder in a $1.3 billion deal with trading powerhouse Wilmar.
Winter's powerhouse consortium is likely to face off against Glencore and Mick Davis' X2 Resources in the auction, along with China-owned Shenhua Group. Deutsche Bank is handling the sale. 
Citi analysts estimate capital expenditure required to get Mount Pleasant up and running would be $US1 billion to $US1.5 billion, having cut its capital expenditure forecasts from $1.8 billion several months ago.
Along with Singapore oils trader Wilmar International, First Pacific acquired Australia's largest listed food manufacturer Goodman Fielder in a $1.3 billion takeover offer in February this year. 


Elsewhere, investors in the Investa Commercial Property Fund will meet this week to decide on the $3 billion wholesale fund's future.
Sources said by the end of the week a committee of investors – which include local super funds and big ticket offshore investors – will either choose to make a bid for the $8.9 billion Investa Office management platform or to accept Mirvac Group as the fund manager. 
ICPF, advised by Grant Samuel, was granted access to the data room by Morgan Stanley Real Estate Investing earlier this month and all parties want a decision by next week. 
If ICPF chooses internalisation it will control its own management along with the management of the $2.5 billion China Investment Corporation portfolio and possibly the management of the listed Investa Office Fund pending its own strategic review announced last month. 

For ICPF to buy the management platform and take control of its own future would be an unusual and even trailblazing move. Normally institutional investors in unlisted funds leave the management up to an external manager.
If ICPF takes this route it has ramifications for both Australia's unlisted and listed real estate sectors.

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China's coal import regime still worries Aussie miners
DateSeptember 20, 2015 - 2:35PM

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Amanda Saunders
Australia's coal miners believe China's import quality testing regime may be a form of protectionism.


Chinese officials have not ruled out allowing Australia's coal sector to conduct quality tests on coal before it is shipped to China, amid ongoing fears China's import quality testing regime is being used to favour domestic miners. 
Australia's struggling coal export industry continues to face "difficulties" over China's import quality testing regime, with a government push to conduct the testing in Australia so far failing to get over the line.

Government in consultation with industry has raised the application of coal quality regulations with Chinese officials 

But Chinese officials have suggested they are open to allowing tests to be conducted in Australia, after an appeal by Trade Minister Andrew Robb in recent weeks on a trip to China.
Minerals Council of Australia coal boss Greg Evans said industry and government were, "seeking a practical solution to allow appropriate testing of coal before shipment so as to reduce uncertainty and disruption".
"There are still difficulties with testing procedures," he said. 
"Government in consultation with industry has raised the application of coal quality regulations with Chinese officials. This effort is ongoing and consideration is taking place as to how best achieve this."
The MCA in July called for the testing to be suspended called to give officials from both countries a chance to "assess the situation", but it has continued. 
Some Australian coal cargoes are being turned away because they don't pass China's import quality restrictions, and there is concern the measures are being misused.
Australian coal is generally of higher quality than its main export competitors – Indonesia and South Africa – and most domestic Chinese producers.
At odds with global standards
Queensland Resources Council chief executive Michael Roche has told The Australian Financial Review that some testing has been inconsistent and did not appear to comply with global standards. 
Mr Evans has said that China's testing protocols were "not universally applied in a consistent and transparent manner, leading to added costs and uncertainty in the trade".
In January this year, China introduced new bans covering imports of coal with more than 16 per cent ash and 3 per cent sulphur to two of China's most polluted regions,  the Yangtze River delta near Shanghai and the Pearl River delta near Hong Kong. The restrictions already apply in the Beijing-Tianjin region.
Some Australian miners suspect the new testing is designed to help prop up China's struggling domestic coal industry.
Prices for both thermal and metallurgical coal continue to languish at multi-year lows. Thermal coal has fallen 13 per cent since January to $US56 a tonne, a fraction of the about $US150 it was fetching at the heady days of 2011. Metallurgical coal has crashed another 26 per cent this year to about $US80 a tonne – again, nowhere near the $US300 a tonne it was trading at four years ago. 
But the Australian industry continues to pump out record volumes, in part because producers are attempting to spread costs across a greater number of tonnes. 
New data shows Queensland coal exports hit a record of 37.5 million tonnes for the first two months of the current fiscal year.
It follows data earlier this month showing coal exports from New South Wales rose 3.6 per cent to a record 172.9 million tonnes for financial 2014-15. Most coal produced in NSW is thermal, while about 75 per cent of Queensland coal exports are metallurgical coal.

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Coal sector's recovery won't come quickly
DateSeptember 21, 2015 - 6:02PM

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[Image: 1426318537894.png]
Amanda Saunders
Resources Reporter
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[Image: 1442838170737.jpg]

The depressed coal market will take at least another few years to recover, the WCA says. Photo: Glenn Hunt

The depressed coal market will take at least another few years to recover, and the Australian industry must do more to counter the anti-coal lobby, says the World Coal Association's new chief executive, Benjamin Sporton.
When asked if he was managing an industry in decline, Mr Sporton said: "No, not at all", and stressed that the fundamentals for coal still remain very strong.
Speaking to Fairfax Media on Monday during a trip to Australia this week, he said it was too difficult to tell if the coal market was bouncing along the bottom, but he was confident it would recover.
"I think the market will come back and we'll be doing well, but it will take a couple of years," he said.
Coal will continue to be "a very important part" of the Australian economy, and local miners were working hard to maintain their social licence to operate in Australia, for example through sustainable mining, he said.
Thermal coal has fallen 13 per cent since January to $US56 a tonne, a fraction of the roughly $US150 it was fetching in the heady days of 2011. Metallurgical coal has crashed another 26 per cent this year to about $US80 a tonne – again, nowhere near the $US300 a tonne it was trading at four years ago.
"I see an industry that continues to grow, perhaps not at the pace that it has done historically, but it still continues to play a really important role in the world's energy mix. The growth in demand in China for coal is slowing down but I don't see it going away any time soon."
And coal will be crucial to India's growth, and growth will be big in Indonesia too, he said. "I certainly don't see an industry in decline."
Mr Sporton, who became chief of the WCA in June, has been on tour in Asia in the lead-up to the COP21 sustainable business conference in Paris in November to push clean, low-emissions coal technologies.
"We can't wish coal away; many countries are looking to coal to power their economies and we need to be helping them do that in the cleanest way possible," he said.
The role of coal was changing, and becoming an "Asian story" he said, and Australian coal was needed to power that.
"Much of demand growth in recent years, and projected going forward, is actually in Asia. I don't think that is well understood in the United States and Europe, and North America. It's easy to think coal is going away because in those places coal is playing a lesser role."
"I think we need to do more to explain the fact that Australian coal is needed elsewhere in the world, that is something that the industry here is focused on doing."
The Australian industry also needed to do more to explain to communities the role that coal plays.

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Coal prices turn off investors
DateSeptember 26, 2015 - 12:00AM

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Amanda Saunders

[Image: 1443174754255.jpg]

World Coal Association CEO Benjamin Sporton (right) with the Association's Chairman Mick Buffier. Photo: Wayne Taylor

First it was tobacco, then alcohol, gambling, then asbestos. Sugar might also be on the nose for investors. But right now it is hard to find a more loathed sector than coal.
Not only are the forces of environmentalists lining up against the commodity. But there seems to be no end in sight for depressed prices.
The gas industry turned rogue on their counterparts in coal a few months ago too, attacking the industry in a bid to position itself as a cleaner source of energy.
And in a fresh kick in the guts, news broke out from the United States on Friday thatChinese President Xi Jinping was preparing to announce a cap-and-trade scheme to curb emissions as part of a climate deal with the US, ahead of climate talks in Paris in December. China is Australia's biggest coal customer and as China and US face off in a climate change battle, the commodity is likely to be a victim.
So imagine the challenge facing the person that has to talk up this industry under siege. That person is Benjamin Sporton, chief executive of the World Coal Association.
It might feel like he is trying to sell ice to eskimos, lobbying for an industry so beleaguered. But Sporton, an Australian who took the top job at the World Coal Association three months ago, is ditching soft diplomacy for advocacy. 
"You can't compare it to tobacco," he told AFR Weekend in Melbourne on Friday. 
"Coal has social value, coal is a provider of electricity, and products that make steel and cement. That's where we have the job to explain that. I don't think as a global industry we've been sufficiently active in making the case for coal." 
The case for coal
The WCA is not the only outfit turning to advocacy. On Friday, it also came out that Royal Dutch Shell and BHP Billiton are heading a carbon caucus to reintroduce fossil fuels to the highest levels of debate over climate change ahead of COP21 in Paris this year. 
Sporton is in Australia to talk up coal's case after touring Asia earlier this month. Clean coal is a major part of the solution to a lower carbon future, he says.
Sporton's chairman, Mick Buffier, who is also a key coal executive for Glencore in Australia, has joined Sporton on tour. 
Australia, along with the United States, is one of the most hostile countries in the world to coal right now. Progress in the Hunter Valley is under threat, and Indian giant Adani's plans to build a mega mine in Queensland's Galilee Basin are looking incredibly shaky. Australia is the world's second-biggest exporter of coal, after Indonesia. 
Buffier says "Australia is up there" as a challenge, "particularly with the activisation of people opposing coal mines, but we are also experiencing this globally". 
"A large chunk of opposition driven is by the premise that to solve climate change, coal has got to go away. But that doesn't add up. It puts more pressure back on the industry to explain why coal will continue to have an ongoing role." 
Coal is "not dying", he says, and the industry body needs to focus on getting the message across that coal no longer has to be associated with high emissions. Buffier says the anti-coal lobby is "partly succeeding" in their goal of delaying coal projects, and mine expansions,  which is "costing the industry money". 
As the rallying cry for divestment has ramped up over the past 18 months, the industry had been slow to make its case.  In a direct response to the increasingly successful divestment and anti-coal push, Brendan Pearson's MCA has created an advertising campaign called Little Black Rock, with the tagline 'Coal. It's an amazing thing'.
Whitehaven managing director Paul Flynn told AFR Weekend on Friday that the industry must continue to state its case, and the facts, to drown out the "noise" from the anti-coal lobby. 
"The industry is coming from behind because we've allowed the hysterical, screaming minority to suck up all the oxygen in the room," he said from the US, where he is on an investor roadshow post 2014-15 results. 
Asia investing in coal-fired power
"When you focus on the facts it is irrefutable that coal will be the cornerstone of energy needs or energy supply in our region in particular."
Flynn says coal is not in structural decline, but a cyclical downturn. 
In Asia, all key markets are growing their coal-fired power stations. It is likely China will agree to help finance cleaner energy options for poorer countries, as well as trying to halt its own emissions by making it more expensive to pollute and forcing companies to use cleaner forms of energy.  
How far China's cap and trade system will go is still to emerge, but it could see the Asian giant push even harder on its rollout of low-emission high-efficiency power stations called supercritical and ultra-supercritical.  Two years ago, the US committed to stop financing new coal-fired power plants. It is not clear, either, how far China will go to try to beat the US on carbon policy after this historic White House summit meeting with Barack Obama. 
But energy demand is still growing and coal still has a big role to play in that, Sporton says. And the coal industry is banking on the 1.3 billion people in the world who live without access to electricity.
Anti-coal campaigns have gained a high profile in Australia, even though Whitehaven's Flynn, who has been on the frontline with the miner's Maules Creek project in NSW, says there have been "no substantive wins that they can claim".
But in the United States, the gas revolution that has driven down the price of gas and encouraged the switch from coal, has proven a bigger problem for the industry than divestment. 
But the coal industry says switching to gas isn't the answer, despite the rival industry's concerted campaign.
Sporton picked up the phone and called some of the oil and gas big boys after a surprise attack from Woodside, Royal Dutch Shell, BP and France's Total, who used a World Gas Conference in Paris in June to attack coal, call for a carbon price and push cleaner-burning but more expensive gas as an alternative to coal to make electricity.
"I have spoken to people I know in the oil and gas industry saying 'why are we doing this'. Gas isn't an answer either. They try to help us forget that these companies are in oil and gas. But we are all part of the fossil fuels industry, we all need to address our emissions. So we should all be working together on this, lobbying for more action on CCS [carbon capture and storage] together."
And in most Asian countries, gas cannot displace coal. 
Prices fall further
Coal prices continue to take a battering – with 2015 shaping as a horror year. New Hope chief executive Shane Stephan said earlier this week that a recovery in thermal coal prices "is likely to be gradual and is still some time away".  Thermal coal has fallen 16 per cent since January to $US55 ($78) a tonne, a fraction of the roughly $US150 it was fetching in the heady days of 2011. Metallurgical coal has crashed another 28 per cent this year to about $US79 a tonne – again, nowhere near the $US300 a tonne it was trading at four years ago.
The IEA says coal will still be the world's main source of electricity for the next 20 years. It's an emerging world fuel that the developed world doesn't like anymore. 
The future looks a bit brighter for exporters of quality coal, like Australia.
Quality coal is better for the more efficient power stations, cleaner and attracts a premium that at current prices could be the difference between being in the red and the black. Whitehaven is one example, helping boost margins with its thermal coal attracting a premium of about $US5 a tonne on top of the current benchmark thermal coal prices of about $US55 a tonne. The importance of high-quality coal is underlined by the the new Chinese coal import testing regime. 
Even with the IEA's ambitious growth projection for renewables and significant international climate action, coal will still be big in 2040, the WCA says. 
The IEA says electricity generation from coal will be 45 per cent higher in 2040, despite its share of generation reducing from 75 per cent to 52 per cent. Again, how China's cap-and-trade scheme would alter that is unknown. 
Globally there are 510 coal-fired power plant units under construction. With a further 1,874 planned that's a total of 2,384. They are mostly in China, India and Indonesia. Of those, India is the great hope. 
Sporton says the most important thing countries can do in the short term to reduce CO2 emissions is to increase the efficiency of coal-fired power plants.
After that, the great hope is near-zero emissions from coal using the still nascent carbon capture and storage (CCS) technology. 
Sporton and Buffier reject suggestions the coal industry has been too slow to move on CCS. They are calling for "urgent and improved action" but say it's not the industry's fault there has been insufficient investment to date. Only now, there's not as much money in coal miner's coffers. 
Coal miners and industry groups are also vocal on the energy poverty line – coal is the cheapest, most effective, reliable form of energy.  
"We are 88 per cent urbanised, China is 52 per cent, India today is 35 per cent. You need electricity and concrete and steel to feed that," Buffier says. 
BHP coal president Mike Henry says that the coal industry needed to improve its "public engagement" but it isn't about "selling" coal. 
"It's about getting the facts on the table and engaging in balanced discussion about the role of coal in the world," he says. "The public has more than enough ability to make sense of the facts and the different perspectives once they have them."

[greengiraffe]

• OPINION
   
  
  
•  Sep 25 2015 at 5:16 PM 
   
  
  
•  Updated Sep 25 2015 at 5:16 PM 
  

China's 'war on pollution' will hit coal hard

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[img=620x0]http://www.afr.com/content/dam/images/1/3/y/x/n/f/image.related.afrArticleLead.620x350.gjv1k1.png/1443165364269.jpg[/img]A survey published by the Pew Research Center this week found air pollution was rated as China's second biggest problem, after corrupt officials. Reuters
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by Angus Grigg
After a decade of denial, the Australian coal industry must finally acknowledge it has not only lost the public relations battle but also the economic argument.
The expected announcement of an emissions trading scheme by Chinese President Xi Jinping in Washington on Friday, means the already bleak future for coal can only get worse.
In taking such concerted action, Beijing is acknowledging its development path must change if it has any chance of cleaning up the country's chronic air pollution. That means burning less coal.
For China's leaders this will be a 15-year task but one which is wildly popular among the public.

Unlike Australia where environmentalists can be easily branded inner-city hipsters with an ideological hatred of coal, in China it's an issue as fundamental as food and shelter.
Environmentalists are parents who want their children to play outside or hope their elderly relatives won't suffer from respiratory problems.
Indeed, a survey published by the Pew Research Centre this week found air pollution was rated as China's second biggest problem, after corrupt officials.
It outranked crime, food safety, unemployment and healthcare as perceived problems facing the country – water pollution was ranked third.


Another sign of the public's outrage over pollution was seen earlier this year when the environmental film, Under the Dome, was downloaded more than 100 million times in the 24 hours after its release.
The Communist Party, despite not having to face elections, is highly sensitive to such concerns and its radical action on climate change is a function of public dissatisfaction.
This saw it declare "war on pollution" in 2014 and it now needs to start delivering on its promise.
The slowing economy has helped its cause but the problem remains daunting.

'UNHEALTHY' AIR QUALITY MOST OF THE TIME
According to the government's own data, Beijing's air quality was "unhealthy" for at least an hour during eight of the last 10 days.
Industrial pollution from burning coal is the main culprit and this is what the government is targeting.
Last year China's overall coal consumption was down 0.7 per cent but the country still managed to burn a staggering 3.87 billion tonnes.

Greenpeace estimates over the first four months of the year China's coal consumption was down 8 per cent, compared to the same period last year.
This is a historic shift after double-digit growth for much of the last decade, but it has further to fall if the air is to be cleaned.
While local coal producers have not been immune to the decline in consumption, importers have been the hardest hit.
Over the first eight months of the year coal imports to China fell 31 per cent, according to the Customs Bureau.
For Australia, this saw overall thermal coal exports fall 0.7 per cent in the year to June, while coking coal exports rose modestly.
In the face of a global downturn this is not a bad performance but it's well shy of 10 per cent growth forecast by the now disbanded Australian Coal Association just three years ago.
And while the Department of Industry and Science is predicting growth in coal exports to pick up at the back half of the decade this looks wildly optimistic if China is to meet its new climate commitments, but more importantly clean up its chronically polluted air.