A roundup of international coal news from April 3-10.
Analysts expect the impact of Cyclone Debbie to drive metallurgical coal prices higher as flooding is expected to disrupt rail transportation between Australian mines and ports for more than a month.
"We can expect severe congestion on the lines to keep pressure on the export markets," FBR & Co. analyst Lucas Pipes wrote in an April 3 report. "Naturally, with the world's largest met coal region unable to export anywhere near full capacity, the met price has increased. ... We believe that these events raise the probability of a [Q2'17] benchmark settlement above $175/[tonne]. We believe a settlement may still be negotiated over the coming weeks."
The storm made landfall March 28 and left widespread flooding in its wake as it soaked Queensland and New South Wales.
Alaska: Alaska-based developer Pacrim Coal LP suspended all permitting efforts related to the controversial $600 million Chuitna Coal Project after an investor fell through, the Alaska Dispatch News reported April 4. The project, which is expected to produce an average of 12 million tonnes of coal per year, would be the largest strip mine in Alaska and would sit about 45 miles west of Anchorage, according to the project's main website.
Germany: Germany's RWE AG is in the crosshairs of environmental advocates over the planned expansion of its Garzweiler and Hambach lignite mines, Deutsche Welle reported April 3. The German Federal Environment Agency said lignite is responsible for a third of CO2 emissions in the western German state of North-Rhine Westphalia, where the Garzweiler and Hambach mines are located. In 2014 alone, consumption of the controversial fossil fuel resulted in €16.8 billion in environmental damages, according to the report.
While cyclones in the northern parts of Australia can be quite destructive, it appears that severe weather events are reducing in frequency, and miners are becoming better at preparing for them. However, the damage to transport infrastructure from Cyclone Debbie was more extensive, with rail network operator Aurizon Holdings Ltd. expecting to take about five weeks to complete repairs and return to operation. Shipping delays are also expected at ports. S&P Global Platts estimated that the suspension of rail transport could disrupt 15 million to 20 million tonnes of metallurgical coal exports, leading to significant implications for global seaborne supply.
Aurizon's four major coal systems, Newlands, Goonyella, Blackwater and Moura, which form part of the Central Queensland Coal Network, were damaged by Cyclone Debbie and are closed. A senior industry source told Reuters that the entire industry is facing a force majeure issue. "I don't see any way around it if it is going to impact that amount of shipments." The export of 12 million to 15 million tonnes of coal shipments could be affected, Mark Pervan, AME Group chief economist, told the newswire.
Glencore Plc has declared force majeure on coal shipments from Queensland as a result of the damage done to railway lines from the recent tropical cyclone, according to a statement emailed to S&P Global Market Intelligence on April 6.
BHP Billiton Group on April 5 declared force majeure on coal produced at its operations in Queensland's Bowen Basin as a result of damage caused by Cyclone Debbie to Aurizon's rail infrastructure. The operations include its BHP Billiton Mitsubishi Alliance with Mitsubishi Corp. and its BHP Billiton Mitsui Coal Pty. Ltd. venture with Mitsui & Co. Ltd.
Australia's QCoal Pty Ltd. declared force majeure on two coal shipments due to the damaged rail links between the mines and the ports in Queensland following Cyclone Debbie, Reuters reported April 3, citing an emailed statement from the company. The ships were due to be loaded this week.
New Zealand: Bathurst Resources Ltd. secured an offtake agreement for the supply of 65,000 tonnes per annum from its Canterbury coal mine in New Zealand. CEO Richard Tacon said April 6 that the contract replaces the supply lost last year with the closure of the Westport cement works. The agreement includes an "escalation option" and is for up to 10 years.
South Africa: Anglo American Plc is selling its Eskom-tied domestic thermal coal operations in South Africa to a wholly owned subsidiary of Seriti Resources Holdings Pty. Ltd. for 2.3 billion South African rand. The sale includes the New Vaal, New Denmark and Kriel collieries, as well as four closed collieries, according to an April 10 statement.
Coal of Africa Ltd. has struck a deal to acquire Pan African Resources Coal Holdings Pty. Ltd and its 91% stake in the Uitkomst thermal coal operation in South Africa. The acquisition is part of the company's move to restructure its balance sheet and acquire a cash generating asset that can provide cash flow to support the development of its flagship Makhado project in South Africa.
S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.
This feature was updated as of 12:05 p.m. ET on April 10. Some external links may require a subscription.