Coal Works in South Africa

South Africa has applied to the World Bank for a loan to continue the ongoing construction of the 4,800 megawatt Medupi coal power plant -- a facility urgently needed to alleviate the chronic electricity shortages that plague the country. This supercritical coal plant would employ some of the most advanced clean coal technology available in the world.

Criticism of the World Bank by some groups in the United States cavalierly ignores the economic and energy realities of South Africa. Over 12 million people have no electricity whatsoever and millions more only have access to power on a sporadic basis. Blanket opposition to coal plants smacks of an unseemly indifference to the plight of developing countries. South Africa is seeking to electrify schools and medical facilities.

Coal works in South Africa:  The government seeks to achieve universal access to electricity but upward of 10,000 MW of additional generation capacity will be needed. Due to the availability of moderately priced coal, South Africa has some of the lowest electric rates in the world. Coal is the heart of energy supply. South Africa uses coal conversion to produce oil and natural gas.  Economic growth and industrialization cannot be sustained without coal.

"South Africa's wind resources ... have the potential to provide 1 percent of its annual electricity requirement." -- Environmental Industries Commission, 2010

Coal is the only alternative at scale: South Africa has the world's sixth largest reserve of coal but ranks 85th in terms of oil reserves and 102nd in regard to natural gas. Some of the hydroelectric potential has already been developed and wind and solar are too expensive, intermittent and sparse to make a major contribution. South Africa is proceeding with the Pebble Bed Modular nuclear project but the expense of additional reactors is prohibitive. Coal is available, affordable and deployable.

Why India is Turning to Coal

The extent of energy deprivation in India is difficult for most Americans to comprehend. Almost 40 percent of the population on the subcontinent lacks access to electricity and has no linkage whatsoever to the  benefits such access brings to an improved quality of life. For tens of millions of other Indians, availability of power is extremely limited as they have electricity for only a few hours a day.

The World Bank has stated: "India needs much more power in a short time frame to continue its economic development" and has concluded that the bulk of that electricity will come from coal.

To meet projected demand, and replace projected incremental coal-based electricity generation, India would have to do one of the following:

• Obtain more than 14 trillion cubic feet (Tcf) of natural gas;

• Build 250 nuclear power plants, or;

• Construct the equivalent of 450 Hoover Dams.

"India still must rely on [coal] to meet growing demand...Gas-based power is not a viable alternative…not enough natural gas is available…and the power it generates is too expensive.... Wind power still has limited reliability and its higher cost …makes it unsustainable for meeting large scale demand."

-- The World Bank

"Removal of poverty is the greater immediate imperative than global warming."  -- P. Ghosh, India's Secretary of Environment

In 2010, India will obtain over 560 billion kWh of electricity from coal.  That's 65 percent of its total supply.

"Coal is expected to be the mainstay of power generation in the years to come." -- India's 11th Five Year Plan (2007-2012)

In India the increasing level of coal -based generation has been the prime mover in more people living better and living longer.

By 2030, the 1.5 billion people in India will depend more on coal for energy than any country in the world -- except for the 1.5 billion people in China.

Coal Exports Grind to a Halt Due to Rail Crash

In late February, a train derailment near Singleton in New South Wales, Australia, it cost the coal industry millions after rail traffic came to a halt for several days after the accident.  There were no major injuries.

120 metres of tracks were damaged when the empty grain train derailed.  The track had only just opened after a four-day scheduled maintenance shutdown, so supply was already low, resulting in coal shipments suspended at Newcastle Port due to a lack of resupply from the mines.

The delay resulted in the late shipment of 570,000 tons of coal, according to Port Waratah Co. Ltd, who operates the Kooragang Island and Carrington terminals at Newcastle.

The harbor caters to mining giants Rio Tinto, BHP Biliton and Xstrata, and is the world's biggest export port for power station coal. 80 percent of the coal shipped out via the port is thermal coal, which is used in power stations.

Coal exports were also suspended at the Hay Point terminal in Queensland due to inclement weather. Shipping was halted on March 11th due to strong winds, which made continuing operations unsafe.

Coal exports have been hit hard this year, starting with the poor weather situation in Queensland as Xstrata and Peabody Energy Corp. stopped operations after what they termed "exceptional rain" in late February,  early March.

Dhaka and New Delhi have formed a joint venture company under Indian management and operation for installation of a 1,320-megawatt coal-based power plant in Khulna worth up to $1.8 billion.  A cross-border power transmission line will also be installed, enabling Dhaka to import 250MW of electricity from India.  The Power Development Board and NTPC will have equal share in the proposed joint venture company, which will be installed as an independent power plant in 36 to 48 months.

China's coal output will reach 3.3 billion metric tons in 2010, predicts the China Logistics Information Center (CLIC).   CLIC said global electric power generation and steel output have been rising slightly since October of 2009.  Demands for energy, including crude oil and coal, are expected to grow along with the bettering economy.

China's Xinjiang plans to produce about 100 million tons of coal in 2010.  The Xinjiang Uygur Autonomous Region had an output of 87.4 million tons last year.  The region has four large coal fields, 13 key mining areas and 11 general collieries, and a predicted coal reserve of 2.19 trillion tons that accounts for some 40 percent of the total in China.

Peabody Energy's Wilpinjong Mine has shipped its first coal to the Newcastle Coal Infrastructure Group (NCIG) Export Terminal from its surface mine in New South Wales.  The terminal began exports in April.  Peabody is investing in a major capital program to expand its Australia metallurgical and thermal platform and is set to nearly double export volumes by 2014.

Ongoing and planned investments in new power generation capacity in the southern African region will add some 35,500 MW by 2015, according to the Southern Africa Power Pool (SAPP), which indicated that the projects would help raise the reserve margin -- or spare capacity -- to at least 10 percent.  With the new system SAPP is aiming at boosting trade and allowing utilities to cover short-term supply shortages.

Aquila Resources, Perth, Australia, reports that the feasibility study for a planned four million ton a year Washpool coking coal project in Queensland's Bowen Basin would be completed by this June.  The proposed opencut coal mine, would produce 1.6 million tons a year of saleable hard coking coal when at full capacity.

The Abhijeet Group is seeking a mining contract in Jharkhand's Ramgarh district where it plans to introduce an environment-friendly and economic method of coal extraction called Energy Coal Gasification Technology or UCG.  The Coal Mining and Planning Development of India, an undertaking of Coal India Limited, had sought interested companies for UCG for the Kaitha coal block in Ramgarh district.  Under UCG technology, the coal, which cannot be extracted after a certain depth, is utilized and used for commercial purposes for the power and steel sector.

Continental Coal is on schedule for the start of coal production and sales from its Vlakvarkfontein coal mine in the second quarter of 2010, following the appointment of mining contractor Trollope Mining Services.  Monthly sales production of 100,000 tons of domestic-quality thermal coal is scheduled to begin this May, before increasing to full production by August.

Exxaro plans to form a clean-energy company in which it will raise funding for clean-energy projects with strategic partners.  Exxaro is part of the Tsitsikamma community wind farm consortium, which plans to generate 40 MW of wind power by 2013, from an R1-billion project in the Eastern Cape.  The consortium includes the Tsitsikamma Development Trust, Watt Energy and the Danish Industrialization Fund for Developing Countries and Danish power producer European Energy.  Also in the plans is the construction of a 100 MW wind farm at Brand-se-baai in the West Coast.

China Securities Journal reports that long-term power coal supplies between Australia and Japan are likely to conclude on a final contract price of $95 to $100/metric ton.  China expects to face greater coal demand with an improved economy after becoming a net importer in 2009 for the first time on tight domestic supplies.  China's power plants have almost finished their negotiations with domestic coal suppliers for an average contacted coal price increasing 50 yuan/ton.

Centennial Coal's Airly mine is complete, the Mandalong export infrastructure is almost in place, and the Joy flexible conveyor train at Clarence is expected to hit full production in May, as the company preps for a big 2010.  First coal from the Airly mine came last December with mine commissioning underway and set to finish by April.  The company expects to mine 1.6 to 1.8 million tons a year, which will be exported through Port Kembla.  Drilling continues at the Angus Place North East area with longwall layout options under assessment.  Angus Place is forecast to produce 2.1 million tons, Myuna 1.3 million tons, Mannering 900,000 tons and Awaba 800,000 tons. The Charbon mine is expected to produce 1.2 million tons.

Noble Energy announces the Tamar gas field will become operational in 2012, allowing Israel to meet its own energy needs, and potentially become an exporter of fuel.  Tamar's five wells are each expected to pump 150 million cubic feet of natural gas per day.  The company expects to open operations in a second Israeli field, called Dalit, at a later time.  Two wells are already in place in the Tamar field, and the company plans to break ground on additional wells later this year, and is awarding contracts to build undersea pipelines in the coming months.  Israeli officials expect demand for natural gas to more than double over the next decade, fueled by economic growth and a shift away from coal -- which currently powers about 60 percent of electricity production.

BHP Billiton Ltd has a three-month contract with JFE Holdings Inc.'s steel unit, in which JFE will pay $200 a metric ton, starting in April.  This compares with $129 a ton for the year ending March 31.

Commodity trader Glencore is expected to buy back its Prodeco coal mines from Xstrata for about 2.5 billion, analysts said.  Swiss-based Glencore was forced to give up the Prodeco operations last year for $2 billion when it was short of cash, but it has an option to buy them back.

Sasol may make an investment decision on what could be a $10 billion coal-to-liquids (CTL) project in China sometime during 2010.  Sasol and its partner, the Shenhua Group, are focused on a potential project in the Ningxia Hui Autonomous Region.  Should it proceed, it would mark South Africa's first CTL plant to be built amidst growing pressure on companies to reduce climate-altering carbon dioxide emissions and the first to be designed together with the option for carbon capture and storage.  The feasibility study is scheduled to be completed by the middle of 2010.

NTPC, India's biggest power producer expects coal consumption to rise as it expands capacity.  The firm, which accounts for a fifth of India's power generation capacity of 155,000 MW, currently burns 126 million tons of coal a year, including imports of 10 million tons.  NTPC's coal imports are expected to rise to 13.5 million tons in 2010/11.  Coal meets more than half of India's energy demand, and rapid economic growth is encouraging several steel and power firms to look overseas for supplies.

Xstrata Coal has applied for federal government approval for a $A900 million Ravensworth Operations Project, establishing Ravensworth North pit and extend surface mining for another 29 years, plus expanding surface infrastructure for the underground longwall mine.  The pit will mine up to 16 million tons a year of run-of-mine coal using dragline and truck and shovel methods.  Existing mine infrastructure will be upgraded or expanded, and new access roads will be built.

Namibia plans to adopt nuclear power as a source of energy over the next 15 to 20 years.  It is reported that Namibia will be an industrial country by 2030 and more energy will be needed.  Commissioning of the projected nuclear power plant is estimated to be around the second half of the next decade, or earlier if possible.

White Energy has signed an agreement with coal and electricity producer Guodian Inner Mongolian Energy Sources, to form a joint venture to build and operate a coal upgrading facility with initial capacity of 1 million tons a year and with an option to increase to 5Mtpa.  Guodian is currently undertaking feasibility studies.  White envisions it will have a 35 percent stake in the JV if it builds a 5Mtpa plant.  Guodian's mines produced a total of 25Mtpa.

Macathur Coal plans to kick off Stage 2 of its expansion of the Middlemount mine in the Bowen Basin that will increase run-of-mine coal output to 5.4 million tons per year and extend mining to 2031.  Initial production at the coking and pulverized coal injection coal mine is expected to reach 3.6Mtpa for the first year and up to 5.4Mtpa for the next 19 years.  Stage 2 is based on a resource of 100Mt, considerably more than the 40Mt approved under Stage 1.

Macmahon Holdings has a $A190 million contract from Syntech Resources to develop and operate the new Cameby Downs coal mine in Queensland's Surat Basin.  Macmahon will undertake all mining activities for stage 1 of the project, including planning, mine development, waste stripping, coal mining, coal preparation and train loading.