Thursday, 16 June 2011

China coal imports to double in 2015, India close behind

By Rebekah Kebede and Michael Taylor | Reuters – Mon, May 30, 2011

NUSA DUA, Indonesia (Reuters) - Top coal consumer China should see import demand more than double in the next four years and India will be close behind as both hoover up supplies on international markets to feed rapidly growing power industries, industry executives said on Monday.

China's thermal coal imports could rise to 200 million tonnes in 2015 from around 90 million tonnes in 2011, Neil Dhar, executive vice president of trading house Noble Group, told the Coaltrans Asia conference.

At 90 million tonnes, China's 2011 imports would be steady from 2010, he said. That would indicate shipments would rise for the rest of the year, as China's imports in the first four months of 2011 were down a quarter on 2010.

The flow into China, which emerged as the world's second-largest coal importer after Japan last year, fluctuates according to domestic coal prices and whether or not those are high enough to encourage more electricity output from coal-fired power producers.

China boosted power prices on Monday in an attempt to ease its worst power shortages since 2004. That may encourage more coal imports to boost power supply.

India's thermal imports could rise to more than 100 million tonnes by 2015, from around 67 million tonnes in 2011, Dhar said. Imports would jump by almost 10 million tonnes this year, he added.

Despite a bullish long-term outlook, Asian coal prices have been depressed in recent months, largely due to the aftermath of the Japanese quake and tsunami in March that knocked out some coal-fired plants.

The index for Australian coal on the globalCOAL index closed at $119.47 a tonne on Friday, down from more than $140 in January when prices were driven up by flooding and wet weather in Australia's eastern Queensland state.

WHO BUYS MORE FROM INDONESIA?

India will overtake Japan as the biggest buyer of Indonesian coal in 2011, staying ahead of China in the competition for supply from the world's top thermal coal supplier. Most of India's coal imports come from Indonesia.

India's domestic shortfall in coal supplies to meet power demand will spur the country to import up to 60 million tonnes from Indonesia this year, five million tonnes more than last year and surpassing Japan as top importer, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.

Imports from Indonesia to India, Asia's third-largest economy, would race to 90 million tonnes by 2013, Kamandanu told Reuters.

"Japan has traditionally been the leader at importing Indonesian coal, but now India is surpassing it," Kamandanu said on the sidelines of the conference. "In terms of tonnage, India is moving towards 50-60 million tonnes... very strong.

Demand from India's growing number of independent power producers would push the country's imports, Kamandanu said.

Japan, which suffered a massive earthquake and tsunami in March, would import 57 million to 58 million tonnes of Indonesian coal this year, down from previous peaks of around 65 million tonnes and unchanged from 2010.

The disaster in Japan shut down some coal-fired power plants along the northeastern coast, crimping demand. Japan's thermal coal imports in April fell 13.4 percent on the year to 6.591 million tonnes.

CRANKING UP OUTPUT

Indonesia's coal mining companies are already cranking up production to meet the fast pace of demand growth, and the country and Kamandanu forecast the country would produce 340 million tonnes this year up from 320 million tonnes in 2010.

"All the big guys are increasing their numbers," he said.

Bayan Resources Tbk, the country's eighth-largest coal miner, is projected to more than double its output to as much as 25 million tonnes by 2013 versus last year, said chief financial officer Alastair McLeod. The company's main focus was on striking long-term supply deal to India, he added.

Bayan expects to produce 14.5 million to 15.5 million tonnes in 2011, up from 11.9 million tonnes in 2010, he told Reuters in an interview.

"We started two new mines in 2008 and two new mines in 2009, therefore they have a ramp-up profile over four or five years before they get up to their capacity," McLeod said. "We'll be continually ramping up -- our target by 2013 is to get to 20-25 million tonnes."

Another major Indonesian coal producer, Bhakti Energi, is also eyeing the stiffening competition between China and India for Indonesian supplies.

"India has no alternative for its energy resources. India will become a very good importer for Indonesia," said Bhakti's president director Jeffrey Mulyono.

"China is different. China is growing well in demand but they still have alternatives for fulfilling (coal) combinations with their own development."

Mulyono expects Indonesian coal output to rise at least 10 percent annually over five years, and sees the easternmost province of Papua tapping into its huge coal reserves longer-term.

Chinese, Indian coal demand to surge by 2015

Industry executives said China's thermal coal imports could rise to as much as 200m tonnes by 2015 while India could see import demand hit 100m tonnes.

Author: Rebekah Kebede and Michael Taylor (Reuters)
Posted: Tuesday , 31 May 2011

Indonesian coal giant Adaro Energy expects 2011 coal production up 5 million tons from last year to 46-48 million tons, and then to nearly 50 million in 2012, while Bayan Resources is aiming to more than double its output to as much as 25 million tonnes by 2013. Indonesia is expected to make up 39% of the global increase in coal exports, with Adaro and top miner Bumi Resources becoming two of the top three exporters by 2015.

Australia will follow closely behind in terms of growth. India will surpass Japan as the leading buyer of Indonesian coal this year, the country’s coal association told Reuters, and India’s demand will continue to surge as electricity demand is expected to rise 56% by 2017.

Hellenic Shipping News reports:

While India and China’s power needs are well known other fast-growing nations in the region are also planning sizable coal demand increases, likely a reflection of the high price of diesel, unreliability of hydro and start-up costs of nuclear.

Coal Production Starts at Moatize

Maputo — Mozambican President Armando Guebuza and the chairperson of the Brazilian mining giant Vale, Roger Agnelli, on Sunday detonated the first charge of explosives initiating coal production at Vale's open cast mine in Moatize, in the western Mozambican province of Tete.

The two men together pressed a button installed in the giant tent where the official ceremony to launch coal production was held. The explosion sent an enormous black cloud of coal dust into the atmosphere, as the crowd burst into applause.

It has long been known that there are coal reserves in Moatize, but under Portuguese colonial rule, and in the initial post-independence period, they were barely scratched in small underground mines. One such mine, now run by the British company Beacon Hill, continues to produce - but at the very low level of 30,000 tonnes a year. Vale is talking of millions of tonnes a year.

The Vale licence was granted in 2004, and even then Vale officials were speaking of Moatize as one of the last great unexploited coal basins in the world. Construction of the mine began on 27 March 2009, when Guebuza and Agnelli laid the first stone.

Guebuza declared that the Sunday ceremony was the confirmation that a dream has now become a reality. "What was previously a dream is now a majestic undertaking in which natural resources are driving the development of Mozambican human resources", he said.

He regarded the start of coal production at the Vale mine as a further victory in the struggle waged by Mozambique against poverty.

Guebuza stressed Mozambique's high potential in natural resources such as coal, natural gas, gold, tantalite, titanium-bearing heavy sands, and phosphates, among others, which are a pole of attraction for national and foreign direct investment. To keep the investment flowing, he pledged that the government will continue to introduce reforms to improve the Mozambican business environment.

Guebuza called on Mozambicans to exploit all the potential of the country's coal reserves in order to generate, in a sustainable and structured manner, more employment, income and development in Moatize district, Tete province, and the country as a whole.

Agnelli announced that so far Vale has invested about two billion US dollars in Mozambique, and intends to invest a further four billion dollars in the next five years.

As for the export of coal, Agnelli expected it to begin within the next two months, despite the delays in rebuilding the Sena railway line, linking Moatize to the port of Beira.

Currently, Vale-Mozambique employs about 8,000 workers, more than 85 per cent of whom are Mozambican. "In the second phase of the project, which is already being developed, we shall reach 15,000 workers", said Agnelli.

He stressed that this relatively large number of waged workers would change the face of Tete, since it would create a large demand for other services, including public transport and supermarkets.

As for new investments in the coming years, Agnelli stressed the plan to build a new railway from Moatize to the northern Mozambican port of Nacala, across southern Malawi, and the improvements to the port so that it can eventually handle 22 million tonnes of coal a year.

But in the initial phase, the mine will have the nominal capacity to produce 11 million tonnes of coking and thermal coal a year, which will be taken down the 600 kilometres of the Sena line to the new coal terminal under construction at Beira.

Agnelli was confident that, even in the first phase, coal exports will reach between 2.5 and three billion dollars a year. As from next year Mozambique should have a positive balance of payments, with the value of the country's exports surpassing that of its imports.

Vale has also invested over 100 million dollars in projects of corporate social responsibility, including the rehabilitation of Tete Provincial Hospital, the building of schools and health centres, and the development of local agriculture.

Mozambique: Moatize Coal Deposit

In November 2004, IFC concluded a mandate advising the

Government of Mozambique on selecting a developer for the

Moatize coal deposit in the poverty-stricken Zambezi Valley.

The Moatize Coal Project is intended to serve as anchor project

to develop the Zambezi Valley, increase economic activity, and

improve local social conditions while also contributing to the

country’s income.

The winner was Brazil’s Companhia Vale do Rio Doce (CVRD), which bid US$122.8 million

for the rights to explore and develop the coal deposit. CVRD’s proposal included

an integrated feasibility study for the Moatize Coal Project and for associated railway

and port infrastructure, plus studies to develop a 1,500 megawatt coal-fired power

plant, along with pre-feasibility studies for other industrial projects. CVRD committed

to spending US$6.5 million on community development projects during the project

exploration phase and more than US$50 million during the production phase.

IFC benefited from the support of DevCo to pay for international technical and legal

consultants. Devco is a trust fund supported by the U.K. Department of International

Development, the Swedish International Development Cooperation Agency, the Department

of Development Cooperation of the Netherlands Ministry of Foreign Affairs,

and IFC.

Background

Mozambique enjoyed some economic success from 2001 to 2004.

Its GDP had a sustained growth rate in excess of 7% spurred by

the Government’s strategy of promoting economic development

through some successful “mega projects”. Even though these

capital-intensive projects contributed greatly to the country’s

economic growth, their trickle-down effect was not at the level

the Government had anticipated and did not spur growth in the

traditional and informal sectors. Consequently, Mozambique

continued to face great challenges: a GDP among the lowest in the

world with large disparities between regions, half the population

below the national poverty line, low life expectancy, and only 40%

literacy rate.

The Zambezi Valley remained simultaneously one of the least

developed and one of the most populated regions of the countrty,

with approximately 3.5 to 4.0 million people living off subsistence

agriculture. The region was ravaged by a 15-year long civil war and

remained largely on the sidelines of the economic development

experienced by the rest of the country.

IFC’s Role

Following 10 years of unsuccessful attempts to attract a company

to develop the Moatize mine, in November 2003, the Government

hired IFC to advise on the selection of developer and set the

conditions for its successful development. The Government’s

objectives were socioeconomic and included :

engendering sustainable development, particularly • in the Zambezi

Valley;

• strengthening and diversifying Mozambique’s productive base.

The project presented major challenges. In particular, the

complex geology and the limited availability of geological

information, which prevented potential investors from presenting

well-informed offers; legacy issues; large capital investment

requirements; and complex infrastructure arrangements as the

600-km long Sena railway line had just been awarded under a

25-year concession --which made the project dependent on the

railway investor for its connection to the port of Beira.

Specifically, IFC:

• prequalified investors, resulting in the selection of four large

international mining companies;

• compiled all available data and assisted investors with due

diligence;

• defined the selection criteria and developed guidelines for the

proposals;

• assisted in negotiations with prequalified investors and lead the

drafting of the bidding documents; and

• assisted the Government in the evaluation of proposals.

Transaction structure

A complex selection process was designed to create competition

among four large mining companies while ensuring transparency

and credibility and obtaining the highest possible value for

the Government. Bidders were required to be committed to

environmental management and to undertaking community and

social development programs in the region.

Bidding

Ten mining companies presented credentials for prequalification

and four were prequalified: the Anglo American Corporation,

BHP Billiton Mitsubishi, CVRD, and Rio Tinto.

CVRD was declared the winning bidder on November 12, 2004.

In addition to a strong financial component, key elements of

CVRD’s proposal included a strong commitment to community

and social development as well as a long-term strategy that

included the development of a mine with a capacity of 21 million

tonnes per year, 3% royalty (production tax); 5% free carried

interest for the Government in the project, and up to10% of

shares reserved for Mozambican nationals.

post-tender results

• CVRD spent approximately US$80 million on the

feasibility study, in addition to US$130 million on

the fee for the exploration license.

• The expected investment includes US$1.5 billion for

developing the mine, US$1 billion for rehabilitating

the Nacala railway line, more than US$1 billion for

power generation, and US$0.5 to US$1 billion for

power transmission.

• The success of the project brought international visibility

to Mozambique’s potential as a coal producer,

spurring investment by large international companies

such as Tata, Riverdale, and India Coal in the

Tete region of the Zambezi

Valley that will result in

large inflows of investment

to the region.

Transaction structure

A complex selection process was designed to create competition

among four large mining companies while ensuring transparency

and credibility and obtaining the highest possible value for

the Government. Bidders were required to be committed to

environmental management and to undertaking community and

social development programs in the region.

Bidding

Ten mining companies presented credentials for prequalification

and four were prequalified: the Anglo American Corporation,

BHP Billiton Mitsubishi, CVRD, and Rio Tinto.

CVRD was declared the winning bidder on November 12, 2004.

In addition to a strong financial component, key elements of

CVRD’s proposal included a strong commitment to community

and social development as well as a long-term strategy that

included the development of a mine with a capacity of 21 million

tonnes per year, 3% royalty (production tax); 5% free carried

interest for the Government in the project, and up to10% of

shares reserved for Mozambican nationals.

Mozambique will become Africa's second-largest coal producer

Vale in Mozambique coal project

Brazilian mining company Vale has launched a $1.3bn (£908.5m) coal mining project in Mozambique.

The new plant is expected to produce 11 million tonnes of coal a year, to be exported to Brazil, Europe, Asia and the Middle East.

It is thought Mozambique will now become the continent's second-largest coal producer behind South Africa, which holds most of Africa's reserves.

Mozambique has attracted increasing numbers of foreign investors recently.

In total, the project is expected to generate 8.5 million tonnes of metallurgical coal, which is used for the production of steel. It will also produce 2.5 million tonnes of thermal coal, which is used for electricity generation, every year.

Speaking at the inauguration of the project, Mozambique's president Armando Guebuza said he hoped it would better the situation of the country's people.

"We want these resources to continue contributing in a sustainable way to the improvement of the living conditions of our marvellous people," said President Guebuza.

Mozambique, which traditionally relies on agriculture, is one of the Africa's poorest countries.

Vale is the world's second-largest mining company and the largest producer of iron ore.

Losing confidence

The news is a boost for African commodities, which have been hit hard as consumers abroad continue to shun high-end purchases in the economic downturn.

Commodity prices have also been badly affected by the reduction in demand from China, which once had an insatiable appetite for buying raw materials in order to fuel its now-fading economic boom.

Countries such as South Africa, Congo and Botswana have particularly felt the effects of cooling trade in raw materials.

Last month, Debswana, a diamond producing firm jointly owned by Botswana's government and luxury jewellery company De Beers, closed two mines for the rest of the year as demand continued to fall.

Meanwhile, Anglo American's South African unit, Anglo Platinum, announced some 10,000 job cuts in February.

Scaling back

Because of soaring mineral prices, Congo's economy had been projected to grow by up to 12% last year, a target which now seems unlikely.

In Congo's Katanga province, the authorities estimate that 300,000 people have lost their jobs virtually overnight as several miners, including BHP Billiton, close down mines or scale back their activities in the country.

Zambia, which garners some two-thirds of its export revenue from copper, has also felt the effects of a slowdown for commodities.

Having enjoyed the benefits of copper trading at more than $8,000 (£5,584) a tonne only last summer, it is now asking for a $200m (£139.6m) loan from the International Monetary Fund after prices plummeted to about $3,900 a tonne.

Coal global demand and supply 2011-2050 & Demand for clean tech

Thursday, 16 June 2011

China coal imports to double in 2015, India close behind

By Rebekah Kebede and Michael Taylor | Reuters – Mon, May 30, 2011

Chinese, Indian coal demand to surge by 2015

Industry executives said China's thermal coal imports could rise to as much as 200m tonnes by 2015 while India could see import demand hit 100m tonnes.

RELATED STORIES

Indonesian coal boom coming

Coal Production Starts at Moatize

Mozambique: Moatize Coal Deposit

Mozambique will become Africa's second-largest coal producer

Vale in Mozambique coal project

Thursday, 16 June 2011

China coal imports to double in 2015, India close behind

By Rebekah Kebede and Michael Taylor | Reuters – Mon, May 30, 2011

RELATED CONTENT

Chinese, Indian coal demand to surge by 2015

Industry executives said China's thermal coal imports could rise to as much as 200m tonnes by 2015 while India could see import demand hit 100m tonnes.

RELATED STORIES

Indonesian coal boom coming

Coal Production Starts at Moatize

Mozambique: Moatize Coal Deposit

Mozambique will become Africa's second-largest coal producer

Vale in Mozambique coal project