WorldCoal October 2014 Preview

8/10/2019 WorldCoal October 2014 Preview

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OCTOBER 2014 - VOLUME 23 NUMBER 10


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C OVER I NFORMATION

World Coal (ISSN No: 0968-3224, USPS No: 020-997) is published monthly byPalladian Publications Ltd, GBR and distributed in the USA by Asendia USA, 17B S Middlesex Ave,Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing ofces.POSTMASTER: send address changes toWorld Coal , 701C Ashland Ave, Folcroft PA 19032.

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For more information, please visit:www. http://www.logmarin.net

The front cover illustrates the collaboration of Bedeschi,Liebherr and Logmarin Advisors (BLL). Each company

maintains its individual leadership worldwide, providescomplete and integrated services to marine supply

chains, customising innovative solutions and efcient

products to clients' specic needs. BLL: from software supply chain feasibility studies, including computer

simulation to hardware port cargo handling facilities.

OCTOBER2014 - VOLUME23NUMBER10

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Keynote Articles

16 Still In DemandLinda Taglieri, AME, Australia, looks at the global thermal coaltrade markets from 2013 2016 and sees the demand outlookremaining solid across the board.

22 Around The WorldTim Mortimer, Mortimer Mining, Australia, discusses global coalindustry dynamics during these currently difficult times.

Regional Report: China

30 Facing A New RealityAmy Gibbs and Daisy Jackson, JLT Specialty Ltd, UK, explain howChinas cooling demand for coal will affect international miners andexplore the impact of the slowdown in Chinese coal import demand.

Coal Transportation & Logistics

38 Going The DistanceUS coal exports have slowed this year, but transport providersexpect volumes to remain at high levels in the years ahead and areinvesting in new facilities to boost supply chain capacity, writesMichael King.

45 The Big PictureFrancesca Bonsignore, Logmarin Advisors, Italy, explains howcompanies can optimise the logistical operations of their supplychains.

49 Going DirectBosch Rexroth, Sweden, discusses the advantage of direct drivesystems for bucket wheel stacker/reclaimers.

3 Comment

5 Coal News

14 Industry View: An Ode To TranshipmentCapt. Giordano Scotto d'Aniello, Coeclerici Logistics, Italy.

53 Come Hell Or High WaterRaymond Perr, P.E., Industrial Resources Inc., US, discusses thedesign of flood-proof coal handling solutions on the Ohio River.

Mine Lighting56 Into The Light

Nate Klieve, Phoenix Products Co. Inc., US, explains how LEDtechnology can revolutionise mine lighting solutions.

Mine Infrastructure Planning

61 Stuck In The PastAndrew Keith, Aurecon, Australia, explains that, as major miningcapital projects fail to achieve the desired outcomes, it is time tostep away from a reliance on geology, mining and processing todrive productivity improvement.

64 The Race For SpaceDavid Nolan, Golder Associates, Indonesia, discusses the need forIndonesian coal miners to utilise the space allotted to mine wasteproducts as effectively as possible.

General Interest

71 New BeginningsToby White, University of Leicester, UK, charts developments at anew co-operative coal mining project in the UK.

77 The Junior ChallengePeter Ellis and Dan Peel, RungePincockMinarco, Australia, explainthat conserving cash and adding value are key to junior mining andexploration company survival.


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Managing Editor [email protected] [email protected] [email protected] [email protected]

[email protected] [email protected]@worldcoal.comOfce Administrator

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Website [email protected] [email protected] Baxter Gordon CopeMichael King Ng Weng HoongPublisher Nigel Hardy

Palladian Publications Ltd15 South Street, Farnham,Surrey, GU9 7QU, UKt: +44 (0)1252 718999f: +44 (0)1252 718992w: www.energyglobal.come: [email protected]

Jonathan Rowland Editor [email protected]

As I prepared to write this comment, there was achance that I would be doing so in a very differentcountry to the one I had grown up in: anot-so-United Kingdom, dismembered by a

referendum on Scottish independence that had, in the run up, been too close to call. In the event, the Scots chose to remain inthe union by a decisive but not overwhelming 55% to 45%. Evenso, Scotlands relationship with the rest of the UK is likely tochange fundamentally.

In the last few weeks running up to the vote, the leaders of themain unionist parties the governing coalition of Conservativesand Liberal Democrats and the oppositionLabour Party promised increaseddevolution of power from the BritishParliament in Westminster to the ScottishParliament in Edinburgh. And quickly: theUK is due a general election in May 2015;David Cameron, the British prime minister,has promised draft legislation by January analmost absurdly optimistic timetable.

Further devolution will give Scotlandautonomy akin to those enjoyed by states infederal systems of government such asAustralia, the US or Germany.Accommodating this within the UKs unitary political system will be cause for some signi cant political turbulence in the comingmonths and years less so than independence negotiations, butstill fundamentally changing the landscape of British politics.There is now no return to the status quo ante.

The Scottish referendum is the latest in a line of important votesthis year that has taken us to India, Indonesia and South Africa forgeneral elections and will culminate in the US Midterm Electionsin November. Here, control of the Senate lies in the balance withthe very real possibility that the Republicans will take control and

thus enjoy majorities in both houses of Congress majorities they

will use to attack the pillars of President Obamas administration:the Affordable Care Act (Obamacare) and environmentalregulation.

Not that anything is likely to change: the presidents veto penwill ensure that any legislative attempts to curtail theEnvironmental Protection Agencys radical regulatory agenda orrepeal Obamacare will fail. Two years of continued gridlock thuslie ahead in the run up to the 2016 presidential election a fate thatIndia and Indonesia will hope to avoid under their new reformist

leaders. Both countries need reform to boost economic growth particularly in their coal industries where the two countries facecontrasting problems. India cannot produceenough coal; Indonesia is arguably producingtoo much, helping to keep thermal coal prices inthe doldrums.

In many ways, politics always boils down toeconomics: its the economy, stupid may have become a clich but that doesnt stop it beingtrue. In the Scottish referendum, it waseconomic arguments that swayed voters: formany, it came down to whether they believedthey would be better or worse off in anindependent Scotland. Narendra Modi and Joko Widodo rose to power promising economic

reform. The erce ideological battles in the US largely boil down towhat you believe the states role in the economy should be.

Unfortunately, this intersection between politics and economicsis all too often a breeding ground for bad ideas andgrowth-damaging uncertainty. It neednt be so. Adam Smith, thefather of modern economics, author of The Wealth of Nations and( ttingly) a Scot, once wrote that little else is required to bring acountry from poverty to prosperity than peace, easy taxes and atolerable administration of justice. Politicians would do well toremember that; the world would be a more prosperous place if

they did.

IN MANY WAYS,POLITICS ALWAYSBOILS DOWN TOECONOMICS.


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October 2014 | World Coal | 5

C hina will ban the import and local sale ofcoal with high ash and sulfur content, ina bid to tackle air pollution and support thedomestic Chinese coal sector.

Beijing has faced calls from Chinese coalminers to support the domestic industry, asit sees widespread losses due to oversupply

and anaemic demand for coal. Speaking in July, the head of the China National CoalAssociation said that more than 70% ofChinese coal miners were losing money,as prices suffer from oversupply andreduced demand.

The Chinese Government has also been keen to paint a picture of itself asenvironmentally conscious, with a view toreduce use of so-called dirty coal. Thecountry has looked to reduce the amountsof smog and pollution that often suffocatemajor Chinese cities. Pollution in Chinahas been a serious issue for some time, but ithas now become one of the biggest sourcesof public discontent in the country, said Jonathan Robinson of Frost & Sullivan in arecent report.

Under the new regulations, the use of coalwith ash content higher than 16% and sulfurcontent above 1% will be restricted in themain population centres of the country from1 January 2015. There will also be a ban onthe mining, sale, transportation and importof coal with ash and sulfur content exceeding

40% and 3%, respectively. For coal that will be transported for more than 600 km fromproduction site or receiving port, the ashcontent limit will be 20%.

Australian concernAustralian producers could bear the bruntof the ban. Winston Han, an analyst withthe China Coal Transport and DistributionAssociation, told Bloomberg that Chinesedemand for coal from abroad could fallas much as 15% before 2015. Any such

fall in Chinese demand could impact the50 million tpa of thermal coal Australia exportsto the country. John Rolfe, resources economistat Central Queensland University, said therestrictions will be a big deal for miningoperations in Australia.

The fear in Australia is that 80% of thecountrys exports of coal to China is expectedto exceed the sulfur and ash content limits,according to Wood Mackenzie.

A storm in a teacup?Yet not all onlookers are pessimistic about theregulations. Many have pointed out that theyare less onerous than earlier draft proposals.Clyde Russel, in a column for Reuters, saidit seems far more likely that the impact will be minimal, but not non-existent, as the newrules will lead to changes in the compositionof coal China imports. Russell argued that thesituation may sound dire, but said it isntan accurate re ection of the real situation forAustralian coal exporters.

One potential scenario is that Australianexports that do not meet the Chinese standard

will be diverted elsewhere: for example, toIndia and southern and northern Asia.

Macquarie Bank has further moved toallay miners fears, reminding the industry

that although the regulations restrictcoal consumption in some of the largestcoal-consuming regions, the nationwidequality restrictions are not particularlyrestrictive.

UBS analyst, Daniel Morgan, has suggestedAustralian coal miners take high-ash coal

and blend it with other coal, as well asfurther reducing ash content by washing coal.According to Morgan, doing so would mean:the amount of coal leaving Australia thatyou wouldnt be able to mitigate to meet thespeci cations would be low.

Meanwhile, the major mining companiesdo not seem overly concerned. BHP Billiton,the worlds largest mining company anda major exporter of Australian coal, said itexpects no material impact on its business.

Clive Palmer, whose rm Waratah Coalhas approval for an AU$ 6 billion coal minein central Queensland, said he would goso far as to welcome the new restrictions.Comparatively, Australia has more cleanenergy than competing countries likeIndonesia, Palmer said. It will have a greaterimpact on Indonesia. Its a good move. Therewill be less pollution as a result.

Peabody Energy agreed. In a statement, thecompany said that it joins other Australianproducers in believing that emerging Chinesepolicies regarding thermal coal qualities arelikely to bene t Australian coal exports due to

Australias superior coal qualities. Based oncurrent information, Peabody expects Chinasrecent policy to have no negative impact onthe companys coal export volumes.

CHINA China bans low-quality coal imports


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6 | World Coal | October 2014

W orld Coal presents its monthly round upof news from coal projects in Australia,Botswana, Canada, Mongolia, Poland andthe UK.

Australia

Rio TintoRio Tintos energy boss has warned thattime is running out for the Mt ThorleyWarkworth coal mine in New South Wales.

Harry Kenyon-Slaney said the mine wouldnot be economically viable beyond the endof 2015 because it would not be able to run atfull capacity without approval to expand. Thecompany has been ghting an ongoing battleto expand the mine since original approval forexpansion was rejected by the state Land andEnvironmental Court, a decision that was laterupheld by the state Supreme Court.

Tiaro CoalTiaro Coal continues to progress plans to

develop a metallurgical-PCI coal mine inQueensland with the companys T9 Westproject prefeasibility study now at the mineplanning and economic analysis stage. Thecompany is currently raising funds througha share purchase plan to help it continuedevelopment of the coal project.

Botswana

Shumba CoalShumba Coal has been awarded the rights toa new prospecting licence for coal explorationin Botswana. The companys efforts willfocus on con rming the presence of largein-situ reserves of carbonaceous material rstidenti ed in the 1970s. The company estimatesexpenditure to be around US$ 330,000.

Canada

Anglo AmericanOperations at the Peace River coal mine will be suspended at the end of 2014, accordingto the mines operator, Anglo American. The

company said it remained committed to thePeace River mine in the long term and willensure operations can be restarted quicklywhen market conditions improve.

Mongolia

Aspire MiningWork has begun at Aspire Minings Nuursteicoal project, as the company begins itsexploration programme. Drilling is expected to be completed by the end of October 2014, withlaboratory analysis expected to be received inthe December quarter.

Viking MinesViking Mines has issued a letter of intent toEllehcor LLC for the provision of drillingservices for its Berkh Uul coal projectin northern Mongolia. Results from theprogramme will contribute to an update of theexisting JORC Resource of 38.3 million t of coal.

Auminco Mines subject of a takeover bid by Viking Mines has also engageda Mongolian consultancy group to beginenvironmental baseline studies at theBerkh Uul coal project. The baseline study is akey step in the application process for a mining

license for the project.

Poland

Prairie MiningPrairie Mining has started a prefeasibilitystudy at the Lublin coal project in Poland. TheLublin project is reported to be the premiumthermal and semi-soft metallurgical coal projectin the Lublin Coal Basin. The project liesadjacent to the Bogdanka mine the operatorof which, Lubelski Wegiel Bogdanka, recentlylost a bid to expand its mining reserves.Prairie, an Australian rm, has been protectedfrom any mining encroach by Bogdanka byan investment protection agreement betweenPoland and Australia. The prefeasibility studyshould be completed during H1 2015.

UK

NUMThe National Union of Mineworkers mayhave saved Hat eld coal mine the UKs lastviable underground coal mine by investing

4 million in the employee-owned mine nearDoncaster. The South Yorkshire pit had facedclosure without urgent funds to start mining anew coalface in the coming weeks.

INTERNATIONAL A round up of global coal project developments

AusRock 20145 - 6 November 2014Sydney, Australiawww.groundcontrol2014.ausimm.com.au

Coaltrans Emerging Asian Coal Markets5 - 6 November 2014Ho Chi Minh, Vietnamwww.coaltrans.com

Coaltrans Coal Trading & Shipping Forum24 - 25 November 2014Dubai, UAEwww.coaltrans.com

POWER-GEN International9 - 11 December 2014Orlando, USwww.power-gen.com

bC India15 - 18 December 2014Delhi, Indiawww.bcindia.com

Coaltrans UK29 January 2015London, UKwww.coaltrans.com

Coaltrans USA5 - 6 February 2015Miami, USwww.coaltrans.com

Coal Operators Conference 201511 - 13 February 2015Wollongong, Australiawww.coalconference.net.au

SME Annual Conference & Expo 201515 - 18 February 2015Denver, USwww.smeannualconference.com

PDAC 20151 - 4 March 2015

Toronto, Canadawww.pdac.ca/convention

Coaltrans India2 - 4 March 2015New Delhi, Indiawww.coaltrans.com

ELECTRIC POWER Conference + Exhibition 201521 - 23 April 2015Rosemont, USwww.electricpowerexpo.com

Coal Prep International 201527 - 29 April 2015Lexington, USwww.coalprepshow.com

Austmine 201519 - 20 May 2015Brisbane, Australiawww.austmine2015.com

DIARY DATES


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Seamless integration from mine to market?

Naturally.

Main Technology Center for material handling03048 Cottbus, [email protected]


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NEWSINBRIEF

COLOMBIA Barry Baxter reports on growth and a bigger US appetite for Colombian coal

C olombias major mining companiesremain supportive of of cial projections ofincreased coal production over 2014, but at leastone junior is facing problems.

The countrys biggest miner, Cerrejn, a jointventure between Anglo American, BHP Billitonand Glencore, appears con dent it will increaseproduction over the year. Company president,Roberto Junguito, would not be drawn to givea speci c forecast, but nonethless said: We areconvinced we will be able to produce and export

more coal than in 2013.Production at the companys El Cerrejn mine

over 2013 was 33 million t. Overall, Colombiaproduced 85.5 million t of coal over that yearin the face of strikes at most large mines andconsiderable disruption of logistics.

US-based Drummond is the countrys secondlargest coal producer. Its mines are targeting25 million t over 2014.

The of cial expectation is that total exportsshould reach 97 million t. This is up from aprevious forecast of 89 million t. Production over

Q1 2014 was 24.5 million t.

More for lessHowever, some analysts will not welcomemore Colombian coal into the market:Alongside Australia and Indonesia, Colombiaand South Africa have been major forces inaggravating the global oversupply situation,they say. Colombia exported 12.5 million t ofcoal in May, more than double the 5.4 million tshipped in the previous month. More Colombiancoal in the market can only exacerbate the currentoversupply situation for which read prices andpro ts.

The Colombian Government has sinceannounced plans to dredge the Magdalena River,down which coal is barged. This, it says, could boost metallurgical coal exports vefold. Ithas admitted that the project could potentiallyworsen the global oversupply of metallurgicalcoal, but says that it will help reduce the costof transporting it from the Colombian mines tocoastal coal terminals by as much as 50%.

Investor-support delaysAt the recent launch of the Colombian MiningAssociation, Santiago Angel said that Colombiaseconomy could grow 1.5% faster each year ifthe government was to set clearer rules to draw

more investment into the mining sector. Weare talking about one half percentage points forGDP in the coming year just looking at projectsof strategic national interest, he said. Thereis a lack of co-ordination between national andlocal authorities, which leads to delays in issuingenvironmental licences and mining permits. Thisis limiting foreign investment and job creation.

Beatriz Uribe, the head of Colombian miningcompany, Mineros, said the government neededto make clear whether it supported mining or not.

Her company was considering abandoning someexploration projects, due to problems with localcommunities and authorities and licensing delays.She also reiterated concern over resumption ofopposition-backed guerrilla activity.

However, Colombia has been recordinggrowth that most other countries are unable toachieve, particularly those in Latin America.It currently forecasts real growth of 4.7% over2014 but expects to revise that upwards. Thegovernment attributes 12% of its exports to coal.

Obama boost for Colombia coalUS President Barack Obamas ongoing war oncoal may be leading to more coal mines closingthroughout Central Appalachia, but it hascertainly meant more business for Colombiancoal companies. US imports of coal are going upand Colombia seems to be the preferred supplier.

It costs more to ship coal fromCentral Appalachia to US domestic destinationsthan to import it from Colombia it is cheaperto move coal by ship than by train. Citing lowlabour costs and more cost-effective shipping,a number of reports say that coal fromCentral Appalachia can be landed in Floridaat US$ 26/t, yet from Colombia the cost is atUS$ 15/t.

US coal producer Alpha Natural ResourcesCEO, Kevin Crutch eld, said: As we haveto deal with stricter government regulationsthat are causing coal- red power plants toclose and no new ones to be built, marketsremain extremely challenging. Prices are belowthe break-even point for most US producers.There are increased imports, primarily fromColombia.

Global Trade Information Services saidUS coal imports were up 44% to 5.4 million tduring H1 2014, compared year on year. Twothirds of the coal came from Colombia.

Juniors geological woes Junior miner and Colombia-focused TSX-listedPaci c Coal Resources is targeting productionof 1.36 million t over 2014, compared with1.32 million t in 2013 and 1.27 million t in 2012.

While nancial revenues over 2013 droppedto US$ 119.24 million from US$ 129.01 millionover 2012, with operating margins per tonne upto US$ 7.49 against a negative US$ 13.57 overthe previous year. Net earnings were a pro tableUS$ 7.46 million against a US$ 123.75 million loss

over 2012.The company operates the La Caypa mine,

from which it is targeting expects 960,000 t, aswell as the Cerro Largo mine, for which it isforecasting production of 400,000 t.

However, after an encouraging Q1 2014in which it cut a comparable 2013 loss ofUS$ 3.15 million to US$ 113,000, it ran intoproduction problems.

At the agship La Caypa mine, minersuncovered the naturally occurring burning ofcoal mantles due to a geological fault. Production

fell 18% against Q1 and was 27% off-target.At Cerro Largo, production was 12% morethan in Q1, but the ramp-up was slower thanexpected and the nal tonnage 36% below target.

Overall output was down 30% on 2013to 279.6 million t, sales reduced by 35% to229.3 million t. Alongside that, the averagerealised coal price for the quarter declined, bringing comparable revenue down 40%.

The market reacted primarily to thefault found at La Caypa and, unsure of thelonger-term, outcome wiped off a third of thecompanys market capitalisation. However,new investors still saw value and supported aUS$ 6.5 million debt offering.

Strikes and strifeBoth Cerrejn and the Drummond minesexperienced strikes lasting several weeks during2013. There were also logistical problems and,although deputy mining minister Cesar Diazand the companies themselves play down theeffects of the strikes, there are signs of morelabour unrest and fears of a resumption of leftistguerrilla activity, which the government has

previously insisted it could contain.We are worried about strikes, but we have

no impact to report, Cerrejns vice president ofpublic affairs, Juan Carlos Restrepo, said.


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GERMANY The Aachen International Mining Symposium 2014 focused on high performance mining

T he 2014 Aachen International MiningSymposium (AIMS) took place11 12 June 2014 under the direction ofProf. Per Nicolai Martens. Focused on thetheme of High Performance Mining, theAIMS series is regarded as one of Germanyspre-eminent annual symposia for the miningindustry, attracting over 300 participants from30 countries and proving that both miningand raw materials supply are high up on thepriority list of politicians, producers, equipment

suppliers and governmental organisations, aswell as those involved in research and academiaon an international, EU and national level.

More than 60 papers were presented byinternational experts. These gave valuableinsights into operations and processes thatcan be used for benchmarking miningoperations worldwide. Conference papersdealt with innovation and latest developments,regarding both equipment and the miningprocess. Process optimisation, thinking alongthe value chain and sensor technology were

certainly topical buzzwords that featuredthroughout presentations.

PresentationsAs the use of automation and remote controlin mining operations increases, an urgent needhas developed for new wireless undergroundcommunications technologies, as well asintegrating communication and informationtechnology to offer increased ef ciency andsafety. The integration of German technologyin this area into the world market, whilemeeting international safety standards, wasdemonstrated at the symposium. Thus, inan integrated process chain view of miningand consecutive process steps, permanentmonitoring of every step in the operationgains importance. The aim is to control andreact immediately to deviations from a giventarget. Automation is increasingly supported by improved and ever-more sophisticatedsensor technology. The trend is to operate minesin a manner that increasingly must resemblepredictable industrial manufacturing.

The opti-mine session focused on

this emerging eld of mining technology,as comprehensive network solutions werepresented. Another focus with numeroustalks and adjacent discussions was held on

3-D modelling, visualisation, simulation andtagging and tracking.

The ultimate goal will be autonomousprocesses, but this still has a long, dif cultway to go. Increasingly sophisticated, complexsystems may also lead to an increase in systemfailures, which will have to be overcome shouldthis challenge materialise.

Over the course of AIMS 2014, it becameclear that health and safety issues willcontinuously grow in importance. This is to be

seen on a global basis in emerging economies, aswell as in industrialised countries. Here again, both manufacturers and mining companies haveto take responsibility. One session, in particular,focused on health and safety in mining, asspeakers from the US, Australia and Germanypresented their research results to the audience.

The same goes for sustainable developmentaspects, which must be adhered to. Here, casestudies and new approaches from Brussels, Japan,Vietnam and Iran were presented and compared.

Process optimisation and the application

of novel technology not only leads to higherenergy ef ciency, but also reduces the impact onthe local environment. Facing the tendency tominimise the footprint at the surface, solutionsfor shifting processing facilities undergroundhave been developed and implemented.Technologies to enable safety and productivity inroadway development were addressed, as weredevelopments in materials sciences that increasewear and impact resistance of steel parts.

Several author contributions created aholistic overview of the latest mechanical andconventional shaft sinking technology. Yetanother focus was on shaft monitoring andrefurbishment. Furthermore, rockbolting tookattention in another session. Experiences of fourdifferent mining countries (Turkey, Australia,India and Poland) were shared and discussed.

The challenging conditions of Germanhard coal mining were reviewed in severalpresentations. The discussed approaches to theseconditions, experiences and lessons learned cancontribute to hard coal mining worldwide.

There is a clear trend in hard rock miningfrom drill-and-blast operations towards

continuous mechanised systems. However,this trend is still in its infancy. The results offurther research will hopefully be presented atfuture conferences.

Future predictionsA comprehensive overview of what the miningindustry of the future will be was addressed by

fteen predictions for future mining, based oncurrent research.

The iMine project, with LKAB as projectleading company, was also presented. Researchwill be necessary to augment mining operations,which will have to dig deeper underground asthey deal with the constraints of challengingrock mechanics, energy ef ciency, automated

operation, safety aspects and environmentalconcerns. AIMS 2014 and RWTH AachenUniversity, as one of the 27 partners of theiMine project, put one whole-day focus areaon this four year EU project, as initial resultswere presented. For those who had not heardyet of iMine, Kent Tano from LKAB explainedto the audience what the de ned topics andtargets of the projects were. Challenges relatedto deep-mining in Europe included: gravity

ow, rock-mechanics, subsidence prediction andstakeholder engagement. Technological papers,

meanwhile, focused on cutting technology andmachine guidance.In the last paper of the plenary session,

current and upcoming EU research fundingprogrammes were discussed. The aim of theseprogrammes is to foster research in the area ofmineral raw materials. The paper was given byMilan Grohol from the European Commission.As Grohol presented the paper, it becameclear that mining and minerals have receivedand will continue to receive visibility andattention in the future. This was underlined by Mark Rachovides, who gave an outlook onthe EU minerals industry of the future and itschallenges.

The conference was accompanied by amajor number of exhibitors, which fosteredthe exchange of information on the latesttechnologies available. In general, the aim oflarge extraction rates at lowest cost is consideredone of the major drivers for new or improvedtechnology.

Prof. Martens concluded: The technologicalchallenges for mining at increasing depths, withhigh extraction rates and constant cost pressure,

will de nitely keep us occupied in the years tocome. Regarding the road ahead, we are pleasedto announce the AIMS 2015 will focus onMinerals Resources and Mine Development.


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DIGITAL HIGHLIGHTS The stories that are making the news on www.worldcoal.com

Union loan could save Hatfield coal mineNational Union of Mineworkers steps in to saveHat eld coal mine in the UK with a 4 millionloan.

Germany cuts support for overseas coal plantsGermany plans to limit the nancial supportthat the KfW state development bank can giveto coal projects abroad.

Japans search for CBM raises tensions with ChinaAs Japan extends its exploration area forcoalbed methane, it could encroach onChinese territory.

Mining: Eagle Butte coal mine equips vehicles with LNG fired enginesCoal mining vehicles at the Eagle Butte mine will be equipped with LNG- redengines and supplied with LNG by a mine-adjacent plant.

Preparation: Coal separation in IrelandHayes Fuels installs new coal separation units at its Irish operations.

Ports & Terminals: Ambre Energy to appeal Oregon coal terminal decisionAmbre Energy appeals Oregons rejection of a construction permit for aproposed coal export terminal on the Columbia River.

Power: Polish coal-fired power plant outfits unit with new technologyEmerson technology will control a new 1075 MW ultra supercritical unit at theKozienice coal- red power plant in Poland.

Product News: The new Cat 824K wheel dozerThe new Cat 824K wheel dozer delivers ef cient productivity with long-termdurability for optimum value.

MOST READ ON WORLDCOAL.COMFROM OUR SECTORS

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1NUM offers 4 million loan to UK coal mineThere is power in a union.

2Chinese ban on coal importsChina introduces coal import regulations.

3 Coal dust: a clear and present dangerBetter protection against coal dust explosions.4 EPA regulations force power plant closureThe war on coal continues.5 Coalbed methane in PennsylvaniaInsight into CBM industry in Pennsylvania.

Links to all of these stories can be found at:www.worldcoal.com/DH/08


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AuthorGiordano Scotto dAniello is a Master Mariner and has worked on dry

bulk vessels for over a decade. He joined the Coeclerici Group in 1999,as part of its shipping department, before joining the groups logistics

division in 2004. He is currently the head of the commercial logisticsdivision and is involved in the conceptualisation of offshore transhipment

solutions for clients worldwide.

I have worked in the shipping industry fortwenty years, both at sea and in the of ce.In the last ten years, I have been involved in theconceptualisation of offshore logistics solutions.Frequently, while dealing with clients, such ascoal mining companies, steel mills and powerplants, I have noticed a lack of trust on theeffective capability of transhipment to providea solution to such clients logistical problems. Ihope this Industry View will help to throw newlight on the transhipment world.

The benets of transhipmentCoeclerici Logistics, the logistics division ofCoeclerici Group, has over 40 years of experiencein this speci c eld. The company has engineeredand promoted the use of oating terminalsthroughout the world. These carry out all thesame functions as a port terminal, but with farsmaller investment costs, lower managementcosts and less environmental impact.

Today, the only way to avoid some of theproblems associated with port infrastructure is

to handle vessels offshore. The offshore solutionis based on a oating system, which is able toload and/or discharge large ocean-going bulkcarriers offshore, with a good daily rate. Thesystem might also be self-propelled, so that it can be moved easily from one location to anotherwithout the need for tugboats. The versatilityof the system is such that it is able to overcomedraft restrictions, vessel size restrictions and alack of port facilities, as well as environmentalrestrictions. It should be simple enough to adaptto the local conditions and to operation by alocal crew. The exibility of the system shouldallow the terminal to handle all kinds of dry bulkcargo. Last but not least, the speed with whichthe system is implemented is paramount. Thisis because it is important to minimise the lossesincurred by the importers.

If the challenges of designing andconstructing such oating systems can be facedand overcome, clients can be offered solutionsfor their logistics needs, based on the conceptof offshore transhipment units, which are fast,reliable and environmentally friendly.

Coeclerici is able to provide its customers

with highly up-to-date transhipper vessels, built in line with the technological and safetystandards set by the some of the most advancedshipyards in the world. An example of a

successful Coeclerici transhipment project is theMoatize coal project in Mozambique. Coeclericis bid for the project was selected among otheroffers made by leading offshore logisticsoperators that participated to the internationaltender issued by Vale.

Moatize project, MozambiqueThe Moatize project, acquired in December 2009,is the biggest offshore coal transhipment projectever awarded. The project foresees the handling

of about 11 million tpa of coal during a 20 yearcontract. The cargo involved is 80% metallurgicalcoal and 20% thermal coal.

The project involves the exploitation of acoal mining concession area in Moatize, in theTete Province of Mozambique, approximately600 km from the Port of Beira. The coal is railedto the Port of Beira, but once there cannot be loaded into large panamax or capesizevessels due to limitations in the port anddraft restrictions in the approaching channel.Offshore transhipment is therefore the only

solution that can be implemented that takesadvantage of economies of scale in the seabournetransportation part of the logistics chain.

Both transhipment units at the Moatizeoating terminal are tailor-made and designed,

built and operated by Coeclerici. The units areloaded at berth in Beira and transport theircoal cargo to a suitable deep-water anchorageoff the coast, where there are no draughtconstraints and where the coal is transferred intoocean-going vessels (OGV) up to 180,000 DWTvia a sophisticated loading system, which isinstalled onboard.

Bulk Zambesi and Bulk Limpopo are eachduly equipped with heavy duty cranes, grabs, a belt conveyor system (which is able to transhipat 4000 tph), as well as state-of-the-art gears.These features allow a throughput of around12 million tpa of coal. These two twin vessels

y the Italian ag, are classed with RINA andare in compliance with the latest internationalcode resolutions for ships safety and security,protection of crew and of the environment.

The agreement with Vale Group is anexample of Coeclerici Groups ability to develop

solutions that can overcome port logisticsconstraints in developing countries.

Owing to the Moatize projects 20 yearduration, it is perfectly in line with recently

implemented policies that aim to ensurestable pro tability for the Coeclerici Groupthrough agreements with rst-classinternational operators.

The path to successOther successful oating transfer stationprojects, overseen by Coeclerici, include:

n A number of floating transfer stationunits Bulk Java, Bulk Borneo,

Bulk Sumatra and Bulk Celebes haveall been tailor-made and designed for thespecific need of PT Berau Coal (thefifth-largest coal producer in Indonesia). Thestations are employed to conduct offshorecoal transloading operations at Muara Pantaianchorage, East Kalimantan, Indonesia, at aloading rate of about 45,000 tpd (each unit).

n The Bulk Pioneer unit was built forKaltim Prima Coal (one of the largestcoal exporters in Indonesia) to be used inTanjung Bara offshore anchorage, Indonesia,

for coal loading operations from barges intoOGVs at a loading rate of about 40,000 tpd. n Bulk Kremi I: Coeclerici Spa and

Transship Ltd, one of the largest Ukrainianshipping companies, set up a joint ventureto operate in the Gulf of Kerch to overcomethe existing logistics bottleneck in thearea. Since 2010, the sufur transhipmentoperations, which are performed by theBulk Kremi I in conjunction with the floatingcrane Atlas I, offer an integrated logisticschain solution to their users. Bulk Kremi Iwas converted in the year 2000 into aself-loading and self-discharging vessel toperform transhipment operations of dry bulkmaterial in the Black Sea. In 2012, in order tofurther improve the services rendered by the joint venture, Bulk Kremi I has undertakenmodernisation works to enhance the loadingperformance rate.

The successful story of the oatingtransfer station is unparalleled in the world oftranshipment and supply chain logistics. Byoffering clients custom-designed solutions for

some of the logistical challenges associated withstandard port infrastructure, the stations caneffectively enhance trading activities aroundthe world.

AN ODE TO TRANSHIPMENT Capt. Giordano Scotto dAniello, Coeclerici Logistics, Italy


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Still indemandLinda Taglieri, AME, Australia, looksat the GLOBAL thermal coal trademarkets from 2013 2016 and sees

the demand outlook remaining solidacross the board.



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Global thermal coal export volumes haveexpanded sharply in recent years, mostly driven by strong demand growth in China, the largestimporting country, and India, the third-largest.

Imports to Japan, currently the second-largest importer,have been more volatile. Global demand growth haseased since 2013, affected by a cooling of Chinasrampant pace of economic growth. Nevertheless,Chinese import demand is forecast to remain solid, ataround 5%/year, while Indias import growth isexpected to pick up in the coming years, as itseconomic growth accelerates.

The Chinese dragonThermal coal continues to play a critical role in theeconomic development of China, the worlds largestelectricity consumer. The US Energy InformationAdministration (EIA) estimated that China already

accounted for 47% of global coal consumption in 2010.The Chinese Government has become increasinglyaware of environmental concerns and is taking steps toreduce the countrys dependence on coal through anumber of measures, such as improving the ef ciencyof coal- red plants and gradually moving to cleanerenergy sources. For example, Beijing recently shutdown the rst of four coal- red power plants set to bede-commissioned by end-2016, as part of the citys planto address pollution. Beijing intends to make up someof the power shortfall with new gas- red plants. Thiscould indicate the beginnings of a series of policies to

shift away from coal in the energy mix, but thetransition will be gradual and long-term, while theshort-term impact is expected to be limited.

It is estimated that over 90% of thermal coalconsumed in China is domestically produced, but theshare of imports has risen sharply in the last ve years.China has been mulling a ban on imports of lowquality coal which, if implemented, would likely forcea switch from Indonesian coal to higher qualitysuppliers, such as Australia, although it could alsoencourage greater use of domestically produced coal(while some of the freed up Indonesian exports could

nd an alternative market in India). The use of highercalori c value coal would also imply higher powergeneration ef ciency, with implications for coal volumerequirements. In conclusion, under the assumption ofcontinued robust albeit slower growth in Chinaseconomy, electricity demand is expected to continue to

expand at a solid pace. This implies that, taking intoaccount its enormous market size, China will remainthe most important source of growth in the globalthermal coal market in 2015 2016.

Japan's post-Fukushima coal high Japan is another important player in the globalseaborne coal market, because it imports nearly 100%of its coal needs. According to the International EnergyAgency (IEA), thermal coal accounted for around 27%of the energy mix in 2010, while nuclear energycontributed around 26%. However, the whole picture

October 2014 | World Coal | 17


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changed after the 2011 Fukushimadisaster, when all 48 nuclear reactorswere forced to shut down. AfterFukushima, Japanese power utilitiesinitially consumed more LNG and oil forpower generation, as the country reducedits reliance on nuclear energy and anumber of coal- red plants weredamaged. However, with coal- redcapacity subsequently coming online,coal imports have made up ground: in2013, Japan imported 109 million t ofthermal coal, up 7.7% compared to 2011,as cheaper coal replaced more expensivefuel resources post-Fukushima.

The current Japanese Governmentaims to ll some of the nuclear generationgap with renewables, but these currently

account for only a small share of totalgeneration. In addition, LNG isexpensive. The government isencouraging the construction of morecoal- red capacity, while Japaneseutilities companies, includingKyushu Electric Power andTokyo Electric Power, have announcedplans to invest in new coal- red plants.More advanced technology in new plantsis expected to help limit carbon emissions.

A few years after the nuclear disaster,the Japanese Government is keen to beginrestarting the countrys nuclear powerplants, despite the populations wariness.

In July 2014, Japans Nuclear RegulationAuthority said that two nuclear reactorsat the Sendai plant in Kagoshima

Prefecture now comply with the morestringent safety regulations that wereintroduced after Fukushima, makingthem the rst candidates for restart.Although the timing of the restart processis still uncertain, nuclear is expectedremain an important energy source in Japan in the future, considering costissues. However, nuclear is not expectedto regain its previous share of the energymix, owing to safety concerns. Inaddition, some old nuclear reactors aredeemed too expensive to upgrade to meetthe new safety regulations. So while thepotential restart of nuclear plants presentsa downside risk to other energy sourcesin the short term, the impact on coalconsumption is expected to be limited.

A passage to IndiaIn addition to China, a key driver oftraded coal demand into the medium andlong term will be India. In the worldssecond most populous country, asigni cant proportion of the populationstill does not have access to electricity.AME estimates Indias electricityproduction at 0.9 MWh/capita in 2014,which is low compared to Brazil(2.9 MWh/capita), China

(3.8 MWh/capita) and Japan(8.4 MWh/capita). The countrysfast-growing population and increasingincomes are expected to push upelectricity demand over the next fewdecades. And, since Indias power sectoris still at an early stage of development,coal is expected to remain the mainsource of electricity.

A large share of coal demand will bemet by domestic production, butstructural impediments in the domesticindustry mean that imports will continueto grow. Nevertheless, in the short term,growth in thermal coal imports will becapped by cost considerations and poorinfrastructure. The government regulatesIndias power tariffs, while powerproducers low pro t margins constrainthe quality of imported coal that they canafford. As a consequence, low quality andcheaper coals are preferred by Indianimporters, which mean that movementsin coal prices lead to high volatility inimports. In addition, insuf cient

development of ports and railwaysremains a bottleneck for coal imports. Ithas recently been reported that, due to


Figure 1. Global thermal coal imports demand and the Top 10 importing countries.Source: AME.

Figure 2. Global thermal coal export supply and the Top 10 importing countries.Source: AME.


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transport congestion, Indian powerplants were running low on coalreserves, despite high levels of coalinventory in Indian ports. To summarise,AME believes that Indias imported coaldemand has huge growth potential inthe longer term, but in the short term thismay not be fully realised due to Indian buyers price sensitivity and theunderdeveloped state of thecountrys infrastructure.

The exportersOn the supply side, global thermal coalexports are estimated to have increased by 5.2% between 2012 and 2013 to1 billion t (Figure 2). AME forecasts 2014global thermal coal exports to be

5.8 million t less than 2013 exports,equivalent to a 0.6% decline, before rising by 4.6% in 2015 and a further 2.8%in 2016.

Indonesia, the US andAustraliaIndonesia, the worlds largest coalexporter, is forecast to export 2.7% lessthermal coal in 2014 due to lowerdemand for low calori c value coal inChina. Demand for Indonesian coal is

forecast to rise 5% in 2015, due toincreased demand from India and to alesser degree China. AME expects UScoal exports to reduce by roughly 32%year-on-year in 2014, as hightransportation costs make coal exportsunpro table under current coal prices .This trend is forecast to continue for thenext two years.

However, slowing exports from theUS and Indonesia have been offset bysupply increases of about 25 million t in2014 from Australia, Colombia andRussia, as producers in these countriesseek to amortise xed production costsover a larger volume and, especiallywithin the Australian coal industry, tomeet take-or-pay contracts for port andrail. To remain competitive in the exportmarket, producers are being forced tocut mining costs and increaseproductivity. AME expects producers inthese countries to increase their marketshare in the short to medium term. Theincreased production from countries

that comprise about 45% of exportsupply at a time ofweaker-than-expected thermal coal

demand, has slowed the recovery ofthermal coal prices.

Along with increased production,producers have cut the cash costs oftheir mines by about 25% in the last18 months by moving to areas of lowerstrip ratio, reducing staff numbers,deferring sustaining CAPEX and cuttingexploration expenditure. However, it isto be noted that some of these cost cutsare not sustainable.

A portion of the additional supply isfrom newly commissioned projects thathave been in construction during the lastthree years; the record prices witnessedin 2010, 2011 and 2012 enabledproducers to nance both green eld and brown eld expansions, such as the

Cerrejn mine in Colombia, as well asGlencores Ulan West, Ravensworthopencast, Rolleston, Mangoola andClermont mines in Australia. The mostadvanced of the projects planned duringthe boom have continued on tocommissioning phases, while early stageprojects, such as Glencores Wandoan inthe Surat Basin in Australia, were put oninde nite hold once thermal coal pricesfell. In 2014, 18 million t of capacity fromnew projects is scheduled to come onto

the market, with an additional56 million t forecast to be commissionedin the following two years, providednew thermal projects are funded andnot delayed.

Coal pricesAnother signi cant supply factor is thenarrow price range for the differentgrades of coal with the lowest grade ofmetallurgical coal semi-softmetallurgical coal only US$ 6/t onaverage more than the price of premiumthermal coal in 2014. The result is thatthe economics favour processing thesemi-soft coal less and selling it in thepremium thermal market. This has hada knock on effect down the spectrum ofthermal coal qualities, with the result being little demand for lower calori cvalue coal.

The low thermal coal prices haveresulted in some mines closing or beingidled, with over 14 million t removedfrom the thermal coal market in the US

and Australia in the last 12 months.These closures signify a weak marketenvironment, but the closure of marginal

cost operations means that there will beless competition for survivingoperations, which are able to operate atcurrent prices. In Indonesia, the lowerexport prices has induced producersto increase their sales in thedomestic market.

DemandAME expects demand and supply to balance in the long run. Supply fromSouth Africa and Colombia are expectedto remain restricted by the lack ofinfrastructure in the medium term. InSouth Africa, railway capacity willcontinue to be unable to match port andmine capacity. Transnet Freight Rail,which runs from the coal-rich

Mpumalanga area to the Richards Bayterminal, is currently operating at73 81 million tpa capacity, belowRichards Bays 91 million t nameplatecapacity. In Mozambique, Vales new railand Nacala coal terminal will go someway to easing the countrys shortage ofinfrastructure.

Indonesia and Australia willremain the largest exporters over theshort term; however, Indonesianproduction faces challenges from

government policies and depletion of better deposits.

Prices forecast to recoverGlobal thermal coal prices havedeclined over the past few years.Newcastle thermal coal (6300 GAR)spot prices averaged US$ 84/t in 2013and US$ 75/t in the rst half of 2014,down from US$ 95/t in 2012.Meanwhile, lower quality Kalimantanthermal coal (5000 GAR) spot prices fellto US$ 57/t in 2013 and US$ 56/t in the

rst half of 2014 from US$ 62/t in 2012.AME expects that the thermal coal

market has reached the bottom in 2014and that the downward trend is forecastto reverse in the short term. On thesupply side, years of low prices havediscouraged investments, which implylower supply growth in the next fewyears. Meanwhile, demand growth isset to remain solid. Overall, AMEexpects global traded thermal coaldemand and supply growth to

converge, gradually pushing up globalthermal coal prices from their 2014 bottom.



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