Coal

Continuing with its acquisition of the U.S. natural gas assets, the Bangkok-based Banpu has now agreed to purchase a combined cycle gas-fired power plant in Texas.

According to Forbes , Banpu, controlled by billionaire Isara Vongkusolkit, will buy the power plant for U.S. $430 million.

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Banpu looks to the future

mergers and acquisitions

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For some time now, Banpu has been investing in sustainable projects as it steers a new course.

Last year, it established Banpu Next, which includes its energy technology businesses. Those include electric vehicles, renewable energy plants and electric ferries.

The company may not exit the coal mining business altogether for another decade or so because of the continued demand for coal. However, it has said it will no longer invest in new coal assets, preferring to put money into renewable energy.

In an interview with CNBC, Chief Executive Somruedee Chaimongkol — sometimes referred to as “Asia’s first lady of coal” — said the firm wanted to make half of its earnings from green energy by 2025.

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joint venture puzzle pieces

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This morning in metals news: Ford Motor Co. and Mahindra announced the mutual decision to end joint venture talks; the Energy Information Administration released its quarterly coal report; and, finally, the zinc price has retraced.

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Ford, Mahindra end joint venture talks

A previously announced joint venture between Ford Motor Co. and Mahindra will not be going through, the companies announced recently.

The two companies had reached a deal back in October 2019, with a long-term expiration date of Dec. 31, 2020.

“According to the companies, the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – over the past 15 months,” Ford said in a prepared statement. “Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities.”

Meanwhile, Ford said its independent operations in India will continue “as is.”

EIA releases quarterly coal report

In addition to the Ford-Mahindra joint venture news, the EIA released its quarterly coal report, reporting Q3 2020 production of 135.8 million short tons.

The output total in Q3 marked an increase of 17.9% from the previous quarter. However, Q3 2020 output declined 25.2% year over year.

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steel imports

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This morning in metals news: the U.S. has seen rising imports of blooms, billets and slabs; the power sector’s coal consumption dropped significantly in the first half of this year; and copper prices trended sideways this week.

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U.S. imports of blooms, billets and slabs rise

U.S. imports of blooms, billets and slabs surged during the July-September 2020 period compared with the October 2019-June 2020 period, per Steel Imports Monitoring and Analysis (SIMA) system.

Total imports of blooms, billets and slabs jumped 489% to 50,110 tons during the July-September 2020 period.

Meanwhile, imports of blooms, billets and slabs from India jumped 2,954% to 18,333 tons during the July-September 2020 period.

In other SIMA trend data, U.S. imports of steel piling from China jumped 532%. Imports of tin plate from China jumped 448% to 6,152 metric tons.

Coal consumption declines

The U.S. power sector’s coal consumption fell by 30% during the first half of 2020 compared with the first half of 2019, the Energy Information Administration (EIA) reported.

“After setting an annual record of 1,045 MMst in 2007, coal consumption in the electric power sector has been declining,” the EIA said. “This decline is happening as many coal-fired power plants are retiring or are converting to natural gas, driven by tighter air emission standards and the decreased cost-competitiveness of coal relative to other resources.”

Copper trends sideways

As the U.S. awaits the final results of the 2020 presidential election, the copper price has taken a breather.

The copper price closed Wednesday at $6,760 per metric ton after closing last week at $6,706 per metric ton.

However, over a one-month period, the copper price is up 3.69%.

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copper smelter

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This morning in metals news: the copper price inched upward Wednesday; U.S. coal-fired plants have been transitioning to natural gas; and Norilsk Nickel recently released its production results for the first half of the year.

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India’s coal sector is in the limelight following a series of recent government decisions.

A new study by data analytics company GlobalData shows that India and a few other countries would step in to bolster an anticipated about 7.8% drop in U.S. coal production this year.

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This morning in metals news, thousands of Ford Motor Co. employees who have been working remotely as a result of the coronavirus pandemic might be allowed to continued doing so during the remainder of the year, Chinese coal imports dropped in May and Chinese steel rebar prices lost some ground on oversupply concerns.

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Sector experts in India are hailing the new coal mining and mineral sector reforms announced a few days ago by the country’s finance minister, believing the reform will open up commercial coal mining, attract investments and save on India’s import bills, thus pushing self-reliance in coal production.

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Renewables are not normally a core topic of ours. In recognition of the growing importance of the sector and the legal and incentive landscape that is encouraging investment in such technologies, MetalMiner does produce a Renewables Monthly Metals Index (MMI) that tracks metal input costs to the sector.

But, as a rule, we tend not to cover the sector directly, so see this as a stroll off the reservation today as two posts this week in the Financial Times present both short-term negative issues and longer-term positive issues that some readers may find of interest.

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It has come as a surprise to some in the coal sector that for the third consecutive month, India’s coal imports are set to drop in October.

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News agency Reuters reported India’s seaborne imports of both thermal and coking coal were on track to be about 13.3 million tons this month, according to vessel tracking and port data compiled by Refinitiv.

The development has caught some experts off guard given the fact that India’s largest producer, Coal India, has seen industrial action in some of its operations and the flooding of a major mine.

By the end of October, analysts believe India’s import figure is likely to go up. Even if October imports do exceed the current estimate, it’s likely they will still fall short of the 15.3 million tons of September, which was down from 15.9 million tons in August.

Like their global counterparts, Indian steelmakers are dependent on coal for making steel. India is dependent on imports of coking coal, as there is not enough indigenous coal to meet domestic demand (India’s total coal reserves are about 260 billion tons).

India imports coal from countries like Australia, Canada and the U.S. The import figures through July this year were 8% higher as compared with the same seven-month period in 2018.

Because of strikes, Coal India said its output was down by 13 million tons, or 2.1%, of its annual output this financial year.

To add to the coal producer’s woes, an unusually high and largely devastating monsoon season has stopped production at a major coal mine in the Chhattisgarh province, exacerbating the overall coal production shortfall.

In the last days of September, a river here suddenly changed its course, flooding the Dipka coal mine in Korba district, Quartz India reported. Incidentally, Chhattisgarh produced the highest quantity of coal in the country in financial year 2018-19.

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Recently, India became the second-largest destination for seaborne coking coal after China, which was about 13% of global demand in the spot market.

Following a decade of hype, there remains huge debate about the viability of carbon capture as a solution to carbon emissions from coal-fired power stations.

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A recent article in the Financial Times lays out both sides of the argument. On the one hand, there is the one put forward by the coal lobby, broadly drawing on the work of coal miners in the form of Coal21, an industry body in Australia backed by 26 mining groups (including BHP, Anglo American and Glencore). On the other hand, there is a more disparate group of academics, research bodies and NGOs who rubbish the miners’ position as untenable.

Coal21, however, is pouring a considerable amount of money into research, lobbying and, most controversially, marketing in an effort to influence the debate in its favor.

The industry club has invested $4 million in advertising to promote the prospects for carbon capture and sequestration (CCS) as a solution to coal’s carbon emissions. That comes in addition to some $400 million BHP has pledged over five years to reduce its emissions and those of its customers.

Meanwhile, Glencore, the world’s largest coal exporter, is building a pilot plant to capture and store carbon emissions from a nearby coal-fired power station in the Surat basin in Australia, funded in part by Coal21. The plan is to capture some 200,000 tons a year of carbon, but commercial projects in Canada and the U.S. are said to be running at 50% efficiency, at best (in one case, little more than 5%). Glencore will need new technology if it hopes to reach the 90% efficiency CCS plants are headlined to achieve.

Even then, grave doubts remain as to their economic viability for coal-fired power generation.

Source: Financial Times

CRU research is cited by the FT estimates the technology is only viable if the carbon dioxide (CO2) can be sold to other industries as a commercial source of CO2. Generally, it is either simply stored underground or used to boost oil field production by pumping sequestered CO2 back into oil reservoirs.

Without the value generated by selling CO2 to other industries, the cost of the technology needs to fall by 50% to make pure CO2 storage economical, the Financial Times reports. Cynics suggest miners’ focus on CCS as a solution has more to do with countering what they see as an increasingly negative view of coal use as the consequences of rising CO2 levels is more widely accepted.

Coal miners may be facing a losing battle, regardless of public perceptions.

The article reports that in many parts of the world, solar, wind and battery storage produces electricity at lower cost than coal, not to mention the advantages of lower CO2 producing natural gas and the latter’s greater flexibility to provide swing production to balance renewables’ lower predictability.

Although huge sums have been poured into CCS research and multiple pilot plants have been set up around the world, the technology is still less efficient than necessary and more expensive to operate than required if it is to be economical (certainly for coal-fired power generation).

But there are other industries where large quantities of CO2 are generated. The arguments for CCS may be on a firmer footing for industries like cement, steel, and oil and gas.

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If the technology can be further refined to reduce emission from these industries, that would be a huge gain — but for coal-fired power stations, CCS looks like a lost cause.

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