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McCloskey Coal Report

Comprehensive news & analysis of the international coal market

12 June 2015 | Issue 362 mccloskeycoal.com

South Korean clampdown on Market round-up

Asia

coal rattles Indonesian miners

South Korean thermal coal buyers are
facing testing times, with the coal-import
tax about to increase and several coal-fired
power plants being delayed or axed.
The tax rise - roughly $4.40/t across the
board and effective 1 July - has sent shivers
down the spines of Indonesian suppliers, as
it further weakens the value proposition of
lower-c.v. product.
And South Korea’s long-term coal demand
on the whole appears damper than originally
hoped, in the wake of the stalling and
culling of power plants.
The wider backdrop is that coal’s
prominence in South Korea’s energy mix is
set to be significantly diluted in the coming
15 years - to 26.7% from the current 37.0%.
The gloomy outlook from South Korea -
one of the world’s largest coal importers at
92.73 mt last year - has rattled many major
Indonesian miners.
Indonesia was the country’s largest
supplier last year at 35.99 mt, just ahead of
Australia with 35.35 mt, while Russia was
third with 13.77 mt, according to the Korea
Customs and Trade Development Institute.
However, analysis by IHS Energy’s Global
Steam Coal Service (GSC) puts last year’s
thermal coal imports closer to 103 mt, with
Australian at 43.65 mt, Indonesian at 35.06 mt
and Russian at 14.48 mt. These figures include
tonnes reported as Australian anthracite,
which GSC believes to be thermal coal.
Some supply tension is lingering, especially for Newcastle,
keeping a floor under pricing, at least for prompt branded
material. General prices have changed little, as producers
and traders continue to rely on some purchased coal to meet
even sub-bituminous material.” commitments. With active Asian tendering for higher-c.v.
material supporting demand, prompt deliveries commanded
Korean buyers will still have to maintain $60.00/t FOB, basis 6,000 kc NAR, but deals were scant.
a portion of lower-c.v. coal requirement Stability improvements in China’s domestic markets helped
within their portfolios, with certain power hold Australian imports at $45.50-46.00/t FOB, basis 5,500
plants designed specifically to take such kc NAR, or $52.00-53.00/t CFR, same basis. Indonesian
prices remain pressured by slow Indian and Chinese buying.
coal, but buyers agree that the pressure on
lower c.v. has mounted. Europe
“Buyers evaluate the price based on Northwest European thermal coal prices pushed slightly
higher in the past week amid robust trading activity and
6,080 kc NAR basis, considering the
gains in the API2 paper market. Third-quarter sentiment is
calorific value per metric ton,” one buying said to be improving marginally, albeit from depressed levels.
source in Seoul said. “This will weaken the Prompt European demand remains lacklustre with strong
price competitiveness of lower calorific competition from renewable and gas across the region.
Richards Bay prices were more rangebound, with trade
coals even more than [they are] now in the
remaining slow on limited offers and swollen Indian stocks
Korean market.” going into the monsoon season.
Some Indonesian miners believe the
decline in Russian exports into China in IHS McCloskey key physical markers
Jun-14 May-15 05-Jun 12-Jun
recent months will further increase the
NW Europe steam coal marker ($/t)
competitiveness in getting into South Korea.
72.31 58.84 57.31 56.86
“Australian 5,500 kc NAR will also be
Richards Bay FOB marker ($)
[even] better value for money for the Korean
74.09 63.01 61.93 61.13
gencos [state-run power generators],”
Newcastle FOB marker ($)
another mining source added.
71.48 58.51 56.95 57.50
There is still optimism among Indonesian
Australian 5,500kc NAR FOB marker ($/t)
suppliers though, as Bumi Resources
60.61 46.11 45.90 46.00
highlighted the benefits it has over other
South China 5,500kc NAR CFR marker ($/t)
lower-c.v. producers.
70.65 51.88 52.35 52.50
“I’d think Indonesia has a comparative
Indonesian sub bit FOB marker ($/t)
freight advantage to South Korea over other
56.49 45.62 43.85 43.90
low-c.v. producers and so might well be lesser
Australian prime hard coking coal FOB ($/t)
impacted,” said Dileep Srivastava, corporate
115.04 87.50 87.30 88.42
secretary and a director with Bumi,
Colombian FOB Marker ($/t)
Indonesia’s largest miner.
66.51 53.94 52.30 52.70

Indonesia, with its prominence on the The tax rise Weekly average German power price - (E/MWh)

lower-c.v. side, will feel the most pressure The rise, announced on 5 June, puts the rate 32.07 25.52 25.23 31.39

from the tax change. for above 5,000 kc NAR up to KRW24,000/t Carbon - (E/t)

Australian and Russian suppliers, with
their higher-c.v. output, have the potential
for some advantage.
Fears arose over the ability of Indonesian
product to remain competitive when the tax
was introduced last July, but suppliers largely
came through unscathed.
“This time it’s going to hurt us,” a source
at one top Indonesian coal miner said. “It
will put a lot more pressure on low-rank and
($21.36/t) from KRW19,000/t, while
below 5,000 kc NAR goes to KRW22,000/t
($19.58/t) from KRW17,000/t.
Demand has been generally concentrated
into the 4,800-5,000 kc NAR and 5,800-
6,100 kc NAR brackets since the tax first
arrived on 1 July 2014.
These band should now be expected to
narrow further as South Korean buyers seek
the best bang for their buck.
5.58 7.44 7.35 7.51
Source: IHS Energy, Xinhua Infolink, Marex Spectron
© 2015 IHS
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mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  1

Contents

IHS™ McCloskey Coal Report

Publisher
John Howland
Contents   12 June 2015  Issue 362

Mobile: +44 (0) 7580 751119 john.howland@ihs.com

Leads Yancoal mine extension gets key approval 21
Managing Editor
Andrew Wells South Korean clampdown on coal rattles Canada’s Donkin mine could
Tel: +44 (0) 20 3159 3667 Indonesian miners 1 start production this year 22
Mobile: +44 (0) 7920 872254 andrew.wells@ihs.com
Coal divestment movement gathers pace 4
Markets Editor
Nick Trevethan Coal cuts continue as Peabody wields knife 5 Power
Tel: +44 (0) 20 8276 4738 nick.trevethan@ihs.com
Fenoco restart faces possible delay Philippines coal-fired generation jumps in April 22
Asia Editor
Bruce Jacques after new court ruling 5 UK Q1 thermal coal use falls 15% to record low 22
Mobile: +61 408 257 528 bruce.jacques@ihs.com RBCT exports up 10% in May Taiwan’s coal-fired generation
Asia News Editor on record Indian buying 6 falls 5% in Jan-Apr 23
Billy Youngson
Tel: +65 65765412 billy.youngson@ihs.com China’s monthly coal imports continue to fall 6 Spain’s coal consumption continues to grow 23
Senior Americas Correspondent South Korean gencos actively buying 6 El Niño likely to increase Chile’s hydro output23
Jackie Cantillo
Mobile: +57 310 871 1203 jackie.cantillo@ihs.com Tighter high-c.v. supply could bring Vietnam’s coal-fired generation
Senior Journalist wave of SAF coal washing 8 rises 12% in May 23
Darren Malone GlobalCOAL limits Richards Bay lot German coal generation falls 3% in Jan-Mar 23
Tel: +44 (0) 780 505 1838 darren.malone@ihs.com
Senior Journalist
sizes to 25 kt multiples 9 JPU monthly coal use falls again in May 24
Robin Knight Contentious Newcastle coal
Mobile: +44 (0) 7966 692604 robin.knight@ihs.com
terminal gets key approval 9 Transport & Logistics
Senior Journalist
Jan Principato Met settlements take shape for Q3 9 Egypt plans port upgrades 24
Tel: +1 (912) 217-9367 jan.principato@ihs.com High thermal inventories at India’s RZD mulls rail freight discount
Asia Analyst
Hongfei Wang
main import terminals 9 for met shippers 24
Tel: +65 65766412 hongfei.wang@ihs.com BHP, Glencore diverge further on Russia’s Zarechny resumes thermal
Asia Price Reporter marketing strategy 10 output and railings 25
Diyana Putri Alan
Tel: +65 6439 6210 diyanaputri.alan@ihs.com Australia’s coal shipments return
Asia Business Development Manager to normal in May 11 Steel
Scott Dendy
Tel: +65 97219006 scott.dendy@ihs.com
Ukraine’s met coke output rises 15% in May 25
Marketing Manager
Key physical markets commentary
Steph Aldock steph.aldock@ihs.com Tough times continue for Indonesian prices 11 Markets - Steam Coal
Product Manager August demand supports China import values 11 Russian thermal cargo sells into Egypt 25
Sam Shoro  sam.shoro@ihs.com
Spot interest livens up in Atlantic Vizag Steel tenders for thermal coal 25
Sales
petcoke market 12 Joban Joint tenders for 2015-16 supply 25
EMEA
Tel: +44 (0) 1344 328155 CoalEMEA@ihs.com Spot met coal prices gain amid thin trading 12 Essar Power tenders for 1.35 mt
APAC Atlantic thermal coal prices edge lower 13 of thermal coal 26
Tel: +65 6439 6000 CoalAPAC@ihs.com India’s Vedanta tenders for thermal coal 26
Americas Carbon & Sparks Indian cement producers return
Tel: +1 303-754-3952
US/Canada Toll-free: +1 888 645 3282 UK coal-fired margin increases to petcoke market 26
CoalAmericas@ihs.com over gas in merit order 18 Taipower issues Q3 bituminous tender 26
Subscriptions Morocco’s ONE issues Q3/Q4 thermal tender 26
Tel: +44 (0) 1344 328 300 customer.support@ihs.com Indonesia Med cement producer seeks
Design and Layout Indonesia’s Cakra gets backing for Cokal bid 20 petcoke and thermal 26
Carol Kidd
Tel: +44 (0) 203 253 2123 carol.kidd@ihs.com
Indonesian barge operators see little activity 20 Nova Scotia Power seeks
mid-sulphur steam coal 26
Editorial Address
IHS Energy, 133 Houndsditch Corporate Taiwan’s FPG tenders for Philippines,
London, EC3A 7BX, UK.
Tel: +44 (0) 203 1593300 www.mccloskeycoal.com
Blackhawk takes the lead China supplies 27
in race for Patriot assets 20
Published once a fortnight
Wollongong Coal shares suspended Regulars
Registered Office
IHS Global Limited, Willoughby Road
over missing report 20 Trade 27
Bracknell, Berkshire. Coalspur takeover enters final phase 20 People 31
RG12 8FB, UK.
Tel: +44 (0) 1344 328000 Walter Energy delays another debt repayment 20 Coal Equities Bulletin 32

This publication was produced Mining

using FSC® certified paper
Guildford in Mongolian thermal coal deal 21
®
MIX Jameson to pay less for Canadian
Paper from
responsible sources coking coal project 21
FSC® C020438
CoAL completes funding
ISSN: 2056 4597
for Makhado project 21

2  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com


Korea monthly steam coal imports by origin (‘000t)
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Feb-12 Jun-12 Oct-12 Feb-13 Jun-13
Other South Africa
Source: IHS Energy
This is the first increase since the introduction of the tax, which
was first proposed in November 2013, originally at flat rate of
$20.00/t, with the suggestion it would later rise to $30.00/t.
When the import tax initially came into force it spurred advance
buying to avoid extra costs down the line.
This time the window is too small for buyers to gain any
advantage, with the rise little more than a fortnight away.
Korean buyers will either have to foot the costs out of their
existing budgets or press for the costs to be passed down to
electricity consumers through another tariff rise.
The government and Korea Electric Power Corporation (Kepco),
the body responsible for 93% of Korea’s electricity generation,
designed the tax as a means to better balance the country’s energy
sector against record power consumption spurred by tariffs which
they considered to be too low.
The tax rise is a switch in tone from the glimmers of hope which
were emerging late last year.
South Korea’s gencos had been hopeful of getting a more
favourable rate for 3,800 kc NAR product last October, but that
aspiration quietly faded away.
A reinvigorating of the 3,800 kc NAR market would have been
somewhat surprising though, as South Korea’s appetite for such
material has waned significantly in recent years.
A lack of value and government encouragement to avoid
ultra-low c.v. after the blackout of September 2011 have deterred
such buying.
Plants axed, delayed
The South Korean government’s decision to axe plans for four coal-
fired power plants, with combined capacity of 3.74 GW, was a further
downbeat note as the market began to digest the tax rise.
State-run generator Korea South-East Power’s (Kosep)
Yeongheung units 7 and 8, both 870 MW, have been cut due to
environmental issues. They were due for completion in 2019-20.
The facilities’ location is regarded as being too near Seoul,
considering the levels of emissions they would generate,
sources said.
Private-sector power company Dongbu Hasla Power’s Gangneung
Dongbu Hasla units 1 and 2, each 1 GW, have also been dropped.
They had been targeted for commissioning in December 2019 and
June 2020 respectively.
mccloskeycoal.com
Leads
Oct-13 Feb-14 Jun-14 Oct-14 Feb-15
Russia Indonesia Australia
These two units could not feasibly be connected to the power
grid, sources said.
Two new 1.5 GW nuclear units are being proposed in place of
the dropped coal-fired plants, under the country’s seventh power
generation master plan, an agenda updated every two years, with the
latest version covering 2015-29.
Seoul will make a final decision on the plan after public hearings at
the end of this month.
Separately, Korea East-West Power (EWP) is delaying the
construction of two 1 GW coal-fired plants in Danjin, units 9 and 10,
which were due online in 2017.
The delay is a result of public opposition to new power
transmission lines being built, arising from fears over the effects of
electromagnetic waves on people, EWP’s head of coal procurement,
Jason Jang, told the Coaltrans conference in Bali.
This means around 7 mt/y of expected extra coal demand in 2017 is
now unlikely to materialise, while Jang suggested other gencos may
yet follow suit and delay their own projects for similar reasons.
South Korea’s other major coal-fired plants at advanced stages
of development are Kospo’s 2 GW Samcheock plant and Kowepo’s
2.1 GW Taean 9 and 10 development, which are all still expected to
begin operations next year.
The introduction of this additional coal-fired capacity was
expected to push Korea’s coal requirements to 110-120 mt/y, and
beyond that it was expected to rise to 140mt by the end of the
decade, but now a questions mark hangs over just how achievable
this will actually be.
Coal to lose energy mix share
South Korea is moving to reduce coal’s share of the country’s energy
mix to 26.7% in 2029, from the 37.0% forecast for this year, and down
from the proposed 29.2% under its sixth plan.
The remainder of the country’s energy would largely come from
nuclear, with 23.7% of the mix from 26 plants. LNG would cover
20.5% and biomass 20%.
Coal is expected to account for 37% of the country’s energy mix in
2015, slightly up from 36% last year, and representing 32.1 GW of 87.5
GW of generating capacity, according to IHS data.
Gas is forecast to be responsible for 34% of generation this year at
29.7 GW, down from 35% last year, while nuclear at 21.87 GW will
represent 25%, flat to last year.
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  3
Leads
Coal divestment
movement gathers pace
The growing wave of divestment from the coal sector has gathered
pace over the past month, with more heavy-hitters from the
investment world turning their back on assets tied to what is seen by
some as the unpalatable practice of burning the black stuff.
Norway’s parliament, which governs the world’s biggest sovereign
wealth fund with a total value close to $900bn, voted in May to cut
its exposure to the global coal industry, re-igniting the debate on the
ethics of investing in the sector.
The move – from the fund built on Norway’s huge oil wealth - is
expected to impact some 122 companies globally, including coal
miners and several European utilities that engage in coal-fired
power generation.
“All the parties in the Storting [Norwegian parliament] have
reached agreement that the Government Pension Fund Global
(GPFG) will no longer invest in coal companies. The government
has now been requested to invite Norges Bank and the Council on
Ethics for guidance in preparing the criteria for the withdrawal,” a
parliament statement said.
“The committee is of the view that there are ethical aspects
connected with the operations of a number of coal companies within
mining and power production.”
Interestingly, the reasons behind the divestment, as put forward
by Norwegian Conservative minister Svein Flaatten to local media,
are more than just ideological. Flaatten highlighted the financial risk
to holding coal assets as much as the global-warming risks.
The argument being that the ongoing shift to sell the sector on ethical
grounds will put downward pressure on prices, which would erode the
value of holdings and further add to the downward price spiral. The
upshot is a warning to those holding coal assets that they could take a
serious hit in the short term if they do not join in the selling.
Another stark warning came in the form of Axa’s decision in May
to cull $563m of coal investments from its investment portfolio,
highlighting growing concern among the insurance industry over
exposure to climate change risk. The prospect of a wave of litigation
against coal-related companies on climate grounds is surely enough
to bring insurers out in cold sweats.
This week, the G7 also threw its weight behind the push to
“decarbonise”, with the group’s countries now aiming to cut power
generation by coal and oil by 40-70% by 2050, from 2010 levels, and
totally decarbonise their economies by 2100.
Capital raising concerns
The divestment movement comes at a time when many coal-
related companies – particularly miners - have already seen
their share values decimated by historically weak coal prices,
widespread over-supply with increased global competition and rising
government intervention.
The overall effect of the shift could make it increasingly difficult for
already struggling coal-related companies to remain a going concern,
according to Lysle Brinker, director of equity research at IHS Herold.
“A lack of investor interest, or even investor loathing, has
contributed to the decline in coal company stock prices and raises the
cost of capital,” Brinker said. “If you have a depressed stock price then
you’re less likely to issue more shares because that would be dilutive to
4  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
your earnings and equity base, which most investors wouldn’t like.”
For companies already struggling with debt and negative cash flow,
such as some of the US coal producers, the additional pressure of
divestment will likely prove detrimental, according to Brinker.
One senior industry executive adds that the ability of coal
companies to access funds from banks is also being restricted.
“The industry has become un-bankable, so it’s convenient for
banks to kowtow to environmentalists and give in,” he said. The
banks “are going to be spending the next 3-5 years trying to recover
the money they already leant,” he added.
For coal companies already in a difficult financial position and
struggling to take on any more debt or raise any equity, “their only
real option would be to merge or be bought out, which is where
private equity could step in,” according to Brinker.
Brinker’s comments echo what many market watchers have
pointed out during the divestment wave – that for every seller there
has to be a buyer, and the buyer of an undervalued asset could stand
to gain from a recovery further down the line, while the likes of
Norway’s sovereign wealth fund have to stand by and watch.
“There’s not a whole lot going right for coal producers, and
the stock prices of some companies could be oversold and deeply
discounted so there may still be some opportunities there, if you are
less concerned about managing the longer-term issues on carbon and
climate,” Brinker said.
The move could play into the hands of private investors groups,
such as the Cline Group, which has experience of turning around
struggling coal mining assets.
Power shift
What is more unclear is the impact on the large European utilities,
which are only partially engaged in coal-fired generation and provide
the backbone of the region’s power production and distribution
networks. It is a question further muddied by the Norwegian
parliament’s criteria for exclusion:
“Coal power companies and mining companies who themselves
or through other operations they control base 30% or more of their
activities on coal, and/or derive 30% of their revenues from coal,
should as a rule fall under the essentiality principle.”
This distinction has some of the utilities scratching their heads, with
certain companies unclear if they qualify to remain in the fund or not.
One potential route for the European utilities, aside from
accelerating the ongoing shift towards alternative power sources at
many of the major providers, is separating or selling off coal assets
from the main company.
This has been seen with Vattenfall divesting its Fyn power station
to domestic district-heating company Fjernvarme Fyn in October
last year, while putting its German lignite assets on the block,
and with Eon spinning off its fossil fuel and nuclear generation
businesses to focus on renewables.
The difficult outlook for the utilities was underlined in a new
study by the Carbon Tracker Initiative, which suggests that Europe’s
five biggest energy utilities – Eon, RWE, GDF Suez, EDF and Enel –
collectively lost some 37% of their share value between 2008 and 2013,
partly because of an decreased dependence on coal-fired capacity.
“In many respects, the EU’s electricity sector has been the ‘canary
in the coal mine’ with regards to understanding how the low-carbon
transition will create winners and losers. What has happened in Europe
over the last five years should send a stark warning to investors,” said
mccloskeycoal.com

Matthew Gray, advisor to Carbon Tracker and lead author of the report.
“Coal has got caught in the path of the utility death spiral, which
is likely to continue wiping out value for shareholders if they keep
betting on new coal plants,” he added.
The report said that there is currently a restructuring cycle
playing out at many of the major European utilities, with varying
degrees of success.
“Eon, for example, is spinning off its fossil fuel and renewables
businesses. This means that large investors such as Axa or the
giant Norwegian Government Pension Fund will be able to choose
between high-carbon and low-carbon utility options going forward,”
the report said.
There are pockets of resistance to the divestment move, with
counter-arguments being put forward by some of the companies
blacklisted by the movement.
Anglo American argues that coal divestment will harm the
development of technologies needed to turn an abundant and cheap
power source into a cleaner one that will benefit developing countries.
“Symbolic divestments of coal assets will not affect demand, but
will affect access to the finance necessary to drive the technological
innovation required to mitigate emissions, such as CCS [carbon
capture and storage] technology,” Anglo American told IHS Energy.
A similar view put forward by several industry watchers is that
a move away from coal will simply benefit gas, but will not drive
investment into genuinely green power sources, therefore delaying
the shift to a more sustainable future.
Coal cuts continue as
Peabody wields knife
United States-based Peabody Energy said there is a strong chance
it could make further coal output cuts, and has revealed plans for a
large staff reductions to combat stressed coal markets.
Peabody said it will cut about 250 jobs, representing about 25% of
its “regional and support positions”.
It is also “undertaking a review of shifts, scheduling and
mine planning at operations in Australia to determine optimal
production levels”.
There are also unconfirmed reports it will cut 50 jobs at its 7 mt/y
Wambo thermal/metallurgical operation in New South Wales,
Australia. Wambo – with underground and open-cut sections
plus a washery – is understood to employ about 500 people,
including contractors.
Earlier this month, Peabody announced immediate output cuts of
around 50% at its premium 3 mt/y North Goonyella hard coking coal
mine in Queensland, Australia.
Its other Australian operations, now more vulnerable to cuts,
include – in Queensland – the Burton hard coking mine, the
Coppabella and Moorvale PCI operations, the Millennium coking
and PCI mine, and a share in the Middlemount coking/PCI mine.
In New South Wales, Peabody also controls the Metropolitan
coking coal mine, the Wambo thermal/PCI operation and the
Wilpinjong thermal mine.
Before the North Goonyella cut, Peabody’s Australian operations
were due to produce 35-37 million short tons (mst) in 2015, including
15-16 mst of metallurgical coal and 12-13 mst of thermal material.
The Peabody cuts follow similar recent actions at Teck’s met coal
mccloskeycoal.com
Leads
operations in Canada, Glencore’s Collinsville met/thermal complex
in Queensland plus Alpha Natural Resources and Murray Energy in
the United States.
Peabody expects the staff cuts to save $40m-45m/y. “[This]
represents another necessary step to drive the company lower on the
cost curve,” Peabody said. “Actions also include closing of offices at
Evansville, Indiana and Gillette, Wyoming. Any charges associated
with the actions are not included in the company’s previously
announced financial targets and will be reviewed in the second-
quarter earnings release.”
Peabody said its North Goonyella output cuts are “designed to
lower costs, improve cash flows and increase productivity, while
preserving high-quality hard-coking coal reserves for sales when
markets improve”.
The mine is expected to transition to one production shift per day,
with associated employee and contractor reductions of 35-40%.The
production cuts equate to 1.5 mst/y, but for 2015 will reduce output
to 2.3 mst, from 3.0 mst in 2014.
Peabody also left potential wide open for further cuts in all
areas by reiterating that the latest move is “one of a range of
measures the company is taking to improve the business across
four key areas of management emphasis: operational, SG&A,
financial and portfolio”.
Meanwhile, it has confirmed continuing financial exposure
to its former subsidiary, Patriot Coal, which filed for Chapter 11
bankruptcy last month, its second such filing in less than two years.
Peabody said it remains “secondarily liable” for some statutorily
determined Patriot lung-disease liabilities, estimated at $150m and
paid as claims are incurred.
Peabody had also provided $122m in credit support to Patriot as of 31
March, including $15m of “black lung” obligations. Patriot bankruptcy
filings also list Peabody as an unsecured creditor, owed $4.9m.
“This amount is related to a coal-terminaling agreement that
runs through early 2016,” the company said. “Patriot also owes the
company approximately $2m in reimbursements relating to retiree
healthcare obligations.”
Peabody added it was not a signatory to any Patriot industrial
agreements that require contributions and would “continue to
vigorously defend its rights” in all related matters.
Fenoco restart faces possible
delay after new court ruling
Colombia’s Constitutional Court has handed down another
ruling that could delay the restart of night railings on the Fenoco line
until the first week of September, despite recent hopes of a restart by
the end of June.
However, the Ministry of Mines and Energy and National
Infrastructure Agency (ANI) are expected to ask the Court to
revisit the decision.
The ruling orders Fenoco to halt construction of its second rail line
for three months. In addition, it orders that the suspension of night-
time coal railings through Bosconia in Cesar province be extended for
three months to cover the towns of Fundación and Zona Bananera,
both in Bolívar department, and the town of Algarrobo in Magdalena
department, although it is unclear when this will come into force.
According to officials, ANI has not officially received the ruling,
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  5
Leads
issued on 27 May, so the new ban is not yet in place. For now, the
only night-railing suspension is the one that came into effect on 14
February as a result of another ruling from the same court.
It is not yet clear when the new three-month restriction will come
into effect. Much will depend on the government’s plea to the court.
The night ban is affecting exports from Drummond, Glencore
and Goldman Sachs affiliate Colombian Natural Resources. Best
estimates indicate 1.0-1.1 mt/month of export coal has been lost
since the ban came into force, making a total loss of 5.0-6.0 mt.
Assuming the restriction continues until the end of August,
Colombia would lose at least 7-8 mt of export coal in 2015. The
country’s export forecast is 84-88 mt, which was made without
taking the night ban into consideration.
Colombia’s National Mining Agency (ANM) reduced its production
forecast to 87 mt from 97.4-98.5 mt at the beginning of the year as a
result of the Fenoco restriction.
Fenoco is building two 2.5 kilometre (km) walls to reduce noise
along the railway in the town of Bosconia, which is expected to
satisfy the demands of the first ruling. The Ministry of Mines and
Energy said it expects railings along the stretch of line in Bosconia
to resume by 24 June. However, construction of the walls has been
delayed by protests from many of the town’s residents, which could
delay the restart.
The latest court decision came in response to a complaint from
seven communities in three towns along the railway that claim they
were not consulted before Fenoco began building its second line. The
court said in its ruling that, “Construction works of the second line
as well as the noise caused by the trains’ transit generate a polluting
noise that threatens the collective right to a healthy environment
for the communities, including children.”
Fenoco’s expansion began in 2009 and was expected to be
fully operational by mid-2011. However, construction has faced
numerous delays for environmental reasons, and because of
opposition from local communities complaining about noise,
vibration and coal dust.
The railway has 37 km of track still to build on the second line,
which spans 193 km. Construction will not be complete before mid-
2017. Once the second line is fully operational, Fenoco’s capacity is
expected to reach 90 mt/y, up from 65 mt/y now.
RBCT exports up 10% in May
on record Indian buying
Exports from South Africa’s Richards Bay Coal Terminal (RBCT)
rose by 10% to 6.52 mt in May, from 5.90 mt in April, as Indian buying
surged to a record 4.47 mt, according to shipping sources.
India accounted for 68.6% of the May total, trailed by Pakistan
and Morocco, which bought 0.27 mt and 0.26 mt respectively, each
equivalent to around 4% of RBCT’s throughput. In April, Pakistan
took 0.39 mt and Morocco 0.40 mt.
The Amsterdam-Rotterdam-Antwerp region took just 0.16 mt,
down from 0.24 mt in April, and Malaysia’s share fell by around two
thirds to 0.07 mt, from 0.21 mt in April.
However, shipments to Israel rose to 0.18 mt last month from 0.17
mt in April, while exports to Turkey climbed to 0.22 mt from 0.16 mt
over the same period. There was a big fall in shipments to the United
Arab Emirates, to 53,000 t in May from 0.25 mt in April.
6  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
RBCT exported nothing to China for a third consecutive month.
Year-on-year, May’s total shipments were 17% stronger.
For the first five months of this year, RBCT exported a total of
31.01 mt, which annualises to 74.42 mt. Last year, the terminal
exported 71.00 mt, having shipped 26.99 mt in the first five months
of the year. In January-May 2013, RBCT shipped 27.74 mt.
China’s monthly coal imports
continue to fall
China’s monthly imports of all coal types fell again in May, as year-
to-date volumes continue to trail 2014 levels, preliminary statistics
from Chinese customs authorities show.
May’s intake dropped 41% year-on-year, to 14.25 mt from 24.01 mt,
while January-May imports fell 38% y-o-y, to 83.25 mt from 135.13 mt.
Arrivals in May were 28.6% down on April’s 19.95 mt, when
imports rose slightly compared with March, after having already
increased from February.
However, China’s exports of coal and lignite rose 110% on the
month, to 0.61 mt from 0.29 mt. Exports for the first five months of
this year were 1.88 mt.
A more detailed breakdown of import/export data is due to be
published on or after 22 June.
South Korean gencos
actively buying
South Korea’s state-owned power generators (gencos) have been
fairly active in coal purchasing so far this month, awarding term and
joint tenders and making new enquiries for spot supplies.
Korea Midland Power (Komipo) awarded a three-year term
tender that close on 5 June, for two specs of coal for its 4 GW
Boryeong power plant.
It bought four Capes, 0.50 mt, of Australian 5,750 kc NAR typical
material, split evenly for loading in the third and fourth quarters,
from Bengalla at $53.50/t FOB on a 6,080 kc NAR Newcastle basis.
Komipo required coal with 15% max moisture, 17% max ash air
dried and 1% max sulphur. Chinese and Russian coals were barred
from participating.
The company has also bought tour Panamaxes, 0.28 mt, of
Indonesian 4,700 kc NAR typical product, for the same delivery
schedule from Korean trader KCH at $50.00/t FOB, basis 6,080 kc
NAR Samarinda. It required coal with 28% max moisture, 17% max
ash air dried and 1% max sulphur.
The first contract year spans July-December this year, while the
second and third contract years run for calendar 2016 and 2017.
The tonnage and grade of coal required in tender KOMIPO-Bid
Notice-2015-LT03 mirrored that of the generator’s previous term
tender, LT02, awarded at the end of May.
In that tender, Komipo bought four Capes of Australian 5,850 kc
NAR typical material from Glencore at around $53.50/t FOB on a
6,080 kc NAR Newcastle basis.
The generator also bought four Panamaxes of Indonesian 4,850
kc NAR typical coal from Taiwanese agent Energy Man Holdings,
understood to be providing product from Kayan Putra Utama Coal, at
$54.00/t FOB, on a 6,080 kc NAR Samarinda basis.
mccloskeycoal.com
 Leads

Korean tender results

Genco Status Terms Closing Volume (mt) * Loading Min c.v. NAR Origin Price basis 6,080kc NAR FOB
Joint tender Awarded Spot 03-Jun 0.65 August 5,700 Australian $54.00/t
Joint tender Awarded Spot 03-Jun 0.35 July 4,600 Indonesian $51.00-52.00/t
Komipo Awarded Term 05-Jun 0.5 July 2015-December 2017 5,700 Australian $53.50/t
Komipo Awarded Term 05-Jun 0.28 July 2015-December 2017 4,600 Indonesian $50.00/t
EWP Closed Spot 05-Jun 0.006 August 4,250
Kospo Open Spot 15-Jun 0.008 July 4,700
Kospo Open Spot 15-Jun 0.009 July 4,700
Kosep Open Spot 19-Jun 0.006 September 4,700
Kospo Open Spot 16-Jun 0.138 August 5,800
Kospo Open Spot 16-Jun 0.138 August 5,800
Kospo Open Spot 16-Jun 0.138 September 5,800
Kowepo Open Term 23-Jun 0.44 September 2015-June 2016
*joint tender
Source: IHS

Joint tenders awarded
South Korea’s five gencos awarded two joint tenders that closed
on 3 June.
Glencore was awarded five Capesize shipments, 0.65 mt, of
August-loading Australian 5,850 kc NAR material at just below
$54.00/t FOB on a 6,080 kc NAR Newcastle basis.
The tender, K.Genco-COAL-2015-JT01, called for 5,700 kc NAR
minimum coal with 15% max moisture, 17% max ash air dried and
1% max sulphur.
The gencos have also bought Indonesian coal through
tender K.Genco-COAL-2015-JT02.
Trafigura has been awarded two Panamaxes, 0.14 mt, of
4,850 kc NAR at around $51.25/t FOB, KCH has been awarded
two Panamaxes, 0.14 mt, of 4,800 kc NAR at just below $52.00/t
FOB, and Mercuria has been awarded one Panamax, 70,000 t,
of 4,700 kc NAR at around $50.75/t FOB, all on a 6,080 kc NAR
Samarinda basis.
This means the awards, at 0.35 mt in total, fell one Panamax short
of the six Panamax, 0.42 mt, requirement.
The tender sought July-loading 4,600 kc NAR minimum coal, with
28% max moisture, 10% max ash air dried and 1% max sulphur.
Both tenders, led by Korea East-West Power (EWP), called for
delivery to Dangjin port. Russian coal was not allowed to participate.
These were the first joint tenders by South Korea’s gencos since
last November, and the first since the country’s government revoked
a decree ordering increased joint tendering for thermal coal.
The directive had called on the gencos to jointly tender for 15% of
total tonnage last year, 30% this year - around 30 mt - and 40% next
year - almost 50 mt, but this was cancelled in February.
EWP closes tender
EWP was in the market for 60,000 t of thermal coal for the 400 MW
Donghae power plant. The deadline for offers was 5 June, but no
award details had emerged as MCR went to press.
The generator was seeking 4,250 kc NAR minimum material, with
12% max moisture, 30% max ash air dried, and 0.8% max sulphur, for
August loading on a FOB basis, through tender EWP-COAL-2015-DSP01.
Kospo calls for two Panamaxes
Korea Southern Power (Kospo) is the market for two Panamaxes
of July-loading sub-bituminous material for the 4 GW Hadong
Power Plant. The deadline for offers is 15 June.
It requires an 80,000 t shipment of 4,700 kc NAR minimum
material, with 28% max moisture, 17% max ash air dried and 1% max
sulphur, for 11-20 July loading in tender SMT05_1.
It is also seeking a 90,000 t cargo of the same specifications for
second half of July loading in tender SMT05_2.
Indonesian coal suppliers loading from South Kalimantan’s
Taboneo port are not allowed to participate in either tender.
Pricing for both requirements is to be on a FOB basis.
Kospo last month bought a Panamax each from Avra and Trafigura,
of July-loading Indonesian material at $52.50/t FOB for 4,700 kc NAR
and $54.00/t FOB for 4,900 kc NAR respectively, both on a
6,080 kc NAR basis, through tender KOSPO-Coal-2015-SMT04_1,
which closed on 14 May.
Kosep seeks single mine sub-bit
Korea South-East Power (Kosep) launched a tender for September-
loading single mine sub-bituminous supplies for its 3.24 GW
Samcheonpo and 5.08 GW Yeonghung power plants. The deadline for
offers is 19 June.
The state-owned generator is seeking 60,000 t of 4,700 kc NAR
minimum material with 28% max moisture, 17% max ash air dried
and 0.7% max sulphur, on a CFR basis.
Participants who do not have a track record of supplying to South
Korean generators are invited to offer into this tender, NSP01.
Kosep last month bought three Panamaxes, 0.24 mt, of 4,700 kc NAR
product for July-loading at $52.30/t FOB on a 6,080 kc NAR Samarinda
basis from Avra in tender KOSEP-Coal-2015-SP06.
Kospo launches trio of tenders
Korea Southern Power (Kospo) has issued a trio of tenders for
bituminous material for the 4 GW Hadong power plant. The deadline
for offers is 16 June.
Each tender calls for a Capesize, 0.138 mt, of 5,800-6,000 kc NAR
material, with ST01_1 seeking first half August loading, ST01_2
second half August loading, and ST01_3 September loading.
The first and third tenders exclude Russian material, while the
second excludes both Russian coal and Australian coal from New
South Wales.
Coal with 15% max moisture, 17% max ash air dried and 1% max
sulphur is requested, priced on a FOB basis.

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  7

Leads
All three tenders are only open to suppliers who have previously
provided coal for Kospo.
Kospo is also in the market for two Panamaxes of July-loading sub-
bit material for Hadong. The deadline for offers is 15 June.
Kowepo launches term tender
Korea Western Power (Kowepo) has launched a five-year term tender
to supply its 4 GW Taean power plant with bituminous material. The
deadline for offers is 23 June.
For the first contract year starting 1 September 2015, Kowepo is
seeking 0.22 mt of 5,700 kc NAR minimum, with 15% max moisture,
17% max ash air dried and 1% max sulphur material for loading in the
third quarter of 2015.
A second batch of 0.22 mt of material with the same specifications
is required for loading in the first to second quarter of 2016.
According to tender 2015-LT-02, prices for the remaining
second to fifth contract years shall be determined by mutual
agreement of both parties.
Pricing for both requirements is to be on a FOB basis.
Kowepo last month purchased two Panamaxes of Indonesian
4,700 kc NAR material, for July-September loading. It paid around
$50.50/t FOB on a 6,080 kc NAR Samarinda basis through South
Korean agent Korea Polymer, sources in Seoul said.
It requested coal with 28% max moisture, 17% max ash air dried
and 1% max sulphur in the tender, APSP-04, which closed on 26 May.
Tighter high-c.v. supply could
bring wave of SAF coal washing
High-c.v. coal is becoming an increasingly scarce commodity in
South Africa, which only a few years ago accounted for more than half
of annual exports, as unfavourable economics and, to a lesser extent,
declining quality and technical challenges have caused exports of the
traditional Richard’s Bay 6,000 kc NAR spec to dwindle.
Between 15% and 20% of the coal passing through the Richards
Bay Coal Terminal (RBCT) is of this quality, with a minimum c.v. of
around 5,900 kc NAR, according to mining sources, with 5,700 kc
product accounting for 50% and the remaining 30-35% a 5,500 kc
quality or below. Other market players estimated the proportion of
traditional spec material to be lower at 10-15%.
On that basis, the 6,000 kc NAR material accounts for around
0.7-1.4 mt/month of shipments out of RBCT. This is partly a result
of the shift in South Africa’s customer base, away from Europe
towards Asia.
India alone accounted for nearly 70% of the 6.52 mt of coal
shipped from RBCT in May, and Indian buyers have tended to want
lower-c.v. products.
By contrast, Northwest Europe, which at the start of last year
accounted for a quarter of RBCT throughput, bought just 0.18 mt
this May.
“India has become South Africa’s largest customer, and its mining
industry produces high-ash coals which the power stations are
prepared to accept,” one South Africa-based miner said,
That has helped narrow the gap between 5,500 kc and 6,000 kc
prices, which from February 2014 to March this year averaged just
$3.68/t on a c.v.-adjusted basis, according to IHS Energy data.
“Countries like Turkey, China and India were willing to pay
8  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
almost the same price for a lower quality 5,700 kc coal as they
were paying for the 6,000 kc products,” said Johan de Korte, senior
researcher at South Africa’s Council for Scientific and Industrial
Research (CSIR).
That pushed a number of South African miners to produce
lower-grade products, where they gain a significant yield advantage
compared with producing a 6,000 kc NAR product. This also saves
them the cost of washing, he said.
Washing a tonne of coal to upgrade it to 6,000 kc from 5,700 kc
typically results in the loss of about 5-10% of its mass. In addition,
coal fines, which can make up as much as 8% of the mass, are not
usually added back into 6,000 kc type coals, but can be added to
lower grades, de Korte said.
The cost of washing varies but is estimated at around ZAR30/t
($2.40/t) of raw coal.
But the focus on lower grades that require less or no washing could
be reversing as supplies of lower-grade coal are outpacing demand.
Firstly, seasonal factors may soon cool India’s appetite for South
African material. India’s thermal coal stocks going into the monsoon
season are high at its east and west coast ports, according to
shipping sources.
There is at least 13.50 mt of thermal coal in storage at east and west
coast terminals. The east coast has higher stockpiles at its main ports,
with an estimated 2.5 mt at Gangavaram, 2.7 mt at Krishnapatnam
and about 3.0 mt at the Panamax terminal at Paradip.
Most of the bigger ports in India are well-equipped to deal with the
worst of the monsoon season, but terminal operations do slow down
(see separate story).
Some ports have discharge rates of 45,000 t/day, but will
only guarantee 25,000 t/d during the monsoon period. Regular
stoppages are seen to avoid the coal getting too wet and loadings,
are “rained off” until the weather improves. Interior logistics are
impacted more. Road and rail Infrastructure and general drainage
systems usually affect internal deliveries of coal to power plants
and industrial sites. India’s monsoon season typically starts in June
and ends in September.
The economic imperative discouraging washing is also easing.
Since the start of May, the premium for 6,000 kc NAR products from
South Africa has jumped to just over $7.00/t, almost double the
average over the previous 12 months, which could trigger a move
back in favour of washing.
The supply of higher-c.v. material is becoming tighter, and it
is understood that the stock of 5,700 kc coals at RBCT is moving
more slowly, traders said. However, any increase could take time
to show up.
“There are one or two mines that are more agile and can switch,
but most can’t,” another South African miner said. “But if the
premiums prevail and the market sends the signal for more high-c.v.
coal, they will respond. We are not quite there yet.”
In the longer term, there remains the bigger problem of declining
coal qualities in South Africa, as long-established – “grand old ladies“
– near the end of their mine lives, and newer projects are expected to
be lower grade and have short lives.
The coal reserves of the Witbank, Highveld and Ermelo coal
fields are being depleted and new production may have to mine
poorer-quality coal seams, which could add to the cost of washing,
decrease yields and further reduce the quantity of high-c.v. exports
in the years to come.
mccloskeycoal.com

GlobalCOAL limits Richards
Bay lot sizes to 25 kt multiples
GlobalCOAL (gC) will limit fixed-price bids, offers and trades to
25,000 t multiples through its screen brokerage platform in the
physical Richards Bay FOB market.
The move is a result of recent market consultation and addresses
concerns voiced by market members about bidding activity in
unusual clip sizes, gC said.
“The new clip size limit will be implemented on the globalCOAL
platform over the weekend of 13 June and will remain in place till the
end of December 2015, when the functioning of the market will be
re-examined by globalCOAL,” it said.
All other lot sizes “will be accommodated in the Phys API4 Index
market and by globalCOAL’s voice brokerage service”, gC added.
Some of gC’s market members have expressed concern about a
proliferation of 60,000 t bids on screen in recent weeks. The trading
platform argues that it is difficult for many traders to offer against
cargoes of that size. They say it restricts liquidity to producers
and shareholders in the port. Historically, trades have been in
25,000 t increments.
It is understood that gC plans to hold a forum in London on 17 June
to discuss the issue.
Contentious Newcastle coal
terminal gets key approval
Newcastle is a step closer to gaining full approval for a new coal
terminal that would add an initial 70 mt/y of capacity, but will also
face huge environmental protests.
The latest step forward is approval from the state government,
meaning the project will now be referred to the New South Wales
Planning Assessment Commission. It is also subject to a separate
Federal government approval process.
The new Australian terminal has been described locally
as “a project the community doesn’t want and the developer
doesn’t need”.
Port Waratah Coal Services (PWCS) is significantly under-
utilising its existing 145 mt/y of capacity – plus 66 mt/y from the
rival Newcastle Coal Infrastructure Group – because of stressed
coal markets.
Throughput at all Newcastle terminals is running at an annualised
rate of less than 160 mt in 2015, according to the Hunter Valley Coal
Chain Coordinator.
But PWCS says it is necessary to plan now for the new terminal,
which will not be operational for several years given current
development speeds.
PWCS – which has already reduced the planned terminal from
an initial 120 mt/y to the current 70 mt/y, partially to comply
with environmental concerns – welcomed the latest approval, but
acknowledged further processes lay ahead.
“We have been seeking approval for Terminal 4 for almost five
years, and this is a very welcome next step in the process,” it said.
“We have extensively examined the different engineering and
construction options to reach an outcome that best balances the
environmental, social, economic and engineering factors.
mccloskeycoal.com
Leads
“Coal shipments from Newcastle’s terminals are approximately
on par with this time last year, despite the challenging economic
climate. This only reinforces the importance of planning for future
coal export infrastructure.”
Met settlements take
shape for Q3
Hard coking coal contract benchmark settlements are taking
shape for July-September, with Australian and Canadian shippers
beginning the offer process with Japanese steel mills.
Sources suggest Teck, Anglo American and Rio Tinto all held
negotiations with Nippon Steel and other Japanese mills this week,
with FOB offers of $92-95/t.
This price range has been firming, with BHP early this month
reportedly making July monthly offers in several markets including
Japan at $89-92/t.
The BHP offers were not only said to have differed between
markets, but also involved apparent “crossing” in pricing for its two
top brands, with Goonyella mid-vol offered in some markets at a
higher price than Peak Downs low-vol.
This effectively reverses the order of pricing that has held sway
since the early 1990s, with Peak Downs sometimes at a premium
of $5/t to Goonyella, partially reflecting some tightness in mid-
vol supply.
For now though, the two brands are bracketed together at
$109.50/t in the ruling headline contract benchmark settlement
for April-June.
This means Teck, Anglo and Rio’s alleged offers would represent
cuts of 13-16% on the ruling benchmark headline, but would be
solidly higher than some reported recent spot deals into China at
about $85/t FOB for top-tier met coals.
BHP is also said to have held high-level discussions with Nippon
Steel late last week, sources said. However, several market
participants believe BHP is no longer willing to make spot offers
to Nippon that are capable of being used to settle the benchmark,
even though this has been the procedure in the past three
benchmark settlements.
With those settlements, BHP offered spot pricing for separate
forward months and Nippon has then told other suppliers that,
reflecting rapidly falling prices, BHP’s numbers represent “the
market”. Settlement has then rapidly ensued as shippers moved to
protect tonnes.
High thermal inventories at
India’s main import terminals
India’s thermal coal stocks going into the monsoon season are
high at its east and west coast ports, according to shipping sources.
There is at least 13.5 mt of thermal coal in storage at east and
west coast terminals. The east coast has the higher stockpiles at
its main ports, with an estimated 2.5 mt at Gangavaram, 2.7 mt
at Krishnapatnam and about 3.0 mt at the Panamax terminal at
Paradip. Smaller ports such as Haldia, Karaikal and Cochin are
also understood to be well stocked, with a few million tonnes
between them.
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  9
Leads

India’s major coal ports

Mundra - West Bedi/Kandla (anchorage) Paradip Dhamra

• Max Vessel - Cape • Max Vessel - Small Cape • Max Vessel - Post Pmx • Max Vessel - Cape
• Draft - 17.3m • Draft - 16m • Draft - 12.5m • Draft - 18m

Mundra - Berth 1&6 Vizag

• Max Vessel - Post Pmx • Max Vessel - Small Cape
• Draft - 14.5m/15.4m • Draft - 14.5m

Dahej Gangavaram
• Max Vessel - Mini-Cape • Max Vessel - Cape
• Draft - 14m • Draft - 18.5m

Hazira Krishnapatnam
• Max Vessel - Mini-Cape • Max Vessel - Cape
• Draft - 14m • Draft - 18m

Jaigarh Ennore
• Max Vessel - Mini-Cape • Max Vessel - Mini-Cape
• Draft - 14m • Draft - 13.5m

Mormugao New Mangalore Karaikal (future)

• Max Vessel - Mini-Cape • Max Vessel - Mini-Cape • Max Vessel - Mini-Cape
• Draft - 14m • Draft - 14m • Draft - 14.5m

Source: IHS Energy

On the west coast, at least 5.3 mt is on the ground at the Capesize
port of Mundra, and baby or mini-Cape ports such as Dahej, Bedi/
Kandla and Jaigarh.
Vessel congestion at the main ports on the west coast such as Mundra
has been relatively stable. Mundra has six vessels queuing, while
average waiting times have fallen to 14.5 days, from 15.8 last week.
On the east coast, Krishnapatnam has one vessel queuing and average
waiting times are down to 3 days, compared with 4.2 days a week ago.
Most of the bigger ports in India are well-equipped to deal with the
worst of the monsoon season, but terminal operations do slow down.
Some ports have discharge rates of 45,000 t/day, but will
guarantee only 25,000 t/d during the monsoon. There are regular
stoppages to avoid the coal getting too wet, with loadings “rained
off” until the weather improves.
Interior logistics are impacted more. Road and rail infrastructure
and general drainage systems usually affect internal deliveries of
coal to power plants and industrial sites.
India’s monsoon season typically starts in June and ends
in September.
“Over-supply may persist for some time,” he said. “Prices for most
commodities are now lower than the extreme highs of the recent
past and closer to more sustainable long-term levels.
“So we have to remain competitive. It is unproductive for Australia
to cut or stall low-cost and profitable supply when the cycle drops.
It destroys value, penalises shareholders, customers and employees
and disrupts the power of open markets.
“It is these markets that induce investment during times of higher
prices and reduce investment during times of lower prices.”
The comments reinforced BHP’s rigid adherence to maximising
output despite low prices – a view that sharply contrasts with that
of Glencore, where CEO Ivan Glasenberg has been a heavy critic of
over-production in commodities, especially coal.
Glencore coal chief Peter Freyberg this month said his company
was among the first to call a halt to new coal development, delaying
its A$7bn ($5.6bn) Wandoan thermal project in Queensland,
Australia, in 2013.
“Placing Wandoan on hold was the right thing to do by our
shareholders and the rest of the Australian thermal export market,”
Freyberg said.

BHP, Glencore diverge further
on marketing strategy
Metallurgical and thermal coal giants BHP Billiton and Glencore
have widened the gulf between their marketing strategies.
BHP CEO Andrew Mackenzie, following heavy criticism
of the company’s high iron ore output, said the glut in many
commodities markets is a function of incremental supply induced
by recent high prices.
“We will not push incremental tonnes on to markets that don’t
want them or need them. Doing so would force prices down further.
Right now, we aren’t looking at incremental build.”
Freyberg also clarified the company’s plan to cut coal exports
by 15 mt in 2015. He said the company’s installed capacity is about
110 mt/y and its original plan was to increase exports. But after
consideration, it has decided that the “appropriate” level of exports
this year is “closer to 90 mt than 100 mt”.
“Simply put, our decision to remove volume is the responsible
thing to do,” Freyberg said.

10  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com

 Leads > Key physical markets commentary

But he emphasised a very different long-term view. “We remain However, New South Wales exports fell 2.5% year-on-year in
bullish about thermal coal in the longer term, particularly based on January-May, dropping by 1.67 mt to 67.91 mt.
our detailed understanding of thermal power station build – and Queensland shipments in May were 17.80 mt, an increase of about
demand – in Korea, Taiwan, Vietnam, India and Japan,” he said. 1 mt on the month. All ports, with the exception of Abbot Point,
“Coal is still the most abundant, most economic and most reliable increased exports during the month. However, overall shipments fell
means of delivering access to energy and support a rise in living 1.5% y-o-y from 18.07 mt.
standards in many developing countries. Coal will continue to be Queensland’s coal exports grew 3.2% y-o-y to 86.89 mt in January-
chosen as the base-load primary energy provider for decades ahead. May, from 84.19 mt. Only the Port of Gladstone did not exceed its
“Why? Because building coal-fired power is still the cheapest way previous year’s January-May throughput.
of powering people out of poverty. Compared to solar or nuclear in
India, coal provides in the order of four times the amount of power Australian coal shipments – May 2015 ('000t)
Port May-15 May-14 YTD 15 YTD 14
per dollar invested – at half the cost.”
Abbot Point 1,909 2,167 11,134 8,923

Australia’s coal shipments

Dalrymple Bay 6,019 6,140 28,380 26,640
Hay Point 3,427 3,451 17,343 17,249

return to normal in May Gladstone

Brisbane
5,743
703
5,654
658
26,947
3,082
28,531
2,848

Australian coal shipments returned to normal levels in May, as QLD Total 17,801 18,070 86,886 84,191

the aftermath of April’s wild weather and flood disruption in New Newcastle

South Wales faded. PWCS 9,177 8,701 43,606 46,001

Total coal exports in May rose 2.1% year-on-year, to 32.16 mt from NCIG 4,135 3,732 19,535 18,098

31.49 mt, and increased 20% from 26.77 mt in April. Pt Kembla 1,044 990 4,771 5,479

Exports from Australia’s east coast rose just 0.7% y-o-y in January- NSW Total 14,356 13,423 67,912 69,578

May, to 154.80 mt from 153.77 mt. AUST Total 32,157 31,493 154,798 153,769
Source: IHS Energy
New South Wales shipments last month climbed 7% y-o-y, to 14.36
mt from 13.42 mt, and jumped 35.4% from 10.61 mt in April.

Key physical markets commentary Panamax, as bids dipped below $30.00/t FOB, same basis.
Gearless Panamax were offered at $32.20/t FOB, basis
4,200 kc GAR, for June, and $31.00/t FOB, same basis.
Tough times continue for Indonesian prices The IHS McCloskey Indonesian Sub-Bituminous FOB marker
The situation in Indonesia remains bleak, with barge is at $43.90/t, basis 4,900 kc NAR, up marginally from
operators continuing to complain of limited export activity $43.85/t a week earlier.
across Kalimantan, despite optimal water levels on the
Mahakam and Barito rivers. August demand supports China
There was some activity in the week to 12 June, with a import values
sub-bituminous cargo reportedly traded at $42.50/t FOB,
Prices for coal imports into China continue to take support
basis 4,700 kc NAR, for a June-loading Panamax of
from demand for early August arrivals of Australian high-ash
single-mine material.
product, with some Chinese traders looking to use imports for
However, things are weaker for a month further out and
physical settlement of September contracts of domestic
beyond. There were bids at $41.00-42.00/t FOB, basis
thermal coal futures.
4,700 kc NAR, and offers around $42.50/t FOB, same basis,
Several trades were understood to have concluded at $52.50/t
for July loads.
CFR, basis 5,500 kc NAR, for arrival into South China in July.
Demand remains weak in China, and news that Indian
Bids for August arrivals of Australian high ash were around
traders are seeking to place surplus cargoes there amid
$52.50/t CFR, basis 5,500 kc NAR, although further rises are
lower-than-expected domestic demand has also had a
thought to be unlikely, with domestic thermal futures prices
negative impact on prices.
expected to cap prices.
Some producers have been holding offers higher at around
Suppliers were holding offers at around $53.00/t CFR, basis
$44.00/t FOB, basis 4,700 kc NR, especially for the more
5,500 kc NAR, as Capesize rates from Newcastle to South
premium brands, although bids do not appear to be willing to
China firmed over the week to 12 June.
move much higher than $42.50/t FOB.
An Indonesian sub-bituminous Panamax sold into
On a delivered basis, trades were reported into South China
Guangzhou at $48.00/t CFR, basis 4,700 kc NAR, for arrival in
at $48.00/t CFR, basis 4,700 kc NAR, and $49.25/t FOB, basis
July, while another traded into Xiamen at $49.25/t CFR, basis
4,900 kc NAR. These were for July Panamaxes into
4,900 kc NAR, also for July.
Guangzhou and Xiamen, respectively.
In the domestic market, FOB levels out of Qinghuangdao
Lower-rank material has also softened further, transacting at
(QHD) softened in the week to 12 June, with trades captured
$30.00/t FOB, basis 3,700 kc NAR, for a July-loading gearless

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  11

Key physical markets commentary

at $67.03/t FOB, basis 5,500 kc NAR, including value-added Assessments of freight activity for United States to India is
tax, compared with the previous week’s levels of $67.02- mixed. Trading sources indicated an offer of $30/t for a
67.91/t FOB, same basis. Supramax, but this appears to be way off the market.
Lower-c.v. material traded at $57.96-58.85/t FOB, basis Cement producers and suppliers are indicating $24-26/t for
5,000 kc NAR, while 5,800 kc NAR changed hands at the same route.
around $71.30/t FOB. Spot interest out of China is very quiet. An Indian cement
Stocks at QHD fell sharply to 5.41 mt, from 6.20 mt in the producer is negotiating a third-quarter cargo with offers at
week to 5 June. Inventories at Guangzhou (GZ) also eased, to $75-76/t CIF east coast. This is $2-3/t higher than deals in
2.07 mt from 2.22 mt. April and May. Domestic petcoke prices are averaging about
Coastal freight markets dipped as end users’ offtake slowed, $85/t FOT, according to local trading sources.
with QHD to GZ cargoes in 40,000-50,000 t vessels averaging The Middle East market has been limited to a deal from the
$5.16/t, down from $7.69/t in the week to 5 June, and QHD to Yanbu refinery for an 8% cargo into India. Yanbu, located on
Shanghai in 20,000-30,000 t vessels valued at $3.57/t, the Red Sea, is expected to have about 3-4 cargoes/month to
compared with $6.20/t. offer in the third quarter. Price details remain murky. Offer
prices out of the Jubail refinery, located in the Persian Gulf, are
Spot interest livens up in Atlantic in the high $50s/t FOB, basis 7,500 kc NAR, down from
petcoke market $61-62/t FOB, same basis, in the week to 5 June.
There has been an increase in enquiries for prompt petroleum Meanwhile, US power generator Jacksonville Electric
coke recently, especially in the Mediterranean, while Indian Authority is seeking bids to supply 35,000 short tons of
cement producers remain a perennial backstop for US Gulf petcoke to its site in Jacksonville, Florida, in the third quarter. It
and Middle East cargoes. can take 3-7% sulphur material.
The Mediterranean market continues to provide pricing The IHS McCloskey USGVC high-sulphur petcoke FOB
signals for mid-sulphur. In Turkey, recent deals have marker is assessed at $51.75/t, up $0.50/t from the first week
concluded at $73-74/t CIF Marmara, basis 7,500 kc NAR. A of June. The average price in May was $50.15/t.
Venezuelan cargo is understood to have closed at $75/t CIF
Marmara, same basis.
Spot met coal prices gain amid thin trading
A Mediterranean cement producer is looking for petcoke Spot metallurgical coal trading has been relatively subdued
and thermal coal cargoes into Greece and Bulgaria, over the past fortnight, partly because of a focus on quarterly
respectively, for August delivery. It is requesting a 40,000 t negotiations, although prices have lifted moderately across the
mid-sulphur cargo into Elefsina and a 20,000 t thermal cargo quality spectrum amid restocking demand from China.
into Varna. Another Turkish cement producer is expected to be PCI is selling in a range of $66-73/t CFR, quality dependent,
in the market for two cargoes of mid-sulphur in July. into China, while Rio Tinto’s Hail Creek product is apparently
The same producer booked two cargoes in the first week of being offered at $101/t CFR. Highly prized Lake Vermont
June at $68.30/t CIF Thessaloniki, basis 7,500 kc NAR, for a coking coal is being offered at $91-92/t CFR, sources said.
30,000 t, 5.5% sulphur cargo and a 20,000 t, 4.5% sulphur
cargo at $72.80/t CIF, same basis. IHS daily coking coal markers – 1 June - 12 June, 2015 ($/t)
In the US Gulf, a US oil refiner is understood to have N. China prime HCC CFR Australia prime HCC FOB
awarded its July-loading 4.5% cargo at $61t FOB Mississippi Monday 1st Holiday Holiday
River, basis 7,500 kc NAR. Tuesday 2nd 91.25 85.55
In Venezuela, Petróleos de Venezuela (PDVSA) is offering Wednesday 3rd 91.25 87.50
one cargo per month spread over a year out of the San Jose Thursday 4th 91.25 87.50
terminal. One of the export terminals, Petrocedeno, is down Friday 5th 92.75 88.10
because of a fire at the end of May. Monday 8th 92.75 88.10
Despite the recent price falls in mid-sulphur markets, the Tuesday 9th 92.75 88.10
product is still relatively expensive buying directly from PDVSA Wednesday 10th 93.25 88.75
and performance is high risk. There is also a price war to place Thursday 11th 93.75 88.90
cargoes in the only regular spot market – Turkey. In Northwest Friday 12th 94.95 88.25
Europe, interest has gone very quiet following deals in the low Source: IHS Energy
$70s/t CIF Rotterdam, basis 7,500 kc NAR, by a regular
industrial buyer.
The weekly IHS McCloskey USGVC mid-sulphur petcoke The recent improvement in met coal spot prices has left
FOB marker is assessed at $58.75/t, up $0.75/t on the week to some market participants confused. One producer source
5 June. The average price in May was $58.70/t. said it made no sense given that supply/demand
For high-sulphur markets, recent deals have closed at fundamentals had not changed.
$52.00/t and $52.50/t FOB US Gulf, basis 7,500 kc NAR. And Profit margins for Chinese steel mills remain under pressure
there are indications that July cargoes could be closing at thanks to the recent increase in raw material costs, notably for
$53.00/t FOB, same basis. iron ore, but also for coking coal. A Chinese trading source

12  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com

 Key physical markets commentary

said coking coal prices have remained largely steady for the Richards Bay FOB prices have also remained rangebound,
past few weeks and are expected to start falling somewhat but trended marginally lower over the past fortnight, while
after the third quarter settles. traded volumes have been subdued with only three
The third-quarter price settlement for Australian hard coking fixed-price prompt deals.
coal is likely next week, with a final headline number for Exports from South Africa’s Richards Bay Coal Terminal
premium brands expected to be in the range of $91-93/t FOB, (RBCT) rose by 10% to 6.52 mt in May, from 5.90 mt in April,
according to sources in Japan. as Indian buying surged to a record 4.47 mt, according to
Several producers including Anglo American, Rio Tinto shipping sources.
and Teck are in Japan for discussions, with Anglo and Teck India accounted for 68.6% of the May total, trailed by Pakistan
tabling $95/t FOB for premium hard coking coal, according and Morocco, which bought 0.27 mt and 0.26 mt respectively,
to sources. The tone for price discussions was set last each equivalent to around 4% of RBCT’s throughput. In April,
week when BHP Billiton offered its July monthly price to Pakistan took 0.39 mt and Morocco 0.40 mt.
Japanese steel mills at around $92/t FOB for premium
DES ARA fixed price deals – 1 Jun - 12 Jun 2015
Australian hard coking coal – a rise of $3/t from the monthly
Date $/t Del Origin Port Qty (000t)
June contract settlement.
01-Jun 57.50 Jun-15 ACPRS AR 50*
Meanwhile, Japanese steel company Nisshin is understood
01-Jun 57.25 Jun-15 ACPRSU AR 50*
to have awarded a prime hard coking coal tender to Noble at
01-Jun 58.15 Aug-15 ACPRSU AR 50>1
just below $90/t FOB.
03-Jun 57.00 Jun-15 ACPRSU AR 50*

Atlantic thermal coal prices edge lower 09-Jun 56.10 Jul-15 ACPRSU AR 50>1
09-Jun 56.10 Jul-15 ACPRSU AR 50>1
Prices in the DES Amsterdam-Rotterdam-Antwerp market
10-Jun 56.10 Jul-15 ACPRSU AR 50>1
have remained within a tight range over the past fortnight, but
11-Jun 57.20 Aug-15 ACPRSU Rott 50*
edged slightly lower overall as seasonal factors weigh on
12-Jun 58.40 Jul-15 ACPRSU AR 50>1
prompt demand.
12-Jun 58.40 Aug-15 ACPRSU Rott 50*1
In addition to the ongoing lack of heating demand in
12-Jun 58.35 Aug-15 ACPRSU AR 50*
Northwest Europe, competition from alternative sources
including gas, solar and wind power is also impacting coal’s 04-Jun 58.00 Jul-15 RS Amst 50*
* Denotes trades on globalCOAL
ability to price into the grid.
Meanwhile, supply-side issues have done little to bolster > Denotes trades through Atlantic Brokers

prices, but are said to have kept the market from sinking AR - Amsterdam, Rotterdam

significantly lower. ACPRS - Australian, Colombian, Polish, Russian, South African

There remains confusion over the likely duration of the ban U - US

to night-time railings on Colombia’s Fenoco line. 1 - EFP (exchange of futures for physical)

Colombia’s Ministry of Mines and Energy and the National Trades in italics are non-index

Infrastructure Agency (ANI) are expected to ask the

Constitutional Court to revisit a recent ruling that restricts Newcastle FOB fixed price deals – 1 Jun - 12 Jun 2015
night-time coal movements for three months in the towns of Date $/t Loading Tonnes
Fundación and Zona Bananera in Bolívar department, and 01-Jun 57.00 Sep-15 25*1
Algarrobo in Magdalena department. 02-Jun 58.75 Jul-15 25*
According to officials, ANI has not officially received the ruling, 02-Jun 58.75 42186 65*1
which was issued on 27 May, so the new ban is not in place yet 03-Jun 58.55 Jul-15 25*
and it is not yet clear when it will come into effect. For now, the 03-Jun 57.90 Sep-15 50*1
only existing night suspension is the one that began on 14 04-Jun 59.00 Jul-15 25*
February as a result of another ruling from the same court. 10-Jun 59.60 Jul-15 65*
Meanwhile, prompt supply out of Colombia is said to be 11-Jun 60.00 Jul-15 70*
sufficient to meet European demand, with no customers * Denotes trades on globalCOAL
reporting delays to cargoes as a result of the ban. 1 - EFP (exchange of futures for physical)
Russian supply into the Baltic is understood to be strong,
despite issues related a landslide impacting railings earlier
Richards Bay FOB fixed price deals – 1 Jun - 12 Jun 2015
in the year. Date $/t Del Qty (000t)
Last month, Russian state-run railway operator RZD
04-Jun 62.45 Jul-15 50*
suspended the Kuzbass Fuel Company from shipping thermal
10-Jun 61.25 Jul-15 50*
coal from to Russia’s eastern port of Vostochny, as it focuses
10-Jun 60.55 Aug-15 50>1
on higher-yielding coking coal.
* Denotes trades on globalCOAL
The move is said to be partially adding to the flow of
> Denotes trades through Atlantic Brokers
Russian thermal coal being offered into the Atlantic market
1 - EFP (exchange of futures for physical)
through Baltic ports.

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  13

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Data Pages

IHS McCloskey steam coal FOB marker prices ($/t) International coking coal spot prices ($/t)
Port Jun-14 May-15 May 29th Jun 12th Grade Apr-15 May-15
Australia – Basis 6,000kc NAR US high ash high vol FOB 93.09 90.39
Newcastle 71.48 58.51 56.15 57.50 US low vol FOB 99.23 94.17
Japanese reference price ^ 81.80 67.80 67.80 67.80 Australian prime hard FOB 100.76 87.50
Colombia – Basis 11,300Btu GAR ULV PCI FOB 86.95 75.80
Puerto Bolivar - ARA 63.65 53.94 53.40 52.70 Coke FOB Rizhao 167.51 158.31
Puerto Bolivar - US 63.65 53.94 53.40 52.70 Coke CIF ARA 202.85 193.41
Russia East – Basis 6,700kc GAD Source: IHS Energy
Vostochniy 73.34 62.87 60.85 60.70
Russia West – Basis 6,000kc NAR
Baltic 68.19 55.43 55.00 53.75
South Africa – Basis 6,000kc NAR IHS McCloskey NWE steam coal marker vs Richards Bay FOB (US$/t)
Richards Bay 74.09 63.01 63.34 61.13
220
Maputo 72.09 61.01 61.34 59.13
200
United States – Basis 6,000kc NAR
180
East Coast 69.48 54.74 53.55 53.30
160
Gulf High Sulphur 60.25 44.29 43.55 43.40 140

$US/t
Petcoke (4-5.5% Sulphur) – Basis 7,500kc NAR 120
US Gulf/Venezuela/Carribean 75.38 58.70 58.25 58.75 100
Petcoke (>5.5-7% Sulphur) – Basis 7,500kc NAR 80
US Gulf/Venezuela/Carribean 62.85 50.15 50.00 51.75 60
Indonesian, Sub-Bituminous – Basis 4,900kc NAR 40
South East Kalimantan 56.49 45.62 44.55 43.90 20
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11

Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13

Jan-15
Apr-15
China export – Basis 5,800kc NAR
Qinhuangdao 99.16 73.84 73.40 73.15
Japanese reference price 115.50 -- -- -- NWE Marker RBay FOB
China domestic* Source: IHS Energy
Qinhuangdao (5,000kc NAR) 72.46 58.25 58.62 58.56
(or 4,900kc NAR) 71.01 57.09 57.45 57.39
Qinhuangdao (5,500kc NAR) 83.88 68.26 70.16 67.26
Qinhuangdao (5,800kc NAR) 90.14 71.69 71.26 71.02 IHS McCloskey daily marker prices ($/t)
(or 6,000kc NAR) 93.25 74.17 73.72 73.46 Mon Tue Wed Thu Fri Ave.
Note: FOB prices include domestic taxes June 8th - June 12th, 2015
^ Japanese Fiscal Year price (April 1-March 31) representing the bulk of annual tonnage NW Europe (CIF/ 56.32 56.17 56.39 57.03 58.39 56.86
Source: IHS Energy, *Xinhua Infolink & IHS Energy DES ARA)
Richards Bay (FOB) 61.19 60.69 60.92 61.22 61.64 61.13
June 1st - June 5th, 2015
NW Europe (CIF/ 57.77 57.58 57.48 57.07 56.67 57.31
IHS McCloskey steam coal CIF marker prices ($/t) DES ARA)

Port Jun-14 May-15 May 29th Jun 12th Richards Bay (FOB) 61.96 61.62 62.03 62.35 61.70 61.93
NW Europe Source: IHS Energy

US$/t 72.31 58.84 57.70 56.86

ARA euro marker
E/t 53.19 52.63 52.50 50.44
ARA FOB Barge marker Chinese domestic freight ($/t)
Freight 29-May 05-Jun 12-Jun
US$/t 74.26 60.89 59.75 58.90
QHD to Shanghai 5.02 6.20 3.57
Asian CIF steam coal marker
QHD to GZ 6.74 7.69 5.16
US$/t 78.20 62.34 62.34 --
Note: QHD to Shanghai 20-30kt, QHD to GZ 40-50kt
Japan CIF steam coal marker
Source: IHS Energy, Xinhua Infolink
US$/t 75.56 58.43 58.43 --
South China CFR marker*
The NW European, Richards Bay and Newcastle markers are produced every Friday. The other
4,900kc NAR 62.31 49.49 49.55 49.20
FOB markers are produced with every issue of MCR – once a fortnight. The Asian Steam Coal
5,500kc NAR 70.65 51.88 52.40 52.50 marker and The Japan CIF Steam Coal marker are produced once a month. For information on
how these indices are compiled, visit the MCR homepage at http://cr.mccloskeycoal.com and
6,000kc NAR 79.06 60.60 60.75 59.80
click on Index Pricing Methodology on the navigation bar. From May 4, 2010, the weekly IHS
Note: CFR prices are exclusive of Chinese taxes Energy NW Europe CIF ARA and Richards Bay FOB Marker Prices will be derived from a straight
average of the daily IHS Energy Marker Prices. A methodology for the daily IHS Energy Marker
Source: IHS Energy, *Xinhua Infolink & IHS Energy
Prices can be found on www.mccloskeycoal.com.

16  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com

 Data Pages

Clarksons daily coal freight report (prompt rates) SSY Atlantic Capesize Index
Route (All to Rotterdam) Jun-14 May-15 5th Jun 12th Jun Last Last Last This
Richards Bay C 8.60 4.79 5.09 4.94 Year Month Week Week
Richards Bay P 12.21 7.51 7.50 7.50 Narvik/Rotterdam 4.45 3.55 3.70 4.40
Puerto Bolivar C 10.31 5.54 5.75 5.58 Tubarao/Rotterdam 7.50 5.30 5.60 7.50
Puerto Bolivar P 10.56 9.44 9.08 10.26 Richards Bay/Rotterdam 7.90 4.20 5.15 7.95
Maracaibo P 14.94 13.31 12.82 14.43 Hampton Roads/Rotterdam 9.40 5.80 6.80 9.35
Ventspils P 5.03 5.59 5.33 5.83 Puerto Bolivar/Rotterdam 8.90 5.45 5.50 8.90
Haypoint C 14.20 6.31 6.39 6.39 Nouadibou/Taranto P2 5.35 3.90 3.90 5.30
Dalrymple BayP 19.10 13.63 14.12 14.20 Tubarao/Japan 18.40 10.15 11.25 18.90
Banjarmasin C 10.12 4.84 4.75 4.75 Tubarao/Beilun+Baoshan 18.75 10.00 11.35 19.25
Banjarmasin P 15.08 11.79 12.17 12.21 T/C Trip Cont/Far East 4.15 1.70 2.14 4.18
Baltimore C 11.61 6.44 6.68 6.50 T/C Transatlantic Round 1.50 0.71 0.77 1.50
Norfolk P 8.69 7.90 7.60 8.60 Calculated Index 5,771 3,475 3,816 5,807
New Orleans P 13.49 10.12 10.40 10.75 Change on Previous Week -288 71 -414 36
Murmansk P 5.40 5.69 5.43 5.93 Change on Four Weeks Ago 131 289 412 -493
A Murmansk rate basis 12.8m draft and 12000 shinc loading rate Change on Previous Year 610 -2,165 -2,243 694
Note: Monthly freight rates are averages of all Friday daily rates for the month Change on Two Years Ago 220 -1,626 -1,425 469
Source: Clarksons Source: SSY

Atlantic and Asian freight rates
continue to feel the pressure
Freight rates were mixed in the Atlantic basin dry-bulk market
over the past fortnight, but remain depressed.
On the Richards Bay to Rotterdam route, Capesize rates were
around $4.95/t, compared with $5.00/t two weeks ago, according to
the Baltic Exchange (BE). While from Bolivar to Rotterdam, Cape
rates were $5.60/t, up slightly from $5.55/t a fortnight ago.
In Asia, freight rates for Capesize vessels came under pressure
again after iron ore trading into China slowed further and bunker
fuel prices softened.
On the BE, rates for Capes on the Pacific round voyage, route
C10_3, edged down 2% to $4,980/day, from $5,084/d a week earlier.
Panamaxes saw daily chartering rates firm week-on-week, although
freight traders said some old ships doing the China-Indonesia voyage
were holding rates down, and fundamentally there was very little to
support this market, with July and the third quarter still weak.
The average rate for Panamaxes on the Japan-South Korea/Pacific
round voyage, P3A_03 was up 8.7% to $4,600/d, compared with
$4,232/d a week ago.

Weekly coal fixtures 2015

Date Name Cargo Cargo Laycan Load Port Discharge Rate Terms Charterer
Size Port
29-05-15 MOL TBN Coal 70,000 15/25 Jun Hampton Roads ARA $7.45 fio 30000 shinc/25000 shinc ZKS
29-05-15 Polaris TBN Coal 150,000 16/25 Jun Gladstone Samcheonpo $6.27 fio scale/25000 shinc KEPCO
01-06-15 E.On TBN Coal 80,000 21/30 Jun Hampton Roads Rotterdam $6.75 fio 30000shinc/25000shinc TKS
01-06-15 Minmetals Zhejiang TBN Coal 150,000 1/17 Jun Gladstone Zhoushan $5.70 fio scale/30000shinc Pangxin Energy
02-06-15 Fuk Hing TBN Coal 150,000 1/17 Jun Gladstone Zhoushan $5.70 fio scale/30000shinc Minmetals Zhejiang
02-06-15 SwissMarine TBN Coal 108,000 19/28 Jun Roberts Bank Dangjin $9.10 fio 30000shinc/45000sashinc Hyundai Glovis
03-06-15 TBN Coal 75,000 20/30 Jun Gladstone East Coast India $10.30 fio 20000shinc bends SAIL
04-06-15 Phillipos A Coal 150,000 19/28 Jun Puerto Bolivar Iskenderun $6.45 chopt redelivery Rotterdam, rate $5.85, K-Line
fio 50000shinc/30000shinc

05-06-15 Stella Belinda Coal 70,000 16/21 Jun Convent La Rotterdam $10.50 fio 20000shinc/25000shinc Mercuria
05-06-15 SwissMarine TBN Coal 150,000 15/24 Jun Hay Point or Dalrymple Bay Redcar $9.85 fio 50000shinc/30000shinc SVS
08-06-15 HL Richards Bay Coal 125,000 21/30 Jun Newcastle Boryeong $6.64 fio scale/25000shinc KEPCO
08-06-15 SK Shipping TBN Coal 138,000 21/30 Jun Newcastle Hadong $6.80 fio scale/25000shinc KEPCO
08-06-15 TBN Coal 150,000 9/18 Jun South East Kalimanta East Coast India $5.00 fio 15000shinc/35000shinc basis Mundra LSS Ocean Transport
option 40000shinc basis Guangavaram

08-06-15 Tenten Coal 70,000 12/21 Jun Taboneo Mauban $3.50 fio 15000shinc/20000shinc Cetragpa
09-06-15 Indus Triumph Coal 75,000 10/24 Jun Richards Bay Dahej $9.10 fio scale/30000shinc LSS Ocean Transport
10-06-15 Aurora Venus Coal 150,000 25/30 Jun Richards Bay Visakhapatnam $6.40 fio scale/25000shinc Oldendorff
10-06-15 KSL Sydney Coal 160,000 18/22 Jun Puerto Bolivar Rotterdam $5.65 fio 50000shinc/25000shinc SwissMarine
11-06-15 Collonges Coal 125,000 1/15 Jul Newcastle Dangjin $6.47 fio scale/25000shinc KEPCO
11-06-15 TBN Coal 150,000 1/10 Jul Puerto Drummond Rotterdam $5.60 fio 45000shinc/25000shinc Noble
11-06-15 Zheng Yao Coal 70,000 10/20 Jun Samarinda Dahej $7.25 fio 15000shinc/30000shinc LSS Ocean Transport

Source: SSY

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  17

Data Pages

Carbon Market View The CER market is down over the fortnight, remaining at very
low levels. The 2015 contract closed at EUR0.40/t on 11 June and
The price of EU Allowances (EUA) rose over the past fortnight, 2016 CERs were at EUR0.39/t, down 4.8% and 4.9% respectively
as the G7 threw its weight behind the push to “decarbonise” at a from two weeks ago.
summit in Germany.
The group’s countries are now aiming to cut power generation by Forward EU carbon prices (€/t of CO2)
2015 2016 2017 2018
coal and oil by 40-70% by 2050, compared with 2010 levels, as well as
22-May 7.30 7.39 7.49 7.65
limiting global warming to 2 degrees Celsius.
29-May 7.35 7.44 7.54 7.71
For EUAs, the 2015 contract was trading at EUR7.55/t (Marex
05-Jun 7.44 7.52 7.63 7.77
Spectron based) on 11 June. This is up 2.7% from EUR7.35/t a
11-Jun 7.55 7.62 7.72 7.86
fortnight ago. Further out, the 2018 product is up 1.9%, trading at
2 wk % chg 2.7% 2.4% 2.4% 1.9%
EUR7.86/t, from EUR7.71/t on 29 May.
Source: Marex Spectron

Carbon & Sparks compared with GBP1.40/MWh two weeks ago.

This gives the clean dark a GBP3.08/MWh advantage over the
UK coal-fired margin increases clean spark, up 34% compared with the GBP2.30/MWh advantage it
had two weeks ago.
over gas in merit order German power prices have risen over the past fortnight, with
the average base-load price for the week ending 12 June up 19%
The coal-fired margin has increased in the United Kingdom (UK) in at EUR31.39/MWh (Marex Spectron-based) compared with
the past fortnight, on the back of weaker coal, and higher gas prices. EUR26.34/MWh on 29 May.
In Germany, the coal and gas-fired differential was little Gas prices edged down over the fortnight to EUR20.38/MWh, against
changed from two weeks ago, with the spark and dark spreads EUR20.53/MWh. As a result, the dirty spark stood at minus EUR10.11/
making similar increases. MWh, compared with minus EUR15.45/MWh two weeks ago.
The UK’s average day-ahead power price for the week ending 12 The dirty dark was significantly higher at EUR11.03/MWh from
June was GBP41.34/MWh (Marex Spectron-based), up 2% from two EUR5.57/MWh a fortnight ago. This puts the dirty dark EUR21.14/MWh
weeks ago, when it averaged GBP40.44/MWh. ahead of the dirty spark (-EUR10.11/MWh). The clean dark (EUR3.92/
UK gas prices are 6% lower over the fortnight, with the weekly MWh) is EUR17.11/MWh ahead of the clean spark (-EUR13.19/MWh).
average spot price (again Marex Spectron-based) at 42.48 pence/
therm (ppt), compared with 45.02 ppt on 15 May. Weekly average sparks & darks
29-May 05-Jun 12-Jun
The current power price is 14% higher than a year ago, when June 2014
United Kingdom £/MWh
base-load power averaged GBP36.24/MWh. The UK gas price is up 8%
Power 40.44 40.71 41.34
compared with the same month last year, when it averaged 39.24 ppt.
Gas PPT 42.48 43.69 44.09
The dirty-dark spread’s advantage over the dirty-spark spread has
Dirty-Spark 10.95 10.38 10.73
increased over the past fortnight, although this is before the cost of
offsetting carbon is taken into account. Dirty-Dark 25.70 25.73 26.44

The UK dirty-dark spread is GBP26.44/MWh for the week ending 12 Differential -14.75 -15.35 -15.71

June, up 3% from a fortnight ago when it averaged GBP25.70/MWh. Clean-Spark 1.40 0.76 1.04

The dirty spark is 2% lower than it was two weeks ago at GBP10.73/ Clean-Dark 3.70 3.57 4.12

MWh, from GBP10.95/MWh for the week ending 29 May. This Differential -2.30 -2.81 -3.07

means the dirty dark is now GBP15.71/MWh more profitable than Germany €/MWh

the dirty spark, up 7% compared with its advantage two weeks ago Power 26.34 25.23 31.39

of GBP14.75/MWh. Gas €/MWh 20.53 20.48 20.38

Spot carbon prices edged up, with the weekly average for Dirty-Spark -15.45 -16.46 -10.11

European Union (EU) carbon prices (Marex Spectron-based) at Dirty-Dark 5.57 4.49 11.03

EUR7.51/t for the week ending 12 June, compared to the level two Differential -21.02 -20.96 -21.14

weeks ago of EUR7.26/t. Clean-Spark -18.43 -19.49 -13.19

UK carbon prices are EUR32.20/t for the week ending 12 June, Clean-Dark -1.30 -2.47 3.92

down 1.6% from EUR32.73/t in the week ending 29 May. The UK Differential -17.13 -17.02 -17.11

government’s carbon price support (CPS) rate rose to GBP18.08/t on Carbon

1 April, from GBP9.55/t in the previous financial year, which gets EUA €/t 7.26 7.35 7.51

added onto the EU carbon price. UK Carbon €/t 32.73 32.37 32.20
Notes: Differentials are calculated by taking the spark away from the dark – therefore negative
Including the cost of carbon in the calculations gives the “clean” numbers favour coal over gas and positive numbers favour gas over coal.
spreads, which saw coal’s margin over gas increase overall. Spark spreads assume an efficiency of 49.13% whilst dark spreads assume an efficiency of 36%.
The clean dark spread is up 11% at GBP4.12/MWh from GBP3.70/ UK power and gas prices are from Marex Spectron.
Source: Marex Spectron
MWh two weeks before, while the clean spark fell to GBP1.04/MWh,

18  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com

 Data Pages

UK spark-spread differential UK dark-spread differential

14 35
12
30
10
25
8

£/MWh
£/MWh

6 20

4 15
2
10
0
-2 5

-4 0
08-May 15-May 22-May 29-May 05-Jun 12-Jun 08-May 15-May 22-May 29-May 05-Jun 12-Jun

dirty spark clean spark dirty dark clean dark

UK dark and spark-spreads compared to carbon prices UK clean-spread differential

35 33.00 7
6
30 32.80
5
32.60 4
25
32.40 3
€/tonne

20
£/MWh

£/MWh

2
32.20
15 1
32.00 0
10 31.80 -1
5 -2
31.60
-3
0 31.40 -4
08-May 15-May 22-May 29-May 05-Jun 12-Jun 08-May 15-May 22-May 29-May 05-Jun 12-Jun

dirty dark dirty spark Carbon clean dark clean spark

German dark-spread differential German dirty-dark and dirty-spark spreads

20 20
15
15
10
10 5
5 0
€/MWh
€/MWh

-5
0
-10
-5 -15

-10 -20
-25
-15 -30
-20 -35
08-May 15-May 22-May 29-May 05-Jun 12-Jun 08-May 15-May 22-May 29-May 05-Jun 12-Jun

clean dark dirty dark dirty dark dirty spark

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  19

Indonesia > Corporate
Indonesian market update incorporating Indonesian Coal Report
Indonesia’s Cakra gets
backing for Cokal bid
Indonesia’s Cakra Mineral has sealed an underwriting deal for
a US$100m equity raising to fund its takeover bid for Cokal, the
Australia-quoted company developing the Bumi Barito Mineral
(BBM) coking coal prospect in Central Kalimantan.
The equity issue will be underwritten by Sinarmas Sekuritas,
an offshoot of the Sinar Mas Group, one of Indonesia’s
largest conglomerates.
The arrangement satisfies a condition of Cakra’s Cokal bid, estimated
to be worth A$75.5m (US$57.4m). Other conditions apply, but Cokal
now predicts the transaction could be complete by mid-August.
Meanwhile, Cokal has detailed a private placement to raise
A$2.5m from Asia commodities investor Cedrus Investments. With
another investor, Platinum Partners, Cedrus is also negotiating a
US$110m finance facility for BBM.
Indonesian barge operators
see little activity
Indonesian barging operators continue to endure weak market
conditions, further diluting export activity out of Kalimantan.
“Only about 60% of my 25 barges are operating and they are
mostly serving the domestic market,” a Jakarta-based tugs and barge
services operator said.
Water levels on Kalimantan’s Mahakam and Barito rivers are
optimal for barging at maximum capacity, sources say.
But domestic market demand remains low and barging operators
are struggling to cope with the slump in coal exports.
“My other colleagues only have 30-40% of their barges traveling up
and down the rivers,” the source added.
Corporate
Blackhawk takes the lead
in race for Patriot assets
Blackhawk Mining has officially entered a letter of intent to
acquire assets from struggling United States-based Patriot Coal, with
an emphasis on metallurgical coal properties.
The deal is worth $643m plus other considerations, Patriot said.
The Central Appalachian coal producer is in the midst of its second
Chapter 11 bankruptcy filing in the past two years.
“Our focus is to build a company that can compete in the reality
of today’s thermal and metallurgical coal markets,” Blackhawk
president Nick Glancy said. “This acquisition furthers that goal by
sustainably increasing our leverage to metallurgical coal markets.”
Blackhawk’s focus within the proposal of purchased assets
includes the met coal mines Panther, Rocklick and Wells, the met
and thermal mines Kanawha Eagle and Paint Creek, as well as the
Midland Trail thermal complex. Combined 2013 coal sales from the
assets Blackhawk hopes to purchase came in at 9.83 million short
tons, according to Patriot.
20  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
“We feel strongly that the proposed transaction with Blackhawk is
in the best interest of Patriot, and its employees and stakeholders,”
Patriot CEO Bob Bennett said. “This transaction creates a viable
path forward in this challenging market environment, enabling our
mining operations to continue serving customers and preserving
jobs in the communities in which they operate.”
The companies are still in the documentation and negotiating
process, and hope to finalise a deal by September.
Patriot assets not included in the proposed transaction with
Blackhawk will be subject to a separate sale process, during
which Patriot will continue shipments and sales to customers on
a normal schedule.
Wollongong Coal shares
suspended over missing report
Shares in Australian metallurgical coal producer Wollongong
Coal have been suspended from stock-exchange trading over the
company’s failure to report its results.
Wollongong, controlled by India’s Jindal Group, is yet to lodge its
preliminary report for the year to March. It has not reported audited
accounts since November 2014, revealing a loss of almost A$63m
for the six months to September, with auditors citing “significant
uncertainty” on its ability to remain solvent.
The company released unaudited “management accounts” in
February this year, showing a A$36.1m loss for October-December,
with zero revenue from coal sales. Its first-quarter production was
just over 33,000 t, again, with no sales declared.
Coalspur takeover
enters final phase
The takeover bid by an associate of the US-based Cline Group
for Canadian thermal coal developer Coalspur has entered its final
phase, following approval from Australia’s Federal Court.
Coalspur said on 11 June that the takeover should become legally
effective this week, with the company’s shares suspended from
stock exchange quotation.
Shareholders holding Coalspur stock on 18 June are then
expected to receive the Cline offer, equating to US$0.23/share,
scheduled to be paid by 25 June.
Walter Energy delays
another debt repayment
United States-based metallurgical coal shipper Walter Energy
has delayed another scheduled interest payment, its second such
move in recent months.
Walter said it has opted to exercise a “30-day grace period” from
the due date of 15 June for an interest payment on debt securities
described as Senior Notes.
The company said it continues to “work with its debt holders
to establish a capital structure that will position the company to
weather a highly competitive and challenging market”.
mccloskeycoal.com
 Corporate > Mining

A similar decision earlier this year to delay an interest payment Monthly throughput from key export ports (‘000t)
Port May-14 May-15 Jan-May'14 Jan-May'15
on a separate debt category sparked rumours that company may
Australia
be preparing for a Chapter 11 Bankruptcy filing. Walter itself has
Abbot Point 2,167 1,909 8,923 11,134
canvassed Bankruptcy as an option in corporate reporting documents.
Dalrymple Bay 6,140 6,019 26,640 28,380
But the company last month made the relevant interest payment,
Hay Point 3,451 3,427 17,249 17,343
insisting it remained solvent. “Walter Energy does not have a
Gladstone 5,654 5,743 28,531 26,947
current liquidity issue as it had approximately $435m of cash and
Brisbane 658 703 2,848 3,082
investments at 31 March, 2015,” it said.
Port Kembla 990 1,044 5,479 4,771

Mining Newcastle
PWCS 8,701 9,177 46,001 43,606

Guildford in Mongolian NCIG

Total
3,732
31,493
4,135
32,157
18,098
153,769
19,535
154,798

thermal coal deal South Africa

Richards Bay 5,580 6,517 26,993 31,011

Mongolian metallurgical coal shipper Guildford Coal is moving Port Apr'14 Apr'15 Jan-Apr'14 Jan-Apr'15

into the country’s thermal coal/power business with a deal to take United States**

an 80% stake in a mine mouth coal-fired generating project. Norfolk 3,657 2,037 15,282 9,720

The project at Tsaidam Nuur involves three mining licences Baltimore 985 1,618 4,141 6,004

covering a coal deposit close to a proposed 600 MW power plant, New Orleans 693 839 4,219 2,738

slated for connection to the Mongolian central energy system and Mobile 880 904 4,148 4,071

endorsed by the government, Guildford said. Total 6,215 5,398 27,790 22,534
* includes Qinhuangdao/Jintang/Huanghua  ** To destinations excluding Canada
The company plans to buy control of the project from local
Source: IHS Energy, RBCT, US FTD
company Tsaidam Energy, subject to approvals. Australia-quoted
Guildford, with Noble Group as a strategic shareholder, started
shipments earlier this year from its Baruun Noyon Uul mine in Key port stocks (mt)
Port March April May
Mongolia’s South Gobi region.
2015 2015 2015

Jameson to pay less for

ARA
Amsterdam (OBA) 2.50 2.20 2.45

Canadian coking coal project Rotterdam (EMO)

Total
2.10
4.60
1.80
4.00
1.90
4.35

The three companies selling Australia-based Jameson Resources South Africa

a Canadian coking coal project have “agreed to accept a significant Richards Bay n/a n/a n/a

reduction in the remaining compensation”, Jameson said, after Total n/a n/a n/a

the company reviewed its portfolio and found the costs under the China

original terms of the agreement “could not be justified”. Domestic

When Jameson agreed to acquire the Dunlevy coking coal project Qinhuangdao 8.00 5.59 6.04

in 2011, it said it would issue an additional consideration of 6m Guangzhou 2.74 1.95 2.14
Source: IHS Energy
shares. However, Jameson said the three companies have now agreed
to accept 0.6m shares to complete the acquisition. It will issue 0.3m
shares this month and 0.3m in June 2016. CoAL said last month that it had been awarded mining rights at
The Dunlevy project is located in the Peace River mining district Makhado, slated as a 5.5 mt/y project producing about 2.3 mt/y of
of northeastern British Columbia. Production in the region is not hard coking coal, with the rest thermal.
profitable given current coking coal prices. However, Jameson said, The company recently ran an asset-divestment programme
“The Peace River holdings continue to represent significant potential including the sale of the mothballed 1.6 mt/y Mooiplaats thermal
upside at a low holding cost.” coal project in South Africa.

CoAL completes funding Yancoal mine extension

for Makhado project
South Africa-listed Coal of Africa (CoAL) has completed a three-
stage funding programme worth $59.1m, with the funds earmarked
for development of the Makhado metallurgical/thermal prospect in
Limpopo province.
The company said the funding programme involved a share
placement raising $12.4m.
gets key approval
Quoted Australian shipper Yancoal has received a key approval
for a planned 2.6 mt/y extension of the Stratford metallurgical/
thermal operation in New South Wales.
The state government Planning Assessment Commission has
approved the project, but the federal government still needs to issue
environmental approval, Yancoal said.

mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  21

Mining > Power
The Stratford extension involves three mining areas using existing
on-site infrastructure. Stratford is part of Yancoal’s Gloucester
mining group, also including the Duralie mine.
The complex has capacity of about 2.0 mt/y of met and thermal
coal, but saleable output dipped to just 0.31 mt for the first quarter of
this year, down 42.6% on the year from 0.54 mt.
Canada’s Donkin mine could
start production this year
Kameron Collieries, a Canada-based subsidiary of the US Cline
Group, is expected to begin production at the Donkin coal project in
Nova Scotia this year, industry sources told IHS Energy.
“The de-watering process at the two mine tunnels was completed
last week, and Nova Scotia Power has reportedly agreed to purchase
400 t of test coal from Donkin,” one source said.
Kameron has placed advertisements seeking continuous miner
machine operators, underground mine foremen and other skilled
labour for employment in Canada, a source said.
The company has not officially made any announcements about
when production will start; however, it could happen later this month,
when Kameron officials meet with provincial government leaders.
Donkin coal is expected to have average specs of 14,600 Btu/lb, 2.8%
ash and 2.25% sulphur, and can be marketed as high-vol metallurgical
coal or steam coal. Kameron has indicated that it plans to sell Donkin
coal as steam coal, a market in which Cline has a great deal of expertise.
Kameron expects production at Donkin to begin at 1 mt/y, with
the potential to rise to 3 mt/y when market conditions improve.
Donkin has 344 mt of identified or inferred coal reserves under the
North Atlantic seabed.
“Kameron is negotiating with Nova Scotia Power to establish a
long-term contract to supply the Lingan plant,” another source said.
“That would be a good base to build on.”
Kameron has favourable logistical conditions at Donkin. The
mine is located 30 kilometres (km) from the Port of Sydney, which
can accommodate Capesize vessels. Coal can be delivered to port by
truck or barge.
Mining will take place in two tunnels that extend about 0.25
miles (0.4 km) under the North Atlantic ocean bed. The mine has
never been in production before. Federally owned coal producer
Cape Breton Development Corporation carved out the tunnels in
1980. However, it put the project on hold when coal prices fell, and
decommissioned all its mines in 2001.
In December 2014, Kameron bought Glencore’s 75% interest in
Donkin for an undisclosed sum, and in January it agreed to buy
the remaining 25% from Morien Resources for $5.5m, plus royalty
payments of 2-4%.
Power
Philippines coal-fired
generation jumps in April
Coal burn in the Philippines increased in April, with coal-
fired generation on the major Luzon and Visayas grids rising by
a combined 31% to 2,823 GWh, from 2,163 GWh in March, the
22  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
country’s Wholesale Electricity Spot Market (WESM) data show.
Coal took first place in the power mix in April, with its share rising to
53.4%, from 46.9% in March and 43.1% in February. This jump is largely
seasonal, as air-conditioning demand starts to increase for the summer.
Total power consumption also grew in April, climbing 15% on the
month, to 5,287 GWh from 4,612 GWh in March. It was also up 3%
from 5,124 GWh in April 2014.
Gas was second in the mix at 1,279 GWh, down 1% from 1,287 GWh
in March. Gas held a 24.2% market share, a fall from 27.9% in March.
Geothermal held a 14.7% market share, down from 15.1% in March,
although generation rose to 777 GWh from 696 GWh.
Mindanao – the country’s only other grid, which covers the south
– is not part of the WESM data. There is currently no major coal-fired
generation on its network.
UK Q1 thermal coal use falls
15% to record low
The United Kingdom’s (UK) first-quarter thermal coal use hit its
lowest level on record this year, as competition with gas ramped up
and installed coal-fired capacity continued to decline.
Coal consumption by UK power generators reached 11.3 mt in January-
March, down 15% from 13.3 mt a year earlier, making it the lowest first-
quarter total on Department of Energy and Climate Change (DECC)
records, which go back to 1995. However, consumption in the first
quarter of this year rose 8% from 10.5 mt in the fourth quarter of 2014.
The decline is a result of several factors, including increased
competition from gas, which partly stems from the UK government’s
carbon price support (CPS) rate. In April 2014, the CPS rate rose to
£9.55/t ($14.72/t), from £4.94/t in the previous financial year, which
is added onto the cost of European Union carbon-offset permits.
The rate increased again to £18.08/t from 1 April this year, which
is expected to have resulted in gas surging ahead of coal in the merit
order, meaning coal-fired power will have a place in the market only
in the winter.
The clean-dark spread, which is the margin for coal-fired generation
after carbon is offset, was an average of £9.38/MWh more profitable that
the equivalent gas margin in the first quarter of this year, compared with
an advantage of £17.81/MWh in the same period last year.
In 2014, gas-fired generation edged ahead of coal for the first time,
with gas output rising 6% year-on-year to 101.1 TWh, while coal-fired
generation fell 26% to 97.4 TWh, according to DECC.
The fall in UK coal usage is also a reflection of several coal-fired
power plants either being decommissioned or converted to run on
alternative fuels such as biomass.
The UK’s installed coal-fired generation fell to 18.8 GW in 2014,
from 21.2 GW in 2013, and is off more than 10 GW from 29.1 GW in
2010, according to IHS data. This trend is expected to continue, with
more closures announced including the last remaining 1 GW unit at
Ferrybridge power station, which will close next year.
Power stations’ full-year coal consumption is forecast to fall 10%
to around 35.0 mt this year, from 38.4 mt last year, according to IHS
Energy Steam Coal Forecaster.
Meanwhile, coal stocks held by power generators averaged 18.6
mt across the first quarter, up 37% from an average of 13.6 mt in
January-March 2014, and marginally higher than 18.4 mt in the
fourth quarter of 2014.
mccloskeycoal.com

“UK stocks are ridiculously high, and the means of consuming those
stocks are much less than in previous years with installed capacity
down and coming off hard,” one European utility/trader said.
Taiwan’s coal-fired generation
falls 5% in Jan-Apr
Taiwan’s coal-fired power generation fell 5% year-on-year in
January-April, data from state-owned power group Taipower show.
Coal was responsible for 25,104 GWh of generation in the period,
down from 26,425 GWh a year earlier.
Total power generation in the period rose 0.9% y-o-y, to 65,824
GWh from 65,218 GWh.
Coal’s share of the generation mix was 38.1% in January-April,
falling from 40.5% in the same period last year.
Gas generated 21,332 GWh in the four months, up 14.6% y-o-y
from 18,622 GWh, while its market share rose to 32.4% from 28.6%.
Nuclear accounted for 12,019 GWh during the period, down 7.8%
y-o-y from 13,039 GWh. It covered 18.3% of the generation mix,
down from 20.0% a year earlier.
Oil-fired generation rose 75% y-o-y in January-April, to 2,263 GWh
from 1,292 GWh, while renewables and hydro increased collectively
by 41%, to 2,505 GWh from 1,778 GWh. Combined heat and power
output fell 45%, to 1,651 GWh from 3,031 GWh.
Spain’s coal consumption
continues to grow
Spain’s coal-fired generation continued to rise in January–May
at the expense of hydro generation, according to the latest statistics
from grid operator Red Electrica de España.
Generation using domestic and imported coal increased by a combined
91% on the year in the five-month period, to 17.27 TWh from 9.06 TWh.
In comparison, hydro generation fell 36% to 13.71 TWh from
21.37 TWh, while gas-fired generation increased 30% to 9.15 TWh
from 7.00 TWh.
In January-May, coal generated 15.2% of Spain’s electricity. Nuclear
captured a larger share at 22.2%, followed by hydro with 14.2%, while
cogeneration – solar, wind and combined-cycle gas turbines – and
fuel oil supplied the balance. In the same period of last year, nuclear
had a 22.9% share, hydro supplied 21.8% followed by coal with 8.1%.
Total generation in January-May was 107.25 TWh, up just 0.6%
from 106.60 TWh a year earlier.
El Niño likely to increase
Chile’s hydro output
El Niño is expected to increase hydro availability in Chile’s central
and southern regions, according to the country’s weather service.
Chile has experienced a severe drought for the past five years, but
El Niño reportedly has a 70% chance of increasing rainfall to above
average levels in the second and third quarters of this year, meaning
hydro generation would displace gas-fired generation.
During El Niño, surface water temperatures on the Pacific
Ocean become warmer than average, causing droughts in some
mccloskeycoal.com
Power
northern regions of South America and increasing rainfall in the
Northern Peru and Southern Chile.
The average temperature has increased by close to 1°C in the
past month, indicating higher than usual rainfall in June and July,
according to an official from Chile’s weather service. Before the
temperature began to rise, weather forecasters had predicted a dry
year, similar to the predominant pattern of the past four years.
High rainfall could cut marginal electricity costs by up to 70% to $30-
50/MWh on Chile’s Central Interconnected System (SIC) power grid,
which supplies 93% of the population. In comparison, costs can reach
$50-70/MWh and $140-160/MWh during drought conditions. Current
low coal prices mean marginal costs at coal-fired units are $40-50/MWh.
Chile expects to import 10.0-10.5 mt of coal this year, compared
with 9.3 mt last year. The expected restart of Endesa’s coal-fired
Bocamina complex in the next three months will help boost intake.
Vietnam’s coal-fired
generation rises 12% in May
Vietnam’s coal-fired generation jumped in May, as total power
demand grew with the beginning of the summer-demand season.
Total generation rose 11.8% to 14,981 GWh last month, from 13,402
GWh in April, data from state-run electricity company EVN show.
Coal-fired generation increased 25.4% over the period, to 5,670
GWh from 4,523 GWh. Its share of the generation mix rose to 38.3%,
from 33.7% in April.
Hydroelectricity production showed only a moderate increase in May,
climbing to 4,389 GWh from 4,287 GWh in April. Hydro accounted for
29.3% of May’s power generation, down from 31.0% in April.
Gas-fired generation, along with electricity imports from China,
also increased their contributions to the grid compared with the
previous month.
Natural gas generated 4,259 GWh in May, giving it a 28.6% market
share. While the volume grew from April’s 4,142 GWh, the market
share fell from 31.0%.
Electricity imports from China accounted for 1.0% of the mix at
151 GWh in May, which is down from 1.1% and 146 GWh in April.
Oil and small-scale gas turbines got only limited use in May,
generating 21 GWh and 18 GWh respectively. However, this is up
from April, when they produced 1 GWh and 2 GWh respectively.
German coal generation
falls 3% in Jan-Mar
German coal-fired power generation fell by 1.25 TWh, or 3% on
the year, to 40.81 TWh in January-May, according to provisional
Fraunhofer ISE data.
Coal burn fell roughly 0.5 mt over the period, and in May alone
coal-fired generation dropped almost 25% to just 5.42 TWh,
compared with 7.20 TWh in the same month of 2014.
Consumption slid against a background of rising renewables
output. Combined German wind and solar generation rose by 8.6
TWh, or 23% on the year, to 46.1 TWh in in January-May, according
to EEX transparency data.
Over the same period, Germany’s electricity export surplus soared
to 22.1 TWh from 17.1 TWh, Fraunhofer ISE data show.
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  23
Power > Transport & Logistics
Market-stability mechanism's potential impact on CO2 price
Year 2015 2016 2017 2018 2019 2020 2021
CO2 price (EUR/t) 7 7 8 8 8 9
Source: Agora Energiewende
Despite the fall in coal-fired generation, there is still plenty of
potential for marketing coal generation through electricity exports,
according to thinktank Agora Energiewende.
The expansion of renewables means Germany requires ever less
electricity from conventional generation and will steadily increase
exports, Agora Energiewende said.
This will be possible because low carbon dioxide (CO2) prices make
lignite and coal-fired generation particularly competitive, allowing
them to push gas generation elsewhere in Europe out of the market.
The downside is that Germany looks unlikely to meet its CO2
emissions reduction target for 2020¬ – a 40% cut compared with 1990
levels – and beyond. Without additional political measures at a national
level, the German export surplus will continue into the medium term,
even taking account of rising CO2 prices because of reform of the
European Union emissions trading scheme, the thinktank said.
In May 2015, the European Council and European Parliament
agreed that the CO2 market-stability mechansim should kick in from
2019, taking in 900 million backloaded certificates, as well as an
expected surplus to 2020 of another 900 million certificates.
The market-stability mechanism is designed to take surplus CO2
certificates out of the market and return them when a scarcity arises,
with the aim of generating a CO2 price that can incentivise a lower-
carbon generation mix, Agora said.
It analysed the impact of the measures and found only a slow
increase in the CO2 price to EUR19/t ($21.50/t) in 2030 (see table).
Although Germany’s need for conventional power capacity will
roughly halve by 2035, its coal and lignite fleets remain competitive
in neigbouring electricity markets, and are key to it increasing its
electricity export surplus through to 2030, Agora said. It cites studies
in which the annual export surplus is forecast to rise to 41-53 TWh
by 2020 and stay at about this level to 2030.
Germany plans to significantly increase its cross-border transmission
capacity in the coming years to help with exports. Its Transmission
Network Development Plan 2014 foresees connections with
neighbouring countries nearly doubling in capacity to 25.6 GW by 2024,
with another 8.4 GW added by 2034, according to the Agora study.
German electricity export surplus 2010-14
Year 2010 2011 2012 2013 2014
Electricity export surplus 18 6 23 34 36
Source: Agora Enegriewende
Lignite is currently the cheapest form of generation in Gemany,
with marginal costs of EUR18-24/MWh because of low variable
lignite costs of around EUR2/MWhth, and low CO2 allowance prices.
Nuclear – which is being phased out by 2022 – would be the cheapest,
with short-term fuel costs of EUR3/MWhth, were it not for the
nuclear fuel tax introduced in 2011 and running to the end of 2016,
which adds EUR13/MWhth and makes marginal generation costs
EUR21-24 /MWhth.
Coal plants have marginal costs of EUR22-32/MWh, currently lower
than gas because of low coal prices of around EUR9/Mwhth, the study
said. Gas-fired costs are EUR43-53/MWhth, the highest of all fossil
24  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
2022 2023 2024 2025 2026 2027 2028 2029 2030
9 10 12 13 14 15 16 17 18 19
fuel generation, because of high gas prices of abut EUR22/MWhth.
Lignite federation Debriv said in 2014 that CO2 prices would have
to increase tenfold to around EUR55/t to make a swtich to gas from
lignite economic.
JPU monthly coal use
falls again in May
Japanese power utility (JPU) coal use fell year-on-year for the
second consecutive month in May, according to the Federation of
Electric Power Companies of Japan.
The JPUs consumed 3.19 mt in a public holiday-impacted month,
down 20.3% y-o-y from 4.00 mt, and down 16.9% from 3.84 mt in April.
The dip followed a 3.0% y-o-y fall in total JPU generation and
purchases in May, to 64.98 TWh.
It also reflected a 16.5% y-o-y lift in hydro generation to 6.83 TWh
last month, with the water flow rate at 99.3% against 88.9% a year
earlier. Nuclear generation remained at zero.
Transport & Logistics
Egypt plans port upgrades
Plans to upgrade Egypt’s ports to meet the growing needs of its
solid-fuel imports are under way, according to Waleed Abouraya,
president of RGS Egypt, speaking at the Argus Mediterranean Solid
Fuels conference in Istanbul, Turkey, on 3 June.
Work is taking place on plans to upgrade Alexandria or Dekheila
port in the Mediterranean to accommodate Capesize vessels,
expanding from their existing Supramax capacity. Realisation of this
is 3-4 years away, Abouraya said.
Adabiya port in the Gulf of Suez is also building a new terminal
that will be able to take Panamaxes, but there is no specific timetable
for completion. Financing for the projects is still being finalised.
Egypt’s thirst for power and energy is significant and the country
lacks sufficient natural gas to meet the growing demand. The country’s
power production is 27 GW, while consumption is 30 GW and Abouraya
said an additional 30 GW will be needed by 2027. The government has
already approved five coal-fired projects totalling 10 GW.
The country’s thermal coal imports are slowly increasing, but
Abouraya expects Egypt to become a major player in the thermal
coal market in the years ahead. The government is already trying to
raise revenue from solid fuels and recently applied a 1% import tax to
thermal coal and petroleum coke imports.
RZD mulls rail freight
discount for met shippers
Russian state-run railway operator RZD is considering
reducing tariffs for coking coal producers, who are struggling with
negative margins.
mccloskeycoal.com
 Transport & Logistics > Steel > Markets - Steam Coal
“We are in talks with several producers who show that given
the rouble’s volatility and the tariff they pay, the price of their
production is becoming uncompetitive,” RZD president Vladimir
Yakunin said. “Coking coal is in a difficult situation.”
RZD is also introducing a 6% discount on tariffs for domestic coal
transportation from certain railway stations in Kuzbass, as long as
producers guarantee the amount of coal they intend to transport.
The stations include Malinovka, Mezhdurechensk,
Oboronnaya, Osinniki and Abza. RZD said up to 20.2 mt of coal
can be transported under the reduced tariff between 20 June and
the end of this year.
Last month, RZD suspended Kuzbass Fuel Company’s transportation
of thermal coal to the port of Vostochny in eastern Russia, to give
coking coal preference at the terminal’s limited storage capacity.
Russia’s Zarechny resumes
thermal output and railings
Thermal coal production at Suek’s Zarechny open-pit mine
in Russia’s Kuzbass region is going well and is expected to return
to full capacity next month, following a landslide in April that
restricted output.
Railcar deliveries from the mine to export terminals have also
resumed, helping to build port stocks. Thermal coal inventories
at the Baltic terminal of Ust-Luga and Barents Sea terminal of
Murmansk are back to normal levels. For Murmansk, this means
thermal stocks are 0.20-0.25 mt.
Before April’s landslide, railcar deliveries averaged 0.70-
1.00 mt/month. But the incident disrupted production and
deliveries, as well as output at Kuzbassrazrezugol’s adjoining
Taldynsky open-cast mine.
The landslide was caused by a 10 million cubic metre “slag heap”
collapsing at Taldynsky, which is situated near Novokuznetsk. Some
coal deliveries were getting out by truck, then using a nearby loading
station to be railed on to export terminals. But this was a limited and
more expensive option.
Thermal coal from Zarechny, located in the Kemerovo region, is
high c.v., with an average heat value of 6,100 kc NAR. The mine can
produce up to 2 mt/y.
Steel
Ukraine’s met coke output
rises 15% in May
Ukraine’s metallurgical coke output increased 15% to 969,000
t in May, from 842,000 t a month earlier, according to national coke
producers’ association Ukrkoks.
The Avdeevsky, Yasinovsky and Alchevsky coke plants all
increased output last month, while production fell at Zaporozhkoks,
mostly because of old equipment.
There is plenty of coke availability for Ukrainian steel-makers,
because coke imports have increased considerably, Ukrkoks said, but
did not provide any exact figures.
However, January-May met coke output declined by 40.4% on the year
to 4.26 mt, largely because of the political instability in the country.
mccloskeycoal.com
Markets - Steam Coal
Russian thermal cargo
sells into Egypt
A European cement producer with assets in Egypt has booked a
Russian thermal coal cargo for delivery into Alexandria, Egypt.
It paid $71.50/t CIF Alexandria, basis 6,000 kc NAR, for up to
60,000 t for delivery in August. Freight costs for a Supramax loading
out of Black Sea ports, such as Novorossiysk, are $9.50-10.50/t.
This is the first deal for thermal coal into Egypt since mid-March,
when South African cargoes were closing at $90/t CIF Gulf of Suez,
but these deals were for 30,000 t and freight costs were very high
at about $28/t. A separate cement producer is looking for a thermal
Panamax into Greece for prompt delivery.
Russian coal is more competitive than South African coal,
especially for smaller vessels. There has been strong bidding interest
for prompt South African coal in recent weeks and this has pushed
FOB prices higher.
Vizag Steel tenders
for thermal coal
Indian state-controlled steel maker Rashtriya Ispat Nigam
(RINL), also known as Vizag Steel, is in the market with a spot
tender for 50,000 t of imported thermal coal. The deadline for
offers is 26 June.
The company requires coal with a heating value of 5,800 kc GAD
minimum, 20% max moisture, 12% max ash on an air dried basis
and 0.9% max sulphur.
The shipment should be priced on a FOB basis, with unloading to be
through the east coast Indian ports of Visakhapatnam or Gangavaram.
A delivery schedule will be agreed within 30 days of award.
Joban Joint tenders
for 2015-16 supply
Joban Joint Power has tendered for six Panamaxes of thermal
coal for supply from July 2015 to March 2016. The closing date for
offers is 19 June.
While Joban is a relative regular in spot markets, this latest tender,
understood to involve what is broadly a Newcastle spec, is part of a
growing strategy among major Japanese thermal importers to lift
their proportion of spot purchases versus contract procurement.
The tender comes amid strong talk that Tokyo Electric Power
Company (Tepco) is also preparing a large tender, perhaps around 1
mt, and probably seeking supply spread over the next 9-12 months.
This is in line with speculation that Tepco may not renew current
June-expiry contracts, but opt to take the tonnage either at index
pricing or through spot procurement, subject to negotiation
with suppliers.
A number of other major Japanese buyers are understood to have
sought spot supply in recent weeks for delivery in the second half of
2015, with Chugoku Electric, Ube Industries and Oji Paper said to
have picked up combined tonnage of about 400,000 t.
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  25
Markets - Steam Coal
Essar Power tenders
for 1.35 mt of thermal coal
India’s largest private-sector power producer, Essar Power
Gujarat, launched a spot tender for 1.35 mt of thermal coal for
August-October loading. The deadline for offers was 9 June.
Essar was seeking minimum 3,950 kc GAR coal, ideally 4,100-
6,200 kc GAR, with 38% max moisture, 16% max ash and 1% max
sulphur. It would prefer single-mine material, but will consider
blends, with pricing on a FOB basis.
The company required deliveries of 0.45 mt each month, in any
standard vessel size, but with a preference for Capesizes to CIFFO
Bedi anchorage, Port Bedi Bunder, Salaya Anchorage or Salaya Port.
Essar Power operates the 380 MW Vadinar and 580 MW Vadinar
P2 plants and the 1.2 GW Salaya plant.
India’s Vedanta tenders
for thermal coal
Indian power generator Vedanta entered the market with a
tender for imported thermal coal for various plants. The deadline for
offers was 8 June.
The company was seeking 150,000-200,000 t of June-July loading
5,500 kc GAR minimum coal, with 25% max moisture, 25% max ash
and 2.5% max sulphur, on a FOB basis.
Indian cement producers
return to petcoke market
India’s cement producers are looking at high-sulphur petcoke
once more, as South African thermal coal prices remain high.
A recent petcoke tender from one of the main buyers has seen
offers in the mid-$70s/t CIF east coast, basis 7,500 kc NAR, for a
Supramax loading out of the United States (US) Gulf of Mexico.
Freight costs between the Gulf and India have increased recently
by $1/t to $26/t.
A separate high-sulphur tender from a US oil refiner is also
understood to have concluded at $52/t FOB US Gulf, same basis, for a
July-loading Supramax.
Taipower issues Q3
bituminous tender
Taipower has issued a new tender for third-quarter supply of
bituminous coal, after cancelling a tender in the first week of June
because the offers exceeded its price ceiling. The deadline for the
new tender is 18 June.
The generator is now seeking six Panamaxes, 0.504 mt, of
bituminous material, 5,500 kc GAR min, with 15% max total
moisture and 15% max ash, although the moisture can be 22% max
if the ash content is less than 10%. The maximum sulphur content is
1.1%. Delivery is for July-October.
Offers of Indonesian cargoes must come with a copy of the ET
Batubara export permit issued by the Indonesian Ministry of Trade.
26  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
Morocco’s ONE issues Q3/Q4
thermal tender
Moroccan power generator Office National de l’Électricité
(ONE) is in the market for 0.256 mt of thermal coal for delivery
spread over the third and fourth quarters of 2015.
It is looking for eight shipments of 32,000 t for delivery into
Casablanca port in September-December. The laycan dates are 1-15 of
each month.
The closing date for offers is 9 July. Typical specs for ONE are 1.5%
max sulphur and a minimum heat value of 5,700 kc NAR.
Separately, Morocco’s Jorf Lasfar Electricity Company is
understood to have awarded Polish material in its recent tender
seeking one 60,000 t cargo in July, August and October. Price details
are murky, but offers for South African material at $66/t CIF Jorf
Lasfar, basis 6,000 kc NAR, did not make the shortlist.
Med cement producer seeks
petcoke and thermal
A Mediterranean cement producer is looking for petcoke and
thermal coal cargoes into Greece and Bulgaria, respectively, for
August delivery. It is requesting a 40,000 t mid-sulphur cargo into
Elefsina and a 20,000 t thermal cargo into Varna.
The same producer booked two cargoes in the first week of June
at $68.30/t CIF Thessaloniki, basis 7,500 kc NAR, for a 30,000 t,
5.5% sulphur cargo and a 20,000 t, 4.5% sulphur cargo at $72.80/t
CIF, same basis.
In Turkey, two tenders by separate cement producers have closed.
A deal for a Venezuelan Supramax closed at $75/t CIF Marmara,
basis 7,500 kc NAR, while another producer bought two mid-sulphur
cargoes at $73/t and $74/t CIF, same basis, for open origin cargoes
from the United States or Venezuela.
Freight for Supramaxes from Venezuela to Marmara ports is about
$15/t and from the United States Gulf is about $14/t.
Nova Scotia Power seeks
mid-sulphur steam coal
Canada’s Nova Scotia Power (NSP) is seeking bids on up to 0.75 mt
of mid-sulphur steam coal for delivery from the second half of this
year to the end of 2017.
NSP is requesting a minimum of 50,000 t with the possibility of
purchasing up to 0.15 mt for delivery in the third and fourth quarters
of this year, and a minimum of 50,000 t with possible buys of up to
0.2 mt each year in 2016 and 2017.
The company will evaluate offers for 2015 exclusively, or will
consider both 2015 and 2016 or longer-term offers extending to the
end of 2017. Bids can be on a fixed and index-priced basis, FOB load
port and CIF pricing for delivery to the International Pier, Sydney
and Point Tupper Marine Terminal.
Minimum quality specifications on an as received basis are
calorific value 12,800 Btu/lb, 30% volatile matter, HGI 50-60, 7%
typical moisture with 12% max, ash 7% (typical) and 12% (max).
Bids are due by 16 June and must remain valid until 30 June.
mccloskeycoal.com

Taiwan’s FPG tenders for
Philippines, China supplies
Taiwan’s Formosa Plastics Group (FPG) has tendered for 40,000 t for
supply to the Philippines in August. The closing date for offers is 15 June.
It has also issued two tenders for supply to China in the third
quarter, with a closing date for offers of 15 June.
The Philippines tender calls for minimum 5,500 kc GAR material
for delivery to Bataan port on 1-10 August. FPG specifies Handy
vessels and will accept only CFR offers.
The China tenders both seek unspecified tonnage of minimum
5,850 kc GAR product for delivery to China’s Houshi terminal from
1 July to 31 August. FPG has specified Panamax vessels and will
consider offers on a CFR basis only.
However, one tender calls for offers to be denominated in US
dollars, while the other requires offers in Chinese currency.
FPG tendered late last month for unspecified tonnage of minimum
6,000 kc GAR material for delivery to Taiwan’s Mailiao terminal
from 1 July to 31 August.
Trade
Morocco’s thermal imports
set to rise 70% to 11 mt/y
Morocco’s thermal coal imports are expected to rise by about
70% reach 11 mt/y in the next few years, according to Zakariye
Tajani, fuel procurement manager at Office National de l’Electricite
(ONE), speaking at the Argus Mediterranean Solid Fuels conference
in Istanbul, Turkey on 2 June.
The growth is being led by expansions to the coal-fired fleet. The 1.32
GW Safi plant is expected to be complete in 2017 and will import about
3.5 mt/y. A new baby Capesize terminal will also be built near the plant.
In addition, ONE’s 165 MW Jerada plant is adding a further 350
MW of capacity, which will see it import at least another 0.35 mt/y
of coal. It expects to complete this work by 2016.
Morocco typically imports about 6.50 mt/y for power generation
by ONE and the Jorf Lasfar Electricity Company. The import market
has grown steadily from about 5.30 mt in 2011, according to IHS
McCloskey data.
The country is also expanding its renewable sector and will develop
its first commercially operational solar plant this year, the Ouarzazate
160 MW facility. Renewable capacity is forecast to expand to 8 GW by
2020, as Morocco looks to reduce its dependence on fossil fuels, which
account for 81% of its energy needs. The country is also developing
its first commercial wind farm at Taza, which will have a capacity of
about 400 MW and is due online this year.
Egypt cement goals depend on
quicker switch to solid fuels
Egypt’s cement industry has to accelerate its switch from natural
gas to solid fuels if it is to reach its production potential, according to
delegates attending the Argus Mediterranean Solid Fuels conference
in Istanbul, Turkey, on 2-3 June.
mccloskeycoal.com
Markets - Steam Coal > Trade
There is a fundamental shortage of natural gas in Egypt and
the cement industry is not a priority user for the fuel, which the
government subsidises heavily. Cement plants are consequently
running at below capacity.
Egypt’s cement capacity is about 75 mt/y, but it is struggling to
produce 50 mt/y because of regular disruptions to energy supplies. It
has a production target of more than 63 mt for this year. However, if
the country is intent on reaching its target of 90 mt/y in the next few
years, its imports of solid fuels will have to improve significantly.
So far this year, Egypt has imported about 0.30-0.35 mt of thermal
coal, mainly from South Africa, compared with zero last year.
However, an Egyptian cement producer recently bought a Russian
Supramax of thermal coal.
There are restrictions on how long solid fuel imports can be stored.
Petroleum coke and thermal coal can only be stored in a covered
area and for up to four weeks. Outside port areas, solid fuels must be
limited to the equivalent of 21 days’ consumption.
Earlier this year, the country’s Industrial Development Authority
(IDA) proposed 12 new cement-production licences nationwide
in 2015. The IDA will not consider urban areas such as Cairo and
Alexandria, but focus instead on areas such as Beni Suef and New
Valley. The specifications of the solid fuels, such as heat value, sulphur
and volatile limits are dealt with on a licence-by-licence basis.
Imports of coal and petcoke have to deal with weak infrastructure
at ports, meaning vessels are subject to delays, and then can
face poor-quality roads. Egypt’s ports are also restricted to
berthing Supramaxes.
Currency issues are also a difficult barrier, as converting the
Egyptian pound back into euros or US dollars provides another cost
for traders.
Colombian thermal stocks
rise, spill into ARA
Thermal coal stocks at Colombian ports are understood to be
building, with inventories at Glencore’s Puerto Nuevo said to have all
but doubled to near full capacity at 1.5-2.0 mt in early June, despite
ongoing restrictions on the Fenoco railway’s night-time activities.
Puerto Nuevo stocks stood at 0.9 mt at the start of May, having
been depleted by the ban on railings between 2230 and 0430,
which was implemented on 13 February. However, Drummond’s
port inventories are said to remain at 0.3-0.4 mt, steady compared
with last month, but half of the average for the terminal before the
Fenoco disruptions began.
Glencore declined to comment when contacted by MCR;
Drummond was unavailable for comment.
The restart of night railings is now not expected until the start of
September, following another ruling handed down by Colombia’s
Constitutional Court that extended the ban through Bosconia
in Cesar province for three months and to cover the towns of
Fundación and Zona Bananera.
The high stocks at Porto Nuevo could be pushing more coal across
the Atlantic to the Amsterdam-Rotterdam-Antwerp (ARA) hub,
where total coal inventories at the five major terminals stand at 6.79
mt, up from 6.36 mt in late May and 6.09 mt in February.
In particular, thermal stocks at the EBS terminal in Rotterdam
have risen to multi-year highs of 0.75 mt, more than three times
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  27
Trade
higher on the year and putting them at their highest level since June
2012. This is understood to be partly because the Ertsoverslagbedrijf
Europoort C.V. (EECV) terminal is diverting vessels to EBS due to
high stocks and vessel congestion.
One of the factors leading to stock increases is lacklustre demand
in Europe, which is seeing a seasonal slowdown because of reduced
heating demand and higher renewable output, plus increased
competition from gas.
“It’s a choice between building stocks and exporting less or
keeping the exports flowing and letting stocks remain low,” one
European utility/trader said of the higher Colombian inventories.
“But once stockpiles are full you either have to slow production or
stimulate demand by lowering prices.”
Last year, Fenoco moved 41 mt of coal to ports on the Caribbean
coast, which accounted for 54% of Colombia’s exports, while total
coal capacity on the rail line is 65-67 mt/y.
First-quarter 2015 output in Cesar department clearly reveals the
impact of the Fenoco ban, with production falling about 10% on the
year, to 12.70 mt from 13.97 mt.
Vostochny coal throughput
rises 31% in May
Russia’s eastern port of Vostochny exported 2.15 mt of coal to
Asia-Pacific in May, up 31% from 1.64 mt the previous month, the
port authority said.
Volumes were 10% higher compared with May 2014, when exports
totalled 1.95 mt.
Handling at the port’s automated specialised coal complex hit a
monthly record of 1.75 mt in May, as volumes rose 14.6% on the year.
Vostochny has been exporting mostly coking coal since Russian
state-run railway operator RZD suspended Kuzbass Fuel Company
from railing thermal coal to the port as of 16 May.
The suspension, which will last until further notice, is a result of
limited space for thermal coal storage at Vostochny and the port’s
inability to keep up with railcar arrivals.
API5, API8 volumes expand,
Newcastle falls
Newcastle paper volumes slumped in May, hitting their lowest
monthly level for this year.
However, total volumes for January-May more than doubled on
the year.
Traded futures and options combined fell to 26.3 mt in the month,
less than half of the all-time peak of 58.8 mt achieved in February,
and far lower than the 41.4 mt and 44.5 mt recorded in March and
April respectively.
Newcastle futures and options trades stood at 199.4 mt in January-
May, up from 78.2 mt in the same period last year.
In the newer Asian swaps markets, API5 volumes rose 23.8% on
the month to 495,000 t in May. And across the first five months of
this year, the total traded volume for API5 reached 2.5 mt, nearly
triple the 0.9 mt traded in the same period last year.
API8 also saw liquidity picking up again in May, with 467,000 t
traded, up 86.8% from the previous month’s low of 250,000 t.
28  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
Swaps done against the IHS McCloskey Indonesian Sub-bituminous
FOB marker dropped, with 70,000 t going through in May, down from
190,000 t in April.
Japan met imports dip 1% in
April, but Canada boosts share
Japan’s metallurgical coal imports edged 1% lower to 3.80 mt in
April, from 3.85 mt in the same month a year earlier, with volumes
from Australia declining but Canada and Russia increasing their
market share, according to government statistics.
The monthly total was up 18% compared with March this year,
when Japan imported 3.23 mt.
Australia remained the dominate supplier in April, but its
shipments fell 14% to 2.30 mt, from 2.67 mt in April 2014, and were
stable on the month.
Volumes from Canada increased 8% on the year, to 0.94 mt from
0.87 mt, and were more than double the 0.35 mt shipped in March.
Russia supplied 0.31 mt in April, up from 0.12 mt in April last year and
0.20 mt in March this year.
In January-April, Japan imported a total of 14.0 mt, down 7% from
15.0 mt in the same four months of 2014.
Turkey’s thermal imports
rise nearly 80% y-o-y
Turkey’s thermal imports increased strongly year-on-year in
April, led by robust intake from South Africa, according to the latest
data from the Turkish Statistical Institute.
Total thermal imports in April were 2.00 mt, up from 1.12 mt in the
same month last year, an increase of 79.40%. January-April imports
were 8.69 mt, compared with 6.62 mt in the same period last year.
April’s imports from Colombia, the biggest supplier, were 0.97 mt,
up from 0.64 mt in April 2014 and the highest monthly total since
June 2014. March deliveries were also 0.64 mt.
Imports for January-April were 3.23 mt, up from 3.00 mt a year
earlier. The main supplier of Colombian coal - CMC – has its own
rail line and is not affected by the Fenoco railway restrictions on
overnight deliveries.
Russian deliveries to Turkey were 0.54 mt in April, up from
0.36 mt a year earlier, but down from 0.72 mt in March. Shipments
in January-April were 2.82 mt, up from 2.38 mt in the same four
months last year.
The lack of competition from Ukrainian suppliers has helped
Russian suppliers increase their market share. Novorossiysk port
delivered 45,000 t in the first week of May.
Imports from South Africa continue to see a strong push, mainly
because of competitive freight rates, which have opened up trade
opportunities. Turkey’s April intake from South Africa was 0.43 mt,
up from 52,000 t in the same month last year, but lower than 0.67 mt
in March. Deliveries for January-April were 2.25 mt, compared with
0.70 mt in the period last year.
Ukraine did not supply any thermal coal to the Turkish market in
April and has not done so since January, when it delivered a 55,000
t cargo. It did not export any anthracite in April, compared with
77,000t in April 2014 and 3,265 t in March this year.
mccloskeycoal.com

Japan’s thermal imports
rise 11% y-o-y in April
Japan’s thermal coal imports rose 11% year-on-year in April, to
11.02 mt from 9.85 mt, Japanese Ministry of International Trade and
Industry data show.
However, the monthly total was down 5% from 11.68 mt in March.
Shipments from Australia rose more than 1 mt y-o-y in April, rising
20% to 7.62 mt from 6.33 mt, but were practically flat to March’s 7.60 mt.
Indonesian arrivals fell 7% y-o-y, to 2.15 mt from 2.32 mt, and
dropped 26% from 2.93 mt in March.
Russian supply rose 19% y-o-y, to 0.70 mt from 0.59 mt, and
increased 9% from March’s 0.64 mt.
Canadian coal saw by far the largest percentage increase, rising 51%
y-o-y to 0.34 mt, from 0.23 mt, and soaring 110% from March’s 0.16 mt.
For January-April, Japan’s thermal coal imports grew 2.9% y-o-y, to
47.96 mt from 46.57 mt.
The full data can be found in the Statistics section of the McCloskey
Coal Report website.
Turkey’s Q1 cement
output falls 24%
Turkey’s cement output fell 24% year-on-year in the first quarter,
according to the Turkish Cement Association.
Output in January-March was 12.50 mt, compared with 16.47 mt in
the same period of 2014.
March’s cement production fell to 5.87 mt, from 6.07 mt a year
earlier, but was higher than February’s 3.38 mt.
Domestic first-quarter sales weakened on the year, falling 24%
to 11 mt. Sales for March were better month-on-month at 5.00 mt,
compared with 3.05 mt in February, and the year-on-year drop was not
as severe as for the first quarter. The winter months were colder than
expected and this restricted construction activity, although it has
since improved, reducing some of the over-supply that had built up.
Cement exports were slightly lower on the year in January-
March, falling to 1.63 mt from 1.64 mt. But March exports were
higher at 0.76 mt, up from 0.62 mt for the same month last year.
Markets in the Black Sea area such as Bulgaria and Russia are
beginning to pick up.
Stocks at the end of March were 0.79 mt, down from 0.91 mt a
year earlier.
The slow-down in cement output has not deterred Turkish
cement producers from importing solid fuels, especially thermal
coal to produce cement. Turkey imported 1 mt of petcoke from the
United States in January-April, broadly stable with 2014, and its total
thermal coal imports in the same period were 8.69 mt, compared
with 6.62 mt in the same period last year.
Ukraine allocates
$142.7m to buy coal
Ukraine’s cabinet has set aside $142.7m to buy coal for the
country’s electricity producers, energy and coal minister Vladimir
Demchishin said on 8 June.
mccloskeycoal.com
Trade
The country plans to begin buying anthracite on the international
market shortly, he added. Ukraine needs 2.5 mt of coal before the
start of winter, including 1.5 mt of grade G material and 1 mt of grade
A coal, a form of anthracite.
Storage facilities in the country have recently re-filled somewhat,
holding 0.27 mt of coal, including over 0.10 mt of anthracite,
Demchishin said. However, Ukraine still needs to buy another 0.7-
0.8 mt of anthracite before winter.
The country’s ports can handle about 0.4 mt/month of imports, so
they can easily land the required volume.
Exports at Canada’s Ridley
Terminals fall 45% in May
Coal exports through Canada’s Ridley Terminals fell almost 45%
year-on-year in May, to 0.457 mt from 0.830 mt, according to the
Prince Rupert Port Authority.
Coking coal exports dropped 57%, to 0.147 mt from 0.344 mt,
while steam coal shipments slid 60%, to 0.163 mt from 0.410 mt.
However, petroleum coke exports rose to 0.146 mt, compared with
75,752 t in May last year.
January-May exports totalled 1.86 mt, a 50% drop from 3.74 mt in
the same period last year.
Coking coal exports in the five-month period were 0.97 mt, down
56% from 2.22 mt a year earlier. Steam coal exports also tumbled
56% in January-May, slipping to 0.498 mt from 1.13 mt in the same
period last year.
Petroleum coke exports grew 3% on the year in January-May, to
0.392 mt from 0.380 mt.
New Orleans, Mobile coal
exports rise 11% y-o-y in April
Coal exports through the United States (US) ports of Mobile
and New Orleans totalled 1.74 mt in April, up 11% from 1.57 mt in
the same month last year, according to the US International Trade
Commission (USITC).
Terminals in New Orleans handled 0.839 mt, compared with 0.693
mt in April 2014. Steam coal exports regained some strength over the
period, rising to 0.754 mt from 0.669 mt, and climbing from 0.363 mt
in March this year.
Coking coal exports through New Orleans remained low in April at
84,368 t, but still increased from 23,686 t in April 2014.
January-April coal shipments through New Orleans totalled
2.73 mt, according to the USITC, down from 4.21 mt in the same
period last year. Coking coal exports fell to 0.265 mt from 0.444
mt over the period, while steam coal exports declined steeply,
sliding to 2.47 mt from 3.77 mt.
Mobile shipped 0.903 mt of coal in April, up from 0.880 mt in
the same month last year. Coking coal exports, slipped to 0.727
mt from 0.738 mt, while steam coal exports moved up to 0.176 mt
from 0.141 mt.
January-April shipments through Mobile came to 4.07 mt,
compared with 4.14 mt in the same period a year earlier. Coking coal
exports edged down to 3.35 mt from 3.50 mt during the four-month
period, while steam coal exports rose to 0.717 mt from 0.640 mt.
© 2015 IHS  12 June 2015  McCloskey Coal Report  |  29
Trade
Mechel signs 1 mt thermal deal
with Chinese cement company
Russian metals and mining company Mechel has signed an
agreement with China’s Jidong Cement to supply 1 mt of thermal
coal by March 2016.
The coal will be produced at the Neryungrinsky and Elga open pits,
while the price and exact volume will be decided on a monthly basis.
Mechel and the Chinese cement producer are also considering
expanding their co-operation into metallurgical coal supplies to
facilities owned by Jidong Development Group, the holding company
of Jidong Cement.
“The Chinese market remains a priority for Mechel’s mining segment.
It accounts for a major share - 70% - of our total sales to the entire Asia
Pacific,” Mechel Mining Management CEO Pavel Shtark said.
“With a global slump in demand for coal, it is particularly important
for us to develop long-term ties that enable us to retain our share in
the market and ensure the stability of our coal exports,” he added.
Mechel’s full-year steam coal sales edged up 1% to 5.96 mt in 2014,
from 5.90 mt in 2013, as output from the Elga deposit offset the loss
of production from Mechel Bluestone. Full-year run-of-mine output
fell 18% on the year to 22.62 mt, from 27.52 mt in 2013.
US east coast exports
slide 18.5% in May
United States (US) coal exports from terminals at Hampton Roads
and Baltimore totalled 3.02 mt in May, down 18.5% from the previous
month’s total of 3.71 mt, and 33.6% lower compared with 4.55 mt in
May 2014, according to ship agent and broker, T. Parker Host.
January-May exports at 18.96 mt were down 18.9% compared with
23.38 mt in the same period a year earlier. Exports annualise to 45.5
mt, down 8.1% from last year’s actual exports of 49.5 mt.
Metallurgical coal accounted for 12.9 mt of the shipments and
steam coal 6.1 mt in January-May versus 15.3 mt for met coal and 8.2
mt for steam coal in the same period last year.
January-May shipments from Hampton Roads totalled 12.3 mt,
compared with 17.7 mt in the same period last year and 20.9 mt in the
first five months of 2013. Met coal shipped out of Hampton Roads in
the first five months was 10.1 mt with the steam coal total reaching
2.1 mt, compared with 11.3 mt of met coal and 6.4 mt of steam coal in
January-May 2014, and 13.6 mt of met coal and 7.3 mt of steam coal in
the same period of 2013.
Total exports at Baltimore climbed to 6.70 mt in the first five months
of this year, compared with 5.67 mt in the same period of 2014, and 7.00
mt in January-May 2013. Met coal’s share of the exports totalled 2.76
mt and steam coal shipments were 3.94 mt, compared with 3.92 mt of
met coal and 1.75 mt of steam coal in January-May 2014, and 5.38 mt of
met coal and 1.63 mt of steam coal in the first five months of 2013.
In May, the Americas received 0.5 mt of met coal and no steam coal,
while Northern Europe took 1.18 mt of met coal and 79,736 t of steam
coal. The Mediterranean region received 0.39 mt of met coal and 0.12
mt of steam coal in May. Shipments of US export coal to the Far East in
May included 0.54 mt of met coal and 0.21 mt of steam coal.
In January-May, Xcoal was the largest exporter from the US East
Coast, shipping 5.74 mt of coal, followed by Alpha Natural Resources
30  |  McCloskey Coal Report  12 June 2015  © 2015 IHS
with 4.60 mt and Arch with 1.27 mt. In the same period last year,
Alpha was the largest exporter with 6.79 mt, followed by Xcoal with
5.36 mt and EdF with 1.48 mt.
Hampton Roads breakdown
Exports from Hampton Roads totalled 2.22 mt in May, down 2.1%
from 2.27 mt in April and 33.9% lower than 3.36 mt in May 2014,
according to shipping sources.
Norfolk Southern’s Lamberts Point terminal shipped 4.93 mt in
the first five months of this year, 31.3% lower than 7.17 mt in the
same period last year. Shipments annualise to 11.8 mt, a drop of 22%
from 15.2 mt in 2014.
January-May exports from CSX-served Dominion Terminal
Associates (DTA) totalled 4.39 mt, down 30.4% compared with 6.31
mt in the same period last year. Exports from DTA annualise to 10.55
mt, 14.3% lower than total exports of 12.31 mt in 2014.
Shipments from Kinder Morgan’s Pier IX terminal in January-
May totalled 2.93 mt, down 36.5% from 4.62 mt in the same period
last year. Pier IX’s exports annualise to 7.00 mt, a drop of 27.8%
versus 9.75 mt in 2014.
US steam coal imports
rise 8.29% in Jan-Apr
The United States (US) imported 2.81 mt of steam coal in January-
April, an increase of 8.29% from 2.60 mt in the same period last year,
according to the US Department of Commerce.
Imports in April were 0.64 mt, the second-largest monthly total
this year, topped by 1 mt in January. In comparison, imports were
0.56 mt in March and 0.63 mt in April 2014.
Colombian shipments rose 20% on the year in January-April, to
2.34 mt from 1.95 mt. Indonesia supplied 0.42 mt, down 28.9% from
0.59 mt in January-April 2014.
Colombia provided 83.3% of the US’s total coal imports in January-
April, followed by Indonesia with 14.9% and Venezuela with 1.2%. In
the same period last year, Colombia’s share was 75.1% of the total,
followed by Indonesia with 22.8% and Venezuela with 1.5%.
January-April steam coal imports annualise to 8.44 mt, almost flat
compared with 8.51 mt in 2014.
Great Lakes, Canada, US west
coast exports rise in April
Coal exports from the United States (US) through the Great
Lakes, Canada and the west coast increased on the year in April,
rising to 1.04 mt from 0.89 mt, according to the US International
Trade Commission (USITC).
Exports of sub-bituminous coal rose to 0.404 mt from 0.343 mt,
metallurgical coal shipments grew to 0.250 mt from 0.225 mt and
bituminous exports climbed to 0.391 mt from 0.323 mt.
January-April shipments totalled 3.63 mt, up from 3.35 mt in the
same period last year. Metallurgical coal exports in the four months
dropped about 10% year-on-year, to 0.602 mt from 0.667 mt.
Sub-bituminous shipments totalled 1.63 mt in January-April,
compared with 1.31 mt in the same period last year, while
bituminous exports edged up to 1.38 mt from 1.36 mt.
mccloskeycoal.com
 Trade > People

Vietnam’s Trade Ministry calls
for hike in exports
Vietnam’s Ministry of Industry and Trade has asked the
government to end its clampdown on coal exports.
The country’s coal depots are over-loaded following the
government’s move to limit exports to ensure energy security amid
growing domestic demand, according to Nguyen Khac Tho, deputy
head of the ministry’s power department.
Vietnam’s coal exports fell 57% year-on-year in April to 248,742 t,
statistics from the country’s customs department show.
China, traditionally Vietnam’s largest market for coal, took
nothing in the first four months of this year. South Korea took most
of April’s volume, at 103,455 t.
Early indications are that Vietnam exported 150,000 t in May,
down 40% month-on-month, with preliminary customs statistics
expected in the week beginning 15 June.
Overall exports in January-April fell 78% y-o-y to 745,493 t.
Meanwhile, Vietnam’s total coal imports rose 90% y-o-y in
April, to 362,861 t.
At the same time, the country’s coal production has increased
compared with last year, rising 4.5% y-o-y to 17.58 mt in January-May.
People
Ex-Goldman’s Bradley starting
US coal and power venture
Coal veteran Peter Bradley is understood to be setting up a new
US-centric coal and power venture, according to trading sources.
The new venture, called Javelin, would work with Europe-based
utility Eon, and with US coal miner Murray Energy, which produces
around 65 million short tons/year of coal from Northern Appalachia,
the Illinois and Uintah basins.
Bradley was managing director for fixed income, currency and
commodities at Goldman Sachs, having moved across in 2009 when
Goldman bought most of Constellation Energy’s commodities business.
The team is also understood to include Alpha Natural Resources vice-
president of international hedging sales and marketing, Nick Ingham,
who left the company in April and had previously traded coal at Drax.

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mccloskeycoal.com © 2015 IHS  12 June 2015  McCloskey Coal Report  |  31

Coal Equities Bulletin

Coal Equities Bulletin International coal company share prices

Change on

Further declines for global Name

Global Diversifieds
CCY Last 1 Mth YTD 12 Mths

coal equities BHP Billiton

Rio Tinto
AUD
AUD
27.66
56.07
-4.1%
-4.4%
3.9%
-3.3%
-15.8%
-6.0%

Global coal equities took another bruising over the past Anglo American Plc GBP 9.85 -12.6% -17.9% -32.1%

month, with most of the MCR share list, compiled by Credit BHP Billiton GBP 13.15 -10.3% 1.6% -25.3%

Suisse, sitting in the red. Rio Tinto GBP 27.81 -8.2% -7.3% -11.7%

The global diversified miners and US producers were among the Glencore GBP 2.75 -9.6% -7.4% -14.4%
Pure Coal Companies
hardest hit, with virtually all of the major names declining.
Cockatoo Coal AUD 0.00 -20.0% -29.0% -64.5%
BHP Billiton shares fell 4.1% in Australia and 10.3% in the United
Coal of Africa AUD 0.12 101.8% 271.0% 74.2%
Kingdom, while Rio Tinto lost 4.4% and 8.2% in the same regions.
Wollongong Coal AUD 0.02 -4.8% 0.0% -52.4%
Anglo American dropped 12.6% and Glencore lost 9.6%.
New Hope Corporation AUD 1.92 -10.1% -22.5% -27.5%
In Australia, there were a couple of exceptions to the overriding
Sedgman AUD 0.75 4.2% 25.0% 53.1%
trend. Sedgman gained 4.2%, while Yancoal added 25% and the
Whitehaven Coal AUD 1.40 -8.2% -0.4% -2.8%
Australia listing of Coal of Africa (CoAL) jumped 101.8%.
Yancoal AUD 0.15 25.0% -3.2% -38.8%
CoAL has completed a three-stage funding program totalling
US$59.1m, with proceeds slated for development of the Makhado Aquila Rsc AUD 3.37 0.0% 0.0% -3.4%

metallurgical/thermal prospect in Limpopo province. Wesfarmers AUD 41.55 -4.2% -0.4% -0.9%

Last month, CoAL said it had been awarded a mining right at Yanzhou Coal Mining HKD 7.22 0.7% 9.9% 14.8%
Company Limited
Makhado, slated as a 5.5 mt/y project, producing about 2.3 mt/y of
hard coking coal, with the balance as thermal product. Yanzhou Coal USD 9.27 1.4% 10.0% 16.0%

Meanwhile, Yancoal received a key approval for its slated China Shenhua Energy CNY 19.94 2.7% -13.1% -10.2%
Company Limited
2.6 mt/y extension of the Stratford met/thermal operation in
New South Wales. Environmental approval from the federal Adaro Energy Rupiah 830.00 -8.3% -20.2% -36.2%

government is still required. GCM GBP 0.13 27.8% -24.1% -34.4%

Also in Australia, shares in Australian metallurgical coal producer Antam Rupiah 730.00 -8.8% -31.5% -36.5%

Wollongong Coal have been suspended from stock-exchange trading Banpu Public Co Ltd Rupiah 25.25 -12.2% 1.4% -15.1%

over the company’s failure to report its results. PT Bumi Resources Tbk Rupiah 67.00 -35.0% -16.3% -65.5%

Wollongong, controlled by India’s Jindal Group, is yet to lodge its Semirara Mining Corporation PHP 137.50 -15.1% -3.2% 9.1%

preliminary report for the year to March. It has not reported audited Arch Coal, Inc. USD 0.50 -48.4% -71.9% -85.8%

accounts since November 2014, revealing a loss of almost A$63m Alpha Natural Resources LLC USD 0.48 -37.6% -71.0% -85.9%

for the six months to September, with auditors citing “significant Peabody Energy Corp USD 3.28 -28.7% -57.6% -79.8%

uncertainty” on its ability to remain solvent. CONSOL Energy Inc. USD 27.79 -14.0% -17.8% -40.3%

In the United States, Peabody Energy will reduce met coal Walter Energy, Inc USD 0.31 -36.8% -77.7% -93.5%

production by 1.5 million short tons/y at its North Goonyella mine in Teck Resources Ltd CAD 14.45 -17.0% -9.0% -39.2%

Queensland, Australia, and plans sweeping staff reductions aimed at Sherritt Intl CAD 2.36 -20.0% -21.3% -49.6%
Source: Credit Suisse
lowering the company’s cost base.
Peabody said the cuts would cut about 250 jobs, representing
around 25% of “regional and support positions”.
Shares in Peabody fell 28.7% on the month. Arch Coal fell 48.4%,
while Alpha Natural Resources and Walter Energy fell 37-38% and
Consol lost 14%. In Canada, Teck Resources declined 17.0% and
Sherritt lost 20%.
In Asia, Yanzhou Coal gained 1.4%, while Shenhua Energy added
2.7% and GCM jumped 27.8%. Adaro Energy and Antam gained 8-9%,
while Banpu Public and Semirara Mining added 12-15%. PT Bumi
Resources shares fell 35% over the month.

32  |  McCloskey Coal Report  12 June 2015  © 2015 IHS mccloskeycoal.com