Over the past week, European thermal coal indices rose to 116-117 USD/t. Prices remain supported by low stockpiles, expected cold weather and rising quotes for gas, following Iran’s strikes on Israel in response to the military invasion of Lebanon. Also, combined thermal coal shipments from Colombia (including deliveries to Europe) declined by 20% w-o-w.
Last week, the UK closed its last coal-fired power plant (2 GW), becoming the first G7 country to completely phase out coal-fired generation. However, this event will have a limited impact on the market, as the UK almost halted steam coal imports as recently as last year (the volume in 2023 did not exceed 50,000 t).
Gas quotations at the TTF hub strengthened to 442.97 USD/1,000 m3 (+11.21 USD/1,000 m3 w-o-w), despite an increase in EU underground storage reserves. Coal stocks at ARA terminals stayed flat at a relatively low level of 3.6 mio t.
South African High-CV 6,000 rose to 106-108 USD/t amid growth in the European market coupled with demand from the Asia Pacific, including Vietnam, which was hit by Typhoon Yagi. Meanwhile, market participants mention discounts in some deals for high-CV material, compared to exchange indices, resulting in speculation stating that the correlation between the exchange and physical markets has started to diminish.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao remained largely unchanged at 124 USD/t due to a slowdown in trading activity related to the Golden Week celebrations within October 1-7. Some market participants are optimistic, as they expect that prices will be supported after the weekend by cooling temperatures caused by the La Nina phenomenon, as well as announced measures to stimulate the country’s economy and maintenance of the Daqin railway line from October 6 to 26.
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The Five Largest Coal Producing States in the US
The north-western state of Wyoming is the least populous state in the US, but has been the largest coal-producing state since 1986, in large part thanks to ten mines in the Powder River Basin. The Wyoming Mining Association (WMA) estimates that the state has coal reserves of 1.4 trillion tonnes, more than 165 billion of which is recoverable, with some seams in the Powder Basin in excess of 200ft thick.
The WMA claims that the low sulphur content of the coal and ‘world-class’ coal seams have contributed to the state’s significant coal production. The close proximity of coal seams to the surface also eliminates the need for expensive and dangerous digging operations, keeping production costs and risk to workers low. Wyoming’s coal production soared in the 20th century, from 9.4 million tonnes in 1918 to a peak of 466 million tonnes in 2008.
The state was responsible for 40.8% of all US coal production in 2016, and its North Antelope Rochelle mine in the Powder Basin is the largest coal operation in the world. The Peabody-owned project covers over 11,000 hectares, close to double the size of Manhattan island, and 21 freight trains full of coal leave the mine every day for over 100 power plants across the country. Between 2003 and 2016, Wyoming exported over 267 million tonnes of coal to other US states, making the Powder Basin projects an integral part of both the state’s economy, and the power supply of the US.
West Virginia: 79.8 million short tonnes
While West Virginia was the second-largest producer of coal in the US in 2016, its production was less than a third of that of Wyoming’s. The Hobet mine has historically been one of the state’s most productive, and enjoyed rapid growth in the 1970s, from the start of coal production in the family-owned operation in 1974, to a peak annual production of 5 million tonnes in 2002.
However, strike action in 1993 saw the workforce nearly halved, and the mine’s owners Patriot Coal filed for bankruptcy twice between 2012 and 2015, putting the future of one of the state’s largest mines in doubt.
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What the UK Wants Wyoming to Learn From its Long History With Coal
Coal has played a significant role in the United Kingdom – and British identity – since the Industrial Revolution. Coal first generated electricity in the country in the 1880s. It was the country’s largest bulk export until 1939. Even the word “smog” was coined in London for the hazy skyline coal power created. But now, the U.K. is the world’s first major economy to quit coal power, beating a climate-focused deadline the government set back in 2015.
A CSX train passes the station platform at Charleston
Tammy Sandhu is the British consul general for the northwest United States. Wyoming Public Radio’s Kamila Kudelska was interested to have her compare how the UK is navigating its energy transition with Wyoming, the U.S.’s top coal producer. Sandhu started by explaining what’s taking coal’s place.
Editor’s Note: This interview was lightly edited for brevity and clarity.
Tammy Sandhu: Up until 12 years ago, so 2012, coal was still producing 40 percent of our electricity. So what we are moving towards heavily in the U.K. is an energy mix: energy that is powered by clean energy, by homegrown clean energy. Our solar and wind generated electricity is coming from the U.K. itself. That's supported by high quality green jobs.
Kamila Kudelska: So the phase out plan was made about a decade ago. Logistically, that's not a lot of time. You guys did it, but how? And how could that possibly be a model for other countries?
TS: Actually the critical piece that allowed us to do this so quickly was to make the economic arguments, and make it economically inviolable for coal and economically viable for renewables to take off.
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MCPA's 48th Annual Fall Meeting & Excellence in Mining Reclamation & Virginia Energy's Safety Awards Banquet - October 24, 2024 - Lebanon, VA
MCPA 48th Annual Fall Meeting and Awards Dinner is scheduled Thursday, October 24, 2024, beginning at 5:30 p.m., Russell County Conference Center, 139 Highland Drive, Lebanon, VA 24266. MCPA and Virginia Energy are excited to honor and showcase their reclamation and safety awards winners for 2024.
Let’s make this event an opportunity to recognize the workers who work with various agencies to design and implement award winning sites. This lets the employees be recognized for their commitment and dedication to the companies’ reclamation and safety programs by the Metallurgical Coal Producers Association, its membership and Virginia Department of Energy-Virginia Energy.
We have a short program beginning at 5:30 p.m. J.P. Richardson, MCPA Chairman; Ben Beakes, President; Randy Moore, Virginia Energy; and MCPA’s legislative and environmental teams will update the audience on ongoing activities.
All MCPA members are invited to attend the meeting and banquet. There is not a charge for this event as we have secured financial sponsors.
You may respond to this email as to your participation and the number of people from your company attending or call 423-549-6048. Register TODAY!
Remember – Thursday, October 24, 2024, at the Russell County Conference Center, 139 Highland Drive, Lebanon, VA 24266.
Remember Met Coal makes Steel!
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PJM Can’t Get New Capacity Online
At the precise moment power demand is exploding, PJM, the operator of the nation’s largest grid, is struggling to get new capacity online. In fact, the problem is doubly difficult. At the exact time PJM desperately needs new capacity additions to surge, they’re stalled, and the U.S. Environmental Protection Agency (EPA) is making matters worse with its relentless drive to take essential dispatchable capacity offline.
Just 2,000 megawatts (MW) of capacity, nearly all of it solar, has come online in PJM this year, down from close to 5,000 MW in 2023. And because solar can’t be counted on during peak demand conditions – like a bitterly cold night – that 2,000 MWs of nameplate capacity is in fact an addition of far less, “which is nowhere near where we need to be,” said Paul McGlynn, PJM vice president of planning.
Project developers are facing a variety of challenges outside of PJM’s control, including long-lead times to procure equipment, growing local opposition to industrial-scale renewable projects and financing obstacles.
According to PJM, nearly 450 projects totaling about 37.2 GW in nameplate capacity have signed interconnection agreements but haven’t been built.
While renewable advocates have again and again pointed to the interconnection queue as the critical chokepoint in holding back projects, PJM is adamant that just the opposite is true. The grid operator has reformed its process, is clearing significant capacity yet it isn’t being built while reserve margins continue to tighten and capacity prices in the grid footprint soar.
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